exv10w5






Exhibit 10.5




 





REGISTRATION
RIGHTS AGREEMENT




by
and among


CORNERSTONE THERAPEUTICS INC.

and

CHIESI FARMACEUTICI SPA,




Dated as of May 6, 2009




 





 









 





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
	 	 	5	 
	 
	 	 	 	 
	Section 2.3 SEC Forms
	 	 	6	 
	 
	 	 	 	 
	Section 2.4 Holdback Agreements
	 	 	7	 
	 
	 	 	 	 
	Section 2.5 Registration Procedures
	 	 	7	 
	 
	 	 	 	 
	Section 2.6 Suspension of Disposition
	 	 	11	 
	 
	 	 	 	 
	Section 2.7 Registration Expenses
	 	 	12	 
	 
	 	 	 	 
	Section 2.8 Underwritten Offering
	 	 	13	 
	 
	 	 	 	 
	Section 2.9 Indemnification
	 	 	13	 
	 
	 	 	 	 
	Section 2.10 Rule 144
	 	 	15	 
	 
	 	 	 	 
	ARTICLE III MISCELLANEOUS
	 	 	15	 
	 
	 	 	 	 
	Section 3.1 Effectiveness
	 	 	15	 
	 
	 	 	 	 
	Section 3.2 Termination
	 	 	15	 
	 
	 	 	 	 
	Section 3.3 Notice
	 	 	15	 
	 
	 	 	 	 
	Section 3.4 Entire Agreement
	 	 	16	 
	 
	 	 	 	 
	Section 3.5 Waiver
	 	 	17	 
	 
	 	 	 	 
	Section 3.6 Amendment
	 	 	17	 
	 
	 	 	 	 
	Section 3.7 No Third Party Beneficiaries
	 	 	17	 
	 
	 	 	 	 
	Section 3.8 Assignment; Binding Effect
	 	 	17	 
	 
	 	 	 	 
	Section 3.9 GOVERNING LAW
	 	 	17	 
	 
	 	 	 	 
	Section 3.10 CONSENT TO JURISDICTION AND SERVICE
OF PROCESS; WAIVER OF JURY TRIAL
	 	 	17	 
	 
	 	 	 	 
	Section 3.11 Invalid Provisions
	 	 	18	 
	 
	 	 	 	 
	Section 3.12 Counterparts
	 	 	18	 
	 
	 	 	 	 
	Section 3.13 Remedies
	 	 	18	 






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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”), and
CHIESI FARMACEUTICI SPA, a corporation organized under the laws of Italy (“Purchaser”).



RECITALS




     WHEREAS, concurrently with the execution and delivery of this Agreement, (i) Purchaser and
certain stockholders of the Company 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, following consummation of the transactions contemplated by the Initial Stock Purchase
Agreement and the Company Stock Purchase Agreement, Purchaser will own approximately 13,502,741
shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”); and



     WHEREAS, 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.



     “Demand Registration” means any registration of Registrable Securities under the
Securities Act requested by Purchaser 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.



     “Governance Agreement” means the Governance Agreement, dated the same date as this
Agreement, by and among the Company, Purchaser and, solely with respect to the sections identified
therein, certain stockholders of the Company named therein.



     “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 Purchaser in accordance with Section 2.2.



     “Registrable Securities” means shares of Common Stock that are Beneficially Owned by
Purchaser 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 at any time after the Blackout Period (as defined in the Governance Agreement), the
Company shall receive a notice from Purchaser 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 Purchaser 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, Purchaser shall be entitled to
request four (4) Demand Registrations.



     (c) Subject to Section 2.1(e), 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 $50,000,000 as of
the date of such Demand Notice or is for one hundred percent of Registrable Securities.



     (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 Purchaser, 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) 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(e) 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(e), the Company shall promptly (but in
any event within 10 days), upon determining to seek such deferral, deliver to Purchaser a
certificate signed by an executive officer of the Company stating that the Company is deferring
such filing pursuant to this Section 2.1(e), a general statement of the reason for such
deferral and an approximation of the anticipated delay. Within 20 days after receiving such
certificate, Purchaser 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(e) 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(e) 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.



     (f) No securities to be sold for the account of any Person (including the Company), other than
Purchaser 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



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Purchaser 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 Purchaser 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 Purchaser is sufficiently large to cause an
Adverse Effect, the Registrable Securities of Purchaser to be included in such Demand Registration
shall equal the number of shares which Purchaser is so advised can be sold in such offering without
an Adverse Effect; provided, that the Company shall not include any Registrable Securities
of any executive officer, director or employee of the Company or any of its subsidiaries if the
managing underwriters (or such investment bank) shall advise the Company and Purchaser that the
participation of any such persons may have an Adverse Effect; provided, further that if the
number of Registrable Securities to be included in the Demand Registration is less than 80% of the
number requested to be so included, Purchaser 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.




     (g) Purchaser may withdraw Registrable Securities from a Demand Registration at any time and
Purchaser shall have the right to cancel a proposed Demand Registration of Registrable Securities
pursuant to this Section 2.1(g). 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.



     (h) 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 Purchaser.



     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
Purchaser, which notice shall set forth Purchaser’s rights under this Section 2.2 and shall
offer Purchaser 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 Purchaser may request,
subject to the provisions of Sections 2.2(a), 2.2(b) and 2.2(c). Upon the
request of Purchaser 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 Purchaser), 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
Purchaser 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,
Purchaser must sell all 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



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such
registration, the Company shall determine for any reason not to register such securities, the
Company shall give notice to Purchaser 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, Purchaser 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 Purchaser thereof; 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 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 Purchaser) if such
managing underwriters advise the Company and Purchaser 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), Purchaser shall not be entitled to include all Registrable Securities in a registration
that Purchaser has requested to be so included, Purchaser may withdraw its 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



- 6 -









 




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 Purchaser notifies the Company in writing that it intends 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 pursuant to Section 144) of any such securities during such period (except as part
of such underwritten registration, if otherwise permitted).



     (c) Purchaser 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 Purchaser 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



- 7 -









 




any amendment or supplement thereto, the Company shall furnish to
Purchaser 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 Purchaser shall have the opportunity to object to any
information contained therein and the Company shall make any corrections or other amendments
reasonably requested by Purchaser 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 Purchaser 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 prospectus and any
summary
prospectus), any documents incorporated by reference therein and such other documents as
Purchaser or underwriters reasonably may request in order to facilitate the disposition of the
Registrable Securities owned by Purchaser 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 Purchaser 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 Purchaser 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 Purchaser to consummate the disposition of the Registrable
Securities owned by Purchaser 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 Purchaser 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



- 8 -









 




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 Purchaser to participate in the preparation of such registration statement or
related prospectus and promptly incorporate any information furnished to the Company by Purchaser
that, in the reasonable judgment of Purchaser and its counsel, should be included if Purchaser, in
its sole and exclusive judgment, might reasonably be deemed to be an underwriter or a controlling
person of the Company (within the meaning of the Securities Act);



     (h) make reasonably available senior management of the Company, as selected by Purchaser, to
assist in the 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 twelve (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
Purchaser, promptly incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriters or Purchaser reasonably requests to be included therein,
including with respect to the Registrable Securities being sold by Purchaser, 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 Purchaser;



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     (l) cooperate with Purchaser 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 Purchaser 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 Purchaser and any underwriter participating in
any disposition pursuant to any registration statement, and any attorney, accountant or other agent
or representative retained by Purchaser 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 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) Purchaser agrees to enter into a
confidentiality agreement in customary form and subject to customary exceptions; and
provided, further that Purchaser 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 Purchaser 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 Purchaser) addressed to them covering the matters
customarily covered in opinions requested in Underwritten Offerings and such other matters as may
be reasonably requested by Purchaser 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;



- 10 -









 





     (r) cooperate with Purchaser 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 Purchaser 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 such customary agreements and take all
such other actions as Purchaser or the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities. Purchaser shall be party 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 Purchaser;



     (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
Purchaser 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 Purchaser, 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. Purchaser 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, Purchaser shall promptly discontinue
disposition of Registrable Securities until receipt of the copies of the supplemented or amended
prospectus, or until it is advised in



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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, Purchaser
shall deliver to the Company all copies, other than permanent file copies then in its 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 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 Purchaser shall be paid for by the Company, which counsel shall be selected by
Purchaser. Any underwriting discounts, commissions, or fees attributable to the sale of the
Registrable Securities shall be borne by Purchaser whether or not any registration statement
becomes effective, and the fees and expenses of any counsel, accountants, or other persons retained
or employed by Purchaser (other than as set forth in the preceding sentence) shall be borne by
Purchaser.



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     Section 2.8 Underwritten Offering.



     (a) At the request of Purchaser, 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. Purchaser shall select (i) the investment banking firm or firms to manage
the Underwritten Offering and (ii) counsel to Purchaser; 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. Purchaser may not participate in any Underwritten Offering
pursuant to this Agreement unless Purchaser (x) agrees to sell 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 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 Purchaser shall not be required to make any representations or warranties in
connection with any such registration other than representations and warranties as to (i)
Purchaser’s ownership of the Registrable Securities to be transferred free and clear of all liens,
claims, and encumbrances created by Purchaser, (ii) Purchaser’s power and authority to effect such
transfer, and (iii) such matters pertaining to Purchaser’s compliance with securities laws as may
be reasonably requested; provided, further that any obligation of Purchaser to indemnify
any Person pursuant to any such underwriting agreement shall be limited to the net amount received
by Purchaser from the sale of 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);
provided, further that this Section 2.8(a) shall not require Purchaser 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 Purchaser, the officers, directors and agents and employees of
Purchaser, each Person who controls Purchaser (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 Purchaser 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, Purchaser shall furnish to the Company in writing such information as the Company
reasonably requests for use in connection with each applicable registration statement and



- 13 -









 




prospectus. Purchaser 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 information so furnished in writing by or on behalf
of Purchaser 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



- 14 -









 




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 considerations referred to in the second immediately
preceding sentence. Notwithstanding the provisions of this Section 2.9(d), Purchaser shall
not be required to contribute any amount which is in excess of the amount by which the total
proceeds received by Purchaser from the sale of the Registrable Securities (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 Purchaser may reasonably request,
all to the extent required from time to time to enable Purchaser 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 Purchaser, the Company will
deliver to Purchaser 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 Purchaser or the Company, if the Company Stock Purchase Agreement is terminated pursuant
to its Section 6.1 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





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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



If to Purchaser:



Chiesi Farmaceutici SpA

Via Palermo 26/A

43122 Parma, Italy

Attention: President and CEO

               Corporate Development Director and Legal and Corporate Affairs

               Director



Facsimile: +39-0521-774468



With copies (which shall not constitute notice) to:



Morgan, Lewis & Bockius LLP

1111 Pennsylvania Avenue, NW

Washington, DC 20004

Attention: Stephen Paul Mahinka

Facsimile: (202) 739-3001



and



Morgan, Lewis & Bockius LLP

502 Carnegie Center

Princeton, New Jersey 08540-6241

Attention: Emilio Ragosa

Facsimile: (609) 919-6701




     (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.



- 16 -









 





     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.



     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



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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 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	 
	 
	 	CHIESI FARMACEUTICI SPA

 	 
	 	By:  	/s/
Alberto Chiesi	 
	 	 	Name:  	Alberto Chiesi	 
	 	 	Title:  	President	 
	 



[Signature Page to Registration Rights Agreement (Purchaser)]