Exhbit
10.5


Amended
and Restated

Employment Agreement


THIS EMPLOYMENT AGREEMENT (this “Agreement”)
made effective as of the 7th day of November 2006 (the “Effective Date”), by
and between Advanced Life Sciences, Inc., an Illinois corporation (the “Company”),
and Ze-Qi Xu, Ph.D. (the “Executive”).


WHEREAS, the
Company and the Executive previously entered into an employment contract (the “Existing
Employment Contract”); and


WHEREAS, the
Company and the Executive desire to enter into this Amended and Restated Agreement,
effective as of the Effective Date, to amend and restate the Existing
Employment Contract; and


WHEREAS, the
Company desires to employ the Executive in accordance with the terms and
conditions hereinafter set forth and the Executive desires to be so employed;
and


WHEREAS, the
Company has agreed with the Executive that this Agreement shall set forth the
terms and conditions of the Executive’s employment with the Company;


NOW, THEREFORE, in
consideration of the mutual covenants contained herein, the Company and the
Executive agree as follows:


1.             Term. The employment of the
Executive by the Company pursuant to this Agreement shall begin as of the
Effective Date and shall expire on the third anniversary of the Effective Date
(the “Term”), unless extended, as set forth below, or otherwise terminated
pursuant to the provisions of this Agreement; provided, however,
that commencing on the third anniversary of the Effective Date and on each
anniversary thereafter, the Term of this Agreement shall automatically be
extended for one additional year unless, not later than 90 days prior to such
anniversary, the Executive or the Company shall have given notice in writing
that he or it does not wish to extend this Agreement.


2.             Position and Duties. The
Executive shall serve as the Chief Scientific Officer of
the Company, and shall have such responsibilities, duties and authority as are
assigned by the Chief Executive Officer of the Company and are customarily
associated with such position, including but not limited to, those he may have
as of the Effective Date. The Executive shall devote such time to the
performance of his duties as is necessary to satisfactorily perform his
responsibilities and duties.


3.             Place of Performance. In
connection with the Executive’s employment by the Company, the Executive shall
be based at the principal executive offices of the Company currently in
Woodridge, Illinois, except for required travel on the Company’s business.


4.             Compensation and Related Matters.
During the Term of the Executive’s employment, as compensation and
consideration for the performance by the Executive of the Executive’s duties,
responsibilities and covenants pursuant to this Agreement, the Company shall
pay the Executive and the Executive agrees to accept in full payment for such
performance the amounts and benefits set forth below.


(a)           Salary.
The Company shall pay to the Executive an annual base salary of $180,000 (“Base Salary”), payable in substantially equal
installments no less frequently than monthly in accordance with the Company’s
applicable payroll practices. The amount of Base Salary shall be reviewed
annually by the Chief Executive Officer to determine whether to increase the
Base Salary on a prospective basis and may be increased by the Compensation
Committee of the Board. Any such salary adjustment shall then be considered
Base Salary for 









 



the purposes of this Agreement. The Executive’s Base Salary shall not
be reduced after any increase, without the Executive’s consent.


(b)           Bonus.
The Executive shall be eligible to participate throughout the Term in the
Company’s annual bonus plan or any similar or successor bonus plan (“Bonus
Plan”) in accordance with the Company’s compensation practices and the
terms and provisions of the Bonus Plan. The Executive may be eligible to
receive an annual performance bonus equal to thirty
percent (30%) of Base
Salary or such greater amount as the Compensation Committee of the Board of
Directors may determine. The amount of Bonus shall be reviewed annually and may
be increased by the Compensation Committee of the Board of Directors.


(c)           Stock
Incentive Plan. As of the Effective Date, the Executive shall be shall be
eligible to receive additional awards of the Company’s common stock under the
Company’s Stock Incentive Plan or under any other equity plan of the Company as
determined by the Compensation Committee of the Board of Directors of the
Company in its discretion.


(d)           Other
Benefits and Perquisites. During the Term of the Executive’s employment
hereunder:


(i)            Benefit Plans. The Executive
shall be entitled to participate in or receive benefits under any employee
pension or welfare benefit plan or arrangement made available by the Company at
any time during his employment hereunder to its employees (collectively the “Benefit
Plans”), including without limitation each qualified retirement plan, life
insurance and accident plan, medical, dental insurance plans, and disability
plan, subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements, as they may be amended
from time to time.


(ii)           Vacation. The Executive shall
be entitled to not less than 20 days of paid
vacation in each calendar year, in accordance with the Company’s vacation
policy.


(iii)          Expense Reimbursement. The
Executive shall be entitled to receive reimbursement for all reasonable
business, travel or other out-of-pocket expenses incurred by the Executive in
fulfilling the Executive’s duties and responsibilities hereunder, provided that
such expenses are incurred and accounted for in accordance with the policies
and procedures established by the Company.


5.             Termination.


(a)           The
Executive’s employment hereunder may be terminated under the following
circumstances:


(i)            The
death of the Executive;


(ii)           By
the Company for “Cause”, which shall mean any of the following:, as determined
by the Board in its discretion: (A) conviction of or plea of guilty or nolo contendere to any criminal violation
involving dishonesty or fraud; (B) engagement in conduct that is injurious to
the Company; (C) engagement in any act of dishonesty or misconduct that results
in damage to the Company or its business or reputation or that the Board
determines to adversely affect the value, reliability or performance of the
Executive to the Company; (D) refusal or failure to substantially comply with
the Company’s human resources rules, policies, directions and/or restrictions
relating to harassment and/or discrimination, or with compliance or risk
management rules, policies, 



 2
 






 



directions and/or restrictions; (E) unauthorized use or disclosure of
Confidential Information (as defined below) or other trade secrets of the
Company; (F) loss of any license or registration that is necessary for the
Executive to perform his duties to the Company, or commission of any act that
could result in the legal disqualification of the Executive from being employed
by the Company or any of its affiliates; (G) failure to cooperate with the
Company or any of its affiliates in any internal investigation or administrative,
regulatory or judicial proceeding; or (H) continuous failure by the Executive
to perform his duties to the Company (which may include any sustained and
unexcused absence of the Executive from the performance of such duties, which
absence has not been certified in writing as due to physical or mental illness
or disability), after a written demand for performance has been delivered to
the Executive identifying the manner in which the Executive has failed to
substantially perform such duties. The application of any part of the
definition of Cause set forth in clauses (A) through (H) above to the Executive
shall not preclude or prevent the reliance by the Company or the Board on any
other part of the definition that also may be applicable. In addition, the
Executive’s employment shall be deemed to have terminated for Cause if, after
the Executive’s employment has terminated, facts and circumstances are
discovered that would have justified a termination for Cause.


(iii)          By
mutual agreement between the Company and the Executive; or


(iv)          By
the Executive or the Company for any reason other than as stated in Sections
5(a)(i) through 5(a)(iii) above, upon providing a Notice of Termination (as
defined in Section 5(b)).


(b)           Notice
of Termination. Any termination of the Executive’s employment by the
Company or by the Executive (other than a termination pursuant to Section
5(a)(i) above) shall be communicated by written Notice of Termination to the
other party hereto in accordance with Section 10. For purposes of this
Agreement, a “Notice of Termination” shall mean a notice that shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated.


(c)           “Date
of Termination” shall mean (i) if the Executive’s employment is terminated
pursuant to Section 5(a)(i) above, the date of his death; (ii) if the Executive’s
employment is terminated pursuant to Section 5(a)(ii) or 5(a)(iv) above, the
date such Notice of Termination is given (or such later date as provided
therein); (iii) if the Executive’s employment is terminated pursuant to Section
5(a)(iii) above, the date mutually agreed to by the parties; (iv) the date the
Term of this Agreement expires, if either the Company or the Executive provides
notice in accordance with Section 1; or (v) if the Executive terminates his
employment and fails to provide written notice to the Company of such termination,
the date of such termination.


6.             Compensation Upon Termination.


(a)           The
following payments shall be made upon the Executive’s termination of employment
for any reason: (i) earned but unpaid Base Salary through the Executive’s Date
of Termination; (ii) any accrued but unpaid vacation; (iii) unreimbursed
business expenses owed pursuant to Section 4(d)(iii); and (iv) any amounts
payable under any of the Company’s Benefit Plans in accordance with the terms
of those plans. All amounts under clauses (i) through (iii) shall be paid in a
lump sum on the Executive’s Date of Termination or as soon as administratively
practicable thereafter.



 3
 






 



(b)           In
the event that the Executive’s employment is terminated pursuant to Sections
5(a)(i) or 5(a)(ii), or by the Executive for any reason pursuant to Section 5(a)(iv), above, the
Company shall have no further obligation to the Executive under this Agreement,
other than the payments in Section 6(a).


(c)           If
the Executive’s employment is terminated by the parties pursuant to Section
5(a)(iii) above, the Executive shall be entitled to receive the compensation
the parties specify in any written agreement that the Company and the Executive
execute regarding the Executive’s termination.


(d)           In
addition to the payments made under Section 6(a), if the Executive’s employment
is terminated by the Company without Cause pursuant to Section 5(a)(iv) above,
the Company shall, for a period of six (6) months
following the Date of Termination (the “Severance Period”) or such greater
amount as the Compensation Committee of the Board of Directors may determine,
(i) provide to Executive salary continuation, at Executive’s Base Salary rate
then in effect, and (ii) continue the Executive’s coverage under the Benefit
Plans in which the Executive participated immediately prior to the Date of
Termination, provided, however, that if the Company cannot continue such
coverage, the Company shall provide or arrange to provide, at its expense,
similar coverage to the Executive. The Severance Period may be increased by the
Compensation Committee of the Board Directors. Any such increase shall then be
considered the Severance Period for the purposes of this Agreement. Notwithstanding
the forgoing, vacation days shall not accrue during the six (6)
month period of severance.


(e)           The
Executive shall not be required to mitigate the amount of any payment provided
for in this Section 6 by seeking other employment or otherwise, nor shall the
amount of any payment or benefit provided for in this Section 6 be reduced by
any compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.


(f)            The
obligations of the Company to make payments and provide benefits under this
Section 6 shall survive the termination of this Agreement.


7.             Change in Control. Upon a Change in
Control, all outstanding stock options and other equity awards under the
Company’s Stock Incentive Plan or other similar or successor plan held by the
Executive will immediately become fully vested and exercisable.


(a)           Payments and Benefits Upon Employment
Termination Upon a Change in Control. If the Executive’s employment is
terminated other than for Cause within 24 months after a Change in Control (as
defined below), the Company shall provide the following payments and benefits
to the Executive, in lieu of those payments and benefits provided under
Sections 6(d), but in addition to the amounts payable under Section 6(a):


(i)            The Company shall pay the Executive
a lump sum cash amount equal to two (2) times the sum of (A) the Executive’s
Base Salary as in effect on the date of the Executive’s termination of
employment and (B) the Executive’s target bonus amount for the fiscal year in
which the Executive’s employment is terminated OR an amount equal to the annual
bonus paid to the Executive during the fiscal year immediately preceding the
Executive’s termination of employment.


(ii)           The Company shall continue the
Executive’s coverage under the Benefit Plans in which the Executive
participated immediately prior to the Executive’s termination of employment for
a period of 24 months, provided, however, that if the Company cannot continue
such coverage, the Company shall provide or arrange to provide, at its expense,
similar coverage to the Executive.



 4
 






 



(b)           Timing of Payment. All payments under
Section 7(a) shall be made in a lump sum cash payment as soon as practicable,
but in no event more than 10 days after the Executive’s termination of
employment.


(c)           Definitions. For purposes of this
Agreement, the following terms shall have the following definitions:


(i)            “Change in Control” means the
occurrence of any one or more of the following:


(A)          Any “person”
(as such term is defined in Section 3(a)(9) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) and as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act), including a “group” (as defined in Section
13(d)(3) of the Exchange Act), other than (I) the Company, (II) any
wholly-owned subsidiary of the Company, (III) any employee benefit plan (or
related trust) sponsored or maintained by the Company or any of its affiliates,
or (IV) a “Permitted Holder” (as defined below), becomes a “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company having fifty percent (50%) or more of the combined
voting power of the then-outstanding securities of the Company that may be cast
for the election of directors of the Company (other than as a result of an
issuance of securities initiated by the Company in the ordinary course of
business) (the “Company Voting Securities”); provided, however, that the event
described in this Section 7(c)(i) shall not be deemed to be a Change in Control
by virtue of any underwriter temporarily holding securities pursuant to an
offering of such securities;


(B)           During
any period of two consecutive years, individuals who at the beginning of any
such period constitute the Board (the “Incumbent Directors”) cease for any
reason to constitute at least a majority of the Board, unless the election, or
the nomination for election by the stockholders of the Company, of each new
director of the Company during such period was approved by a vote of at least
two-thirds of the Incumbent Directors then still in office;


(C)           As
the result of, or in connection with, any cash tender or exchange offer, merger
or other business combination, sale of all or substantially all of the Company’s
assets or contested election, or any combination of the foregoing transactions,
less than a majority of the combined voting power of the then-outstanding
securities of the Company or any successor corporation or entity entitled to
vote generally in the election of the directors of the Company or such other
corporation or entity after such transaction is held in the aggregate by the
holders of the securities of the Company entitled to vote generally in the
election of directors of the Company immediately prior to such transaction; or


(D)          The
stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company.


Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any person acquires beneficial
ownership of more than fifty percent (50%) of the Company Voting Securities as
a result of the acquisition of Company Voting Securities by the Company which
reduces the 



 5
 






 



number of Company Voting Securities outstanding;
provided, however, that if after such acquisition by the Company such person
becomes the beneficial owner of additional Company Voting Securities that
increases the percentage of outstanding Company Voting Securities beneficially
owned by such person, a Change in Control transaction shall then occur.


Further notwithstanding the foregoing, unless a
majority of the Incumbent Directors determines otherwise, no Change in Control
shall be deemed to have occurred with respect to the Executive if the Change in
Control results from actions or events in which the Executive is a participant
in a capacity other than solely as an officer, employee or director of the
Company or any of its affiliates.


(ii)           “Permitted
Holders” means (A) Michael T. Flavin (the “Principal”), (B) the spouse or any
immediate family member of the Principal and any child or spouse of any spouse
or immediate family member of the Principal, (C) a trust, corporation,
partnership or other entity, the beneficiaries, stockholders, partners, owners
or persons beneficially holding, directly or indirectly, a controlling interest
of which consists of the Principal and/or such other persons referred to in the
immediately preceding clause (B), or (D) the trustees of any trust referred to
in clause (D).


(d)           Treatment
of Parachute Payments.


(i)            Notwithstanding
any other provisions of this Agreement, and except as set forth below, in the
event that any payment or benefit received or to be received by the Executive
in connection with a Change in Control or the termination of the Executive’s
employment (whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any person whose actions result in a
Change in Control or any person affiliated with the Company or such person)
(all such payments and benefits, including payments under Section 7(a) above,
being hereinafter called “Total Payments”) is determined to be an “excess
parachute payment” pursuant to Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”), or any successor or substitute provision of the
Code, with the effect that the Executive is liable for the payment of the
excise tax described in Code Section 4999 or any successor or substitute
provision of the Code (the “Excise Tax”), then, after taking into account any
reduction in the Total Payments provided by reason of Code Section 280G in such
other plan, arrangement or agreement, the cash payments provided in Section
7(a)(i) of this Agreement shall first be reduced, and the noncash payments and
benefits shall thereafter be reduced, to the extent necessary so that no
portion of the Total Payments is subject to the Excise Tax; provided, however,
that the Executive may elect (at any time prior to the payment of any Total
Payment under this Agreement) to have the noncash payments and benefits reduced
(or eliminated) prior to any reduction of the cash payments under this
Agreement.


(ii)           All
determinations required to be made under this Section 7(d), and the assumptions
to be utilized in arriving at such determination, shall be made by the
certified public accounting firm used for auditing purposes by the Company
immediately prior to the date of the Executive’s termination of employment or,
if the parties determine that such certified public accounting firm cannot make
such determination because of legal restrictions, the parties shall agree on a
different certified public accounting firm (such certified public accounting
firm is hereinafter referred to as the “Accounting 



 6
 






 



Firm”), which shall provide detailed supporting calculations both to
the Company and the Executive not later than 5 days prior to the date of the
Executive’s termination of employment. The Company shall pay all fees and
expenses of the Accounting Firm. Any determination by the Accounting Firm shall
be binding upon the Company and the Executive, except as provided in paragraph
(iii) below.


(iii)          As
a result of the uncertainty in the application of Code Sections 280G and 4999
at the time of the initial determination by the Accounting Firm hereunder, it
is possible that the Internal Revenue Service (the “IRS”) or other agency will
claim that an Excise Tax, or a greater Excise Tax, is due. If the Executive is
required to make a payment of any such Excise Tax, the Company will promptly
pay the Executive an additional amount equal to the amount, or greater amount,
of Excise Tax the Executive is required to pay (plus a gross up payment for any
income taxes, interest, penalties or additional Excise Tax payable by Executive
with respect to such Excise Tax or additional payment), as determined by the
Accounting Firm. The Executive will notify the Company in writing of any claim
by the IRS or other agency that, if successful, would require payment by the
Company of the additional payments under this paragraph. The Executive and the
Company shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the existence or amount of
liability for Excise Tax with respect to the Total Payments. The Company shall
pay all fees and expenses of the Executive relating to a claim by the IRS or
other agency.


8.             Restrictive
Covenants.


(a)           Trade
Secrets. The Executive acknowledges that he has had and shall have access to
confidential information of the Company, whether or not reduced to writing and
whether in paper, electronic, digital, analog or other format (including, but
not limited to, trade secrets, know-how, Inventions (as defined below), new
product and product development information, research results, marketing and
sales programs, customer and supplier information, financial data, employee
records, cost information, pricing information, sales and marketing strategies,
the identity of customers, information received by the Company under an
obligation of confidentiality to customers, and all information generated by
the Company for customers) relating to the past, present or planned business,
customers, clients, contacts, prospects and assets of the Company that is
unique, valuable and has not purposefully been made generally known to the
public by the Company (“Confidential Information”). Confidential Information
shall not include any information that: (i) is now, or hereafter becomes,
through no act or failure to act on the part of the Executive that constitutes
a breach of this Section 8, generally known or available to the public; (ii) is
hereafter furnished without restriction on disclosure to the Executive by a
third party, other than an employee or agent of the Company, who is not under
any obligation of confidentiality to the Company; (iii) is disclosed with the
written approval of the Company; or (iv) is required to be disclosed or
provided by law, court order, or similar compulsion, including pursuant to or
in connection with any legal proceeding involving the parties hereto; provided,
however, that such disclosure shall be limited to the extent so required or
compelled; and provided further, however, that if the Executive is required to
disclose such Confidential Information, the Executive shall give the Company
notice of such disclosure and cooperate in seeking suitable protections. The
Executive acknowledges that all Confidential Information, and all documents,
files, reports, drawings, designs, specifications, formulae, samples, data,
writings, tools, equipment, memory devices or any other tangible objects that
incorporate, contain, refer to or embody any Confidential Information (“Items”),
acquired by the Executive in connection with the Executive’s employment with
the Company are the property of the Company. Other than in the course of
performing services for the Company or otherwise authorized in writing by the 



 7
 






 



Company, the Executive shall not, at any time, directly or indirectly
use, divulge, furnish or make accessible to any person any Confidential
Information, but instead shall keep all Confidential Information strictly and
absolutely confidential. The Executive shall deliver promptly to the Company,
at the termination of his employment or at any other time at the request of the
Company, without retaining any copies, all Items and any other documents or
materials in the Executive’s possession relating, directly or indirectly, to
any Confidential Information.


(b)           Non-competition.
Beginning on the Effective Date and for a period of twelve (12) months
following Executive’s Date of Termination (the “Restricted Period”), Executive
shall not directly or indirectly, alone or in conjunction with any other party,
own any interest in, operate, control, engage in or participate as a partner,
director, principal, officer, employee, independent contractor or agent of, act
as a consultant to, perform any services for, or assist in any way any company,
person, or entity in the United States that is engaged in “Competing Services”
(as defined herein). Competing Services shall mean chemistry and biology
research and development relating to, arising from, connected with, or
competitive with or intended to be competitive with, any product or research
project as to which the Executive performed services for the Company, or about
which the Executive received access to Confidential Information while employed
by the Company. If the Executive obtains other employment during the
twelve-month period after the Executive’s Date of Termination, the Executive
agrees to notify the Company in writing of the name and address of such
employer. The Executive understands, and the Company agrees, that the Company
shall pay to the Executive a monthly amount equal to one month of the Executive’s
final Base Salary if the Executive is unable to secure other employment as a
direct result of this Section 8(b). The Executive agrees and acknowledges that
(i) the Company shall be obligated to make such payment only upon a written
request by the Executive containing sufficient information for the Company to
make a determination that this Section 8(b) caused the Executive’s inability to
secure other employment, and (ii) the Company shall be released from the
obligation to make such payment if the Company provides the Executive a written
release from this Section 8(b). The Company’s obligation to make payments under
this Section 8(b) shall be made only for the period beginning with the
Executive’s inability to secure other employment as a result of this Section
8(b) and ending no later than the expiration of the twelve-month period
following the Executive’s Date of Termination.


(c)           Non-Solicitation
of Employees. During the Restricted Period, the Executive shall not, directly
or indirectly solicit or induce, or attempt to solicit or induce, any current
employee of the Company, or any individual who becomes an employee during the
Restricted Period, to leave his or her employment with the Company or join or
become affiliated with any other business or entity, hire any employee of the
Company or in any way interfere with the relationship between any employee and
the Company.


(d)           Non-Solicitation
of Customers. During the Restricted Period, the Executive shall not, directly
or indirectly, solicit or induce, or attempt to solicit or induce, any
customer, supplier, licensee, licensor or other business relation of the
Company to terminate its relationship or contract with the Company, to cease
doing business with the Company, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Company (including making any negative statements or communications concerning
the Company or their employees).


(e)           Inventions.
The Executive acknowledges all inventions of the Company (including, but not
limited to, procedures, systems, machines, methods, processes, uses,
apparatuses, compositions of matter, designs, or configurations of any kind,
discovered, conceived, reduced to practice, developed, made or produced) (“Inventions”)
that (i) relate to the present or planned business of the Company or the work
performed by the Company for its 



 8
 






 



customers, and (ii) are conceived or reduced to practice by the
Executive, either alone or with others, during the Executive’s employment with
the Company or during a period of 120 days after the Executive’s Date of
Termination, whether or not done during the Executive’s regular working hours,
are the sole property of the Company, including, without limitation, all
domestic and foreign patent rights, rights of registration or other protection
under the copyright laws, or other rights pertaining to the Inventions. For
purposes of this Agreement, Inventions shall include any improvements to an
Invention and shall not be limited to the definition of a patentable invention
or copyrightable work of authorship as contained in the United States patent or
copyright laws. The Executive shall disclose promptly and fully in writing to
the Company each Invention, whether or not reduced to practice, that the
Executive conceives or learns (either alone or jointly with others) during the
Term of Employment. The Executive hereby assigns to the Company, or its
nominee, all of the Executive’s right, title and interest, including
international priority rights, in and to all Inventions (other than any
Invention that was developed entirely on the Executive’s own time and for which
no equipment, supplies, facilities or trade secret information of the Company
was used, unless such Invention relates directly to the Company’s business or
to the Company’s actual or demonstrably anticipated research or development),
and in and to all United States or foreign patents, copyrights and other
proprietary rights granted thereon or resulting therefrom, and in and to all
applications for United States or foreign copyrights, patents and other
proprietary rights. The Executive shall execute all papers, perform all lawful
acts or assist the Company in any way the Company deems necessary or advisable
(at the Company’s expense) for the preparation, filing, prosecution, issuance,
procurement, maintenance or enforcement of patents applications and patents of
the United States and foreign countries, and for obtaining and enforcing
copyright protection and registration, of any Invention. To that end, the
Executive shall at the Company’s request and without limitation, testify in any
suit or other proceeding involving any of the Inventions, execute all documents
that the Company reasonably determines to be necessary or convenient for use in
applying for and obtaining patent or copyright protection and registration on
any of the Inventions and enforcement of that protection and registration, and
execute all necessary documents and papers required to vest title in and assign
to the Company (or its nominee) patent or copyright protection and
registration. The Executive’s obligation to assist the Company in obtaining and
enforcing patent or copyright protection and registration for the Inventions
shall continue following termination of this Agreement, but Company shall
compensate the Executive following the expiration or termination of this Agreement
at a rate of $10 for the execution of each document and $150 per day for each
day or portion thereof spent at the Company’s request in rendering assistance,
plus reimbursement for the reasonable out-of-pocket expenses incurred by the
Executive for such assistance. The Executive hereby irrevocably appoints the
Company and its duly authorized officers and agents as his agent and
attorney-in-fact to act for and on behalf of the Executive in filing all patent
applications, applications for copyright protection and registration
amendments, renewals and all other appropriate documents in any way related to
the Inventions.


(f)            Survival.
The provisions set forth in this Section 8 shall survive termination of this
Agreement.


(g)           Scope
Limitations. If the scope, period of time or area of restriction specified in
this Section 8 are or would be judged to be unreasonable in any court
proceeding, then the period of time, scope or area of restriction shall be
reduced or limited in the manner and to the extent necessary to make the
restriction reasonable, so that the restriction may be enforced in those areas,
during the period of time and in the scope that are or would be judged to be
reasonable.


9.             Binding Agreement; Successors. This
Agreement and all rights of the Executive hereunder shall inure to the benefit
of and be enforceable by the Executive’s personal or legal 



 9
 






 



representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts would still be payable
to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive’s devisee, legatee, or other designee or, if there
be no such designee, to the Executive’s estate. This Agreement shall be binding
upon, and inure to the benefit of, any successors or assigns of the Company.
This Agreement is not intended to confer upon any person other than the parties
hereto (and the Executives’ Spouse and dependents) any rights or remedies,
except as specifically provided in this Section 9.


10.           Notice. Notices, demands and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered, if delivered
personally, or (unless otherwise specified) when received, if mailed by United
States certified or registered mail, return receipt requested, postage prepaid,
by Federal Express or other reputable overnight courier service or by facsimile,
addressed as follows:


If to
the Executive:


Ze-Qi Xu, Ph.D.

6609 Chick Evans Lane

Woodridge, IL 60517


If to
the Company:


Advanced Life Sciences, Inc.

1440 Davey Road

Woodridge, Illinois 60517

Attn: Chief Executive Officer


or to such other address as
any party may have furnished to the other in writing in accordance herewith,
except that notices of change of address shall be effective only upon receipt.


11.           General Provisions. No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by the
Executive and such officer of the Company as may be specifically designated by
the Company’s Board. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party that are not set forth expressly in this Agreement.


12.           Validity. The invalidity or
unenforceability of any provision or provisions of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect. If any provision of this Agreement
is found to be invalid or unenforceable, in whole or in part, then it shall be
deemed to be modified or restricted to the extent and in the manner necessary
to render it valid and enforceable, or shall be deemed excised from this
Agreement, as the case may require, and this Agreement shall be construed and
enforced to the maximum extent permitted by law, as if the provision had been
originally incorporated herein as so modified or restricted, or as if it had
not originally been incorporated herein, as the case may be.


13.           Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be deemed to
be an original but all of which together shall constitute one and the same
instrument.



 10
 






 



14.           Entire Agreement. This
Agreement sets forth the entire agreement of the parties hereto in respect of
the subject matter contained herein and supersedes all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto; and any prior agreement of the parties hereto in respect
of the subject matter contained herein is hereby terminated and canceled. For
the avoidance of doubt, the Company and the Executive hereby agree that this
Agreement shall replace and supercede the Existing Employment Contract and
govern the relationship of the parties.


15.           Irreparable Harm. The
Executive acknowledges that: (i) the Executive’s compliance with this Agreement
is necessary to preserve and protect the proprietary rights, Confidential
Information and the goodwill of the Company and its subsidiaries as going
concerns; (ii) any failure by the Executive to comply with the provisions of
this Agreement shall result in irreparable and continuing injury for which
there will be no adequate remedy at law; and (iii) in the event that the
Executive should fail to comply with the terms and conditions of this
Agreement, the Company shall be entitled, in addition to such other relief as
may be proper, to all types of equitable relief (including, but not limited to,
the issuance of an injunction and/or temporary restraining order) as may be
necessary to cause the Executive to comply with this Agreement, to restore to
the Company its property, and to make the Company whole.


16.           Consent to Jurisdiction and Forum;
Legal Fees and Costs. The Company and the Executive hereby expressly and
irrevocably agree that any action, whether at law or in equity, arising out of
or based upon this Agreement or the Executive’s employment by the Company shall
only be brought in a federal or state court located in Cook County, Illinois.
The Executive hereby irrevocably consents to personal jurisdiction in such
court and to accept service of process in accordance with the provisions of
such court. In connection with any dispute arising out of or based upon this
Agreement or the Executive’s employment by the Company, each party shall be
responsible for its or his own legal fees and expenses and all court costs
shall be shared equally by the Company and the Executive unless the court
apportions such legal fees or court costs in a different manner.


17.           Withholding. All payments made
to the Executive pursuant to this Agreement shall be subject to applicable
withholding taxes, if any, and any amount so withheld shall be deemed to have
been paid to the Executive for purposes of amounts due to the Executive under
this Agreement.


18.           Governing Law. This Agreement
is governed by and is to be construed and enforced in accordance with the laws
of the State of Illinois, without regard to its conflict of law provisions.


IN WITNESS
WHEREOF, the parties have executed this Agreement on the date and year first
above written.


	
  Executive

  	
   

  	
  Advanced Life
  Sciences, Inc.

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Ze-Qi Xu

  	
   

  	
  By:

  	
  /s/ Michael T. Flavin

  
	
  Name:

  	
  Ze-Qi
  Xu, Ph.D.

  	
   

  	
  Name:

  	
  Michael T. Flavin, Ph.D.

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  



 



 11