Exhibit 10.3

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) dated as of
March 13, 2009, is made by and among IGI Laboratories, Inc., a Delaware
corporation (the “Company”), the purchasers set forth on Schedule A hereto (each
an “Investor” and collectively, the “Investors”), and the placement agent set
forth on Schedule B hereto (the “Agent”).

WHEREAS, the Company and the Investors have entered into a Securities Purchase
Agreement (the “Purchase Agreement”) dated as of even date herewith pursuant to
which the Company agreed to issue and sell to each of the Investors, and each of
the Investor agreed to purchase from the Company, shares (the “Shares”) of the
Company’s Series B-1 Convertible Preferred Stock, $0.01 par value per share (the
“Series B-1 Preferred Stock”), a secured convertible promissory note (each a
“Note” and collectively, the “Notes”) and a warrant (each a “Warrant” and
collectively, the “Warrants”) to purchase shares of the Company’s Series B-2
Preferred Stock, $0.01 par value per share (the “Series B-2 Preferred Stock”).
 The Shares, the Notes and the Warrants are referred to collectively as the
“Securities.”  A condition to the Investors’ obligations under the Purchase
Agreement is that the Company enters into this Agreement in order to provide the
Investors with certain rights relating to the registration of certain equity
securities held by the Investors.  

WHEREAS, the Company and the Agent have entered into an Engagement Letter, dated
August 28, 2008, as amended and supplemented through the date hereof (the
“Engagement Letter”), pursuant to which the Company has issued to the Agent a
warrant dated as of the date hereof (the “Agent Warrant”) to purchase 350,000
shares of the Company’s Common Stock (such shares of Common Stock, the “Agent
Shares”) in partial compensation for services provided by the Agent pursuant to
the terms of the Engagement Letter.  A condition to the Agent’s obligations
under the Engagement Letter was that the Company provide the Agent with certain
rights relating to the registration of the Agent Shares issuable upon exercise
of the Agent Warrant.

The Company desires to facilitate the rights set forth in this Agreement, and
the sale and purchase of the Securities pursuant to the Purchase Agreement, and
to satisfy its obligations under the Engagement Letter, by agreeing to the terms
and conditions set forth below.  All capitalized terms used herein but not
otherwise defined shall have the meanings ascribed to such terms in the Purchase
Agreement.

NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows.

1.

Definitions.

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

“Advice” shall have the meaning set forth in Section 6(d).

“Agent” shall have the meaning set forth in the Preamble.

“Agent Shares” shall have the meaning set forth in the Recitals.

“Agent Warrant” shall have the meaning set forth in the Recitals.

“Agreement” shall have the meaning set forth in the Preamble.

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

“Common Stock” means the common stock of the Company, par value $0.01 per share.

“Company” shall have the meaning set forth in the Preamble.

“Conversion Shares” means the shares of Series B-1 Preferred Stock into which
the Notes are convertible.  

“Effectiveness Date” means, with respect to the Initial Registration Statement
required to be filed hereunder, the one (1) year anniversary of the date hereof,
and with respect to any additional Registration Statements which may be required
pursuant to Section 3(c), the ninetieth (90th) calendar day following the date
on which an additional Registration Statement is required to be filed hereunder;
provided, however, that in the event the Company is notified by the Commission
that one or more of the above Registration Statements will not be reviewed or is
no longer subject to further review and comments, the Effectiveness Date as to
such Registration Statement shall be the fifth (5th) Trading Day following the
date on which the Company is so notified if such date precedes the dates
otherwise required above.

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

“Engagement Letter” shall have the meaning set forth in the Recitals.

“Event” shall have the meaning set forth in Section 2(b).

“Event Date” shall have the meaning set forth in Section 2(b).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

“FINRA” means the Financial Industry Regulatory Authority and any successor
self-regulatory organization.

“Filing Date” means, with respect to the Initial Registration Statement required
hereunder, the nine (9) month anniversary of the date hereof and, with respect
to any additional Registration Statements which may be required pursuant to
Section 3(c), the earliest practical date on which the Company is permitted by
SEC Guidance to file such additional Registration Statement related to the
Registrable Securities.

“Holder” or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities.

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“Indemnified Party” shall have the meaning set forth in Section 5(c).

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

“Initial Registration Statement” means the initial Registration Statement filed
pursuant to this Agreement.

“Investor” or “Investors” shall have the meaning set forth in the Preamble.

“Losses” shall have the meaning set forth in Section 5(a).

“Note” or “Notes” shall have the meaning set forth in the Recitals.

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

“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 by the Commission pursuant to
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.

“Purchase Agreement” shall have the meaning set forth in the Recitals.

“Registrable Securities” means (a) the Underlying Shares and the Agent Shares
and (b) any securities issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event with respect to the
foregoing; provided, however, that Registrable Securities shall not include, and
the Company shall not be required to maintain the effectiveness or file another
Registration Statement hereunder with respect to, any shares of Common Stock
described in clause (a) or (b) above which (i) are subject to an effective
registration statement, (ii) have been sold to the public either pursuant to a
Registration Statement or Rule 144, (iii) which have been sold in a private
transaction in which the transferor’s rights under this Agreement are not
assigned, or (iv) are eligible for resale without volume or manner-of-sale
restrictions and without current public information pursuant to Rule 144.

“Registration Statement” means any registration statement required to be filed
hereunder pursuant to Section 2(a) and any additional registration statements
contemplated by Section 3(c), including (in each case) the Prospectus,
amendments and supplements to any 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
any such registration statement.

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“Restated Certificate” means the Amended and Restated Certificate of
Incorporation of the Company.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

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

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

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

“Securities” shall have the meaning set forth in the Recitals.

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

“Series B-1 Preferred Stock” shall have the meaning set forth in the Recitals.

“Series B-2 Preferred Stock” shall have the meaning set forth in the Recitals.

“Shares” shall have the meaning set forth in the Recitals.

“Trading Day” means a day on which the principal Trading Market is open for
trading.

“Trading Market” means the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: NYSE Alternext
US, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange or the OTC Bulletin Board.

“Underlying Shares” means the shares of Common Stock into which the Shares or
the Conversion Shares are convertible pursuant to the terms of the Restated
Certificate.

“Warrant” or “Warrants” shall have the meaning set forth in the Recitals.

2.

Shelf Registration.

(a)

Subject to any objection as contemplated by Section 3(a) hereof, on or prior to
each Filing Date, the Company shall prepare and file with the Commission a
Registration Statement covering the resale of Registrable Securities in an
amount at least equal to the

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Underlying Shares and Agent Shares that are not then registered on an effective
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415.  Each Registration Statement filed hereunder shall be on Form S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith) and shall contain a plan of
distribution in a form reasonably acceptable to the Holders.  Subject to the
terms of this Agreement, the Company shall use its commercially reasonable
efforts to cause a Registration Statement to be declared effective under the
Securities Act as promptly as possible after the filing thereof, but in any
event prior to the applicable Effectiveness Date, and shall use its commercially
reasonable efforts to keep such Registration Statement continuously effective
under the Securities Act until all Registrable Securities covered by such
Registration Statement have been sold, or may be sold without volume or
manner-of-sale restrictions pursuant to Rule 144, without the requirement for
the Company to be in compliance with the current public information requirement
under Rule 144, as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the Transfer
Agent and the affected Holders (the “Effectiveness Period”).  The Company shall
telephonically request effectiveness of a Registration Statement as of 5:00 p.m.
New York City time on a Trading Day.  The Company shall immediately notify the
Holders via facsimile or by e-mail of the effectiveness of a Registration
Statement on the same Trading Day that the Company telephonically confirms
effectiveness with the Commission, which shall be the date requested for
effectiveness of such Registration Statement.  The Company shall, by 9:30 a.m.
New York City time on the Trading Day after the effective date of such
Registration Statement, file a final Prospectus with the Commission as required
by Rule 424.  Failure to so notify the Holder within one (1) Trading Day of such
notification of effectiveness or failure to file a final Prospectus as foresaid
shall be deemed an Event under Section 2(b).  

(b)

If: (i) the Initial Registration Statement is not filed on or prior to its
Filing Date (provided, that if the Company files the Initial Registration
Statement without affording the Holders the opportunity to review and comment on
the same as required by Section 3(a) herein, the Company shall be deemed to have
not satisfied this clause (i)); (ii) the Company fails to file with the
Commission a request for acceleration of a Registration Statement in accordance
with Rule 461 promulgated by the Commission pursuant to the Securities Act,
within five (5) Trading Days of the date that the Company is notified (orally or
in writing, whichever is earlier) by the Commission that such Registration
Statement will not be “reviewed” or will not be subject to further review; (iii)
prior to the effective date of a Registration Statement, the Company fails to
use commercially reasonable efforts to file a pre-effective amendment and
otherwise respond in writing to comments made by the Commission in respect of
such Registration Statement within fifteen (15) business days after the receipt
of comments by or notice from the Commission that such amendment is required in
order for such Registration Statement to be declared effective; (iv) a
Registration Statement registering for resale all of the Registrable Securities
(or such lesser number of Registrable Securities in the event the Commission
restricts the number of Registrable Securities to be included) is not declared
effective by the Commission by the Effectiveness Date of the Initial
Registration Statement; (v) after the effective date of a Registration
Statement, such Registration Statement ceases for any reason to remain
continuously effective as to all Registrable Securities included in such
Registration Statement, or the Holders are otherwise not permitted to utilize
the Prospectus therein to resell such Registrable Securities, and such
Registrable Securities are ineligible for resale pursuant to Rule 144, for more
than sixty (60)

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calendar days (which need not be consecutive calendar days) during any twelve
(12) month period; or (vi) the Company fails to satisfy the current public
information requirement under Rule 144 as to the applicable Registrable
Securities (any such failure or breach being referred to as an “Event”, and for
purposes of clauses (i), (iv), (v) and (vi), the date on which such Event
occurs, and for purpose of clause (ii) the date on which such five (5) Trading
Day period is exceeded, and for purpose of clause (iii) the date which such
fifteen (15) business day period is exceeded, and for purpose of clause (v) the
date on which such thirty (30) or sixty (60) calendar day period, as applicable,
is exceeded being referred to as “Event Date”), then, in addition to any other
rights the Holders may have hereunder or under applicable law, on each such
Event Date and on each monthly anniversary of each such Event Date (if the
applicable Event shall not have been cured by such date) until the earlier of
(1) the cure of the applicable Event and (2) the Registrable Securities cease to
be Registrable Securities, the Company shall pay (i) to the Investors an
aggregate amount in cash, as partial liquidated damages and not as a penalty,
equal to fifteen thousand dollars ($15,000.00) and (ii) to the Agent an amount
in cash, as partial liquidated damages and not as a penalty, equal to three
hundred sixty dollars ($360.00).  If the Company fails to pay any partial
liquidated damages pursuant to this Section in full within three (3) calendar
days after the date payable, the Company will pay interest thereon at a rate of
fifteen percent (15%) per annum (or such lesser maximum amount that is permitted
to be paid by applicable law) to the Holder, accruing daily from the date such
partial liquidated damages are due until such amounts, plus all such interest
thereon, are paid in full.  The partial liquidated damages pursuant to the terms
hereof shall apply on a daily pro rata basis for any portion of a month prior to
the cure of an Event.  However, for purposes of clause (iii), (iv), and (v), the
Company shall not be liable for liquidated damages under the Agreement if the
reason for noncompliance is attributable to any Holder, as evidenced by the
Commission’s comments or other administrative or judicial action, and the
Company has so notified the Holders.  

3.

Registration Procedures.

In connection with the Company’s registration obligations hereunder, the Company
shall:

(a)

Not less than five (5) Trading Days prior to the filing of each Registration
Statement and not less than one (1) Trading Day prior to the filing of any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall (i) furnish to each Holder 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 review of such
Holders and (ii) cause its officers and directors, counsel and independent
registered public accountants to respond to such inquiries as shall be
necessary, in the reasonable opinion of respective counsel to each such Holder,
to conduct a reasonable investigation within the meaning of the Securities Act.
 The Company shall not file a Registration Statement or any such Prospectus or
any amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities  shall reasonably object in good faith, provided that,
the Company is notified of such objection in writing no later than five (5)
Trading Days after such Holders have been so furnished copies of a Registration
Statement or one (1) Trading Day after such Holders have been so furnished
copies of any related Prospectus or amendments or supplements thereto.  

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(b)

(i) Prepare and file with the Commission such amendments, including
post-effective amendments, to a Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep a Registration Statement
continuously effective as to all of the Registrable Securities for the
Effectiveness Period; (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 Commission with respect to a Registration Statement or any amendment
thereto and provide as promptly as reasonably possible to the Holders true and
complete copies of all correspondence from and to the Commission relating to a
Registration Statement (provided that, the Company may excise any information
contained therein which would constitute material non-public information as to
any Holder which has not executed a confidentiality agreement with the Company);
and (iv) comply in all material respects with the provisions of the Securities
Act and the Exchange Act with respect to the disposition of all Registrable
Securities covered by a Registration Statement during the applicable period in
accordance (subject to the terms of this Agreement) with the intended methods of
disposition by the Holders thereof set forth in such Registration Statement as
so amended or in such Prospectus as so supplemented.

(c)

If during the Effectiveness Period, the number of Registrable Securities at any
time exceeds one hundred percent (100%) of the number of shares of Common Stock
then registered in a Registration Statement, then the Company shall file as soon
as reasonably practicable, but in any case prior to the applicable Filing Date,
an additional Registration Statement covering the resale by the Holders of not
less than the number of such Registrable Securities.

(d)

Notify the Holders of Registrable Securities to be sold (which notice shall,
pursuant to clauses (iii) through (vi) of this subsection (d), be accompanied by
an instruction to suspend the use of the Prospectus until the requisite changes
have been made) as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than one (1) Trading Day prior to such filing) and (if requested
by any such Person) confirm such notice in writing no later than one (1) Trading
Day following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a “review” of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement; and (C) with respect to a Registration Statement or
any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose; (v) of the occurrence of any event or passage of
time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to

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a Registration Statement, Prospectus or other documents so that, in the case of
a Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any 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; and
(vi) of the occurrence or existence of any pending corporate development with
respect to the Company that the Company believes may be material and that, in
the determination of the Company, makes it not in the best interest of the
Company to allow continued availability of a Registration Statement or
Prospectus, provided that, any and all of such information shall remain
confidential to each Holder until such information otherwise becomes public,
unless disclosure by a Holder is required by law; provided, further, that
notwithstanding each Holder’s agreement to keep such information confidential,
each such Holder makes no acknowledgement that any such information is in fact
material, non-public information.

(e)

Use its commercially reasonable efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order stopping or suspending the effectiveness
of a Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

(f)

Furnish to each Holder, without charge, at least one conformed copy of each such
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that any such item which is available
on the EDGAR system need not be furnished in physical form.

(g)

Subject to the terms of this Agreement, the Company hereby consents to the use
of such Prospectus and each amendment or supplement thereto by each of the
selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto,
except after the giving of any notice pursuant to Section 3(d).

(h)

The Company shall cooperate with any broker-dealer through which a Holder
proposes to resell its Registrable Securities in effecting a filing with the
FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as requested
by any such Holder, and the Company shall pay the filing fee required by such
filing within two (2) Business Days of request therefor.

(i)

Prior to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
Registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the

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disposition in such jurisdictions of the Registrable Securities covered by each
Registration Statement; provided, that, the Company shall not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified, subject the Company to any material tax in any such jurisdiction
where it is not then so subject or file a general consent to service of process
in any such jurisdiction.

(j)

If requested by a Holder, cooperate with such Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
in the case of the Underlying Shares, or the Agent Warrant, in the case of the
Agent Shares, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as any such
Holder may request.

(k)

Upon the occurrence of any event contemplated by Section 3(d), as promptly as
reasonably possible under the circumstances taking into account the Company’s
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement or
amendment, including a post-effective amendment, to a Registration Statement or
a supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an 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 under which they were made,
not misleading.  If the Company notifies the Holders in accordance with clauses
(iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus
until the requisite changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus.  The Company will use its commercially
reasonable efforts to ensure that the use of the Prospectus may be resumed as
promptly as is practicable.  The Company shall be entitled to exercise its right
under this Section 3(k) to suspend the availability of a Registration Statement
and Prospectus for a period not to exceed sixty (60) calendar days (which need
not be consecutive days) in any twelve (12) month period, subject to the payment
of partial liquidated damages otherwise required pursuant to Section 2(b) in the
event that such suspension exceeds sixty (60) calendar days (which need not be
consecutive days) in any twelve (12) month period.

(l)

Use its commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission relating to the registration of the Registrable
Securities pursuant to the Registration Statement or otherwise.

(m)

Notwithstanding anything in this Agreement to the contrary, not be required to
effect a registration pursuant to Section 2 or Section 3(c): (i) subject to
Section 6(b), during the period starting with the date sixty (60) days prior to
the Company’s good faith estimate of the date of filing of, and ending on a date
one hundred eighty (180) days after the effective date of, a Company-initiated
registration; provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective; or
(ii) if the Company shall furnish each Holder a certificate signed by the
Chairman of the Board stating that in the good faith and reasonable judgment of
the Board of Directors of the

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Company, it would be seriously detrimental to the Company and its shareholders
for such registration statement to be effected at such time, in which event the
Company shall have the right to defer such filing for a period of not more than
sixty (60) days; provided that such right to delay a filing shall be exercised
by the Company not more than once in any twelve (12) month period.

4.

Registration Expenses.  All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration
Statement.  The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses of the Company’s counsel and independent
registered public accountants) (A) with respect to filings made with the
Commission; (B) with respect to filings required to be made with any Trading
Market on which the Common Stock is then listed for trading; (C) in compliance
with applicable state securities or Blue Sky laws reasonably agreed to by the
Company in writing (including, without limitation, fees and disbursements of
counsel for the Company in connection with Blue Sky qualifications or exemptions
of the Registrable Securities); and (D) with respect to any filing that may be
required to be made by any broker through which a Holder intends to make sales
of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the
broker is receiving no more than a customary brokerage commission in connection
with such sale; (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities); (iii) messenger, telephone
and delivery expenses; (iv) fees and disbursements of counsel for the Company;
(v) Securities Act liability insurance, if the Company so desires such
insurance; (vi) reasonable fees and expenses of one (1) counsel to the Holders;
and (vii) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement.  In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.  In no event shall the Company be
responsible for any broker or similar commissions of any Holder.

5.

Indemnification.

(a)

Indemnification by the Company.  The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, and employees (and any other Persons with a functionally
equivalent role of a Person holding such titles, notwithstanding a lack of such
title or any other title) of each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) and the officers, directors, members, partners, agents and
employees (and any other Persons with a functionally equivalent role of a Person
holding such titles, notwithstanding a lack of such title or any other title) of
each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, reasonable attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out of or relating to (1) any
untrue or alleged untrue statement of a material fact contained in a
Registration Statement, any Prospectus

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or any form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading; or (2)
any violation or alleged violation by the Company of the Securities Act, the
Exchange Act or any state securities law, or any rule or regulation thereunder,
in connection with the performance of its obligations under this Agreement,
except to the extent, but only to the extent, that (i) such untrue statements or
omissions are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder’s proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder, or such Holder’s legal counsel, expressly
for use in a Registration Statement, such Prospectus or in any amendment or
supplement thereto; or (ii) in the case of an occurrence of an event of the type
specified in Section 3(d)(iii)- (vi), the use by such Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder
of the Advice contemplated in Section 6(d).  The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding
arising from or in connection with the transactions contemplated by this
Agreement of which the Company is aware.

(b)

Indemnification by Holders.  Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers and employees,
each Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors, officers,
agents or employees of such controlling Persons, to the fullest extent permitted
by applicable law, from and against all Losses, as incurred, to the extent
arising out of or based solely upon: (1) such Holder’s failure to comply with
the prospectus delivery requirements of the Securities Act; or (2) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading (i) to the extent, but only to the extent,
that such untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company specifically for inclusion in
such Registration Statement or such Prospectus; (ii) to the extent that such
information relates to such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by
such Holder, or such Holder’s legal counsel, expressly for use in a Registration
Statement, such Prospectus or in any amendment or supplement thereto; or (iii)
in the case of an occurrence of an event of the type specified in Section
3(d)(iii)-(vi), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d).  In no event shall the liability of any selling
Holder hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.

(c)

Conduct of Indemnification Proceedings.  If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom
indemnity is sought (the

11

“Indemnifying Party”) in writing, and the Indemnifying Party shall have the
right to assume the defense thereof, including the employment of counsel
reasonably satisfactory to the Indemnified Party and the payment of all fees and
expenses incurred in connection with defense thereof; provided, that, the
failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except (and only) to the extent that it shall be finally determined by a court
of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and counsel to the Indemnified Party shall
reasonably believe that a material conflict of interest is likely to exist if
the same counsel were to represent such Indemnified Party and the Indemnifying
Party (in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
the defense thereof and the reasonable fees and expenses of no more than one
separate counsel shall be at the expense of the Indemnifying Party).  The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed.  No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

Subject to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten (10) Trading Days of written notice thereof to
the Indemnifying Party; provided, that, the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is judicially
determined not to be entitled to indemnification hereunder.

(d)

Contribution.  If the indemnification under Section 5(a) or 5(b) is unavailable
to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then each Indemnifying Party shall contribute to the amount paid
or payable by such Indemnified Party, in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations.  The relative
fault of such Indemnifying Party and Indemnified Party shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission of a material fact, has been

12

taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission.  The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in this Agreement,
any reasonable attorneys’ or other fees or expenses incurred by such party in
connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
 Notwithstanding the provisions of this Section 5(d), no Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.  No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.

The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

6.

Miscellaneous.

(a)

Remedies.  In the event of a breach by the Company or by a Holder of any of
their respective obligations under this Agreement, each Holder or the Company,
as the case may be, in addition to being entitled to exercise all rights granted
by law and under this Agreement, including recovery of damages, shall be
entitled to specific performance of its rights under this Agreement.  The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall not assert
or shall waive the defense that a remedy at law would be adequate.

(b)

No Piggyback on Registrations; Prohibition on Filing Other Registration
Statements.  Neither the Company nor any of its security holders (other than the
Holders in such capacity pursuant hereto) may include securities of the Company
in any Registration Statements other than the Registrable Securities.  The
Company shall not file any other registration statements until all Registrable
Securities are registered pursuant to a Registration Statement that is declared
effective by the Commission, provided that this Section 6(b) shall not prohibit
the Company from (i) filing amendments to registration statements filed prior to
the date of this Agreement or (ii) filing a registration statement on Form S-4
or Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with the Company’s stock option or other employee benefit plans.

13

(c)

Compliance.  Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to a Registration
Statement.

(d)

Discontinued Disposition.  By its acquisition of Registrable Securities, each
Holder agrees that, upon receipt of a notice from the Company of the occurrence
of any event of the kind described in Section 3(d)(iii) - (vi), such Holder will
forthwith discontinue disposition of such Registrable Securities under a
Registration Statement until it is advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed.  The Company will use its commercially
reasonable efforts to ensure that the use of the Prospectus may be resumed as
promptly as is practicable.  The parties agree and acknowledge that any periods
during which the Holder is required to discontinue the disposition of the
Registrable Securities hereunder shall be subject to the provisions of Section
2(b) and Section 3(k).

(e)

Piggy-Back Registrations.  If, at any time during the Effectiveness Period,
there is not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the Company’s stock option or
other employee benefit plans, then the Company shall deliver to each Holder a
written notice of such determination and, if within fifteen (15) days after the
date of the delivery of such notice, any such Holder shall so request in
writing, the Company shall include in such registration statement all or any
part of such Registrable Securities such Holder requests to be registered;
provided, however, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 6(e) that are the subject of a
then effective Registration Statement.  The Company shall have the right to
terminate or withdraw any registration initiated by it under this Section 6(e)
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration.

(f)

Amendments and Waivers.  No provision of this Agreement may be waived or amended
except in a written instrument signed by both the Company and Holders of a
majority of the then outstanding Registrable Securities (including, for this
purpose any Registrable Securities issuable upon exercise or conversion of any
Security or the Agent Warrant).  If any amendment or waiver of any provision of
this Agreement would have an adverse effect on the rights of any Holder in a
manner different from the effect of such amendment or waiver on the rights of
Holders generally, then such amendment or waiver shall require the approval of
such adversely affected Holder.  No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.  Any amendment, waiver or consent effected in accordance with
this Section 6(f) shall be binding on all Holders, notwithstanding that all
Holders have not executed such amendment, waiver or consent.

14

(g)

Notices.  Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be delivered as set forth in the
Purchase Agreement or the Agent Warrant, as applicable.

(h)

Successors and Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns.  The Company
may not assign (except by merger) its rights or obligations hereunder without
the prior written consent of a majority of the Holders of the then outstanding
Registrable Securities.  Each Holder may assign their respective rights
hereunder to any transferee or assignee of Shares, Conversion Shares, the Agent
Warrant and/or Registrable Securities.

(i)

No Inconsistent Agreements.  Neither the Company nor any of its Subsidiaries has
entered, as of the date hereof, nor shall the Company or any of its
Subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities, that would have the effect of impairing the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof.  Except as provided in Section 3.02(c) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries has previously entered
into any agreement granting any registration rights with respect to any of its
securities to any Person that have not been satisfied in full.

(j)

Execution and Counterparts.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.

(k)

Governing Law.   This Agreement and all acts and transactions pursuant hereto
and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the internal Laws of the State of
Delaware, without giving effect to principles of conflicts of law.  Each of the
parties hereto (a) submits to the jurisdiction of any state or federal court
sitting in Delaware in any action or proceeding arising out of or relating to
this Agreement; (b) agrees that all claims in respect of such action or
proceeding may be heard and determined in any such court; (c) waives any claim
of inconvenient forum or other challenge to venue in such court; (d) agrees not
to bring any action or proceeding arising out of or relating to this Agreement
in any other court; and (e) waives any right it may have to a trial by jury with
respect to any action or proceeding arising out of or relating to this
Agreement.  Each of the parties hereto agrees to accept service of any summons,
complaint or other initial pleading made in the manner provided for the giving
of notices as provided in Section 6(g), provided that nothing in this Section
6(k) shall affect the right of a party to serve such summons, complaint or other
initial pleading in any other manner permitted by law.

(l)

Cumulative Remedies.  The remedies provided herein are cumulative and not
exclusive of any other remedies provided by law.

15

(m)

Severability.  In case any one or more of the provisions of this Agreement shall
be invalid or unenforceable in any respect, the validity and enforceability of
the remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision which shall be a reasonable substitute therefor, and
upon so agreeing, shall incorporate such substitute provision in this Agreement.

(n)

Headings.  The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

(o)

Independent Nature of Holders’ Obligations and Rights.  The obligations of each
Holder hereunder are several and not joint with the obligations of any other
Holder hereunder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder hereunder.  Nothing contained
herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto or thereto, 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 are in any way
acting in concert with respect to such obligations or the transactions
contemplated by this Agreement.  Each Holder shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an
additional party in any proceeding for such purpose.

[Signature Pages Follow]

16

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

 

IGI LABORATORIES, INC.

 

 

 

 

 

 

 

By:

/s/ Rajiv Mathur

 

Name:

Rajiv Mathur

 

Title:

President & CEO

 

 

 

 

 

 

 

LIFE SCIENCES OPPORTUNITIES
FUND II, L.P.

 

 

 

 

 

 

 

By:

Signet Healthcare Partners, G.P., its
General Partner

 

 

 

 

 

 

 

By:

/s/ James C. Gale

 

Name:

James C. Gale

 

Title:

Managing Partner

 

 

 

 

 

 

 

LIFE SCIENCES OPPORTUNITIES FUND
(INSTITUTIONAL) II, L.P.

 

 

 

 

 

 

 

By:

Signet Healthcare Partners, G.P., its
General Partner

 

 

 

 

 

 

 

By:

/s/ James C. Gale

 

Name:

James C. Gale

 

Title:

Managing Partner

 

 

 

 

 

 

 

ROCKPORT VENTURE SECURITIES, LLC

 

 

 

 

 

 

 

By:

/s/ Mark Bosland

 

Name:

Mark Bosland

 

Title:

Managing Director

[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

SCHEDULE A

PURCHASERS

Life Sciences Opportunities Fund II, L.P.

Life Sciences Opportunities Fund (Institutional) II, L.P.

SCHEDULE B

PLACEMENT AGENT

Rockport Venture Securities, LLC