Exhibit 10.6
 
REGISTRATION RIGHTS AGREEMENT
by and among
CORNERSTONE THERAPEUTICS INC.,
CRAIG A. COLLARD,
STEVEN M. LUTZ,
CORNERSTONE BIOPHARMA HOLDINGS, LTD.,
CAROLINA PHARMACEUTICALS LTD.
and
LUTZ FAMILY LIMITED PARTNERSHIP
Dated as of May 6, 2009
 

 

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TABLE OF CONTENTS

              Page  
ARTICLE I DEFINITIONS
    1  
 
       
Section 1.1 Certain Definitions
    1  
 
       
Section 1.2 Interpretation
    3  
 
       
ARTICLE II REGISTRATION RIGHTS
    3  
 
       
Section 2.1 Demand Registrations
    3  
 
       
Section 2.2 Piggyback Registrations
    6  
 
       
Section 2.3 SEC Forms
    7  
 
       
Section 2.4 Holdback Agreements
    7  
 
       
Section 2.5 Registration Procedures
    8  
 
       
Section 2.6 Suspension of Disposition
    12  
 
       
Section 2.7 Registration Expenses
    13  
 
       
Section 2.8 Underwritten Offering
    13  
 
       
Section 2.9 Indemnification
    14  
 
       
Section 2.10 Rule 144
    16  
 
       
ARTICLE III MISCELLANEOUS
    16  
 
       
Section 3.1 Effectiveness
    16  
 
       
Section 3.2 Termination
    16  
 
       
Section 3.3 Notice
    16  
 
       
Section 3.4 Entire Agreement
    17  
 
       
Section 3.5 Waiver
    17  
 
       
Section 3.6 Amendment
    17  
 
       
Section 3.7 No Third Party Beneficiaries
    17  
 
       
Section 3.8 Assignment; Binding Effect
    18  
 
       
Section 3.9 GOVERNING LAW
    18  
 
       
Section 3.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY
TRIAL
    18  
 
       
Section 3.11 Invalid Provisions
    18  
 
       
Section 3.12 Counterparts
    19  
 
       
Section 3.13 Remedies
    19  

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REGISTRATION RIGHTS AGREEMENT
     This REGISTRATION RIGHTS AGREEMENT, dated as of May 6, 2009 (this
“Agreement”), is by and among CORNERSTONE THERAPEUTICS INC., a Delaware
corporation (the “Company”), CRAIG A. COLLARD, STEVEN M. LUTZ, CORNERSTONE
BIOPHARMA HOLDINGS, LTD., a limited liability company organized under the laws
of Anguilla, and CAROLINA PHARMACEUTICALS LTD., a limited liability company
organized under the laws of Bermuda, and LUTZ FAMILY LIMITED PARTNERSHIP, a
North Carolina limited partnership (the “Stockholders”).
RECITALS
     WHEREAS, concurrently with the execution and delivery of this Agreement,
(i) Chiesi Farmaceutici SpA, an Italian corporation (“Purchaser”) and two of the
Stockholders are entering into a Stock Purchase Agreement (the “Initial Stock
Purchase Agreement”), dated the same date as this Agreement, and (ii) the
Company and Purchaser are entering into a Stock Purchase Agreement (the “Company
Stock Purchase Agreement”), also dated the same date as this Agreement;
     WHEREAS, concurrently with the execution and delivery of this Agreement,
the Stockholders, the Company and Purchaser are entering into a Stockholders
Agreement, dated the same date as this Agreement (the “Stockholders Agreement”),
pursuant to which, among other things, the Stockholders agree to certain
restrictions on transfers of the shares of Common Stock owned by such
Stockholders (the “Lockup Restrictions”); and
     WHEREAS, to induce the Stockholders to enter into the Stockholders
Agreement, the parties wish to provide for certain registration rights that are
to take effect upon the closings of the transactions provided for in the Initial
Stock Purchase Agreement and the Company Stock Purchase Agreement;
     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions herein contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
     Section 1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
     “Affiliate” means, with respect to any Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Person specified.
     “Beneficially Own” means, with respect to any security, having or sharing
the power to direct or control the voting or disposition of such security and
“Beneficial Ownership” has a correlative meaning.
     “Board” or “Board of Directors” means the Board of Directors of the Company
except where the context otherwise requires.
     “Business Day” means any day other than a Saturday, Sunday or day when
commercial banks in New York City are permitted or required by law to be closed
for the conduct of regular banking business.
     “Common Stock” means the Company’s common stock, par value $0.001 per
share.

 

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     “Demand Registration” means any registration of Registrable Securities
under the Securities Act requested by a Stockholder in accordance with
Section 2.1.
     “Effective Date” means the date of the Closing provided for in the Company
Stock Purchase Agreement.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
     “Excluded Registration” means a registration under the Securities Act of
(i) securities on Form S-8 or any similar successor form or (ii) securities to
effect the acquisition of, or combination with, another Person registered on
Form S-4 or any similar successor form.
     “FINRA” means the Financial Industry Regulatory Authority.
     “FINRA Rules” means the rules of the Financial Regulatory Authority, Inc.,
including the NASD Rules as incorporated into the FINRA Transitional Rule Book,
as amended, and any successor rules.
     “hereto”, “hereunder”, “herein”, “hereof” and words of similar import, when
used in this Agreement, refer to this Agreement as a whole and not to any
particular provision of this Agreement.
     “Material Disclosure Event” means, as of any date of determination, any
pending or imminent event relating to the Company or any of its subsidiaries
that the Board reasonably determines in good faith, after consultation with
outside counsel to the Company, (i) would require disclosure of material,
non-public information relating to such event in any registration statement or
related prospectus including Registrable Securities (including documents
incorporated by reference therein) so that such registration statement would not
be materially misleading, (ii) would not otherwise be required to be publicly
disclosed by the Company at that time in a periodic report to be filed with or
furnished to the SEC under the Exchange Act but for the filing of such
registration statement or related prospectus and (iii) if publicly disclosed at
the time of such event, could reasonably be expected to have a material adverse
effect on the business, financial condition, prospects or results of operations
of the Company and its subsidiaries or would materially adversely affect a
pending or proposed material acquisition, merger, recapitalization,
consolidation, reorganization, financing or similar transaction, or negotiations
with respect thereto.
     “Person” means any natural Person, corporation, general partnership,
limited partnership, limited or unlimited liability company, proprietorship,
joint venture, other business organization, trust, union, association or any
U.S. or non-U.S. government, regulatory or administrative authority, agency,
instrumentality or commission or any court, tribunal, judicial or arbitral body
or other similar authority.
     “Piggyback Registration” means any registration of Registrable Securities
under the Securities Act requested by a Stockholder in accordance with
Section 2.2.
     “Registrable Securities” means shares of Common Stock that are Beneficially
Owned by a Stockholder and any securities into which such shares may have been
converted pursuant to any merger, corporate reorganization or other similar
transaction, unless (i) such securities have been effectively registered under
Section 5 of the Securities Act and disposed of pursuant to an effective
registration statement, or (ii) such securities may be transferred pursuant to
Rule 144 under the Securities Act without volume limitations such that, after
any such transfer referred to in this clause (ii), such securities thereafter
may be freely transferred without restriction under the Securities Act.

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     “Rule 144” means Rule 144 promulgated by the Commission under the
Securities Act, and any successor provision thereto.
     “SEC” means the Securities and Exchange Commission.
     “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
     “Shelf Registration” means a registration of the Company Common Stock in a
continuous or delayed offering pursuant to Rule 415 under the Securities Act (or
any successor rule).
     “Underwritten Offering” means a firm commitment underwritten public
offering pursuant to an effective registration statement under the Securities
Act, other than pursuant to a registration statement on Forms S-4 or S-8 or any
similar or successor form.
     Section 1.2 Interpretation.
     (a) When a reference is made in this Agreement to an Article or a Section
hereof, such reference shall be to an Article or a Section of this Agreement
unless otherwise indicated.
     (b) The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
     (c) The parties have participated jointly in negotiating and drafting this
Agreement. If an ambiguity or a question of intent or interpretation arises,
this Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.
     (d) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms.
     (e) References to a Person are also to its permitted successors and
assigns.
     (f) The use of “or” is not intended to be exclusive unless expressly
indicated otherwise.
ARTICLE II
REGISTRATION RIGHTS
     Section 2.1 Demand Registrations.
     (a) If on or after the Effective Date, the Company shall receive a notice
from a Stockholder that the Company effect a Demand Registration (a “Demand
Notice”), for all or any portion of the Registrable Securities specified in such
Demand Notice, specifying the intended method of disposition thereof, then the
Company shall use its reasonable best efforts to effect within 60 days of such
Demand Notice, subject to the restrictions of this Section 2.1, the registration
under the Securities Act of the Registrable Securities for which the Stockholder
has requested registration under this Section 2.1, all to the extent necessary
to permit the disposition (in accordance with the intended methods thereof as
specified in the Demand Notice) of the Registrable Securities so to be
registered.

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     (b) Subject to the provisions of this Section 2.1, each Stockholder shall
be entitled to request an aggregate of two Demand Registrations before the
expiration of the Lockup Restrictions and three Demand Registrations thereafter.
     (c) Subject to Section 2.1(f), the Company shall file the registration
statement in respect of a Demand Registration as soon as practicable and, in any
event, within 45 days after receiving a Demand Notice (the “Required Filing
Date”) on Form S-1 or S-3 or any similar or successor to such forms under the
Securities Act, or, if they are not available, any form for which the Company
then qualifies, and which form shall be available for the sale of the
Registrable Securities in accordance with the intended methods of distribution
thereof, and shall use its reasonable best efforts to cause the same to be
declared effective by the SEC as promptly as practicable after such filing;
provided, that the Company shall not be obligated to effect a Demand
Registration pursuant to Section 2.1(a) (i) within 180 days after the effective
date of a previous Demand Registration and (ii) unless the Demand Notice is for
a number of Registrable Securities with an expected market value that is equal
to at least $5,000,000 as of the date of such Demand Notice or is for one
hundred percent of Registrable Securities of the stockholder that initially sent
the Demand Notice (the “Demanding Stockholder”) that such Stockholder then is
permitted to sell under the Lockup Restrictions.
     (d) With respect to any Demand Registration, subject to the availability of
a registration statement on Form S-3, the Company shall, upon written request
from a requesting Stockholder, agree to effect a Shelf Registration, and,
thereafter, shall use its reasonable best efforts to cause such registration
statement to be declared effective under the Securities Act as promptly as
practicable after the filing thereof.
     (e) Upon receipt of any Demand Notice, the Company shall promptly (but in
any event within 10 days) give written notice of such proposed Demand
Registration to all other Stockholders, who shall have the right, exercisable by
written notice to the Company within 20 days of their receipt of the Company’s
notice, to elect to include in such Demand Registration such portion of their
Registrable Securities as they may request, so long as such Registrable
Securities are proposed to be disposed of in accordance with the method or
methods of disposition requested pursuant to Section 2.1(a). All other
Stockholders requesting to have their Registrable Securities included in a
Demand Registration in accordance with the preceding sentence shall be deemed to
be a requesting Stockholder for purposes of Section 2.1(b).
     (f) The Company may defer the filing (but not the preparation) of a
registration statement required by this Section 2.1 until after the Required
Filing Date (i) for a period not to exceed 90 days, if, at the time the Company
receives the Demand Notice, there exists a Material Disclosure Event, or
(ii) for a period not to exceed 90 days, if, prior to receiving the Demand
Notice, the Company had determined to effect a registered underwritten public
offering of Company Common Stock, or securities convertible into or exchangeable
for Company Common Stock, for the Company’s account in connection with a
material public financing transaction and the Company had taken substantial
steps (including selecting a managing underwriter for such offering, if
applicable) and is proceeding with reasonable diligence to effect such offering.
A deferral of the filing of a registration statement pursuant to this
Section 2.1(f) shall be lifted, and the requested registration statement shall
be filed forthwith, if, in the case of a deferral pursuant to clause (i) of the
preceding sentence, the Material Disclosure Event is publicly disclosed or
otherwise ceases to exist, or, in the case of a deferral pursuant to clause
(ii) of the preceding sentence, the proposed registration for the Company’s
account is abandoned or the filing of a registration statement with respect to
any such proposed registration is delayed by more than 30 days from the time of
receipt of the applicable Demand Notice. In order to defer the filing of a
registration statement pursuant to this Section 2.1(f), the Company shall
promptly (but in any event within 10 days), upon determining to seek such
deferral, deliver to each requesting Stockholder a certificate signed by an
executive officer of the

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Company stating that the Company is deferring such filing pursuant to this
Section 2.1(f), a general statement of the reason for such deferral and an
approximation of the anticipated delay. Within 20 days after receiving such
certificate, the Demanding Stockholder may withdraw such Demand Notice by giving
notice to the Company; if withdrawn, the Demand Notice shall be deemed not to
have been made for all purposes of this Agreement and the Company shall pay all
expenses of such withdrawn Demand Registration in accordance with Section 2.7.
The Company may defer the filing of a particular registration statement pursuant
to this Section 2.1(f) only once in any period of 12 consecutive months;
provided, that any deferral pursuant to clause (i) of the first sentence of this
Section 2.1(f) shall be deemed to be a “Suspension Period” for purposes of
Section 2.6 and shall be subject to the limitations and obligations during
Suspension Periods set forth in Section 2.6.
     (g) No securities to be sold for the account of any Person (including the
Company), other than a requesting Stockholder, shall be included in a Demand
Registration if the managing underwriters (or, in an offering that is not
underwritten, a nationally recognized investment bank) shall advise the Company
and the requesting Stockholders in writing that the aggregate amount of such
securities requested to be included in any offering pursuant to such Demand
Registration is sufficiently large to have an adverse effect on the success of
any such offering, based on market conditions or otherwise (an “Adverse
Effect”). Furthermore, if the managing underwriters (or such investment bank)
shall advise the Company and the requesting Stockholders that, even after
exclusion of all securities of other Persons pursuant to the immediately
preceding sentence, the amount of Registrable Securities proposed to be included
in such Demand Registration by requesting Stockholders is sufficiently large to
cause an Adverse Effect, the Registrable Securities of the requesting
Stockholders to be included in such Demand Registration shall equal the number
of shares which the requesting Stockholders are so advised can be sold in such
offering without an Adverse Effect and such shares shall be allocated pro rata
among the requesting Stockholders on the basis of the number of Registrable
Securities requested to be included in such registration by each such requesting
Stockholder; provided, that the Company shall not include any Registrable
Securities of any executive officer, director or employee of the Company (other
than the Stockholders) or any of its subsidiaries if the managing underwriters
(or such investment bank) shall advise the Company and the requesting
Stockholders that the participation of any such persons may have an Adverse
Effect; provided, further that if the number of Registrable Securities owned by
the Demanding Stockholder to be included in the Demand Registration is less than
80% of the number requested to be so included, the Demanding Stockholder may
withdraw such Demand Notice by giving notice to the Company; if withdrawn, the
Demand Notice shall be deemed not to have been made for all purposes of this
Agreement and the Company shall pay all expenses of such withdrawn Demand
Registration in accordance with Section 2.7; provided, however, that if the
holders of a majority of the remaining Registrable Securities covered by such
Demand Notice desire to proceed with such Demand Registration, the Company shall
proceed forward with such Demand Registration and the Demand Notice shall be
deemed to have been made for all purposes of this Agreement by the remaining
holders.
     (h) Any requesting Stockholder may withdraw such Stockholder’s Registrable
Securities from a Demand Registration at any time and any Demanding Stockholder
shall have the right to cancel a proposed Demand Registration of Registrable
Securities pursuant to this Section 2.1(h). Upon such cancellation, the Company
shall cease all efforts to secure registration and such Demand Registration
shall not be counted as a Demand Registration under this Agreement for any
purpose and the Company shall pay the expenses of such cancelled Demand
Registration in accordance with Section 2.7.
     (i) In any registration requested pursuant to this Section 2.1, the Company
shall not register securities other than Registrable Securities for sale for the
account of any Person (including the Company), unless permitted to do so by the
written consent of the holders of a majority of the Registrable Securities to be
sold in such registration.

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     Section 2.2 Piggyback Registrations.
     (a) Whenever the Company proposes to register any of its equity securities
under the Securities Act (other than a registration statement on Form S-8 or on
Form S-4 or any similar successor forms), whether for its own account or for the
account of one or more stockholders of the Company, the Company shall each such
time give prompt written notice at least 20 business days prior to the
anticipated filing date of the registration statement relating to such
registration to all Stockholders, which notice shall set forth the Stockholders’
rights under this Section 2.2 and shall offer the Stockholders the opportunity
to include in such registration the number of Registrable Securities of the same
class or series as those proposed to be registered as the Stockholders may
request, subject to the provisions of Sections 2.2(a), 2.2(b) and 2.2(c). Upon
the request of a Stockholder made within 15 business days after the receipt of
notice from the Company (which request shall specify the number of Registrable
Securities, if any, intended to be registered by the Stockholder), the Company
shall use its reasonable best efforts to effect the registration under the
Securities Act of all Registrable Securities that the Company has been so
requested to register by the Stockholder to the extent necessary to permit the
disposition of the Registrable Securities so to be registered; provided, that
(i) if such registration involves an Underwritten Offering, the Stockholder must
sell such Stockholder’s Registrable Securities to the underwriters selected by
the Company on the same terms and conditions as apply to the Company, as
applicable, and (ii) if, at any time after giving notice of its intention to
register any securities pursuant to this Section 2.2(a) and prior to the
effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register such
securities, the Company shall give notice to the Stockholder and, thereupon,
shall be relieved of its obligation to register any Registrable Securities in
connection with such registration. No registration effected under this
Section 2.2 shall relieve the Company of its obligations to effect a Demand
Registration to the extent required by Section 2.1. There shall be no limitation
on the number of Piggyback Registrations that the Company shall be required to
effect under this Section 2.2.
     (b) At any time prior to the effective date of the registration statement
relating to such registration, a Stockholder may revoke such Piggyback
Registration request by providing a notice to the Company revoking such request.
     (c) If a Piggyback Registration is in respect of an Underwritten Offering
and was initiated by the Company, and if the managing underwriters advise the
Company that the inclusion of Registrable Securities requested to be included in
the registration statement pursuant to this Section 2.2 would cause an Adverse
Effect, then the Company shall be required to include in such registration
statement, to the extent of the amount of securities that the managing
underwriters advise may be sold without causing such Adverse Effect, (A) first,
the securities the Company proposes to sell; (B) second, the Registrable
Securities requested to be included in such registration by any Stockholder
thereof, pro rata among such Stockholders on the basis of the number of
Registrable Securities requested to be registered by each such Stockholder; and
(C) third, any other securities requested to be included in such registration;
provided, that the Company shall not include any Registrable Securities of any
executive officer or employee of the Company or any of its subsidiaries (other
than the Stockholders) if such managing underwriters advise the Company and the
requesting Stockholders that the participation of any such individual may have
an Adverse Effect. If, as a result of the provisions of this Section 2.2(c), any
Stockholder shall not be entitled to include all Registrable Securities in a
registration that such Stockholder has requested to be so included, such
Stockholder may withdraw such Stockholder’s request to include Registrable
Securities in such registration statement.
     (d) If a Piggyback Registration is in respect of an Underwritten Offering
and was initiated by a security holder of the Company (other than a
Stockholder), and if the managing underwriters advise the Company that the
inclusion of Registrable Securities requested to be included in the registration
statement

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would cause an Adverse Effect, the Company shall include in such registration
statement, to the extent of the amount of securities that the managing
underwriters advise may be sold without causing such Adverse Effect, (A) first,
the Registrable Securities requested to be included in such registration by any
Stockholder thereof, pro rata among the Stockholders on the basis of the number
of Registrable Securities requested to be registered by each such Stockholder;
and (B) second, any other securities requested to be included in such
registration (including securities to be sold for the account of the Company);
provided, that the Company shall not include any Registrable Securities of any
executive officer or employee of the Company or any of its subsidiaries (other
than the Stockholders) if such managing underwriters advise the Company and the
requesting Stockholders that the participation of any such individual may have
an Adverse Effect. If, as a result of the provisions of this Section 2.2(d), any
Stockholder shall not be entitled to include all Registrable Securities in a
registration that such Stockholder has requested to be so included, such
Stockholder may withdraw such Stockholder’s request to include Registrable
Securities in such registration statement.
     (e) Notwithstanding any of the foregoing, the provisions of Sections 2.2(c)
and 2.2(d) shall not apply to a Piggyback Registration that is a Shelf
Registration.
     Section 2.3 SEC Forms. The Company shall use its reasonable best efforts to
cause any Demand Registrations to be registered on Form S-3 (or any successor
form), if applicable, once the Company becomes eligible to use Form S-3. If the
Company is not then eligible under the Securities Act to use Form S-3, such
Demand Registrations shall be registered on the form for which the Company then
qualifies. The Company shall use its best efforts to become and remain eligible
to use Form S-3. All such registration statements shall comply with applicable
requirements of the Securities Act, and, together with each prospectus included,
filed or otherwise furnished by the Company in connection therewith, shall not
contain any untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
     Section 2.4 Holdback Agreements.
     (a) The Company agrees (i) not to effect any public sale or distribution of
its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, except pursuant to Excluded Registrations,
during the seven days prior to the effective date of any registration statement
in connection with a Demand Registration or Piggyback Registration and
thereafter until the date on which all of the Registrable Securities subject to
such registration statement have been sold (not to exceed 90 days, as required
by the underwriters managing the offering) and (ii) if requested by the managing
underwriters, to use reasonable efforts to cause each director and executive
officer to agree not to effect any public sale or distribution (including sales
pursuant to Rule 144 of the Securities Act) of any such securities during such
period (except as part of such underwritten registration, if otherwise
permitted); provided, that the foregoing described holdback shall not apply to
the extent that the managing underwriters of such offering otherwise agree or,
in the event a registration statement does not relate to an Underwritten
Offering, if the holders of a majority of such Registrable Securities consent
thereto.
     (b) If any Stockholders notify the Company in writing that they intend to
effect an underwritten sale of Company Common Stock registered pursuant to a
Shelf Registration, the Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for its equity securities, during the seven days
prior to and during the 90-day period beginning on the filing of the prospectus
supplement with respect to such offering, other than pursuant to Excluded
Registrations or to the extent that the managing underwriters of such offering
otherwise agree and (ii) if requested by the managing underwriters, to use
reasonable efforts to cause each director and executive officer to agree not to
effect any public sale or distribution (including sales

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pursuant to Section 144) of any such securities during such period (except as
part of such underwritten registration, if otherwise permitted).
     (c) Each Stockholder agrees, in the event of an Underwritten Offering by
the Company (whether for the account of the Company or otherwise), not to effect
any public sale or distribution of any Registrable Securities, or any securities
convertible into or exchangeable or exercisable for such Registrable Securities,
including any sale pursuant to Rule 144 (except as part of such Underwritten
Offering), during the seven days prior to and ending up to 90 days after the
date of the final prospectus, subject in each case to such extensions as are
customary to permit the publication of research in compliance with Rule 2711(f)
of the rules of the National Association of Securities Dealers, Inc. as
incorporated in the FINRA Rules (or any similar successor rule thereto);
provided, that each other stockholder of the Company and each executive officer
of the Company is subject to substantially the same restrictions.
     Section 2.5 Registration Procedures. Whenever any Stockholder has requested
that any Registrable Securities be registered pursuant to this Agreement, the
Company shall use its best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended method of
disposition thereof as promptly as is practicable, and pursuant thereto the
Company shall as expeditiously as possible:
     (a) prepare and file with the SEC by the Required Filing Date a
registration statement on the appropriate form under the Securities Act with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective as soon as practicable after the
initial filing thereof; provided, that as far in advance as practicable before
filing such registration statement or any amendment or supplement thereto, the
Company shall furnish to the selling Stockholders copies of reasonably complete
drafts of all such documents prepared to be filed (including exhibits and
documents that are to be incorporated by reference into the registration
statement, amendment or supplement), and any such Stockholder shall have the
opportunity to object to any information contained therein and the Company shall
make any corrections or other amendments reasonably requested by such
Stockholder with respect to such information prior to filing any such
registration statement, amendment or supplement;
     (b) except in the case of a Shelf Registration, prepare and file with the
SEC such amendments, post-effective amendments, and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than 180 days (or such lesser period as is necessary for the underwriters in an
Underwritten Offering to sell unsold allotments) and comply with the provisions
of the Securities Act with respect to the disposition of all securities covered
by such registration statement during such period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement;
     (c) in the case of a Shelf Registration, prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities subject thereto for a
period ending on the earlier of (i) 24 months after the effective date of such
registration statement and (ii) the date on which all the Registrable Securities
subject thereto have been sold pursuant to such registration statement;
     (d) furnish to each Stockholder selling Registrable Securities and the
underwriters, if any, of the securities being registered such number of copies
of such registration statement, each amendment and supplement thereto, the
prospectus included in such registration statement (including each preliminary

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prospectus and any summary prospectus), any documents incorporated by reference
therein and such other documents as such Stockholder or underwriters reasonably
may request in order to facilitate the disposition of the Registrable Securities
owned by such Stockholder or the sale of such securities by such underwriters
(it being understood that, subject to this Section 2.5 and the requirements of
the Securities Act and applicable state securities laws, the Company consents to
the use of the prospectus and any amendment or supplement thereto by each such
Stockholder and the underwriters in connection with the offering and sale of the
Registrable Securities covered by the registration statement of which such
prospectus, amendment or supplement is a part);
     (e) use its best efforts to register or qualify such Registrable Securities
under such other securities or “blue sky” laws of such jurisdictions as any
Stockholder thereof or the managing underwriters reasonably request; use its
reasonable best efforts to keep each such registration or qualification (or
exemption therefrom) effective during the period in which such registration
statement is required to be kept effective; and do any and all other acts and
things which may be reasonably necessary or advisable to enable each such
Stockholder to consummate the disposition of the Registrable Securities owned by
such Stockholder in such jurisdictions; provided, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph or
(ii) consent to general service of process in any such jurisdiction;
     (f) promptly notify each Stockholder of such Registrable Securities and
each underwriter, if any, in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed and, with respect to a
registration statement or any post-effective amendment, when the same has become
effective; (ii) of the issuance by any state securities or other regulatory
authority of any order suspending the qualification or exemption from
qualification of any of the Registrable Securities under state securities or
“blue sky” laws or the initiation or threat of initiation of any proceedings for
that purpose; and (iii) if such registration statement or related prospectus, at
the time it or any amendment thereto became effective or at any time such
prospectus is required to be delivered under the Securities Act, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
upon the discovery by the Company of such material misstatement or omission or
of the happening of any event as a result of which the Company believes there
would be such a material misstatement or omission; provided, that, in the case
of clause (iii), promptly after delivery of such notice, the Company shall, as
the case may be, (x) prepare and file with the SEC a post-effective amendment to
such registration statement and use its best efforts to cause such amendment to
become effective so that such registration statement, as so amended, shall not
contain any untrue statement of a material fact or omit a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading or (y) prepare and furnish a supplement or
amendment to such prospectus so that, as thereafter deliverable to the
purchasers of such Registrable Securities, such prospectus shall not contain any
untrue statement of a material fact or omit a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
     (g) permit (i) any selling Stockholder that, in such Stockholder’s sole and
exclusive judgment, might reasonably be deemed to be an underwriter or a
controlling person of the Company (in each case, within the meaning of the
Securities Act) and (ii) any selling Stockholder holding, or representing
Stockholders of, a majority of the Registrable Securities included in such
registration statement, to participate in the preparation of such registration
statement or related prospectus and promptly incorporate any information
furnished to the Company by such Stockholder that, in the reasonable judgment of
such Stockholder and its counsel, should be included;
     (h) make reasonably available senior management of the Company, as selected
by the Stockholders of a majority of the Registrable Securities included in such
registration, to assist in the

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marketing of the Registrable Securities covered by such registration, including
the participation of such members of the Company’s senior management in “road
show” presentations and other customary marketing activities, including
“one-on-one” meetings with prospective purchasers of the Registrable Securities
to be sold in the Underwritten Offering and otherwise to facilitate, cooperate
with, and participate in each proposed offering contemplated herein and
customary selling efforts related thereto, in each case to the same extent as if
the Company were engaged in a primary registered offering of its capital stock;
provided, that such assistance does not unduly interfere with the normal
operations of the Company in the ordinary course of business, consistent with
past practice;
     (i) otherwise use its best efforts to comply with all applicable rules and
regulations of the SEC, including the Securities Act and the Exchange Act, and
make generally available to the Company’s security holders an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder, as soon as reasonably practicable, but no later than 30 days after
the end of the 12-month period beginning with the first day of the Company’s
first fiscal quarter commencing after the effective date of a registration
statement, which earnings statement shall cover said 12 month period; provided,
that such requirement shall be deemed satisfied if the Company timely files
complete and accurate information on Forms 10-Q, 10-K and 8-K under the Exchange
Act as required thereby and otherwise complies with Rule 158 under the
Securities Act;
     (j) in the case of an Underwritten Offering, if requested by the managing
underwriters or any selling Stockholder, promptly incorporate in a prospectus
supplement or post-effective amendment such information as the managing
underwriters or such selling Stockholder reasonably requests to be included
therein, including with respect to the Registrable Securities being sold by such
selling Stockholder, the purchase price being paid therefor by the underwriters
and with respect to any other terms of the Underwritten Offering of the
Registrable Securities to be sold in such offering, and promptly make all
required filings of such prospectus supplement or post-effective amendment;
     (k) as promptly as practicable after filing with the SEC of any document
that is incorporated by reference into a registration statement (in the form in
which it was incorporated), deliver a copy of each such document to each selling
Stockholder;
     (l) cooperate with the selling Stockholders and the managing underwriters
to facilitate the timely preparation and delivery of certificates representing
securities sold under any registration statement, which certificates shall not
bear any restrictive legends unless required under applicable law, and enable
such securities to be in such denominations and registered in such names as the
managing underwriters or such selling Stockholders may request and keep
available and make available to the Company’s transfer agent prior to the
effectiveness of such registration statement a supply of such certificates;
     (m) promptly make available for inspection by any selling Stockholder and
any underwriter participating in any disposition pursuant to any registration
statement, and any attorney, accountant or other agent or representative
retained by any such selling Stockholder or underwriter (collectively, the
“Inspectors”), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the “Records”), as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company’s officers, directors, employees and
independent accountants to supply all information requested by any such
Inspector in connection with such registration statement; provided, that, unless
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in the registration statement or the release of such Records is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction, the Company shall not be required to provide any information under
this subparagraph (m) if (i) the Company reasonably determines in good faith,
after consultation with outside counsel, that to do so would cause the Company
to forfeit an

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attorney-client privilege that was applicable to such information or (ii) if
either (A) the Company has requested and been granted from the SEC confidential
treatment of such information contained in any filing with the SEC or documents
provided supplementally or otherwise or (B) the Company reasonably determines in
good faith that such Records are confidential and so notifies the Inspectors in
writing, unless prior to furnishing any such information with respect to clause
(ii) such selling Stockholder requesting such information agrees to enter into a
confidentiality agreement in customary form and subject to customary exceptions;
and provided, further that each selling Stockholder agrees that it shall, upon
learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at its expense,
to undertake appropriate action and to prevent disclosure of the Records deemed
confidential;
     (n) furnish to each selling Stockholder and underwriter, if any, a signed
counterpart of (i) an opinion or opinions of counsel to the Company and updates
thereof (which counsel and which opinions shall be reasonably satisfactory to
the underwriters and the Stockholders of a majority of the Registrable
Securities covered by the registration statement) addressed to them covering the
matters customarily covered in opinions requested in Underwritten Offerings and
such other matters as may be reasonably requested by the Stockholders of a
majority of the Registrable Securities covered by the registration statement and
underwriters or their counsel, (ii) a comfort letter or comfort letters and
updates thereof from the Company’s independent public accountants addressed to
them, each in customary form and covering such matters of the type customarily
covered by comfort letters by underwriters in connection with primary
Underwritten Offerings;
     (o) cause the Registrable Securities included in any registration statement
to be listed for quotation on the NASDAQ Capital Market (or such other principal
trading market as the Company’s shares of Common Stock may then be traded on);
     (p) provide a transfer agent and registrar for all Registrable Securities
registered hereunder not later than the effective date of the registration
statement related thereto;
     (q) use its best efforts to cause Registrable Securities covered by such
registration statement to be registered with or approved by such other
government agencies or authorities as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Securities;
     (r) cooperate with each selling Stockholder and each underwriter, if any,
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with
FINRA;
     (s) as may be required in connection with the initial filing of any
registration statement, and during the period when the prospectus is required to
be delivered under the Securities Act, promptly file all documents required to
be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act;
     (t) notify each selling Stockholder promptly of any written comments by the
SEC or any request by the SEC for the amending or supplementing of such
registration statement or prospectus or for additional information;
     (u) if applicable, enter into an underwriting agreement for such offering,
such agreement to contain such representations and warranties by the Company and
such other terms and provisions as are customarily contained in underwriting
agreements with respect to that offering, including indemnities and contribution
to the effect and to the extent provided in Section 2.9 and the provision of
opinion of counsel and accountants’ letters to the effect and to the extent
provided in Section 2.5(n) and enter into any other

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such customary agreements and take all such other actions as the Stockholders of
a majority of the Registrable Securities covered by the registration statement
or the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities. The selling
Stockholders shall be parties to any such underwriting agreement, and the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such selling Stockholders;
     (v) make every reasonable effort to prevent the entry of any order
suspending the effectiveness of the registration statement and, in the event of
the issuance of any such stop order, or of any order suspending or preventing
the use of any related prospectus or suspending the qualification of any
security included in such registration statement for sale in any jurisdiction,
the Company shall use commercially reasonable efforts promptly to obtain the
withdrawal of such order;
     (w) provide a CUSIP number for all Registrable Securities not later than
the effective date of the registration statement with respect thereto;
     (x) in connection with an Underwritten Offering make such representations
and warranties to the selling Stockholders of such Registrable Securities and
the underwriters with respect to the Registrable Securities and the registration
statement as are customarily made by issuers to underwriters in primary
Underwritten Offerings and deliver such documents and certificates as may be
reasonably requested by each seller of Registrable Securities covered by the
registration statement and by the underwriters to evidence compliance with such
representations and warranties and with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company; and
     (y) advise each selling Stockholder, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance or threat of issuance of any stop
order by the SEC suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for such purpose and promptly
use its best efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued.
     Section 2.6 Suspension of Disposition. Each Stockholder agrees by
acquisition of any Registrable Securities that, upon receipt of any notice (a
“Suspension Notice”) from the Company of the happening of any Material
Disclosure Event, such Stockholder shall promptly discontinue such Stockholder’s
disposition of Registrable Securities until such Stockholder’s receipt of the
copies of the supplemented or amended prospectus, or until it is advised in
writing by the Company (the “Advice”) that the use of the prospectus may be
resumed, and has received copies of any additional or supplemental filings that
are incorporated by reference in the prospectus, and, if so directed by the
Company, such Stockholder shall deliver to the Company all copies, other than
permanent file copies then in such Stockholder’s possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any Suspension Notice, the time
period regarding the effectiveness of registration statements set forth in
Sections 2.5(b) and 2.5(c) hereof shall be extended by the number of days during
the period from and including the date of the giving of the Suspension Notice to
and including the date when each seller of Registrable Securities covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus or the Advice (such period, a “Suspension Period”). The
Company shall use its best efforts and take such actions as are reasonably
necessary to render the Advice as promptly as practicable and shall as promptly
as practicable after the expiration of the Suspension Period prepare a
post-effective amendment or supplement to the registration statement or the
prospectus or any document incorporated therein by reference, or file any
required document so that, as thereafter delivered to purchasers of the
Registrable Securities included therein, the prospectus will not include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in light of the circumstances under

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which they were made, not misleading. Notwithstanding anything herein to the
contrary, the Company shall not be entitled to more than two Suspension Periods
during any consecutive 12-month period, which Suspension Periods shall have
durations of not more than 90 days each; provided, that a Suspension Period
shall automatically expire upon the public disclosure of the information to
which the Material Disclosure Event relates. The fact that a Suspension Period
is in effect under this Section 2.6 shall not relieve the contractual
obligations of the Company as set forth in Section 2.5 or in any SEC rules to
file timely reports and otherwise file material required to be filed under the
Exchange Act.
     Section 2.7 Registration Expenses. The Company shall pay all out-of-pocket
fees and expenses incident to any Demand Registration or Piggyback Registration,
including all expenses incident to the Company’s performance of or compliance
with this Article 2, all registration and filing fees, all internal fees and
expenses of the Company (including any allocation of salaries of employees of
the Company or any of its subsidiaries or other general overhead expenses of the
Company and its subsidiaries or other expenses related to the preparation of
financial statements or other data normally prepared by the Company and its
subsidiaries in the ordinary course of business and expenses of its officers and
employees performing legal or accounting duties), all fees and expenses
associated with filings required to be made with the FINRA (including, if
applicable, the reasonable fees and expenses of any “qualified independent
underwriter” as such term is defined in Schedule E of the By-Laws of the FINRA,
and of its counsel) or with any other applicable governmental authority, as may
be required by the rules and regulations of the FINRA or such other governmental
authority, fees and expenses of compliance with securities or “blue sky” laws
(including reasonable fees and disbursements of counsel in connection with “blue
sky” qualifications of the Registrable Securities), rating agency fees, printing
expenses (including expenses of printing certificates for the Registrable
Securities in a form eligible for deposit with Depository Trust Company and of
printing prospectuses if the printing of prospectuses is requested by a holder
of Registrable Securities), messenger, duplicating, distribution and delivery
expenses, the expense of any annual audit or quarterly review, the expense of
any liability insurance, the fees and expenses incurred in connection with any
listing or quotation of the Registrable Securities, fees and expenses of counsel
for the Company and its independent certified public accountants (including the
expenses of any special audit or “cold comfort” letters required by or incident
to such performance), the fees and expenses of any special experts retained by
the Company in connection with such registration and the reasonable fees and
expenses of any one counsel for all Stockholders participating in such
registration shall be paid for by the Company, which counsel shall be selected
by the Stockholders of a majority of the Registrable Securities to be registered
in such offering. Any underwriting discounts, commissions, or fees attributable
to the sale of the Registrable Securities shall be borne by the Stockholders pro
rata on the basis of the number of Registrable Securities so registered whether
or not any registration statement becomes effective, and the fees and expenses
of any counsel, accountants, or other persons retained or employed by any
Stockholder (other than as set forth in the preceding sentence) shall be borne
by such Stockholder.
     Section 2.8 Underwritten Offering.
     (a) At the request of the Stockholders of a majority of the Registrable
Securities to be registered in any Demand Registration, the offering of
Registrable Securities pursuant to such Demand Registration including pursuant
to a Shelf Registration, shall be in the form of an Underwritten Offering. The
Stockholders of a majority of the Registrable Securities to be so registered
shall select (i) the investment banking firm or firms to manage the Underwritten
Offering and (ii) counsel to the requesting Stockholders; provided, that, in the
case of clause (i), such selection shall be subject to the consent of the
Company, which consent shall not be unreasonably withheld or delayed. No
Stockholder may participate in any Underwritten Offering pursuant to this
Agreement unless such Stockholder (x) agrees to sell such Stockholder’s
Registrable Securities on the basis provided in any underwriting agreement
described above as agreed upon by the Company and accepts the underwriters
selected in accordance with the procedures

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described in this Section 2.8. and (y) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
agreements; provided, that no such Stockholder shall be required to make any
representations or warranties in connection with any such registration other
than representations and warranties as to (i) such Stockholder’s ownership of
his, her or its Registrable Securities to be transferred free and clear of all
liens, claims, and encumbrances created by such Stockholder, (ii) such
Stockholder ‘s power and authority to effect such transfer, and (iii) such
matters pertaining to such Stockholder ‘s compliance with securities laws as may
be reasonably requested; provided, further that any obligation of such
Stockholder to indemnify any Person pursuant to any such underwriting agreement
shall be several, not joint and several, among such Stockholders selling
Registrable Securities, and such liability shall be limited to the net amount
received by such Stockholder from the sale of his, her or its Registrable
Securities pursuant to such registration (which amounts shall include the amount
of cash or the fair market value of any assets in exchange for the sale or
exchange of such Registrable Securities or that are the subject of a
distribution), and the relative liability of each such Stockholder shall be in
proportion to such net amounts; provided, further that this Section 2.8(a) shall
not require any Stockholder to agree to any lock up agreement, market standoff
agreement or holdback agreement other than those permitted by Section 2.4.
     (b) If Registrable Securities are to be sold in a Underwritten Offering,
the Company agrees to include in the registration statement, or in the case of a
Shelf Registration, a prospectus supplement, to be used all such information as
may be reasonably requested by the underwriters for the marketing and sale of
such Registrable Securities.
     Section 2.9 Indemnification.
     (a) In connection with each Demand Registration or Piggyback Registration,
the Company shall indemnify and hold harmless each Stockholder, the officers,
directors and agents and employees of each of them, each Person who controls
each such Stockholder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the directors, officers, agents and
employees of each such controlling Person, from and against any and all losses,
claims, damages, liabilities, judgment, costs (including, without limitation,
reasonable attorneys’ fees) (collectively, “Losses”), arising out of or based
upon any untrue or alleged untrue statement of a material fact contained in any
registration statement or prospectus, or in any amendment or supplement thereto,
or in any preliminary prospectus, or arising out of or based upon any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as the
same are based upon information furnished to the Company by or on behalf of such
Stockholder for use therein.
     (b) In connection with each Demand Registration or Piggyback Registration
and each offering of Registrable Securities proposed to be made pursuant to such
Demand Registration or Piggyback Registration, each Stockholder shall furnish to
the Company in writing such information as the Company reasonably requests for
use in connection with each applicable registration statement and prospectus.
Each Stockholder agrees to indemnify, to the full extent permitted by law, the
Company, its directors, officers, agents or employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the directors, officers, agents or employees
of such controlling Person, from and against any and all Losses, as incurred,
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in such registration statement or prospectus or in any
amendment or supplement thereto, or in any preliminary prospectus, or arising
out of or based upon any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, to the extent, but only to the extent, that such untrue or alleged
untrue statement or omission or alleged omission is based upon any

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information so furnished in writing by or on behalf of such Stockholder to the
Company expressly for use in such registration statement or prospectus.
     (c) If any Person shall be entitled to indemnity hereunder (an “indemnified
party”), such indemnified party shall give prompt notice to the party from which
such indemnity is sought (the “indemnifying party”) of any claim or of the
commencement of any proceeding with respect to which such indemnified party
seeks indemnification or contribution pursuant hereto; provided, that the delay
or failure to so notify the indemnifying party shall not relieve the
indemnifying party from any obligation or liability except to the extent that
the indemnifying party has been prejudiced by such delay or failure. The
indemnifying party shall have the right, exercisable by giving written notice to
an indemnified party promptly after the receipt of written notice from such
indemnified party of such claim or proceeding, to assume, at the indemnifying
party’s expense, the defense of any such claim or proceeding, with counsel
reasonably satisfactory to such indemnified party; provided, that (i) an
indemnified party shall have the right to employ separate counsel in any such
claim or 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
unless: (A) the indemnifying party agrees to pay such fees and expenses; (B) the
indemnifying party fails promptly to assume the defense of such claim or
proceeding or fails to employ counsel reasonably satisfactory to such
indemnified party; or (C) the named parties to any proceeding (including
impleaded parties) include both such indemnified party and the indemnifying
party, and such indemnified party shall have been advised by counsel that there
may be one or more legal defenses available to it that are inconsistent with
those available to the indemnifying party or that a conflict of interest is
likely to exist among such indemnified party and any other indemnified parties
(in which case the indemnifying party shall not have the right to assume the
defense of such action on behalf of such indemnified party); and (ii) subject to
clause (C) above, the indemnifying party shall not, in connection with any one
such claim or proceeding or separate but substantially similar or related claims
or proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one firm of attorneys (together with appropriate local counsel) at any time for
all of the indemnified parties, or for fees and expenses that are not
reasonable. Whether or not such defense is assumed by the indemnifying party,
such indemnified party shall not be subject to any liability for any settlement
made without its consent. The indemnifying party shall not consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release, in form and substance reasonably satisfactory to
the indemnified party, from all liability in respect of such claim or litigation
for which such indemnified party would be entitled to indemnification hereunder.
     (d) If the indemnification provided for in this Section 2.9 is unavailable
to an indemnified party in respect of any Losses (other than in accordance with
its terms), then each applicable indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party, on the one
hand, and such indemnified party, on the other hand, 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, on the one hand, and indemnified party, on the other hand, shall be
determined by reference to, among other things, whether any action in question,
including any untrue statement of a material fact or omission or alleged
omission to state a material fact, has been taken 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 any such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include any legal or other
fees or expenses incurred by such party in connection with any investigation or
proceeding. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.9(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable

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considerations referred to in the second immediately preceding sentence.
Notwithstanding the provisions of this Section 2.9(d), an indemnifying party
that is a Stockholder shall not be required to contribute any amount which is in
excess of the amount by which the total proceeds received by such Stockholder
from the sale of the Registrable Securities sold by such Stockholder (net of all
underwriting discounts and commissions) exceeds the amount of any damages that
such indemnifying party 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.
     Section 2.10 Rule 144. The Company shall use its reasonable best efforts to
file in a timely fashion all reports and other documents required to be filed by
it under the Securities Act and the Exchange Act and that it will take such
further action as the Stockholders may reasonably request, all to the extent
required from time to time to enable the Stockholders to sell Registrable
Securities without registration under the Securities Act pursuant to
(i) Rule 144 or (ii) any similar rule or regulation hereafter adopted by the
Commission. Upon the request of a Stockholder, the Company will deliver to such
Stockholder a written statement as to whether it has complied with such
requirements.
ARTICLE III
MISCELLANEOUS
     Section 3.1 Effectiveness. The provisions of this Agreement shall become
effective on the Effective Date.
     Section 3.2 Termination. This Agreement shall terminate automatically,
without the action of any Stockholder or the Company, if the Company Stock
Purchase Agreement is terminated pursuant to Section 6.1 thereof prior to the
Effective Date. Notwithstanding the foregoing, the Company shall have no further
obligations pursuant to this Agreement at such time as no Registrable Securities
are outstanding.
     Section 3.3 Notice.
     (a) All notices and other communications under this Agreement must be in
writing and delivered to the applicable party or parties in Person or by
delivery to the address or facsimile number specified below (or to such other
address or facsimile number as the recipient previously shall have specified by
notice to the other parties hereunder):
If to the Company:
c/o Cornerstone Therapeutics Inc.
1255 Crescent Green Drive, Suite 250
Cary, NC 27518
Attention: Chief Financial Officer
                  General Counsel
Facsimile: (888) 443-3092
With a copy (which shall not constitute notice) to:
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019

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Attention: John A. Healy
Facsimile: (212) 878-8375
If to the Stockholders:
c/o Cornerstone Therapeutics Inc.
1255 Crescent Green Drive, Suite 250
Cary, NC 27518
Attention: Chief Financial Officer
                  General Counsel
Facsimile: (888) 443-3092
With a copy (which shall not constitute notice) to:
Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019
Attention: John A. Healy
Facsimile: (212) 878-8375
     (b) All notices and other communications sent to the applicable address or
facsimile number specified above shall be deemed to have been delivered at the
earlier of (i) the time of actual receipt by the addressee; (ii) if the notice
is sent by facsimile transmission, the time indicated on the transmitting
party’s receipt of confirmation of transmission that time is during the
addressee’s regular business hours on a Business Day, and otherwise at 9:00 a.m.
on the next Business Day after such time; and (iii) if the notice is sent by a
nationally recognized, reputable overnight courier service, the time shown on
the confirmation of delivery provided by that service if that time is during the
recipient’s regular business hours on a Business Day, and otherwise at 9:00 a.m.
on the next Business Day after such time.
     Section 3.4 Entire Agreement. This Agreement constitutes the sole and
entire agreement among the parties to this Agreement with respect to the subject
matter of this Agreement, and supersede all prior and contemporaneous
representations, agreements and understandings, written or oral, with respect to
the subject matter hereof.
     Section 3.5 Waiver. Subject to applicable law and except as otherwise
provided in this Agreement, any party to this Agreement may, at any time prior
to termination of this Agreement, extend the time for performance of any
obligation under this Agreement of any other party or waive compliance with any
term or condition of this Agreement by any other party. No such extension or
waiver shall be effective unless set forth in a written instrument duly executed
by the party granting such extension or waiver. No delay in asserting or
exercising a right under this Agreement shall be deemed a wavier of that right.
     Section 3.6 Amendment. Subject to applicable law and except as otherwise
provided in this Agreement, this Agreement may be amended, supplemented or
modified at any time; provided, that no such amendment, supplement or
modification shall be effective unless it is set forth in a written instrument
duly executed by each of the parties hereto.
     Section 3.7 No Third Party Beneficiaries. Except as set forth in
Section 2.9, the terms and provisions of this Agreement are intended solely for
the benefit of each party hereto and their respective successors or permitted
assigns, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other Person.

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     Section 3.8 Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation under this Agreement may be assigned by any party
to this Agreement, by operation of law or otherwise, without the prior written
consent of the other parties to this Agreement and any attempt to do so will be
void. Subject to the foregoing, this Agreement is binding upon, inures to the
benefit of and is enforceable by the parties to this Agreement and their
respective successors and assigns.
     Section 3.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
FOR ANY OF THE CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE
APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
     Section 3.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY
TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE DELAWARE CHANCERY COURT SITTING IN THE COUNTY OF NEW CASTLE,
OR IF SUCH COURT SHALL NOT HAVE PROPER JURISDICTION, OF THE UNITED STATES
FEDERAL DISTRICT COURT SITTING IN DELAWARE, AND ANY APPELLATE COURT THEREOF, IN
RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND AGREES THAT ANY SUCH
ACTION, SUIT OR PROCEEDING SHALL BE BROUGHT ONLY IN SUCH COURTS (AND WAIVES AND
AGREES NOT TO ASSERT ANY OBJECTION BASED ON FORUM NON CONVENIENS OR ANY OTHER
OBJECTION TO VENUE THEREIN OR JURISDICTION THEREOF); PROVIDED, HOWEVER, THAT
SUCH CONSENT TO JURISDICTION IS SOLELY FOR THE PURPOSE REFERRED TO IN THIS
SECTION 3.10 AND SHALL NOT BE DEEMED TO BE A GENERAL SUBMISSION TO THE
JURISDICTION OF SAID COURTS OR IN THE STATE OF DELAWARE OTHER THAN FOR SUCH
PURPOSE. Any and all process may be served in any action, suit or proceeding
arising in connection with this Agreement by complying with the provisions of
Section 3.3. Such service of process shall have the same effect as if the party
being served were a resident in the State of Delaware and had been lawfully
served with such process in such jurisdiction. The parties hereby waive all
claims of error by reason of such service. Nothing herein shall affect the right
of any party to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against the other in any other
jurisdiction to enforce judgments or rulings of the aforementioned courts. EACH
PARTY TO THIS AGREEMENT HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED HEREBY, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 3.10.
     Section 3.11 Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law,
(a) such provision will be fully severable, (b) this Agreement will be construed
and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (c) the remaining provisions of this Agreement will
remain in full force and effect and will not be affected by the illegal, invalid
or unenforceable provision or by its severance herefrom and (d) in lieu of such
illegal, invalid or unenforceable provision, there will be added automatically
as a part of this Agreement a legal, valid and enforceable provision as similar
in terms to

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such illegal, invalid or unenforceable provision as may be possible and the
parties hereto shall cooperate in good faith to formulate and implement such
provision.
     Section 3.12 Counterparts. This Agreement may be executed manually or by
facsimile, in any number of counterparts, all of which will constitute one and
the same instrument, and will become effective when a counterpart shall have
been executed and delivered by each party to the other parties (except that
parties that are affiliates need not deliver counterparts to each other in order
for this Agreement to be effective).
     Section 3.13 Remedies. The parties hereto agree that if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to injunctive relief to prevent breaches
of this Agreement and to specific performance of the terms hereof, in addition
to any other remedy at law or equity to which the parties may be entitled.
Except as otherwise provided herein, all remedies available under this
Agreement, at law or otherwise, shall be deemed cumulative and not alternative
or exclusive of other remedies. The exercise by any party of a particular remedy
shall not preclude the exercise of any other remedy.

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

            CORNERSTONE THERAPEUTICS INC.
      By:   /s/ Craig A. Collard       Name:   Craig A. Collard       Title:  
CEO    

[Signature Page to Registration Rights Agreement (Stockholders)]

 

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                  /s/ Craig A. Collard         CRAIG A. COLLARD    
 
                CORNERSTONE BIOPHARMA HOLDINGS, LTD.    
 
           
 
  By:   /s/ Craig A. Collard    
 
     
 
Name: Craig A. Collard    
 
      Title: CEO    
 
                CAROLINA PHARMACEUTICALS LTD.    
 
           
 
  By:   /s/ Craig A. Collard    
 
     
 
Name: Craig A. Collard    
 
      Title: Director    

[Signature Page to Registration Rights Agreement (Stockholders)]

 

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/s/ Steven M. Lutz 
   
 
  STEVEN M. LUTZ    
 
       
 
  LUTZ FAMILY LIMITED PARTNERSHIP    
 
       
 
  By: STEVEN M. LUTZ, its general partner    
 
       
 
 
/s/ Steven M. Lutz 
   

[Signature Page to Registration Rights Agreement (Stockholders)]