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Targeted Medical Pharma, Inc. 8-K [tmp-8k_012511.htm]
 
 
EXHIBIT 10.19
 
REGISTRATION RIGHTS AGREEMENT
 
 
REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of January 31, 2011,
by and among Targeted Medical Pharma, Inc., a Delaware corporation, with
headquarters located at 2980 Beverly Glen Circle, Suite 301, Los Angeles, CA
90077 (the “Company”), and the investors listed on the Schedule A attached
hereto (each, a “Stockholder” or “Holder” and collectively, the “Stockholders”
or “Holders”).
 
WHEREAS, in connection with that certain Agreement and Plan of Reorganization,
dated of even date herewith, by and among AFH Acquisition III, Inc. (“AFH”), TMP
Merger Sub, Inc., AFH Merger Sub, Inc., AFH Holding and Advisory LLC and
Targeted Medical Pharma, Inc. (the “Merger Agreement”), the Company desires to
enter into this Agreement with the Persons listed on Schedule A hereto (the “AFH
Stockholders”) to provide such stockholders with certain rights relating to the
registration of the shares of AFH common stock they held prior to the
consummation of the Merger Agreement (the “Securities”).
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
 
1.           DEFINITIONS. The following capitalized terms used herein have the
following meanings:
 
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Merger Agreement. As used in this
Agreement, the following terms shall have the following meanings:

(a)           “Additional Effective Date” means the date the Additional
Registration Statement, if any, is declared effective by the SEC.

(b)           “Additional Filing Date” means the date on which the Additional
Registration Statement is filed with the SEC.

(c)           “Additional Registrable Securities” means, (i) any Cutback Shares
not previously included on a Registration Statement and (ii) any capital stock
of the Company issued or issuable with respect to the Securities, or the Cutback
Shares, as applicable, as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, until such time as
such securities are saleable pursuant to Rule 144 without any restriction.

(d)           “Additional Registration Statement” means a registration statement
or registration statements of the Company, if any, filed under the 1933 Act
covering any Additional Registrable Securities.

(e)           “Additional Registration Amount” means (I) any Cutback Shares not
previously included on a Registration Statement, all subject to adjustment as
provided in Section 2, or (II) such other amount as may be required by the staff
of the SEC pursuant to Rule 415.

(f)           “Business Day” means any day other than Saturday, Sunday or any
other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.

 
 

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(h)           “Cutback Shares” means any of the Initial Registration Amount or
the Additional Registration Amount (without regard to clause (II) in the
definition thereof) of Registrable Securities not included in all Registration
Statements previously declared effective hereunder as a result of a limitation
on the maximum number of shares of Common Stock of the Company permitted to be
registered by the staff of the SEC pursuant to Rule 415 until such time as such
securities are saleable pursuant to Rule 144 without any restriction.

(i)           “Effective Date” means the Initial Effective Date and the
Additional Effective Date, as applicable.

(j)           “Holder” means the AFH Stockholders, any transferee or assignee
thereof to whom an AFH Stockholder assigns its rights under this Agreement and
who agrees to become bound by the provisions of this Agreement in accordance
with Section 7 and any transferee or assignee thereof to whom a transferee or
assignee assigns its rights under this Agreement and who agrees to become bound
by the provisions of this Agreement in accordance with Section 7.
 
(k)           “Effective Date” means the date that the Registration Statement
has been declared effective by the SEC.

(n)           “Initial Registrable Securities” means (i) the Securities, and
(ii) any capital stock of the Company issued or issuable, with respect to the
Securities.

(q)           “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.

(r)           “register,” “registered,” and “registration” refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415, and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.

(s)           “Registrable Securities” means the Initial Registrable Securities
and the Additional Registrable Securities.

(u)           “Required Holders” means the holders of at least a majority of the
Registrable Securities.

(v)           “Rule 144” means Rule 144 promulgated under the 1933 Act or any
successor rule providing for the resale of restricted securities.

(w)           “Rule 415” means Rule 415 promulgated under the 1933 Act or any
successor rule providing for offering securities on a continuous or delayed
basis.

(x)           “SEC” means the United States Securities and Exchange Commission.

(y)           “SEC Guidance” means (i) any publicly-available written or oral
guidance of the Commission staff, or any comments, requirements or requests of
the Commission staff and (ii) the 1933 Act.

 
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(z)           “Selling Expenses” means all underwriting discounts, selling
commissions, and stock transfer taxes applicable to the sale of Registrable
Securities, and fees and disbursements of counsel for any Holder.

(a)           “1933 Act” means the Securities Act of 1933, as amended.

(b)           “1934 Act” means the Securities Exchange Act of 1934, as amended.

2.           Registration.

(a)           Piggyback Registration.  At any time the Company proposes to file
a registration statement under the 1933 Act (each a “Registration Statement”)
with respect to an offering of equity securities, or securities or other
obligations exercisable or exchangeable for, or convertible into, equity
securities, by the Company for its own account or for shareholders of the
Company for their account (or by the Company) and by shareholders of the Company
other than a Registration Statement (i) filed in connection with any employee
stock option or other benefit plan, (ii) for an exchange offer or offering of
securities solely to the Company’s existing shareholders, (iii) for an offering
of debt that is convertible into equity securities of the Company; (iv) for a
dividend reinvestment plan or (v) for an offering of equity securities of the
Company underwritten by Sunrise Securities Corp. (the “Sunrise Offering”), then
the Company shall (x) give written notice of such proposed filing to the holders
of Registrable Securities as soon as practicable but in no event less than ten
(10) days before the anticipated filing date, which notice shall describe the
amount and type of securities to be included in such offering, the intended
method(s) of distribution, and the name of the proposed managing underwriter or
underwriters, if any, of the offering, and (y) offer to the holders of
Registrable Securities (each a “Holder”) in such notice the opportunity to
register the sale of such number of shares of Registrable Securities as such
holders may request in writing within five (5) days following receipt of such
notice (a “Piggyback Registration”). The Company shall cause such Registrable
Securities to be included in such registration and shall use its best efforts to
cause the managing underwriter or underwriters of a proposed underwritten
offering to permit the Registrable Securities requested to be included in a
Piggyback Registration to be included on the same terms and conditions as any
similar securities of the Company and to permit the sale or other disposition of
such Registrable Securities in accordance with the intended method(s) of
distribution thereof. All holders of Registrable Securities proposing to
distribute their securities through a Piggyback Registration that involves an
underwriter or underwriters shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such Piggyback
Registration.

(b)           Cutback.  Notwithstanding any other provision of this Agreement,
if any SEC Guidance sets forth a limitation on the number of Registrable
Securities permitted to be registered on a Registration Statement, the number of
Registrable Securities to be registered on the Registration Statement on behalf
of each Holder will be reduced: (i) before any shares of Common Stock or other
securities included in such Registration Statement pursuant to written
contractual arrangements with Persons other than the Holders are reduced and
(ii) on a pro rata basis based on the total number of unregistered Registrable
Securities held by such Holders.  In the event of a cutback hereunder, the
Company shall give the Holders at least two (2) business days prior written
notice along with the calculations as to such Holder’s allotment.

 
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(c)           Reduction of Underwritten Offering. If the managing underwriter or
underwriters for a Piggyback Registration that is to be an underwritten offering
advises the Company and the Holders of Registrable Securities in writing that
the dollar amount or number of shares of Common Stock which the Company desires
to sell, taken together with shares of Common Stock, if any, as to which
registration has been demanded pursuant to written contractual arrangements with
Persons other than the Holders of Registrable Securities hereunder, the
Registrable Securities as to which registration has been requested under this
Section 2(c), and the shares of Common Stock, if any, as to which registration
has been requested pursuant to the written contractual piggyback registration
rights of Persons other than the Holders, exceeds the exceeds the maximum dollar
amount or maximum number of shares that can be sold in such offering without
adversely affecting the proposed offering price, the timing, the distribution
method, or the probability of success of such offering (such maximum dollar
amount or maximum number of shares, as applicable, the “Maximum Number of
Shares”), then the Company shall include in any such registration: If the
registration is undertaken for the Company’s account: (A) first, the shares of
Common Stock or other securities that the Company desires to sell that can be
sold without exceeding the Maximum Number of Shares; (B) second, to the extent
that the Maximum Number of Shares has not been reached under the foregoing
clause (A), the shares of Common Stock or other securities for the account of
persons other than the Holders that the Company is obligated to register
pursuant to written contractual registration rights with such persons (pro rata
in accordance with the number of shares of Common Stock which each such person
has actually requested to be included in such registration, regardless of the
number of shares of Common Stock with respect to which such persons have the
right to request such inclusion) that can be sold without exceeding the Maximum
Number of Shares; and (C) third, to the extent that the Maximum Number of Shares
has not been reached under the foregoing clauses (A) and (B), the Registrable
Securities as to which registration has been requested (pro rata in accordance
with the number of shares of Common Stock which each such person has actually
requested to be included in such registration, regardless of the number of
shares of Common Stock with respect to which such persons have the right to
request such inclusion) that can be sold without exceeding the Maximum Number of
Shares.  To facilitate the allocation of shares in accordance with the above
provisions, the Company or the underwriters may round the number of shares
allocated to any Holder to the nearest 100 shares.  For purposes of
apportionment in this Agreement, for any Holder that is a partnership, limited
liability company, or corporation, the partners, members, retired partners,
retired members, stockholders, and Affiliates of such Holder, or the estates and
immediate family members of any such partners, retired partners, members, and
retired members and any trusts for the benefit of any of the foregoing Persons,
shall be deemed to be a single “Holder,” and any pro rata reduction with respect
to such “Holder” shall be based upon the aggregate number of Registrable
Securities owned by all Persons included in such “Holder,” as defined in this
sentence.

(d)           Underwriting Requirements.

(i)           If, pursuant to Section 2(a), the Holders intend to distribute the
Registrable Securities by means of an underwriting, they shall so advise the
Company.  The underwriter(s) will be selected by the Company and shall be
reasonably acceptable to the Required Holders.  In such event, the right of any
Holder to include such Holder’s Registrable Securities in such registration
shall be conditioned upon such Holder’s participation in such underwriting and
the inclusion of such Holder’s Registrable Securities in the underwriting to the
extent provided herein.  All Holders proposing to distribute their securities
through such underwriting shall (together with the Company) enter into an
underwriting agreement in customary form with the underwriter(s) selected for
such underwriting.  Notwithstanding any other provision of this Section 2(d)(i),
if the managing underwriter(s) advise(s) the Company or the Holders in writing
that marketing factors require a limitation on the number of shares to be
underwritten, then the number of Registrable Securities that may be included in
the underwriting shall be allocated among such Holders of Registrable Securities
in proportion (as nearly as practicable) to the number of Registrable Securities
owned by each Holder or in such other proportion as shall mutually be agreed to
by all such selling Holders.  To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may round
the number of shares allocated to any Holder to the nearest 100 shares.

 
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(ii)           In connection with any offering involving an underwriting of
shares of the Company’s capital stock, the Company shall not be required to
include any of the Holders’ Registrable Securities in such underwriting unless
the Holders accept the terms of the underwriting as agreed upon between the
Company and its underwriters, and then only in such quantity as the underwriters
in their sole discretion determine will not jeopardize the success of the
offering by the Company.  If the total number of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the number of securities to be sold (other than by the Company)
that the underwriters in their reasonable discretion determine is compatible
with the success of the offering, then the Company shall be required to include
in the offering only that number of such securities, including Registrable
Securities, which the underwriters and the Company in their sole discretion
determine will not jeopardize the success of the offering.

(e)           Allocation of Registrable Securities.  The initial number of
Registrable Securities included in any Registration Statement and any increase
or decrease in the number of Registrable Securities included therein shall be
allocated pro rata among the holders of Registrable Securities based on the
number of Registrable Securities held by each holder at the time the
Registration Statement covering such initial number of Registrable Securities or
increase or decrease thereof is declared effective by the SEC.  In the event
that Holder sells or otherwise transfers any of such Holder’s Registrable
Securities, each transferee shall be allocated a pro rata portion of the then
remaining number of Registrable Securities included in such Registration
Statement for such transferor.  Any shares of Common Stock included in a
Registration Statement and which remain allocated to any Person which ceases to
hold any Registrable Securities covered by such Registration Statement shall be
allocated to the remaining Holders, pro rata based on the number of Registrable
Securities then held by such Holders which are covered by such Registration
Statement.

3.           Related Obligations.

(a)           The Company shall keep each Registration Statement, if any,
effective pursuant to Rule 415 at all times until the earlier of (i) the date as
of which the Holders may sell all of the Registrable Securities covered by such
Registration Statement without restriction or limitation pursuant to Rule 144
and without the requirement to be in compliance with Rule 144(c)(1) (or any
successor thereto) promulgated under the 1933 Act or (ii) the date on which the
Holders shall have sold all of the Registrable Securities covered by such
Registration Statement (the “Registration Period”).  The Company shall ensure
that 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 the case of
prospectuses, in the light of the circumstances in which they were made) not
misleading.

(b)           The Company shall 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 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 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 filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the 1934 Act, the Company shall have incorporated such
report by reference into such Registration Statement, if applicable, or shall
file such amendments or supplements with the SEC on the same day on which the
1934 Act report is filed which created the requirement for the Company to amend
or supplement such Registration Statement.

 
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(c)           The Company shall use its best efforts to (i) register and
qualify, unless an exemption from registration and qualification applies, the
resale by Holder of the Registrable Securities covered by a Registration
Statement under such other securities or “blue sky” laws of all applicable
jurisdictions in the United States, (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 (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(c), (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 holder of the Registrable
Securities 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
threatening of any proceeding for such purpose.

(d)           The Company shall use its 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 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 each holder of Registrable Securities being sold 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.

(e)           The Company shall cooperate with the holders of Registrable
Securities being offered and, to the extent applicable, 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 Holders may reasonably request and registered in such
names as the Holders may request.

(f)            If requested by a Holder, the Company shall as soon as
practicable (i) incorporate in a prospectus supplement or post-effective
amendment such information as a Holder reasonably requests to be included
therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the number of
Registrable Securities being offered or sold, the purchase price being paid
therefor and any other terms of the offering of the Registrable Securities to be
sold in such offering; (ii) make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) supplement or make amendments to any Registration Statement if reasonably
requested by a Holder

(g)           The Company shall use its best efforts to cause the Registrable
Securities covered by a 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.

(h)           Within two (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 Holders whose
Registrable Securities are included in such Registration Statement) confirmation
that such Registration Statement has been declared effective by the SEC.

 
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(i)           Notwithstanding anything to the contrary herein, at any time after
the Effective Date, the Company may delay the disclosure of material, non-public
information concerning the Company the disclosure of which at the time is not,
in the good faith opinion of the Board of Directors of the Company and its
counsel, in the best interest of the Company and, in the opinion of counsel to
the Company, otherwise required (a “Grace Period”); provided, that the Company
shall promptly (i) notify the Holders in writing of the existence of material,
non-public information giving rise to a Grace Period (provided that in each
notice the Company will not disclose the content of such material, non-public
information to the Holders) and the date on which the Grace Period will begin,
and (ii) notify the Holders in writing of the date on which the Grace Period
ends.  For purposes of determining the length of a Grace Period above, the Grace
Period shall begin on and include the date the holders of Registrable Securities
receive the notice referred to in clause (i) and shall end on and include the
later of the date the Holders receive the notice referred to in clause (ii) and
the date referred to in such notice.
 
4.           Obligations of the Holders.

(a)           At least five (5) Business Days prior to the first anticipated
filing date of a Registration Statement, the Company shall notify each Holder in
writing of the information the Company requires from each such Holder if such
Holder elects to have any of such holder’s Registrable Securities included in
such Registration Statement.  It shall be a condition precedent to the
obligations of the Company to complete any registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Holder that
such Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect and
maintain the effectiveness of the registration of such Registrable Securities
and shall execute such documents in connection with such registration as the
Company may reasonably request.

(b)           Each Holder, by such Holder’s acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Holder has notified the Company in writing of
such Holder’s election to exclude all of such Holder’s Registrable Securities
from such Registration Statement.

(c)           Each Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(d),
such Holder will immediately discontinue disposition of Registrable Securities
pursuant to any Registration Statement(s) covering such Registrable Securities
until such Holder’s receipt of copies of the supplemented or amended prospectus
as contemplated by Section 3(d).

(d)           Each holder covenants and agrees that it will comply with the
prospectus delivery requirements of the 1933 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 reasonable expenses, other than Selling Expenses, incurred in connection
with registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualifications
fees, printers and accounting fees, and fees and disbursements of counsel for
the Company shall be paid by the Company.

 
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6.           Indemnification.

In the event any Registrable Securities 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 each Holder, the directors,
officers, partners, members, employees, agents, representatives of, and each
Person, if any, who controls any Holder within the meaning of the 1933 Act or
the 1934 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
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the 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, (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any violation of this
Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, “Violations”).  Subject to Section 6(c), the Company shall
reimburse the Indemnified Persons, promptly as such expenses are incurred and
are due and payable, for any legal fees 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):  (i) 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 for such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if such
prospectus was timely made available by the Company pursuant to Section 3; and
(ii) 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 or delayed.  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 Holder pursuant to Section 7.

 
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(b)           In connection with any Registration Statement in which an Holder
is participating, each such holder of Registrable Securities agrees to severally
and not jointly 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 1933 Act or
the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or
are 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 such Holder expressly for use in
connection with such Registration Statement; and, subject to Section 6(c), such
holder shall reimburse the Indemnified Party any legal or other expenses
reasonably incurred by an Indemnified Party 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 such
Investor, which consent shall not be unreasonably withheld or delayed; provided,
further, however, that Holder 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 such holder 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 holders pursuant to Section 7.

(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 all such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the Indemnified Person or
Indemnified Party, as the case may be, 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.  In the case of an Indemnified Person, legal counsel
referred to in the immediately preceding sentence shall be selected by the
Holders holding at least a majority in interest of the Registrable Securities
included in the Registration Statement to which the Claim relates.  The
Indemnified Party or Indemnified Person shall reasonably cooperate 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 and such settlement shall not include any
admission as to fault on the part of the Indemnified Party.  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.

 
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(d)           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.           Assignment of Registration Rights.

The rights under this Agreement shall be automatically assignable by the Holder
to any transferee of all or any portion of such Holder’s Registrable Securities
if:  (i) the Holder agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (a) the
name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned;
(iii) immediately following such transfer or assignment the further disposition
of such securities by the transferee or assignee is restricted under the 1933
Act or applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (v) such transfer shall have been made in
accordance with the applicable requirements of the Merger Agreement and any
lock-up provisions contained therein.

8.           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 with the written consent of the Company and the Required
Holders.  Any amendment or waiver effected in accordance with this Section 8
shall be binding upon each Holder.  No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Registrable
Securities.  No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of this Agreement unless
the same consideration also is offered to all of the parties to this Agreement.

9.           Miscellaneous.

(a)           A Person is deemed to be a Holder 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 such record owner of such
Registrable Securities.

 
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(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:

Targeted Medical Pharma, Inc.
2980 Beverly Glen Circle
Suite 301
Los Angeles, CA 90077
Attn: Elizabeth Charuvastra

If to Holder, to its address, facsimile number or email address set forth on the
Schedule A attached hereto, or to such other address, facsimile number and/or
email address to the attention of such other Person as the recipient party has
specified by written notice given to each other party five (5) 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)           All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws of
the State of Delaware, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of Delaware or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Delaware.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the State of
Delaware 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.  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.

 
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(e)           If any provision of this Agreement is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the
parties.  The parties will endeavor in good faith negotiations to replace the
prohibited, invalid or unenforceable provision(s) with a valid provision(s), the
effect of which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

(f)           This Agreement, the Merger Agreement and the instruments
referenced herein and therein 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 Merger Agreement and the
instruments referenced herein and therein supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.

(g)           Subject to the requirements of Section 7, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

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

(i)            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.

(j)            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 any 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.

(k)           All consents and other determinations required to be made by the
holders of Registrable Securities pursuant to this Agreement shall be made,
unless otherwise specified in this Agreement, by the Required Holders.

(l)           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.

(m)          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.

(n)           The obligations of each holder of Registrable Securities hereunder
are several and not joint with the obligations of any other holder of
Registrable Securities, and no provision of this Agreement is intended to confer
any obligations on any holder of Registrable Securities vis-à-vis any other
holder of Registrable Securities.  Nothing contained herein, and no action taken
by any holder of Registrable Securities pursuant hereto, shall be deemed to
constitute the holders as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the holders of Registrable
Securities are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated herein.

 
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IN WITNESS WHEREOF, the Company have caused its signature page to this
Registration Rights Agreement to be duly executed as of the date first written
above.

   
COMPANY:
 
 
TARGETED MEDICAL PHARMA, INC.
         
By:
/s/ William E. Shell, MD
   
Name:
William E. Shell, MD
   
Title:
Chief Executive Officer

 
 
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