**EXHIBIT 4.19****Execution Version****INVESTOR RIGHTS AGREEMENT**     This INVESTOR RIGHTS AGREEMENT (as the same may be amended, supplemented or otherwise modifiedfrom time to time, this “Agreement”) is made as of February 12, 2008, between ArtesMedical, Inc., a Delaware corporation (the “Company”) and Cowen Healthcare RoyaltyPartners, L.P., a Delaware limited partnership (together with its affiliates, “CHRP”).RECITALS     WHEREAS, pursuant to the terms of that certain Revenue Interest Financing and Warrant PurchaseAgreement (as the same may be amended, supplemented or otherwise modified from time to time, the“Revenue Agreement”) dated as of January 28, 2008, CHRP is acquiring a warrant (as the samemay be amended, supplemented or otherwise modified from time to time, the “Second Warrant”)dated of even date herewith, exercisable for three hundred seventy five thousand (375,000) sharesof common stock, $0.001 par value per share, of the Company (the “Common Stock”) at anexercise price per share and subject to adjustment as set forth in the Second Warrant;     WHEREAS, pursuant to the terms of that certain Note and Warrant Purchase Agreement (as thesame may be amended, supplemented or otherwise modified from time to time, the “Note andWarrant Purchase Agreement”) dated of even date with the Revenue Agreement, CHRP is acquiring awarrant (as the same may be amended, supplemented or otherwise modified from time to time, the“First Warrant”; together with the Second Warrant, the “Warrants”) dated of evendate herewith, exercisable for one million three hundred thousand (1,300,000) shares of CommonStock at an exercise price per share and subject to adjustment as set forth in the First Warrant;     WHEREAS, the Warrants each contemplate this Agreement being executed by the parties hereto asof the date hereof;     WHEREAS, the Company is a party to an Amended and Restated Investors’ Rights Agreement, datedJune 23, 2006 (the “Existing Agreement”), with the investors listed on Schedule A thereto,in which the investors have certain registration rights and the Company has certain obligations tosuch investors;     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreementscontained herein, and for other good and valuable consideration, the receipt and sufficiency ofwhich are hereby acknowledged, the parties hereto hereby agree as follows:1. Definitions. Unless otherwise provided in this Agreement, capitalized terms used herein shallhave the following meanings:     “Affiliate” shall mean any Person that controls, is controlled by, or is under commoncontrol with another Person. For purposes of this definition, “control” shall mean (i) inthe case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of thestock or shares having the right to vote for the election of directors, and (ii) in the case ofnon-corporate
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entities, direct or indirect ownership of at least fifty percent (50%) of the equityinterest with the power to direct the management and policies of such non-corporate entities.     “Agreement” has the meaning set forth in the first paragraph of this Agreement.     “Board” has the meaning set forth in Section 6.1.     “Business Day” shall mean any day other than a Saturday, Sunday or U.S. federalholiday or a day on which banking institutions located in New York, New York are authorized orobligated to be closed.     “CHRP” has the meaning set forth in the first paragraph of this Agreement.     “CHRP Designees” has the meaning set forth in Section 6.1.     “CHRP Employee Designee” has the meaning set forth in Section 6.1.     “CHRP Industry Designee” has the meaning set forth in Section 6.1.     “Common Stock” has the meaning set forth in the recitals of this Agreement.     “Company” has the meaning set forth in the first paragraph of this Agreement.     “Confidentiality Agreement” has the meaning set forth in Section 7.5.     “Continuously Effective” with respect to the Resale Registration Statement means thatsuch registration statement shall not cease to be effective and available for Transfers ofRegistrable Securities except as permitted by Sections 2.3, 2.4(b), or2.4(e).     “Director Qualifications” has the meaning set forth in Section 6.3.     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rulesand regulations of the SEC thereunder, all as the same shall be in effect at that time.     “Existing Agreement” has the meaning set forth in the recitals of this Agreement.     “FINRA” means the Financial Industry Regulatory Authority (f/k/a the NationalAssociation of Securities Dealers) and any successor entity.     “First Warrant” has the meaning set forth in the recitals of this Agreement.     “Holder” means with respect to any Registrable Securities, CHRP, unless and until CHRPTransfers such Registrable Securities to new Holders in accordance with Section 7.4.     “Losses” has the meaning set forth in Section 5(a).     “Note” has the meaning set forth in the Note and Warrant Purchase Agreement.
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     “Note and Warrant Purchase Agreement” has the meaning set forth in the recitals ofthis Agreement.     “Person” means any individual, corporation, partnership, joint venture, association,joint-stock company, limited liability company, trust, unincorporated organization or government orother agency or political subdivision thereof.     “Prospectus” means the prospectus included in the Resale Registration Statement, asamended or supplemented by any prospectus supplement and by all other amendments thereto,including post-effective amendments, and all material incorporated by reference into suchProspectus.     “Register, Registered and Registration” refer to a registration effected by preparingand filing a registration statement in compliance with the Securities Act, and the declaration orordering by the SEC of effectiveness of such registration statement or document.     “Registrable Securities” means (a) any Common Stock issuable or issued upon anyexercise of the Warrants and (b) any Common Stock issued or issuable with respect to any of thesecurities referred to in clause (a) by way of an event triggering any adjustment in the number ofshares of Common Stock into which the Warrant is exercisable. Except for purposes of Section2.1(d)(iv), Registrable Securities shall be deemed to be outstanding and in existence, wheneversuch Person has the right to acquire such Registrable Securities upon exercise of the Warrants,whether or not such exercise has actually been effected, and such Person shall be entitled toexercise the rights of a Holder of such Registrable Securities hereunder. As to any particularRegistrable Securities, such securities shall cease to be Registrable Securities when they (x) havebeen registered and Transferred pursuant to the Securities Act, (y) have been Transferred pursuantto Rule 144 or any similar rule promulgated by the SEC pursuant to the Securities Act permittingthe resale of restricted securities without the necessity of a registration statement under theSecurities Act or (z) have been Transferred to a Person, who by virtue of Section 7.4, isnot entitled to the rights provided by this Agreement.     “Registration Default” has the meaning set forth in Section 2.2.     “Registration Expenses” has the meaning set forth in Section 4.1.     “Resale Effective Deadline” has the meaning set forth in Section 2.1(b).     “Resale Filing Deadline” has the meaning set forth in Section 2.1(a).     “Resale Registration Statement” has the meaning set forth in Section 2.1(a).     “Revenue Agreement” has the meaning set forth in the recitals of this Agreement.     “SEC” means the Securities and Exchange Commission and includes any governmentalauthority or agency succeeding to the functions thereof.     “Second Warrant” has the meaning set forth in the recitals of this Agreement.
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     “Securities Act” means the Securities Act of 1933, as amended, and the rules andregulations of the SEC thereunder, all as the same shall be in effect at that time.     “Transfer” means and includes the act of selling, giving, transferring, creating atrust (voting or otherwise), assigning or otherwise disposing of (other than pledging,hypothecating or otherwise transferring as security) (and correlative words shall have correlativemeanings); provided, however, that any transfer or other disposition uponforeclosure or other exercise of remedies of a secured creditor after an event of default under orwith respect to a pledge, hypothecation or other transfer as security shall constitute a“Transfer”; provided, further, however, no “Transfer” shall be deemed to haveoccurred if CHRP continues to be an Affiliate of the Holder of the Registrable Securities aftersuch transfer or other distribution.     “Underwritten Registration” means a registration in which securities of the Companyare sold to an underwriter for reoffering to the public.     “Violation” has the meaning set forth in Section 5(a).     “Warrants” has the meaning set forth in the recitals of this Agreement.2. Resale Registration Statement.     2.1 Obligations of the Company. The Company shall (subject to Section 2.3) usecommercially reasonable efforts to:          (a) cause to be filed with the SEC as soon as practicable, but in no event later than April30, 2008 (the “Resale Filing Deadline”), a registration statement pursuant to Rule 415under the Securities Act (the “Resale Registration Statement”), which Resale RegistrationStatement shall provide for resales and Transfers of all Registrable Securities by the Holders aspermitted by such Rule 415;          (b) cause the Resale Registration Statement to be declared effective by the SEC at theearliest practicable time (and in any event before any registration under Section 2.2 ofthe Existing Agreement becomes effective), but in no event later than the earlier to occur of (i)if the SEC notifies the Company that it does not intend to review the Resale RegistrationStatement, ten (10) days after the Company receives such notice from the SEC; (ii) if the SEC failsto notify the Company that it intends to review the Resale Registration Statement within the timeperiod permitted by SEC rule for the SEC to provide such notice, ten (10) days after the expirationof the time period permitted by SEC rule for the SEC to review such Resale Registration Statement;or (iii) if the SEC notifies the Company that it intends to review the Resale RegistrationStatement, one-hundred twenty (120) days after Resale Filing Deadline (or if such day is not aBusiness Day, the next succeeding Business Day, the “Resale Effective Deadline”);          (c) in connection with the foregoing, file all pre-effective amendments to the ResaleRegistration Statement as may be necessary in order to cause such Resale Registration Statement to become effective and if applicable, a post-effective amendment to the ResaleRegistration Statement pursuant to Rule 430A under the Securities Act; and
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          (d) cause the Resale Registration Statement to remain Continuously Effective, supplemented andamended as required by the provisions of Section 2.4 to the extent necessary to ensure thatit is available for resales and Transfers of Registrable Securities by the Holders, and to ensurethat it conforms with the requirements of this Agreement, the Securities Act and the policies,rules and regulations of the SEC as announced from time to time, for a period beginning on theResale Effective Deadline and continuing through the earliest to occur of (i) the date none of theshares of Common Stock issuable upon exercise of the Warrants qualify as Registrable Securities,(ii) the sixth (6th) anniversary of the date hereof, (iii) the date on which all of the RegistrableSecurities may be sold in a single transaction by the Holder to the public pursuant to Rule 144 orany similar rule promulgated by the SEC pursuant to the Securities Act permitting the resale ofrestricted securities without the necessity of a registration statement under the Securities Act,(iv) the date upon which CHRP has Transferred all of the Registrable Securities or (v) upon thetermination of this Agreement.     2.2 Registration Default. If (i) the Resale Registration Statement required by this Agreementis not filed with the SEC on or prior to the Resale Filing Deadline; (ii) the Resale RegistrationStatement has not been declared effective by the SEC on or prior to the Resale Effective Deadline;or (iii) any Registration Statement required by this Agreement is filed and declared effective butshall thereafter cease to be Continuously Effective without being succeeded immediately by apost-effective amendment to such Registration Statement that cures such failure and that is itselfimmediately declared effective (each such event referred to in clauses (i) through (iii), a“Registration Default”), then the interest rate borne by the Note shall be increased to*** percent (***%) per annum immediately for all periods where there is one or moreuncured Registration Defaults.     2.3 The Company shall be entitled to (i) postpone the effectiveness of the Resale RegistrationStatement filed pursuant to this Agreement and (ii) suspend the use of any Prospectus included inthe Resale Registration Statement, in the event (a) of the issuance by the SEC of any stop ordersuspending the effectiveness of the Resale Registration Statement or the initiation of anyproceedings for that purpose; (b) upon the occurrence of an event set forth in Section2.4(b) or Section 2.4(e); or (c) the Company’s chief executive officer delivers to theHolders an executed certificate stating that in the good faith judgment of the Board it would bematerially detrimental to the Company and its stockholders either for such Resale RegistrationStatement to become effective or for Transfers to be made thereunder (including, withoutlimitation, due to the inadvisability of filing a required prospectus supplement or post-effectiveamendment), because such action would materially interfere with, or require premature disclosureof, any bona fide plan or proposal by the Company to engage in any material financing, acquisition,disposition, reorganization, merger or tender offer or other significant transaction.Notwithstanding anything to the contrary, the Company shall not exercise its rights under thisSection 2.3 more than once in any twelve (12) month period, nor for a period of morethan sixty (60) days. The Holder hereby acknowledges that any notice given by the Companypursuant to this Section 2.3 shall constitute material non-public information. *** Portions of this page have been omitted pursuant to arequest for Confidential Treatment filed separately with the Commission.
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     2.4 Registration Procedures. In connection with the Company’s obligations arising under thisAgreement regarding the Resale Registration Statement (and any other Prospectus required by thisAgreement to permit the resale and Transfer of Registrable Securities), the Company will (subjectto Section 2.3 and, where applicable, subject to the Resale Registration Statement havingbeen declared effective) use commercially reasonable efforts to:          (a) effect such registration to permit the sale of the Registrable Securities being sold inaccordance with the intended method or methods of distribution selected by the Holders of theRegistrable Securities and permitted by Rule 415, and keep the Resale Registration StatementContinuously Effective for all periods required by this Agreement;          (b) upon the occurrence of any event that would cause the Resale Registration Statement or anyProspectus filed in connection therewith (i) to contain a material misstatement or omission or (ii)not to be effective and usable for resale and Transfer of Registrable Securities during any periodrequired by this Agreement, the Company shall file promptly an appropriate amendment to the ResaleRegistration Statement or a prospectus supplement, in the case of clause (i), correcting any suchmisstatement or omission, and, in the case of either clause (i) or (ii), if a post-effectiveamendment is utilized, cause such amendment to be declared effective and the Resale RegistrationStatement and the related Prospectus to become usable for their intended purpose(s) as soon aspracticable thereafter;          (c) prepare and file with the SEC such amendments and post-effective amendments to the ResaleRegistration Statement as may be necessary to keep the Resale Registration Statement effective forthe applicable period set forth in Section 2.1;          (d) cause the Prospectus to be supplemented by any required prospectus supplement, and as sosupplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully withthe applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; andcomply with the provisions of the Securities Act with respect to the disposition of all securitiescovered by the Resale Registration Statement during the applicable period in accordance with theintended method or methods of distribution by the sellers thereof set forth in the ResaleRegistration Statement or supplement to the Prospectus;          (e) advise the Holders promptly and, if requested by such Persons, to confirm such advice inwriting, (i) when the Prospectus or any prospectus supplement or post-effective amendment has beenfiled, and, with respect to the Resale Registration Statement or any post-effective amendmentthereto, when the same has become effective; (ii) of any request by the SEC for amendments to theResale Registration Statement or amendments or supplements to the Prospectus or for additionalinformation relating thereto; (iii) of the issuance by the SEC of any stop order suspending theeffectiveness of the Resale Registration Statement under the Securities Act or of the suspension byany state securities commission of the qualification of the Registrable Securities for offering orsale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes;(iv) of the existence of any fact or the happening of any event that makes any statement of amaterial fact made in the Resale Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by referencetherein untrue, or that requires the making of any additions to or changes in the ResaleRegistration Statement or the Prospectus in order to make the statements therein not misleading.
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If at any time the SEC shall issue any stop order suspending the effectiveness of the ResaleRegistration Statement, or any state securities commission or other regulatory authority shallissue an order suspending the qualification or exemption from qualification of the RegistrableSecurities under state securities or blue sky laws, the Company shall obtain the withdrawal orlifting of such order as soon as practicable;          (f) furnish without charge to each of the Holders, and each of the underwriter(s) if any,before filing with the SEC, copies of the Resale Registration Statement or any Prospectus includedtherein or any amendments or supplements to the Resale Registration Statement or Prospectus(including all documents incorporated by reference after the initial filing of the ResaleRegistration Statement), which documents will be subject to the review and comment of such Holdersand underwriter(s) in connection with such sale, if any, for a period of at least three (3)Business Days, and the Company will not file the Resale Registration Statement or Prospectus or anyamendment or supplement to the Resale Registration Statement or Prospectus (including all suchdocuments incorporated by reference) to which a Holder covered by such registration statement orthe underwriter(s), if any, shall reasonably object in writing within three (3) Business Days afterthe receipt thereof (such objection to be deemed timely made upon confirmation of telecopytransmission within such period), unless the Company receives advice from legal counsel that thedelay required by such review period would be detrimental to the Company. For purposes of thisSection 2.4(f), the objection of a Holder or underwriter, if any, shall be deemed to bereasonable if the Resale Registration Statement, amendment, Prospectus or supplement, asapplicable, as proposed to be filed, contains a material misstatement or omission;          (g) make available any document that is incorporated by reference into the Resale RegistrationStatement or Prospectus, provide copies of such document to the Holders, and to the underwriter(s),if any, and make the Company’s representatives available for discussion of such document and othercustomary due diligence matters;          (h) make available at reasonable times for inspection by the Holders or underwriter(s), ifany, participating in any disposition pursuant to the Resale Registration Statement and anyattorney or accountant retained by the Holders or underwriter(s), if any, all financial and otherrecords, pertinent corporate documents and properties of the Company and cause the Company’sofficers, directors and employees to supply all information reasonably requested by the Holders,underwriter(s), if any, or their attorneys or accountants in connection with the ResaleRegistration Statement or any post-effective amendment thereto subsequent to the filing thereof andprior to its effectiveness and to participate in meetings with investors to the extent requested bythe underwriter(s), if any; provided that in each such case the requested information must be inexistence and available to the Company and the Company shall not be required to incur out of pocketexpenses;          (i) if requested by a Holder or the underwriter(s), if any, to promptly incorporate in theResale Registration Statement or Prospectus, pursuant to a supplement or post-effective amendmentif necessary, such information as the Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, informationrelating to the “Plan of Distribution” of the Registrable Securities, information with respect tothe Registrable Securities being sold, the purchase price being paid therefor and any other termsof
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the offering of the Registrable Securities to be sold in such offering; and make all requiredfilings of such Prospectus supplement or post-effective amendment as soon as practicable after theCompany is notified of the matters to be incorporated in such Prospectus supplement orpost-effective amendment;          (j) furnish to each Holder and each of the underwriter(s), if any, upon request, withoutcharge, at least one copy of the Resale Registration Statement, as first filed with the SEC, and ofeach amendment thereto, including financial statements and schedules, all documents incorporated byreference therein and all exhibits (including exhibits incorporated therein by reference);          (k) deliver to each Holder and each of the underwriters, if any, upon request, without charge,as many copies of the Prospectus (including each preliminary prospectus) and any amendment orsupplement thereto as such Holder reasonably may request;          (l) enter into such customary agreements (including a customary underwriting agreement), andmake such customary representations and warranties, and take all such other actions in connectiontherewith in order to expedite or facilitate the disposition of the Registrable Securities pursuantto the Resale Registration Statement contemplated by this Agreement, all to such extent as may bereasonably requested by any Holder or underwriter, if any, in connection with any resale orTransfer pursuant to the Resale Registration Statement; and if and only if the registration is anUnderwritten Registration, the Company shall:               (i) furnish to each Holder, and each underwriter, in such substance and scope as they mayreasonably request and as are customarily made by issuers to underwriters in primary underwrittenofferings, upon the initial effective date of the Resale Registration Statement:                    (1) a certificate, dated the date of the date of effectiveness of the Resale RegistrationStatement signed by (y) the President or any Vice President and (z) a principal financial oraccounting officer of the Company confirming, as of the date thereof, such matters (including,without limitation representations and warranties) as the Holders and underwriters may reasonablyrequest;                    (2) an opinion, dated the date of effectiveness of the Resale Registration Statement, ofcounsel for the Company, covering such matters as the Holders and the underwriters may reasonablyrequest, and in any event including a statement to the effect that such counsel have participatedin conferences with officers and other representatives of the Company, representatives of theindependent public or certified public accountants for the Company and with representatives of theunderwriter(s), and counsel to the underwriter(s), if any, at which the contents of the ResaleRegistration Statement and the related Prospectus and related matters were discussed and, on thebasis of the foregoing, no facts have come to such counsel’s attention that would lead such counselto believe that (i) the Resale Registration Statement, at the time of the Resale RegistrationStatement or any post effective amendment thereto became effective, or (ii) that the Prospectus contained in the Resale RegistrationStatement as of its date, contained or contains an untrue statement of a material fact or omittedor
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omits to state a material fact necessary in order to make the statements therein, in the lightof the circumstances under which they were made, not misleading; and                    (3) a customary comfort letter, dated the date of effectiveness of the Resale RegistrationStatement, from the Company’s independent accountants, in the customary form and covering mattersof the type customarily requested to be covered in comfort letters by underwriters in connectionwith primary underwritten offerings, and covering or affirming the matters set forth in any comfortletters delivered pursuant to the Resale Registration Statement;               (ii) set forth in full the indemnification provisions and procedures of Section 5 withrespect to all parties to be indemnified pursuant to said Section; and               (iii) deliver such other documents and certificates as may be reasonably requested by suchparties to evidence compliance with Section 2.4(l)(i) and with any customary conditionscontained in the underwriting agreement entered into by the Company pursuant to this Section2.4(l).     If at any time the representations and warranties of the Company contemplated in Section2.4(l)(i) cease to be true and correct, the Company shall so advise the Holders and theunderwriter(s), promptly and, if requested by such Persons, shall confirm such advice in writing;          (m) prior to any public offering of Registrable Securities, cooperate with the Holders, theunderwriter(s), if any, and their respective counsel in connection with the registration andqualification of the Registrable Securities under the state securities or blue sky laws of suchjurisdictions as the Holders or underwriter(s), if any, may reasonably request and do any and allother acts or things necessary or advisable to enable the disposition in such jurisdictions of theRegistrable Securities covered by the Resale Registration Statement; provided,however, that the Company shall be required to register or qualify as a foreign corporationwhere it is not then so qualified or to take any action that would subject it to the service ofprocess in suits or to taxation, other than as to matters and transactions relating to the ResaleRegistration Statement, in any jurisdiction where it is not then so subject and provided, further,that if the Common Stock is not then a “covered security” as defined in Section 18 of theSecurities Act, then the Company shall not be required to register and qualify the RegistrableSecurities under the state securities or blue sky laws in more than ten (10) states;          (n) cooperate with the Holders and the underwriter(s), if any, to facilitate the timelypreparation and delivery of certificates representing the Registrable Securities to be sold and notbearing any restrictive legends; and enable such Registrable Securities to be in such denominationsand registered in such names as the Holders or the underwriter(s), if any, may request at least two(2) Business Days prior to any sale of Registrable Securities made by such Holders orunderwriter(s), if any; provided, the Holders provide the Company with the necessary information toprepare such certificates at least four (4) Business Days prior to the applicable sale ofRegistrable Securities;          (o) if any fact or event contemplated by Section 2.4(e)(iv) shall exist or haveoccurred, prepare a supplement or post-effective amendment to the Resale Registration
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Statement orrelated Prospectus or any document incorporated therein by reference or file any other requireddocument so that, as thereafter delivered to the purchasers of Registrable Securities, theProspectus will not contain an untrue statement of a material fact or omit to state any materialfact necessary in order to make the statements therein not misleading;          (p) cooperate and assist in any filings required to be made with FINRA and in the performanceof any due diligence investigation by any underwriter (including any “qualified independentunderwriter”) that is required to be retained in accordance with the rules and regulations ofFINRA;          (q) otherwise comply with all applicable rules and regulations of the SEC, and make generallyavailable to its security holders, as soon as practicable, a consolidated earnings statementmeeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (i)commencing at the end of any fiscal quarter in which Registrable Securities are sold tounderwriters in a firm commitment or best efforts Underwritten Offering or (ii) if not sold tounderwriters in such an offering, beginning with the first month of the Company’s first fiscalquarter commencing after the effective date of the Resale Registration Statement;          (r) cause all securities covered by the Resale Registration Statement to be listed on eachsecurities exchange or automated quotation system on which the Common Stock issued by the Companyis then listed if requested by any Holder or the underwriter(s), if any; and          (s) provide promptly to each Holder upon request each document filed with the SEC pursuant tothe requirements of Section 13 and Section 15 of the Exchange Act.3. Holder Obligations. Each Holder agrees to, and in addition it shall be a condition precedent tothe obligation of the Company to take any action pursuant to this Agreement with respect to theRegistrable Securities of the Holders, that each Holder shall:          (a) Promptly furnish to the Company such information regarding the Holder, the number of theRegistrable Securities owned by it, the number of Registrable Securities to be registered and theintended method of disposition of such securities as shall be required to effect the registrationof the Registrable Securities of the Holders, and cooperate fully with the Company in preparing theResale Registration Statement and any related Prospectus.          (b) If the Company has delivered a Prospectus to the Holder and after having done so theProspectus is amended or supplemented to comply with the requirements of the Securities Act, at thewritten request of the Company, the Holder shall immediately cease making offers or RegistrableSecurities and, upon receipt of the amended or supplemented Prospectus from the Company, the Holdershall use only such amended or supplemented Prospectus in making offers of the RegistrableSecurities.          (c) During such time as the Holder may be engaged in a distribution of Registrable Securities,the Holder shall comply with Regulation M promulgated under the Exchange Act and pursuant theretoit shall, among other things, (i) not engage in any stabilization activity in connection with thesecurities of the Company in contravention of such regulation or (ii) distribute Registrable Securities under the Resale Registration Statementother than in the manner described in the Resale Registration Statement.
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          (d) If the Company has delivered to the Holder written notice in accordance with Section2.3, then the Holder shall immediately cease making offers or Transfers of RegistrableSecurities until the Company shall have given the Holder written notice that the Holder may onceagain commence making offers or Transfers of Registrable Securities under the current (or amendedor supplemented) Prospectus.4. Registration Expenses.     4.1 Company Expenses. Subject to Section 4.2, all expenses incident to the Company’sperformance of or compliance with this Agreement, including all registration and filing fees, feesof any transfer agent and registrar, fees and expenses of compliance with securities or blue skylaws, printing expenses, fees and disbursements of counsel for the Company and its independentcertified public accountants, the Company’s internal expenses and the expenses and fees for listingthe securities to be registered on each securities exchange or quotation system on which similarsecurities issued by the Company are then listed or quoted (all such expenses being herein called“Registration Expenses”) shall be borne by the Company.     4.2 Holder Expenses. In connection with the registration contemplated hereunder, the Companyshall reimburse the Holders included in a registration for the reasonable fees and disbursements ofone counsel, in an amount not to exceed $50,000 in the aggregate. The Holders, and not theCompany, shall be responsible for all fees and expenses of underwriters (including discounts andcommissions attributable to the Registrable Securities included in such registration).5. Indemnification; Contribution. If any Registrable Securities are included in a registrationstatement under this Agreement:          (a) To the extent permitted by applicable law, the Company shall indemnify and hold harmlesseach Holder, each Person, if any, who controls such Holder within the meaning of the SecuritiesAct, and each officer, director, partner and employee of such Holder and such controlling Person,against any and all losses, claims, damages, liabilities and expenses (joint or several), includingreasonable attorney’s fees and disbursements and reasonable expenses of investigation(collectively, “Losses”), incurred by such Person pursuant to any actual or threatenedaction, suit, proceeding or investigation, or to which any of the foregoing Persons may otherwisebecome subject under the Securities Act, the Exchange Act or other federal or state laws, but onlyinsofar as such Losses arise out of or are based upon any of the following statements or omissions(collectively, a “Violation”):     (i) any untrue statement or alleged untrue statement of a material factcontained in the registration statement, including any preliminary Prospectus orfinal Prospectus contained therein, or any amendments or supplements thereto; or     (ii) the omission or alleged omission to state therein a material factrequired to be stated therein, or necessary to make the statements therein, inlight of the circumstances under which they were made, not misleading;
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provided, however, that the indemnification required by this Section 5(a)shall not apply to amounts paid in settlement of any such Loss if such settlement is effectedwithout the consent of the Company (which consent shall not be unreasonably withheld), nor shallthe Company be liable in any such case for any such Loss to the extent that it arises out of or isbased upon a Violation which occurs in reliance upon and in conformity with information furnishedin writing to the Company by or on behalf of a Holder or any underwriter expressly for use inconnection with such registration; and provided, further, that any indemnification required by thisSection 5(a) shall not apply to the extent that any such Loss is based on or arises out ofan untrue statement or alleged untrue statement of a material fact, or an omission or allegedomission to state a material fact, included in or omitted from any preliminary prospectus if thefinal prospectus shall correct such untrue statement or alleged untrue statement, or such omissionor alleged omission, and a copy of the final prospectus has not been sent or given by the Holder orany underwriter to the Person alleging damage at or prior to the confirmation of sale to suchPerson; and provided, further, that this indemnity shall not apply to the extent that any such Lossis based on an offer or Transfer of Registrable Securities during any period which the Company hasnotified the Holder that such offers and Transfers must cease under the Agreement, including underSection 2.3, Section 2.4(b) or Section 2.4(e).          (b) To the extent permitted by applicable law, the Holders (severally and not jointly) shallindemnify and hold harmless the Company, each of the directors of the Company, each of the officersof the Company who shall have signed the Resale Registration Statement, each Person, if any, whocontrols the Company within the meaning of the Securities Act, and each officer, director, partner,and employee of such controlling Person, against any and all Losses incurred by such Personpursuant to any actual or threatened action, suit, proceeding or investigation, or to which any ofthe foregoing Persons may otherwise become subject under the Securities Act, the Exchange Act orother federal or state laws, but only insofar as such Losses arise out of or are based upon anyViolation, in each case to the extent that such Violation arises out of or is based uponinformation furnished in writing by or on behalf of a Holder expressly for use in connection withsuch registration, or upon the Holder’s failure to properly and timely deliver an “official”Prospectus, or upon the Holder’s use of a written or oral prospectus other than the “official”Prospectus; provided, however, that any indemnification required by thisSection 5(b) shall not apply to amounts paid in settlement of any such Loss if suchsettlement is effected without the consent of the Holders (which consent shall not be unreasonablywithheld, conditioned or delayed) and in no event shall the amount of any indemnity obligationunder this Section 5(b) exceed the gross proceeds from the applicable offering received bythe Holders.          (c) Promptly after receipt by an indemnified party under this Section 5 of notice ofthe commencement of any action, suit, proceeding, investigation or threat thereof made in writingfor which such indemnified party may make a claim under this Section 5, such indemnifiedparty shall deliver to the indemnifying party a written notice thereof and the indemnifying partyshall have the right to participate in, and, to the extent the indemnifying party so desires,jointly with any other indemnifying party similarly noticed, to assume the defense thereof withcounsel reasonably satisfactory to the indemnified party; provided, however, thatan indemnified party shall have the right to retain its own counsel, with the fees anddisbursements and expenses (in each case, to the extent reasonable) to be paid by the indemnifyingparty, if representation of such indemnified party by the counsel retained by the indemnifyingparty would be inappropriate due to actual or potential differing interests between suchindemnified
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party and any other party represented by such counsel in such proceeding. The failureto deliver written notice to the indemnifying party within a reasonable time following thecommencement of any such action, if prejudicial to its ability to defend such action, shall relievesuch indemnifying party of any liability to the indemnified party under this Section 5 tothe extent of such prejudice but shall not relieve the indemnifying party of any liability that itmay have to any indemnified party otherwise than pursuant to this Section 5. Any suchindemnified party shall have the right to employ separate counsel in any such action, claim orproceeding and to participate in the defense thereof, but the fees and expenses of such counselshall be the expenses of such indemnified party unless (i) the indemnifying party has agreed to paysuch fees and expenses or (ii) the indemnifying party shall have failed to promptly assume thedefense of such action, claim or proceeding or (iii) the named parties to any such action, claim orproceeding (including any impleaded parties) include both such indemnified party and theindemnifying party, and such indemnified party shall have been advised by counsel that there may beone or more legal defenses available to it that are different from or in addition to thoseavailable to the indemnifying party and that the assertion of such defenses would create a conflictof interest such that counsel employed by the indemnifying party could not faithfully represent theindemnified party (in which case, if such indemnified party notifies the indemnifying party inwriting that it elects to employ separate counsel at the expense of the indemnifying party, theindemnifying party shall not have the right to assume the defense of such action, claim orproceeding on behalf of such indemnified party, it being understood, however, that the indemnifyingparty shall not, in connection with any one such action, claim or proceeding or separate butsubstantially similar or related actions, claims or proceedings in the same jurisdiction arisingout of the same general allegations or circumstances, be liable for the reasonable fees andexpenses of more than one separate firm of attorneys (together with appropriate local counsel) atany time for all such indemnified parties, unless in the reasonable judgment of such indemnifiedparty a conflict of interest may exist between such indemnified party and any other of suchindemnified parties with respect to such action, claim or proceeding, in which event theindemnifying party shall be obligated to pay the reasonable fees and expenses of such additionalcounsel or counsels).          (d) If the indemnification required by this Section 5 from the indemnifying party isunavailable to an indemnified party hereunder in respect of any Losses referred to in thisSection 5:     (i) the indemnifying party, in lieu of indemnifying such indemnified party,shall contribute to the amount paid or payable by such indemnified party as aresult of such Losses in such proportion as is appropriate to reflect therelative fault of the indemnifying party and indemnified parties in connectionwith the actions that resulted in such Losses, as well as any other relevantequitable considerations. The relative fault of such indemnifying party andindemnified parties shall be determined by reference to, among other things,whether any Violation has been committed by, or relates to information suppliedby, such indemnifying party or indemnified parties, and the parties’ relativeintent, knowledge, access to information and opportunity to correct or prevent such Violation. The amount paid or payable by a party as a result ofthe Losses referred to above shall be deemed to include, subject to thelimitations set forth in Sections 5(a), 5(b) and 5(c),any legal or other fees or
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expenses reasonably incurred by such party inconnection with any investigation or proceeding;     (ii) the parties hereto agree that it would not be just and equitable ifcontribution pursuant to this Section 5(d) were determined by pro rataallocation or by any other method of allocation which does not take into accountthe equitable considerations referred to in Section 5(d)(i). No Personguilty of fraudulent misrepresentation (within the meaning of Section 11(f) ofthe Securities Act) shall be entitled to contribution from any Person who was notguilty of such fraudulent misrepresentation.          (e) The obligations of the Company and the Holders under this Section 5 shall survivethe completion of any offering of Registrable Securities pursuant to the registration statementunder this Agreement, and otherwise.6. Board Representation.     6.1 Effective as of and contingent upon the Closing, the Company shall cause Todd Davis oranother employee of CHRP reasonably acceptable to the Company to be elected as a member of theBoard of Directors of the Company (the “Board”), to fill a vacancy in the Board’s directorclass (Class I) with a term ending on May 30, 2010 (the “CHRP Employee Designee”). TheCompany shall cause an individual designated by CHRP, who (a) shall have relevant industryexperience in the Company’s industry, (b) shall not be an employee of CHRP, and (c) shall beacceptable to a majority of the then serving directors on the Board, to be elected as a member ofthe Board within nine (9) months of the Closing Date, to fill a vacancy in the Board’s directorclass (Class II) with a term ending on May 30, 2011 (the “CHRP Industry Designee” andcollectively with the “CHRP Employee Designee”, the “CHRP Designees”). CHRP shall beentitled to lead the search effort for the CHRP Industry Designee, which may include the engagementof an executive recruiter and other related expenses which commercially reasonable expenses shallbe borne by the Company.     6.2 After the date hereof, until the earlier to occur of (i) the end of the Term (as definedin the Revenue Agreement), (ii) the date the Applicable Percentage (as defined in the RevenueAgreement) converts to ***% pursuant to the terms of the Revenue Agreement, or (iii) aChange of Control (as defined in the Revenue Agreement), if CHRP so elects and subject toSection 6.3, the Company will use commercially reasonable efforts to cause the CHRPDesignees to be included in the slate of nominees recommended by the Board to the Company’sstockholders for election as directors, including at each annual or special meeting of stockholdersof the Company at which directors are elected and including by voting any proxies it holds andusing its best efforts to cause any officers of the Company who hold proxies to vote such proxies,except, in either case, as otherwise directed by the stockholder who submitted such proxy, in favor of the election of the CHRP Designees. Upon the occurrence of an event set forth inclauses (i) and (iii) of the immediately preceding sentence, CHRP shall cause the CHRP EmployeeDesignee to submit his resignation from the Board, and upon the occurrence of an *** Portions of this page have been omitted pursuant to arequest for Confidential Treatment filed separately with the Commission.
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event set forth inclause (ii) of the immediately preceding sentence the Company shall have the right to request CHRPto cause, and if the Company does so request then CHRP shall cause, the CHRP Employee Designee tosubmit his resignation from the Board. With respect to the foregoing, the Company shall (i) enterinto Director Indemnification Agreements with each CHRP Designee in the same form as entered intowith the Company’s other directors and executive officers; (ii) reimburse the CHRP Designees forall reasonable out-of-pocket costs and expenses incurred with respect to membership on (orobservation of) the Board in accordance with the Company’s Board reimbursement policies; and (iii)otherwise compensate and indemnify the CHRP Designees in accordance with the Company’s policies fornon-employee directors.     6.3 The CHRP Designees will possess such qualifications and meet such standards as areapplicable to all members of the Board (whether under law, rule or regulation or as established bythe Board) (“Director Qualifications”) at the time for the nomination of the CHRP Designeesto the Board. If the Nominating and Corporate Governance Committee of the Board at any timedetermines that a particular CHRP Designee does not have the Director Qualifications or that theirfiduciary duties preclude them from nominating a CHRP Designee for election to the Board, then CHRPshall have a reasonable opportunity to designate a substitute CHRP Designee.     6.4 After the date hereof, until the earlier to occur of (i) the end of the Term (as definedin the Revenue Agreement), (ii) the date the Applicable Percentage (as defined in the RevenueAgreement) converts to ***% pursuant to the terms of the Revenue Agreement or (iii) aChange of Control (as defined in the Revenue Agreement), in the event there is no CHRP EmployeeDesignee then serving as a director on the Board, CHRP shall be entitled to designate arepresentative to attend and participate in all meetings of the Board and committees thereof in anonvoting observer capacity and, in this respect, the Company shall give such representative copiesof all notices, financial statements, minutes, consents, and other materials (including, withoutlimitation, access to such information, documents, records and reports as may be reasonablyrequested by the representative) that it provides to its directors at the same time and in the samemanner as provided to such directors; provided CHRP will remain subject to the terms of theConfidentiality Agreement, and each observer shall execute an individual confidentiality agreementwith the Company with substantially similar terms to the Confidentiality Agreement;provided, further, that the Company reserves the right to exclude suchrepresentative from access to any material or meeting or portion thereof relating directly toCHRP’s rights under the Transaction Documents.7. Miscellaneous.     7.1 Remedies. Any Person having rights under any provision of this Agreement shall be entitledto enforce such rights specifically, to recover damages caused by reason of any breachof any provision of this Agreement and to exercise all other rights granted by law. Theparties hereto agree and acknowledge that money damages are not an adequate remedy for any breachof the provisions of this Agreement and that any party may apply for specific performance and for *** Portions of this page have been omitted pursuant to arequest for Confidential Treatment filed separately with the Commission.
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other injunctive relief in order to enforce or prevent violation of the provisions of thisAgreement.     7.2 Amendments and Waivers.          (a) This Agreement shall not be amended, modified or supplemented except by written instrumentsigned by the Company and the holders of a majority of the Registrable Securities.          (b) Any term or provision of this Agreement may be waived, or the time for performanceextended, as authorized in writing by the party or parties entitled to the benefit thereof. Nowaiver of any term or condition of this Agreement shall operate as a waiver of any other breach ofsuch term and condition or any other term or condition, nor shall any failure to enforce anyprovision hereof operate as a waiver of such provision or of any other provision hereof. No writtenwaiver hereunder, unless it by its own terms explicitly provides to the contrary, shall beconstrued to effect a continuing waiver of the provisions being waived and no such waiver in anyinstance shall constitute a waiver in any other instance or for any other purpose or impair theright of the party against whom such waiver is claimed in all other instances or for all otherpurposes to require full compliance with such provision.     7.3 Further Assurances. Each of the parties hereto shall execute all such further instrumentsand documents and take all such further action as any other party hereto may reasonably require inorder to effectuate the terms and purposes of this Agreement.     7.4 Successors, Assigns and Subsequent Holders.          (a) All covenants and agreements in this Agreement by or on behalf of any of the partieshereto shall bind and inure to the benefit of the respective successors and the permitted assignsof the parties hereto.          (b) The rights to cause the Company to register Registrable Securities pursuant to thisAgreement may be assigned (but only with all related obligations) by any Holders, provided suchassignee acquires at least 375,000 shares of Registrable Securities or the right to acquire 375,000shares of Registrable Securities upon exercise of the Warrants.          (c) No assignment of rights under this Agreement pursuant to this Section 7.4 shall beeffective unless (i) the Company is, within ten (10) days after such assignment of rights underthis Agreement, furnished with written notice of the name and address of the transferee and thesecurities with respect to which such registration rights are being assigned; and (ii) suchtransferee agrees in writing to be bound by and subject to the terms and conditions of thisAgreement.     7.5 Entire Agreement. This Agreement constitutes the entire agreement of the parties heretowith respect to the subject matter contained herein, and supersedes all prior agreements,negotiations, discussions and understandings among the parties hereto with respect to such subject matter, provided, however, the terms of that certain Confidentiality Agreement by andbetween the Company and CHRP dated as of August 24, 2007 (the “Confidentiality Agreement”)shall continue in effect. No representation, inducement, promise, understanding, condition or
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warranty not set forth herein (or in the Exhibits, Schedules or other Transaction Documents) hasbeen made or relied upon by either party hereto. Neither this Agreement nor any provision hereofis intended to confer upon any Person other than the parties hereto any rights or remedieshereunder.     7.6 Severability. Wherever possible, each provision of this Agreement will be interpreted insuch manner as to be effective and valid under applicable law and in such a way as to, as closelyas possible, achieve the intended economic effect of such provision and this Agreement as a whole,but if any provision contained herein is, for any reason, held to be invalid, illegal orunenforceable in any respect, such provision shall be ineffective to the extent, but only to theextent, of such invalidity, illegality or unenforceability without invalidating the remainder ofsuch provision or any other provisions hereof, unless such a construction would be unreasonable.     7.7 Notices. All notices or other communications required or permitted hereunder shall be inwriting and shall be deemed given (a) when delivered personally, (b) if transmitted by facsimile oremail, when confirmation of transmission is received, (c) if sent by registered or certified mail,postage prepaid, return receipt requested, when received, or (d) if sent by reputable overnightcourier service, the next Business Day; and shall be addressed as follows (or to such changedaddress as a party may give written notice of pursuant to this Section 7.7):If to CHRP to:Cowen Healthcare Royalty Partners, L.P.