As filed with the Securities and Exchange Commission on August 30, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------------
CELLEGY PHARMACEUTICALS, INC.
(Exact name of the Registrant as specified in its charter)
California 82-0429727
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
349 OYSTER POINT BOULEVARD, SUITE 200
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(650) 616-2200
(Address and telephone number of the Registrant's principal executive offices)
----------------------
K. MICHAEL FORREST
CHIEF EXECUTIVE OFFICER
CELLEGY PHARMACEUTICALS, INC.
349 OYSTER POINT BOULEVARD, SUITE 200
SOUTH SAN FRANCISCO, CA 94080
(650) 616-2200
(Name, address and telephone number of the Registrant's agent for service)
----------------------
Copies to:
C. KEVIN KELSO
FENWICK & WEST LLP
TWO PALO ALTO SQUARE, SUITE 800
PALO ALTO, CALIFORNIA 94306
(650) 494-0600
----------------------
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<TABLE>
Calculation Of Registration Fee
<CAPTION>
- -------------------------------------------------- ---------------- ----------------------- ------------------- --------------------
Proposed Maximum Proposed Maximum
Title of Each Class of shares of common Amounts to be Offering Price per Aggregate Offering Amount of
stock to be Registered Registered(1) Share(1) Price(1) Registration Fee
- -------------------------------------------------- ---------------- ----------------------- ------------------- --------------------
<S> <C> <C> <C> <C>
common stock, no par value 1,561,000 $7.03125 $10,975,781.25 $3,051.27
- -------------------------------------------------- ---------------- ----------------------- ------------------- --------------------
common stock issuable upon exercise of warrants 14,000 $7.03125 $98,437.50 $27.37
- -------------------------------------------------- ---------------- ----------------------- ------------------- --------------------
<FN>
(1) Estimated solely for the purpose of calculating the amount of registration fee pursuant to Rule 457(c) under the Securities Act
of 1933, as amended, based on the average of the high and low prices of the common stock on the Nasdaq Stock Market on August
24, 1999.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the Registrant files a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.
</FN>
</TABLE>
<PAGE>
Subject to completion, dated August 30, 1999
- --------------------------------------------------------------------------------
PROSPECTUS
- --------------------------------------------------------------------------------
Cellegy Pharmaceuticals, Inc.
1,575,000 shares of common stock
-----------------------------------------------------
Cellegy's common stock currently trades on the Nasdaq
Stock Market. Last reported sale price on August 27, 1999 $7.50 per share.
Trading Symbol: CLGY
-----------------------------------------------------
The Offering
The selling stockholders named on page 8 of this prospectus may offer and sell
the shares of Common stock offered in this prospectus. Cellegy will not receive
any of the proceeds from the sale of these shares.
-----------------------------------------------------
This investment involves a high degree of risk. Please carefully consider the
"Risk Factors" beginning on page 3 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is August 30, 1999
********************************************************************************
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
********************************************************************************
<PAGE>
In connection with this offering, no person is authorized to give any
information or to make any representations not contained in this prospectus. If
such information is given or representations made, you may not rely on such
information or representations as having been authorized by us. This prospectus
is neither an offer to sell nor a solicitation of an offer to buy any securities
other than those registered hereby, nor is it an offer to sell or a solicitation
of an offer to buy securities where such an offer or solicitation would be
unlawful. You may not imply from the delivery of this prospectus, nor from any
sale made under this prospectus, that our affairs are unchanged since the date
of this prospectus or that the information contained in this prospectus is
correct as of any time after the date of this prospectus.
-----------------------------------------------------
TABLE OF CONTENTS
-----------------------------------------------------
Forward-looking Statement .......3 Plan of Distribution..................... 9
The Company .....................3 Where You Can Find More Information .....10
Risk Factors ....................3 Documents Incorporated by Reference .....11
Use of Proceeds .................7 Legal Matters ...........................11
Selling Stockholders ............8 Experts .................................11
Unless the context otherwise requires, the terms "we," "our," "us" and
"Cellegy" refer to Cellegy Pharmaceuticals, Inc., a California corporation and
its subsidiaries.
2
<PAGE>
FORWARD-LOOKING STATEMENT
This Registration Statement on Form S-3 includes forward-looking
statements. Words such as "believes," "anticipates," "expects," "intends" and
similar expressions are intended to identify foward-looking statements, but are
not the exclusive means of identifying such statements. These forward-looking
statements concern matters that involve risks and uncertainties that could cause
our actual results to differ materially from those in the forward-looking
statements. Further, we undertake no obligation to revise any forward-looking
statements in order to reflect events or circumstances that may arise after the
date of this report. Actual events or results may differ materially from those
discussed in this prospectus.
THE COMPANY
We are a specialty bio-pharmaceutical company engaged in the development of
prescription drugs and cosmeceutical products based on our patented topical and
transdermal drug delivery technologies.
Cellegy's most advanced prescription product candidates include
Anogesic(R), a nitroglycerin-based product for the treatment of anal fissures
and hemorrhoids, and a transdermal testosterone gel for the treatment of male
hypogonadism, a condition that frequently results in lethargy and reduced libido
in men above the age of 40. We recently completed patient enrollment in a Phase
III clinical trial using Anogesic for the treatment of chronic anal fissures.
In addition to prescription drugs, Cellegy is testing and developing a line
of non-prescription cosmeceutical products which we believe will help reverse
the signs of skin aging and address the skin care needs of an affluent and aging
population.
RISK FACTORS
Please carefully consider the specific factors set forth below as well
as the other information contained in, or incorporated by reference into, this
prospectus before purchasing shares of our common stock. Factors that might
cause such a difference include, but are not limited to, those discussed below.
We have a history of losses, and we expect losses to continue for at least
several years.
Our accumulated deficit as of June 30, 1999 was approximately $35.1
million. We have never operated profitably and, given our planned level of
operating expenses, we expect to continue to incur losses for at least the next
several years. We plan to increase our operating expenses as we continue to
devote significant resources to preclinical studies, clinical trials,
administrative, marketing and patent activities. We have not generated any
significant revenues from royalties or licensing of our technologies, and we
expect that it will take several years for any of the prescription products to
be approved for marketing. Accordingly, without substantial revenues from new
corporate collaborations, royalties on product sales or other revenue sources,
we expect to incur substantial and increased operating losses in the foreseeable
future as our earlier stage potential products move into clinical development,
and as we invest in research or acquire additional technologies, product
candidates or businesses. Our losses may increase in the future, and even if we
achieve our revenue targets, we may not be able to sustain or increase
profitability on a quarterly or annual basis. The amount of future net losses,
and the time required to reach profitability, are both highly uncertain. To
achieve sustained profitable operations, we must, among other things,
successfully discover, develop, obtain regulatory approvals for and market
pharmaceutical or cosmeceutical products. We cannot assure you that we will ever
be able to achieve or sustain profitability.
Our clinical trial results are very difficult to predict in advance, and failure
of one or more clinical trials could adversely affect our business and our stock
price.
Before we obtain regulatory approval for the commercial sale of most
potential drug products, we must demonstrate through preclinical studies and
clinical trials that the product is safe and efficacious for use in the clinical
indication for which approval is sought. We cannot assure you that we will be
permitted by the U.S. Food and Drug Administration ( the "FDA") or other
international regulatory authorities to undertake or continue clinical trials
for any of our potential products or, if such trials are permitted, that such
products will demonstrate safety and efficacy. Moreover, results of preclinical
studies and early clinical trials may not be good predictors of results that
will be obtained in later-stage clinical trials. We cannot assure you that
Cellegy's present or future clinical trials, including for example, the current
Phase II and III clinical trials using our Anogesic product, or the current
Phase II dose ranging study for testosterone gel, will demonstrate the results
required for approval to market these potential products or even to continue
with additional clinical development. Because of the independent and blind
nature of certain human clinical testing, there will be extended periods during
the testing process when we will have only limited, or no, access to information
about the status or results of the tests. Other pharmaceutical companies have
believed that their products performed satisfactorily in early tests, only to
find their performance in later tests, including Phase III clinical trials, to
be inadequate or unsatisfactory, or that FDA Advisory
3
<PAGE>
Committees have declined to recommend approval of the drugs, or that the FDA
itself refused approval, with the result that such companies' stock prices have
fallen precipitously. If Anogesic fails to successfully complete its current
Phase III or any future clinical testing, including toxicology studies, our
business and stock price would be materially and adversely affected.
Our potential products are in early stages of product development, and we have
not sought regulatory approval to distribute any products.
To date, we have not sought regulatory approval to distribute any
products. The time and resource commitment required to achieve market success
for any individual product is extensive and uncertain. We cannot assure you that
our product development efforts will be successful, that required regulatory
approvals can be obtained, that potential products can be manufactured at an
acceptable cost and with appropriate quality or that any approved products can
be successfully marketed.
With the exception of certain skin care cosmeceutical products, Cellegy
has not yet completed the development of other products or sought regulatory
approval for the marketing of our drug products and have not begun to market or
generate revenues from our prescription products. Development of our potential
products will require significant additional research and development. Many of
Cellegy's product development efforts are based upon technologies and
therapeutic approaches that have not been widely tested or used. Moreover,
Cellegy's beliefs regarding the therapeutic and commercial potential for its
products are based on studies conducted to date, and later studies may not
support Cellegy's current beliefs. In addition, results of our studies have not
been published in medical journals or reviewed by independent third parties, and
as a result have not been subjected to the same degree of scrutiny as results
that have been published or subjected to review by independent parties.
Cellegy's potential products are subject to the risks of failure inherent
in the development of all products based on new technologies. These possible
risks include:
o Cellegy's therapeutic approaches will not be successful;
o the results from future clinical trials may not correlate with any
safety or efficacy results from prior clinical studies conducted by
Cellegy or others;
o Cellegy's potential products will not be successfully developed;
o products will not be found to be safe and effective by the FDA, or
other international regulatory agencies;
o our future clinical and research and development activities will not
result in any commercially viable products.
Possible FDA regulation of our cosmeceutical products as drugs would adversely
impact our planned marketing program.
Cellegy intends to introduce products that will compete in the
cosmeceutical market, including a product line that will compete in what is
generally referred to as the "anti-wrinkling" market. "Cosmeceuticals" are not
defined in the Food, Drug and Cosmetics Act (the "FD&C Act"). The FDA has not
defined the term by regulation and may consider use of the term to imply
drug-like qualities. Cosmeceuticals (a hybrid of the words "cosmetics" and
"pharmaceuticals") are products that contain active ingredients which, when
applied to the skin, will enhance appearance. Cosmeceuticals which satisfy the
definition of a cosmetic under the FD&C Act and which are not also drugs under
that statute are not subject to the same FDA requirements as drug products. The
FDA may contend that one or more cosmeceutical products, including Cellegy's or
competitors' anti-wrinkling products that are currently marketed or may in the
future be marketed, are not cosmetics but instead are subject to regulation as
drugs.
Competition and technological change is increasing. In the future, Cellegy may
not have the resources required to develop innovative products.
The pharmaceutical and cosmeceutical industries are subject to rapid
and significant technological change. In the development and marketing of
topical prescription drugs, skin care and other cosmeceutical products and drug
delivery systems, Cellegy faces intense competition. Competitors of Cellegy in
the United States and abroad are numerous and include, among others, major
pharmaceutical, chemical, cosmetic, consumer product, and biotechnology
companies, specialized firms, universities and other research institutions.
Cellegy's competitors may succeed in developing technologies and products that
are more effective than any which we are developing and could render Cellegy's
technology and potential products obsolete and noncompetitive. Many of these
competitors have substantially greater financial and
4
<PAGE>
technical resources, clinical production and marketing capabilities and
regulatory experience. In addition, these companies and academic and research
institutions compete with us in recruiting and retaining highly qualified
scientific and management personnel. As a result, we cannot assure you that
Cellegy's products under development will be able to compete successfully with
existing products or innovative products under development by other
organizations.
The type and scope of patent coverage we have may limit the commercial success
of our products.
Cellegy's success depends, in part, on our ability to obtain patent
protection for our products and methods, both in the United States and in other
countries. Several of Cellegy's products are based on existing compounds with a
history of use in humans but are being developed by Cellegy for new therapeutic
use in skin diseases. Cellegy cannot obtain composition patent claims on the
compound itself, and will instead need to rely on patent claims, if any,
directed to use of the compound to treat certain conditions or to specific
formulations we are attempting to develop. Cellegy may not be able to prevent a
competitor from using our formulations or compounds for a different purpose. We
cannot assure you that any additional patents will be issued to Cellegy, that
the protection of any patents issued in the future will be commercially valuable
or that current or future patents will be held valid if subsequently challenged.
The patent position of companies engaged in businesses such as Cellegy's
business generally is uncertain and involves complex legal and factual
questions. There is a substantial backlog of patent applications at the United
States Patent and Trademark Office. Further, issued patents can later be held
invalid by the patent office issuing the patent or by a court. There can be no
assurance that any patent applications relating to Cellegy's products or methods
will issue as patents, or, if issued, that the patents will not be challenged,
invalidated or circumvented or that the rights granted thereunder will provide
us a competitive advantage. In addition, many other organizations are engaged in
research and product development efforts in drug delivery, skin biology and
cosmeceutical fields that may overlap with Cellegy's products. Such
organizations may currently have, or may obtain in the future, legally blocking
proprietary rights, including patent rights, in one or more products or methods
under development or consideration by Cellegy. These rights may prevent us from
commercializing technology, or may require Cellegy to obtain a license from the
organizations to use the technology. Cellegy may not be able to obtain any such
licenses that may be required on reasonable financial terms, if at all, or that
the patents underlying any such licenses will be valid or enforceable. Moreover,
the laws of certain foreign countries do not protect intellectual property
rights relating to United States patents as extensively as those rights are
protected in the United States. Cellegy is subject to the risk that individuals
or organizations located in such countries will engage in development, marketing
or sales activities of Cellegy's products.
Our agreements with the University of California give us exclusive license
rights to certain drug delivery and other technologies that contain certain
development and performance milestones which Cellegy must satisfy in order to
retain such rights. While we currently believe we will be able to satisfy the
revised milestone dates, a loss of rights to these technologies could have a
material adverse effect on our business and stock price.
Our product sales strategy involving corporate partners is highly uncertain. No
new partnership agreements have been finalized.
Cellegy is actively seeking to enter into agreements with certain corporate
partners granting rights to commercialize our lead products. Cellegy has an
agreements with one academic institution, and intends to enter into other
collaborative agreements in the future. Cellegy may rely on its partners to:
o conduct clinical trials;
o to obtain regulatory approvals; and,
o if approved, to manufacture and market or co-promote these products.
Once agreements are completed, Cellegy may have little or no control over
the development of these potential products and little or no opportunity to
review clinical data before or after public announcement of results. Further,
Cellegy may not be able to establish any such collaborative arrangements, and
any arrangements that may be established may not be successful. Failure to enter
into any such arrangements could have a material adverse effect on our ability
to develop and market our products, particularly in certain international
markets. If we are unable to find another corporate partner to develop and
market Glylorin, it may never be commercialized.
We are subject to regulation by regulatory authorities including the FDA;
obtaining approval to market drugs is a lengthy process, and regulatory
authorities could delay or prevent marketing of our products.
5
<PAGE>
The research, development, testing, manufacture, labeling,
distribution, marketing and advertising of products such as Cellegy's products,
and our ongoing research and development activities, are subject to extensive
regulation by governmental regulatory authorities in the United States and other
countries. The extensive preclinical and clinical testing requirements and
regulatory approval process of the FDA in the United States and of certain
foreign regulatory authorities require a number of years and the expenditure of
substantial resources. We may not be able to obtain the necessary approvals for
clinical testing or for the marketing of products on a timely basis or at all.
Moreover, additional government regulations may be established that could
prevent or delay regulatory approval of Cellegy's products. Delays in obtaining
regulatory approvals could have a material adverse effect on our business and
stock price. Even if regulatory approval of a product is granted, such approval
may include significant limitations on the indicated uses of the product or the
manner in which or conditions under which the product may be marketed. Moreover,
failure to comply with regulatory requirements for marketing drugs, or if
Cellegy's cosmeceutical products are deemed to be drugs by the FDA, could
subject Cellegy to regulatory or judicial enforcement actions, including, but
not limited to, product recalls or seizures, injunctions against production,
distribution, sales and marketing, civil penalties, criminal prosecution of
Cellegy, our officers or employees, refusals to approve new products and
suspensions and withdrawals of existing approvals, as well as potentially
increased product liability exposure. Sales of Cellegy's products outside the
United States will be subject to regulatory requirements governing clinical
trials and marketing approval. These requirements vary widely from country to
country and could delay introduction of Cellegy's products in those countries.
Our prospects for obtaining additional financing, if required, are uncertain and
failure to obtain needed financing could affect our ability to develop or market
products.
Throughout our history, we have consumed substantial amounts of cash. Our
cash needs are expected to continue to increase significantly over at least the
next several years in order to fund the additional expenses required to expand
our current research and development programs. Cellegy has no current source of
significant ongoing revenues or capital beyond existing cash and investments,
and product sales to Gryphon, the development subsidiary of specialty retailer,
Bath & Body Works. In order to complete the research and development and other
activities necessary to commercialize our products, additional financing will be
required.
Cellegy will seek private or public equity investments and future
collaborative arrangements with third parties to help fund future cash needs.
Such funding may not be available on acceptable terms, if at all. Insufficient
funding may require Cellegy to delay, reduce or eliminate some or all of our
research and development activities or planned clinical trial programs. Cellegy
believes that available cash resources and interest earned will be adequate to
satisfy its capital needs through at least December 31, 2000.
We currently have no products we sell on our own and have limited sales and
marketing experience.
We may market certain of our products, if successfully developed and
approved, through a direct sales force in the United States and through sales
and marketing partnership or distribution arrangements outside the United
States. Cellegy has no history or experience in sales, marketing or
distribution. To market our products directly, we intend to establish a
marketing group and direct sales force or obtain the assistance of our marketing
partner. If we enter into marketing or licensing arrangements with established
pharmaceutical companies, our revenues will be subject to the terms and
conditions of such arrangements and will be dependent on the efforts of our
partner. Cellegy may not be able to successfully establish a direct sales force,
or assure you that our collaborators may not effectively market any of our
potential products, and either circumstance could have a material adverse effect
on our business and stock price.
We have not manufactured products before and are dependent on a limited number
of critical suppliers.
Cellegy has no direct experience in manufacturing commercial quantities
of products and currently does not have any capacity to manufacture products on
a large commercial scale. We currently rely on a limited number of contract
manufacturers and suppliers to manufacture our formulations. Although we believe
that there will be adequate third party manufacturers, there can be no assurance
that we will be able to enter into acceptable agreements with them. In the
future, we may not be able to obtain contract manufacturing on commercially
acceptable terms for compounds or product formulations in the quantities we
need. Manufacturing or quality control problems could occur at the contract
manufacturers such that they may not be able to maintain compliance with the
FDA's current good manufacturing practice requirements necessary to continue
manufacturing our products.
The health care industry is unpredictable, and changes in the health care
industry could adversely affect our business.
6
<PAGE>
The health care industry is subject to changing political, economic and
regulatory influences that may significantly affect the purchasing practices and
pricing of human therapeutics. Cost containment measures, whether instituted by
health care providers or enacted as a result of government health administration
regulators or new regulations, such as pricing limitations or formulating
eligibility for dispensation by medical providers, could result in greater
selectivity in the availability of treatments. Such selectivity could have an
adverse effect on Cellegy's ability to sell prescription products, and adequate
patient insurance coverage may not be available for Cellegy to maintain price
levels. The trend towards managed health care in the United States, as well as
legislative proposals to reform health care or reduce government insurance
programs, may result in lower prices or reduced markets for Cellegy's products.
The adoption of any such measures or reforms could have a material adverse
effect on the business and financial condition of Cellegy. Moreover,
cosmeceutical products generally are not reimbursed by third party payors.
We have very limited staffing and will continue to be dependent upon key
employees.
Our success is dependent upon the efforts of a small technical and
management team. If key individuals leave Cellegy, we could be adversely
affected if suitable replacement personnel are not quickly recruited. Our future
success depends upon our ability to continue to attract and retain qualified
scientific, marketing and technical personnel. There is intense competition for
qualified personnel in all functional areas and competition will make it
difficult to attract and retain the qualified personnel necessary for the
development and growth of our business.
We are subject to the risk of product liability lawsuits.
The testing, marketing and sale of human health care products entails
an inherent risk of allegations of product liability. We are subject to the risk
that substantial product liability claims could be asserted against us in the
future. Cellegy has obtained limited amounts of insurance relating to our
clinical trials. There can be no assurance that Cellegy will be able to obtain
or maintain insurance on acceptable terms for clinical and commercial activities
or that any insurance obtained will provide adequate protection against
potential liabilities.
Our stock price could be volatile.
Our stock price has from time to time experienced significant price and
volume fluctuations that may be unrelated to operating performance.
Announcements that could significantly impact our stock price include:
o clinical trial results;
o developments or disputes concerning patent or proprietary rights;
o publicity regarding actual or potential clinical results relating to
our products under development or by our competitors;
o regulatory developments in both the United States and foreign
countries;
o sales of a large number of shares of common stock in the market;
o economic and other external factors; and,
o period-to-period fluctuations in financial results.
Our quarterly operating results are subject to fluctuations, which could affect
our stock price.
Given the uncertain nature of drug development, it is difficult for us
to predict operating expenses and revenues from period to period. If our
products are approved, it will be very difficult to predict the sustainability
of initial prescription patterns and resulting revenues of our products. These
potential fluctuations in financial results may negatively impact our stock
price.
USE OF PROCEEDS
If the warrants described under "Selling Stockholders" below are
exercised for cash, then we would receive the proceeds from exercise of the
warrants. However, we will not receive any proceeds from the sale of the common
stock by any of the selling stockholders.
7
<PAGE>
SELLING STOCKHOLDERS
We are registering the shares of common stock (the "Shares") pursuant
to (i) a Common Stock Purchase Agreement dated as of July 30, 1999 (the
"Agreement"), by and among Cellegy and the selling stockholders named below
other than Dr. Crowley and Dr. Bank, (ii) a common stock purchase warrant dated
January 18, 1999 between Cellegy and Michael P. Crowley, Ph.D., and (iii) a
common stock purchase warrant dated January 19, 1999 between Cellegy and Richard
Bank, M.D. The warrant held by Dr. Crowley is exercisable until July 2, 2000,
and 2,000 warrants have an exercise price of $4.6875 per share. The warrant held
by Dr. Bank is exercisable until January 19, 2001 and has an exercise price of
$4.00 per share. The warrants were issued in consideration of services provided
by Dr. Crowley and Dr. Bank to Cellegy.
<TABLE>
The following table sets forth information with respect to the selling
stockholders and the shares of the common stock that may be offered pursuant to
this prospectus. Except as provided below, none of the selling stockholders has,
or within the past three years has had, any position, office or other material
relationship with us or any of our predecessors or affiliates.
Each selling shareholder represented to us, in their respective
agreements, that they were purchasing such Shares for investment and with no
present intention of distributing or reselling such Shares. However, in
recognition of the fact that each such stockholder, even though purchasing such
Shares for investment, wishes to be legally permitted to sell the Shares when
they deem appropriate, we are filing this registration statement. Upon
effectiveness, the selling stockholders may from time to time offer and sell any
or all of their Shares pursuant to this prospectus. Because the selling
stockholders are not obligated to sell shares of common stock, and because
selling Stockholders may also acquire publicly traded shares of our common
stock, we cannot estimate how many shares of common stock each selling
stockholder will beneficially own after this offering.
<CAPTION>
Shares of Common Stock Shares of Common Stock
Beneficially Owned(1) Number of Beneficially Owned(1)
Prior to the Offering Shares After the Offering
---------------------- Being ----------------------
Name Number Percent Offered Number Percent
- ---- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
Four Partners 3,104,300(2) 26.2% 720,000 2,384,300 23.3%
Bay Resource Partners, L.P. 182,302 1.5% 40,000 142,302 1.4%
Bay Resource Partners Offshore Ltd. 105,900 0.9% 56,000 49,900 0.5%
Janus Global Life Sciences Fund 720,000 6.1% 720,000 -- 0.0%
K. Michael Forrest(3) 793,494 6.6% 25,000 768,494 7.4%
Michael P. Crowley, Ph.D. 2,000 0.0% 2,000 -- 0.0%
Richard Bank, M.D. 12,000 0.1% 12,000 -- 0.0%
<FN>
- ----------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Unless otherwise indicated below, the persons
and entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned, subject to community property laws
where applicable.
(2) Consists of: (i) 725,000 shares of common stock owned by Four Partners; (ii)
47,700 shares of common stock owned by Four-Fourteen Partners LLC; (iii) 578,100
shares of common stock owned The Andrew H. Tisch 1999 Annuity Trust I; (iv)
578,100 shares of common stock owned The Daniel R. Tisch 1999 Annuity Trust I;
(v) 578,100 shares of common stock owned The James S. Tisch 1999 Annuity Trust
I; (vi) 578,100 shares of common stock owned The Thomas J. Tisch 1999 Annuity
Trust I; and (vii) 19,200 shares of common stock held by James S. Tisch as
custodian for his children. Four Partners is a New York general partnership, the
sole partners of which are Andrew H. Tisch 1991 Trust, for which Andrew H. Tisch
is the managing trustee, Daniel R. Tisch 1991 Trust, for which Daniel R. Tisch
is the managing trustee, James S. Tisch 1991 Trust, for which James S. Tisch is
the managing trustee, and Thomas J. Tisch 1991 Trust, for which Thomas J. Tisch
is the managing trustee. Four Partners might be deemed to be the beneficial
owner of the shares of common stock owned by the 1999 Annuity Trusts I and by
James S. Tisch as custodian enumerated above.
(3) Mr. Forrest is the President and Chief Executive Officer of Cellegy.
</FN>
</TABLE>
Cellegy has an agreement that so long as Four Partners and persons and
entities associated with Four Partners and/or the Tisch Family own at least
1,250,000 shares of Cellegy common stock, that Cellegy will, upon request of
such shareholders, increase the authorized number of the members of Cellegy's
Board of Directors and caused one designee of such shareholders to be nominated
and elected to fill one such position on the Board of Directors.
8
<PAGE>
PLAN OF DISTRIBUTION
We have filed a Registration Statement of which this prospectus forms a
part pursuant to registration rights we granted to the selling stockholders
pursuant to the Agreement.
To our knowledge, no selling stockholder has entered into any
agreement, arrangement or understanding with any particular broker or market
maker with respect to the shares of common stock offered hereby, nor do we know
the identity of the brokers or market makers that will participate in the sale
of the shares. As used in this prospectus, the term "selling stockholders"
includes donees and pledgees selling shares received from a named selling
stockholder after the date of this prospectus.
Who May Sell; How Much; Applicable Restrictions. The selling
stockholders may from time to time offer the shares of common stock through
brokers, dealers or agents who may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders and/or the
purchasers of the shares of common stock for whom they may act as agent. In
effecting sales, broker-dealers that are engaged by the selling stockholders may
arrange for other broker-dealers to participate. The selling stockholders and
any such brokers, dealers or agents who participate in the distribution of the
shares of common stock may be deemed to be "underwriters," and any profits on
the sale of the shares of common stock by them and any discounts, commissions or
concessions received by any such brokers, dealers or agents might be deemed to
be underwriting discounts and commissions under the Securities Act. To the
extent the selling stockholders may be deemed to be underwriters, the selling
stockholders may be subject to certain statutory liabilities of, including but
not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5
under the Exchange Act. To our knowledge, there are currently no plans,
arrangements or understandings between any selling stockholders and any broker,
dealer, agent or underwriter regarding the sale of the shares of common stock by
the selling stockholders.
Manner of Sales and Applicable Restrictions. The selling stockholders
will act independently of Cellegy in making decisions with respect to the
timing, manner and size of each sale. Such sales may be made over the Nasdaq
Stock Market or otherwise, at then prevailing market prices, at prices related
to prevailing market prices or at negotiated prices. The shares of common stock
may be sold according to one or more of the following methods:
(a) a block trade in which the broker or dealer so engaged will
attempt to sell the shares of common stock as agent but may
position and resell a portion of the block as principal to
facilitate the transaction;
(b) purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this prospectus;
(c) an over-the-counter distribution in accordance with the Nasdaq
rules;
(d) ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
(e) privately negotiated transactions.
A selling stockholder may decide not to sell any shares. We cannot
assure you that any selling stockholder will use this prospectus to sell any or
all of the shares. Any shares covered by this prospectus which qualify for sale
pursuant to Rule 144 or Rule 144A of the Securities Act 1933 may be sold under
Rule 144 or Rule 144A rather than pursuant to this prospectus. In addition, a
selling stockholder may transfer, devise or gift the shares by other means not
described in this prospectus.
Certain persons participating in this offering may engage in
transactions that stabilize, maintain or otherwise affect the price of our
common stock, including the entry of stabilizing bids or syndicate covering
transactions or the imposition of penalty bids. The selling stockholders and any
other person participating in such distribution will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder
including, without limitation, Regulation M (which regulation may limit the
timing of purchases and sales of any of the shares of common stock by the
selling stockholders and any other such person). The anti-manipulation rules
under the Exchange Act may apply to sales of shares of common stock in the
market and to the activities of the selling stockholders and their affiliates.
Furthermore, Regulation M of the Exchange Act may restrict the ability of any
person engaged in the distribution of the shares of common stock to engage in
market-making activities with respect to the particular shares of common stock
being distributed for a period of up to five business days prior to the
commencement of such distribution. All of the foregoing
9
<PAGE>
may affect the marketability of the shares of common stock and the ability of
any person or entity to engage in market-making activities with respect to the
shares of common stock.
Rules 101 and 102 of Regulation M under the Exchange Act, among other
things, generally prohibit certain participants in a distribution from bidding
for or purchasing for an account in which the participant has a beneficial
interest, any of the securities that are the subject of the distribution. Rule
104 of Regulation M governs bids and purchases made to stabilize the price of a
security in connection with a distribution of the security.
Hedging and Other Certain Transactions with Broker-Dealers. In
connection with distributions of the shares of common stock or otherwise, the
selling stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the shares of common stock registered hereunder in the course of hedging the
positions they assume with selling stockholders. The selling stockholders may
also sell shares of common stock short and redeliver the shares of common stock
to close out such short positions. The selling stockholders may also enter into
option or other transactions with broker-dealers which require the delivery to
the broker-dealer of the shares of common stock registered hereunder, which the
broker-dealer may resell or otherwise transfer pursuant to this prospectus.
Selling stockholders may also loan or pledge the shares of common stock
registered hereunder to a broker-dealer and the broker-dealer may sell the
shares of common stock so loaned or, upon a default, the broker-dealer may
effect sales of the pledged shares of common stock pursuant to this prospectus.
Expenses Associated With Registration. We have agreed to pay the
expenses of registering the shares of common stock under the Securities Act,
including registration and filing fees, printing expenses, administrative
expenses and certain legal and accounting fees. Each of the selling stockholders
will bear its pro rata share of all discounts, commissions or other amounts
payable to underwriters, dealers or agents as well as fees and disbursements for
legal counsel retained by any such selling stockholder.
Indemnification. Under the terms of the Agreement, we have agreed to
indemnify each of the parties to the Agreement and certain other persons against
certain liabilities in connection with the offering of the shares of common
stock, including liabilities arising under the Securities Act.
Prospectus Updates; Suspension of this Offering. At any time a
particular offer of the shares of common stock is made, a revised prospectus or
prospectus supplement, if required, will be distributed. Such prospectus
supplement or post-effective amendment will be filed with the SEC to reflect the
disclosure of required additional information with respect to the distribution
of the shares of common stock. Under the terms of the Agreement, upon the
occurrence of any event known to our executive officers as a result of which
this prospectus is known by our executive officers to include an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing, the parties have each agreed not to
trade shares of common stock from the time the selling stockholder receives
notice from Cellegy of such an event until such party receives a prospectus
supplement or amendment. Upon the occurrence of such an event, a prospectus
supplement or post-effective amendment, if required, will be distributed to the
parties.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act and, in accordance therewith, we file reports and other information
with the Securities and Exchange Commission. Reports, registration statements,
proxy and information statements, and other information that we have filed can
be inspected and copied at the public reference facilities maintained by the SEC
at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the
regional offices of the SEC located at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300,
New York, New York 10048. You may obtain copies of such material from the Public
Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549
at rates prescribed by the SEC. The public may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The
SEC also maintains a World Wide Web site that contains reports, proxy and
information statements, and other information that is filed electronically with
the SEC. This Web site can be accessed at http://www.sec.gov. Our common stock
is listed on the Nasdaq Stock Market and reports, proxy statements and other
information concerning Cellegy may be inspected at the offices of the National
Association of Securities Dealers, Inc., 9513 Key West Avenue, Rockville,
Maryland 20850.
10
<PAGE>
We have filed with the SEC a registration statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the common stock offered
hereby. This prospectus does not contain all of the information set forth in the
Registration Statement and its exhibits and schedules, certain parts of which
are omitted in accordance with the rules and regulations of the SEC. For further
information with respect to us and our common stock, please refer to the
Registration Statement and its exhibits and schedules. Statements contained in
this prospectus as to the contents of any contract or other document are not
necessarily complete and, in each instance, reference is made to the copy of
such contract or document filed as an exhibit to the Registration Statement.
Each such statement is qualified in all respects by such reference. Copies of
the Registration Statement, including exhibits thereto, may be inspected without
charge at the SEC's principal office in Washington, D.C., and you may obtain
copies from this office upon payment of the fees prescribed by the SEC.
We will furnish without charge to each person, including any beneficial
owner, to whom a copy of this prospectus is delivered, upon such person's
written or oral request, a copy of any and all of the information that has been
incorporated by reference into this prospectus (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference
herein as well). Requests for such copies should be directed to A. Richard
Juelis, our Chief Financial Officer, at (650) 616-2200.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents that we have filed with the SEC are
incorporated by reference into this prospectus:
(a) the Registration Statement and the exhibits and schedules filed
therewith.
(b) our annual report on Form 10-K for the fiscal year ended December
31, 1998.
(c) all other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since December 31, 1998, including: (1) our
quarterly reports on Form 10-Q for the fiscal quarters ended
March 31, 1999 and June 30, 1999; and (2) our Proxy Statement on
Form DEF 14A filed on April 14, 1999.
(d) all other information that we file with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of this prospectus and prior to the termination of
this offering.
(e) our Report on Form 8-K filed on August 18, l999.
Any statement incorporated herein shall be deemed to be modified or
superseded for the purposes of this prospectus and the Registration Statement to
the extent that a statement contained herein or in any other subsequently filed
document that is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
prospectus and the Registration Statement.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered hereby
will be passed upon for us by Fenwick & West LLP, our counsel.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial
statements included in our Annual Report on Form 10-K for the year ended
December 31, 1998, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report given on their authority as experts in accounting and auditing.
11
<PAGE>
================================================================================
CELLEGY PHARMACEUTICALS, INC.
1,575,000 Shares of Common Stock
--------------------
PROSPECTUS
--------------------
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be paid by the Registrant in connection with this
offering are as follows:
NASDAQ Stock Market Fee $17,500.00
Securities and Exchange Commission registration fee $ 3,078.64
Accounting fees and expenses $ 4,000.00
Legal fees and expenses $10,000.00
Miscellaneous $25,000.00
----------
Total $59,578.64
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Amended and Restated Articles of Incorporation (the
"Restated Articles") include a provision that eliminates the personal liability
of its directors to the Registrant and its shareholders for monetary damages for
breach of the directors' fiduciary duties to the maximum extent permitted under
California law. This limitation has no effect on a director's liability (i) for
acts or omissions that involve intentional misconduct or a knowing and culpable
violation of law, (ii) for acts or omissions that a director believes to be
contrary to the best interests of the Registrant or its shareholders or that
involve the absence of good faith on the part of the director, (iii) for any
transaction from which a director derived an improper personal benefit, (iv) for
acts or omissions that show a reckless disregard for the director's duty to the
Registrant or its shareholders in circumstances in which the director was aware,
or should have been aware, in the ordinary course of performing a director's
duties, of a risk of a serious injury to the Registrant or its shareholders, (v)
for acts or omissions that constitute an unexcused pattern of inattention that
amounts to an abdication of the director's duty to the Registrant or its
shareholders, (vi) under Section 310 of the California Corporations Code (the
"California Code") (concerning contracts or transactions between the Registrant
and a director) or (vii) under Section 316 of the California Code (concerning
directors' liability for improper dividends, loans and guarantees). The
provision does not extend to acts or omissions of a director in his capacity as
an officer. Further, the provision has no effect on claims arising under federal
or state securities laws and will not affect the availability of injunctions and
other equitable remedies available to the Registrant's shareholders for any
violation of a director's fiduciary duty to the Registrant or its shareholders.
The Restated Articles also include an authorization for the Registrant
to indemnify its agents (as defined in Section 317 of the California Code),
through bylaws provisions, by agreement or otherwise, to the fullest extent
permitted by law. Pursuant to this latter provision, the Registrant's Bylaws
provide for indemnification of the Registrant's directors, officers and
employees. Indemnification may only be authorized by a majority of Registrant's
directors or shareholders or by order of a court, unless the agent has been
successful on the merits. In addition, the Registrant's policy is to enter into
indemnification agreements with each of its officers and directors. These
indemnification agreements provide that directors and officers will be
indemnified and held harmless to the fullest extent permitted by law. These
agreements, together with the Restated Articles, may require the Registrant,
among other things, to indemnify such directors, officers and employees against
certain liabilities that may arise by reason of their status or service as
directors or officers (other than liabilities resulting from willful misconduct
of a culpable nature), to advance expenses to them as they are incurred,
provided that they undertake to repay the amount advanced if it is ultimately
determined by a court that they are not entitled to indemnification, and to
obtain directors' and officers' insurance if available on reasonable terms.
Section 317 of the California Code makes provisions for the
indemnification of officers, directors and other corporate agents in terms
sufficiently broad to indemnify such persons, under certain circumstances, for
liabilities (including reimbursement of expenses incurred) arising under the
Securities Act.
The Underwriting Agreement referred to below sets forth certain
provisions with respect to the indemnification of the Registrant and certain
directors, officers, and controlling persons against certain losses and
liabilities, including certain liabilities under the Securities Act.
The Amended and Restated Registration Rights Agreement dated April 10,
1992, entered into by and among the Registrant and various investors, and the
Amended and Restated Registration Rights Agreement dated February 10, 1995,
entered into by and among the Registrant and various investors provide for cross
indemnification of certain holders of Registrant's securities, and of Registrant
and its officers and directors for certain liabilities existing under the
Securities Act and otherwise.
13
<PAGE>
The Registrant also maintains a director and officer liability policy.
ITEM 16. EXHIBITS.
The following exhibits are filed herewith or incorporated by reference herein:
4.1 - Common Stock Purchase Agreement dated as of July 30, 1999.
4.2 - Common Stock Purchase Warrant dated as of January 18, 1999
4.3 - Common Stock Purchase Warrant dated as of January 19, 1999
5.1 -- Opinion of Counsel regarding the legality of common stock.
23.1 -- Independent Auditors' Consent.
23.2 -- Consent of Counsel (included in Exhibit 5.1).
24.1 -- Power of Attorney (see page II-5).
- ---------------------------
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the Registrant
pursuant to the provisions described under Item 15 above, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the
"Securities Act"); (ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information in the Registration Statement;
and (iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement; provided,
however, that (i) and (ii) do not apply if the information required to be
included in a post-effective amendment thereby is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all for the requirements
for filing on Form S-3 and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of South San Francisco, State of California, on the ___ day of ____, 1999.
CELLEGY PHARMACEUTICALS, INC.
By: ___________________________________
K. Michael Forrest, CEO
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS that each individual whose signature appears below
constitutes and appoints K. Michael Forrest and A Richard Juelis, and each of
them, his attorneys-in-fact, and agents, each with the power of substitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to sign any registration statement for the same offering covered
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto and all
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
<TABLE>
Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
________________________________
K. Michael Forrest Chief Executive Officer _____, 1999
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER:
________________________________ Vice President, Finance,
A. Richard Juelis Chief Financial Officer,
and Secretary _____, 1999
DIRECTORS:
________________________________
Carl R. Thornfeldt, M.D. Chairman of the Board of Directors _____, 1999
________________________________
Jack L. Bowman Director _____, 1999
________________________________
Tobi B. Klar, M.D. Director _____, 1999
15
<PAGE>
________________________________
Alan A. Steigrod Director ______, 1999
________________________________
Larry J. Wells Director ______, 1999
________________________________
Ronald J. Saldarini, Ph.D. Director ______, 1999
</TABLE>
16
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Title
- ------- -------------
4.1 Common Stock Purchase Agreement dated as of July 30, 1999.
4.2 Common Stock Purchase Warrant dated January 18, 1999
4.3 Common Stock Purchase Warrant dated January 19, 1999
5.1 Opinion of Counsel regarding the legality of common stock
23.1 Independent Auditors' Consent
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (see page II-5)
CELLEGY PHARMACEUTICALS, INC.
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of July 30, 1999 by and among Cellegy Pharmaceuticals, Inc., a
California corporation (the "Company"), and the parties listed on the Schedule
of Investors separately delivered to the Investors (the "Schedule of Investors")
(each hereinafter individually referred to as an "Investor" and collectively
referred to as the "Investors").
1. AGREEMENT TO PURCHASE AND SELL STOCK.
1.1 Authorization. As of the Closing (as defined below) the
Company will have authorized the issuance, pursuant to the terms and conditions
of this Agreement, of up to 1,561,000 shares of the Company's Common Stock, no
par value (the "Common Stock").
1.2 Agreement to Purchase and Sell. The Company agrees to sell
to each Investor at the Closing, and each Investor agrees, severally and not
jointly, to purchase from the Company at the Closing, the number of shares of
Common Stock for the aggregate price set forth beside such Investor's name on
the Schedule of Investors, at the price per share for such Investor set forth on
the Schedule of Investors. The shares of Common Stock purchased and sold
pursuant to this Agreement will be collectively hereinafter referred to as the
"Purchased Shares."
2. CLOSING.
2.1 The Closing. The purchase and sale of the Purchased Shares
will take place at the offices of Fenwick & West LLP, Two Palo Alto Square,
Suite 800, Palo Alto, California, at 11:00 a.m. Pacific Time, on July 30, 1999
or at such other time and place as the Company and Investors who have agreed to
purchase a majority of the Purchased Shares listed on the Schedule of Investors
mutually agree upon (which time and place are referred to in this Agreement as
the "Closing"), provided that the closing may not be delayed for more than five
business days without the consent of all Investors. At the Closing, the Company
will deliver to each Investor a certificate representing the number of Purchased
Shares that such Investor has agreed to purchase hereunder as shown on the
Schedule of Investors against delivery to the Company by such Investor of the
full purchase price of such Purchased Shares, paid by (i) a check payable to the
Company's order, (ii) wire transfer of funds to the Company or (iii) any
combination of the foregoing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Investor that, except as set forth in the Disclosure
Schedule and Schedule of Exceptions (the "Disclosure Schedule") separately
delivered by the Company to the Investors (which Disclosure Schedule shall be
deemed to be representations and warranties to the Investors by the Company
under this Section and to qualify each of the
<PAGE>
representations and warranties set forth herein), the statements in the
following paragraphs of this Section 3 are all true and correct:
3.1 Organization, Good Standing and Qualification. The Company
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California, and has all requisite corporate power and
authority to conduct its business as currently conducted. The Company is
qualified to do business as a foreign corporation in each jurisdiction where
failure to be so qualified could reasonably be expected to have a material
adverse effect on the business, assets, financial condition, prospects, or
results of operations or assets of the Company (the "Business") (such effect
referred to as a "Material Adverse Effect").
3.2 Capitalization. Immediately before the Closing the
capitalization of the Company will consist of the following:
(a) Preferred Stock. A total of 5,000,000 authorized
shares of Preferred Stock, no par value per share (the "Preferred Stock"), none
of which are issued and outstanding.
(b) Common Stock. A total of 20,000,000 authorized
shares of Common Stock, of which approximately 10,177,063 shares were issued and
outstanding as of June 30, 1999.
(c) Options, Warrants, Reserved Shares. Except for:
(i) the approximately 1,657,400 shares of Common Stock issuable upon exercise of
options outstanding as of June 30, 1999, (iii) approximately 34,000 additional
shares of Common Stock reserved for issuance under the Company's 1995 Directors
Stock Option Plan, (iv) approximately 792,600 additional shares of Common Stock
reserved for issuance under the Company's 1995 Equity Incentive Plan and (v)
warrants to purchase an aggregate of approximately 1,573,000 shares of Common
Stock, there are not outstanding any options, warrants, rights or agreements for
the purchase or acquisition from the Company of any shares of its capital stock
or any securities convertible into or ultimately exchangeable or exercisable for
any shares of the Company's capital stock.
3.3 Subsidiaries. Except for Cellisis Pharmaceuticals, Inc.,
which is not a "significant subsidiary" as defined in Rule 1-02 of Regulation
S-X, the Company does not presently own or control, directly or indirectly, any
interest in any other corporation, partnership, trust, joint venture,
association, or other entity.
3.4 Due Authorization; No Violation. All corporate action on
the part of the Company and its officers, directors and shareholders necessary
for the authorization, execution and delivery of, and the performance of all
obligations of the Company under, this Agreement, and the authorization,
issuance, reservation for issuance and delivery of all of the Purchased Shares
being sold under this Agreement, has been taken or will be taken prior to the
Closing, and this Agreement constitutes a valid and legally binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to
2
<PAGE>
or affecting the enforcement of creditors' rights generally and (ii) the effect
of rules of law governing the availability of equitable remedies. Neither the
execution, delivery or performance by the Company of this Agreement nor the
consummation by the Company of the transactions contemplated hereby will (i)
conflict with or result in a breach of any provision of the Restated Articles of
Incorporation of the Company (the "Restated Articles") or the Company's Bylaws,
(ii) conflict with, result in a violation or breach of, or cause a default (or
give rise to any right of termination, cancellation or acceleration) under any
of the terms, conditions or provisions of any material agreement, instrument or
obligation to which the Company is a party, which default could reasonably be
expected to have a Material Adverse Effect or (iii) violate any law, statute,
rule or regulation or judgment, order, writ, injunction or decree of any
governmental authority, in each case applicable to the Company or its properties
or assets and which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.
3.5 Valid Issuance of Stock. The Purchased Shares, when
issued, sold and delivered in accordance with the terms of this Agreement for
the consideration provided for herein, will be duly and validly issued, fully
paid and nonassessable and are not subject to preemptive or other similar rights
of any shareholder of the Company.
3.6 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the valid execution and delivery of
this Agreement, the offer, sale and issuance of the Purchased Shares, or the
consummation of the transactions contemplated by this Agreement, except for
qualifications or filings under the Securities Act of 1933, as amended (the
"Act") and the applicable rules and regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") under the Act, and all
other applicable securities laws as may be required in connection with the
transactions contemplated by this Agreement. All such consents, approvals,
orders, authorizations, registrations, qualifications, designations,
declarations or filings will be effective on the Closing, and all such filings
be made within the time prescribed by law.
3.7 Absence of Changes. After the respective dates as of which
information is given in the Company's Proxy Statement for the annual meeting of
shareholders held on May 20, 1999, the Company's Annual Report on Form 10-K for
the year ended December 31, 1998, the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1999 respectively (such documents, together with
the Disclosure Schedule, referred to collectively as the "Disclosure
Documents"), there has not been (i) any material adverse change in the Business,
(ii) any transaction that is material to the Company, (iii) any obligation,
direct or contingent, that is material to the Company, incurred by the Company,
(iv) any change in the outstanding indebtedness of the Company that is material
to the Company, (v) any dividend declared, paid or made on the capital stock of
the Company or (vi) any loss or damage (whether or not insured) to the property
of the Company which has been sustained which could reasonably be expected to
have a Material Adverse Effect.
3.8 Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation ("Action") pending (or, to the Company's knowledge,
currently threatened) against
3
<PAGE>
the Company, its activities, properties or assets, which (i) might prevent the
consummation of the transactions contemplated hereby or (ii) if adversely
resolved against the Company could reasonably be expected to have a Material
Adverse Effect.
3.9 Nasdaq Listing. The Common Stock is registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and is listed on the Nasdaq Stock Market (Nasdaq National Market). The
Company has not received any notification that the Commission or the National
Association of Securities Dealers, Inc. is contemplating the termination of such
registration or listing. Before the Shelf Registration Statement (as defined in
Section 7.2) is declared effective by the Commission, the Purchased Shares will
have been approved for quotation on the Nasdaq Stock Market, subject to notice
of issuance.
3.10 Exchange Act Filings. The Company has filed in a timely
manner all reports and other information required to be filed ("Filings") with
the Commission pursuant to the Exchange Act during the preceding twelve calendar
months. On their respective dates of filing, the Filings complied as to form in
all material respects with the requirements of the Exchange Act, and the
published rules and regulations of the Commission promulgated thereunder. To the
Company's knowledge after reasonable investigation, on their respective dates of
filing, the Filings did not include any untrue statement of a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, and all
financial statements contained in the Filings fairly present the financial
position of the Company on the dates of such statements and the results of
operations for the periods covered thereby in accordance with generally accepted
accounting principles consistently applied throughout the periods involved and
prior periods, except as otherwise indicated in the notes to such financial
statements.
3.11 Disclosure. To the Company's knowledge after reasonable
investigation, the representations and warranties made by the Company in this
Agreement (including the Disclosure Schedule) when read together do not contain
any untrue statement of a material fact and do not omit to state a material fact
necessary to make the statements herein as a whole not misleading.
3.12 Governmental Permits, Etc. The Company possesses all
licenses, franchises, governmental approvals, permits or other governmental
authorizations (collectively, "Authorizations") relating to the operation of the
Business, except for those Authorizations the failure of which to possess would
not, separately or in the aggregate, have a Material Adverse Effect. To the
Company's knowledge after reasonable investigation, the Company is in compliance
with the terms of all Authorizations and all laws, ordinances, regulations and
decrees which to the Company's knowledge are applicable to the Business, except
for such non-compliance which does not, separately or in the aggregate, have a
Material Adverse Effect.
3.13 Insurance. The Company is covered by insurance with
companies the Company believes to be responsible and in such amounts and
covering such risks as it believes to be adequate for the conduct of its
Business and the value of its properties and as is customary for
4
<PAGE>
companies engaged in similar businesses in similar industries. The Company has
no knowledge that any such carrier has grounds or intends to cancel or fail to
renew such policies.
3.14 Intellectual Property. To the Company's knowledge after
reasonable investigation, the Company owns or possesses the patents, patent
rights, licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) and other rights or interests in items of intellectual
property as are necessary for the operation of the Business operated by it (the
"Patent and Proprietary Rights"), except where the failure to own or possess
such rights would not have a Material Adverse Effect; the Company has not
received notice of any asserted rights with respect to any of the Patent and
Proprietary Rights which, if determined unfavorably with respect to the
interests of the Company would have a Material Adverse Effect; and the Company
has not received notice or is otherwise aware of any infringement of or conflict
with asserted rights of others with respect to any of the Patent or Proprietary
Rights, which infringement or conflict (if the subject of any unfavorable
decision, ruling or finding), individually or in the aggregate, would result in
a Material Adverse Effect.
4. REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF INVESTORS.
Each Investor hereby represents and warrants to, and agrees with, the Company,
that:
4.1 Authorization. All corporate action on the part of the
Investor and its officers, directors and stockholders necessary for the
authorization, execution and delivery of, and the performance of all obligations
of the Investor under, this Agreement has been taken or will be taken prior to
the Closing, and this Agreement constitutes a valid and legally binding
obligation of the Investor, enforceable against the Investor in accordance with
its terms, except as enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights generally and (ii) the effect of
rules of law governing the availability of equitable remedies.
4.2 Purchase for Own Account. The Purchased Shares to be
purchased by such Investor hereunder will be acquired for investment for such
Investor's own account, not as a nominee or agent, and not with a view to the
public resale or distribution thereof within the meaning of the Act, and such
Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same. If not an individual, such Investor also
represents that such Investor has not been formed for the specific purpose of
acquiring Purchased Shares.
4.3 Disclosure of Information. The Investor has received a
copy of the Disclosure Documents and has received or has had full access to all
the information it considers necessary or appropriate to make an informed
investment decision with respect to the Purchased Shares to be purchased by the
Investor under this Agreement. Investor further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of the Purchased Shares and to obtain additional
information (to the extent the Company possessed such information or could
acquire it without unreasonable effort
5
<PAGE>
or expense) necessary to verify any information furnished to the Investor or to
which the Investor had access. The foregoing, however, does not in any way limit
or modify the representations and warranties made by the Company in Section 3.
4.4 Investment Experience. Such Investor understands that the
purchase of the Purchased Shares involves substantial risk. Such Investor: (i)
has experience as an investor in securities of companies in the development
stage and acknowledges that such Investor is able to fend for itself, can bear
the economic risk of such Investor's investment in the Purchased Shares and has
such knowledge and experience in financial or business matters that such
Investor is capable of evaluating the merits and risks of this investment in the
Purchased Shares and protecting its own interests in connection with this
investment and/or (ii) has a preexisting personal or business relationship with
the Company and certain of its officers, directors or controlling persons of a
nature and duration that enables such Investor to be aware of the character,
business acumen and financial circumstances of such persons.
4.5 Accredited Investor Status. Unless otherwise expressly
indicated on the Schedule of Investors to this Agreement, such Investor is an
"accredited investor" within the meaning of Regulation D promulgated under the
Act.
4.6 Restricted Securities. Such Investor understands that the
Purchased Shares are characterized as "restricted securities" under the Act
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under the Act and the Rules and Regulations
such securities may be resold without registration under the Act only in certain
limited circumstances. In this connection, such Investor represents that such
Investor is familiar with Rule 144 of the Commission and understands the resale
limitations imposed thereby and by the Act. Such Investor understands that the
Company is under no obligation to register any of the Purchased Shares except as
provided in Section 7 below.
4.7 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, such Investor further agrees not
to make any disposition of all or any portion of the Purchased Shares unless and
until:
(a) there is then in effect a registration statement
under the Act covering such proposed disposition and such disposition is made in
accordance with such registration statement and the provisions of Section 7 of
this Agreement; or
(b) (i) such Investor shall have notified the Company
of the proposed disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed disposition, and (ii)
such Investor shall have furnished the Company, at the expense of such Investor
or its transferee, with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such securities
under the Act.
Notwithstanding the provisions of paragraphs (a) and (b) above,
no such registration statement or opinion of counsel shall be required: (i) for
any transfer of any Purchased Shares in compliance with Rule 144 or Rule 144A
(except that an opinion of counsel
6
<PAGE>
may be required for other than routine Rule 144 transactions), or (ii) for any
transfer of Purchased Shares by an Investor that is a partnership or a
corporation to (A) a partner of such partnership or shareholder of such
corporation, or (B) the estate of any such partner or shareholder, or (iii) for
the transfer by gift, will or intestate succession by any Investor to his or her
spouse or lineal descendants or ancestors or any trust for any of the foregoing;
provided, that in each of the foregoing cases the transferee agrees in writing
to be subject to the terms of this Section 4 (other than Section 4.5) to the
same extent as if the transferee were an original Investor hereunder.
4.8 Legends. It is understood that the certificates evidencing
the Purchased Shares will bear the legends set forth below:
(a) THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT
ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
(b) THE SHARES EVIDENCED BY THIS CERTIFICATE ARE
SUBJECT TO THE PROVISIONS OF, AND MAY HAVE CERTAIN REGISTRATION RIGHTS PURSUANT
TO, THE PROVISIONS OF A PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE HOLDER,
WHICH MAY RESTRICT THE TRANSFER OF SUCH SHARES IN CERTAIN CIRCUMSTANCES. A COPY
OF SUCH AGREEMENT MAY BE OBTAINED, WITHOUT CHARGE, AT THE COMPANY'S PRINCIPAL
OFFICE.
(c) After consultation with counsel for the Investor,
any legend that counsel to the Company reasonably deems appropriate under the
laws of the State of California.
The legends set forth in (a) and (b) above shall be removed by the
Company from any certificate evidencing Purchased Shares upon delivery to the
Company of an opinion of counsel to the Investor, reasonably satisfactory to the
Company, that the legended security can be freely transferred in a public sale
without a registration statement being in effect under the Act and in compliance
with exemption requirements under applicable state securities laws and that such
transfer will not jeopardize the exemption or exemptions from registration
pursuant to which the Company issued the Purchased Shares.
4.9 Resale Restrictions. To the extent requested by the
Company or an underwriter or placement agent of securities of the Company, each
Investor agrees that it will not
7
<PAGE>
directly or indirectly offer, sell, contract or grant an option to sell, pledge,
encumber, or otherwise dispose of or otherwise transfer (a "Disposition") any
Purchased Shares (other than to donees, shareholders or partners of the Investor
who agree to be similarly bound) for up to 90 days after the effective date of a
registration statement of the Company filed under the Act; provided, however,
that (i) this paragraph shall be applicable only to the first such registration
statement of the Company filed after the date of this Agreement that covers
securities to be sold on its behalf to the public in an underwritten offering
and (ii) all executive officers and directors of the Company then holding Common
Stock who beneficially own more than one percent of the outstanding shares of
Common Stock enter into similar agreements. This paragraph shall not preclude
Investor from including Registrable Securities in, and selling such Registrable
Securities pursuant to, such registration statement.
5. CONDITIONS TO INVESTOR'S OBLIGATIONS AT CLOSING.
5.1 Closing. The obligations of each Investor under Section 2
of this Agreement to purchase the Purchased Shares at the Closing are subject to
the fulfillment or waiver, on or before the Closing, of each of the following
conditions, and the Company shall use all reasonable efforts to cause such
conditions to be satisfied on or before the Closing:
5.1.1 Representations and Warranties True. Each of
the representations and warranties of the Company contained in Section 3 shall
be true and correct on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the Closing.
5.1.2 Performance. The Company shall have performed
and complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing and shall have obtained all approvals, consents and qualifications
necessary to complete the purchase and sale described herein.
5.1.3 Compliance Certificate. The Company shall have
delivered to the Investors at the Closing a certificate signed on its behalf by
its President, Chief Executive Officer, or Chief Financial Officer certifying
that the conditions specified in Sections 5.1.1 and 5.1.2 have been fulfilled.
5.1.4 Registration; Securities Exemptions. The offer
and sale of the Purchased Shares to the Investors pursuant to this Agreement
shall be exempt from the registration requirements under the Act and the
California Corporate Securities Law of 1968, as amended, and the rules
thereunder (the "Law") and the registration and/or qualification requirements of
all other applicable state securities laws.
5.1.5 Proceedings and Documents. All corporate and
other proceedings in connection with the transactions contemplated at the
Closing and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Investor and to special counsel to the Investors, and
they shall each have received all such documents as they may reasonably request.
8
<PAGE>
5.1.6 No Material Change. There shall have been no
material adverse change in the Business from the date of this Agreement.
5.1.7 Opinion of Counsel. The Investors shall have
received an opinion of counsel to the Company substantially in the form of
Exhibit B attached hereto.
6. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING.
6.1. Closing. The obligations of the Company under this
Agreement to sell the Purchased Shares to the Investors at the Closing are
subject to the fulfillment or waiver on or before the Closing of each of the
following conditions by the Investor, and each Investor shall use all reasonable
efforts to cause such conditions to be satisfied on or before the Closing:
6.1.1 Representations and Warranties. The
representations and warranties of the Investor contained in Section 4 shall be
true and correct on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the Closing.
6.1.2 Payment of Purchase Price. The Investor shall
have delivered to the Company the purchase price for the Purchased Shares
specified for such Investor on the Schedule of Investors attached hereto, in
accordance with the provisions of Section 2.
6.1.3 Registration; Securities Exemptions. The offer
and sale of the Purchased Shares to the Investor pursuant to this Agreement
shall be exempt from the registration requirements under the Act and shall be
exempt from the qualification requirements of the Law and the registration
and/or qualification requirements of all other applicable state securities laws.
6.1.4 Proceedings and Documents. All corporate and
other proceedings in connection with the transactions contemplated at the
Closing and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Company and to the Company's legal counsel, and the
Company shall have received such documents as it may reasonably request.
7. REGISTRATION RIGHTS.
7.1 Definitions. For purposes of this Agreement:
(a) Form S-3. The term "Form S-3" means such form
under the Act as is in effect on the date hereof or any successor registration
form under the Act subsequently adopted by the Commission which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the Commission.
(b) Holder. The term "Holders" shall mean holders of
Registrable Securities that have registration rights pursuant to this Agreement.
9
<PAGE>
(c) Registration. The terms "register," "registered,"
and "registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement.
(d) Registrable Securities. The term "Registrable
Securities" means: (1) all of the Purchased Shares, and (2) any shares of Common
Stock of the Company issued as a dividend or other distribution with respect to,
or in exchange for or in replacement of, any of the Purchased Shares; provided,
however, that the term "Registrable Securities" shall exclude in all events (and
such securities shall not constitute "Registrable Securities") (i) any
Registrable Securities sold or transferred by a person in a transaction in which
the registration rights granted under this Agreement are not assigned in
accordance with the provisions of this Agreement, (ii) any Registrable
Securities sold in a public offering pursuant to a registration statement filed
with the Commission or sold pursuant to Rule 144 promulgated under the Act
("Rule 144") or (iii) as to any Holder, the Registrable Securities held by such
Holder if all of such Registrable Securities can be publicly sold without volume
restriction within a three-month period pursuant to Rule 144.
(e) Prospectus: The term "Prospectus" shall mean the
prospectus included in any Shelf Registration Statement (including, without
limitation, a prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Act), as amended or supplemented by any
prospectus supplement (including, without limitation, any prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Shelf Registration Statement), and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
(f) Shelf Registration Statement. See Section 7.2(a).
7.2 Form S-3 Shelf Registration.
(a) Registration. The Company shall prepare and file
with the Commission within 60 days following the Closing and use all reasonable
efforts to have declared effective as soon as practicable thereafter, a
registration statement on Form S-3 (or, if the Company is not then eligible to
use Form S-3, then another appropriate form) providing for the resale by the
Holders of all of the Registrable Securities (the "Shelf Registration
Statement"). The Shelf Registration Statement may include securities other than
those held by Holders. If the Shelf Registration Statement is not declared
effective by December 31, 1999 and does not remain effective for 45 continuous
days after its effective date (except for any permitted closing of the Permitted
Window as described in Section 7.2(b)(c) below), then the Investors holding
Registrable Securities shall be entitled to receive from the Company (pro rata
in accordance with their ownership of Registrable Securities) an aggregate
number of shares of Common Stock equal to 1% of the number of Purchased Shares
for each month after November 30, 1999, that the Shelf Registration Statement is
not declared effective (or does not remain effective), up to a
10
<PAGE>
maximum aggregate amount of 5% of the Purchased Shares. The Company shall use
its best efforts to keep the Shelf Registration Statement continuously
effective, pursuant to the Act and the Rules and Regulations promulgated
thereunder, until (i) the date when such Registrable Securities cease to meet
the definition of Registrable Securities pursuant to Section 7.1, or (ii) the
Company's obligations hereunder terminate; provided, however:
(i) that the Holders will sell the Registrable
Securities pursuant to such registration only during a "Permitted Window" (as
defined below);
(ii) if the Company furnishes to the Holders a
certificate signed by the President or Chief Executive Officer of the Company
stating that, in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its shareholders
for sales to be made from such Shelf Registration Statement at such time (or, in
the case a "Notice of Resale" (as defined below) has been given, that it would
be seriously detrimental to the Company and its shareholders for the Permitted
Window to commence at such time) due to (A) the existence of a material
development or potential material development involving the Company which the
Company would be obligated to disclose in the Prospectus contained in the Shelf
Registration Statement, which disclosure would, in the good faith judgment of
the President or Chief Executive Officer or the Board of Directors of the
Company, be premature or otherwise inadvisable at such time or (B) concurrent
public filings with the Commission of other registration statements, then the
Company will have the right to defer the filing (the "Deferral Right") of the
Shelf Registration Statement (or the commencement of the Permitted Window, as
the case may be) for a period of not more than 60 days after the date it would
otherwise be required to file the Shelf Registration Statement pursuant to this
Section 7.2(a) (or after receipt of the Notice of Resale, as the case may be);
provided, however, that the Company will not utilize the Deferral Right more
than once in any twelve month period; and provided further, however, that the
Company may defer the filing of the Shelf Registration Statement (or the
commencement of the Permitted Window as the case may be) for up to 60 days if so
requested by an underwriter in connection with an underwritten offering of the
Company's securities so long as any selling shareholders in such underwritten
offering are subject to a lock-up agreement of the same duration (other than
with respect to the Company securities to be sold by such selling shareholders
in such underwritten offering); and
(iii) that the Company will not be required to effect
any such registration, qualification or compliance under applicable state blue
sky laws in any particular jurisdiction in which the Company would thereby be
required to qualify to do business or to execute a general consent to service of
process.
In the event that the Shelf Registration Statement shall cease
to be effective, the Company shall promptly prepare and file a new registration
statement covering the Registrable Securities and shall use its best efforts to
have such registration statement declared effective as soon as possible. Any
such registration statement shall be considered a "Shelf Registration Statement"
hereunder.
11
<PAGE>
(b) Permitted Window.For the purposes of this
Agreement, a "Permitted Window" with respect to a Holder is a period of 30
consecutive calendar days commencing upon delivery to the Holder of the
Company's written notification to the Holder in response to a Notice of Resale
that the Prospectus contained in the Shelf Registration Statement is available
for resale. In order to cause a Permitted Window to commence, a Holder must
first give written notice to the Company of its present intention to sell part
or all of the Registrable Securities pursuant to such registration (a "Notice of
Resale"). Upon delivery of such Notice of Resale, the Company will give written
notice to the Holders as soon as practicable, but in no event not more than
three business days after such delivery, that (A) the Permitted Window will
commence on the date the Company's notice is delivered to the Holder, (B) it is
necessary for the Company to supplement the Prospectus or make an appropriate
filing under the Exchange Act so as to cause the Prospectus to become current
(unless a certificate of the President or Chief Executive Officer is delivered
as provided in 7.2(a)(ii) above), or (C) the Company is required under the Act
and the Rules and Regulations thereunder to amend the Shelf Registration
Statement in order to cause the Prospectus to be current (unless a certificate
of the President or Chief Executive Officer is delivered as provided in
7.2(a)(ii) above). If the Company determines that a supplement to the
Prospectus, the filing of a report pursuant to the Exchange Act or an amendment
to the Shelf Registration Statement required under the Act, as provided above,
is necessary, it will take such actions as soon as reasonably practicable
(subject to paragraph (c) below), and the Company will notify the Holder of the
filing of such supplement, report or amendment, and, in the case of an
amendment, the effectiveness thereof, and the Permitted Window will then
commence.
(c) Closing of Permitted Window. During a Permitted
Window and in the event (i) of the happening of any event of the kind described
in Section 7.3(c) hereof or (ii) that, in the judgment of the President, Chief
Executive Officer or the Company's Board of Directors, it is advisable to
suspend use of the Prospectus for a discrete period of time due to undisclosed
pending corporate developments or pending public filings with the Commission
(which need not be described in detail), the Company shall deliver a certificate
in writing to the Holder to the effect of the foregoing and, upon receipt of
such certificate, the Permitted Window shall terminate. The Permitted Window
shall resume upon the Holder's receipt of copies of the supplemented or amended
Prospectus, or at such time as the Holder is advised in writing by the Company
that the Prospectus may be used, and at such time as the Holder has received
copies of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in such Prospectus and which are required to be
delivered as part of the Prospectus. In any event, the Permitted Window shall
resume no later than 45 days after it has been terminated pursuant to this
Section. If the Company has previously terminated a Permitted Window pursuant to
this subsection within 90 days of the date that it delivers another notice
pursuant this subsection terminating another Permitted Window, then the time
period set forth in the preceding sentence shall be shortened so that the
Permitted Window shall resume no later than 10 days after it has been terminated
pursuant to such second notice.
(d) Expenses. The registration fees and expenses
incurred by the Company in connection with the Shelf Registration Statement and
actions taken by the Company
12
<PAGE>
in connection with each Permitted Window shall be borne by the Company. Holder
shall be responsible for any fees and expenses of its counsel or other advisers.
7.3 Obligations of the Company. Whenever required to effect
the registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:
(a) Furnish to the Holder such number of copies of a
Prospectus, including a preliminary Prospectus, in conformity with the
requirements of the Act, and such other documents as it may reasonably request
in order to facilitate the disposition of the Registrable Securities owned by it
that are included in such registration.
(b) Use all reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holder, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(c) Notify the Holder promptly (i) of any request by
the Commission or any other federal or state governmental authority during the
period of effectiveness of a registration statement for amendments or
supplements to such registration statement or related prospectus or for
additional information, (ii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a registration statement or the initiation of any proceedings
for that purpose and (iii) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose.
(d) Make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the Shelf Registration
Statement at the earliest possible time.
(e) If the registration involves an underwritten
offering, enter into an underwriting agreement in customary form with the
underwriters containing customary indemnification provisions.
7.4 Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to Section 7.2 that
the Holder shall furnish to the Company such information regarding it, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to timely effect the registration of its
Registrable Securities.
7.5 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Agreement:
(a) By the Company. To the extent permitted by law,
the Company will indemnify and hold harmless the Holder, the officers and
directors of the Holder and each
13
<PAGE>
person, if any, who controls the Holder (such persons and entities referred to
as "Holder Indemnified Parties"), against any losses, expenses, damages or
liabilities to which they may become subject under the Act, the Exchange Act or
other federal or state law (a "Loss"), insofar as such Losses (or actions in
respect thereof) arise out of any claim, action or proceeding brought by a third
party arising out of or based upon any of the following statements, omissions or
violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement
of a material fact contained in a registration statement filed
pursuant to this Section 7;
(ii) the omission or alleged omission to state in a
registration statement filed pursuant to this Section 7 a
material fact required to be stated therein, or necessary to
make the statements therein not misleading; or
(iii) any violation or alleged violation by the
Company of the Act, the Exchange Act, any federal or state
securities law or any rule or regulation promulgated under the
Act, the Exchange Act or any federal or state securities law,
in each case in connection with the offering covered by such
registration statement;
and the Company will reimburse each Holder Indemnified Party for any legal or
other expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such Violation; provided, however, that the
indemnity agreement contained in this subsection shall not apply to amounts paid
in settlement of any such Loss, if such settlement is effected without the
consent of the Company, nor shall the Company be liable in any such case for any
such Loss to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration statement by the Holder
Indemnified Party; and provided further, that the Company will not be liable for
the reasonable legal fees and expenses of more than one counsel to the Holder
Indemnified Parties.
(b) By the Holder. To the extent permitted by law,
each Holder will indemnify and hold harmless the Company, each of its directors,
each of its officers who have signed the registration statement, and each
person, if any, who controls the Company within the meaning of the Act (such
persons and entities referred to as "Company Indemnified Parties") against any
Losses to which such Company Indemnified Parties may become subject under the
Act, the Exchange Act or other federal or state law, insofar as such Losses (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by the Holder
expressly for use in connection with such registration statement; and the Holder
will reimburse any legal or other expenses reasonably incurred by such Company
Indemnified Parties in connection with investigating or defending any such
Violation; provided, however, that the indemnity agreement contained in this
subsection shall not apply to amounts
14
<PAGE>
paid in settlement of any such Loss if such settlement is effected without the
consent of the Holder; provided further, that the Holder shall not be liable for
the reasonable legal fees and expenses of more than one counsel to the Company
Indemnified Parties; and provided further, that the total amounts payable in
indemnity by the Holder under this subsection in respect of any Violation shall
not exceed the net proceeds received by the Holder in the registered offering
out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified
party under this Section of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim for
indemnification in respect thereof is to be made against any indemnifying party
under this Section, deliver to the indemnifying party a written notice of the
commencement of such an action and the indemnifying party shall 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 with counsel selected by the indemnifying party and reasonably
acceptable to a majority in interest of the indemnified parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the reasonable fees and expenses to be paid by the indemnifying
party, if the indemnified party has been advised in writing by counsel that
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual conflict of interests
between such indemnified party and any other party represented by such counsel
in such proceeding. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action shall
relieve such indemnifying party of liability to the indemnified party under this
Section to the extent such delay caused actual prejudice to the indemnified
party, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section.
(d) Contribution. In order to provide for just and
equitable contribution to joint liability under the Act in any case in which
either (i) a Holder Indemnified Party makes a claim for indemnification pursuant
to this Section but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section provides for indemnification in such case, or (ii) contribution
under the Act may be required on the part of the Holder Indemnified Party in
circumstances for which indemnification is provided under this Section then, and
in each such case, the Company and the Holder Indemnified Parties will
contribute to the aggregate Losses to which they may be subject (after
contribution from others) in proportion to their relative fault as determined by
a court of competent jurisdiction; provided however, that in no event, except in
instances of fraud by the Holder in which there is no limitation, (i) shall the
Holder be responsible for more than the portion represented by the percentage
that the public offering price of its Registrable Securities offered by and sold
under the registration statement bears to the public offering price of all
securities offered by and sold under such registration statement and (ii) shall
the Holder be required to contribute any amount in excess of the public offering
price of all such Registrable Securities offered and sold by the Holder pursuant
to such registration statement; and in any event, no person or entity guilty of
fraudulent
15
<PAGE>
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation.
(e) Defect Eliminated in Final Prospectus. The
foregoing indemnity agreements of the Company and the Holder are subject to the
condition that, insofar as they relate to any Violation made in a preliminary
prospectus but eliminated or remedied in the amended prospectus on file with the
Commission at the time the registration statement in question becomes effective
or in the amended prospectus filed with the Commission pursuant to Rule 424(b)
of the Commission (the "Final Prospectus"), such indemnity agreements shall not
inure to the benefit of any person if a copy of the Final Prospectus was
furnished in a timely manner to the indemnified party and was not furnished to
the person asserting the loss, liability, claim or damage at or prior to the
time such action is required by the Act.
(f) Survival. The obligations of the Company and the
Holder under this Section shall survive the completion of any offering of
Registrable Securities in a registration statement, and otherwise.
7.6 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, for so long as the Holder owns any Registrable Securities, the
Company agrees to:
(a) Make and keep adequate, current public
information available, as those terms are understood and defined in Rule 144
under the Act, at all times;
(b) File with the Commission in a timely manner all
reports and other documents required of the Company under the Exchange Act; and
(c) So long as the Holder owns any Registrable
Securities, to furnish to the Holder forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of said Rule
144, a copy of the most recent annual or quarterly report of the Company, and
such other reports and documents of the Company as the Holder may reasonably
request in availing itself of any rule or regulation of the Commission allowing
a Holder to sell any such securities without registration.
7.7 Termination of Cellegy's Obligations. The Company shall
have no obligation to register, or maintain, a registration statement governing
Registrable Securities, (i) if all Registrable Securities have been registered
and sold pursuant to registrations effected pursuant to this Agreement, or (ii)
with respect to any particular Holder, at such time as all Registrable
Securities held by such Holder may be sold without any volume restrictions
within a three month period under Rule 144, as it may be amended from time to
time, including but not limited to amendments that reduce that period of time
that securities must be held before such securities may be sold pursuant to such
rule.
7.8 Piggyback Registrations. (a) The Company shall use its
best efforts to notify all Holders of Registrable Securities in writing at least
twenty (20) days before filing any
16
<PAGE>
registration statement under the Act for purposes of effecting an underwritten
public offering by the Company of securities of the Company (excluding
registration statements relating to any employee benefit plan or a corporate
merger, acquisition or reorganization, or any Form S-3 similar shelf
registration statements relating to the non-underwritten offer and sale of
securities for the account of persons or entities other than the Company) and
will afford each such Holder an opportunity to include in such registration
statement all or any part of the Registrable Securities then held by such
Holder. Each Holder desiring to include in any such registration statement all
or any part of the Registrable Securities held by such Holder shall, within ten
(10) days after receipt of the above-described notice from the Company, so
notify the Company in writing, and in such notice shall inform the Company of
the number of Registrable Securities such Holder wishes to include in such
registration statement. If a Holder decides not to include all of its
Registrable Securities in any such registration statement filed by the Company,
such Holder shall nevertheless continue to have the right to include any
Registrable Securities in any subsequent registration statement or registration
statements as may be filed by the Company with respect to offerings of its
securities, all upon the terms and conditions set forth herein. The Holders'
rights to include any Registrable Securities in any offering under this Section
are subject in all events to the ability of the managing underwriter for such
offering to exclude some or all of the Registrable Securities requested to be
registered on the basis of a good faith determination that inclusion of such
securities might adversely affect the success of the offering or otherwise
adversely affect the Company. Any such exclusion shall be pro rata among all
Holders who have requested to sell Registrable Securities in such registration.
(b) Underwriting. If a registration statement under
which the Company gives notice under this Section is for an underwritten
offering, then the Company shall so advise the Holders of Registrable
Securities. In such event, the right of any such Holder's Registrable Securities
to be included in a registration pursuant to this Section shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their Registrable Securities through
such underwriting shall enter into an underwriting agreement in customary form
with the managing underwriter or underwriters selected for such underwriting and
shall furnish such information and documents as the Company or the managing
underwriter or underwriters may reasonably request. Notwithstanding any other
provision of this Agreement, if the managing underwriter determine(s) in good
faith that marketing factors require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude Registrable
Securities from the registration and the underwriting, pro rata among all
Holders who have requested to sell Registrable Securities in such registration.
If any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration.
(c) Expenses. The Holders shall be responsible for
their pro rata share of registration fees and underwriters' and brokers'
discounts and commissions relating to any Registrable Securities included in
such registration. Other registration expenses (such as legal
17
<PAGE>
and accounting fees of counsel to the Company, printing fees, road show
expenses, and the like) shall be shall be borne by the Company.
(d) Number of Piggyback Registrations. The piggyback
registration rights granted to the Holders under this Section shall apply to the
first three registrations filed by the Company after the Closing.
8. ASSIGNMENT. Notwithstanding anything herein to the contrary,
the registration rights of the Holder under Section 7 hereof may be assigned
only to a party who acquires from the Holder at least 100,000 shares of
Registrable Securities (as such number may be adjusted to reflect subdivisions,
combinations and stock dividends of the Company's Common Stock), (such party is
referred to as a "Assignee"); provided, however, that (w) no party may be
assigned any of the foregoing rights until the Company is given written notice
by the assigning party at the time of such assignment stating the name and
address of the Assignee and identifying the securities of the Company as to
which the rights in question are being assigned; (x) that any such Assignee
shall receive such assigned rights subject to all the terms and conditions of
this Agreement; and (y) no such assignment or assignments shall increase the
obligations of the Company hereunder.
9. MISCELLANEOUS.
9.1 Survival of Warranties. The representations, warranties
and covenants of the Company and the Investors contained in or made pursuant to
this Agreement shall survive the execution and delivery of this Agreement and
the Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors, their counsel or the
Company, as the case may be.
9.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.
9.3 Governing Law; Consent to Jurisdiction. This Agreement
shall be governed by and construed under the internal laws of the State of
California as applied to agreements among California residents entered into and
to be performed entirely within California, without reference to principles of
conflict of laws or choice of laws.
9.4 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.5 Headings. The headings and captions used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement. All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
18
<PAGE>
9.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified, by
telecopier or upon deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified in the
case of the Company, at 349 Oyster Point Boulevard, South San Francisco, CA
94080, attention: President, with a copy to C. Kevin Kelso, Fenwick & West LLP,
Two Palo Alto Square, Palo Alto, California 94306, or in the case of Investor,
at the record address for such Investor as reflected on the books of the
Company, with a copy to Peter Ingerman, Esq., Chadbourne & Parke LLP, 30
Rockefeller Plaza, New York, New York 10112, or at such other address as any
party may designate by giving ten (10) days advance written notice to the other
party. Notices shall be deemed delivered upon delivery if personally delivered,
one business day after transmission with confirmation of receipt if sent by
telecopier, or three days after deposit in the mails if mailed.
9.7 No Finder's Fees. Each party represents that it neither is
nor will be obligated for any finder's or broker's fee or commission in
connection with this transaction. Each Investor agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of a finder's or broker's fee (and any asserted liability) for which
the Investor or any of its officers, partners, employees, or representatives is
responsible. The Company agrees to indemnify and to hold harmless each Investor
from any liability for any commission or compensation in the nature of a
finder's or broker's fee (and any asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
9.8 Costs, Expenses. Each party's costs in connection with the
preparation, execution delivery and performance of this Agreement (including
without limitation legal fees) shall be borne by that party.
9.9 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors
holding a majority of the Purchased Shares purchased hereunder; provided,
however, that no amendment or waiver of the Company's obligations under Section
7 of this Agreement shall be binding upon any holder of Purchased Shares unless
that holder has consented in writing to such amendment or waiver. Subject to the
limitations set forth in the preceding sentence, any amendment or waiver
effected in accordance with this Section shall be binding upon each holder of
any Purchased Shares at the time outstanding (even if such Investor or other
holder did not vote with respect to, or voted against, such amendment or
waiver), each future holder of such securities, and the Company. The Investors
acknowledge that by virtue of this provision, holders of a majority of the
Purchase Shares may bind other holders to amendment or waivers that such other
holders may have voted to oppose.
9.10 Severability. If one or more provisions of this Agreement
are held to be invalid, illegal or unenforceable under applicable law, such
provision(s) shall be excluded from
19
<PAGE>
this Agreement and the balance of the Agreement shall be interpreted as if such
provision(s) were so excluded and shall be enforceable in accordance with its
terms.
9.11 Entire Agreement. This Agreement, together with any
exhibits or schedules hereto, constitutes the entire agreement and understanding
of the parties with respect to the subject matter hereof and supersedes any and
all prior negotiations, correspondence, agreements, understandings duties or
obligations between the parties with respect to the subject matter hereof.
9.12 Further Assurances. From and after the date of this
Agreement, upon the request of an Investor or the Company, the Company and the
Investors shall execute and deliver such instruments, documents or other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
[Remainder of this page intentionally left blank]
20
<PAGE>
COUNTERPART SIGNATURE PAGE
COMMON STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement as of the date first above written.
THE COMPANY: INVESTOR:
Cellegy Pharmaceuticals, Inc., FOUR PARTNERS
a California corporation
By: /s/ K. Michael Forrest By: /s/ Thomas J. Tisch
------------------------------ -------------------------------
Title: President & CEO Title: Trustee
--------------------------- ----------------------------
20
<PAGE>
COUNTERPART SIGNATURE PAGE
COMMON STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement as of the date first above written.
THE COMPANY: INVESTOR:
Cellegy Pharmaceuticals, Inc., Bay Resource Partners, L.P.
a California corporation
By: /s/ K. Michael Forrest By: /s/ Steven E. Levy
------------------------------ -------------------------------
K. Michael Forrest Steven E. Levy
Title: President & CEO Title: Vice President
--------------------------- GMT Capital Corp.
-----------------------------
21
<PAGE>
COUNTERPART SIGNATURE PAGE
COMMON STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement as of the date first above written.
THE COMPANY: INVESTOR:
Cellegy Pharmaceuticals, Inc., Bay Resource Partners Offshore, Ltd.
a California corporation
By: /s/ K. Michael Forrest By: /s/ Steven E. Levy
------------------------------ -------------------------------
K. Michael Forrest Steven E. Levy
Title: President & CEO Title: Vice President
--------------------------- GMT Capital Corp.
-----------------------------
21
<PAGE>
COUNTERPART SIGNATURE PAGE
COMMON STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement as of the date first above written.
THE COMPANY: INVESTOR:
Cellegy Pharmaceuticals, Inc., Janus Global Life Sciences Fund
a California corporation
By: /s/ K. Michael Forrest By: /s/ Deborah Bielicke Eades
------------------------------ -------------------------------
K. Michael Forrest Deborah Bielicke Eades
Title: President & CEO Title: Assistant Vice President
--------------------------- -----------------------------
20
<PAGE>
COUNTERPART SIGNATURE PAGE
COMMON STOCK PURCHASE AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Common Stock
Purchase Agreement as of the date first above written.
THE COMPANY: INVESTOR:
Cellegy Pharmaceuticals, Inc., K. Michael Forrest & Nhu
a California corporation Forrest, Jyten
By: /s/ K. Michael Forrest By: /s/ K. Michael Forrest
------------------------------ -------------------------------
K. Michael Forrest K. Michael Forrest
Title: President & CEO Title:
--------------------------- -----------------------------
21
<PAGE>
SCHEDULE OF INVESTORS
<TABLE>
The price per share of common stock paid by all Investors shall be
$6.25 per share.
<CAPTION>
Name Address Number
- ---- ------- ------
of Shares
---------
<S> <C> <C>
Four Partners Tisch Financial Management 720,000
Attention: Barry Bloom
655 Madison Avenue, 8th Floor
New York, NY 10021
Bay Resource Partners, L.P. GMT Capital Corp. 40,000
Attention: Greg Deese
2100 River Edge Parkway, Suite 840
Atlanta, GA 30328
Bay Resource Partners Offshore GMT Capital Corp. 56,000
Ltd. Attention: Greg Deese
2100 River Edge Parkway, Suite 840
Atlanta, GA 30328
Janus Global Life Chase Manhattan Bank, NA 720,000
Sciences Fund Attention: Matt Rollo
In Account of State Street Bank & Trust Co.
4 New York Plaza, Ground Floor, Receive Window
New York, NY 10004
K. Michael Forrest & Nhu c/o Cellegy Pharmaceuticals, Inc. 25,000
Forrest, JY TEN Attention: K. Michael Forrest
349 Oyster Point Blvd., Suite 200
South San Francisco, CA 94080
TOTAL 1,561,000
- -----
</TABLE>
EXHIBIT 4.2
THE SECURITIES REPRESENTED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAWS AND
MAY NOT BE SOLD, EXCHANGED, PLEDGED, HYPOTHECATED OR TRANSFERRED IN ANY MANNER
(A "TRANSFER") EXCEPT IN COMPLIANCE WITH THE TERMS OF THIS WARRANT, THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES SATISFACTORY TO THE COMPANY, STATING
THAT SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND COMPLIES WITH APPLICABLE STATE SECURITIES LAWS.
Warrant Certificate No. 409
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
CELLEGY PHARMACEUTICALS, INC.
THIS WARRANT (the "Warrant") is dated as of January 18, 1999 and is issued by
Cellegy Pharmaceuticals, Inc., a California corporation (the "Company"), to
Michael P. Crowley ("Warrantholder"), in the amount of up to 2,000 Warrants,
subject to other conditions of this warrant and the consulting agreement dated
January 16, 1999.
Section 1. Definitions
1.1 Definitions. For purposes of this Warrant, the following
terms shall have the following meanings.
"Act" shall mean the Securities Act of 1933, as amended.
"Common Stock" means the Company's Common Stock, no par value.
"Exercise Price" has the meaning given to that term in Section
2.2.
"Merger or Sale" shall have the meaning given to that term in
Section 7.3.
"Shares" shall mean the shares of Common Stock that can be
acquired upon exercise of the Warrant.
"Termination Date" shall mean the date on which the Warrant is
no longer exercisable, which date shall be no later than one year after the
completion of the consulting agreement (July 2, 2000) between the Company and
Dr. Crowley.
<PAGE>
"Transfer Agent" shall mean the Company's registrar and
transfer agent, if any, for the Warrant.
"Warrant" shall mean this Warrant to purchase shares of Common
Stock. The term "Warrant" shall include any Warrant evidenced by a certificate
or certificates issued upon division, exchange, substitution or transfer
pursuant to the terms of this Warrant.
Section 2. Issuance of Warrant; Form of Warrant.
2.1 Issuance. In consideration of the Warrantholder's services
on behalf of the Company, the Company hereby issues the Warrant to the
Warrantholder to purchase 2,000 shares of Common Stock.
2.2 Exercise Price and Exercise Conditions. The price per
share at which 2,000 shares shall be purchasable upon exercise of the Warrant
(the "Exercise Price") is $4.6875 per share.
2.3 Registration. The Warrant shall be numbered and shall be
registered on the books of the Company.
2.4 Transfer. The Warrant may not be transferred, except to
members of the Warrantholder's immediate family or trusts for the benefit of the
Warrantholder or one or more members of the Warrantholder's immediate family. To
the extent that the Warrant is transferable, the Warrant shall be transferable
only on the books of the Company maintained at its principal office in Foster
City, California (or wherever its principal office may then be located) or, if
the Company has a Transfer Agent, then at the offices of the Transfer Agent,
upon delivery thereof duly endorsed by the Warrantholder or by its duly
authorized attorney or representative, accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall execute and deliver a new Warrant to the person
entitled thereto.
2.5 Certificates. The Warrant may be divided or combined, upon
request to the Company by the Warrantholder, into a certificate or certificates
representing the right to purchase the same aggregate number of Shares. Unless
the context indicates otherwise, the term "Warrantholder" shall include any
transferee or transferees of the Warrant.
2.6 Signatures. The number of Shares issuable upon exercise of
the Warrant is subject to adjustment upon the occurrence of certain events, all
as hereinafter provided. The Warrant shall be executed on behalf of the Company
by its President or by a Vice President and attested to by its Secretary or an
Assistant Secretary. A Warrant bearing the signature of an individual who was at
any time the proper officer of the Company shall bind the Company,
notwithstanding that such individual shall have ceased to hold such office prior
to the delivery of such Warrant or did not hold such office on the date of this
Warrant.
-2-
<PAGE>
2.7 Legends on Certificate. Each certificate representing the
Warrant, and for Shares initially issued upon exercise of the Warrant, shall
bear the following legends, unless, at the time of exercise, such Shares are
subject to a currently effective Registration Statement under the Act:
(a) THE SECURITIES REPRESENTED BY THIS WARRANT
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, EXCHANGED, PLEDGED,
HYPOTHECATED OR TRANSFERRED IN ANY MANNER (A "TRANSFER") EXCEPT IN COMPLIANCE
WITH THE TERMS OF THIS WARRANT, THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
SATISFACTORY TO THE COMPANY, STATING THAT SUCH TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND COMPLIES WITH
APPLICABLE STATE SECURITIES LAWS.
(b) Any legend required by applicable state
securities laws.
Any certificate issued at any time in exchange or substitution
for any certificate bearing such legends (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Act of the securities represented thereby) shall also bear the above legends
unless, in the opinion of the Company's counsel, the securities represented
thereby need no longer be subject to such restrictions.
2.8 Exchange of Warrant Certificate. Any Warrant certificate
may be exchanged for another certificate or certificates entitling the
Warrantholder to purchase a like aggregate number of Shares as the certificate
or certificates surrendered then entitled such Warrantholder to purchase. Any
Warrantholder desiring to exchange a Warrant certificate shall make such request
in writing delivered to the Company, and shall surrender, properly endorsed,
with signatures guaranteed if required by the Company, the certificate
evidencing the Warrant to be so exchanged. Thereupon, the Company shall execute
and deliver to the person entitled thereto a new Warrant certificate as so
requested.
Section 3. Term of Warrant; Exercise of Warrant.
3.1 Term. Subject to the terms of this Warrant, the
Warrantholder shall have the right, at any time after the date of this Warrant
and ending at 5:00 p.m., California Time, on the Termination Date to purchase
from the Company up to the number of fully paid and nonassessable Shares to
which the Warrantholder may at the time be entitled to purchase pursuant to this
Warrant, upon surrender to the Company, at its principal office, of the
certificate evidencing the Warrant to be exercised, together with the purchase
form, duly filled in and signed, with signatures guaranteed if required by the
Company or its Transfer Agent, and upon payment to the Company of the Exercise
Price for the number of Shares in respect of which the Warrant is then
exercised, but in no event for less than 100 Shares (unless fewer than an
aggregate of 100 Shares are then purchasable pursuant to the Warrant).
Notwithstanding the foregoing, the Company shall not be obligated to deliver any
Shares pursuant to the exercise of the Warrant, and
-3-
<PAGE>
the Warrantholder shall not have the right to exercise the Warrant, if in the
Company's opinion the delivery of Shares upon exercise of the Warrant would not
comply with any applicable federal or state securities laws; and without
limiting the foregoing, the Warrant may not be exercised by, or securities
issued to, any Warrantholder in any state in which such exercise would be
unlawful.
3.2 Payment of Exercise Price. Payment of the aggregate
Exercise Price shall be made in cash or by check, or any combination thereof.
3.3 Issuance of Certificate. Upon such surrender of the
Warrant and payment of such Exercise Price, the Company shall issue and cause to
be delivered to the Warrantholder and in the Warrantholder's name, a certificate
or certificates for the number of full Shares so purchased upon the exercise of
the Warrant, together with cash, as provided herein, in respect of any
fractional Share otherwise issuable upon such surrender. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
securities as of the date of surrender of the Warrant and payment of the
Exercise Price, as aforesaid, notwithstanding that the certificate or
certificates representing such securities shall not actually have been
delivered. The Warrant shall be exercisable, at the election of the
Warrantholder, either in full or from time to time in part and, in the event
that a certificate evidencing the Warrant is exercised in respect of less than
all of the Shares specified therein at any time prior to the Termination Date, a
new certificate evidencing the remaining portion of the Warrant will be issued
by the Company.
Section 4. Payment of Taxes.
The Company will pay all documentary stamp taxes, if any, attributable
to the initial issuance of the Warrant or the securities comprising the Shares;
provided, however, the Company shall not be required to pay any tax which may be
payable in respect of any transfer of the Warrant or the securities comprising
the Shares.
Section 5. Mutilated or Missing Warrants.
In case the certificate or certificates evidencing the Warrant shall be
mutilated, lost, stolen or destroyed, the Company shall, at the request of the
Warrantholder, issue and deliver in exchange and substitution for and upon
cancellation of the mutilated certificate or certificates, or in lieu of and
substitution for the certificate or certificates lost, stolen or destroyed, a
new Warrant certificate or certificates of like tenor and representing an
equivalent right or interest, but only upon receipt of evidence satisfactory to
the Company of such loss, theft or destruction of such Warrant and a bond of
indemnity, if requested, also satisfactory in form and amount, at the
applicant's cost. Applicants for such substitute Warrant certificate shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe.
-4-
<PAGE>
Section 6. Reservation of Shares.
There has been reserved, and the Company shall at all times keep
reserved so long as the Warrant remains outstanding, out of its authorized and
unissued Common Stock, such number of shares of Common Stock as shall be subject
to purchase under the Warrant.
Section 7. Adjustment of Number of Shares.
The number and kind of securities purchasable upon the exercise of the
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
7.1 Adjustments. The number of Shares purchasable upon the
exercise of the Warrant shall be subject to adjustment as follows:
(a) Stock Splits; Stock Dividends. In case the
Company shall (i) pay a dividend in Common Stock, (ii) subdivide its outstanding
Common Stock, (iii) combine its outstanding Common Stock into a smaller number
of shares of Common Stock, including without limitation any combination of its
outstanding Common Stock that may occur after October 1, 1997, or (iv) issue by
reclassification of its Common Stock other securities of the Company, then the
number of Shares purchasable upon exercise of the Warrant immediately prior
thereto shall be adjusted so that the Warrantholder shall be entitled to receive
upon exercise of the Warrant the kind and number of Shares or other securities
of the Company which it would have owned or would have been entitled to receive
immediately after the happening of any of the events described above, had the
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. Any adjustment made pursuant to this
subsection shall become effective immediately after the effective date of such
event, retroactive to the record date, if any, for such event.
(b) De Minimis Changes. No adjustment in the number
of Shares purchasable pursuant to the Warrant shall be required unless such
adjustment would require an increase or decrease of at least one percent in the
number of Shares then purchasable upon the exercise of all Commitment Warrants;
provided, however, that any adjustments which by reason of this subsection are
not required to be made immediately shall be carried forward and taken into
account in any subsequent adjustment.
(c) Corresponding Adjustment of Exercise Price.
Whenever the number of Shares purchasable upon the exercise of the Warrant is
adjusted, as herein provided, the Exercise Price payable upon exercise of the
Warrant shall be adjusted by multiplying such Exercise Price immediately prior
to such adjustment by a fraction, the numerator of which shall be the number of
Shares purchasable upon the exercise of the Warrant immediately prior to such
adjustment, and the denominator of which shall be the number of Shares so
purchasable immediately thereafter.
(d) Notice of Adjustment. Whenever the number of
Shares purchasable upon the exercise of the Warrant is adjusted as herein
provided, the Company shall
-5-
<PAGE>
cause to be mailed to the Warrantholder within a reasonable time thereafter
notice of such adjustment setting forth the number of Shares purchasable upon
the exercise of the Warrant after such adjustment, a brief statement of the
facts requiring such adjustment and the computation by which such adjustment was
made.
7.2 No Adjustment for Dividends. Except as provided in
subsection 7.1(a), no adjustment in respect of any dividends or distributions
out of earnings shall be made during the term of the Warrant or upon the
exercise of the Warrant.
7.3 Preservation of Purchase Rights upon Reclassification,
Consolidation, etc.
(a) Subject to paragraph (b) of this Section, in case
of any consolidation of the Company with or merger of the Company into another
corporation where the Company will not be the surviving corporation, or in case
of any sale or conveyance to another corporation of the property, assets or
business of the Company as an entirety or substantially as an entirety (any such
event referred to as a "Merger or Sale"), the Company or such successor or
purchasing corporation, as the case may be, shall agree that the Warrantholder
shall have the right thereafter upon payment of the Exercise Price in effect
immediately prior to such action to purchase, upon exercise of the Warrant, the
kind and amount of shares and other securities and property which it would have
owned or have been entitled to receive after the happening of such Merger or
Sale had the Warrant been exercised immediately prior to such action. Any such
agreements referred to in this subsection shall provide for adjustments, which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section. The provisions of this subsection shall similarly apply to
successive Mergers or Sales.
(b) Notwithstanding the foregoing provisions, if the
surviving, successor or purchasing corporation does not agree to the provisions
set forth in paragraph (a) above, or if the Board of Directors of the Company
determines that the Warrants should not be outstanding following consummation of
such Merger or Sale, then the Company shall deliver a notice to each
Warrantholder at least 20 days before the consummation of such Merger or Sale,
the Warrantholder may exercise the Warrant at any time before the consummation
of such Merger or Sale (and such exercise may be made contingent upon the
consummation of such Merger or Sale), and any portion of the Warrant that has
not been exercised before consummation of such Merger or Sale shall terminate
and expire, and shall no longer be outstanding.
7.4 Independent Public Accountants. The Company may retain a
firm of independent public accountants of recognized national standing (which
may be any such firm regularly employed by the Company) to make any computation
required under this Section, and a certificate signed by such firm shall be
conclusive evidence of the correctness of any computation made under this
Section.
7.5 Statement on Warrant Certificates. Irrespective of any
adjustments in the number of securities issuable upon exercise of the Warrant,
the Warrant certificates theretofore or thereafter issued may continue to
express the same number of securities as are stated in the similar Warrant
certificate initially issued. However, the Company may, at any time in its sole
discretion
-6-
<PAGE>
(which shall be conclusive), make any change in the form of Warrant certificate
that it may deem appropriate and that does not affect the substance thereof; and
any Warrant certificate thereafter issued, whether upon registration of transfer
of, or in exchange or substitution for, an outstanding Warrant certificate, may
be in the form so changed.
Section 8. Fractional Interests.
The Company shall not be required to issue fractional Shares on the
exercise of the Warrant. If any fraction of a Share would, except for the
provisions of this Section, be issuable on the exercise of the Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
then fair market value of a share of Common Stock (as determined in good faith
by the Board of Directors of the Company) multiplied by such fraction.
Section 9. No Rights as Shareholder; Notices to Warrantholder.
Nothing contained in this Warrant shall be construed as conferring upon
the Warrantholder or its transferees any rights as a shareholder of the Company,
including the right to vote, receive dividends, consent or receive notices as a
shareholder in respect of any meeting of shareholders for the election of
directors of the Company or any other matter.
Section 10. Restrictions on Transfer.
The Warrantholder agrees that prior to making any sale, transfer,
pledge, assignment, hypothecation, or other disposition (each, a "Transfer") of
the Warrant or Shares, the Warrantholder shall give written notice to the
Company describing the manner in which any such proposed Transfer is to be made
and providing such additional information regarding the Transfer as the Company
reasonably requests. If the Company so requests, the Warrantholder shall at its
expense provide the Company with an opinion of counsel (which counsel must be
reasonably satisfactory to the Company) to the holder, in form and substance
satisfactory to the Company, that the proposed Transfer complies with applicable
federal and state securities laws. The Company shall have no obligation to
Transfer any Securities unless the holder thereof has complied with the
foregoing provisions, and any such attempted Transfer shall be null and void.
Section 11. Certain Representations and Warranties of Warrantholder.
Warrantholder represents and warrants to, and agrees with, the Company,
that:
(a) Purchase for Own Account. This Warrant and the Shares are
being acquired for investment for Warrantholder's own account, not as a nominee
or agent, and not with a view to the public resale or distribution thereof
within the meaning of the Act, and such Warrantholder has no present intention
of selling, granting any participation in, or otherwise distributing the same.
-7-
<PAGE>
(b) Disclosure of Information. Warrantholder has received or
has had full access to all the information it considers necessary or appropriate
to make an informed investment decision with respect to the Warrant.
Warrantholder has had an opportunity to ask questions and receive answers from
the Company regarding the terms and conditions of the Warrant and the Shares and
to obtain additional information necessary to verify any information furnished
to Warrantholder or to which Warrantholder had access.
(c) Investment Experience. Warrantholder understands that the
receipt of the Warrants and the purchase of the Shares involve substantial risk.
Warrantholder: (i) has experience as an investor in securities of companies in
the development stage and acknowledges that it is able to fend for itself, can
bear the economic risk of such investment in the Warrants and Shares and has
such knowledge and experience in financial or business matters that
Warrantholder is capable of evaluating the merits and risks of this investment
in the Warrants and Shares and protecting his or her own interests in connection
with this investment and/or (ii) has a preexisting personal or business
relationship with the Company and certain of its officers, directors or
controlling persons of a nature and duration that enables Warrantholder to be
aware of the character, business acumen and financial circumstances of such
persons.
(d) Restricted Securities. Warrantholder understands that the
Warrants and the Shares are characterized as "restricted securities" under the
Act inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under the Act and applicable regulations
thereunder such securities may be resold without registration under the Act only
in certain limited circumstances. In this connection, Warrantholder represents
that Warrantholder is familiar with Rule 144 of the Securities and Exchange
Commission, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act. Warrantholder understands that the
Company is under no obligation to register any of the securities sold hereunder
except as provided in Section 12 below.
(e) Further Limitations on Disposition. Without in any way
limiting the representations set forth above, Warrantholder further agrees not
to make any disposition of the Warrant or all or any portion of the Shares
unless and until:
(i) there is then in effect a registration statement
under the Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(ii) (A) Warrantholder shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed disposition, and (ii)
Warrantholder shall have furnished the Company, at the expense of Warrantholder
or its transferee, with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such securities
under the Act.
Notwithstanding the provisions of paragraphs (i) and (ii) above, no such
registration statement or opinion of counsel shall be required: (1) for any
transfer of any Shares in compliance with SEC
-8-
<PAGE>
Rule 144 or (2) for the transfer by gift, will or intestate succession by
Warrantholder to his or her spouse or lineal descendants or ancestors or any
trust for any of the foregoing; provided that in each of the foregoing cases the
transferee agrees in writing to be subject to the terms of this Section 11 to
the same extent as if the transferee were the original Warrantholder.
(f) Legends. It is understood that the certificates evidencing
the Warrant Shares will bear the legends set forth below:
(i) THE SECURITIES REPRESENTED BY THIS WARRANT
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, EXCHANGED, PLEDGED,
HYPOTHECATED OR TRANSFERRED IN ANY MANNER (A "TRANSFER") EXCEPT IN COMPLIANCE
WITH THE TERMS OF THIS WARRANT, THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
SATISFACTORY TO THE COMPANY, STATING THAT SUCH TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND COMPLIES WITH
APPLICABLE STATE SECURITIES LAWS.
(ii) Any legend required by the laws of the State of
California:
The legend set forth in (i) above shall be removed by the Company from any
certificate evidencing Shares upon delivery to the Company of an opinion by
counsel, reasonably satisfactory to the Company, that a registration statement
under the Act is at that time in effect with respect to the legended security or
that such security can be freely transferred in a public sale without such a
registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to which the
Company issued the Shares.
Section 12. Registration Rights.
The Company will use all reasonable efforts to register, either the
issuance of shares of Common Stock issuable upon exercise of the Warrant or the
resale of such shares. The Warrantholder agrees to cooperate with the Company
and provide such information as the Company reasonably requests in connection
with such registration.
Section 13. Miscellaneous.
-9-
<PAGE>
13.1 Notices. Any notice pursuant to this Warrant by the
Company or by a Warrantholder or a holder of Shares shall be in writing and
shall be deemed to have been duly given if delivered or mailed by certified
mail, return receipt requested:
(a) If to a Warrantholder or a holder of Shares, addressed to
the holder's address on the books of the Company or the Company's transfer
agent; and
(b) If to the Company addressed to it at the Company's
principal executive offices, Attention: President.
Each party may from time to time change the address to which notices to
it are to be delivered or mailed hereunder by notice in accordance herewith to
the other party.
13.2 Successors. All the covenants and provisions of this
Warrant by or for the benefit of the Company, the Warrantholder, or the holders
of Shares, shall bind and inure to the benefit of their respective successors
and assigns hereunder.
13.3 Applicable Law; Consent to Jurisdiction. This Warrant
shall be governed by and construed in accordance with the laws of the State of
California, without giving effect to the choice of law or conflict of laws
principles thereof. Warrantholder and the Company each consent to the exclusive
jurisdiction and venue of the federal and state court in the district in which
the Company's principal executive offices are then-located for purposes of any
action arising out of or relating to this Warrant, and agrees that service of
process in any such action may be effected by means of the procedures set forth
in Section 13.1 above for giving notices under this Warrant.
13.4 Benefits of this Warrant. Nothing in this Warrant shall
be construed to give to any person or corporation other than the Company, the
Warrantholder and the holders of Shares, any legal or equitable right, remedy or
claim under this Warrant, and this Warrant shall be for the sole and exclusive
benefit of the Company, the Warrantholder and the holders of Shares.
13.5 Amendment. Neither this Warrant nor any term hereof may
be amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought.
13.6 Entire Agreement. This Warrant constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof, and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants, and agreements except as
specifically set forth herein and therein. Nothing in this Warrant, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors and assigns, any rights, remedies, obligations,
or liabilities under or by reason of this Warrant, except as expressly provided
herein.
13.7 Separability. Any invalidity, illegality, or limitation
of the enforceability with respect to any party of any one or more of the
provisions of this Warrant, or any part thereof, whether arising by reason of
the law of any such party's domicile or otherwise, shall in no way
-10-
<PAGE>
affect or impair the validity, legality, or enforceability of this Warrant with
respect to all other parties. In case any provision of this Warrant shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
13.8 Counterparts. This Warrant may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[Remainder of this page intentionally left blank]
-11-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed, all as of the day and year first above written.
CELLEGY PHARMACEUTICALS, INC.
By:
------------------------------
A. Richard Juelis
Chief Financial Officer
Attest:
------------------------------
-12-
EXHIBIT 4.3
THE SECURITIES REPRESENTED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAWS AND
MAY NOT BE SOLD, EXCHANGED, PLEDGED, HYPOTHECATED OR TRANSFERRED IN ANY MANNER
(A "TRANSFER") EXCEPT IN COMPLIANCE WITH THE TERMS OF THIS WARRANT, THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES SATISFACTORY TO THE COMPANY, STATING
THAT SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND COMPLIES WITH APPLICABLE STATE SECURITIES LAWS.
Warrant Certificate No. 408
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
CELLEGY PHARMACEUTICALS, INC.
THIS WARRANT (the "Warrant") is dated as of January 19, 1999 and is issued by
Cellegy Pharmaceuticals, Inc., a California corporation (the "Company"), to
Richard Bank, M.D. ("Warrantholder"), in the amount of up to 12,000 Warrants,
subject to the completion of the six-month consulting engagement between the
Company and Dr. Bank.
Section 1. Definitions
1.1 Definitions. For purposes of this Warrant, the following
terms shall have the following meanings.
"Act" shall mean the Securities Act of 1933, as amended.
"Common Stock" means the Company's Common Stock, no par value.
"Exercise Price" has the meaning given to that term in Section
2.2.
"Merger or Sale" shall have the meaning given to that term in
Section 7.3.
"Shares" shall mean the shares of Common Stock that can be
acquired upon exercise of the Warrant.
"Termination Date" shall mean the date on which the Warrant is
no longer exercisable, which date shall be January 19, 2001, or sooner as
provided in this Warrant, including without limitation, in connection with a
merger or sale of the Company.
<PAGE>
"Transfer Agent" shall mean the Company's registrar and
transfer agent, if any, for the Warrant.
"Warrant" shall mean this Warrant to purchase shares of Common
Stock. The term "Warrant" shall include any Warrant evidenced by a certificate
or certificates issued upon division, exchange, substitution or transfer
pursuant to the terms of this Warrant.
Section 2. Issuance of Warrant; Form of Warrant.
2.1 Issuance. In consideration of the Warrantholder's services
on behalf of the Company in the areas identified in Exhibit A attached, the
Company hereby issues the Warrant to the Warrantholder to purchase a total of
12,000 shares of Common Stock issuable in increments of 2,000 Warrants per month
beginning with the Warrant date (January 19, 1999) and ending on July 19, 1999.
If Dr. Bank and Cellegy mtually agree to discontinue the consulting engagement
earlier than the end of the six-month period, then remaining monthly warrant
grants will be discontinued.
2.2 Exercise Price and Exercise Conditions. The price per
share at which shares shall be purchasable upon exercise of the Warrant (the
"Exercise Price") is $4.00 per share.
2.3 Registration. The Warrant shall be numbered and shall be
registered on the books of the Company.
2.4 Transfer. The Warrant may not be transferred, except to
members of the Warrantholder's immediate family or trusts for the benefit of the
Warrantholder or one or more members of the Warrantholder's immediate family. To
the extent that the Warrant is transferable, the Warrant shall be transferable
only on the books of the Company maintained at its principal office in South San
Francisco, California or, if the Company has a Transfer Agent, then at the
offices of the Transfer Agent, upon delivery thereof duly endorsed by the
Warrantholder or by its duly authorized attorney or representative, accompanied
by proper evidence of succession, assignment or authority to transfer. Upon any
registration of transfer, the Company shall execute and deliver a new Warrant to
the person entitled thereto.
2.5 Certificates. The Warrant may be divided or combined, upon
request to the Company by the Warrantholder, into a certificate or certificates
representing the right to purchase the same aggregate number of Shares. Unless
the context indicates otherwise, the term "Warrantholder" shall include any
transferee or transferees of the Warrant.
2.6 Signatures. The number of Shares issuable upon exercise of
the Warrant is subject to adjustment upon the occurrence of certain events, all
as hereinafter provided. The Warrant shall be executed on behalf of the Company
by its President or by a Vice President and attested to by its Secretary or an
Assistant Secretary. A Warrant bearing the signature of an individual who was at
any time the proper officer of the Company shall bind the Company,
notwithstanding that such individual shall have ceased to hold such office prior
to the delivery of such Warrant or did not hold such office on the date of this
Warrant.
-2-
<PAGE>
2.7 Legends on Certificate. Each certificate representing the
Warrant, and for Shares initially issued upon exercise of the Warrant, shall
bear the following legends, unless, at the time of exercise, such Shares are
subject to a currently effective Registration Statement under the Act:
(a) THE SECURITIES REPRESENTED BY THIS WARRANT
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, EXCHANGED, PLEDGED,
HYPOTHECATED OR TRANSFERRED IN ANY MANNER (A "TRANSFER") EXCEPT IN COMPLIANCE
WITH THE TERMS OF THIS WARRANT, THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
SATISFACTORY TO THE COMPANY, STATING THAT SUCH TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND COMPLIES WITH
APPLICABLE STATE SECURITIES LAWS.
(b) Any legend required by applicable state
securities laws.
Any certificate issued at any time in exchange or substitution
for any certificate bearing such legends (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement under
the Act of the securities represented thereby) shall also bear the above legends
unless, in the opinion of the Company's counsel, the securities represented
thereby need no longer be subject to such restrictions.
2.8 Exchange of Warrant Certificate. Any Warrant certificate
may be exchanged for another certificate or certificates entitling the
Warrantholder to purchase a like aggregate number of Shares as the certificate
or certificates surrendered then entitled such Warrantholder to purchase. Any
Warrantholder desiring to exchange a Warrant certificate shall make such request
in writing delivered to the Company, and shall surrender, properly endorsed,
with signatures guaranteed if required by the Company, the certificate
evidencing the Warrant to be so exchanged. Thereupon, the Company shall execute
and deliver to the person entitled thereto a new Warrant certificate as so
requested.
Section 3. Term of Warrant; Exercise of Warrant.
3.1 Term. Subject to the terms of this Warrant, the
Warrantholder shall have the right, at any time after the date of this Warrant
and ending at 5:00 p.m., California Time, on the Termination Date to purchase
from the Company up to the number of fully paid and nonassessable Shares to
which the Warrantholder may at the time be entitled to purchase pursuant to this
Warrant, upon surrender to the Company, at its principal office, of the
certificate evidencing the Warrant to be exercised, together with the purchase
form, duly filled in and signed, with signatures guaranteed if required by the
Company or its Transfer Agent, and upon payment to the Company of the Exercise
Price for the number of Shares in respect of which the Warrant is then
exercised, but in no event for less than 100 Shares (unless fewer than an
aggregate of 100 Shares are then purchasable pursuant to the Warrant).
Notwithstanding the foregoing, the
-3-
<PAGE>
Company shall not be obligated to deliver any Shares pursuant to the exercise of
the Warrant, and the Warrantholder shall not have the right to exercise the
Warrant, if in the Company's opinion the delivery of Shares upon exercise of the
Warrant would not comply with any applicable federal or state securities laws;
and without limiting the foregoing, the Warrant may not be exercised by, or
securities issued to, any Warrantholder in any state in which such exercise
would be unlawful.
3.2 Payment of Exercise Price. Payment of the aggregate
Exercise Price shall be made in cash or by check, or any combination thereof.
3.3 Issuance of Certificate. Upon such surrender of the
Warrant and payment of such Exercise Price, the Company shall issue and cause to
be delivered to the Warrantholder and in the Warrantholder's name, a certificate
or certificates for the number of full Shares so purchased upon the exercise of
the Warrant, together with cash, as provided herein, in respect of any
fractional Share otherwise issuable upon such surrender. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
securities as of the date of surrender of the Warrant and payment of the
Exercise Price, as aforesaid, notwithstanding that the certificate or
certificates representing such securities shall not actually have been
delivered. The Warrant shall be exercisable, at the election of the
Warrantholder, either in full or from time to time in part and, in the event
that a certificate evidencing the Warrant is exercised in respect of less than
all of the Shares specified therein at any time prior to the Termination Date, a
new certificate evidencing the remaining portion of the Warrant will be issued
by the Company.
Section 4. Payment of Taxes.
The Company will pay all documentary stamp taxes, if any, attributable
to the initial issuance of the Warrant or the securities comprising the Shares;
provided, however, the Company shall not be required to pay any tax which may be
payable in respect of any transfer of the Warrant or the securities comprising
the Shares.
Section 5. Mutilated or Missing Warrants.
In case the certificate or certificates evidencing the Warrant shall be
mutilated, lost, stolen or destroyed, the Company shall, at the request of the
Warrantholder, issue and deliver in exchange and substitution for and upon
cancellation of the mutilated certificate or certificates, or in lieu of and
substitution for the certificate or certificates lost, stolen or destroyed, a
new Warrant certificate or certificates of like tenor and representing an
equivalent right or interest, but only upon receipt of evidence satisfactory to
the Company of such loss, theft or destruction of such Warrant and a bond of
indemnity, if requested, also satisfactory in form and amount, at the
applicant's cost. Applicants for such substitute Warrant certificate shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe.
Section 6. Reservation of Shares.
-4-
<PAGE>
There has been reserved, and the Company shall at all times keep
reserved so long as the Warrant remains outstanding, out of its authorized and
unissued Common Stock, such number of shares of Common Stock as shall be subject
to purchase under the Warrant.
Section 7. Adjustment of Number of Shares.
The number and kind of securities purchasable upon the exercise of the
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
7.1 Adjustments. The number of Shares purchasable upon the
exercise of the Warrant shall be subject to adjustment as follows:
(a) Stock Splits; Stock Dividends. In case the
Company shall (i) pay a dividend in Common Stock, (ii) subdivide its outstanding
Common Stock, (iii) combine its outstanding Common Stock into a smaller number
of shares of Common Stock, including without limitation any combination of its
outstanding Common Stock that may occur after January 19, 1999, or (iv) issue by
reclassification of its Common Stock other securities of the Company, then the
number of Shares purchasable upon exercise of the Warrant immediately prior
thereto shall be adjusted so that the Warrantholder shall be entitled to receive
upon exercise of the Warrant the kind and number of Shares or other securities
of the Company which it would have owned or would have been entitled to receive
immediately after the happening of any of the events described above, had the
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. Any adjustment made pursuant to this
subsection shall become effective immediately after the effective date of such
event, retroactive to the record date, if any, for such event.
(b) De Minimis Changes. No adjustment in the number
of Shares purchasable pursuant to the Warrant shall be required unless such
adjustment would require an increase or decrease of at least one percent in the
number of Shares then purchasable upon the exercise of all Commitment Warrants;
provided, however, that any adjustments which by reason of this subsection are
not required to be made immediately shall be carried forward and taken into
account in any subsequent adjustment.
(c) Corresponding Adjustment of Exercise Price.
Whenever the number of Shares purchasable upon the exercise of the Warrant is
adjusted, as herein provided, the Exercise Price payable upon exercise of the
Warrant shall be adjusted by multiplying such Exercise Price immediately prior
to such adjustment by a fraction, the numerator of which shall be the number of
Shares purchasable upon the exercise of the Warrant immediately prior to such
adjustment, and the denominator of which shall be the number of Shares so
purchasable immediately thereafter.
(d) Notice of Adjustment. Whenever the number of
Shares purchasable upon the exercise of the Warrant is adjusted as herein
provided, the Company shall cause to be mailed to the Warrantholder within a
reasonable time thereafter notice of such adjustment setting forth the number of
Shares purchasable upon the exercise of the Warrant after
-5-
<PAGE>
such adjustment, a brief statement of the facts requiring such adjustment and
the computation by which such adjustment was made.
7.2 No Adjustment for Dividends. Except as provided in
subsection 7.1(a), no adjustment in respect of any dividends or distributions
out of earnings shall be made during the term of the Warrant or upon the
exercise of the Warrant.
7.3 Preservation of Purchase Rights upon Reclassification,
Consolidation, etc.
(a) Subject to paragraph (b) of this Section, in case
of any consolidation of the Company with or merger of the Company into another
corporation where the Company will not be the surviving corporation, or in case
of any sale or conveyance to another corporation of the property, assets or
business of the Company as an entirety or substantially as an entirety (any such
event referred to as a "Merger or Sale"), the Company or such successor or
purchasing corporation, as the case may be, shall agree that the Warrantholder
shall have the right thereafter upon payment of the Exercise Price in effect
immediately prior to such action to purchase, upon exercise of the Warrant, the
kind and amount of shares and other securities and property which it would have
owned or have been entitled to receive after the happening of such Merger or
Sale had the Warrant been exercised immediately prior to such action. Any such
agreements referred to in this subsection shall provide for adjustments, which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Section. The provisions of this subsection shall similarly apply to
successive Mergers or Sales.
(b) Notwithstanding the foregoing provisions, if the
surviving, successor or purchasing corporation does not agree to the provisions
set forth in paragraph (a) above, or if the Board of Directors of the Company
determines that the Warrants should not be outstanding following consummation of
such Merger or Sale, then the Company shall deliver a notice to each
Warrantholder at least 20 days before the consummation of such Merger or Sale,
the Warrantholder may exercise the Warrant at any time before the consummation
of such Merger or Sale (and such exercise may be made contingent upon the
consummation of such Merger or Sale), and any portion of the Warrant that has
not been exercised before consummation of such Merger or Sale shall terminate
and expire, and shall no longer be outstanding.
7.4 Independent Public Accountants. The Company may retain a
firm of independent public accountants of recognized national standing (which
may be any such firm regularly employed by the Company) to make any computation
required under this Section, and a certificate signed by such firm shall be
conclusive evidence of the correctness of any computation made under this
Section.
7.5 Statement on Warrant Certificates. Irrespective of any
adjustments in the number of securities issuable upon exercise of the Warrant,
the Warrant certificates theretofore or thereafter issued may continue to
express the same number of securities as are stated in the similar Warrant
certificate initially issued. However, the Company may, at any time in its sole
discretion (which shall be conclusive), make any change in the form of Warrant
certificate that it may deem appropriate and that does not affect the substance
thereof; and any Warrant certificate thereafter
-6-
<PAGE>
issued, whether upon registration of transfer of, or in exchange or substitution
for, an outstanding Warrant certificate, may be in the form so changed.
Section 8. Fractional Interests.
The Company shall not be required to issue fractional Shares on the
exercise of the Warrant. If any fraction of a Share would, except for the
provisions of this Section, be issuable on the exercise of the Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to the
then fair market value of a share of Common Stock (as determined in good faith
by the Board of Directors of the Company) multiplied by such fraction.
Section 9. No Rights as Shareholder; Notices to Warrantholder.
Nothing contained in this Warrant shall be construed as conferring upon
the Warrantholder or its transferees any rights as a shareholder of the Company,
including the right to vote, receive dividends, consent or receive notices as a
shareholder in respect of any meeting of shareholders for the election of
directors of the Company or any other matter.
Section 10. Restrictions on Transfer.
The Warrantholder agrees that prior to making any sale, transfer,
pledge, assignment, hypothecation, or other disposition (each, a "Transfer") of
the Warrant or Shares, the Warrantholder shall give written notice to the
Company describing the manner in which any such proposed Transfer is to be made
and providing such additional information regarding the Transfer as the Company
reasonably requests. If the Company so requests, the Warrantholder shall at its
expense provide the Company with an opinion of counsel (which counsel must be
reasonably satisfactory to the Company) to the holder, in form and substance
satisfactory to the Company, that the proposed Transfer complies with applicable
federal and state securities laws. The Company shall have no obligation to
Transfer any Securities unless the holder thereof has complied with the
foregoing provisions, and any such attempted Transfer shall be null and void.
Section 11. Certain Representations and Warranties of Warrantholder.
Warrantholder represents and warrants to, and agrees with, the Company,
that:
(a) Purchase for Own Account. This Warrant and the Shares are
being acquired for investment for Warrantholder's own account, not as a nominee
or agent, and not with a view to the public resale or distribution thereof
within the meaning of the Act, and such Warrantholder has no present intention
of selling, granting any participation in, or otherwise distributing the same.
-7-
<PAGE>
(b) Disclosure of Information. Warrantholder has received or
has had full access to all the information it considers necessary or appropriate
to make an informed investment decision with respect to the Warrant.
Warrantholder has had an opportunity to ask questions and receive answers from
the Company regarding the terms and conditions of the Warrant and the Shares and
to obtain additional information necessary to verify any information furnished
to Warrantholder or to which Warrantholder had access.
(c) Investment Experience. Warrantholder understands that the
receipt of the Warrants and the purchase of the Shares involve substantial risk.
Warrantholder: (i) has experience as an investor in securities of companies in
the development stage and acknowledges that it is able to fend for itself, can
bear the economic risk of such investment in the Warrants and Shares and has
such knowledge and experience in financial or business matters that
Warrantholder is capable of evaluating the merits and risks of this investment
in the Warrants and Shares and protecting his or her own interests in connection
with this investment and/or (ii) has a preexisting personal or business
relationship with the Company and certain of its officers, directors or
controlling persons of a nature and duration that enables Warrantholder to be
aware of the character, business acumen and financial circumstances of such
persons.
(d) Restricted Securities. Warrantholder understands that the
Warrants and the Shares are characterized as "restricted securities" under the
Act inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under the Act and applicable regulations
thereunder such securities may be resold without registration under the Act only
in certain limited circumstances. In this connection, Warrantholder represents
that Warrantholder is familiar with Rule 144 of the Securities and Exchange
Commission, as presently in effect, and understands the resale limitations
imposed thereby and by the Securities Act. Warrantholder understands that the
Company is under no obligation to register any of the securities sold hereunder
except as provided in Section 12 below.
(e) Further Limitations on Disposition. Without in any way
limiting the representations set forth above, Warrantholder further agrees not
to make any disposition of the Warrant or all or any portion of the Shares
unless and until:
(i) there is then in effect a registration statement
under the Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(ii) (A) Warrantholder shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed disposition, and (ii)
Warrantholder shall have furnished the Company, at the expense of Warrantholder
or its transferee, with an opinion of counsel, reasonably satisfactory to the
Company, that such disposition will not require registration of such securities
under the Act.
Notwithstanding the provisions of paragraphs (i) and (ii) above, no such
registration statement or opinion of counsel shall be required: (1) for any
transfer of any Shares in compliance with SEC Rule 144 or (2) for the transfer
by gift, will or intestate succession by Warrantholder to his or her
-8-
<PAGE>
spouse or lineal descendants or ancestors or any trust for any of the foregoing;
provided that in each of the foregoing cases the transferee agrees in writing to
be subject to the terms of this Section 11 to the same extent as if the
transferee were the original Warrantholder.
(f) Legends. It is understood that the certificates evidencing
the Warrant Shares will bear the legends set forth below:
(i) THE SECURITIES REPRESENTED BY THIS WARRANT
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, EXCHANGED, PLEDGED,
HYPOTHECATED OR TRANSFERRED IN ANY MANNER (A "TRANSFER") EXCEPT IN COMPLIANCE
WITH THE TERMS OF THIS WARRANT, THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
SATISFACTORY TO THE COMPANY, STATING THAT SUCH TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND COMPLIES WITH
APPLICABLE STATE SECURITIES LAWS.
(ii) Any legend required by the laws of the State of
California:
The legend set forth in (i) above shall be removed by the Company from any
certificate evidencing Shares upon delivery to the Company of an opinion by
counsel, reasonably satisfactory to the Company, that a registration statement
under the Act is at that time in effect with respect to the legended security or
that such security can be freely transferred in a public sale without such a
registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to which the
Company issued the Shares.
Section 12. Registration Rights.
The Company will use all reasonable efforts to register, either the
issuance of shares of Common Stock issuable upon exercise of the Warrant or the
resale of such shares. The Warrantholder agrees to cooperate with the Company
and provide such information as the Company reasonably requests in connection
with such registration.
Section 13. Miscellaneous.
13.1 Notices. Any notice pursuant to this Warrant by the
Company or by a Warrantholder or a holder of Shares shall be in writing and
shall be deemed to have been duly given if delivered or mailed by certified
mail, return receipt requested:
-9-
<PAGE>
(a) If to a Warrantholder or a holder of Shares, addressed to
the holder's address on the books of the Company or the Company's transfer
agent; and
(b) If to the Company addressed to it at the Company's
principal executive offices, Attention: President.
Each party may from time to time change the address to which notices to
it are to be delivered or mailed hereunder by notice in accordance herewith to
the other party.
13.2 Successors. All the covenants and provisions of this
Warrant by or for the benefit of the Company, the Warrantholder, or the holders
of Shares, shall bind and inure to the benefit of their respective successors
and assigns hereunder.
13.3 Applicable Law; Consent to Jurisdiction. This Warrant
shall be governed by and construed in accordance with the laws of the State of
California, without giving effect to the choice of law or conflict of laws
principles thereof. Warrantholder and the Company each consent to the exclusive
jurisdiction and venue of the federal and state court in the district in which
the Company's principal executive offices are then-located for purposes of any
action arising out of or relating to this Warrant, and agrees that service of
process in any such action may be effected by means of the procedures set forth
in Section 13.1 above for giving notices under this Warrant.
13.4 Benefits of this Warrant. Nothing in this Warrant shall
be construed to give to any person or corporation other than the Company, the
Warrantholder and the holders of Shares, any legal or equitable right, remedy or
claim under this Warrant, and this Warrant shall be for the sole and exclusive
benefit of the Company, the Warrantholder and the holders of Shares.
13.5 Amendment. Neither this Warrant nor any term hereof may
be amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought.
13.6 Entire Agreement. This Warrant constitutes the full and
entire understanding and agreement between the parties with regard to the
subject matter hereof, and no party shall be liable or bound to any other in any
manner by any representations, warranties, covenants, and agreements except as
specifically set forth herein and therein. Nothing in this Warrant, expressed or
implied, is intended to confer upon any party, other than the parties hereto,
and their respective successors and assigns, any rights, remedies, obligations,
or liabilities under or by reason of this Warrant, except as expressly provided
herein.
13.7 Separability. Any invalidity, illegality, or limitation
of the enforceability with respect to any party of any one or more of the
provisions of this Warrant, or any part thereof, whether arising by reason of
the law of any such party's domicile or otherwise, shall in no way affect or
impair the validity, legality, or enforceability of this Warrant with respect to
all other parties. In case any provision of this Warrant shall be invalid,
illegal, or unenforceable, the
-10-
<PAGE>
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
13.8 Counterparts. This Warrant may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[Remainder of this page intentionally left blank]
-11-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed, all as of the day and year first above written.
CELLEGY PHARMACEUTICALS, INC.
By:
------------------------------
A. Richard Juelis
Chief Financial Officer
Attest:
------------------------------
-12-
EXHIBIT 5.1
[August 30, 1999]
Cellegy Pharmaceuticals, Inc.
349 Oyster Point Boulevard, Suite 200
South San Francisco, CA 94080
Gentlemen/Ladies:
At your request, we have examined the Registration Statement on Form
S-3 (the "Registration Statement") to be filed by you with the Securities and
Exchange Commission (the "Commission") on or about August 30, 1999, in
connection with the registration under the Securities Act of 1933, as amended,
for resale of an aggregate of 1,575,000 shares of your Common Stock (the
"Stock"), all of which will be sold by the selling shareholders named in the
Prospectus included within the Registration Statement (the "Selling
Shareholders"), including 1,561,000 shares that are presently issued and
outstanding (the "Outstanding Shares") and 14,000 shares (the "Warrant Shares")
that are issuable upon the exercise of certain warrants (the "Warrants") held by
certain Selling Shareholders. The Outstanding Shares and the Warrant Shares will
be collectively refered to herein as the "Shares".
In rendering this opinion, we have examined the following:
(1) the Registration Statement (including the Prospectus included
therein), together with the Exhibits filed as a part thereof;
(2) your registration statement on Form 8A filed with the
Commission in connection with the Company's intial public
offering in August 1995;
(3) the Common Stock Purchase Agreement, dated July 30, 1999, by
and among the Company and the investors listed on Exhibit A
attached thereto;
(4) the Common Stock Purchase Warrant, dated January 18, 1999
between the Company and Michael P. Crowley, Ph.D.;
(5) the Common Stock Purchase Warrant, dated January 19, 1999
between the Company and Richard Bank, M.D.;
(6) the minutes of meetings and actions by written consent of the
Board of Directors that are contained in your minute books and
that are in our possession that relate to the issuance of the
Outstanding Shares, the Warrants and the Warrant Shares;
(7) a Management Certificate addressed to us and executed by the
Company containing certain factual and other representations
including, without limitation, information concerning the
number of outstanding shares of Common Stock and shares of
common stock issuable upon exercise of outstanding options,
warrants and similar rights.
<PAGE>
Cellegy Pharmaceuticals, Inc.
August 30, 1999
Page 2
We have confirmed your eligibility to use Form S-3 and by telephone
call to the offices of the Commission, we have also confirmed the continued
effectiveness of the Company' registration under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the timely filing by you of all
reports required to be filed by you pursuant to Rules 13, 14 and 15 promulgated
under the Exchange Act.
In our examination of documents for purposes of this opinion, we have
assumed, and express no opinion as to, the genuineness of all signatures on
original documents, the authenticity and completeness of all documents submitted
to us as originals, the conformity to originals and completeness of all
documents submitted to us as copies, the legal capacity of all natural persons
executing the same, the lack of any undisclosed termination, modification,
waiver or amendment to any document reviewed by us and the due authorization,
execution and delivery of all documents where due authorization, execution and
delivery are prerequisites to the effectiveness thereof.
As to matters of fact relevant to this opinion, we have relied solely
upon our examination of the documents referred to above and have assumed the
current accuracy and completeness of the information obtained from public
officials and records referred to above. We have made no independent
investigation or other attempt to verify the accuracy of any of such information
or to determine the existence or non-existence of any other factual matters;
however, we are not aware of any facts that would cause us to believe that the
opinion expressed herein is not accurate.
We are admitted to practice law in the State of California, and we
express no opinion herein with respect to the application or effect of the laws
of any jurisdiction other than the existing laws of the United States of America
and the State of California.
In connection with our opinion expressed below, we have assumed that,
at or prior to the time of the delivery of any shares of Stock, the Registration
Statement will have been declared effective under the Securities Act of 1933, as
amended, that the registration will apply to such shares of Stock and will not
have been modified or rescinded and that there will not have occurred any change
in law affecting the validity or enforceability of such shares of Stock.
Based upon the foregoing, it is our opinion that the Outstanding Shares
to be sold by the Selling Stockholders pursuant to the Registration Statement
are, and the warrant shares when and if issued upon exercise of the Warrants and
fully paid for as provided in the Warrants will be (assuming no change in such
documents or applicable law), legally issued and nonassessable and, to our
knowledge, fully paid.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement, the Prospectus constituting a part thereof and any
amendments thereto.
<PAGE>
Cellegy Pharmaceuticals, Inc.
August 30, 1999
Page 3
This opinion speaks only as of its date and we assume no obligation to
update this opinion should circumstances change after the date hereof. This
opinion is intended solely for the your use as an exhibit to the Registration
Statement for the purpose of the above sale of the Stock and is not to be relied
upon for any other purpose.
Very truly yours,
FENWICK & WEST LLP
By:________________________
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of Cellegy
Pharmaceuticals, Inc. for the registration of 1,561,000 shares of its common
stock and 14,000 shares of its common stock issuable upon exercise of warrants,
and to the incorporation by reference therein of our report dated February 5,
1999, with respect to the financial statements of Cellegy Pharmaceuticals, Inc.
included in its Annual Report (Form 10-K) for the year ended December 31, 1998,
filed with the Securities and Exchange Commission.
Palo Alto, California
August 27, 1999
