Document:

Exhibit 10.1

 

September 27, 2010

 

HAND DELIVERED

 

WITHOUT
PREJUDICE

 

Paul Amirault

83 Woodhaven Road
SW,

Calgary, AB. 
T2W 5P2

 

Dear Mr. Amirault:

 

Re:          Settlement Agreement

 

Further to our
recent discussions, and our meeting on September 15, 2010
we confirm that Niska Partners Management ULC, including Niska Gas Storage
Partners LLC, and its related and affiliated entities, (collectively, the “Company”) is prepared to make a without prejudice offer of
settlement with respect to the termination of your employment on the terms and
conditions as outlined below (the “Settlement Agreement”):

 

1.                                       Your employment with the
Company will terminate on November 15, 2010 (the “Termination
Date”).

 

2.                                       The Company will pay you
all accrued vacation pay, wages and benefits owed, less the applicable
statutory deductions, up to and including the Termination Date.

 

3.                                       The Company will pay you a
lump sum amount of $300,000.00, less applicable statutory deductions, payable
on January 4, 2011 in lieu of any and all further amounts owing to you for
any severance or any other payments related to the termination of your
employment with the Company.

 

4.                                       The Company will agree to
allow you to keep your “B Unit” ownership of 21,624.8 units comprised of 7,564.8 units of Niska GS Holdings US L.P. and 14,060.0 units
of Niska GS Holdings Canada, L.P. and covenants that it shall not seek to
unilaterally repurchase such B Units. 
The Company will also agree to allow you to keep your “A Unit” ownership
of 1632.29 units comprised of 482.14 units of Niska GS Holdings
US L.P. and 1150.15 units of Niska GS Holdings Canada, L.P. and covenants that it
shall not seek to unilaterally repurchase such A Units (paragraph 2, 3 and 4
herein collectively referred to as the (the “Settlement
Payment”);

 

5.                                       You will be required to
return all Company property to Darren Brown, HR Manager, by the close of
business on the Termination Date.

 

 

6.                                       In consideration for the
Settlement Payment, you acknowledge and agree that for eighteen (18) months
following the Termination Date, you will not, without the prior written consent
of the Company, for any reason, either directly or indirectly, either alone or
in conjunction with any other person or persons:

 

(i)                       initiate contact with any
current or former customer or supplier of the Company for the purpose of
soliciting, inducing, or attempting to solicit or induce, such customers or
suppliers to become a customer or supplier of any business venture which
directly or indirectly competes with the Business of the Company; or

 

(ii)                    initiate contact with any
employee, executive or independent contractor of the Company, or any person who
held such position in the 12 months immediately preceding the Termination Date,
for the purpose of offering employment or business opportunities with any
person or entity other than the Company; or

 

(iii)                 enter into, participate in,
or otherwise take part in the conduct, consulting, operation or management of
any business that carries on or is engaged in, any business that is the same or
substantially similar to the Business of the Company, or advise, consult,
participate in or permit your name to be used or employed by any person engaged
in or concerned with or interested in any business that is the same as or
substantially similar to the Business of the Company.  For clarity, it is permitted that you
participate in or otherwise take part in the conduct, consulting, operation or
management of businesses carried on by a person that also owns, directly or
indirectly, businesses the same or substantially similar to the Business of the
Company, provided that you do not participate or take part in those businesses
that are the same or substantially similar to the Business of the Company.

 

For purposes hereof, the “Business  of  the  Company” shall mean the business relating to development,
operation, ownership, management or oversight of natural gas storage facilities
and natural gas storage projects (whether in development or in operation) in
the Province of Alberta and the State of California, carried on by the Company
or any of its parent(s), owners, affiliates or related entities.

 

7.                                       You agree that all
restrictions contained in Section 6 are reasonable, valid and necessary
protections of the Company’s proprietary business interests and hereby waive
any and all defences to the strict enforcement thereof by the Company.  Further, you acknowledge and agree that the
Company will suffer irreparable harm if you breach any of the obligations under
Section 6 of this Settlement Agreement, and that monetary damages would be
impossible to quantify and inadequate to compensate the Company for such a
breach.  Accordingly, you agree that in
the event of a breach, or a threatened breach, by you of any of the provisions
of Section 6, the Company shall be entitled to obtain, in addition to any
other rights, remedies or damages available to the Company at law or in equity,
an interim and permanent injunction, without having to prove damages, in order 

 

2

 

to prevent or restrain any such breach, or
threatened breach, by you, or by any or all of your partners, employers,
employees, servants, agents, representatives and any other persons directly or
indirectly acting for, or on behalf of, or with, you, and that the Company
shall be entitled to all of its costs and expenses incurred in obtaining such
relief including actual solicitor and client legal costs and disbursements.

 

Please note that
this settlement offer, including the Settlement Payment outlined above, is
conditional on your execution of this Settlement Agreement and the attached
Release & Confidentiality Agreement (the “Release”),
thereby releasing the Company from any and all claims, causes of action,
demands, obligations, agreements, promises, liability, damages, costs and fees
arising out of or relating to your employment. 
This Release includes the termination of your employment and the
termination of all benefits relating to your employment.  Please note that the Company’s direct
contributions to your benefit provider will cease as of the Termination
Date.  You will be solely responsible for
arranging for continued coverage by contacting Sun Life
at 1-877-893-9893 to discuss health care options and
Sun Life Financial at 1-866-733-8612 to discuss your Sun life Financial options.

 

This Settlement
Agreement and the attached Release shall be construed and enforced in
accordance with the laws of the Province of Alberta and constitute the entire
agreement between you and the Company, superseding and replacing any and all
prior agreements, undertakings, representations or negotiations pertaining to
the subject matter of this settlement.

 

Please take the
opportunity to review this letter and the attached Release with counsel.  By executing this letter you hereby
acknowledge and agree that you have read and understand the terms of this
letter and that you have had an opportunity to seek independent legal advice
prior to entering into this Settlement Agreement.

 

3

 

The Company’s offer
of settlement remains open until September 30, 2010 at
4:00 p.m. Mountain Time.  You can
elect to accept the settlement conditions contained in this Settlement
Agreement by executing a copy of this letter and the attached Release, and
returning them to Darren Brown, HR Manager, by the above noted date.

 

	
  Yours truly,

  	
   

  
	
   

  	
   

  
	
  Niska
  Partners Management ULC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Jason
  A. Dubchak

  	
   

  
	
  Jason
  A. Dubchak

  	
   

  
	
  VP,
  General Counsel & Corporate Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Niska GS Holdings Canada, L.P.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Jason
  A. Dubchak

  	
   

  
	
  Jason
  A. Dubchak

  	
   

  
	
  VP,
  General Counsel & Corporate Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Niska GS Holdings US L.P.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Jason
  A. Dubchak

  	
   

  
	
  Jason
  A. Dubchak

  	
   

  
	
  VP,
  General Counsel & Corporate Secretary

  	
   

  

 

“I accept the terms
and conditions of settlement contained in this Settlement Agreement and the
attached Release & Confidentiality Agreement.

 

Dated the 27th day of September,
2010.”

 

 

	
  /s/ Paul
  Amirault

  	
   

  
	
  Paul
  Amirault

  	
   

  

 

4

 

RELEASE
AND CONFIDENTIALITY AGREEMENT

 

1.                                       RELEASE

 

IN CONSIDERATION of (i) the sum of $300,000.00, less applicable statutory deductions, payable
on January 4, 2011; (ii) the retention of your existing B Unit
ownership of 21,624.8 B Units comprised of 7,564.8 units of
Niska GS Holdings US L.P. and 14,060.0 units of Niska GS Holdings Canada, L.P.;
and (iii) the retention of your existing A Unit ownership of 1632.29 A Units comprised of 482.14 Units of Niska GS Holdings US L.P. and 1150.15 Units of
Niska GS Holdings Canada, L.P.; and other good and valuable consideration, paid to
me by NISKA PARTNERS MANAGEMENT ULC, I,
Paul Amirault,  of Calgary, Alberta, do for
myself, and my heirs, executors, administrators, trustees, successors and
assigns, (hereinafter collectively referred to as “I”),
forever release, remise and discharge NISKA PARTNERS MANAGEMENT
ULC, its parent companies, subsidiaries and affiliates and all
associated officers, directors, employees, agents, insurers, predecessors,
successors and assigns (hereinafter collectively referred to as the “Company”), jointly and severally from any and all actions,
causes of actions, contracts, (whether express or implied), claims and demand
for damages, loss or injury, suits, debts, sums of money, expenses, interest,
costs and claims of any and every kind and nature whatsoever, at law or in
equity, which against the Company, I ever had, now have, or can hereafter
have by reason of or existing out of any causes whatsoever existing up to and
inclusive of November 15, 2010 (the “Termination Date”),
including but without limiting the generality of the foregoing:

 

5

 

(a)                                  my employment with the
Company;

 

(b)                                 my ceasing to be employed
with the Company; and

 

(c)                                  any and all claims for
damages, salary, wages, termination pay, severance pay, vacation pay,
commissions, bonuses, expenses, allowances, incentive payments, insurance or
any other benefits arising out of my employment with the Company.

 

Notwithstanding the
foregoing, excepted from this Release and Confidentiality Agreement is any
claim I might have for indemnification for any claims made against me by third
parties solely as a result of my position as a senior officer of the Company;
or pursuant to the provisions of any policy of insurance obtained by the
Company for providing coverage for errors and omissions claims made against its
officers and directors.  All such claims
shall be excepted to the extent that such claims would be covered by the
Company’s errors and omissions insurance coverage and excepted only to the
extent that such actions were conducted by me in the course and scope of my
employment.

 

2.                                       NO ADMISSION

 

I acknowledge that
the satisfactory arrangements made between me and the Company do not constitute
any admission of liability by or on behalf of the Company.

 

3.                                       EMPLOYMENT
STANDARDS

 

I acknowledge
receipt of all wages, overtime pay, vacation pay and general holiday pay and I
further reconfirm that there are no entitlements, overtime pay or wages due and
owing to myself by the Company.

 

4.                                       EMPLOYMENT
INSURANCE

 

I confirm and agree
that I have not received any Employment Insurance benefits from Human Resources
and Development Canada, and I further confirm that there are no 

 

6

 

amounts owed or
outstanding by myself or the Company for Employment Insurance benefits.  I hereby agree to indemnify and hold harmless
the Company for any amounts owing for Employment Insurance.

 

5.                                       HUMAN
RIGHTS

 

I acknowledge that
this Release and Confidentiality Agreement applies to any and all claims I have
or may have pursuant to the Alberta Human Rights Act or
any other applicable human rights legislation and further acknowledge or
promise that I have or will abandon, quit and withdraw any complaint filed by
me.

 

6.                                       BENEFITS
AND INSURANCE CLAIMS

 

I acknowledge and
agree that all of my employment benefits ceased as at the date of my
termination, I have received all benefit entitlements, including insurance
benefits to date, and have no further claim against the Company for
benefits.  I fully accept sole
responsibility to replace those benefits that I wish to continue and to exercise
conversion privileges, where applicable, with respect to benefits.  In the event that I become disabled, I
covenant not to sue the Company for insurance or other benefits, or for loss of
benefits.  I hereby release the Company
from any further obligations or liabilities arising from my employment
benefits.

 

7.                                       NON-DISCLOSURE

 

I agree that I will
not divulge or disclose, directly or indirectly, the contents of this Release
and Confidentiality Agreement, or the terms of settlement relating to my ceasing
to be employed by the Company, to any person including, but without limiting
the generality of the foregoing, to employees or former employees of the
Company, except my legal and financial advisors on the condition that they
maintain the confidentiality thereof, or as required by law.

 

7

 

8.                                       PRIVACY

 

I understand that the Company has collected, used
and disclosed personal information (as defined in the Alberta Personal Information Protection Act) about me during the
term of my employment with the Company, including health information shared
with the Company’s insurer for the purposes of managing my potential disability
claims with the Company and the Company’s insurer. I hereby confirm that all
such disclosures were made with my express consent.  I further acknowledge and agree that this Release
and Confidentiality Agreement applies to any and all claims or complaints that
I have or may have pursuant to any applicable privacy legislation and further
acknowledge or promise that I have or will abandon, quit and withdraw any
complaint filed by me.

 

9.                                       CONFIDENTIALITY

 

I recognize and
acknowledge that during my employment with the Company I had access to certain
confidential and proprietary information, the disclosure of which could be
harmful to the interests of the Company. 
As used herein, “Confidential  Information” shall include, but not be limited to,
information, in whatever form kept or recorded, pertaining to: inventions,
discoveries, know-how, ideas, computer programs, designs, algorithms, process
and structures; product information; research and development information;
client information; financial information; business process and methodology;
strategic litigation information; information respecting the Company’s
business, its shareholders, officers, directors, employees, projects,
opportunities, operations, properties or assets, or any other financial
information of the Company whatsoever and any other technical and business
information of the Company which is confidential, trade secret/or proprietary
character.  I acknowledge and agree that
I have taken and will in future take appropriate precautions to safeguard the
Confidential Information.

 

8

 

10.                                 INDEMNITY
REGARDING TAX

 

I further agree to
indemnify and save harmless the Company and shall be liable to the Company for
any claims in regards to non-deduction or insufficient deduction of taxes or
employment insurance monies in regards to the settlement agreed to herein,
including any legal costs, interest or penalties as may be assessed or alleged
against the Company.

 

11.                                 RETURN
OF COMPANY PROPERTY

 

I agree to
immediately return to the Company all Company property in my possession or
control, if I have not done so already. 
Without limiting my obligation, Company material includes all manuals,
vehicles, communications equipment, product information, price lists, displays
and promotional material.

 

12.                                 UNDERSTANDING

 

I declare that I
have had the opportunity to seek independent legal advice with respect to the
matters addressed in this Release and Confidentiality Agreement and the terms
of settlement which have been agreed to by myself and the Company.  I fully understand this Release and
Confidentiality Agreement and the terms of settlement.  I have not been influenced by any
representations or statements made by or on behalf of the Company.  I voluntarily accept these terms for the purpose
of making full and final compromise, adjustments and settlement of all claims
as aforesaid.

 

9

 

13.                                 COMPLETE
AGREEMENT

 

I understand and
agree that this Release and Confidentiality Agreement, and the settlement
letter to which this Release and Confidentiality Agreement has been attached,
contain the entire agreement between the Company and me, that such agreement
may not be modified except by mutual written agreement of me and the Company,
and that the terms of this Release and Confidentiality Agreement are
contractual and not a mere recital.

 

DATED at the City of Calgary, in
the Province of Alberta, this 27th day of September, 2010.

 

 

	
   

  	
  /s/ Jason A.
  Dubchak

  	
   

  	
  /s/ Paul Amirault

  
	
   

  	
  Witness

  	
  Paul Amirault

  

 

10Exhibit
10.16

 

SECOND AMENDED AND RESTATED BUSINESS LOAN AGREEMENT

 

THIS
SECOND AMENDED AND RESTATED BUSINESS LOAN AGREEMENT (this “Credit Agreement”),
dated as of September 9, 2010 (the “Effective Date”), is by and between
ADVANCED LIFE SCIENCES, INC., an Illinois corporation (the “Borrower”),
ADVANCED LIFE SCIENCES HOLDINGS, INC. (“Holdings”), MICHAEL FLAVIN (“Flavin”,
and together with Holdings, the “Guarantors”), and THE LEADERS BANK (the “Lender”),
and shall amend and restate in its entirety that certain Amended and Restated
Business Loan Agreement, dated as of October 23, 2008, executed by and between
the Borrower and the Lender (the “Existing Credit Agreement”).

 

WHEREAS,
the Borrower and the Lender desire to amend and restate in its entirety the Existing
Credit Agreement, and replace it with this Agreement;

 

WHEREAS,
the Borrower has requested, among other things, that the Lender extend the
maturity date of the Revolving Loan (as defined herein) to January 1, 2012; and

 

WHEREAS,
Lender has agreed to continue to extend credit to the Borrower pursuant to the
terms set forth herein.

 

NOW THEREFORE, the parties hereto agree as follows:

 

SECTION 1.  LOANS

 

SECTION 1.1.  REVOLVING LOANS.  Subject to the terms and conditions of this
Agreement, the Lender agrees to make loans to the Borrower, from time to time
from the date of this Agreement to (but not including) January 1, 2012, in an
amount not to exceed the Commitment at such time, as the Borrower may request
(each, a “Revolving Loan”). During such period, the Borrower may borrow, repay
and reborrow the Revolving Loans hereunder.

 

SECTION 1.2.  REVOLVING NOTE.  The Revolving Loans shall be evidenced by the
Second Amended and Restated Promissory Note (the “Revolving Note”),
substantially in the form of Exhibit A, with appropriate insertions,
dated the date hereof, payable to the order of the Lender, in the principal
amount of Eight Million Five Hundred Thousand Dollars ($8,500,000).  The Lender may record the amounts borrowed
and repaid under and the balance due on the Revolving Note in its books and
records, which books and records may treat each borrowing as a separate
Revolving Loan; such endorsement or recording by the Lender shall be rebuttably
presumptive evidence of the principal balance due on the Revolving Note.  The outstanding principal balance of the
Revolving Note, including all accrued but unpaid interest shall be payable to
the Lender in full on January 1, 2012 (the “Maturity Date”).  The Revolving Note constitutes a restatement
of, and a replacement and substitute for that certain Amended and Restated
Promissory Note dated October 23, 2008 made by Borrower to the order of Lender,
in the principal amount of $10,000,000 (the “2008 Note”), which reflects a
reduction in the Commitment from the Lender to the Borrower from $10,000,000 to
$8,500,000.  Any amounts outstanding
under the 2008 Note shall be automatically outstanding under the Revolving
Note.  The indebtedness evidenced by the
Revolving Note is continuing indebtedness, and nothing herein or in the
Revolving Note shall be deemed to constitute a payment, settlement or novation 

 

 

of
the 2008 Note or to release or otherwise adversely affect any lien, mortgage or
security interest securing such indebtedness or any rights of the Lender
against any guarantor, surety, or other party primarily or secondarily liable
for such indebtedness.

 

SECTION 2.  INTEREST AND FEES

 

SECTION 2.1.  INTEREST.  The unpaid principal amount of the Revolving
Loans from time to time outstanding shall bear interest at a rate equal to ten
percent (10%) (the “Interest Rate”). 
After the Maturity Date, until paid, any outstanding amounts of
principal and interest due under the Revolving Loan shall be the Interest Rate plus
three percent (3%) (the “Default Rate”).

 

SECTION 2.2.  INTEREST PAYMENT
DATES.  Accrued
interest shall be paid in respect of principal of the Revolving Loans on the
first Business Day of each calendar month, commencing on October 1, 2010 or the
first of such dates to occur after the Effective Date hereunder, on the
Maturity Date, and upon payment in full; provided however, that, after
the Maturity Date, whether by acceleration or otherwise, interest shall be
payable upon demand and shall accrue at the Default Rate.

 

SECTION 2.3.  BASIS OF
COMPUTATION.  Interest
shall be computed for the actual number of days elapsed on the basis of a year
consisting of 360 days, including the date a Loan is made and excluding the
date a Loan or any portion thereof is paid or prepaid.

 

SECTION 2.4.  LOAN FEE.  As consideration for the further extension of
credit by the Lender, (i) Borrower shall pay to Lender a fee of $100,000
payable in three installments - $30,000 on the Effective Date, $30,000 payable
on November 1, 2010, and $40,000 payable on January 1, 2011 (together, the “Loan
Fee”), (ii) and deliver the Warrants as set forth in Section 7.2 herein.  Borrower shall reimburse Lender on the
Effective Date for all costs and expenses incurred by the Lender in the
preparation of this amendment and the related documents.  Failure by the Borrower to pay the Loan Fee
pursuant to the payment schedule set forth above or to deliver the Warrants as
set forth in Section 7.2 shall be an Event of Default under this Agreement.

 

SECTION 3.  PAYMENTS AND PREPAYMENTS.

 

SECTION 3.1.  FUNDS. All payments
and prepayments of principal, interest and fees shall be made in immediately
available funds to the Lender at its main banking office at 2001 York Road, Suite
150, Oak Brook, Illinois 60523.

 

SECTION 3.2.  OPTIONAL
PREPAYMENT.  The
Borrower may prepay the Revolving Loan in whole or in part at any time.  All prepayments of principal shall include
interest accrued to the date of prepayment on the principal amount being
prepaid.

 

SECTION 3.3.  MANDATORY
PREPAYMENT.  The
Borrower shall from time to time, without prior demand by or notice from the
Lender, make such payments or prepayments of principal hereunder and under the
Revolving Note as are necessary so that, after giving effect to such payment or
prepayment, the sum of (i) aggregate principal amount of the Loans 

 

2

 

outstanding
hereunder and under the Revolving Note shall not exceed the Commitment.  In addition, Borrower shall make two
mandatory prepayments: the first in an amount necessary to reduce the principal
balance of the Revolving Loan to Seven Million Dollars ($7,000,000) on or
before October 1, 2010 (the “First Principal Reduction”), and an additional
payment of One Million Dollars ($1,000,000) on or before April 1, 2011 (the “Second
Principal Reduction”, together the “Principal Reductions”).  Failure of the Borrower to make either
Principal Reduction shall be an Event of Default under the Agreement.

 

SECTION 3.4.   OFFSET.  In addition to and not in limitation of all
rights of offset that the Lender may have under applicable law, the Lender
shall, upon the occurrence of any Event of Default, have the right to take and
apply to the payment of any Loans and any other liabilities of the Borrower or
Holdings hereunder, in such order of application as the Lender may elect, any
and all balances, credits, deposits, accounts or moneys of the Borrower or
Holdings then or thereafter with the Lender.

 

SECTION 4.  GUARANTIES AND COLLATERAL

 

SECTION 4.1.  GUARANTIES.  The payment and performance of the
Obligations shall at all times be guaranteed jointly and severally by Flavin
and Holdings pursuant to one or more guaranty agreements in form and substance
acceptable to the Lender, as the same may be amended, modified or supplemented
from time to time (individually a “Guaranty” and collectively the “Guaranties”).

 

SECTION 4.2.  COLLATERAL.  The Obligations shall be secured by valid,
perfected, and enforceable Liens on all right, title, and interest of the
Borrower and Holdings in all of their accounts, chattel paper, instruments,
documents, general intangibles, letter-of-credit rights, supporting
obligations, deposit accounts, investment property, inventory, equipment,
fixtures, commercial tort claims, real estate and any other personal property,
whether now owned or hereafter acquired or arising, and all proceeds thereof
(together, the “Collateral”).  The
Borrower and Holdings each acknowledge and agree that the Liens on the
Collateral shall be granted to the Lender and shall be valid and perfected
first priority Liens, other than Permitted Liens, pursuant to one or more
Security Documents from such Persons, each in form and substance satisfactory
to the Lender.

 

SECTION 5.  REPRESENTATIONS AND WARRANTIES

 

In
order to induce the Lender to enter into this Agreement, to make Loans as
provided for herein, the Borrower and each Guarantor makes the following
representations and warranties to the Bank, all of which shall survive the
execution and delivery of this Agreement:

 

SECTION 5.1.  STATUS AND
LICENSING.  Each of
Borrower and Holdings, as of the date of this Agreement, is validly existing
corporation in good standing under the laws of the state of its organization
and has the power and authority to own its property and to transact the
business in which it is engaged or presently proposes to engage and is duly
qualified or licensed in good standing in each jurisdiction in which such
qualification is required, unless the failure to so qualify or license could
not have a Material Adverse Effect.

 

3

 

SECTION 5.2.  POWER AND
AUTHORITY.  Borrower and
each Guarantor has full power, authority and legal right to execute, deliver
and carry out the terms and provisions of this Agreement and the other Loan
Documents to which it/he is a party and Borrower and Holdings have taken all
necessary corporate action (including, without limitation, any consent of the
Board of Directors) to authorize the execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party.  This Agreement and the other Loan Documents
to which it is a party constitute legal, valid and binding obligations of the
Borrower and each Guarantor, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally or by general equity principles (whether in an action at law
or in equity).

 

SECTION 5.3.  COMPLIANCE WITH
OTHER INSTRUMENTS.  Except as
listed on Schedule5.3 hereto, no Borrower nor either Guarantor is in default
under any agreement to which it/he is a party (except to the extent that the
existence of such default, when taken together with all other such defaults,
would not have a Material Adverse Effect), and neither the execution, delivery
or performance of this Agreement or the other Loan Documents to which such
Borrower or either Guarantor is a party nor the consummation of the
transactions herein or therein contemplated, nor compliance with the terms and
provisions hereof or thereof, will contravene any provision of law, statute, rule
or regulation to which Borrower or any Guarantor subject or any judgment,
decree, franchise, order or permit applicable to the Borrower or either
Guarantor, or will conflict or will be inconsistent with or will result in any
breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any lien, security interest, charge or
encumbrance upon any of the property or assets of Borrower or either Guarantor
pursuant to the terms of any indenture, mortgage, deed of trust, agreement or
other instrument to which Borrower or either Guarantor is a party or by which
it is bound or to which it may be subject or violate any provision of the
by-laws of Borrower or Holdings.

 

SECTION 5.4.  LITIGATION.  Except as set forth in Schedule 5.4 attached
hereto, there are no actions, suits or proceedings pending or, to the best of
the Borrower’s or either Guarantor’s knowledge, threatened against or affecting
the Borrower or either Guarantor before any court or tribunal or before any
governmental or administrative body or agency (a) with respect to this
Agreement or the other Loan Documents or the transactions contemplated hereby
or thereby or (b) in which the amount involved is $50,000 or more and not
covered by insurance in excess of a deductible of not more than $50,000 or in
which injunctive or similar relief is sought. 
Neither the Borrower nor either Guarantor is in default with respect to
any applicable statute, rule, writ, injunction, decree, order or regulation of
any governmental authority having jurisdiction over the Borrower or either
Guarantor where any such non-compliance, individually or the aggregate could
reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.5.  GOVERNMENTAL
APPROVALS.  No order,
permission, consent, approval, license, authorization, registration or validation
of, or notice to or filing with, or exemption by, any governmental agency,
commission, board or public authority is required to authorize, or is presently
required in connection with, the execution, delivery and performance of 

 

4

 

this
Agreement and the other Loan Documents or the taking of any action hereby or
thereby contemplated.

 

SECTION 5.6.  OWNERSHIP OF
PROPERTY; NO OTHER LIENS.  The Borrower
has a valid leasehold interest in, all its real property, and good title to all
its other property and none of such property is subject to any Lien except for
the Permitted Liens.

 

SECTION 5.7.  FINANCIAL
STATEMENTS.  The Borrower’s
and Holdings’ audited or unaudited financial statements furnished to the Bank
prior to the date of this Agreement was prepared in accordance with GAAP,
consistently applied, subject to usual and customary year-end audit
adjustments.  Both Borrower and Holdings
are solvent and paying its debts generally as such debts become due and, except
as otherwise disclosed to the Lender in writing prior to or as of the date of
this Agreement, neither Borrower nor Holdings has significant liabilities,
contingent or otherwise, including liabilities for taxes or any unusual forward
or long-term commitments which are not (a) disclosed by or reserved against in
the financial statements referred to above or in the notes thereto or (b) otherwise
disclosed in writing to the Lender, and there are no unrealized or anticipated
losses from any unfavorable commitments of the Borrower which may materially
adversely affect the operations, business, property or assets or condition
(financial or otherwise) of the Borrower or Holdings.  Such financial statements (including in each
case the related schedules and notes) fairly present the financial condition of
the Borrower and Holdings as of the date of such balance sheet and the results
of their operations for the period covered by such statement of earnings and
have been prepared in accordance with GAAP, consistently applied throughout the
periods involved.  Since the date of the
most recent financial statements delivered by the Borrower and Holdings to the
Lender, there has been no Material Adverse Change in the operations, business,
property or assets of, or in the condition (financial or otherwise) of the
Borrower or Holdings.

 

SECTION 5.8.  COMPLIANCE WITH
LAWS.  (a)  Each of Holdings and the Borrower are in compliance with
the requirements of all federal, state and local laws, rules and regulations
applicable to or pertaining to their property or business operations
(including, without limitation, the Occupational Safety and Health Act of 1970,
the Americans with Disabilities Act of 1990, and laws and regulations
establishing quality criteria and standards for air, water, land and toxic or
hazardous wastes and substances), where any such non-compliance, individually
or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

 

(b)           Without
limiting the representations and warranties set forth in Section 5.8(a) above,
except for such matters, individually or in the aggregate, which could not
reasonably be expected to result in a Material Adverse Effect, the Borrower and
Holdings represent and warrant that:  (i)
each of the Borrower and Holdings complies in all material respects with all
applicable Environmental Laws; (ii) each of the Borrower and Holdings has
obtained all governmental approvals required for their operations and the
Premises by any applicable Environmental Law; (iii) neither the Borrower nor
Holdings has, and neither Holdings nor the Borrower has knowledge of any other
Person who has, caused any Release, threatened Release or disposal of any
Hazardous Material at, on, about, or off the Premises in any material quantity
and, to the knowledge of Holdings and the Borrower, none of the Premises are
adversely affected by any Release, threatened Release or disposal of a
Hazardous Material originating or emanating from any other property; (iv) No
Premises contain and have contained any: 
(1) underground 

 

5

 

storage
tank, (2) material amounts of asbestos containing building material, (3) landfills
or dumps, (4) hazardous waste management facility as defined pursuant to RCRA
or any comparable state law, or (5) site on or nominated for the National
Priority List promulgated pursuant to CERCLA or any state remedial priority
list promulgated or published pursuant to any comparable state law; (v) neither
the Borrower nor Holdings have used a material quantity of any Hazardous
Material and have conducted no Hazardous Material Activity at the Premises; (vi)
neither the Borrower nor Holdings have any material liability for response or
corrective action, natural resource damage or other harm pursuant to CERCLA,
RCRA or any comparable state law; (vii) neither the Borrower nor Holdings is
subject to, have no notice or knowledge of and are not required to give any
notice of any Environmental Claim involving the Borrower or Holdings or the
Premises, and there are no conditions or occurrences at the Premises which
could reasonably be anticipated to form the basis for an Environmental Claim
against the Borrower or Holdings or the Premises; (viii) no Premises are
subject to any, and neither Holdings nor the Borrower has knowledge of any
imminent restriction on the ownership, occupancy, use or transferability of the
Premises in connection with any (1) Environmental Law, or (2) Release,
threatened Release or disposal of a Hazardous Material; and (ix) there are no
conditions or circumstances on the Premises which pose an unreasonable risk to
the environment or the health or safety of Persons.

 

SECTION 5.9.  TAXES,
ASSESSMENTS, FEES.  Borrower and
each Guarantor has filed or caused to be filed all tax returns which to the
knowledge of the Borrower and each Guarantor are required to be filed, and has
paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes,
assessments, fees or other charges imposed on it or any of its property by any
governmental authority (other than those the amount or validity of which is
currently being contested in good faith by appropriate proceedings and if
adversely determined could not have a Material Adverse Effect); and no tax
liens or liens with respect to any assessments, fees or other charges have been
filed (other than those the amount or validity of which is currently being
contested in good faith by appropriate proceedings and if adversely determined
could not have a Material Adverse Effect and which are stayed or otherwise made
unenforceable during the pendency of any such contest) and, to the knowledge of
the Borrower or either Guarantor, no claims are being asserted (other than
those the amount or validity of which is currently being contested in good
faith by appropriate proceedings and if adversely determined could not have a
Material Adverse Effect and which are stayed or otherwise made unenforceable
during the pendency of any such contest) with respect to any such taxes,
assessments, fees or other charges.

 

SECTION 5.10.  ERISA.  Except as heretofore
disclosed to the Lender in writing, no Termination Event has occurred and is
continuing with respect to any Plan. 
Neither the Borrower nor Holdings, or an Affiliate of the Borrower or
Holdings has incurred (or to the best knowledge of the Borrower and any
Affiliate, is likely to incur) any material accumulated funding deficiency
within the meaning of ERISA or any laws of similar import; incurred any material
liability for any “prohibited transaction” (as defined in ERISA and the Code)
or otherwise under ERISA or the Code; or incurred or is likely to incur any
material liability under Title IV of ERISA to the PBGC or any plan participant,
all in connection with any Plan.  No “Reportable
Event” (as defined in Section 4043 of ERISA) has occurred with respect to any
of the Plans and neither the Borrower nor Holdings, nor any Affiliate of the
Borrower or Holdings 

 

6

 

has
incurred any liability on account of a partial or complete withdrawal from any
multiemployer plan as defined in section 4001(a)(3) of ERISA.  The present value of all vested benefits
under each Plan (other than a multiemployer plan) subject to Title IV of ERISA
(based on those assumptions used to fund the Plan) did not, as of the date
hereof, exceed the value of the assets of the Plan allocable to such vested
benefits.

 

SECTION 5.11.  INVESTMENT
COMPANY ACT; SECURITIES ACT.  Neither
Borrower nor Holdings is not nor is controlled by an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.

 

SECTION 5.12.  USE OF PROCEEDS.  The proceeds of the
Revolving Loans will be used for working capital purposes and no part of any
Loan will be used (a) for any purpose for which a broker could not properly
arrange or extend credit in compliance with Federal Reserve Regulation T or (b)
to purchase or carry any “margin stock” (as defined in Federal Reserve
Regulation U) or to extend credit to others for such purpose.  The Borrowers are not engaged in, nor has as
one of its important activities, the business of extending credit for the
purpose of purchasing or carrying any margin stock.

 

SECTION 5.13.  OBLIGATIONS AS
SENIOR INDEBTEDNESS.  The obligations
of the Borrower and each Guarantor under this Agreement and the other Loan
Documents will constitute “senior indebtedness” as that or any similar term is
or may be defined in any instrument or agreement evidencing or relating to any
subordinated debt or obligations of the Borrowers now or hereafter existing,
and the Lender will be entitled to the benefits of any such subordination
provisions.

 

SECTION 5.14.  ACCURACY OF
INFORMATION.  To the best
knowledge of the Borrower and each Guarantor, all information supplied by the
Borrower and each Guarantor to the Lender relating to the Borrower and each
Guarantor was true, complete and accurate when made in all material respects.

 

SECTION 5.15.  ACCURACY OF
REPRESENTATIONS AND WARRANTIES.  To the best
knowledge of the Borrower, the representations and warranties of the Borrower
contained in each other document delivered in connection with this Agreement
are true and correct in all material respects.

 

SECTION 5.16.  SUBSIDIARIES.  The Borrower has no
Subsidiaries, other than Subsidiaries for which the Lender has provided its
prior written consent.  Borrower is the
only Subsidiary of Holdings.

 

SECTION 5.17.  COLLATERAL.  The Security Agreements
create a valid and continuing lien on and, to the extent provided herein or
therein, perfected security interest in the Collateral referred to in such Loan
Document in favor of the Lender, prior to all other Liens, claims and rights of
all other Persons, and is enforceable as such as against all other Persons,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights
generally or by general equity principles (whether in an action at law or in
equity).

 

7

 

SECTION 6.  COVENANTS

 

Until
all obligations of the Borrower and each Guarantor hereunder and under the Note
is paid or fulfilled in full, the Borrower and each Guarantor agrees that it
shall comply with the following covenants, as applicable, unless the Lender
consents otherwise in writing:

 

SECTION 6.1.  CORPORATE
EXISTENCE, STRUCTURE AND NAME.  The Borrower and Holdings shall preserve and
maintain its existence as a corporation and its rights, franchises, licenses and
privileges, and will not liquidate, dissolve or sell, lease, transfer or
otherwise dispose of any substantial part of its assets.  Neither Borrower nor Holdings shall merge
into or consolidate into any other partnership, corporation or other legal
entity.  Neither the Borrower nor
Holdings shall change its name unless prior thereto it shall have executed and
delivered to the Lender such Uniform Commercial Code financing statements and
other documents which the Lender may reasonably require (including amendments
or restatements of this Agreement, the Revolving Note and the Security
Documents) reflecting such name change.

 

SECTION 6.2.  REPORTS,
CERTIFICATES AND OTHER INFORMATION.  The Borrower and each Guarantor shall furnish
or cause to be transmitted to the Lender, as applicable:

 

(a)           Audit Report. 
Within 135 days after the end of each fiscal year of the Borrower and
Holdings, a copy of an annual audit report of the Borrower, prepared in
conformity with generally accepted accounting principles applied on a basis
consistent with prior financial statements submitted to the Lender, and
prepared and certified by independent certified public accountants of
recognized standing satisfactory to the Lender and accompanied by a statement
that such report is without significant qualification.

 

(b)           Tax Returns. 
Within 15 days after the filing of 
its/his tax return, a copy of such tax return filed with the Internal
Revenue Service.

 

(c)           Quarterly Reports. 
Within 45 days after the end of each fiscal quarter of each of Borrower
and Holdings, a copy of its unaudited balance sheet and income statement.

 

(d)           Certificate of No Default.  Contemporaneously with the furnishing of a
copy of each preliminary annual and quarterly report provided for in this
Section, a certificate dated the date of such annual and quarterly report and
signed by an authorized of the Borrower and Holdings, to the effect that no
Event of Default or Unmatured Event of Default has occurred and is continuing,
or, if there is any such event, describing it and the steps, if any, being
taken to cure it.

 

(e)           Notice of Default and Litigation.  Immediately upon learning of the occurrence
of any of the following, written notice describing the same and the steps being
taken by the Borrower or either Guarantor in respect thereof:  (i) the occurrence of an Event of Default or
any Unmatured Event of Default; or (ii) the institution of, or any adverse
determination in, any litigation, arbitration or governmental proceeding which
involves amounts of  $50,000 or more and not covered by
insurance in excess of a deductible of not more than $50,000 or in which
injunctive or similar relief is sought against the 

 

8

 

Borrower or Holdings or any
assets of the Borrower or Holdings, or which shall threaten to have a Material
Adverse Effect on the future operations of the Borrower or Holdings.

 

(f)            SEC Reporting. 
Immediately upon filing, Holdings shall cause all information and
reports filed with the United States Securities and Exchange Commission and/or
any other governmental authority to be true and accurate and not misleading in
any material respect, and Holdings shall comply with all applicable securities
laws and rules.

 

(g)           Other Information. From time to time such other information,
financial or otherwise, concerning the Borrower or either Guarantor as the
Lender may reasonably request.

 

SECTION 6.3.  INSPECTION.  The Borrower and Holdings shall permit the
Lender and its agents to conduct up to two field audits of the Borrower and/or
Holdings during any twelve-month period, in the course of which field audits
the Lender and its agents may at any time during normal business hours inspect
the Borrower’s or Holdings’ properties and assets and inspect and make copies
of its books and records, subject to reasonable restrictions to protect the
confidentiality of the Borrower’s and Holdings’ confidential and proprietary
information. Such field audits shall be conducted at the Borrower’s and
Holdings’ expense.

 

SECTION 6.4.  INDEBTEDNESS,
LIENS AND TAXES.  Neither the
Borrower nor Holdings shall:

 

(a)           Indebtedness. 
Incur or permit to exist any Indebtedness except: (i) Indebtedness to
the Lender; (ii) Indebtedness secured by Permitted Liens; and (iii) other
Indebtedness approved in writing by the Lender.

 

(b)           Taxes.  Fail
to pay and discharge all taxes, assessments, and governmental charges or levies
imposed upon it, upon its income or profits, or upon any properties belonging
to it, prior to the date on which penalties attach thereto, and all lawful
claims for labor, materials and supplies when due, except that no such tax,
assessment, charge, levy, or claim need be paid which is being contested in
good faith by appropriate proceedings and as to which adequate reserves shall
have been established, and as to which no foreclosure, distraint, sale, or
similar proceedings have commenced.

 

(c)           Keep Well Agreements.  Assume, guarantee, endorse, or otherwise
become or be responsible in any manner (whether by agreement to purchase any
obligations, stock, assets, goods, or services, or to supply or advance any
funds, assets, goods or services, or otherwise) with respect to the obligation
of any other person or entity, except the endorsement of negotiable instruments
for deposit or collection in the ordinary course of business.

 

SECTION 6.5.  CERTAIN
DISTRIBUTIONS.  Neither the
Borrower nor Holdings shall declare or make any distribution, dividend, capital
repayment or similar payment to any shareholder of  Holdings or Borrower at any time.

 

9

 

SECTION 6.6.    MAINTENANCE OF
PROPERTIES.  Each of the
Borrower and Holdings shall maintain, or cause to be maintained, in good
repair, working order and condition, all of its properties (whether owned or
held under lease), and from time to time make or cause to be made all needed
and appropriate repairs, renewals, replacements, additions, betterments and
improvements thereto, so that the practice carried on in connection therewith
may be properly and advantageously conducted at all times.

 

SECTION 6.7.  INSURANCE.  The Borrower and Holdings shall, and cause
the Guarantor to maintain fire and other risk insurance, public liability
insurance and other such insurance as Lender may require with respect to
Borrower’s and Guarantor’s properties and operations, in form, amounts,
coverages and with insurance companies reasonably acceptable to Lender.  Each of Borrower and Holdings, upon request
of Lender, will deliver to Lender from time to time the policies or certificates
of insurance in form reasonably satisfactory to Lender, including stipulations
that coverages not be cancelled or diminished without at least thirty (30) days
prior written notice to Lender.  Each
insurance policy shall also include an endorsement providing that coverage in
favor of Lender will not be impaired in any way by any act, omission or default
of Borrower or Guarantor or any other person. 
In connection with all policies covering assets in which Lender holds or
is offered a security interest, Borrower will provide, and cause the Guarantor
to provide, the Lender with such lender’s loss payable or other endorsements as
the Lender may require.

 

SECTION 6.8.  USE OF PROCEEDS.  The Borrower shall not use or permit any
proceeds of the Loans to be used, either directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of “purchasing or carrying
any margin stock” within the meaning of Regulations V or X of the Board of
Governors of the Federal Reserve System, as amended from time to time. If
requested by the Lender, the Borrower will furnish to the Lender a statement in
conformity with the requirements of Federal Reserve Form V-I to the foregoing
effect. No part of the proceeds of the Loans will be used for any purpose which
violates or is inconsistent with the provisions of Regulation V or X of the
Board of Governors.

 

SECTION 6.9.  COMPLIANCE WITH
LAWS.  (a) Holdings
and the Borrower shall comply in all respects with the requirements of all
federal, state, and local laws, rules, regulations, ordinances and orders
applicable to or pertaining to its personal property or business operations,
where any such non-compliance, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect or result in a Lien
upon any of its property.

 

(b)           Without limiting the agreements set
forth in Section 6.9(a) above, each of Holdings and the Borrower shall, at all
times, do the following to the extent the failure to do so, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect:  (i) comply in all material
respects with, and maintain each of the Premises in compliance in all material
respects with, all applicable Environmental Laws; (ii) require that each tenant
and subtenant, if any, of any of the Premises or any part thereof comply in all
material respects with all applicable Environmental Laws; (iii) obtain and
maintain in full force and effect all material governmental approvals required
by any applicable Environmental Law for operations at each of the Premises; (iv)
cure any material violation by it or at any of the Premises of applicable
Environmental Laws; (v) not allow the presence or operation at any of the
Premises of any (1) landfill or dump or (2) hazardous waste management facility
or solid waste disposal facility as defined pursuant to 

 

10

 

RCRA
or any comparable state law; (vi) not manufacture, use, generate, transport,
treat, store, release, dispose or handle any Hazardous Material at any of the
Premises except in the ordinary course of its business and in de minimis
amounts; (vii) within 10 Business Days notify the Lender in writing of and
provide any reasonably requested documents upon learning of any of the
following in connection with the Borrower or Holdings or any of the Premises: (1)
any material liability for response or corrective action, natural resource
damage or other harm pursuant to CERCLA, RCRA or any comparable state law; (2) any
material Environmental Claim; (3) any material violation of an Environmental
Law or material Release, threatened Release or disposal of a Hazardous
Material; (4) any restriction on the ownership, occupancy, use or
transferability arising pursuant to any (y) Release, threatened Release or
disposal of a Hazardous Material or (z) Environmental Law; or (5) any
environmental, natural resource, health or safety condition, which could
reasonably be expected to have a Material Adverse Effect; (viii) conduct at its
expense any investigation, study, sampling, testing, abatement, cleanup,
removal, remediation or other response action necessary to remove, remediate,
clean up or abate any material Release, threatened Release or disposal of a
Hazardous Material as required by any applicable Environmental Law, (ix) abide
by and observe any restrictions on the use of the Premises imposed by any
governmental authority as set forth in a deed or other instrument affecting the
Borrower’s or any Subsidiary’s interest therein; (x) promptly provide or otherwise
make available to the Lender any reasonably requested environmental record
concerning the Premises which the Borrower or any Subsidiary possesses or can
reasonably obtain; and (xi) perform, satisfy, and implement any operation or
maintenance actions required by any governmental authority or Environmental
Law, or included in any “no further action” letter or covenant not to sue
issued by any governmental authority under any Environmental Law.

 

SECTION 6.10.  FINANCING
STATEMENTS AND OTHER ACTIONS.  Borrower and Holdings each will execute and
deliver to the Lender all financing statements, amendments thereto,
continuation statements in respect thereof and other documents and take such
other actions (and if so requested by the Lender, use its reasonable efforts to
obtain landlord waivers or other applicable consents) as are from time to time
reasonably requested by the Lender in order to perfect and to maintain and
protect a first priority perfected security interest in the Collateral or to
enable the Lender to exercise and enforce its rights and remedies hereunder
with respect to such Collateral.  To the
extent permitted by applicable law, each of the Borrower and Guarantor hereby
authorizes the Lender to file financing or continuation statements and amendments
thereto disclosing the security interest granted to the Lender under the
Security Agreements.  Borrower and
Holdings each agrees that a carbon, photographic, photostatic, or other
reproduction of the Security Agreements or of a financing statement is sufficient
as a financing statement.  The Borrower
and Holdings each will pay all fees and expenses, including without limitation
all recording and filing fees and expenses, in connection therewith.

 

SECTION 7.  CONDITIONS OF EFFECTIVENESS

 

The
effectiveness of this Agreement is subject to the conditions precedent that the
Lender shall have received:

 

SECTION 7.1.  DOCUMENTATION.  The effectiveness of this Agreement is
subject to the conditions precedent that the Lender shall have received:

 

11

 

(a)           This Agreement, duly executed by the Borrower;

 

(b)           The Revolving Note, in the form attached hereto as Exhibit
A, duly executed by the Borrower

 

(c)           The Guaranties executed by Flavin and Holdings;

 

(d)           The Security Agreements, duly executed by the Borrower and
Holdings;

 

(e)           The Pledge Agreement executed by Holdings;

 

(f)            The Landlord Waiver duly executed by BioStart Properties
LLC and Borrower;

 

(g)           Form U-1 executed by the Borrower;

 

(h)           Stock Power executed in blank by Holdings;

 

(i)            Evidence of insurance required to be maintained under the
Loan Documents, naming the Lender as loss payee;

 

(j)            Lender shall have received copies of the Borrower’s and
Holdings’ articles of incorporation and bylaws (or comparable organizational
documents) and any amendments thereto, certified in each instance by its
Secretary or Assistant Secretary;

 

(k)           the Lender shall have received copies of resolutions of
Borrower’s and Holding’s authorizing the execution, delivery and performance of
this Agreement and the other Loan Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby, together with
specimen signatures of the persons authorized to execute such documents on
Borrower’s and Holdings’ behalf, all certified in each instance by its
Secretary or Assistant Secretary;

 

(l)            the Lender shall have received copies of the certificates
of good standing for each of the Borrower and Holdings (dated no earlier than
30 days prior to the Closing Date) from the office of the secretary of the
state of its incorporation or organization and of each state in which it is
qualified to do business as a foreign corporation or organization;

 

(m)          A Certificate of No Default certifying the absence of
defaults by the Borrower and Holdings under the Credit Agreement, executed and
certified by the an authorized officer of the Borrower and Holdings;

 

(n)           Such other documents as the Lender may reasonably request.

 

SECTION 7.2.  DELIVERY OF
WARRANTS

 

Within
(i) thirty (30) days of the date of this Agreement (the “First Warrant Delivery
Date”), and (ii) on the date that is one (1) year from the date of this
Agreement (the “Second Warrant Delivery Date” and together the “Warrant
Delivery Dates”) Holdings shall deliver to 

 

12

 

Lender
in the name of The Leaders Group, Inc. a Warrant for 500,000 shares of the
Borrower at market value.  The Warrants
shall be in a form substantially similar to the Warrant attached hereto as Exhibit
A.

 

SECTION 7.3.  ABBOTT LICENSE.  In the sixty (60) days
following the Effective Date of this Agreement, Holdings will use reasonable
efforts to obtain the consent of Abbott Laboratories to the Collateral
Assignment of Abbott License Agreement and will provide all material status
updates during that time to Lender as well as any written correspondence sent
by Holdings to Abbott Laboratories or received by Holdings from Abbott
Laboratories with respect to such consent.

 

SECTION 7.4.  REPRESENTATIONS AND WARRANTIES; NO DEFAULT.

 

(a)           Representations and Warranties.  At the date of each Loan, the Borrower’s and
each Guarantors’ representations and warranties set forth in Section 4
shall be true and correct in all material respects as at such date with the
same effect as though those representations and warranties had been made on
that date (except to the extent stated to relate to a specific earlier date, in
which case such representations and warranties shall be true and correct in all
material respects as of such earlier date).

 

(b)           No Default. 
At the date of each Loan, and immediately after giving effect to such
Loan, the Borrower shall be in compliance with all the terms and provisions set
forth herein on its part to be observed or performed, and no Event of Default
or Unmatured Event of Default shall have occurred and be continuing at the time
of such Loan, or would result from the making of such Loan.

 

Each
borrowing hereunder shall be deemed a representation and warranty by the
Borrower that the statements in paragraphs (a) and (b) of this Section 7.4
are true and correct.

 

SECTION 8.  DEFAULT

 

SECTION 8.1.  EVENTS OF
DEFAULT.  Each of the
following occurrences is hereby defined as an “Event of Default”:

 

(a)           Nonpayment. 
The Borrower shall fail to make any payment of principal, interest, or
other amounts payable hereunder when and as due and such default continues for
3 business days, including failure to make the Principal Reduction; or

 

(b)           Cross-Default. 
There shall occur any default, event of default or failure to comply, or
any event which would become such with notice or the passage of time or both,
or any similar event, under the terms of any evidence of Indebtedness in excess
of $50,000 issued or assumed or entered into by the Borrower or either
Guarantor or under the terms of any indenture or instrument (including without
limitation the Security Agreements or the Guaranties) in excess of $50,000
under which any such evidence of Indebtedness is issued, assumed, secured or
guaranteed in excess of $50,000, and such event shall continue beyond any
applicable period of grace; or

 

13

 

(c)           Warranties. 
Any representation, warranty, schedule, certificate, financial
statement, report, notice or other writing furnished by or on behalf of the Borrower
or either Guarantor to the Lender is false or misleading in any material
respect on the date as of which the facts therein set forth are stated or
certified; or

 

(d)           Change in Control. 
The Chief Executive Officer of Holdings or Borrower shall voluntarily
resign or be terminated prior to the Maturity Date.

 

(e)           Dissolution or Merger of Borrower or Holdings.  Borrower or Holdings dissolves the
corporation or merges with another corporation or takes any such action
prohibited by Section 6.1.

 

(f)            Litigation. 
Any person shall institute, or any adverse determination in, any
litigation, arbitration or governmental proceeding which involves amounts of
$50,000 or more and not covered by insurance in excess of a deductible of not
more than $50,000 or in which injunctive or similar relief is sought against
the Borrower or Holdings or any assets of the Borrower or Holdings, or which
shall threaten to have a Material Adverse Effect on the future operations of
the Borrower or Holdings; or

 

(g)           Failure to Deliver Warrants.  Holdings shall fail to deliver Warrants to
Lender on the Warrant Delivery Dates.

 

(h)           Noncompliance with this Agreement.  The Borrower or either Guarantor shall fail
to comply with any provision of this Agreement or any other Loan Document which
failure does not otherwise constitute an Event of Default, and such failure
shall continue for thirty (30) days after notice thereof to the Borrower or
either Guarantor by the Lender or any other holder of the Revolving Note; or

 

(i)            Default of Other Agreements.  Any default or event of default shall occur
under the Abbott License and such default or event of default continues for
thirty (30) days by Borrower or either Guarantor; or

 

(j)            ERISA.  Any
reportable event shall occur under the Employee Retirement Income Security Act
of 1974, as amended, in respect of any employee benefit plan maintained for
employees of the Borrower or Holdings and such default continues for 10 days;
or

 

(k)           Bankruptcy. 
Any bankruptcy, insolvency, reorganization, arrangement, readjustment,
liquidation, dissolution, or similar proceeding, domestic or foreign, is
instituted by or against the Borrower or either Guarantor, or the Borrower or
either Guarantor shall take any step toward, or to authorize, such a
proceeding; or

 

(l)            Insolvency. 
The Borrower or either Guarantor shall become insolvent, generally shall
fail or be unable to pay its debts as they mature, shall admit in writing its
inability to pay its debts as they mature, shall make a general assignment for
the benefit of its creditors, shall enter into any composition or similar
agreement, or shall suspend the transaction of all or a substantial portion of
its usual business or practice; or

 

14

 

(m)          Security Agreements. 
Any Security Agreement shall cease to be in full force and effect or the
Borrower or either Guarantor shall so state in writing; or the Lender shall
cease to have a first priority, perfected security interest in all or any
portion of the collateral subject or purported to be subject to any Security
Agreement.

 

SECTION 8.2.  REMEDIES.  Upon the occurrence of any Event of Default
set forth in subsections (a)-(k), or (n) of Section 8.1 and during the
continuance thereof, the Lender or any other holder of a Revolving Note may
declare the Revolving Note and any other amounts owed to the Lender to be
immediately due and payable, whereupon the Revolving Note and any other amounts
owed to the Lender shall forthwith become due and payable.  Upon the occurrence of any Event of Default
set forth in subsections (l)-(m) of Section 8.1, the Revolving Note and
any other amounts owed to the Lender shall be immediately and automatically due
and payable without action of any kind on the part of the Lender or any other
holder of the Revolving Note.  Upon the
occurrence of any Event of Default, the Commitment shall immediately and
automatically terminate without action of any kind on the part of the Lender or
any other holder of the Revolving Note. 
The Borrower and each Guarantor expressly waives presentment, demand,
notice or protest of any kind in connection herewith.  The Lender shall promptly give the Borrower
and each Guarantor notice of any such declaration, but failure to do so shall
not impair the effect of such declaration. 
No delay or omission on the part of the Lender or any holder of the
Revolving Note in exercising any power or right hereunder or under the
Revolving Note shall impair such right or power or be construed to be a waiver
of any Event of Default or any acquiescence therein, nor shall any single or
partial exercise of any power or right hereunder preclude other or further
exercise thereof, or the exercise of any other power or right.

 

SECTION 9.  MISCELLANEOUS

 

SECTION 9.1.  CERTAIN
DEFINITIONS.  As used herein:

 

The
term “Abbott License” shall mean that certain license agreement by and
between Abbott Laboratories and Holdings dated as of December 13, 2004, as
amended and modified from time to time.

 

The
term “Affiliate” means any Person (whether or not incorporated) which is
a member of a group of which any Borrower or Holdings is a member and which is
under common control within the meaning of the regulations under Section 414 of
the Internal Revenue Code of 1986, as amended.

 

The
term “Code” shall mean the United States Internal Revenue Code of 1986,
as the same may be amended from time to time.

 

The
term “Collateral” shall have the meaning assigned thereto in Section 4.2
herein.

 

The
term “Collateral Assignment of Abbott License Agreement” shall mean that
certain Collateral Assignment of the Abbott License Agreement executed by
Holdings in favor of Lender dated as of even date herewith.

 

15

 

The
term “Commitment” means, from the Effective Date until June 30, 2010, an
amount not to exceed Eight Million Five Hundred Thousand Dollars ($8,500,000),
and from October 1, 2010 to and including April 1, 2011, an amount not to
exceed Seven Million Dollars ($7,000,000), and from thereafter until the
Maturity Date, an amount not to exceed Six Million Dollars ($6,000,000).

 

The
term “Environmental Claim” means any investigation, notice, violation,
demand, allegation, action, suit, injunction, judgment, order, consent decree,
penalty, fine, lien, proceeding or claim (whether administrative, judicial or
private in nature) arising (a) pursuant to, or in connection with an actual or
alleged violation of, any Environmental Law, (b) in connection with any
Hazardous Material, (c) from any abatement, removal, remedial, corrective or
response action in connection with a Hazardous Material, Environmental Law or
order of a governmental authority, or (d) from any actual or alleged damage,
injury, threat or harm to health, safety, natural resources or the environment.

 

The
term “Environmental Law” means any current or future legal requirement
pertaining to (a) the protection of health, safety and the indoor or outdoor
environment, (b) the conservation, management or use of natural resources and
wildlife, (c) the protection or use of surface water or groundwater, (d) the
management, manufacture, possession, presence, use, generation, transportation,
treatment, storage, disposal, Release, threatened Release, abatement, removal,
remediation or handling of, or exposure to, any Hazardous Material, or (e) pollution
(including any Release to air, land, surface water or groundwater), and any
amendment, rule, regulation, order or directive issued thereunder.

 

The
term “Event of Default” shall mean any of the events set forth in Section
8.1 herein.

 

The
term “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended from time to time.

 

The
term “Flavin” means Michael Flavin, an individual residing at 1440 Davey
Road, Woodridge, Illinois 60517 and a Guarantor of the Obligations of the Borrower
under the Notes and the Loan Agreements.

 

The
term “GAAP” means generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board (or
agencies with similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the circumstances as of
the date of determination.

 

The
term “Guaranties” shall have the meaning set forth in Section 4.1.

 

The
term “Guarantors” shall have the meaning set forth in the recitals.

 

The
term “Hazardous Material” means any substance, chemical, compound,
product, solid, gas, liquid, waste, byproduct, pollutant, contaminant or
material which is hazardous or 

 

16

 

toxic,
and includes, without limitation, (a) asbestos, polychlorinated biphenyls and
petroleum (including crude oil or any fraction thereof), and (b) any material
classified or regulated as “hazardous” or “toxic” or words of like import
pursuant to an Environmental Law.

 

The
term “Hazardous Material Activity” means any activity, event or
occurrence involving a Hazardous Material, including, without limitation, the
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, Release, threatened Release, abatement, removal,
remediation, handling of or corrective or response action to any Hazardous
Material.

 

The
term “Holdings” shall mean Advanced Life Sciences Holdings, Inc. and a
Guarantor of the Obligations of the Borrower under the Notes and the Loan
Agreements.

 

The
term “Indebtedness” means, without duplication shall mean, with respect
to any Person at any date, (a) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of business and
payable in accordance with customary practices) or which is evidenced by a
note, bond, debenture or similar instrument, 
(b) all obligations of such Person under Financing Leases, (c) all
obligations of such Person in respect of any letters of credit and acceptances
issued or created for the account of such Person, (d) all obligations of such
Person under any guarantee made by such Person in respect of any indebtedness, (e)
all payment obligations, if any, of such Person under interest rate protection
agreements (including without limitation interest rate swaps, hedges and
similar agreements), and any currency swaps and hedges and similar agreements,
and (f) all liabilities secured by any lien on any property owned by such
Person even though such Person has not assumed or otherwise become liable for
the payment thereof.

 

The
term “Intellectual Property Security Agreement” shall mean that certain
Amended and Restated Intellectual Property Security Agreement dated as of even
date herewith executed by Borrower in favor of Lender and amending and
restating the Intellectual Property Security Agreement dated as of October 23,
2008.

 

The
term “Landlord Waiver” shall mean that certain landlord waiver by and
between Borrower, Lender and BioStart Property Group, LLC in form and substance
acceptable to the Lender dated as of even date herewith with respect to the
Leased Property.

 

The
term “Leased Property” shall mean the property leased by Borrower
pursuant to the Lease from BioStart Property Group, LLC, as landlord located at
1440 Davey Road, Woodridge, Illinois 60517.

 

The
term “Lien” means any mortgage, lien, security interest, pledge, charge
or encumbrance of any kind in respect of any property.

 

The
term “Loan” means a Revolving Loan.

 

17

 

The
term “Loan Documents” means, together, this Agreement, the Revolving
Note, the Security Agreements, the Guaranties, the Pledge Agreement, the
Landlord Waiver and the Intellectual Property Security Agreement.

 

The
term “Material Adverse Change” means a change in the financial condition
of Holdings or the Borrower, except those occurring in the ordinary course of
business, any of which individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect.

 

The
term “Material Adverse Effect” means (a) a material adverse change in,
or material adverse effect upon the operations or business of Borrower or
either Guarantor, (b) a material impairment of the ability of the Borrower or
either Guarantor to perform its  obligations
under any Loan Document or (c) a material adverse effect upon (i) the legality,
validity, binding effect or enforceability against Borrower or either Guarantor
of any Loan Document or the rights and remedies of the Lender thereunder or
(ii) the perfection or priority of any Lien granted under any Security
Document.

 

The
term “Note” means the Revolving Note; and “Notes” means the
Revolving Note and the Term Notes collectively.

 

The
term “Obligations” means all obligations of the Borrower and each
Guarantor to pay principal and interest on the Revolving Loan, all fees and
charges payable hereunder, and all other payment obligations of the Borrower
arising under or in relation to any Loan Document, in each case whether now
existing or hereafter arising, due or to become due, direct or indirect,
absolute or contingent, and howsoever evidenced, held or acquired.

 

The
term “Permitted Liens” means (i) Liens imposed by law for taxes that are
not yet due or are being contested; (ii) carriers’, warehousemen’s, mechanics’,
materialmen’s, repairmen’s and other like Liens imposed by law arising in the
liens arising in the ordinary course of business and securing obligations that
are not overdue by more than thirty days or are being contested; (iii) pledges
and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations; judgment liens in respect of judgments that do not constitute an
Event of Default under Section 8.1(f); (iv) easements, zoning restrictions,
rights of way, encroachments, covenants, restrictions, utility easements,
mineral rights, rights of the public and similar encumbrances on real property
imposed by law or arising in the ordinary course of business that do not secure
any monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of the business of the
Borrower; provided, however, that the term “Permitted Liens”
shall not include any Lien securing Indebtedness.

 

The
term “Person” means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization or any other
entity or organization, including a government or agency or political
subdivision thereof.

 

The
term “Plan” means any “employee benefit plan” as defined in Section 3(3)
of ERISA (including a plan defined as a Multiemployer Plan in Section 3(37) of
ERISA) established or 

 

18

 

maintained,
or to which contributions have been made, by any Borrower or any Affiliate for
their respective employees.

 

The
term “Pledge Agreement” means that certain Amended and Restated Pledge
Agreement executed by Holdings and dated as of the date hereof, which amends
and restates that certain Commercial Pledge Agreement dated as of October 23,
2008, as further amended by that certain Amendment to Commercial Pledge
Agreement dated as of November 10, 2008.

 

The
term “Premises” means the real property owned or leased by the Borrower
or any Holdings, including without limitation the real property and
improvements thereon owned by the Borrower or Holdings subject to the Security
Documents.

 

The
term “Release” means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, migration, dumping, or
disposing into the indoor or outdoor environment, including, without
limitation, the abandonment or discarding of barrels, drums, containers, tanks
or other receptacles containing or previously containing any Hazardous
Material.

 

The
term “Reportable Event” shall mean any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.

 

The
term “Security Agreements” means the Second Amended and Restated
Security Agreement by the Borrower in favor of the Lender and the Amended and
Restated Security Agreement dated as of even date herewith by Holdings in favor
of Lender, each as they may from time to time be amended and restated and dated
as of even date herewith.

 

The
term “Security Documents” means the Security Agreements, the
Intellectual Property Security Agreement, the Collateral Assignment of the
Abbott License and the Pledge Agreement.

 

The
term “SEDA” means that certain Standby Equity Distribution Agreement
dated as of September 29, 2008 by and between Holdings and YA Global
Investments, L.P.

 

The
term “Subsidiaries” means, as to any Person, (a) a corporation of which
shares of stock having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person or (b) a
partnership, association or other enterprise of which more than 50% of the
interest in capital and profits is at the time owned, directly or indirectly
through one or more intermediaries, or both, by such Person.

 

The
term “Termination Event” means either (i) a Reportable Event (other than
a Reportable Event not subject to the provision for 30-day notice to the
Pension Benefit Guaranty corporation under such regulations), or (ii) the
withdrawal by any Borrower or any of its Affiliates from a Plan during a plan
year in which it was a substantial employer or (iii) the filing of a notice of
intent to terminate a Plan or the treatment of a Plan amendment as termination 

 

19

 

under
Section 4041 of ERISA, or (iv) the institution of proceedings to terminate a
Plan by the PBGC, or (v) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, a Plan.

 

The
term “Unmatured Event of Default” means an event which would become an
Event of Default with notice or the passage of time or both.

 

The
term “Voting Stock” of any Person means capital stock or other equity
interests of any class or classes (however designated) having ordinary power
for the election of directors or other similar governing body of such Person,
other than stock or other equity interests having such power only by reason of
the happening of a contingency.

 

The
term “Warrant” means a warrant issued by Holdings to Lender or its
designee for the purchase of shares of the Borrower.

 

Except
as and unless otherwise specifically provided herein, all accounting terms in
this Agreement shall have the meanings given to them by generally accepted
accounting principles and shall be applied and all reports required by this
Agreement shall be prepared in a manner consistent with the most recent
financial statements provided to the Lender before this Agreement was signed.

 

SECTION 9.2.  WAIVER OF DEFAULT.  The Lender may, by written notice to the
Borrower and each Guarantor, at any time and from time to time, waive any
default in the performance or observance of any condition, covenant or other
term hereof, or any Event of Default, which shall be for such period and
subject to such conditions as shall be specified in any such notice. In the
case of any such waiver, the Lender, Borrower and each Guarantor shall be
restored to their former position and rights hereunder and under the Revolving
Note and Guaranties, respectively, and any default or Event of Default so
waived shall be deemed to be cured and not continuing; but no such waiver shall
extend to or impair any right consequent thereon or to any subsequent or other
default or Event of Default.

 

SECTION 9.3.  NOTICES.  All notices, requests and demands to or upon
the respective parties hereto shall be deemed to have been given or made when
deposited in the mail, postage prepaid, addressed:

 

(a)           if to the Lender to: 
The Leaders Bank, 2001 York Road, Suite 150, Oak Brook, Illinois 60523,
Attn: John Prosia.

 

(b)           if to the Borrower to: Advanced Life Sciences, Inc., 1440
Davey Road, Woodridge, Illinois 60517, Attn: John Flavin.

 

(c)           if to Holdings to: Advanced Life Sciences Holdings, Inc.,
1440 Davey Road, Woodridge, Illinois 60517, Attn: John Flavin.

 

(d)           if to Flavin to: 
1440 Davey Road, Woodridge, Illinois 60517

 

20

 

or
to such other address as may be hereafter designated in writing by the
respective parties hereto.

 

SECTION 9.4.  CONTINUING FORCE
AND EFFECT OF CREDIT AGREEMENT.   Except as specifically modified or amended by
the terms of this Agreement, all other terms and provisions of the Loan
Documents other than the Existing Credit Agreement which is amended and
restated hereby in its entirety are incorporated by reference herein, and in
all respects, shall continue in full force and effect.  The Borrower and each Guarantor, by execution
of this Agreement, hereby affirms, assumes and binds itself to all of the
obligations, duties, rights, covenants, terms and conditions that are contained
in the Loan Documents.

 

SECTION 9.5.  CONFIRMATION
REGARDING SECURITY AGREEMENT.  The Borrower
and the Lender hereby confirm and agree that the obligations of the Borrower
and each Guarantor under the Revolving Note and Guaranties, respectively, and
this Agreement hereby constitute Secured Obligations (as defined in the
Security Agreements) secured by the Security Agreements.

 

SECTION 9.6.  NONWAIVER;
CUMULATIVE REMEDIES.  No
failure to exercise, and no delay in exercising, on the part of the Lender of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies of the Lender herein
provided are cumulative and not exclusive of any rights or remedies provided by
law.

 

SECTION 9.7.  SURVIVAL OF
AGREEMENTS.  All
agreements, representations and warranties made herein shall survive the
delivery of the Notes and the making of Loans.

 

SECTION 9.8.  SUCCESSORS.  This Agreement shall, upon execution and
delivery by the Borrower and each Guarantor, become effective and shall be
binding upon and inure to the benefit of the Borrower and each Guarantor, the
Lender and their respective successors and assigns, except that neither the
Borrower nor either Guarantor may transfer or assign any of its rights or
interest hereunder without the prior written consent of the Lender.

 

SECTION 9.9.  CAPTIONS.  Captions in this Agreement are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof. References herein to Sections without reference to the
document in which they are contained are references to this Agreement.

 

SECTION 9.10.  SINGULAR AND
PLURAL.  Unless the
context requires otherwise, wherever used herein the singular shall include the
plural and vice versa.

 

SECTION 9.11.  COUNTERPARTS.  This Agreement may be executed by the parties
on any number of separate counterparts; each counterpart shall be deemed an
original instrument; and all of the counterparts taken together shall be deemed
to constitute one and the same instrument.

 

SECTION 9.12.  FEES.  The Borrower and each Guarantor agree to pay
or reimburse the Lender for all costs and expenses of preparing, seeking advice
in regard to, and enforcing this 

 

21

 

Agreement
or any Loan Document, or preserving its rights hereunder or under any document
or instrument executed in connection herewith (including without limitation
reasonable legal fees and reasonable time charges of attorneys who may be
employees of the Lender), whether in or out of court, in original or appellate
proceedings or in bankruptcy.

 

SECTION 9.13.  CONSTRUCTION.  This Agreement, the Revolving Note and any
Loan Document or instrument executed in connection herewith shall be governed
by, and construed and interpreted in accordance with, the internal laws of the
State of Illinois, and shall be deemed to have been executed in the State of
Illinois.

 

SECTION 9.14.  SUBMISSION TO
JURISDICTION; VENUE.  To
induce the Lender to make the Loans, as evidenced by the Notes and this
Agreement, Borrower and each Guarantor irrevocably agree that, subject to the
Lender’s sole and absolute election, all suits, actions or other proceedings in
any way, manner or respect, arising out of or from or related to this
Agreement, the Revolving Note or any document executed in connection herewith,
shall be subject to litigation in courts having situs within the City of
Chicago, State of Illinois.  The Borrower
and each Guarantor hereby consent and submit to the jurisdiction of any local,
state or federal court located within said city and state.  The Borrower and each Guarantor hereby waive
any right it may have to trial by jury or to transfer or change the venue of
any suit, action or other proceeding brought against the Borrower or either
Guarantor by the Lender in accordance with this Section, or to claim that any
such proceeding has been brought in an inconvenient forum.

 

SECTION 9.15.    GENERAL
MATTERS RESPECTING THIS AGREEMENT, THE NOTE AND THE SECURITY AGREEMENT.  It is understood and recited for the
avoidance of doubt that:

 

(a)           This Agreement and the Revolving Note are deemed to
restate and replace in their entirety that certain First Amended and Restated
Business Loan Agreement the Borrower and the Lender dated as of October 23,
2008 (as heretofore amended) and all notes of the Borrower delivered
thereunder, which earlier agreement and notes shall be of no further force or
effect (it being understood, however, that any outstanding indebtedness
thereunder shall be continuing indebtedness hereunder and under the Revolving
Note), and

 

(b)           The Borrower’s and Holdings’ obligations under this
Agreement, the Revolving Note, and the other Loan Documents are secured by and
under the terms of the Security Agreements. It is expressly agreed and recited
that the delivery of the Security Agreements is a condition to the Lender
entering into this Agreement, and that the Lender is authorized and shall have
the unrestricted right, in its sole discretion, to perfect its security
interest in the Collateral, and its interests under the Security Agreements at
any time.

 

The
Borrower and Holdings further represent and warrant to the Lender that (i) the
Security Agreements create, as security for the obligations of the Borrower and
Holdings to the Lender under this Agreement and the Revolving Note, a valid and
enforceable security interest in and liens on all of the Collateral (as defined
in the Security Agreement), in favor of the Lender; and (ii) the Borrower has
not granted any security interest in and liens on the Collateral superior

 

22

 

to
and prior to the security interest of the Lender, and no further recordings or
filings are or will be required in connection with the creation, perfection or
enforcement of such security interests and liens, other than the filing of
continuation statements in accordance with applicable law.

 

23

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the day and year
first above written.

 

 

	
   

  	
  ADVANCED
  LIFE SCIENCES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John L. Flavin

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ADVANCED
  LIFE SCIENCES

  
	
   

  	
  HOLDINGS,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/John
  L. Flavin

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  President
  and Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MICHAEL
  FLAVIN

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/
  Michael T Flavin, Ph.D.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  LEADERS BANK

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John Prosia

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Executive
  Vice President

  

 

24

 

EXHIBIT A

 

TO

 

SECOND AMENDED AND RESTATED

REVOLVING CREDIT AND TERM LOAN AGREEMENT

 

Form of Revolving Note

 

Please see attached.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00178-of-00352.parquet"}]]