Exhibit 10.2


 


DEBT EXCHANGE AGREEMENT


 


THIS DEBT EXCHANGE AGREEMENT (this “Agreement”)
is entered into as of this seventh (7th) day of May, 2010 by and between ADVANCED  LIFE SCIENCES HOLDINGS,
INC., a Delaware corporation (the “Company”), and Michael T.
Flavin (the “Maker”).


 


RECITALS


 


WHEREAS, the Company
and the Maker have entered into that certain Third Amended & Restated
Promissory Note dated as of January 4, 2010 (the “Note”) relating
to indebtedness of the Company to Maker in the outstanding principal amount of
$2.0 million (the “Indebtedness”);


 


WHEREAS, the Company has
filed with the Securities and Exchange Commission a Registration Statement on Form S-1
(Registration No. 333-165388) relating to a proposed registered public
offering by the Company (“Offering”) of units, with each unit consisting
of a specified number of shares of common stock and warrants to purchase common
stock (the “Units”); and


 


WHEREAS, the Maker has
agreed with the Company (acting through the independent audit committee of the
Company’s board of directors) to exchange the Note for Units on the terms and
conditions described herein.


 


NOW, THEREFORE, in
consideration of the foregoing Recitals and the mutual agreements and covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Maker and the Company
hereby agree as follows:


 


ARTICLE
I


DEBT EXCHANGE


 


1.1           Debt Exchange.  Within ten (10) business days following
a Qualified Unit Offering (as defined below), the Maker shall deliver the Note
to the Company for cancellation and retirement in full of the Indebtedness and,
in exchange, receive from the Company a number of Units determined by dividing (a) $2,000,000
by (b) the price per Unit at which the Units were issued and sold to the
public in the Qualified Unit Offering, rounded down to the nearest whole Unit with
any fractional Unit being paid by the Company in cash (the “Exchange”).  A “Qualified Unit Offering” shall mean the
sale of Units by the Company in an Offering that results in gross cash proceeds
to the Company (before taking into account placement agent fees and
reimbursable expenses) greater than or equal to ten million dollars
($10,000,000.00).


 


1.2           Accrued Interest.  On the date of the Exchange, the Company
shall make a cash payment to the Maker in satisfaction of accrued and unpaid
interest on the Indebtedness to but excluding the date of the Exchange.


 


1.3           Restricted
Securities.  The Maker understands
that the Units to be issued by the Company pursuant to this Agreement, the
shares of common stock and warrants underlying such Units and the shares of
common stock underlying such warrants (collectively, the “Securities”) are
characterized as “restricted securities” under the federal securities laws
inasmuch as they will be acquired in a transaction not involving a public
offering, and that under such laws and applicable regulations such securities
may be resold without registration under the federal securities laws only in
certain limited circumstances.  The
certificates for the Securities shall be subject to a legend or legends
restricting transfer under the federal securities laws and referring to
restrictions on transfer herein, such legend to be substantially as follows:


 

















 


THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE BEEN ISSUED
AND SOLD IN RELIANCE UPON EXEMPTIONS FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “1933 ACT”), AND APPROPRIATE EXEMPTIONS FROM
REGISTRATION UNDER THE SECURITIES LAWS OF OTHER APPLICABLE JURISDICTIONS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED OTHER THAN
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE 1933 ACT AND THE APPLICABLE SECURITIES LAWS
OF ANY OTHER JURISDICTION.  THE ISSUER
SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
IT WITH RESPECT TO COMPLIANCE OF THE PROPOSED SALE OR TRANSFER WITH THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT OR EXEMPTION THEREFROM.


 


ARTICLE
II


MISCELLANEOUS


 


2.1           Changes.  This Agreement may be modified, amended or
waived only pursuant to a written instrument signed by the Company and the Maker.


 


2.2           Headings.  The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.


 


2.3           Governing Law.  This Agreement shall be interpreted and the
rights and liabilities of the parties hereto determined in accordance with the
internal laws and decisions of the State of Illinois, without giving affect to
the conflict of laws principals thereof. 
Whenever possible, each provision of this Agreement shall be interpreted
in such a manner as to be effective and valid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or by the remaining
provisions of this Agreement.


 


2.4           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument, and shall become
effective when one or more counterparts have been signed by each party hereto
and delivered to the other party.


 


2.5           Entire Agreement.  This Agreement constitutes the entire
agreement between the parties hereto with respect to the Exchange and
supersedes any prior understandings or agreements with respect thereto.


 


[signature
page follows]


 


2

















 


IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first written above.


 


	
   

  	
  ADVANCED
  LIFE SCIENCES HOLDINGS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark Caputo

  
	
   

  	
   

  	
  Name:  Mark Caputo

  
	
   

  	
   

  	
  Title:    Vice President Accounting and Controller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MICHAEL
  T. FLAVIN

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael Flavin

  



 


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