REGISTRATION RIGHTS AGREEMENT by and among CORNERSTONE THERAPEUTICS INC., CRAIG A. COLLARD, STEVEN M. LUTZ, CORNERSTONE BIOPHARMA HOLDINGS, LTD., CAROLINA PHARMACEUTICALS LTD. and LUTZ FAMILY LIMITED PARTNERSHIP Dated as of May 6, 2009
Exhibit 10.6
by and among
XXXXX X. XXXXXXX,
XXXXXX X. XXXX,
CORNERSTONE BIOPHARMA HOLDINGS, LTD.,
CAROLINA PHARMACEUTICALS LTD.
and
XXXX FAMILY LIMITED PARTNERSHIP
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 |
6 | |||
Section 2.3 SEC Forms |
7 | |||
Section 2.4 Holdback Agreements |
7 | |||
Section 2.5 Registration Procedures |
8 | |||
Section 2.6 Suspension of Disposition |
12 | |||
Section 2.7 Registration Expenses |
13 | |||
Section 2.8 Underwritten Offering |
13 | |||
Section 2.9 Indemnification |
14 | |||
Section 2.10 Rule 144 |
16 | |||
ARTICLE III MISCELLANEOUS |
16 | |||
Section 3.1 Effectiveness |
16 | |||
Section 3.2 Termination |
16 | |||
Section 3.3 Notice |
16 | |||
Section 3.4 Entire Agreement |
17 | |||
Section 3.5 Waiver |
17 | |||
Section 3.6 Amendment |
17 | |||
Section 3.7 No Third Party Beneficiaries |
17 | |||
Section 3.8 Assignment; Binding Effect |
18 | |||
Section 3.9 GOVERNING LAW |
18 | |||
Section 3.10 CONSENT TO JURISDICTION AND
SERVICE OF PROCESS; WAIVER OF JURY TRIAL |
18 | |||
Section 3.11 Invalid Provisions |
18 | |||
Section 3.12 Counterparts |
19 | |||
Section 3.13 Remedies |
19 | |||
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This REGISTRATION RIGHTS AGREEMENT, dated as of May 6, 2009 (this “Agreement”), is by
and among CORNERSTONE THERAPEUTICS INC., a Delaware corporation (the “Company”), XXXXX X. XXXXXXX,
XXXXXX X. XXXX, CORNERSTONE BIOPHARMA HOLDINGS, LTD., a limited liability company organized under
the laws of Anguilla, and CAROLINA PHARMACEUTICALS LTD., a limited liability company organized
under the laws of Bermuda, and XXXX FAMILY LIMITED PARTNERSHIP, a North Carolina limited
partnership (the “Stockholders”).
WHEREAS, concurrently with the execution and delivery of this Agreement, (i) Chiesi
Farmaceutici SpA, an Italian corporation (“Purchaser”) and two of the Stockholders are
entering into a Stock Purchase Agreement (the “Initial Stock Purchase Agreement”), dated
the same date as this Agreement, and (ii) the Company and Purchaser are entering into a Stock
Purchase Agreement (the “Company Stock Purchase Agreement”), also dated the same date as
this Agreement;
WHEREAS, concurrently with the execution and delivery of this Agreement, the Stockholders, the
Company and Purchaser are entering into a Stockholders Agreement, dated the same date as this
Agreement (the “Stockholders Agreement”), pursuant to which, among other things, the
Stockholders agree to certain restrictions on transfers of the shares of Common Stock owned by such
Stockholders (the “Lockup Restrictions”); and
WHEREAS, to induce the Stockholders to enter into the Stockholders Agreement, the parties wish
to provide for certain registration rights that are to take effect upon the closings of the
transactions provided for in the Initial Stock Purchase Agreement and the Company Stock Purchase
Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and conditions
herein contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
“Affiliate” means, with respect to any Person, any other Person that directly, or
indirectly through one or more intermediaries, controls, is controlled by or is under common
control with the Person specified.
“Beneficially Own” means, with respect to any security, having or sharing the power to
direct or control the voting or disposition of such security and “Beneficial Ownership” has
a correlative meaning.
“Board” or “Board of Directors” means the Board of Directors of the Company
except where the context otherwise requires.
“Business Day” means any day other than a Saturday, Sunday or day when commercial
banks in New York City are permitted or required by law to be closed for the conduct of regular
banking business.
“Common Stock” means the Company’s common stock, par value $0.001 per share.
“Demand Registration” means any registration of Registrable Securities under the
Securities Act requested by a Stockholder in accordance with Section 2.1.
“Effective Date” means the date of the Closing provided for in the Company Stock
Purchase Agreement.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the SEC promulgated thereunder.
“Excluded Registration” means a registration under the Securities Act of (i)
securities on Form S-8 or any similar successor form or (ii) securities to effect the acquisition
of, or combination with, another Person registered on Form S-4 or any similar successor form.
“FINRA” means the Financial Industry Regulatory Authority.
“FINRA Rules” means the rules of the Financial Regulatory Authority, Inc., including
the NASD Rules as incorporated into the FINRA Transitional Rule Book, as amended, and any successor
rules.
“hereto”, “hereunder”, “herein”, “hereof” and words of similar
import, when used in this Agreement, refer to this Agreement as a whole and not to any particular
provision of this Agreement.
“Material Disclosure Event” means, as of any date of determination, any pending or
imminent event relating to the Company or any of its subsidiaries that the Board reasonably
determines in good faith, after consultation with outside counsel to the Company, (i) would require
disclosure of material, non-public information relating to such event in any registration statement
or related prospectus including Registrable Securities (including documents incorporated by
reference therein) so that such registration statement would not be materially misleading, (ii)
would not otherwise be required to be publicly disclosed by the Company at that time in a periodic
report to be filed with or furnished to the SEC under the Exchange Act but for the filing of such
registration statement or related prospectus and (iii) if publicly disclosed at the time of such
event, could reasonably be expected to have a material adverse effect on the business, financial
condition, prospects or results of operations of the Company and its subsidiaries or would
materially adversely affect a pending or proposed material acquisition, merger, recapitalization,
consolidation, reorganization, financing or similar transaction, or negotiations with respect
thereto.
“Person” means any natural Person, corporation, general partnership, limited
partnership, limited or unlimited liability company, proprietorship, joint venture, other business
organization, trust, union, association or any U.S. or non-U.S. government, regulatory or
administrative authority, agency, instrumentality or commission or any court, tribunal, judicial or
arbitral body or other similar authority.
“Piggyback Registration” means any registration of Registrable Securities under the
Securities Act requested by a Stockholder in accordance with Section 2.2.
“Registrable Securities” means shares of Common Stock that are Beneficially Owned by a
Stockholder and any securities into which such shares may have been converted pursuant to any
merger, corporate reorganization or other similar transaction, unless (i) such securities have been
effectively registered under Section 5 of the Securities Act and disposed of pursuant to an
effective registration statement, or (ii) such securities may be transferred pursuant to Rule 144
under the Securities Act without volume limitations such that, after any such transfer referred to
in this clause (ii), such securities thereafter may be freely transferred without restriction under
the Securities Act.
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“Rule 144” means Rule 144 promulgated by the Commission under the Securities Act, and
any successor provision thereto.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.
“Shelf Registration” means a registration of the Company Common Stock in a continuous
or delayed offering pursuant to Rule 415 under the Securities Act (or any successor rule).
“Underwritten Offering” means a firm commitment underwritten public offering pursuant
to an effective registration statement under the Securities Act, other than pursuant to a
registration statement on Forms S-4 or S-8 or any similar or successor form.
Section 1.2 Interpretation.
(a) When a reference is made in this Agreement to an Article or a Section hereof, such
reference shall be to an Article or a Section of this Agreement unless otherwise indicated.
(b) The table of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement.
(c) The parties have participated jointly in negotiating and drafting this Agreement. If an
ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this Agreement.
(d) The definitions contained in this Agreement are applicable to the singular as well as the
plural forms of such terms.
(e) References to a Person are also to its permitted successors and assigns.
(f) The use of “or” is not intended to be exclusive unless expressly indicated otherwise.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Demand Registrations.
(a) If on or after the Effective Date, the Company shall receive a notice from a Stockholder
that the Company effect a Demand Registration (a “Demand Notice”), for all or any portion
of the Registrable Securities specified in such Demand Notice, specifying the intended method of
disposition thereof, then the Company shall use its reasonable best efforts to effect within 60
days of such Demand Notice, subject to the restrictions of this Section 2.1, the
registration under the Securities Act of the Registrable Securities for which the Stockholder has
requested registration under this Section 2.1, all to the extent necessary to permit the
disposition (in accordance with the intended methods thereof as specified in the Demand Notice) of
the Registrable Securities so to be registered.
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(b) Subject to the provisions of this Section 2.1, each Stockholder shall be entitled
to request an aggregate of two Demand Registrations before the expiration of the Lockup
Restrictions and three Demand Registrations thereafter.
(c) Subject to Section 2.1(f), the Company shall file the registration statement in
respect of a Demand Registration as soon as practicable and, in any event, within 45 days after
receiving a Demand Notice (the “Required Filing Date”) on Form S-1 or S-3 or any similar or
successor to such forms under the Securities Act, or, if they are not available, any form for which
the Company then qualifies, and which form shall be available for the sale of the Registrable
Securities in accordance with the intended methods of distribution thereof, and shall use its
reasonable best efforts to cause the same to be declared effective by the SEC as promptly as
practicable after such filing; provided, that the Company shall not be obligated to effect
a Demand Registration pursuant to Section 2.1(a) (i) within 180 days after the effective
date of a previous Demand Registration and (ii) unless the Demand Notice is for a number of
Registrable Securities with an expected market value that is equal to at least $5,000,000 as of the
date of such Demand Notice or is for one hundred percent of Registrable Securities of the
stockholder that initially sent the Demand Notice (the “Demanding Stockholder”) that such
Stockholder then is permitted to sell under the Lockup Restrictions.
(d) With respect to any Demand Registration, subject to the availability of a registration
statement on Form S-3, the Company shall, upon written request from a requesting Stockholder, agree
to effect a Shelf Registration, and, thereafter, shall use its reasonable best efforts to cause
such registration statement to be declared effective under the Securities Act as promptly as
practicable after the filing thereof.
(e) Upon receipt of any Demand Notice, the Company shall promptly (but in any event within 10
days) give written notice of such proposed Demand Registration to all other Stockholders, who shall
have the right, exercisable by written notice to the Company within 20 days of their receipt of the
Company’s notice, to elect to include in such Demand Registration such portion of their Registrable
Securities as they may request, so long as such Registrable Securities are proposed to be disposed
of in accordance with the method or methods of disposition requested pursuant to Section
2.1(a). All other Stockholders requesting to have their Registrable Securities included in a
Demand Registration in accordance with the preceding sentence shall be deemed to be a requesting
Stockholder for purposes of Section 2.1(b).
(f) The Company may defer the filing (but not the preparation) of a registration statement
required by this Section 2.1 until after the Required Filing Date (i) for a period not to
exceed 90 days, if, at the time the Company receives the Demand Notice, there exists a Material
Disclosure Event, or (ii) for a period not to exceed 90 days, if, prior to receiving the Demand
Notice, the Company had determined to effect a registered underwritten public offering of Company
Common Stock, or securities convertible into or exchangeable for Company Common Stock, for the
Company’s account in connection with a material public financing transaction and the Company had taken substantial steps (including selecting
a managing underwriter for such offering, if applicable) and is proceeding with reasonable
diligence to effect such offering. A deferral of the filing of a registration statement pursuant
to this Section 2.1(f) shall be lifted, and the requested registration statement shall be
filed forthwith, if, in the case of a deferral pursuant to clause (i) of the preceding sentence,
the Material Disclosure Event is publicly disclosed or otherwise ceases to exist, or, in the case
of a deferral pursuant to clause (ii) of the preceding sentence, the proposed registration for the
Company’s account is abandoned or the filing of a registration statement with respect to any such
proposed registration is delayed by more than 30 days from the time of receipt of the applicable
Demand Notice. In order to defer the filing of a registration statement pursuant to this
Section 2.1(f), the Company shall promptly (but in any event within 10 days), upon
determining to seek such deferral, deliver to each requesting Stockholder a certificate signed by
an executive officer of the
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Company stating that the Company is deferring such filing pursuant to
this Section 2.1(f), a general statement of the reason for such deferral and an
approximation of the anticipated delay. Within 20 days after receiving such certificate, the
Demanding Stockholder may withdraw such Demand Notice by giving notice to the Company; if
withdrawn, the Demand Notice shall be deemed not to have been made for all purposes of this
Agreement and the Company shall pay all expenses of such withdrawn Demand Registration in
accordance with Section 2.7. The Company may defer the filing of a particular registration
statement pursuant to this Section 2.1(f) only once in any period of 12 consecutive months;
provided, that any deferral pursuant to clause (i) of the first sentence of this
Section 2.1(f) shall be deemed to be a “Suspension Period” for purposes of Section
2.6 and shall be subject to the limitations and obligations during Suspension Periods set forth
in Section 2.6.
(g) No securities to be sold for the account of any Person (including the Company), other than
a requesting Stockholder, shall be included in a Demand Registration if the managing underwriters
(or, in an offering that is not underwritten, a nationally recognized investment bank) shall advise
the Company and the requesting Stockholders in writing that the aggregate amount of such securities
requested to be included in any offering pursuant to such Demand Registration is sufficiently large
to have an adverse effect on the success of any such offering, based on market conditions or
otherwise (an “Adverse Effect”). Furthermore, if the managing underwriters (or such
investment bank) shall advise the Company and the requesting Stockholders that, even after
exclusion of all securities of other Persons pursuant to the immediately preceding sentence, the
amount of Registrable Securities proposed to be included in such Demand Registration by requesting
Stockholders is sufficiently large to cause an Adverse Effect, the Registrable Securities of the
requesting Stockholders to be included in such Demand Registration shall equal the number of shares
which the requesting Stockholders are so advised can be sold in such offering without an Adverse
Effect and such shares shall be allocated pro rata among the requesting Stockholders on the basis
of the number of Registrable Securities requested to be included in such registration by each such
requesting Stockholder; provided, that the Company shall not include any Registrable
Securities of any executive officer, director or employee of the Company (other than the
Stockholders) or any of its subsidiaries if the managing underwriters (or such investment bank)
shall advise the Company and the requesting Stockholders that the participation of any such persons
may have an Adverse Effect; provided, further that if the number of Registrable Securities
owned by the Demanding Stockholder to be included in the Demand Registration is less than 80% of
the number requested to be so included, the Demanding Stockholder may withdraw such Demand Notice
by giving notice to the Company; if withdrawn, the Demand Notice shall be deemed not to have been
made for all purposes of this Agreement and the Company shall pay all expenses of such withdrawn
Demand Registration in accordance with Section 2.7; provided, however, that if the
holders of a majority of the remaining Registrable Securities covered by such Demand Notice desire
to proceed with such Demand Registration, the Company shall proceed forward with such Demand
Registration and the Demand Notice shall be deemed to have been made for all purposes of this
Agreement by the remaining holders.
(h) Any requesting Stockholder may withdraw such Stockholder’s Registrable Securities from a
Demand Registration at any time and any Demanding Stockholder shall have the right to cancel a
proposed Demand Registration of Registrable Securities pursuant to this Section 2.1(h).
Upon such cancellation, the Company shall cease all efforts to secure registration and such Demand
Registration shall not be counted as a Demand Registration under this Agreement for any purpose and
the Company shall pay the expenses of such cancelled Demand Registration in accordance with
Section 2.7.
(i) In any registration requested pursuant to this Section 2.1, the Company shall not
register securities other than Registrable Securities for sale for the account of any Person
(including the Company), unless permitted to do so by the written consent of the holders of a
majority of the Registrable Securities to be sold in such registration.
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Section 2.2 Piggyback Registrations.
(a) Whenever the Company proposes to register any of its equity securities under the
Securities Act (other than a registration statement on Form S-8 or on Form S-4 or any similar
successor forms), whether for its own account or for the account of one or more stockholders of the
Company, the Company shall each such time give prompt written notice at least 20 business days
prior to the anticipated filing date of the registration statement relating to such registration to
all Stockholders, which notice shall set forth the Stockholders’ rights under this Section
2.2 and shall offer the Stockholders the opportunity to include in such registration the number
of Registrable Securities of the same class or series as those proposed to be registered as the
Stockholders may request, subject to the provisions of Sections 2.2(a), 2.2(b) and
2.2(c). Upon the request of a Stockholder made within 15 business days after the receipt
of notice from the Company (which request shall specify the number of Registrable Securities, if
any, intended to be registered by the Stockholder), the Company shall use its reasonable best
efforts to effect the registration under the Securities Act of all Registrable Securities that the
Company has been so requested to register by the Stockholder to the extent necessary to permit the
disposition of the Registrable Securities so to be registered; provided, that (i) if such
registration involves an Underwritten Offering, the Stockholder must sell such Stockholder’s
Registrable Securities to the underwriters selected by the Company on the same terms and conditions
as apply to the Company, as applicable, and (ii) if, at any time after giving notice of its
intention to register any securities pursuant to this Section 2.2(a) and prior to the
effective date of the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities, the Company shall give
notice to the Stockholder and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration. No registration effected under this
Section 2.2 shall relieve the Company of its obligations to effect a Demand Registration to
the extent required by Section 2.1. There shall be no limitation on the number of Piggyback
Registrations that the Company shall be required to effect under this Section 2.2.
(b) At any time prior to the effective date of the registration statement relating to such
registration, a Stockholder may revoke such Piggyback Registration request by providing a notice to
the Company revoking such request.
(c) If a Piggyback Registration is in respect of an Underwritten Offering and was initiated by
the Company, and if the managing underwriters advise the Company that the inclusion of Registrable
Securities requested to be included in the registration statement pursuant to this Section
2.2 would cause an Adverse Effect, then the Company shall be required to include in such
registration statement, to the extent of the amount of securities that the managing underwriters
advise may be sold without causing such Adverse Effect, (A) first, the securities the
Company proposes to sell; (B) second, the Registrable Securities requested to be included
in such registration by any Stockholder thereof, pro rata among such Stockholders on the basis of
the number of Registrable Securities requested to be registered by each such
Stockholder; and (C) third, any other securities requested to be included in such
registration; provided, that the Company shall not include any Registrable Securities of
any executive officer or employee of the Company or any of its subsidiaries (other than the
Stockholders) if such managing underwriters advise the Company and the requesting Stockholders that
the participation of any such individual may have an Adverse Effect. If, as a result of the
provisions of this Section 2.2(c), any Stockholder shall not be entitled to include all
Registrable Securities in a registration that such Stockholder has requested to be so included,
such Stockholder may withdraw such Stockholder’s request to include Registrable Securities in such
registration statement.
(d) If a Piggyback Registration is in respect of an Underwritten Offering and was initiated by
a security holder of the Company (other than a Stockholder), and if the managing underwriters
advise the Company that the inclusion of Registrable Securities requested to be included in the
registration statement
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would cause an Adverse Effect, the Company shall include in such
registration statement, to the extent of the amount of securities that the managing underwriters
advise may be sold without causing such Adverse Effect, (A) first, the Registrable
Securities requested to be included in such registration by any Stockholder thereof, pro rata among
the Stockholders on the basis of the number of Registrable Securities requested to be registered by
each such Stockholder; and (B) second, any other securities requested to be included in
such registration (including securities to be sold for the account of the Company);
provided, that the Company shall not include any Registrable Securities of any executive
officer or employee of the Company or any of its subsidiaries (other than the Stockholders) if such
managing underwriters advise the Company and the requesting Stockholders that the participation of
any such individual may have an Adverse Effect. If, as a result of the provisions of this
Section 2.2(d), any Stockholder shall not be entitled to include all Registrable Securities
in a registration that such Stockholder has requested to be so included, such Stockholder may
withdraw such Stockholder’s request to include Registrable Securities in such registration
statement.
(e) Notwithstanding any of the foregoing, the provisions of Sections 2.2(c) and
2.2(d) shall not apply to a Piggyback Registration that is a Shelf Registration.
Section 2.3 SEC Forms. The Company shall use its reasonable best efforts to cause any
Demand Registrations to be registered on Form S-3 (or any successor form), if applicable, once the
Company becomes eligible to use Form S-3. If the Company is not then eligible under the Securities
Act to use Form S-3, such Demand Registrations shall be registered on the form for which the
Company then qualifies. The Company shall use its best efforts to become and remain eligible to
use Form S-3. All such registration statements shall comply with applicable requirements of the
Securities Act, and, together with each prospectus included, filed or otherwise furnished by the
Company in connection therewith, shall not contain any untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the statements therein not
misleading.
Section 2.4 Holdback Agreements.
(a) The Company agrees (i) not to effect any public sale or distribution of its equity
securities, or any securities convertible into or exchangeable or exercisable for such securities,
except pursuant to Excluded Registrations, during the seven days prior to the effective date of any
registration statement in connection with a Demand Registration or Piggyback Registration and
thereafter until the date on which all of the Registrable Securities subject to such registration
statement have been sold (not to exceed 90 days, as required by the underwriters managing the
offering) and (ii) if requested by the managing underwriters, to use reasonable efforts to cause
each director and executive officer to agree not to effect any public sale or distribution
(including sales pursuant to Rule 144 of the Securities Act) of any such securities during such
period (except as part of such underwritten registration, if otherwise permitted);
provided, that the foregoing described holdback shall not apply to the extent that the
managing underwriters of such offering otherwise agree or, in the event a registration
statement does not relate to an Underwritten Offering, if the holders of a majority of such
Registrable Securities consent thereto.
(b) If any Stockholders notify the Company in writing that they intend to effect an
underwritten sale of Company Common Stock registered pursuant to a Shelf Registration, the Company
agrees (i) not to effect any public sale or distribution of its equity securities, or any
securities convertible into or exchangeable or exercisable for its equity securities, during the
seven days prior to and during the 90-day period beginning on the filing of the prospectus
supplement with respect to such offering, other than pursuant to Excluded Registrations or to the
extent that the managing underwriters of such offering otherwise agree and (ii) if requested by the
managing underwriters, to use reasonable efforts to cause each director and executive officer to
agree not to effect any public sale or distribution (including sales
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pursuant to Section 144) of
any such securities during such period (except as part of such underwritten registration, if
otherwise permitted).
(c) Each Stockholder agrees, in the event of an Underwritten Offering by the Company (whether
for the account of the Company or otherwise), not to effect any public sale or distribution of any
Registrable Securities, or any securities convertible into or exchangeable or exercisable for such
Registrable Securities, including any sale pursuant to Rule 144 (except as part of such
Underwritten Offering), during the seven days prior to and ending up to 90 days after the date of
the final prospectus, subject in each case to such extensions as are customary to permit the
publication of research in compliance with Rule 2711(f) of the rules of the National Association of
Securities Dealers, Inc. as incorporated in the FINRA Rules (or any similar successor rule
thereto); provided, that each other stockholder of the Company and each executive officer
of the Company is subject to substantially the same restrictions.
Section 2.5 Registration Procedures. Whenever any Stockholder has requested that any
Registrable Securities be registered pursuant to this Agreement, the Company shall use its best
efforts to effect the registration and the sale of such Registrable Securities in accordance with
the intended method of disposition thereof as promptly as is practicable, and pursuant thereto the
Company shall as expeditiously as possible:
(a) prepare and file with the SEC by the Required Filing Date a registration statement on the
appropriate form under the Securities Act with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective as soon as practicable after
the initial filing thereof; provided, that as far in advance as practicable before filing
such registration statement or any amendment or supplement thereto, the Company shall furnish to
the selling Stockholders copies of reasonably complete drafts of all such documents prepared to be
filed (including exhibits and documents that are to be incorporated by reference into the
registration statement, amendment or supplement), and any such Stockholder shall have the
opportunity to object to any information contained therein and the Company shall make any
corrections or other amendments reasonably requested by such Stockholder with respect to such
information prior to filing any such registration statement, amendment or supplement;
(b) except in the case of a Shelf Registration, prepare and file with the SEC such amendments,
post-effective amendments, and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such registration statement effective for a
period of not less than 180 days (or such lesser period as is necessary for the underwriters in an
Underwritten Offering to sell unsold allotments) and comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such registration statement during
such period
in accordance with the intended methods of disposition by the sellers thereof set forth in
such registration statement;
(c) in the case of a Shelf Registration, prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities subject thereto for a
period ending on the earlier of (i) 24 months after the effective date of such registration
statement and (ii) the date on which all the Registrable Securities subject thereto have been sold
pursuant to such registration statement;
(d) furnish to each Stockholder selling Registrable Securities and the underwriters, if any,
of the securities being registered such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus included in such registration statement (including
each preliminary
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prospectus and any summary prospectus), any documents incorporated by reference
therein and such other documents as such Stockholder or underwriters reasonably may request in
order to facilitate the disposition of the Registrable Securities owned by such Stockholder or the
sale of such securities by such underwriters (it being understood that, subject to this Section
2.5 and the requirements of the Securities Act and applicable state securities laws, the
Company consents to the use of the prospectus and any amendment or supplement thereto by each such
Stockholder and the underwriters in connection with the offering and sale of the Registrable
Securities covered by the registration statement of which such prospectus, amendment or supplement
is a part);
(e) use its best efforts to register or qualify such Registrable Securities under such other
securities or “blue sky” laws of such jurisdictions as any Stockholder thereof or the managing
underwriters reasonably request; use its reasonable best efforts to keep each such registration or
qualification (or exemption therefrom) effective during the period in which such registration
statement is required to be kept effective; and do any and all other acts and things which may be
reasonably necessary or advisable to enable each such Stockholder to consummate the disposition of
the Registrable Securities owned by such Stockholder in such jurisdictions; provided, that
the Company shall not be required to (i) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this subparagraph or (ii) consent to general
service of process in any such jurisdiction;
(f) promptly notify each Stockholder of such Registrable Securities and each underwriter, if
any, in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has
been filed and, with respect to a registration statement or any post-effective amendment, when the
same has become effective; (ii) of the issuance by any state securities or other regulatory
authority of any order suspending the qualification or exemption from qualification of any of the
Registrable Securities under state securities or “blue sky” laws or the initiation or threat of
initiation of any proceedings for that purpose; and (iii) if such registration statement or related
prospectus, at the time it or any amendment thereto became effective or at any time such prospectus
is required to be delivered under the Securities Act, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, upon the discovery by the Company of such material misstatement
or omission or of the happening of any event as a result of which the Company believes there would
be such a material misstatement or omission; provided, that, in the case of clause (iii),
promptly after delivery of such notice, the Company shall, as the case may be, (x) prepare and file
with the SEC a post-effective amendment to such registration statement and use its best efforts to
cause such amendment to become effective so that such registration statement, as so amended, shall
not contain any untrue statement of a material fact or omit a material fact necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading or (y)
prepare and furnish a supplement or amendment to such prospectus so that, as thereafter deliverable
to the purchasers of such Registrable Securities, such prospectus shall not contain any untrue
statement of a material fact or omit a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
(g) permit (i) any selling Stockholder that, in such Stockholder’s sole and exclusive
judgment, might reasonably be deemed to be an underwriter or a controlling person of the Company
(in each case, within the meaning of the Securities Act) and (ii) any selling Stockholder holding,
or representing Stockholders of, a majority of the Registrable Securities included in such
registration statement, to participate in the preparation of such registration statement or related
prospectus and promptly incorporate any information furnished to the Company by such Stockholder
that, in the reasonable judgment of such Stockholder and its counsel, should be included;
(h) make reasonably available senior management of the Company, as selected by the
Stockholders of a majority of the Registrable Securities included in such registration, to assist
in the
- 9 -
marketing of the Registrable Securities covered by such registration, including the
participation of such members of the Company’s senior management in “road show” presentations and
other customary marketing activities, including “one-on-one” meetings with prospective purchasers
of the Registrable Securities to be sold in the Underwritten Offering and otherwise to facilitate,
cooperate with, and participate in each proposed offering contemplated herein and customary selling
efforts related thereto, in each case to the same extent as if the Company were engaged in a
primary registered offering of its capital stock; provided, that such assistance does not
unduly interfere with the normal operations of the Company in the ordinary course of business,
consistent with past practice;
(i) otherwise use its best efforts to comply with all applicable rules and regulations of the
SEC, including the Securities Act and the Exchange Act, and make generally available to the
Company’s security holders an earnings statement satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder, as soon as reasonably practicable, but no later than 30
days after the end of the 12-month period beginning with the first day of the Company’s first
fiscal quarter commencing after the effective date of a registration statement, which earnings
statement shall cover said 12 month period; provided, that such requirement shall be deemed
satisfied if the Company timely files complete and accurate information on Forms 10-Q, 10-K and 8-K
under the Exchange Act as required thereby and otherwise complies with Rule 158 under the
Securities Act;
(j) in the case of an Underwritten Offering, if requested by the managing underwriters or any
selling Stockholder, promptly incorporate in a prospectus supplement or post-effective amendment
such information as the managing underwriters or such selling Stockholder reasonably requests to be
included therein, including with respect to the Registrable Securities being sold by such selling
Stockholder, the purchase price being paid therefor by the underwriters and with respect to any
other terms of the Underwritten Offering of the Registrable Securities to be sold in such offering,
and promptly make all required filings of such prospectus supplement or post-effective amendment;
(k) as promptly as practicable after filing with the SEC of any document that is incorporated
by reference into a registration statement (in the form in which it was incorporated), deliver a
copy of each such document to each selling Stockholder;
(l) cooperate with the selling Stockholders and the managing underwriters to facilitate the
timely preparation and delivery of certificates representing securities sold under any registration
statement, which certificates shall not bear any restrictive legends unless required under
applicable law, and enable such securities to be in such denominations and registered in such names
as the managing underwriters or such selling Stockholders may request and keep available and make
available to the Company’s transfer agent prior to the effectiveness of such registration statement
a supply of such certificates;
(m) promptly make available for inspection by any selling Stockholder and any underwriter
participating in any disposition pursuant to any registration statement, and any attorney,
accountant or other agent or representative retained by any such selling Stockholder or underwriter
(collectively, the “Inspectors”), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the “Records”), as shall be
reasonably necessary to enable them to exercise their due diligence responsibility, and cause the
Company’s officers, directors, employees and independent accountants to supply all information
requested by any such Inspector in connection with such registration statement; provided,
that, unless the disclosure of such Records is necessary to avoid or correct a misstatement or
omission in the registration statement or the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, the Company shall not be required
to provide any information under this subparagraph (m) if (i) the Company reasonably determines in
good faith, after consultation with outside counsel, that to do so would cause the Company to
forfeit an
- 10 -
attorney-client privilege that was applicable to such information or (ii) if either (A)
the Company has requested and been granted from the SEC confidential treatment of such information
contained in any filing with the SEC or documents provided supplementally or otherwise or (B) the
Company reasonably determines in good faith that such Records are confidential and so notifies the
Inspectors in writing, unless prior to furnishing any such information with respect to clause (ii)
such selling Stockholder requesting such information agrees to enter into a confidentiality
agreement in customary form and subject to customary exceptions; and provided, further that
each selling Stockholder agrees that it shall, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at
its expense, to undertake appropriate action and to prevent disclosure of the Records deemed
confidential;
(n) furnish to each selling Stockholder and underwriter, if any, a signed counterpart of (i)
an opinion or opinions of counsel to the Company and updates thereof (which counsel and which
opinions shall be reasonably satisfactory to the underwriters and the Stockholders of a majority of
the Registrable Securities covered by the registration statement) addressed to them covering the
matters customarily covered in opinions requested in Underwritten Offerings and such other matters
as may be reasonably requested by the Stockholders of a majority of the Registrable Securities
covered by the registration statement and underwriters or their counsel, (ii) a comfort letter or
comfort letters and updates thereof from the Company’s independent public accountants addressed to
them, each in customary form and covering such matters of the type customarily covered by comfort
letters by underwriters in connection with primary Underwritten Offerings;
(o) cause the Registrable Securities included in any registration statement to be listed for
quotation on the NASDAQ Capital Market (or such other principal trading market as the Company’s
shares of Common Stock may then be traded on);
(p) provide a transfer agent and registrar for all Registrable Securities registered hereunder
not later than the effective date of the registration statement related thereto;
(q) use its best efforts to cause Registrable Securities covered by such registration
statement to be registered with or approved by such other government agencies or authorities as may
be necessary to enable the sellers thereof to consummate the disposition of such Registrable
Securities;
(r) cooperate with each selling Stockholder and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in connection with any
filings required to be made with FINRA;
(s) as may be required in connection with the initial filing of any registration statement,
and during the period when the prospectus is required to be delivered under the Securities Act,
promptly file
all documents required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act;
(t) notify each selling Stockholder promptly of any written comments by the SEC or any request
by the SEC for the amending or supplementing of such registration statement or prospectus or for
additional information;
(u) if applicable, enter into an underwriting agreement for such offering, such agreement to
contain such representations and warranties by the Company and such other terms and provisions as
are customarily contained in underwriting agreements with respect to that offering, including
indemnities and contribution to the effect and to the extent provided in Section 2.9 and
the provision of opinion of counsel and accountants’ letters to the effect and to the extent
provided in Section 2.5(n) and enter into any other
- 11 -
such customary agreements and take all
such other actions as the Stockholders of a majority of the Registrable Securities covered by the
registration statement or the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities. The selling Stockholders shall be
parties to any such underwriting agreement, and the representations and warranties by, and the
other agreements on the part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such selling Stockholders;
(v) make every reasonable effort to prevent the entry of any order suspending the
effectiveness of the registration statement and, in the event of the issuance of any such stop
order, or of any order suspending or preventing the use of any related prospectus or suspending the
qualification of any security included in such registration statement for sale in any jurisdiction,
the Company shall use commercially reasonable efforts promptly to obtain the withdrawal of such
order;
(w) provide a CUSIP number for all Registrable Securities not later than the effective date of
the registration statement with respect thereto;
(x) in connection with an Underwritten Offering make such representations and warranties to
the selling Stockholders of such Registrable Securities and the underwriters with respect to the
Registrable Securities and the registration statement as are customarily made by issuers to
underwriters in primary Underwritten Offerings and deliver such documents and certificates as may
be reasonably requested by each seller of Registrable Securities covered by the registration
statement and by the underwriters to evidence compliance with such representations and warranties
and with any customary conditions contained in the underwriting agreement or other agreement
entered into by the Company; and
(y) advise each selling Stockholder, promptly after it shall receive notice or obtain
knowledge thereof, of the issuance or threat of issuance of any stop order by the SEC suspending
the effectiveness of such registration statement or the initiation or threatening of any proceeding
for such purpose and promptly use its best efforts to prevent the issuance of any stop order or to
obtain its withdrawal at the earliest possible moment if such stop order should be issued.
Section 2.6 Suspension of Disposition. Each Stockholder agrees by acquisition of any
Registrable Securities that, upon receipt of any notice (a “Suspension Notice”) from the
Company of the happening of any Material Disclosure Event, such Stockholder shall promptly
discontinue such Stockholder’s disposition of Registrable Securities until such Stockholder’s
receipt of the copies of the supplemented or amended prospectus, or until it is advised in writing
by the Company (the “Advice”) that the use of the prospectus may be resumed, and has
received copies of any additional or supplemental filings that are incorporated by reference in the
prospectus, and, if so directed by the Company, such Stockholder shall deliver to the Company all
copies, other than permanent file copies then in such Stockholder’s possession, of the prospectus
covering such Registrable Securities current at the time of
receipt of such notice. In the event the Company shall give any Suspension Notice, the time
period regarding the effectiveness of registration statements set forth in Sections 2.5(b)
and 2.5(c) hereof shall be extended by the number of days during the period from and
including the date of the giving of the Suspension Notice to and including the date when each
seller of Registrable Securities covered by such registration statement shall have received the
copies of the supplemented or amended prospectus or the Advice (such period, a “Suspension
Period”). The Company shall use its best efforts and take such actions as are reasonably
necessary to render the Advice as promptly as practicable and shall as promptly as practicable
after the expiration of the Suspension Period prepare a post-effective amendment or supplement to
the registration statement or the prospectus or any document incorporated therein by reference, or
file any required document so that, as thereafter delivered to purchasers of the Registrable
Securities included therein, the prospectus will not include an untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in light of the
circumstances under
- 12 -
which they were made, not misleading. Notwithstanding anything herein to the
contrary, the Company shall not be entitled to more than two Suspension Periods during any
consecutive 12-month period, which Suspension Periods shall have durations of not more than 90 days
each; provided, that a Suspension Period shall automatically expire upon the public
disclosure of the information to which the Material Disclosure Event relates. The fact that a
Suspension Period is in effect under this Section 2.6 shall not relieve the contractual
obligations of the Company as set forth in Section 2.5 or in any SEC rules to file timely
reports and otherwise file material required to be filed under the Exchange Act.
Section 2.7 Registration Expenses. The Company shall pay all out-of-pocket fees and
expenses incident to any Demand Registration or Piggyback Registration, including all expenses
incident to the Company’s performance of or compliance with this Article 2, all
registration and filing fees, all internal fees and expenses of the Company (including any
allocation of salaries of employees of the Company or any of its subsidiaries or other general
overhead expenses of the Company and its subsidiaries or other expenses related to the preparation
of financial statements or other data normally prepared by the Company and its subsidiaries in the
ordinary course of business and expenses of its officers and employees performing legal or
accounting duties), all fees and expenses associated with filings required to be made with the
FINRA (including, if applicable, the reasonable fees and expenses of any “qualified independent
underwriter” as such term is defined in Schedule E of the By-Laws of the FINRA, and of its counsel)
or with any other applicable governmental authority, as may be required by the rules and
regulations of the FINRA or such other governmental authority, fees and expenses of compliance with
securities or “blue sky” laws (including reasonable fees and disbursements of counsel in connection
with “blue sky” qualifications of the Registrable Securities), rating agency fees, printing
expenses (including expenses of printing certificates for the Registrable Securities in a form
eligible for deposit with Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by a holder of Registrable Securities), messenger, duplicating,
distribution and delivery expenses, the expense of any annual audit or quarterly review, the
expense of any liability insurance, the fees and expenses incurred in connection with any listing
or quotation of the Registrable Securities, fees and expenses of counsel for the Company and its
independent certified public accountants (including the expenses of any special audit or “cold
comfort” letters required by or incident to such performance), the fees and expenses of any special
experts retained by the Company in connection with such registration and the reasonable fees and
expenses of any one counsel for all Stockholders participating in such registration shall be paid
for by the Company, which counsel shall be selected by the Stockholders of a majority of the
Registrable Securities to be registered in such offering. Any underwriting discounts, commissions,
or fees attributable to the sale of the Registrable Securities shall be borne by the Stockholders
pro rata on the basis of the number of Registrable Securities so registered whether
or not any registration statement becomes effective, and the fees and expenses of any counsel,
accountants, or other persons retained or employed by any Stockholder (other than as set forth in
the preceding sentence) shall be borne by such Stockholder.
Section 2.8 Underwritten Offering.
(a) At the request of the Stockholders of a majority of the Registrable Securities to be
registered in any Demand Registration, the offering of Registrable Securities pursuant to such
Demand Registration including pursuant to a Shelf Registration, shall be in the form of an
Underwritten Offering. The Stockholders of a majority of the Registrable Securities to be so
registered shall select (i) the investment banking firm or firms to manage the Underwritten
Offering and (ii) counsel to the requesting Stockholders; provided, that, in the case of
clause (i), such selection shall be subject to the consent of the Company, which consent shall not
be unreasonably withheld or delayed. No Stockholder may participate in any Underwritten Offering
pursuant to this Agreement unless such Stockholder (x) agrees to sell such Stockholder’s
Registrable Securities on the basis provided in any underwriting agreement described above as
agreed upon by the Company and accepts the underwriters selected in accordance with the procedures
- 13 -
described in this Section 2.8. and (y) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably required under the
terms of such underwriting agreements; provided, that no such Stockholder shall be required
to make any representations or warranties in connection with any such registration other than
representations and warranties as to (i) such Stockholder’s ownership of his, her or its
Registrable Securities to be transferred free and clear of all liens, claims, and encumbrances
created by such Stockholder, (ii) such Stockholder ‘s power and authority to effect such transfer,
and (iii) such matters pertaining to such Stockholder ‘s compliance with securities laws as may be
reasonably requested; provided, further that any obligation of such Stockholder to
indemnify any Person pursuant to any such underwriting agreement shall be several, not joint and
several, among such Stockholders selling Registrable Securities, and such liability shall be
limited to the net amount received by such Stockholder from the sale of his, her or its Registrable
Securities pursuant to such registration (which amounts shall include the amount of cash or the
fair market value of any assets in exchange for the sale or exchange of such Registrable Securities
or that are the subject of a distribution), and the relative liability of each such Stockholder
shall be in proportion to such net amounts; provided, further that this Section
2.8(a) shall not require any Stockholder to agree to any lock up agreement, market standoff
agreement or holdback agreement other than those permitted by Section 2.4.
(b) If Registrable Securities are to be sold in a Underwritten Offering, the Company agrees to
include in the registration statement, or in the case of a Shelf Registration, a prospectus
supplement, to be used all such information as may be reasonably requested by the underwriters for
the marketing and sale of such Registrable Securities.
Section 2.9 Indemnification.
(a) In connection with each Demand Registration or Piggyback Registration, the Company shall
indemnify and hold harmless each Stockholder, the officers, directors and agents and employees of
each of them, each Person who controls each such Stockholder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) and the directors, officers, agents and
employees of each such controlling Person, from and against any and all losses, claims, damages,
liabilities, judgment, costs (including, without limitation, reasonable attorneys’ fees)
(collectively, “Losses”), arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in any registration statement or prospectus, or in any
amendment or supplement thereto, or in any preliminary prospectus, or arising out of or based upon
any omission or alleged omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as the same are based upon information
furnished to the Company by or on behalf of such Stockholder for use therein.
(b) In connection with each Demand Registration or Piggyback Registration and each offering of
Registrable Securities proposed to be made pursuant to such Demand Registration or
Piggyback Registration, each Stockholder shall furnish to the Company in writing such
information as the Company reasonably requests for use in connection with each applicable
registration statement and prospectus. Each Stockholder agrees to indemnify, to the full extent
permitted by law, the Company, its directors, officers, agents or employees, each Person who
controls the Company (within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the directors, officers, agents or employees of such controlling Person, from and
against any and all Losses, as incurred, arising out of or based upon any untrue or alleged untrue
statement of a material fact contained in such registration statement or prospectus or in any
amendment or supplement thereto, or in any preliminary prospectus, or arising out of or based upon
any omission or alleged omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, to the extent, but only to the extent, that such untrue
or alleged untrue statement or omission or alleged omission is based upon any
- 14 -
information so
furnished in writing by or on behalf of such Stockholder to the Company expressly for use in such
registration statement or prospectus.
(c) If any Person shall be entitled to indemnity hereunder (an “indemnified party”),
such indemnified party shall give prompt notice to the party from which such indemnity is sought
(the “indemnifying party”) of any claim or of the commencement of any proceeding with
respect to which such indemnified party seeks indemnification or contribution pursuant hereto;
provided, that the delay or failure to so notify the indemnifying party shall not relieve
the indemnifying party from any obligation or liability except to the extent that the indemnifying
party has been prejudiced by such delay or failure. The indemnifying party shall have the right,
exercisable by giving written notice to an indemnified party promptly after the receipt of written
notice from such indemnified party of such claim or proceeding, to assume, at the indemnifying
party’s expense, the defense of any such claim or proceeding, with counsel reasonably satisfactory
to such indemnified party; provided, that (i) an indemnified party shall have the right to
employ separate counsel in any such claim or proceeding and to participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of such indemnified party unless:
(A) the indemnifying party agrees to pay such fees and expenses; (B) the indemnifying party fails
promptly to assume the defense of such claim or proceeding or fails to employ counsel reasonably
satisfactory to such indemnified party; or (C) the named parties to any proceeding (including
impleaded parties) include both such indemnified party and the indemnifying party, and such
indemnified party shall have been advised by counsel that there may be one or more legal defenses
available to it that are inconsistent with those available to the indemnifying party or that a
conflict of interest is likely to exist among such indemnified party and any other indemnified
parties (in which case the indemnifying party shall not have the right to assume the defense of
such action on behalf of such indemnified party); and (ii) subject to clause (C) above, the
indemnifying party shall not, in connection with any one such claim or proceeding or separate but
substantially similar or related claims or proceedings in the same jurisdiction, arising out of the
same general allegations or circumstances, be liable for the fees and expenses of more than one
firm of attorneys (together with appropriate local counsel) at any time for all of the indemnified
parties, or for fees and expenses that are not reasonable. Whether or not such defense is assumed
by the indemnifying party, such indemnified party shall not be subject to any liability for any
settlement made without its consent. The indemnifying party shall not consent to entry of any
judgment or enter into any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release, in form and substance
reasonably satisfactory to the indemnified party, from all liability in respect of such claim or
litigation for which such indemnified party would be entitled to indemnification hereunder.
(d) If the indemnification provided for in this Section 2.9 is unavailable to an
indemnified party in respect of any Losses (other than in accordance with its terms), then each
applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to
the amount paid or payable by such indemnified party as a result of such Losses, in such proportion
as is appropriate to
reflect the relative fault of the indemnifying party, on the one hand, and such indemnified
party, on the other hand, in connection with the actions, statements or omissions that resulted in
such Losses as well as any other relevant equitable considerations. The relative fault of such
indemnifying party, on the one hand, and indemnified party, on the other hand, shall be determined
by reference to, among other things, whether any action in question, including any untrue statement
of a material fact or omission or alleged omission to state a material fact, has been taken by, or
relates to information supplied by, such indemnifying party or indemnified party, and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent any such
action, statement or omission. The amount paid or payable by a party as a result of any Losses
shall be deemed to include any legal or other fees or expenses incurred by such party in connection
with any investigation or proceeding. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2.9(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of the equitable
- 15 -
considerations referred to in the second immediately preceding sentence. Notwithstanding the
provisions of this Section 2.9(d), an indemnifying party that is a Stockholder shall not be
required to contribute any amount which is in excess of the amount by which the total proceeds
received by such Stockholder from the sale of the Registrable Securities sold by such Stockholder
(net of all underwriting discounts and commissions) exceeds the amount of any damages that such
indemnifying party has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
Section 2.10 Rule 144. The Company shall use its reasonable best efforts to file in a
timely fashion all reports and other documents required to be filed by it under the Securities Act
and the Exchange Act and that it will take such further action as the Stockholders may reasonably
request, all to the extent required from time to time to enable the Stockholders to sell
Registrable Securities without registration under the Securities Act pursuant to (i) Rule 144 or
(ii) any similar rule or regulation hereafter adopted by the Commission. Upon the request of a
Stockholder, the Company will deliver to such Stockholder a written statement as to whether it has
complied with such requirements.
ARTICLE III
MISCELLANEOUS
Section 3.1 Effectiveness. The provisions of this Agreement shall become effective on
the Effective Date.
Section 3.2 Termination. This Agreement shall terminate automatically, without the
action of any Stockholder or the Company, if the Company Stock Purchase Agreement is terminated
pursuant to Section 6.1 thereof prior to the Effective Date. Notwithstanding the
foregoing, the Company shall have no further obligations pursuant to this Agreement at such time as
no Registrable Securities are outstanding.
Section 3.3 Notice.
(a) All notices and other communications under this Agreement must be in writing and delivered
to the applicable party or parties in Person or by delivery to the address or facsimile number
specified below (or to such other address or facsimile number as the recipient previously shall
have specified by notice to the other parties hereunder):
If to the Company:
c/o Cornerstone Therapeutics Inc.
0000 Xxxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxx, XX 00000
Attention: Chief Financial Officer
General Counsel
Facsimile: (000) 000-0000
0000 Xxxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxx, XX 00000
Attention: Chief Financial Officer
General Counsel
Facsimile: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxxxxx Chance US LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
- 16 -
Attention: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
If to the Stockholders:
c/o Cornerstone Therapeutics Inc.
0000 Xxxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxx, XX 00000
Attention: Chief Financial Officer
General Counsel
Facsimile: (000) 000-0000
0000 Xxxxxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxx, XX 00000
Attention: Chief Financial Officer
General Counsel
Facsimile: (000) 000-0000
With a copy (which shall not constitute notice) to:
Xxxxxxxx Chance US LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxx
Facsimile: (000) 000-0000
(b) All notices and other communications sent to the applicable address or facsimile number
specified above shall be deemed to have been delivered at the earlier of (i) the time of actual
receipt by the addressee; (ii) if the notice is sent by facsimile transmission, the time indicated
on the transmitting party’s receipt of confirmation of transmission that time is during the
addressee’s regular business hours on a Business Day, and otherwise at 9:00 a.m. on the next
Business Day after such time; and (iii) if the notice is sent by a nationally recognized, reputable
overnight courier service, the time shown on the confirmation of delivery provided by that service
if that time is during the recipient’s regular business hours on a Business Day, and otherwise at
9:00 a.m. on the next Business Day after such time.
Section 3.4 Entire Agreement. This Agreement constitutes the sole and entire
agreement among the parties to this Agreement with respect to the subject matter of this Agreement,
and supersede all prior and contemporaneous representations, agreements and understandings, written
or oral, with respect to the subject matter hereof.
Section 3.5 Waiver. Subject to applicable law and except as otherwise provided in
this Agreement, any party to this Agreement may, at any time prior to termination of this
Agreement, extend the time for performance of any obligation under this Agreement of any other
party or waive compliance
with any term or condition of this Agreement by any other party. No such extension or waiver
shall be effective unless set forth in a written instrument duly executed by the party granting
such extension or waiver. No delay in asserting or exercising a right under this Agreement shall
be deemed a wavier of that right.
Section 3.6 Amendment. Subject to applicable law and except as otherwise provided in
this Agreement, this Agreement may be amended, supplemented or modified at any time;
provided, that no such amendment, supplement or modification shall be effective unless it
is set forth in a written instrument duly executed by each of the parties hereto.
Section 3.7 No Third Party Beneficiaries. Except as set forth in Section 2.9,
the terms and provisions of this Agreement are intended solely for the benefit of each party hereto
and their respective successors or permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other Person.
- 17 -
Section 3.8 Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation under this Agreement may be assigned by any party to this Agreement, by
operation of law or otherwise, without the prior written consent of the other parties to this
Agreement and any attempt to do so will be void. Subject to the foregoing, this Agreement is
binding upon, inures to the benefit of and is enforceable by the parties to this Agreement and
their respective successors and assigns.
Section 3.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD FOR ANY OF THE CONFLICTS OF LAWS
PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
Section 3.10 CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY TRIAL.
EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
DELAWARE CHANCERY COURT SITTING IN THE COUNTY OF NEW CASTLE, OR IF SUCH COURT SHALL NOT HAVE PROPER
JURISDICTION, OF THE UNITED STATES FEDERAL DISTRICT COURT SITTING IN DELAWARE, AND ANY APPELLATE
COURT THEREOF, IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND AGREES THAT ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE BROUGHT ONLY IN SUCH COURTS (AND WAIVES AND AGREES NOT TO ASSERT ANY OBJECTION
BASED ON FORUM NON CONVENIENS OR ANY OTHER OBJECTION TO VENUE THEREIN OR JURISDICTION THEREOF);
PROVIDED, HOWEVER, THAT SUCH CONSENT TO JURISDICTION IS SOLELY FOR THE PURPOSE REFERRED TO
IN THIS SECTION 3.10 AND SHALL NOT BE DEEMED TO BE A GENERAL SUBMISSION TO THE JURISDICTION OF SAID
COURTS OR IN THE STATE OF DELAWARE OTHER THAN FOR SUCH PURPOSE. Any and all process may be served
in any action, suit or proceeding arising in connection with this Agreement by complying with the
provisions of Section 3.3. Such service of process shall have the same effect as if the
party being served were a resident in the State of Delaware and had been lawfully served with such
process in such jurisdiction. The parties hereby waive all claims of error by reason of such
service. Nothing herein shall affect the right of any party to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against the other in any
other jurisdiction to enforce judgments or rulings of the aforementioned courts. EACH PARTY TO
THIS AGREEMENT HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE PARTIES
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 3.10.
Section 3.11 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this Agreement a legal,
valid and enforceable provision as similar in terms to
- 18 -
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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| CORNERSTONE THERAPEUTICS INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxx | |||
| Title: | CEO | |||
[Signature Page to Registration Rights Agreement (Stockholders)]
| /s/ Xxxxx X. Xxxxxxx | ||||||
| XXXXX X. XXXXXXX | ||||||
| CORNERSTONE BIOPHARMA HOLDINGS, LTD. | ||||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||||
| Title: CEO | ||||||
| CAROLINA PHARMACEUTICALS LTD. | ||||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||||
| Title: Director | ||||||
[Signature Page to Registration Rights Agreement (Stockholders)]
/s/ Xxxxxx X. Xxxx
|
||||
| XXXXXX X. XXXX | ||||
| XXXX FAMILY LIMITED PARTNERSHIP | ||||
| By: XXXXXX X. XXXX, its general partner | ||||
/s/ Xxxxxx X. Xxxx
|
[Signature Page to Registration Rights Agreement (Stockholders)]
