Exhibit 4.2


 


Execution Copy


 


REGISTRATION RIGHTS AGREEMENT


 


REGISTRATION
RIGHTS AGREEMENT (this “Agreement”), dated as
of the 29th day of September 2008 (this “Agreement”) between YA GLOBAL INVESTMENTS, L.P., a Cayman
Islands exempt limited partnership (the “Investor”), and ADVANCED LIFE SCIENCES HOLDINGS, INC., a
corporation organized and existing under the laws of the State of Delaware (the
“Company”)


 


WHEREAS:


 


A.                                   In
connection with the Standby Equity Distribution Agreement by and between the
parties hereto of even date herewith (the “Standby Equity Distribution
Agreement”), the Company has agreed, upon the terms and subject to the
conditions of the Standby Equity Distribution Agreement, to issue and sell to
the Investor that number of shares of the Company’s common stock, par value $0.01
per share (the “Common Stock”), which can be purchased pursuant to the
terms of the Standby Equity Distribution Agreement for an aggregate purchase
price of up to $15,000,000.  Capitalized
terms not defined herein shall have the meaning ascribed to them in the Standby
Equity Distribution Agreement.


 


B.                                     To
induce the Investor to execute and deliver the Standby Equity Distribution
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the “Securities
Act”), and applicable state securities laws.


 


NOW,
THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Company and
the Investor hereby agree as follows:


 


1.                                       DEFINITIONS.


 


As used in
this Agreement, the following terms shall have the following meanings:


 


a.                                       “Commitment
Period” has the meaning given thereto in the Standby Equity Distribution
Agreement.


 


b.                                      “Person”
means a corporation, a limited liability company, an association, a
partnership, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.


 


c.                                       “Prospectus”
means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from
a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Securities covered by a Registration
Statement, and all other amendments and supplements to the 


 

















 


Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.


 


d.                                      “Registrable
Securities” means (i) the shares of Common Stock that are or may be
purchased by the Investor pursuant to the Standby Equity Distribution
Agreement, (ii) the Commitment Shares, and (iii) any securities
issued or issuable with respect to any of the foregoing by way of exchange,
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or
otherwise.  As to any particular Registrable
Securities, once issued such securities shall cease to be Registrable
Securities when (a) the Registration Statement has been declared effective
by the Commission and such Registrable Securities have been disposed of
pursuant to the Registration Statement, (b) such Registrable Securities
have been sold under circumstances under which all of the applicable conditions
of Rule 144 (or any similar provision then in force) under the Securities
Act (“Rule 144”) are met, or (c) in the opinion of counsel to the
Company such Registrable Securities may permanently be sold without
registration and without any time, volume or manner limitations pursuant to Rule 144.


 


e.                                       “Registration
Statement” means the registration statements required to be filed hereunder
and any additional registration statements contemplated by Section 2
hereof, including (in each case) the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference in such registration statement.


 


f.                                         “Rule 415”
means Rule 415 promulgated by the SEC pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC 
having substantially the same purpose and effect as such Rule.


 


g.                                      “SEC”
means the United States Securities and Exchange Commission.


 


2.                                       REGISTRATION.


 


a.                                       Filing
of a Registration Statement.  The
Company shall prepare and file with the SEC a Registration Statement, or
multiple Registration Statements, on Form S-1 (or if the Company is then
eligible, on Form S-3) for the resale by the Investor of the Registrable
Securities.  The Company in its sole
discretion may chose when to file such Registration Statements, provided
however, pursuant to the Standby Equity Distribution Agreement the Company
shall not have the ability to make any Advances until the effectiveness of a Registration
Statement.  Each Registration Statement
shall contain the “Plan of Distribution” section in substantially the
form attached hereto as Exhibit A and contain all the required
disclosures set forth on Exhibit B.


 


b.                                      Maintaining
a Registration Statement.  The
Company shall use all commercially reasonable efforts to cause any Registration
Statement that has been declared effective to remain effective at all times until
all Registrable Securities contained in such 


 

















 


Registration Statement cease to be
Registrable Securities (the “Registration Period”).  Each Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading.


 


3.                                       RELATED
OBLIGATIONS.


 


a.                                       The
Company shall, not less than 3 business days prior to the filing of a
Registration Statement and not less than 1 business day prior to the filing of
any related amendments and supplements to all Registration Statements (except
for the filing of its reports under the Exchange Act), furnish to the Investor copies
of all such documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to the
reasonable and prompt review of the Investor. The Company shall not file a
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Investors shall reasonably object in good faith; provided that, the Company is notified of such objection in
writing no later than two business days after the Investors have been so
furnished copies of a Registration Statement.


 


b.                                      The
Company shall (i) prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and the Prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the Securities Act, as may be necessary to keep such
Registration Statement effective at all times during the Registration Period,
and prepare and file with the SEC such additional Registration Statements in
order to register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of
this Agreement), and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received
from the SEC with respect to a Registration Statement or any amendment thereto
and as promptly as reasonably possible provide the Investors true and complete
copies of all correspondence from and to the SEC relating to a Registration
Statement other than correspondence relating to any reports filed by the
Company under the Exchange Act, provided that the Company may excise any
information contained therein which would constitute material non-public
information as to any Investor which has not executed a confidentiality
agreement with the Company; and (iv) comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by such Registration Statement until such time as all of
such Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth
in such Registration Statement.  In the
case of amendments and supplements to a Registration Statement which are
required to be filed pursuant to this Agreement (including pursuant to this Section 3(b))
by reason of the Company’s filing a report on Form 10-K, Form 10-Q, or
Form 8-K or any analogous report under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), the Company shall incorporate
such report by reference into the Registration Statement, if applicable, or
shall file such amendments or supplements with the SEC on the same day on which
the Exchange Act report is filed which created the requirement for the Company
to amend or supplement the Registration Statement.


 

















 


c.                                       The
Company shall furnish to the Investor without charge, (i) at least one
copy of such Registration Statement as declared effective by the SEC and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, all exhibits and each preliminary
prospectus, (ii) 10 copies of the final prospectus included in such
Registration Statement and all amendments and supplements thereto (or such
other number of copies as the Investor may reasonably request) and (iii) such
other documents as the Investor may reasonably request from time to time as
necessary for the disposition of the Registrable Securities owned by the Investor.


 


d.                                      The
Company shall use its reasonable best efforts to (i) register and qualify
the Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of such jurisdictions in the United States as the
Investor reasonably requests, (ii) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (iii) take
such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (iv) take
all other actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to (w) make
any change to its certificate of incorporation or by-laws, (x) qualify to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 3(d), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service
of process in any such jurisdiction.  The
Company shall promptly notify the Investor of the receipt by the Company of any
notification with respect to the suspension of the registration or
qualification of any of the Registrable Securities for sale under the
securities or “blue sky” laws of any jurisdiction in the United States or its
receipt of actual notice of the initiation or threat of any proceeding for such
purpose.


 


e.                                       As
promptly as practicable after becoming aware of such event or development, the
Company shall notify the Investor in writing of the happening of any event as a
result of which the prospectus included in a Registration Statement, as then in
effect, includes an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any material,
nonpublic information), and promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and
deliver 10 copies of such supplement or amendment to the Investor unless such
supplement or amendment is achieved through incorporation by reference of a
report filed under the Exchange Act.  Except
for the filing of reports under the Exchange Act, the Company shall also
promptly notify the Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to the Investor by
facsimile on the same day of such effectiveness), (ii) of any request by
the SEC for amendments or supplements to a Registration Statement or related
prospectus or related information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.


 

















 


f.                                         The
Company shall use its reasonable best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement, or
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction within the United States of America and, if such an
order or suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible moment and to notify the Investor of the
issuance of such order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such purpose.


 


g.                                      If,
after the execution of this Agreement, the Investor believes, after
consultation with its legal counsel, that it could reasonably be deemed to be
an underwriter (other than a statutory underwriter) of Registrable Securities,
at the request of the Investor, the Company shall furnish to the Investor, on
the date of the effectiveness of the Registration Statement and thereafter from
time to time on such dates as the Investor may reasonably request (i) a
letter, dated such date, from the Company’s independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
and (ii) an opinion, dated as of such date, of counsel representing the
Company for purposes of such Registration Statement, in form, scope and
substance as is customarily given in an underwritten public offering, addressed
to the Investor.


 


h.                                      If,
after the execution of this Agreement, the Investor believes, after
consultation with its legal counsel, that it could reasonably be deemed to be
an underwriter (other than a statutory underwriter) of Registrable Securities,
at the request of the Investor, the Company shall make available for inspection
by (i) the Investor and (ii)  one firm of accountants or other agents
retained by the Investor (collectively, the “Inspectors”) all pertinent
financial and other records, and pertinent corporate documents and properties
of the Company (collectively, the “Records”), as shall be reasonably
deemed necessary by each Inspector, and cause the Company’s officers, directors
and employees to supply all information which any Inspector may reasonably
request; provided, however, that each Inspector shall agree, and the Investor
hereby agrees, to hold in strict confidence and shall not make any disclosure
(except to an Investor) or use  any
Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified, unless
(a) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise required
under the Securities Act, (b) the release of such Records is ordered
pursuant to a final, non-appealable subpoena or order from a court or
government body of competent jurisdiction, or (c) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this or any other agreement of which the Inspector and the
Investor has knowledge.  The Investor
agrees that it shall, upon learning that disclosure of such Records is sought
in or by a court or governmental body of competent jurisdiction or through
other means, give prompt notice to the Company and allow the Company, at its
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, the Records deemed confidential.


 


i.                                          The
Company shall hold in confidence and not make any disclosure of information
concerning the Investor provided to the Company unless (i) disclosure of
such information is necessary to comply with federal or state securities laws, (ii) the
disclosure of such information is necessary to avoid or correct a misstatement
or omission in any 


 

















 


Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, or (iv) such
information has been made generally available to the public other than by
disclosure in violation of this Agreement or any other agreement.  The Company agrees that it shall, upon
learning that disclosure of such information concerning the Investor is sought
in or by a court or governmental body of competent jurisdiction or through
other means, give prompt written notice to the Investor and allow the Investor,
at the Investor’s expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.


 


j.                                          The
Company shall use its reasonable best efforts either to cause all the
Registrable Securities covered by a Registration Statement (i) to be
listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange
or to secure the inclusion for quotation on the National Association of
Securities Dealers, Inc. OTC Bulletin Board for such Registrable
Securities.  The Company shall pay all
fees and expenses in connection with satisfying its obligation under this Section
3(j).


 


k.                                       The
Company shall cooperate with the Investor, to the extent applicable, to
facilitate the timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such
denominations or amounts, as the case may be, as the Investor may reasonably
request and registered in such names as the Investor may request.


 


l.                                          The
Company shall use its reasonable best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.


 


m.                                    The
Company shall otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC in connection with any
registration hereunder.


 


n.                                      Within
2 business days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the transfer agent for
such Registrable Securities (with copies to the Investor) confirmation that
such Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit C.


 


o.                                      The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of Registrable Securities pursuant to a
Registration Statement.


 


4.                                       OBLIGATIONS
OF THE INVESTOR.


 


a.                                       The
Investor agrees that, upon receipt of any notice from the Company of the (i) the
happening of any event, following which the prospectus included in a
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a 


 

















 


material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or (ii) the issuance of any
stop order or other suspension of effectiveness of a Registration Statement, or
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction within the United States of America, the Investor will
immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities until the
Investor’s receipt of written notice from the Company indicating that such
event has been cured and confirming that re-sales may be made pursuant to such
Registration Statement.  Notwithstanding
anything to the contrary, the Company shall cause its transfer agent to deliver
unlegended certificates for shares of Common Stock to a transferee of the
Investor in accordance with the terms of the Standby Equity Distribution
Agreement in connection with any sale of Registrable Securities with respect to
which the Investor has entered into a contract for sale prior to the Investor’s
receipt of a notice from the Company described in this section and for which
the Investor has not yet settled.


 


b.                                      The
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it or an exemption
therefrom in connection with sales of Registrable Securities pursuant to the
Registration Statement.


 


5.                                       EXPENSES
OF REGISTRATION.


 


All expenses of
the Company incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers, legal and accounting
fees shall be paid by the Company.


 


6.                                       INDEMNIFICATION.


 


With respect
to Registrable Securities which are included in a Registration Statement under
this Agreement:


 


a.                                       To
the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend the Investor, the directors, officers,
partners, employees, agents, representatives of, and each Person, if any, who
controls the Investor within the meaning of the Securities Act or the Exchange
Act (each, an “Indemnified Person”), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, reasonable
attorneys’ fees, amounts paid in settlement or expenses, joint or several
(collectively, “Claims”) incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation or appeal
taken from the foregoing by or before any court or governmental, administrative
or other regulatory agency, body or the SEC, whether pending or threatened,
whether or not an indemnified party is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such Claims
(or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact in a Registration Statement or any
post-effective amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other “blue sky” laws of
any jurisdiction in which Registrable Securities are offered (“Blue Sky
Filing”), or the omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; 


 

















 


(ii) any untrue statement or alleged
untrue statement of a material fact contained in any final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission to state
therein any material fact necessary to make the statements made therein, in
light of the circumstances under which the statements therein were made, not
misleading; or (iii) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any other law, including, without limitation,
any state securities law, or any rule or regulation there under relating
to the offer or sale of the Registrable Securities pursuant to a Registration
Statement (the matters in the foregoing clauses (i) through (iii) being,
collectively, “Violations”).  The
Company shall reimburse the Investor and each such controlling person promptly
as such expenses are incurred and are due and payable, for any legal fees or
disbursements or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. 
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (x) shall
not apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person expressly for
use in connection with the preparation of the Registration Statement or any
such amendment thereof or supplement thereto; (y) shall not be available
to the extent such Claim is based on a failure of the Investor to deliver or to
cause to be delivered the prospectus made available by the Company, if such
prospectus was timely made available by the Company pursuant to Section 3(e);
and (z) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld. 
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investor.


 


b.                                      In
connection with a Registration Statement, the Investor agrees to indemnify,
hold harmless and defend, to the same extent and in the same manner as is set
forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement and each Person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act (each an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the Securities Act, the
Exchange Act or otherwise, insofar as such Claim or Indemnified Damages arise
out of or is based upon any Violation, in each case to the extent, and only to
the extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by the Investor expressly for use
in connection with such Registration Statement; and, subject to Section 6(d),
the Investor will reimburse any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b) and
the agreement with respect to contribution contained in Section 7 shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of the Investor, which consent shall
not be unreasonably withheld; provided, further, however, that the Investor
shall be liable under this Section 6(b) for only that amount of a
Claim or Indemnified Damages as does not exceed the net proceeds to the
Investor as a result of the sale of Registrable Securities pursuant to such
Registration Statement.  Such indemnity
shall remain in full force and effect regardless of any investigation made by
or on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investor. 
Notwithstanding anything to the contrary contained 


 

















 


herein, the indemnification agreement
contained in this Section 6(b) with respect to any prospectus shall
not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the prospectus was corrected and such
new prospectus was delivered to the Investor prior to the Investor’s use of the
prospectus to which the Claim relates.


 


c.                                       Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person
or Indemnified Party shall, if a Claim in respect thereof is to be made against
any indemnifying party under this Section 6, deliver to the indemnifying
party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume control of the defense thereof with counsel mutually satisfactory to
the indemnifying party and the Indemnified Person or the Indemnified Party, as
the case may be; provided, however, that an Indemnified Person or Indemnified
Party shall have the right to retain its own counsel with the fees and expenses
of not more than one counsel for such Indemnified Person or Indemnified Party
to be paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing  interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The Indemnified Party or Indemnified Person shall cooperate fully
with the indemnifying party in connection with any negotiation or defense of
any such action or claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the Indemnified
Party or Indemnified Person which relates to such action or claim.  The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto.  No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its prior
written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent.  No indemnifying party shall, without the
prior written consent of the Indemnified Party or Indemnified Person, consent
to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all
liability in respect to such claim or litigation.  Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been
made.  The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement
of any such action shall not relieve such indemnifying party of any liability
to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability
to defend such action.


 


d.                                      The
indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are incurred.


 

















 


e.                                       The
indemnity agreements contained herein shall be in addition to (i) any
cause of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.


 


7.                                       CONTRIBUTION.


 


To the extent
any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party agrees to make the maximum contribution with respect to
any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.


 


8.                                       REPORTS
UNDER THE EXCHANGE ACT.


 


With a view to
making available to the Investor the benefits of Rule 144 promulgated
under the Securities Act or any similar rule or regulation of the SEC that
may at any time permit the Investor to sell securities of the Company to the
public without registration (“Rule 144”) the Company agrees to:


 


a.                                       make
and keep public information available, as those terms are understood and
defined in Rule 144;


 


b.                                      file
with the SEC in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act so long as the Company
remains subject to such requirements (it being understood that nothing herein
shall limit the Company’s obligations under Section 6.3 of the Standby
Equity Distribution Agreement) and the filing of such reports and other
documents is required for the applicable provisions of Rule 144; and


 


c.                                       furnish
to the Investor so long as the Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company that it has complied
with the reporting requirements of Rule 144, the Securities Act and the
Exchange Act, (ii) a copy of the most recent annual or quarterly report of
the Company and such other reports and documents so filed by the Company, and (iii) such
other information as may be reasonably requested to permit the Investor to sell
such securities pursuant to Rule 144 without registration.


 


9.                                       AMENDMENT
OF REGISTRATION RIGHTS.


 


Provisions of
this Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only by a written agreement between the Company and the
Investor.  Any amendment or waiver
effected in accordance with this Section 9 shall be binding upon the
Investor and the Company.  


 

















 


No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.


 


10.                                 MISCELLANEOUS.


 


a.                                       A
Person is deemed to be a holder of Registrable Securities whenever such Person
owns or is deemed to own of record such Registrable Securities.  If the Company receives conflicting
instructions, notices or elections from two or more Persons with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.


 


b.                                      Any
notices, consents, waivers or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed
to have been delivered:  (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
business day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such
communications shall be:


 


	
  If to the Company, to:

  	
  Advanced
  Life Sciences Holdings, Inc.

  
	
   

  	
  1440 Davey
  Road

  
	
   

  	
  Woodridge,
  IL 60517

  
	
   

  	
  Attention:

  	
  General
  Counsel

  
	
   

  	
  Telephone:

  	
  (630)
  739-6744

  
	
   

  	
  Facsimile:

  	
  (630)
  739-6754

  
	
   

  	
   

  
	
  With a copy to:

  	
  Winston &
  Strawn LLP

  
	
   

  	
  35 W. Wacker
  Drive

  
	
   

  	
  Chicago, IL
  60601

  
	
   

  	
  Attention:

  	
  R. Cabell
  Morris

  
	
   

  	
  Telephone:

  	
  (312)
  558-5609

  
	
   

  	
  Facsimile:

  	
  (312)
  558-5700

  
	
   

  	
   

  
	
  If to the Investor, to:

  	
  YA Global
  Investments, LP

  
	
   

  	
  101 Hudson
  Street – Suite 3700

  
	
   

  	
  Jersey City,
  New Jersey 07302

  
	
   

  	
  Attention:

  	
  Mark Angelo

  
	
   

  	
   

  	
  Portfolio
  Manager

  
	
   

  	
  Telephone:

  	
  (201)
  985-8300

  
	
   

  	
  Facsimile:

  	
  (201)
  985-8266

  



 

















 


	
  With a copy to:

  	
  YA Global
  Investments, LP

  
	
   

  	
  101 Hudson
  Street – Suite 3700

  
	
   

  	
  Jersey City,
  NJ 07302

  
	
   

  	
  Attention:

  	
  David
  Gonzalez, Esq.

  
	
   

  	
  Telephone:

  	
  (201)
  985-8300

  
	
   

  	
  Facsimile:

  	
  (201)
  985-8266

  



 


Any party may
change its address by providing written notice to the other parties hereto at
least five days prior to the effectiveness of such change.  Written confirmation of receipt (A) given
by the recipient of such notice, consent, waiver or other communication, (B) mechanically
or electronically generated by the sender’s facsimile machine containing the
time, date, recipient facsimile number and an image of the first page of
such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.


 


c.                                       Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.


 


d.                                      The
corporate laws of the State of New Jersey shall govern all issues concerning
the relative rights of the Company and the Investor.  All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of New Jersey, without giving
effect to any choice of law or conflict of law provision or rule (whether
of the State of New Jersey or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New
Jersey.  Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the Superior Courts of the State
of New Jersey, sitting in Hudson County, New Jersey and the Federal District
Court for the District of New Jersey sitting in Newark, New Jersey, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law.  If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other
jurisdiction.  EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.


 

















 


e.                                       This
Agreement, the Standby Equity Distribution Agreement and any related agreements
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof.  There
are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein and therein. 
This Agreement, the Standby Equity Distribution Agreement and any
related agreements supersede all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof and thereof.


 


f.                                         The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.


 


g.                                      This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
agreement.  This Agreement, once executed
by a party, may be delivered to the other party hereto by facsimile
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.


 


h.                                      Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.


 


i.                                          The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction
will be applied against any party.


 


j.                                          This
Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person.


 


[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


 

















 


IN
WITNESS WHEREOF, the parties have caused this
Registration Rights Agreement to be duly executed as of day and year first
above written.


 


	
   

  	
  ADVANCED LIFE SCIENCES HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  T. Flavin

  
	
   

  	
  Name: Michael
  T. Flavin, Ph.D

  
	
   

  	
  Title: Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  YA GLOBAL INVESTMENTS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Yorkville Advisors, LLC

  
	
   

  	
  Its:

  	
  Investment Manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald
  Eicke

  
	
   

  	
  Name: Gerald
  Eicke

  
	
   

  	
  Title: Managing
  Member

  
				



 

















 


EXHIBIT A


 


PLAN OF DISTRIBUTION


 


Each Selling
Stockholder (the “Selling Stockholders”) of the common stock and any of
their pledgees, assignees and successors-in-interest may, from time to time,
sell any or all of their shares of common stock on the                        
or any other stock exchange, market or trading facility on which the shares are
traded or in private transactions.  These
sales may be at fixed or negotiated prices. 
A Selling Stockholder may use any one or more of the following methods
when selling shares:


 


·                  ordinary
brokerage transactions and transactions in which the broker-dealer solicits
purchasers;


 


·                  block trades in
which the broker-dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the
transaction;


 


·                  purchases by a
broker-dealer as principal and resale by the broker-dealer for its account;


 


·                  an exchange
distribution in accordance with the rules of the applicable exchange;


 


·                  privately
negotiated transactions;


 


·                  broker-dealers
may agree with the Selling Stockholders to sell a specified number of such
shares at a stipulated price per share;


 


·                  through the
writing or settlement of options or other hedging transactions, whether through
an options exchange or otherwise;


 


·                  a combination of
any such methods of sale; or


 


·                  any other method
permitted pursuant to applicable law.


 


The Selling
Stockholders may also sell shares under Rule 144 under the Securities Act
of 1933, as amended (the “Securities Act”), if available, rather than
under this prospectus.


 


Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales.  Broker-dealers may
receive commissions or discounts from the Selling Stockholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction not in excess of a customary
brokerage commission in compliance with NASDR Rule 2440; and in the case
of a principal transaction a markup or markdown in compliance with NASDR
IM-2440.


 

















 


In connection
with the sale of the common stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the Common
Stock in the course of hedging the positions they assume.  The Selling Stockholders may also enter into
option or other transactions with broker-dealers or other financial
institutions or the creation of one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of shares
offered by this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended
to reflect such transaction).


 


The Selling
Stockholders and any broker-dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the Securities
Act in connection with such sales.  In
such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.  Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In no
event shall any broker-dealer receive fees, commissions and markups which, in
the aggregate, would exceed eight percent (8%).


 


The Company is
required to pay certain fees and expenses incurred by the Company incident to
the registration of the shares.  The
Company has agreed to indemnify the Selling Stockholders against certain
losses, claims, damages and liabilities, including liabilities under the
Securities Act.


 


Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act including Rule 172 thereunder.  In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this prospectus.  There is no underwriter or coordinating
broker acting in connection with the proposed sale of the resale shares by the
Selling Stockholders.


 


We agreed to
keep this prospectus effective until the earlier of (i) the date on which
the shares may be resold by the Selling Stockholders without registration and
without regard to any volume limitations by reason of Rule 144 under the
Securities Act or any other rule of similar effect or (ii) all of the
shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect.  The resale shares will be sold only through
registered or licensed brokers or dealers if required under applicable state
securities laws. In addition, in certain states, the resale shares may not be
sold unless they have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification requirement is
available and is complied with.


 


Under
applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to the common stock for the applicable
restricted period, as defined in Regulation M, prior to the commencement of the
distribution.  In addition, the Selling
Stockholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, 


 

















 


including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholders or any other
person.  We will make copies of this
prospectus available to the Selling Stockholders and have informed them of the
need to deliver a copy of this prospectus to each purchaser at or prior to the
time of the sale (including by compliance with Rule 172 under the
Securities Act).


 

















 


EXHIBIT B


 


OTHER DISCLOSURES


 


See
attachment provided separately.


 

















 


EXHIBIT C


FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT


 


Attention:


 


Re:                               ADVANCED LIFE SCIENCE HOLDINGS, INC.


 


Ladies and Gentlemen:


 


We are counsel
to Advanced Life Science Holdings, Inc. (the “Company”), and have
represented the Company in connection with that certain Standby Equity
Distribution Agreement (the “Standby Equity Distribution Agreement”)
entered into by and between the Company and YA Global Investments, LP (the “Investor”)
pursuant to which the Company issued to the Investor shares of its Common
Stock, par value $0.01 per share (the “Common Stock”).  Pursuant to the Standby Equity Distribution
Agreement, the Company also has entered into a Registration Rights Agreement
with the Investor (the “Registration Rights Agreement”) pursuant to
which the Company agreed, among other things, to register the Registrable
Securities (as defined in the Registration Rights Agreement) under the
Securities Act of 1933, as amended (the “Securities Act”).  In connection with the Company’s obligations
under the Registration Rights Agreement, on                         
        , the Company filed a Registration
Statement on Form                 
(File No. 333-                          )
(the “Registration Statement”) with the Securities and Exchange
Commission (the “SEC”) relating to the Registrable Securities which
names the Investor as a selling stockholder thereunder.


 


In connection
with the foregoing, we advise you that a member of the SEC’s staff has advised
us by telephone that the SEC has entered an order declaring the Registration
Statement effective under the Securities Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the Securities Act pursuant to the
Registration Statement.


 


	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
  cc:

  	
  YA Global Investments, L.P.