Exhibit 10.1


 


Execution
Copy


 


REGISTRATION RIGHTS AGREEMENT


 


This
Registration Rights Agreement (this “Agreement”)  is made and entered into as of October 7,
2004, by and among Cellegy Pharmaceuticals, Inc., a Delaware corporation (“Cellegy”  or the “Company”),  and the Shareholders and Option Holders of
Biosyn, Inc., a Pennsylvania corporation (“Biosyn”)  that execute the signature page to this
Agreement (“Securityholders”).


 


BACKGROUND


 


A.            Cellegy and Biosyn have entered into an
Agreement and Plan of Share Exchange dated as of October 7, 2004 (the “Exchange
Agreement”),  pursuant to which (i) all of the outstanding shares of capital stock of
Biosyn will be exchanged for shares of Cellegy Common Stock and (ii) all the
outstanding options and warrants of Biosyn will be assumed by Cellegy, as set
forth in the Exchange Agreement (the “Transaction”). The capitalized terms used in this Agreement
and not otherwise defined herein will have the meanings given them in the
Exchange Agreement.


 


B.            The Exchange Agreement provides that Cellegy
will grant the Securityholders certain registration rights with respect to the
shares of Cellegy Common Stock that are issued, or that are issuable upon
exercise of certain of the Options or Warrants, in the Transaction, on the terms,
and subject to the conditions and limitations, set forth in this Agreement.


 


C.            The terms of this Agreement shall become
effective (the “Agreement Date”) only upon the completion of the “Closing” and the “Effective Time,” as
those terms are defined in the Exchange Agreement. If the Closing of the
transactions contemplated by the Exchange Agreement does not occur, then this
Agreement shall have no force or effect and shall terminate in its entirety.


 


AGREEMENT


 


NOW, THEREFORE,  in consideration of the foregoing recitals
and the mutual promises hereinafter set forth, the parties hereto agree as
follows:


 


1.             REGISTRATION RIGHTS.


 


1.1.          Definitions. For purposes of this Agreement, the following terms shall have the
following meanings:


 


“1933 Act”  means the Securities Act of 1933, as amended.


 


“Holder”  means the Securityholders and any Person to
whom Registrable Shares and registration rights hereunder are transferred
pursuant to Section 2 of this Agreement.


 





















 


The
terms “register” “registration”  and “registered”  refer to a registration effected by preparing
and filing a Registration Statement in compliance with the 1933 Act, and the
declaration or ordering of effectiveness of such Registration Statement.


 


“Option
Holders”  means
those holders of options (“Options”)  or Warrants (“Warrants”)  to purchase common stock of Biosyn whose
Options or Warrants are to be assumed by Cellegy pursuant to the terms of the
Exchange Agreement, other than Options or Warrants where the underlying shares
are registered by Cellegy on a Form S-8 registration statement filed with the
SEC as contemplated by the Exchange Agreement (and any such options or warrants
shall not be deemed to be “Options” or “Warrants” for purposes of this
Agreement).


 


“Registrable
Shares” means (a) the
shares of Cellegy Common Stock that are issued pursuant to the Exchange
Agreement, (b) the shares of Cellegy Common Stock that will become issuable
upon exercise of the Options and Warrants pursuant to the Exchange Agreement
and (c) any shares of Cellegy Common Stock issued as a dividend or other
distribution with respect to or in exchange for or in replacement of such
shares of Cellegy Common Stock described in clauses (a) or (b) of this
subsection.


 


“Rule 144”  means SEC Rule 144 promulgated pursuant to
the 1933 Act, and any successor rule.


 


“SEC”  or the “Commission”  means the U.S. Securities and Exchange
Commission.


 


“Shareholders”  means the holders of capital stock of Biosyn.


 


1.2.          Registration.


 


(a)           Cellegy shall use is best efforts to prepare
and file a registration statement on Form S-3 (or other available form) with
the SEC within forty-five (45) days after the Closing Date (and any related
qualification under blue sky laws), covering the resale by the Holders of the
Registrable Shares (the “Registration Statement”),  and to cause the Registration Statement to be
declared effective as soon as reasonably practicable thereafter. The
Registration Statement may include securities other than those held by Holders,
provided that any cutback of securities under such registration shall be first
to the securities not held by Holders.


 


(b)           Notwithstanding the foregoing, Cellegy shall
have no obligation to keep the Registration Statement effective with respect to
any Holder who can sell all of such Holder’s Registrable Shares without any
volume limitation in a 90 day period pursuant to Rule 144 (by complying with
the requirements of Rule 144).


 


1.3.          Expenses. Cellegy will pay all expenses of any registration effected under this
Section 1, other than the fees and expenses of counsel to the Holders and any
brokers’ or similar fees of Holders in connection with sales of Registrable
Shares.


 


1.4.          Termination of Registration. Cellegy shall use all commercially reasonable
efforts to maintain the effectiveness of the Registration Statement until the
first to


 


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occur of (a) such time as
all of the Registrable Shares covered by the Registration Statement have been
sold, or (b) as to any particular Holder, at such time as the Holder may sell
all of the Registrable Shares held by that Holder commencing one year after the
Closing Date in a 90 day period pursuant to Rule 144 (by complying with the
requirements of Rule 144).


 


1.5.          Agreement Not to Sell. Except for sales made in compliance with Rule
144, until the Registration Statement has been filed and declared effective,
Holder will not sell any Registrable Shares publicly on the Nasdaq Stock Market
or any other stock exchange or market system on which securities of the same
class as the Registrable Shares are traded.


 


1.6.          Permitted Window. The provisions of this Section 1.6 shall
apply only to Holders other than Preferred Holders (as defined below).


 


(a)           Notice of Resale. The Holders agree that they will only sell
Registrable Shares pursuant to the provisions of this Agreement. If a Holder
has a bona fide intention to sell the Registrable Shares pursuant to such
registration, they will first deliver a written notice (the “Sale
Notice”) to Cellegy
(such Sale Notice to be delivered via hand delivery, fax, email, mail or
overnight courier pursuant to Section 4.1 of this Agreement). If the Holder
does not receive a communication from Cellegy (also pursuant to Section 4.1 of
this Agreement) within 2 business days of Holder’s Sale Notice, then Holder may
sell the shares included in the Sale Notice at any time over the next 30 days
(such 30-day period, the “Permitted Window”). The Holder may extend the Permitted Window by
10 days by providing Cellegy with an additional Sale Notice. However, if
Cellegy delivers a written notice to the Holder in response to a Sale Notice,
or at any time during a Permitted Window or an extended Permitted Window, that
in the good faith judgment of Cellegy, following consultation with legal
counsel, it would be detrimental to Cellegy or its stockholders for sale of
Registrable Shares to be made pursuant to the Registration Statement due to (i)
the existence of a material development or potential material development
involving Cellegy that Cellegy would be obligated to disclose in the
Registration Statement, which disclosure would be premature or otherwise
inadvisable at such time or could reasonably be expected to have a material
adverse effect on Cellegy or its stockholders, or (ii) a filing of a
Cellegy-initiated registration of any class of its equity securities, which, in
the good faith judgment of Cellegy (as evidenced by a certificate signed by the
President, Chief Executive Officer or Chief Financial Officer of Cellegy and
furnished to the Holders), would adversely affect or require premature
disclosure of the filing of such Cellegy-initiated registration (the receipt of
such certificate and notice thereof, a “Cellegy Notice”),  then Cellegy shall have the right to suspend
use of such Registration Statement, and terminate or suspend the Permitted
Window, for a period of not more than forty five (45) days; provided, however,
that Cellegy will exercise all good faith efforts to minimize the period of
such suspension, consistent with Cellegy’s good faith business judgment, including
without limitation concerning premature public disclosure of confidential or
sensitive information (any such deferral or suspension period, a “Closed
Window Period”). The
Permitted Window shall resume upon the Holder’s receipt of copies of a supplemented
or amended Prospectus, or at such time as the Holder is advised in writing by
Cellegy 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 1.6. Cellegy may not utilize any of its rights


 


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under
this Section 1.6 to suspend or terminate a Permitted Window(s) more than an
aggregate one hundred twenty (120) days in any twelve (12) month period.


 


1.7.         Blackout Period for Holders of Biosyn
Preferred Stock. The
provisions of this Section 1.7 shall apply only to Holders who held shares of
Biosyn Preferred Stock immediately prior to the Transaction (“Preferred
Stockholders”) and to
Holders to whom registration rights hereunder are transferred from Preferred
Stockholders pursuant to Section 2 of this Agreement (“Preferred
Transferees”, and
together with Preferred Stockholders, “Preferred Holders”)


 


(a)           If in the good faith judgment of Cellegy,
following consultation with legal counsel, it would be detrimental to Cellegy
or its stockholders for resale of Registrable Shares to be made pursuant to the
Registration Statement due to (i) the existence of a material development or
potential material development involving Cellegy that Cellegy would be obligated
to disclose in the Registration Statement, which disclosure would be premature
or otherwise inadvisable at such time or could reasonably be expected to have a
material adverse effect on Cellegy or its stockholders, or (ii) a filing of a
Cellegy-initiated registration of any class of its equity securities, which, in
the good faith judgment of Cellegy (as evidenced by a certificate signed by the
President, Chief Executive Officer or Chief Financial Officer of Cellegy and
furnished to the Holders), would adversely affect or require premature
disclosure of the filing of such Cellegy-initiated registration (the receipt of
such certificate and notice thereof, a “Blackout Notice”), Cellegy shall have the right to suspend use
of such Registration Statement for a period of not more than forty five (45)
days; provided, however, that the Company will exercise all good faith efforts
to minimize the period of such suspension, consistent with the Company’s good
faith business judgment, including without limitation concerning premature public
disclosure of confidential or sensitive information (any such deferral or
suspension period, a “Blackout Period”). The Holder acknowledges that it would be
seriously detrimental to Cellegy and its stockholders for the continued use of
such Registration Statement during a Blackout Period and therefore essential to
suspend the use thereof during such Blackout Period and agrees to cease any
disposition of the Registrable Shares during such Blackout Period. Cellegy may not
utilize any of its rights under this Section 1.7(a) to suspend the use of the Registration
Statement more than one hundred twenty (120) days in any twelve (12) month period.


 


(b)           In connection with any Cellegy-initiated
registration described in Section 1.7(a) which causes Cellegy to initiate a
Blackout Period and which relates to an underwritten offering, the Holders
shall be given the opportunity to participate in the first two such offerings that
may occur after the Agreement Date by including all or any of their Registrable
Shares for sale in any such offering by notifying such Holders in writing,
provided that the right to include any Registrable Shares in any such offering
shall be subject to (i) the rights of other shareholders of Cellegy who also
have rights to include shares in such offering, (ii) the ability of the underwriter
for such offering to exclude some or all of the shares 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 Cellegy (with any such exclusion to be pro rata among all
Holders who are requested to sell Registrable Shares in such registration), and
(iii) the execution by the Holders of the underwriting agreement and other
customary documents


 


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requested
by the managing underwriter that are executed by other holders selling
securities in such offering, and the furnishing of such information and documents
as Cellegy or the managing underwriter may reasonably request in connection
with such offering. The Holders shall be responsible for their pro rata share
of registration fees and underwriters’ and brokers’ discounts and commissions
relating to any Registrable Shares included in such registration.


 


1.8.          Cooperation by Holder. It will be a condition precedent to the
obligations of Cellegy to register any Registrable Shares pursuant to this
Agreement that Holder furnish to Cellegy for inclusion in the Registration
Statement such information regarding Holder and the Registrable Shares and the
intended method of disposition of such securities as shall be required to
timely effect the registration of the Registrable Shares.


 


1.9.          Manner of Sales. Holder will sell the Registrable Shares
pursuant to the Registration Statement only in a manner described in the plan
of distribution contained in the Registration Statement, which plan of
distribution shall describe customary manners of sale.


 


1.10.        Obligations of Cellegy. In connection with any registration
effected pursuant to this Agreement, Cellegy shall, as expeditiously as
reasonably possible, take the following actions:


 


(a)           Amendment, Supplements. Subject to the provisions of Sections 1.6
and 1.7 above, Cellegy will prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection with the Registration Statement as Cellegy reasonably determines may
be necessary or appropriate, and use all commercially reasonable efforts to
have such post-effective amendments declared effective as promptly as
practicable. Cellegy will notify Holder promptly in writing when a prospectus,
any prospectus supplement or post-effective amendment has been filed and, with
respect to any post-effective amendment, when the same has become effective.


 


(b)           Copies of Prospectus. Cellegy will furnish to Holder such number of
copies of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the 1933 Act, and such other documents as Holder may
reasonably request in order to facilitate the disposition of the Registrable
Shares owned by it that are included in such registration.


 


(c)           Commission Requests. Cellegy shall notify the Holder promptly (and
in any event within one business day, by email, fax or other type of
communication) (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 or similar action suspending the effectiveness of a registration
statement or the initiation of any proceedings for that purpose and (iii) of
the receipt by the Company from the Commission or any other federal or state
governmental authority of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose.


 


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(d)           Withdrawal of Orders. Use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of the Registration
Statement at the earliest possible time.


 


(e)           Listing. Use all commercially reasonable efforts to cause all Registrable
Shares to be listed continuously throughout the Registration Period on the
Nasdaq National Market.


 


(f)            Cooperation. In the event of an underwritten
offering for which the Holders have the right to participate pursuant to this
Agreement, Cellegy shall enter into customary agreements and take such other
actions as are reasonably required in order to expedite the disposition of the
Registrable Shares.


 


1.11.        Rule 144 Information. With a view to making available the
benefits of Rule 144, Cellegy shall use all commercially reasonable efforts to
(a) make “available” “adequate current public information” regarding Cellegy
(as those terms are understood and defined in Rule 144) at all times from and
after the Closing Date, and (b) cause its general counsel or other securities
counsel to Cellegy, at Cellegy’s cost, to issue a customary opinion regarding
the availability of Rule 144 with respect to a Holder’s proposed sale of
Registrable Shares pursuant to Rule 144; provided that Cellegy shall not be
required to bear the cost of more than one opinion for any single Holder.


 


2.             ASSIGNMENT AND AMENDMENT.


 


2.1.          Assignment; Transfer of Registrable Shares
and Registration Rights. The
registration rights under this Agreement may be assigned by a Holder to a
transferee or assignee of such Registrable Shares with respect to the
Registrable Shares being assigned or transferred, provided that (a) such
transfer may otherwise be effected in accordance with applicable federal and
state securities laws and any applicable contractual obligations between the
Holder and Cellegy, (b) notice of such assignment is given to Cellegy before or
contemporaneously with such assignment with the name and address of such
assignees and the securities with respect to which such registration rights are
being assigned, (c) such transferee or assignee (i) is a wholly owned
subsidiary or constituent limited partner, general partner, retired partner,
member, retired member or shareholder of such Holder, or (ii) is an “affiliate”
(as that term is defined in Rule 405 promulgated by the Commission under the
Securities Act) of the Holder, including, without limitation, where a Holder is
a limited partnership, an affiliated limited partnership managed by the same
management company or managing general partner of such Holder or an entity
which controls, is controlled by, or is under common control with, such
management company or managing general partner, or (iii) is a beneficiary of
the Holder, where such Holder is a trust or (iv) acquires from such Holder or
Holders at least 100,000 Registrable Shares (as appropriately adjusted for
stock splits and the like) in a simultaneous transaction or transactions, or
(v) is approved in advance by Cellegy and (d) such transferee or assignee
agrees to be bound by all provisions of this Agreement by executing a counterpart
signature page hereto (which shall not be deemed an amendment hereto).


 


2.2.          Amendment of Rights. Any provision of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either


 


6





















 


retroactively
or prospectively), only with the written consent of Cellegy and Holders holding
a majority of the aggregate number of outstanding Registrable Shares held by
all Holders at the time of such amendment or waiver. Any amendment or waiver
effected in accordance with this Section 2.2 shall be binding upon each Holder,
each permitted successor or assignee of such Holder and Cellegy; provided,
however, that any such amendment or waiver shall not increase the obligation of
any Holder without the specific written consent of such Holder.


 


3.             MARKET STANDOFF.


 


3.1           Holder agrees that it shall not, directly or
indirectly, make any offering, sale, assignment, transfer, pledge, encumbrance,
contract to sell, grant an option to purchase or make any other disposition of
any Common Stock of Cellegy beneficially owned by Holder (other than to donees
or partners of Holder who agree to be similarly bound) or enter into any swap
or other derivative transaction that transfer to another, in whole or in part,
any of the economic benefit or risk of ownership of such shares of Cellegy
Common Stock, whether any such transaction described above is to be settled by
delivery of Cellegy Common Stock or other securities, in cash or otherwise for
the period of ninety (90) days after the Closing Date. Cellegy may place
restrictive legends on the certificates representing the Registrable Shares and
impose stop transfer instructions with respect to the Cellegy Common Stock
beneficially held by each Holder until the end of such period.


 


4.             GENERAL PROVISIONS.


 


4.1           Notices. All notices and other communications required or permitted under this
Agreement will be in writing and will be either hand delivered in person, sent
by telecopier (fax), sent by electronic mail, sent by certified or registered
first class mail, postage pre-paid, or sent by nationally recognized express
courier service. Such notices and other communications will be effective upon
receipt if hand delivered or sent by telecopier (fax), or electronic mail, with
confirmation of receipt, three (3) days after mailing if sent by mail, and one
(1) business day after dispatch if sent by express courier for overnight
delivery, to the following addresses, or such other addresses as any party may
notify the other parties in accordance with this Section.


 


	
  If to Cellegy:

  	
  Cellegy Pharmaceuticals,
  Inc.

  
	
   

  	
  349 Oyster Point
  Boulevard, Suite 200

  
	
   

  	
  South San Francisco,
  California 94080

  
	
   

  	
  Attention: Chief Financial
  Officer

  
	
   

  	
  Telephone: (650) 616-2200

  
	
   

  	
  Fax: (650) 616-2222

  
	
   

  	
   

  
	
  With a copy to:

  	
  C. Kevin Kelso (which copy
  does not constitute notice)

  
	
   

  	
  Weintraub Genshlea Chediak
  Sproul

  
	
   

  	
  400 Capitol Mall, 11th
  Floor

  
	
   

  	
  Sacramento, California
  95814

  
	
   

  	
  Telephone: (916) 558-6000

  
	
   

  	
  Fax: (916) 446-1611

  
	
   

  	
  Email:
  kkelso@weintraub.com

  
	
   

  	
   

  
	
  If to Securityholders:

  	
  To the addresses set forth
  on the Company’s stock records.

  



 


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4.2           Entire Agreement. This Agreement, together with all the
Exhibits hereto, constitutes and contains 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 respecting the subject matter hereof.


 


4.3           Governing Law; Consent to Jurisdiction. This Agreement shall be governed by the
laws of the State of Delaware except for those provisions governing conflict of
laws, notwithstanding that one or more of the parties to this Agreement is now,
or may hereafter become, a resident or citizen of a different State.


 


4.4           Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, then such provision(s) shall
be excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable
in accordance with its terms.


 


4.5           Third Parties. Nothing in this Agreement, express or
implied, is intended to confer upon any person, other than the parties hereto
and their successors and assigns, any rights or remedies under or by reason of
this Agreement.


 


4.6           Successors And Assigns. Subject to the provisions of Section 2.1,
the provisions of this Agreement shall inure to the benefit of, and shall be
binding upon, the successors and permitted assigns of the parties hereto.


 


4.7           Captions. The captions to sections of this Agreement have been inserted for
identification and reference purposes only and shall not be used to construe or
interpret this Agreement.


 


4.8           Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.


 


4.9           Costs and Attorneys’ Fees. In the event that any action, suit or other
proceeding is instituted concerning or arising out of this Agreement or any
transaction contemplated hereunder, the prevailing party shall recover all of
such party’s costs and attorneys’ fees incurred in each such action, suit or
other proceeding, including any and all appeals or petitions therefrom.


 


4.10         Absence of Third-Party Beneficiary Rights. No provisions of this Agreement are
intended, nor will be interpreted, to provide or create any third party
beneficiary rights or any other rights of any kind in any client, customer,
affiliate, partner or employee of any party hereto or any other person or
entity, unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof will be personal solely between the parties to
this Agreement.


 


4.11         Effectiveness of Agreement. Regardless of when signed, this Agreement
will not become effective or binding unless and until the Agreement Date. If
the Agreement


 


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Date does not occur, then
this Agreement shall have no force or effect and shall terminate in its
entirety.


 


4.12.        Indemnification. In the event any Registrable Shares are
included in a registration statement under this Agreement:


 


(a)           By Cellegy. To the extent permitted by law, Cellegy will indemnify and hold
harmless each Holder, the officers and directors, trustees, and each person, if
any, who controls such Holder (such persons and entities collectively referred
to as “Holder Indemnified Parties”),
against any losses, expenses, damages or liabilities to which they may become
subject under the 1933 Act, the 1934 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 of a material fact
contained in the Registration Statement; or


 


(ii)           the omission to state in the Registration Statement a material fact
required to be stated therein, or necessary to make the statements therein not
misleading;


 


and Cellegy 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 Cellegy, nor shall Cellegy 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; provided further, that Cellegy 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 Cellegy, each of its directors, each of its
officers who have signed the Registration Statement, and each person, if any,
who controls Cellegy within the meaning of the 1933 Act (such persons and
entities collectively referred to as “Company Indemnified Parties”) against any Losses
to which such Company Indemnified Parties may become subject under the 1933
Act, the 1934 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 is caused
by 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
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


 


9





















 


expenses
of more than one counsel to Cellegy Indemnified Parties; and provided further, that in no event shall
the total amounts payable in indemnity by the Holder under this subsection in
respect of any Violation 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 material 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
Cellegy and the Holders 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 1933 Act.


 


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IN WITNESS WHEREOF, the parties hereto have executed this
Registration Rights Agreement as of the date and year first written above.


 


	
  CELLEGY
  PHARMACEUTICALS, INC.

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  



 


SECURITYHOLDER


 


	
  [ENTITY SECURITYHOLDERS USE

  THIS SIGNATURE BLOCK:]

  	
  [INDIVIDUAL SECURITYHOLDERS USE

  THIS SIGNATURE BLOCK:]

  
	
   

  	
   

  
	
  Entity Name:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  (Type or print name on
  line)

  	
   

  	
  (Type or print name on
  line)

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  (Sign here)

  	
   

  	
  (Sign here)

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Fax:

  	
   

  	
   

  	
  Fax:

  	
   

  	
   

  
	
   

  	
   

  
	
  Email:

  	
   

  	
   

  	
  Email:

  	
   

  	
   

  
																		



 


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