Document:

Exhibit
4.1

 

AMENDMENT
NO. 3 TO RIGHTS AGREEMENT

 

This Amendment No. 3
to Rights Agreement (this “Amendment”) is entered into as of March 9,
2010, by and between Facet Biotech Corporation, a Delaware corporation (the “Company”),
and Mellon Investor Services LLC, a New Jersey limited liability company, as
Rights Agent (the “Rights Agent”).

 

RECITALS:

 

WHEREAS, the Company and the Rights Agent have
previously entered into a Rights Agreement dated as of September 7, 2009,
as amended on December 15, 2009 and December 16, 2009 (the “Agreement”;
capitalized terms used but not defined herein shall have the meaning set forth
in the Agreement);

 

WHEREAS,  the Company
proposes to enter into an Agreement and Plan of Merger (the “Merger
Agreement”), with Abbott Laboratories, an Illinois corporation (“Parent”),
Amber Acquisition Inc., a Delaware corporation and a direct or indirect wholly
owned subsidiary of Parent (the “Merger Sub”) pursuant to which (i) the
Merger Sub would commence a cash tender offer (the “Offer”) to purchase
any and all of the outstanding shares of the Company’s common stock, par value
$0.01 per share (the “Common Stock”), and (ii) following
consummation of the Offer, Merger Sub would merge with and into the Company
with the Company surviving as a direct or indirect wholly owned subsidiary of
Parent (the “Merger”);

 

WHEREAS, the Board of Directors of the Company has determined
that an amendment to the Agreement as set forth herein is necessary and
desirable in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement (including the Offer and the Merger) and
has duly authorized any officer of the Company to execute and deliver this
Amendment;

 

WHEREAS, pursuant to Section 27 of the Agreement, for so
long as the Rights are redeemable, the Company may in its sole and absolute
discretion amend any provision of the Agreement in any respect without the
approval of any holders of the Rights, as evidenced by a writing signed by the
Company and the Rights Agent; and

 

WHEREAS, as of the date hereof, the Rights are redeemable and
in accordance with Section 27 of the Agreement, the Company has certified
to the Rights Agent that this Amendment is in compliance with the Agreement.

 

NOW, THEREFORE, in consideration of the premises and
mutual agreements hereinafter set out and of other consideration (the receipt
and sufficiency of which are acknowledged), the parties hereto agree as
follows:

 

1.     Amendment of Section 1 of the
Agreement.  Section 1 of the Agreement is hereby
amended and supplemented by adding the following definitions in the appropriate
locations:

 

“Merger” shall
mean the “Merger” as such term is defined in the Merger Agreement.

 

 

“Merger Agreement”
shall mean the Agreement and Plan of Merger, dated as of March 9, 2010, by
and among the Company, Parent and Merger Sub, as such may be amended from time
to time.

 

“Offer” shall mean
the “Offer” as such term is defined in the Merger Agreement.

 

“Parent” shall
mean Abbott Laboratories, an Illinois corporation, or any of its subsidiaries,
including Merger Sub.

 

“Merger Sub” shall
mean Amber Acquisition Inc., a Delaware corporation and a direct or indirect
wholly owned subsidiary of Parent.

 

“Top-Up Option”
shall mean the “Top-Up Option” as such term is defined in the Merger Agreement.

 

2.     Amendment of Section 1(a) of
the Agreement.  The definition of “Acquiring Person” in Section 1(a) of
the Agreement is hereby amended and supplemented by adding the following
sentence at the end thereof:

 

“Notwithstanding
anything in this Rights Agreement to the contrary, none of Parent, Merger Sub,
or their respective Affiliates or Associates shall be, or shall be deemed to
be, an Acquiring Person for purposes of this Rights Agreement by virtue of one
or more of (i) the approval, execution, or delivery of the Merger
Agreement, (ii) the public or other announcement of the Merger Agreement,
the Top-Up Option or any transaction contemplated by or arising under the
Merger Agreement (including the Offer and the Merger) or (iii) the
consummation of the Offer, the Merger, or any transaction contemplated by or
arising under the Merger Agreement (including the Top-Up Option, each such
event and any combination of such events, an “Exempt Event”).”

 

3.     Amendment of Section 1(ii) of
the Agreement.  The definition of “Stock Acquisition Date” in
Section 1(ii) of the Agreement is hereby amended and supplemented by
adding the following proviso immediately following the words “shall become
aware of the existence of an Acquiring Person”:

 

“; provided,
however, that notwithstanding anything in this Rights Agreement to the
contrary, a Stock Acquisition Date has not occurred and shall not be deemed to
have occurred as the result of an Exempt Event.”

 

4.     Amendment of Section 3(a) of
the Agreement.  Section 3(a) of the Agreement is
hereby amended and supplemented by adding the following proviso immediately
following the words “the earlier of such dates being herein referred to as the “Distribution
Date””:

 

“, provided,
however, that notwithstanding anything in this Rights Agreement to the
contrary, a Distribution Date has not occurred and shall not be deemed to have
occurred as the result of an Exempt Event.”

 

5.     Amendment of Section 3 of the
Agreement.  Section 3 of the Agreement is hereby
amended and supplemented by adding the following Section 3(e):

 

“(e)     Nothing in this Rights Agreement shall be
construed to give any holder of Rights or any other Person any legal or
equitable rights, remedies or claims under this Rights Agreement by virtue of
an Exempt Event.”

 

2

 

6.     Amendment of Section 7(a) of
the Agreement.  Section 7(a) of the Agreement is
hereby amended and supplemented by adding the following sentence at the end
thereof:

 

“Notwithstanding anything
herein to the contrary, immediately prior to the Effective Time (as defined in
the Merger Agreement), but only if the Effective Time shall occur, the Rights
shall expire and become null and void, without any payment, liability or
obligation on the part of the Company, the Rights Agent or the holders of any
Rights. The Company shall give the Rights Agent prior written notice of the
Effective Time; provided, however, that failure to notify the
Rights Agent of the Effective Time shall not in any way affect the time at
which the Rights cease to be exercisable pursuant to the foregoing sentence; provided,
further, that until such written notice is received by the Rights Agent,
the Rights Agent may presume conclusively for all purposes that the Effective
Time has not occurred.”

 

7.     Amendment of Section 15 of the
Agreement.  Section 15 of the Agreement is hereby
amended and supplemented by adding the following sentence at the end thereof:

 

“Nothing in this
Rights Agreement shall be construed to give any registered holder of the Right
Certificates (or, prior to the Distribution Date, the registered holders of the
Common Stock) or any other Person any legal or equitable rights, remedy or
claim under this Rights Agreement in connection with any transaction
contemplated by the Merger Agreement, including, without limitation, the grant
and/or exercise of the Top-Up Option and the making and consummation of the
Offer.”

 

8.     Addition of Section 36 of the
Agreement.  The Agreement is hereby supplemented by
adding a new Section 36 of the Agreement which shall read in its entirety
as follows:

 

“Section 36.
 Termination.  Notwithstanding anything herein to the
contrary, immediately prior to the Effective Time, but only if the Effective
Time shall occur, (a) this Agreement shall be terminated and be without
further force or effect, (b) none of the parties to this Agreement will
have any rights, obligations or liabilities hereunder and (c) the holders
of the Rights shall not be entitled to any benefits, rights or other interests
under this Agreement, including, without limitation, the right to purchase or
otherwise acquire shares of Preferred Stock or any other securities of the
Company or of any other Person; provided, however, that
notwithstanding the foregoing, Sections 18 and 20 hereof shall survive the
termination of this Agreement.”

 

9.     Governing Law.  This Amendment and the Agreement, as amended hereby,
shall be governed by and construed in accordance with the laws of the State of
Delaware, provided, however, that
all provisions regarding the rights, duties, obligations and liabilities of the
Rights Agent shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and to be performed entirely
within such state.

 

10.   Effect of Amendment.  Except
as expressly modified hereby, the Agreement remains in full force and
effect.  Upon the execution and delivery
hereof, as of the day and year first above written, the Agreement shall
thereupon be deemed to be amended and supplemented as hereinabove set forth as
fully and with the same effect as if the amendments and supplements made hereby
were originally set forth in the Agreement, and this Amendment and the
Agreement shall henceforth be read, taken and construed as one and the same
instrument, but such amendments and supplements shall not operate so as to
render invalid or improper any action heretofore taken under the Agreement.

 

3

 

11.   Descriptive Headings.  Section headings
in this Amendment are included herein for convenience of reference only and
shall not constitute a part of this Amendment for any other purpose.

 

12.   Counterparts. 
This Amendment may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Amendment and all of which,
when taken together, will be deemed to constitute one and the same
agreement.  The exchange of copies of
this Amendment and of signature pages by facsimile or electronic
transmission shall constitute effective execution and delivery of this
Amendment as to the parties hereto and may be used in lieu of the original
Amendment for all purposes.  Signatures
of the parties hereto transmitted electronically or by facsimile shall be
deemed to be their original signatures for all purposes.

 

13.   Severability. 
If any term, provision, covenant or restriction of this Amendment is
held by a court of competent jurisdiction or other authority to be invalid,
illegal or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Amendment shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that if such
excluded provision shall effect the rights, immunities, duties or obligations
of the Rights Agent, the Rights Agent shall be entitled to resign immediately.

 

[Signature Page Follows]

 

4

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the day and year first above written.

 

	
   

  	
  FACET BIOTECH CORPORATION

  
	
   

  	
   

  	
   

  
	
   

   

  	
  By:

  	
  /s/ Francis Sarena

  
	
   

  	
  Name:

  	
  Francis Sarena

  
	
   

  	
  Title:

  	
  Vice President, General
  Counsel and Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
  MELLON INVESTOR SERVICES LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sandra Moore

  
	
   

  	
  Name:

  	
  Sandra Moore

  
	
   

  	
  Title:

  	
  Vice
  President & Relationship Manager

  

 

5Exhibit
4.5

 

ADVANCED
LIFE SCIENCES HOLDINGS, INC.

Form of
Warrant for the Purchase of

Shares
of Common Stock, Par Value $0.01 per Share

 

No. 

Issue
Date:

 

THIS
CERTIFIES that,
for consideration, the receipt and sufficiency of which are hereby acknowledged,
and other value received,                           
(the “Holder”) is entitled to
subscribe for, and purchase from, ADVANCED
LIFE SCIENCES HOLDINGS, INC., a Delaware corporation (the “Company”), upon the terms and conditions
set forth herein, at any time or from time to time six months after the date
this warrant is issued (the “Initial
Exercise Date”) until five years after the Issue Date (the “Exercise Period”), up to an aggregate of       
              
shares of common stock, par value $0.01 per share (the “Common Stock”), of the Company. This
Warrant is initially exercisable at a price of $              
per share, subject to adjustment as described in this Warrant. The term “Exercise Price” shall mean, depending on
the context, the initial exercise price (as set forth above) or the adjusted
exercise price per share. The Company may, in its sole discretion, reduce the
then current Exercise Price to any amount or extend the Exercise Period, at any
time. Such modifications to the Exercise Price or Exercise Period may be
temporary or permanent.

 

As used herein, the term “this Warrant” shall mean and include this
Warrant and any Warrant or Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant in whole or in part. Each share of Common
Stock issuable upon the exercise hereof shall be hereinafter referred to as a “Warrant Share.”

 

1.                                       Exercise of this Warrant.

 

(a)                                  Subject to the terms of this
Warrant, this Warrant may be exercised at any time in whole and from time to
time in part, at the option of the Holder, on or after the Initial Exercise
Date and on or prior to the end of the Exercise Period. This Warrant shall
initially be exercisable in whole or in part for that number of fully paid and
nonassessable shares of Common Stock as indicated on the first page of
this Warrant, for an exercise price per share equal to the Exercise Price, by
delivery to the Company at its office at 1440 Davey Road, Woodridge, Illinois
60517, or at such other place as is designated in writing by the Company, of:

 

(i)                         a completed Election to
Purchase, in the form set forth in Exhibit A, executed by the
Holder exercising all or part of the purchase rights represented by this
Warrant;

 

(ii)                      this Warrant; and

 

(iii)                   subject to Section 1(c) below,
payment of an amount equal to the product of the Exercise Price multiplied by
the number of shares of Common Stock being purchased upon such exercise in the
form of, at the Holder’s option, (A) a certified or bank cashier’s check
payable to the Company, or (B) a wire transfer of funds to an account
designated by the Company.

 

(b)                                 As used herein:

 

(i)                         “Fair Market Value” of a security shall mean, on any given
day, the average of the last reported sale prices for the last ten (10) trading
days as officially reported by the principal securities exchange or “over the
counter” (including on the pink sheets or bulletin board) exchange on which the
Common Stock is listed or admitted to trading, or, if the Common Stock is not
listed or admitted to trading on any national securities exchange or sold “over
the counter,” the average closing sale price as furnished by the NASD through
Nasdaq or similar organization if Nasdaq is no longer reporting such
information, or if the Common Stock is not quoted on Nasdaq, as determined in
good faith by resolution of the Board of Directors of the Company, the “Fair
Market Value” shall be as determined by the Board of Directors of the Company
in good faith, absent manifest error.

 

(c)                                  Cashless Exercise.  In the event that a registration statement
covering the Warrant Shares has not been declared effective by the Securities
and Exchange Commission and such registration statement is not effective 

 

 

at the time of the
exercise of this Warrant, this Warrant may be exercised during the Exercise
Period in such circumstances by means of a “cashless exercise” in which the
Holder shall be entitled to receive, without the payment by the Holder of any
additional consideration, a certificate for the number of Warrant Shares equal
to the number as is computed using the following formula:

 

X
= Y (A-B)

  A

 

where

X = the number of Warrant
Shares to be issued to the Holder pursuant to this Warrant.

Y = the number of Warrant
Shares covered by this Warrant with respect to which the cashless exercise
election is made pursuant to this Section 1(c).

A = the Fair Market Value
(as defined above) of one Warrant Share.

B = the Exercise Price in
effect at the time the cashless exercise election is made pursuant to this Section 1(c).

 

(d)                                 Upon the exercise of this Warrant,
the Company shall issue and cause promptly to be delivered upon such exercise
to, or upon the written order of, the Holder a certificate or certificates for
the number of full Warrant Shares to which such Holder shall be entitled;
provided, that, if the Company maintains a direct registration system for its
Common Stock then such Warrant Shares may be issued in electronic
book-entry.  Any reference in this
Warrant to the issuance of a certificate or the certificates representing the
Warrant Shares shall also be deemed a reference to the electronic book-entry
issuance of such Warrant Shares.

 

(e)                                  If this Warrant is exercised in
respect of less than all of the Warrant Shares evidenced by this Warrant at any
time prior to the end of the Exercise Period, a new Warrant evidencing the
remaining Warrant Shares shall be issued to the Holder, or its nominee(s),
without charge therefor.

 

(f)                                    Subject to compliance with any
applicable securities laws, this Warrant and all rights hereunder are
transferable, in whole or in part, upon surrender of this Warrant at the
principal office of the Company, together with a written assignment of this
Warrant substantially in the form attached hereto as Exhibit B duly
executed by the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denomination or denominations specified in such instrument of assignment, and
shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be cancelled. Any such
transfer shall be immediately recorded in the Company’s books, records and
warrant register.

 

2.                                       Call of
Warrant.  Subject to the provisions
of this Section 2, if at any time during the Exercise Period, the average daily
volume weighted average price of the Common Stock, as officially reported by
the principal securities exchange or “over the counter” (including on the pink
sheets or bulletin board) exchange on which the Common Stock is listed or
admitted to trading for any                       (          ) consecutive trading days exceeds         percent (        %) of the Exercise Price (as it may be
adjusted from time to time as provided herein), then the Company may call for
cancellation, for no consideration to the Holder, any portion of this Warrant
which remains unexercised as of the Call Time (as defined below). To exercise
this right, the Company must deliver to the Holder an irrevocable written
notice (a “ Call Notice “), indicating therein the portion of the unexercised
portion of this Warrant to which such notice applies. Any portion of this
Warrant subject to a valid Call Notice which remain unexercised will be
cancelled at 4:00:00 p.m., New York City time, on the tenth (10) trading
day after the date of the Call Notice (the “Call Time “). Any unexercised
portion of this Warrant to which the Call Notice does not pertain will be
unaffected by such Call Notice. The Company covenants and agrees that it will
honor all exercises with respect to Exercise Shares subject to a Call Notice
that are made in accordance with Section 2 from the time of the Call
Notice through the Call Time. The parties agree that any exercise made
following a Call Notice shall first reduce the number of Exercise Shares
subject to such Call Notice prior to reducing the remaining Exercise Shares
available for purchase under this Warrant. Subject again to the provisions of
this Section 4, the Company may deliver subsequent Call Notices for any
unexercised portion of this Warrant. Unless otherwise agreed to by the Holder of this Warrant, a Call
Notice must be given to all holders of outstanding Warrants in proportion to
the 

 

2

 

amounts of Common
Stock which then may be purchased by such respective holders in accordance with
the respective Warrants held by each.

 

3.                                       The Exercise Price for the
Warrants in effect from time to time shall be subject to adjustment as follows:

 

(a)                                  If the
Company, at any time while this Warrant is outstanding: (i) subdivides
outstanding shares of Common Stock into a larger number of shares, (ii) combines
(including by way of reverse stock split) outstanding shares of Common Stock
into a smaller number of shares, or (iii) issues by reclassification of
shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding treasury shares, if any)
outstanding immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event.
Any adjustment required by this Section 2(a) shall be made
immediately after the record date for the determination of stockholders
entitled to receive such dividend or distribution and shall become effective
immediately after the effective date in the case of a subdivision, combination
or reclassification.

 

(b)                                 If the Company, at any time
while this Warrant is outstanding, shall distribute to all or substantially all
holders of Common Stock (and not to the Holder) evidence of its indebtedness or
assets (including cash and cash dividends) or rights or warrants to subscribe
for or purchase any security other than the Common Stock, then in each such
case the Exercise Price shall be adjusted by multiplying the Exercise Price in
effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which (i) the
denominator shall be the Fair Market Value per share of Common Stock determined
as of the record date mentioned above and (ii) the numerator shall be such
Fair Market Value per share of Common Stock on such record date less the then per share fair market value
at such record date of the portion of such evidence of indebtedness or assets
(including cash and cash dividends) or rights or warrants to subscribe for or
purchase any security other than the Common Stock so distributed applicable to
one outstanding share of the Common Stock, which fair market value shall be
reduced by the fair market value of consideration, if any, paid to the Company
by holders of Common Stock in exchange for such evidence of indebtedness or
assets or rights or warrants so distributed, in each case as such Fair Market
Value is determined by the Board of Directors of the Company in good faith. In
either case, the adjustments shall be described in a statement provided to the
Holder of the portion of evidences of indebtedness or assets (including cash
and cash dividends) or rights or warrants to subscribe for or purchase any
security other than the Common Stock so distributed or such subscription rights
applicable to one share of Common Stock. Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately after the
record date mentioned above.

 

(c)                                  All calculations under this Section 2
shall be made to the nearest cent.

 

(d)                                 The Company shall not be
required upon the exercise of this Warrant to issue any fractional shares.  If any fraction of a Warrant Share would,
except for the provisions of this paragraph, be issuable upon exercise of this
Warrant, the number of Warrant Shares to be issued will be rounded up to the
next whole share.

 

4.                                       If the registration statement
covering the Warrant Shares issued on exercise of the Warrants is no longer
effective, then this Warrant may only be exercised on a cashless basis pursuant
to Section 1(c) above. In such case, the Warrant Shares shall be
subject to a stop transfer order and the certificate or certificates
representing the Warrant Shares shall bear an appropriate restrictive legend,
unless such Warrant Shares are eligible for resale without restriction under Rule 144
under the Securities Act of 1933, as amended, and are in fact resold pursuant
thereto.

 

5.                                       The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate
relating to the Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate, without charge, of
like date, tenor and denomination, in lieu of such Warrant or stock
certificate.

 

3

 

6.                                       The Company shall not be
obligated to issue any shares of Common Stock upon exercise of this Warrant if
the issuance of such shares of Common Stock would cause a breach or violation
of the Company’s obligations under any applicable rules or regulations of
any market on which the Company’s securities trade.

 

7.                                       The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to exercise any
portion of this Warrant, to the extent that after giving effect to such
issuance after exercise, such Holder (together with such Holder’s affiliates,
and any other person or entity acting as a group together with such Holder or
any of such Holder’s affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by
such Holder and its affiliates shall include the number of shares of Common
Stock issuable upon exercise of this Warrant with respect to which such
determination is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (A) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by such Holder or any
of its affiliates and (B) exercise or conversion of the unexercised or
nonconverted portion of any other securities of the Company subject to a
limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by such Holder or any of its Affiliates. Except as
set forth in the preceding sentence, beneficial ownership shall be calculated
in accordance with Section 13(d) of the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares of the Common
Stock outstanding immediately after giving effect to the issuance of shares of
Common Stock issuable upon exercise of this Warrant. The Beneficial Ownership
Limitation provisions of this section may be waived by such Holder, at the
election of such Holder, upon not less than 61 days’ prior notice to the
Company to change the Beneficial Ownership Limitation applicable to such Holder
to 9.99% of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon exercise of
this Warrant, and the provisions of this section shall continue to apply. Upon
such a change by a Holder of the Beneficial Ownership Limitation from such
4.99% limitation to such 9.99% limitation, the Beneficial Ownership Limitation
may not be further waived by such Holder. The provisions of this paragraph
shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this section to correct this paragraph (or any
portion hereof) which may be defective or inconsistent with the intended
Beneficial Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such limitation.
The limitations contained in this paragraph shall apply to a successor holder
of this Warrant.

 

8.                                       Status as a Stockholder.

 

(a)                                  The Holder shall not have,
solely on account of its status as a holder of a Warrant, any rights of a
stockholder of the Company, either at law or in equity, or to any notice of
meetings of stockholders or of any other proceedings of the Company, except as
provided in this Warrant.

 

(b)                                 No provision hereof, in the
absence of affirmative action by the Holder to receive Warrant Shares, and no
enumeration herein of the rights or privileges of the Holder hereof, shall give
rise to any liability of the Holder for the purchase price of any Common Stock
or as a stockholder of Company, whether such liability is asserted by Company
or by creditors of Company.

 

9.                                       Fundamental Transaction.

 

(a)                                  If, at any time while this
Warrant is outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of the Company
with or into another Person, (ii) the Company, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other
disposition of all or substantially all of its assets in one or a series of
related transactions, (iii) any, direct or indirect, purchase offer,
tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or property and such
offer has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization
of the Common Stock or any compulsory share exchange pursuant to which the
Common Stock is effectively converted into or exchanged for securities other
than the Company’s securities, cash or property, (v) the Company, directly
or indirectly, in one or more related transactions consummates a stock or share
purchase agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off 

 

4

 

or scheme of
arrangement) with another Person whereby such other Person acquires more than
50% of the outstanding shares of Common Stock (not including any shares of
Common Stock held by the other Person or other Persons making or party to, or
associated or affiliated with the other Persons making or party to, such stock
or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any
subsequent exercise of this Warrant, the Holder shall have the right to
receive, for each Warrant Share that would have been issuable upon such
exercise immediately prior to the occurrence of such Fundamental Transaction,
at the option of the Holder (without regard to any limitation in Section 6
on the exercise of this Warrant), the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such
Fundamental Transaction by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 6 on the exercise
of this Warrant).

 

(b)                                 For purposes of any such
exercise, the determination of the Exercise Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in
such Fundamental Transaction, and the Company shall apportion the Exercise
Price among the Alternate Consideration in a reasonable manner reflecting the
relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such
Fundamental Transaction.  Notwithstanding
anything to the contrary, in the event of a Fundamental Transaction that is (1) an
all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3
under the Exchange Act, or (3) a Fundamental Transaction involving a
person or entity not traded on a national securities exchange, including, but
not limited to, the Nasdaq Global Select Market, the Nasdaq Global Market, or
the Nasdaq Capital Market, the Company or any Successor Entity (as defined
below) or the Holder shall, exercisable at any time concurrently with, or
within 30 days after, the consummation of the Fundamental Transaction, have the
right to purchase or sell this Warrant by paying an amount of cash equal to the
Black Scholes Value of the remaining unexercised portion of this Warrant on the
date of the consummation of such Fundamental Transaction.  “Black Scholes Value” means the value
of this Warrant based on the Black and Scholes Option Pricing Model obtained
from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of
the day of consummation of the applicable Fundamental Transaction for pricing
purposes and reflecting (A) a risk-free interest rate corresponding to the
U.S. Treasury rate for a period equal to the time between the date of the
public announcement of the applicable Fundamental Transaction and the end of
the Exercise Period, (B) an expected volatility equal to the greater of
100% and the 100 day volatility obtained from the HVT function on Bloomberg as
of the trading day immediately following the public announcement of the
applicable Fundamental Transaction, (C) the underlying price per share
used in such calculation shall be the sum of the price per share being offered
in cash, if any, plus the value of any non-cash consideration, if any, being
offered in such Fundamental Transaction and (D) a remaining option time
equal to the time between the date of the public announcement of the applicable
Fundamental Transaction and the end of the Exercise Period; provided however,
such amount shall in no event exceed
             percent
of the Exercise Price. 

 

(c)                                  The Company shall cause any
successor entity in a Fundamental Transaction in which the Company is not the
survivor (the “Successor Entity”) to assume in writing all of the
obligations of the Company under this Warrant and the other Transaction
Documents in accordance with the provisions of this Section 8 pursuant to
a written agreement in customary form and substance prior to such Fundamental
Transaction and shall, at the option of the holder of this Warrant, deliver to
the Holder in exchange for this Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance
to this Warrant which is exercisable for a corresponding number of shares of
capital stock of such Successor Entity (or its parent entity) equivalent to the
shares of Common Stock acquirable and receivable upon exercise of this Warrant
(without regard to any limitations on the exercise of this Warrant) prior to
such Fundamental Transaction, and with an exercise price which applies the
exercise price hereunder to such shares of capital stock (but taking into
account the relative value of the shares of Common Stock pursuant to such
Fundamental Transaction and the value of such shares of capital stock, such
number of shares of capital stock and such exercise price being for the purpose
of protecting the economic value of this Warrant immediately prior to the
consummation of such Fundamental Transaction). 
Upon the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and after the
date of such Fundamental Transaction, the provisions of this Warrant and the
other Transaction Documents referring to the “Company” shall refer instead to
the Successor Entity), and may exercise every right and power of the Company
and shall assume all of the obligations of the Company under 

 

5

 

this Warrant and the
other Transaction Documents with the same effect as if such Successor Entity
had been named as the Company herein. 
For purposes of this Warrant, “Person” means an individual, sole
proprietorship, corporation, partnership, limited partnership, limited
liability company, association, joint venture, trust, statutory trust,
unincorporated organization, estate or other mutual company, joint stock
company, estate, union, employee organization, bank, trust company, land trust or
other organization, whether or not a legal entity.

 

10.                                 All notices that are required or
permitted hereunder shall be in writing and shall be sufficient if personally
delivered, sent by facsimile, or sent by registered or certified mail or
Federal Express or other nationally recognized overnight delivery service. Any
notices shall be deemed given upon the earlier of the date when received at,
the day when delivered via facsimile or the third day after the date when sent
by registered or certified mail or the day after the date when sent by Federal
Express to, the address set forth below, unless such address is changed by
notice to the other party hereto:

 

if to the Company:

 

Advanced Life Sciences
Holdings, Inc.

1440 Davey Road

Woodridge, IL 60517

Attention: Chief
Financial Officer

Fax: 

 

if to the Holder: As set
forth in the Warrant Register of the Company.

 

The Company or the Holder
by notice to the other party may designate additional or different addresses as
shall be furnished in writing by such party.

 

11.                                 Warrant Agent.  The Company shall serve as warrant agent
under this Warrant.  Upon 30 days’ notice
to the Holder, the Company may appoint a new warrant agent.  Any corporation into which the Company or any
new warrant agent may be merged or any corporation resulting from any
consolidation to which the Company or any new warrant agent shall be a party or
any corporation to which the Company or any new warrant agent transfers
substantially all of its corporate trust or stockholder services business shall
be a successor warrant agent under this Warrant without any further act.  Any such successor warrant agent shall
promptly cause notice of its succession as warrant agent to be mailed (by first
class mail, postage prepaid) to the Holder at the Holder’s last address as
shown on the Warrant Register.

 

12.                                 The provisions of this Warrant
may not be amended, modified or changed except by an instrument in writing
signed by each of the Company and the Holder.

 

13.                                 All the covenants and provisions
of this Warrant by or for the benefit of the Company or the Holder shall be
binding upon and shall inure to the benefit of their respective permitted
successors and assigns hereunder.

 

14.                                 The validity, interpretation and
performance of this Warrant shall be governed by the laws of the State of New
York, as applied to contracts made and performed within such State, without
regard to principles of conflicts of law.

 

15.                                 The provisions hereof have been
and are made solely for the benefit of the Company and the Holder, and their
respective successors and assigns, and no other person shall acquire or have
any right hereunder or by virtue hereof.

 

16.                                 The headings in this Warrant are
for convenience only and shall not limit or otherwise affect the meaning
hereof.

 

17.                                 If any term, provision, covenant
or restriction of this Warrant is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or 

 

6

 

invalidated, and the
parties shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such
which may be hereafter declared invalid, illegal, void or unenforceable.

 

18.                                 This Warrant is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein and therein. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. This Warrant supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

 

19.                                 The Company agrees to take such
further action and to deliver or cause to be delivered to each other after the
date hereof such additional agreements or instruments as any of them may
reasonably request for the purpose of carrying out this Warrant and the
agreements and transactions contemplated hereby and thereby.

 

20.                                 Each party hereto acknowledges
and agrees that irreparable harm, for which there may be no adequate remedy at
law and for which the ascertainment of damages would be difficult, would occur
in the event any of the provisions of this Warrant were not performed in
accordance with its specific terms or were otherwise breached. Each party
hereto accordingly agrees that each other party hereto shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Warrant, or any agreement contemplated hereunder, and to enforce specifically
the terms and provisions hereof or thereof in any court of the United States or
any state thereof having jurisdiction, in each instance without being required
to post bond or other security and in addition to, and without having to prove
the inadequacy of, other remedies at law.

 

 

[Signature
Page Follows]

 

7

 

	
   

  	
   

  
	
   

  	
  Dated as of:                                     , 20             

  
	
   

  	
   

  
	
   

  	
  ADVANCED
  LIFE SCIENCES HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

SIGNATURE
PAGE TO ADVANCED LIFE SCIENCES HOLDINGS, INC. WARRANT

 

8

 

EXHIBIT
A

 

ELECTION TO
PURCHASE

 

The undersigned hereby
irrevocably elects to exercise Warrants represented by this Warrant and to
purchase the shares of Common Stock or other securities issuable upon the
exercise of said Warrants, and requests that Certificates for such shares be
issued and delivered (or, if the Company maintain a direct registration system
for its Common Stock, then such shares of Common Stock shall be issued in
electronic book-entry with any required notice of such electronic entry
provided to the undersigned) as follows:

 

PORTION OF WARRANT BEING
EXERCISED: (check applicable box or fill in number of Warrant Shares):

 

	
   

  	
  Entire Warrant o

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
     Warrant

  	
   

  
	
   

  	
  Shares

  	
   

  
	
   

  	
   

  	
   

  
	
  ISSUE TO:

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address, Including Zip
  Code)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Social Security or Tax
  Identification Number)

  	
   

  
	
   

  	
   

  	
   

  
	
  DELIVER TO:

  	
   

  	
   

  
	
   

  	
  (Name)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Address, Including Zip
  Code)

  	
   

  
				

 

In payment of the
purchase price with respect to this Warrant exercised, the undersigned hereby
either (A) tenders payment of $              
by (i) certified or bank cashiers check payable to the order of the
Company o; or (ii) a wire transfer of such
funds to an account designated by the Company o (check applicable box) or (B) hereby
provides notice to the Company that the undersigned is exercising this Warrant
pursuant to the Cashless Exercise set forth in Section 1(c) of the
Warrant, provided, however, in the event the a registration
statement covering the Warrant Shares has been declared effective by the
Securities and Exchange Commission and such registration statement is effective
at the time of the exercise of this Warrant, any Cashless Exercise election and
notice shall be deemed void and invalid and the payment of the purchase price with
respect this Warrant shall be the exclusive manner of purchase to be made
pursuant to clause (A) above.  If
the number of Warrant Shares hereby exercised is fewer than all the Warrant
Shares represented by this Warrant, the undersigned requests that a new Warrant
representing the number of full Warrant Shares not exercised to be issued and
delivered as set forth below:

 

	
  Name of Holder or
  Assignee: 

  	
   

  	
      (Please
  Print)

  

 

 

	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  DATED:

  	
  , 20  

  	
   

  
	
   

  	
   

  	
   

  
	
  (Signature
  must conform in all respects to name of holder as specified on the fact of
  this Warrant)

  
	
   

  	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  
				

 

 

EXHIBIT B

 

ASSIGNMENT FORM

 

(To assign the foregoing
warrant, execute this form and supply required information. Do not use this
form to exercise the warrant.)

 

FOR VALUE
RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby
assigned to

 

whose address is          

 

.

 

 

Dated:               
     ,         

 

	
   

  	
   

  	
   

  
	
  Holder’s Signature:  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Holder’s Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guaranteed:

  	
   

  	
   

  	
   

  
					

 

NOTE: The signature to
this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change
whatsoever, and must be guaranteed by a bank or trust company. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

 

10

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