Document:

EXHIBIT
4.8

 

REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), AND MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
OR (ii) AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT (WHICH, IF REQUESTED BY
THE ISSUER, SHALL BE ACCOMPANIED BY AN OPINION OF COUNSEL TO SUCH EFFECT
REASONABLY SATISFACTORY TO THE ISSUER).

 

ROLLER BEARING HOLDING COMPANY, INC.

 

AMENDED AND
RESTATED

WARRANTS TO PURCHASE CLASS B SUPERVOTING COMMON STOCK

 

THIS WARRANT (“Warrant Agreement”) is entered into
effective as of the 23rd day of June, 1997, by and between ROLLER
BEARING HOLDING COMPANY, INC., a Delaware corporation (the “Company”), and
Michael J. Hartnett (the “Holder”).

 

W I T N E S S E T H

 

In consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound, the
parties hereby agree as follows:

 

Section 1.               Warrants.
Subject to the terms and conditions set forth herein, this Warrant Agreement
entities the Holder to purchase up to four thousand two hundred forty one and
46/100 (4,241.46) shares (each such share being referred to herein as a “Warrant
Share” and all such shares being referred to herein, collectively, as the “Warrant
Shares”) of Class B Supervoting Common Stock, $0.01 par value per share, of the
Company (“Common Stock”), and at the exercise price of one hundred dollars
($100) per Warrant Share (the “Exercise Price”). This Warrant Agreement is not
intended to be an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code, as amended.

 

Section 2.               Duration
and Exercise of Warrants. (a) 
Subject to all the terms and conditions hereinafter set forth
(including, without limitation, the terms and conditions in Section 16), the
Warrants may be exercised by the Holder, in whole or in part, at any time or
from time to time, prior to 5:00 p.m, eastern standard time, on June 23, 2007
(the “Expiration Time”). At the Expiration Time, each Warrant not exercised
prior thereto shall be and become void and of no value.

 

(b)           100% of
the Warrants may be exercised immediately upon execution hereof. In addition,
this Warrant Agreement may not be exercised for less than fifty (50) Warrant
Shares at a time unless it is for the balance of the Warrant Shares available
hereunder.

 

 

(c)           Nothing in
this Warrant Agreement shall confer on the Holder any right to continue to
serve on the Board.

 

Section 3.               Method
of Exercise. (a)  Subject to Sections
4, 9 and 10 hereof, upon (i) delivery of a Form of Election to Purchase
attached as Annex B hereto (the “Form of Election to Purchase”) duly completed
and signed, to the Company at the address provided in Section 11, and (ii)
payment by delivery of a cashier’s or certified check made payable to the
Company, in an amount equal to the Exercise Price multiplied by the number of
Warrant Shares being so exercised, the Company shall promptly issue and cause
to be delivered to or upon the written order of the Holder, a certificate for
the Warrant Shares subject to such exercise. The “Date of Election to Purchase”
any Warrant means the date on which the Company shall have received both (1) a
Form of Election to Purchase duly completed and signed, and (2) payment of the
Exercise Price for such Warrants being acquired.

 

(b)           In the
event shares of Common Stock of the Company are registered under the Securities
Exchange Act of 1934, payment of the Exercise Price hereunder may, in the sole
discretion of the Company, be made by delivering (or certifying as to ownership
of) certificates of shares of Common Stock of the Company which have been held
by the Holder for at least six months (or such longer period as may be required
to avoid a charge to earnings for financial reporting purposes) which are equal
in value (based on their Fair Market Value (as defined in Section 1.3 of the
Stockholders Agreement) on the date of surrender or certification) to such
Exercise Price or the portion thereof so paid. In addition, in the event shares
of Common Stock of the Company are registered under the Securities Exchange Act
of 1934, payment of the Exercise Price hereunder may, in the sole discretion of
the Company, also be made by delivering a properly executed Form of Election to
Purchase to the Company together with a copy of irrevocable instructions to a
broker to promptly deliver to the Company the amount of sale or loan proceeds
to pay the Exercise Price. To facilitate the foregoing, the Company may enter
into agreements for coordinated procedures with one or more brokerage firms.

 

Section 4.               Payment
of Taxes. The Company shall have the right to require, prior to the
issuance or delivery of a certificate for any Warrant Shares acquired
hereunder, payment by the Holder (by cashier’s or certified check made payable
to the Company) of any income or employment taxes, if any, required by law to
be withheld by the Company in connection with the exercise of all or part of
this Warrant Agreement.

 

Section 5.               Non-Transferability;
Death. Except as provided in the Stockholders Agreement, this Warrant
Agreement is not transferable by the Holder otherwise than by will or the laws
of descent and distribution and is exercisable during the Holder’s lifetime
only by him.

 

Section 6.               Reservation
and Issuance of Warrant Shares. (a) 
The Company shall at all times have authorized, and reserve and keep
available, exclusively for the purpose of enabling it to satisfy any obligation
to issue Warrant Shares upon the exercise of the Warrants, the number of
Warrant Shares deliverable upon exercise of the Warrants. The Company shall
take all corporate action necessary to enable the Company to validly and
legally issue, at the Exercise Price, Warrant Shares that are fully-paid and
nonassessable.

 

2

 

(b)           The
Company covenants that all Warrant Shares will, upon issuance in accordance
with the terms of this Warrant Agreement, be (i) duly authorized, validly
issued, fully paid and nonassessable and (ii) free from all taxes or other
governmental charges with respect to the issuance thereof (exclusive of income
or employment taxes) and from all liens, charges and security interests created
by the Company.

 

Section 7.               Adjustments;
Notice of Certain Events. (a)  If the
Company shall effect a stock dividend, stock split, recapitalization,
reorganization, exchange of shares, liquidation, combination or other change in
corporate structure affecting the shares of Common Stock, the total number of
Warrant Shares then remaining subject to purchase hereunder and the Exercise
Price per share shall be adjusted so that the total consideration payable to
the Company upon the purchase of all shares not theretofore purchased and the
interest (as a percentage of all similar interests in the Company) to be
received on exercise hereof, shall not be changed.

 

(b)           Should the
Company elect to undertake any sale of all or substantially all of its assets,
or any merger, consolidation, combination or other corporate reorganization or
restructuring of the Company with or into another corporation which results in
the outstanding shares of Common Stock being converted into or exchanged for
different securities, cash or other property, or any combination thereof (an “Acquisition”),
the Company shall give written notice of such event to the Holder at least
fifteen (15) days prior to the date on which such transaction is expected to
become effective or consummated. Such notice shall specify such expected date
of effectiveness or consummation. Failure to give such notice or any defect
therein shall not effect the validity of any action taken in connection with
such transaction.

 

Section 8.               No
Stock Rights. The Holder shall not be entitled to vote nor be deemed the
holder of shares of Common Stock or any other securities of the Company which
may at any time be issuable on the exercise the Warrants, nor shall anything
contained herein be construed to confer upon the Holder the rights of a
stockholder of the Company or the right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, to exercise any preemptive right,
to receive notice of meetings or other actions affecting stockholders (except
as provided herein), or to receive dividends or subscription rights or
otherwise, unless and until certificates for the Warrant Shares are issued
following the Date of Election to Purchase.

 

Section 9.               Fractional
Warrants and Fractional Warrant Shares. The Company may, but shall not be
required to, issue fractional Warrant Shares. If any fraction of a Warrant
Share would, except for the provisions of this Section 9, be issuable to the
Holder upon exercise of any Warrants, the Company may, at its election, pay to
such Holder an amount in cash equal to the difference between (a) the Fair
Market Value of one share of Common Stock and (b) the Exercise Price,
multiplied by such fraction. The Holder expressly waives the right to receive
any fractional Warrant Shares upon exercise of a Warrant. The Holder shall be
entitled to receive fractional Warrant Shares at the election of the Company.

 

Section 10.             Registration
of Warrant Shares. The Company shall not be required to issue or deliver
any certificate for its shares of Common Stock purchased upon the exercise of
this Warrant Agreement prior to the admission of such shares to listing on any
stock exchange on which shares of the Company’s Common Stock may at that time
be listed. In the 

 

3

 

event of the exercise of
this Warrant Agreement with respect to any shares subject hereto, if other
shares of Common Stock of the Company are then listed, the Company shall make
prompt application for such listing with respect to the shares acquired upon
the exercise hereof. If at any time during the Warrant Agreement period the
Company shall be advised by its counsel that shares deliverable upon exercise
of Warrants are required to be registered under the Federal Securities Act of
1933, as amended, or that delivery of the shares must be accompanied or
preceded by a prospectus meeting the requirements of the Act, the Company will
use reasonable efforts to effect such registration or provide such prospectus
not later than a reasonable time following each exercise of this Warrant
Agreement, but delivery of shares by the Company may be deferred until
registration is effected or a prospectus available. The Company shall be under
no obligation to register the shares deliverable upon exercise of this Warrant
Agreement unless it shall be advised by its counsel that such shares are
required to be so registered. The Holder shall have no interest in the shares
covered by this Warrant Agreement unless and until certificates for the shares
are issued following the exercise of this Warrant Agreement. Notwithstanding
anything to the contrary in this Warrant Agreement, in lieu of affecting the
registration statement described in the preceding sentence, the Company may, in
the alternative, provide the Holder with a cash payment in consideration of the
Warrant Shares subject to such exercise in an amount equal to the excess of the
Fair Market Value of one share of Common Stock over the Exercise Price,
multiplied by the number of Warrant Shares subject to such exercise, and the
Company shall have no further liability of any kind to the Holder with respect
to such Warrant Shares.

 

Section 11.             Notices.
All notices, requests, demands and other communications relating to this
Warrant Agreement shall be in writing, including by telecopier, addressed, if
to the registered Holder hereof, to it at the address furnished by the
registered Holder to the Company, and if to the Company, at its office at 60
Round Hill Road, P.O. Box 430, Fairfield, Connecticut 06430-043060, Attention:
Chief Executive Officer, or to such other address as any party shall notify the
other party in writing, and shall be effective, in the case of written notice
by mail, three days after placement into the mails (first class, postage
prepaid), and in the case of notice by telecopier on the same day as sent.

 

Section 12.             Binding
Effect. This Warrant Agreement shall be binding upon and inure to the sole
and exclusive benefit of the Company, its permitted successors and permitted
assigns, and the Holder.

 

Section 13.             Survival
of Rights and Duties. Unless earlier terminated or cancelled in whole or in
part pursuant to Sections 2 or 15 hereof, this Warrant Agreement and any
unexercised Warrants represented hereby shall terminate and be of no further
force and effect on the earlier of the Expiration Time or the date on which all
the Warrants shall have been exercised, except that the provisions of Sections
4, 6(b) and 10 of this Warrant Agreement shall continue in full force and
effect after any such termination or cancellation.

 

Section 14.             Governing
Law. This Warrant Agreement shall be construed in accordance with and
governed by the internal laws of the State of Delaware applicable to contracts
executed and to be performed wholly within such state, without regard to the
principles of conflicts or choice of law.

 

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Section 15.             Entire
Agreement; Modification and Waiver. Subject to Section 16 hereof, this
Warrant Agreement represents the entire agreement between the Company and the
Holder relating to the subject matter hereof, and supersedes any and all prior
agreements, including but not limited to the Original Warrants. This Warrant
Agreement and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought.

 

Section 16.             Stockholders
Agreement. The Holder acknowledges that it is a party to that certain
Stockholders’ Agreement (the “Stockholders’ Agreement”), dated as of June
23,1997, by and among the Company, OCM Principal Opportunities Fund, L.P.,
Northstar Investment Management Corporation, Merban Equity and certain other
individuals, and that the Holder is bound by all the terms and conditions of
such Stockholders Agreement. Any and all Warrant Shares issued from time to
time hereunder shall, immediately upon issuance thereof, and without any
further action by or on behalf of the Holder or the Company, be subject to the
Stockholders Agreement.

 

5

 

IN WITNESS WHEREOF, the Company has caused this
Warrant Agreement to be executed under its corporate seal by its officers
thereunto duly authorized as of the date hereof, and the Holder has caused this
warrant to be executed and delivered by its duly authorized representative.

 

ROLLER BEARING HOLDING
COMPANY, INC.

 

 

	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Michael J. Hartnett

  	
   

  

 

 

ANNEX A

 

FORM OF ELECTION
TO PURCHASE

 

(To be
executed by the Holder if the Holder desires to exercise Warrants evidenced by
the foregoing Warrant Agreement)

 

To
Roller Bearing Holding Company, Inc.:

 

The
undersigned hereby irrevocably elects to exercise              
Warrants (as defined in and evidenced by the foregoing Warrant) for, and to
purchase thereunder,                    
full shares of Class B Supervoting Common Stock, $0.01 par value per share, of
Roller Bearing Holding Company, Inc., issuable upon exercise of such Warrants
and delivery of $                    
in cash and any applicable taxes payable by the undersigned pursuant to such
Warrant Agreement.

 

The
undersigned requests that certificates for such shares be issued in the name of
the following:

 

	
   

  	
  PLEASE INSERT SOCIAL
  SECURITY OR TAX

  
	
   

  	
  IDENTIFICATION NUMBER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (please
  print name and address)

  

 

 

If
such number of Warrants shall not constitute all the Warrants evidenced by the
foregoing Warrant Certificate; the undersigned request that a new Warrant
Certificate evidencing the Warrants not so exercised be issued in the name of
and delivered to the following:

 

	
  (Please print name and address)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  DR. MICHAEL J. HARTNETT

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature)Exhibit 10.2

 

Amended and Restated Employment
Agreement

 

THIS EMPLOYMENT AGREEMENT (this
“Agreement”) made effective as of the 10th  day of March, 2006 (the “Effective Date”), by
and between Advanced Life Sciences, Inc., an Illinois corporation (the “Company”),
and Michael T. Flavin, Ph.D. (the “Executive”).

 

WHEREAS, the
Company and the Executive previously entered into a Letter of Employment dated
June 1, 2002 (the “Existing Employment Contract”); and

 

WHEREAS, the
Company and the Executive desire to enter into this 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 Executive Officer of the
Company, and shall have such responsibilities, duties and authority as are
assigned by the Board of Directors 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 $260,000 (“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 Compensation Committee of the
Board to determine whether to increase the Base Salary on a prospective basis
and may be increased by the Compensation Committee without amendment to
the 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. During the 2006 fiscal year of the
Company, the maximum bonus that the Executive may receive is $88,000. The
maximum bonus amount shall be reviewed annually by the Compensation Committee
to determine whether to increase the maximum bonus amount on a prospective
basis and may be increased by the Compensation Committee of the Board
without amendment to the Agreement.

 

(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
Stock Incentive Plan or under any other equity plan of the Company as
determined by the Board of Directors of the Company (the “Board”) 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 and vision 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 25 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, 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);
Any outstanding notes payable to you along with the interest due;  and (iv) any amounts payable under any
of the Company’s Bonus Plan and Benefit Plans in accordance with the terms of
those plans. All amounts under clauses (i) through (iv) shall be paid
in a lump sum on the Executive’s Date of Termination or as soon as
administratively practicable thereafter.

 

(b)                                 In the event 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 twenty four (24) months following the Date of
Termination, (i) provide to Executive salary continuation, at Executive’s Base
Salary rate then in effect, and any amounts that may come due under the
Company’s Bonus Plan (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.

 

(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.

 

(g)                                 If the Executive’s
employment is terminated by the parties pursuant to Section 5(a)(iii) or
Section 5(a)(iv) above, the Executive shall remain a Director of
Advanced Life Sciences Holdings, Inc. (“ADLS”) for as long as the
Executive is a beneficial owner of any class of stock in ADLS.

 

7.                                       Change
in Control.

 

(a)                                  Payments
and Benefits Upon Employment Termination Upon a Change in Control. The
Executive hereby agrees to waive any rights associated with the Change in
Control Section of the Existing Employment Contract arising
prior to the date hereof; the rights contained herein shall 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.

 

(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 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.

 

(b)                                 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 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 (c) below.

 

(c)                                  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
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 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 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:

 

Michael T. Flavin, Ph.D.

8817 Royal Swan Lane

Darien, IL 
60561

 

 

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.

 

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/ Michael
  T. Flavin

  	
   

  	
  By:

  	
  /s/ John L.
  Flavin

  	
   

  
	
  Name: Michael T. Flavin

  	
  Name:

  	
  John L. Flavin

  
	
   

  	
  Title:

  	
  President

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