Exhibit 1
CELLEGY PHARMACEUTICALS, INC.
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of July 23, 1997 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 1,547,827 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 Xxxx Xxxx Xxxxxx,
Xxxxx 000, Xxxx Xxxx, Xxxxxxxxxx, at 11 a.m. Pacific Time, on July 23, 1997 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"). 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 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, financial condition, results of operations,
assets or prospects 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"), 1,100 of
which have been designated as Series A Preferred Stock (the "Series A
Preferred"). The Series A Preferred has the rights, preferences and privileges
stated in the Certificate of Designation filed with the California Secretary of
State on April 15, 1996. A total of 25 shares of Series A Preferred are issued
and outstanding, and no other shares of Preferred Stock are outstanding.
(b) Common Stock. A total of 20,000,000 authorized shares of
Common Stock, of which approximately 5,879,115 shares were issued and
outstanding as of June 30, 1997 (subject to increase only by employee stock
option exercises after June 30, 1997 or by conversion of outstanding shares of
Series A Preferred into shares of Common Stock).
(c) Options, Warrants, Reserved Shares. Except for: (i) the
conversion privileges of the Series A Preferred, (ii) the approximately
1,049,047 shares of Common Stock issuable upon exercise of options outstanding
as of June 30, 1997, (iii) approximately additional 74,000 shares of Common
Stock reserved for issuance under the Company's 1995 Directors Stock Option
Plan, (iv) approximately additional 391,830 shares of Common Stock reserved for
issuance under the Company's 1995 Equity Incentive Plan and (v) warrants to
purchase an aggregate of 1,497,911 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. 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 others 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. 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) 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 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 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 qualifications 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 June 5, 1997, the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1996 and the Company's Quarterly Reports on Form
10-QSB for the quarter ended March 31, 1997, 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 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 SmallCap Market. To its knowledge, 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 is declared
effective by the Commission, the Purchased Shares will have been approved for
quotation on the Nasdaq SmallCap 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 preceding the 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, 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, 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, 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 Business Relationships. In November 1996, the Company entered
into a license agreement (the "Glaxo Agreement") with Glaxo Dermatology
("Glaxo"), a division of Glaxo Wellcome, Inc., granting Glaxo worldwide rights
to Glylorin, a lipid compound of the Company. The Company does not have any
knowledge that leads the Company to believe that Glaxo intends to terminate the
Glaxo Agreement or its relationship with the Company, and the Company has not
received any notices or other communications from Glaxo to that 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 others 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 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, 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. Each Investor agrees that it will not, to
the extent requested by the Company or an underwriter or placement agent of
securities of the Company, 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 180 days after the effective date of a registration statement of the Company
filed under the Act; provided, however, that (i) such agreement 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 but not to any Registrable Securities
(as hereinafter defined) that are included in and sold pursuant to such
registration statement; and (ii) all executive officers and directors of the
Company then holding Common Stock enter into similar agreements.
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.
5.1.6 Transfer Agent. The Company shall have made provision
to include the Purchased Shares within the authority of its transfer agent
and/or registrar for its shares.
5.1.7 No Material Change. There shall have been no material
adverse change in the Business from the date of this Agreement.
5.1.8 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.
(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, (2) any other shares of Common Stock
owned, at the time of filing of the Form S-3 by the Company, by an Investor that
reasonably may be deemed to be an "affiliate" (as defined in Rule 144) of the
Company, and (3) 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 shares of Common Stock that are included in clauses (1) and (2)
above; 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.
Cellegy 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 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
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 180 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.
(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 receipt 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 receipt, that (A) the Permitted Window will commence on the date such
notice is received by 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 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 60 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 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.
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 Cellegy. To the extent permitted by law, the Company
will indemnify and hold harmless the Holder, officers and directors of the
Holder, each entity that may be deemed to be an "underwriter" within the meaning
of the Act in connection with the sale of any Registrable Securities pursuant to
the Shelf Registration Statement and each person, if any, who controls the
Holder or any such underwriter within the meaning of the Act or the Exchange Act
(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 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 by the Holder Indemnified
Party; and provided further, that the Company will not be liable for the 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; 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 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 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 elected by the indemnifying party and reasonably acceptable
for the indemnified party materially; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the 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) 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.
(e) 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 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.
(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 obligations 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 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 registration statement under the Act for
purposes of effecting a public offering by the Company of securities of the
Company (excluding registration statements relating to any employee benefit plan
or a corporate reorganization) 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 (or, if there is no underwriter, then the Company)
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 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 33% of the shares of Common Stock
that constituted the original number of Registrable Securities acquired by the
original Holder of the Registrable Securities or, if less, 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. The parties hereby submit to the exclusive
jurisdiction of the state and federal courts located in San Mateo County,
California, for purposes of any action arising out of or relating to this
Agreement or the transactions contemplated hereby, and agree that service of
process in such action may be made in the manner provided herein for the
delivery of notices.
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.
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 0000 X. Xxxxxxxxx Xxxx., Xxxxxx Xxxx, XX 00000,
attention: President, with a copy to C. Xxxxx Xxxxx, Xxxxxxx & West LLP, Two
Palo Xxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000, 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: Xxxxxxx Xxxxxxx, Xxxxxxxxxx & Xxxxx LLP, 00 Xxxxxxxxxxx Xxxxx,
Xxx Xxxx, XX 00000, 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. 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 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.
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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.,
a California corporation
By:/s/K. Xxxxxxx Xxxxxxx By:/s/Xxxxxx X. Xxxxx
Title: President and Title: Managing Partner
Chief Executive Officer Four Partners
