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Exhibit 4.04    
    

 
 

CELLEGY PHARMACEUTICALS, INC.    
    

 
 

COMMON STOCK AND WARRANT PURCHASE AGREEMENT

        This
Common Stock and Warrant Purchase Agreement (this "Agreement") is dated as of July 27, 2004, and is entered into 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 3,070,000 shares of the Company's Common Stock, no par value (the "Common Stock"), and up to
614,000 shares of Common Stock for issuance upon exercise of the Warrants. 

        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, (i) the number of shares of Common Stock 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, and (ii) a warrant to purchase the number of shares of Common Stock 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," the warrants acquired by the Investors will be referred to individually as a
"Warrant" and collectively as the "Warrants," the shares of Common Stock that are issuable upon exercise
of the Warrants will be referred to as the "Warrant Shares," and the Purchased Shares, the Warrants and the Warrant Shares will sometimes be referred to
collectively as the "Securities." 

        2.    CLOSING.    

        2.1.    The Closing.    The purchase and sale of the Purchased Shares and the Warrants will take place at the offices
of Weintraub Genshlea Chediak Sproul, a law corporation, 400 Capitol Mall, 11th floor, Sacramento, CA 95814, at 8:00 a.m. Pacific Daylight Time, on July 27, 2004, or at
such other time and place as the Company and Investors who have agreed to purchase a majority of the Purchased Shares listed on the Schedule of Investors mutually agree upon (which time and place are
referred to in this Agreement as the "Closing"), provided that the Closing may not be delayed for more than five business days without the consent of
all Investors. At the Closing, the Investor will purchase the number of Purchased Shares shown on the Schedule of Investors and will purchase the Warrant to acquire the number of Warrant Shares shown
on the Schedule of Investors, against delivery to the Investor (or its designated custodian) by the Company of (i) a certificate representing such Purchased Shares and/or a copy of the
Company's irrevocable instructions to its transfer agent to prepare and issue such certificate, with delivery of such certificate to occur within three (3) business days thereafter, and
(ii) an executed Warrant. The full purchase price for such Purchased Shares and Warrant shall be paid at Closing by (i) a check payable to the Company's order, (ii) wire transfer
of funds to an account designated by the Company or (iii) any combination of the foregoing, in each case subject to reasonable prior notification. 

        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 

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Exceptions
(the "Disclosure Schedule") separately delivered by the Company to the Investors, the statements in the following paragraphs of this
Section 3 are all true and correct: 

        3.1    Organization, Good Standing and Qualification.    Each of the Company and the Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the jurisdiction under which it is incorporated, and has all requisite corporate power and authority to conduct its business as
currently conducted and to execute, deliver and perform all of its obligations under this Agreement and to consummate the transactions contemplated hereby. Each Investor acknowledges that the
shareholders of the Company have previously approved the reincorporation of the Company from California to Delaware and that the Company intends to effect such reincorporation after the Closing. Each
of the Company and the Subsidiaries is qualified to do business as a foreign corporation in each jurisdiction where failure to be so qualified could, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the business, assets, financial condition, results of
operations, or assets of the Company and the Subsidiaries, taken as a whole (the "Business") (such effect referred to as a
"Material Adverse Effect"). For purposes of this Agreement, "Material Adverse Effect" shall not include
any effect attributable to changes in the trading prices for the Company's Common Stock. 

        3.2    Capitalization.    Immediately before the Closing, the capitalization of the Company will consist of the
following: 

        (a)    Preferred Stock.    A total of 5,000,000 authorized shares of Preferred Stock, no par value per share (the
"Preferred Stock"), none of which are issued and outstanding. 

        (b)    Common Stock.    A total of 35,000,000 authorized shares of Common Stock, of which approximately 20,222,941
shares were issued and outstanding as of June 30, 2004. 

        (c)    Options, Warrants, Reserved Shares.    Except for: (i) the approximately 2,887,008 shares of Common
Stock issuable upon exercise of options outstanding under the Company's 1995 Equity Incentive Plan and 307,500 shares of Common Stock issuable upon exercise of options outstanding under the 1995
Directors' Stock Option Plan, as of June 30, 2004, (ii) approximately 350,000 additional shares of Common Stock reserved for issuance under the Company's 1995 Directors Stock Option
Plan, (iii) approximately 4,850,000 additional shares of Common Stock reserved for issuance under the Company's 1995 Equity Incentive Plan (iv) warrants to purchase an aggregate of
approximately 260,000 shares of Common Stock, (v) options to purchase up to 1,000,000 shares of Common Stock granted to directors, officers or employees of the Company other than pursuant to
the above-referenced plans, and (v) up to a maximum of 1,285,000 shares of Common Stock potentially issuable if certain milestone events are attained in the future pursuant to the terms of an
agreement pursuant to which the Company has previously acquired rights to certain products and intellectual property, 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.
All of such outstanding shares of capital stock have been duly authorized and validly issued and are fully paid and nonassessable and all of such options, warrants and other rights to acquire Common
Stock have been duly authorized by the Company. None of the outstanding shares of capital stock and options, warrants and other rights to acquire Common Stock has been issued in violation of the
preemptive rights of any security holder of the Company. 

        3.3.    Subsidiaries.    Except for Cellisis Pharmaceuticals, Inc., Cellegy Australia Pty Ltd, Cellegy
International Holdings Ltd., Cellegy UK Limited, and Cellegy Canada, Inc. (collectively, the "Subsidiaries"), each of which is not a
"significant subsidiary" as defined in Rule 1-02 of Regulation S-X, the Company does not presently own or control, directly or indirectly, any interest in any
other corporation, partnership, trust, joint venture, association, or other entity. All the outstanding shares of capital stock of, or other equity interests in, each Subsidiary have been validly
issued and are 

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fully
paid and nonassessable and are owned directly or indirectly by the Company free and clear of all pledges, claims, liens, charges, encumbrances or security interests of any kind or nature
whatsoever, and free of any restriction on the right to vote, sell or otherwise dispose of such capital stock or other equity interests. 

        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 Warrant and the transactions
contemplated hereby and thereby, and the authorization, issuance, reservation for issuance and delivery of all of the Purchased Shares and Warrants being sold under this Agreement and the Warrant
Shares upon exercise of the Warrants, and has been taken or will be taken prior to the Closing, and each of this Agreement and each Warrant constitutes a valid and legally binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to 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 or the Warrants 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 or the comparable
organizational documents of any of the Subsidiaries, (ii) conflict with, result in a violation or breach of, or cause a default (or give rise to any right of termination, cancellation or
acceleration), or result in the creation or imposition of any lien, security interest, charge or encumbrance upon any of the properties or assets of the Company or any of the Subsidiaries, under any
of the terms, conditions or provisions of any agreement, instrument or obligation to which the Company or any of the Subsidiaries is a party, which default could, individually or in the aggregate,
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 under this clause (iii) applicable to the Company or any of the Subsidiaries or any of their respective properties or assets and which, individually or in the aggregate, could,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The business and operations of the Company and the Subsidiaries have been conducted in accordance with all
applicable laws, rules and regulations of all governmental authorities, except for such violations which could not, individually or in the aggregate, 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 free and clear of all pledges, liens, encumbrances and restrictions
(other than those arising under federal or state securities laws as a result of the private placement of
the Securities to the Investors) and are not subject to preemptive or other similar rights of any shareholder of the Company. The Warrant Shares, when issued, sold and delivered in accordance with the
terms of the this Agreement and the Warrant for the consideration provided for therein, will be duly and validly issued, fully paid and nonassessable and free and clear of all pledges, liens,
encumbrances and restrictions (other than those arising under federal or state securities laws as a result of the private placement of the Securities to the Investors) and are not subject to
preemptive or other similar rights of any shareholder of the Company. 

        3.6.    Governmental Consents.    No consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local governmental authority on the part of the Company or any of the Subsidiaries is required in connection with the valid execution and
delivery of this Agreement or the Warrants, the offer, sale and issuance of the Purchased Shares, Warrants or Warrant Shares, or the consummation of the transactions contemplated by this Agreement,
except for qualifications or filings under the Securities Act of 1933, as amended (the "Act") 

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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, and such filings with the Nasdaq National Market (as defined below) after the
Closing, as may be required in connection with the transactions contemplated by this Agreement. All such qualifications and filings will be made within the times prescribed by applicable laws or
regulations. 

        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 in June 2004, the Company's Annual Report on Form 10-K for the year ended December 31, 2003, the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and the Company's Reports on Form 8-K filed after December 31, 2003 and before
the date of this Agreement, respectively (such documents, together with the Disclosure Schedule, referred to collectively as the "Disclosure
Documents"), except as set forth in the Disclosure Documents there has not been (i) any Material Adverse Effect on the Business, (ii) any transaction that is
material to the Company or any of the Subsidiaries, (iii) any obligation, direct or contingent, that is material to the Company or any of the Subsidiaries, incurred by the Company or such
Subsidiary, (iv) any change in the outstanding indebtedness of the Company or any of the Subsidiaries that is material to the Company or such Subsidiary, (v) any dividend declared, paid
or made on the capital stock of the Company, (vi) any loss or damage (whether or not insured) to the property of the Company or any of the Subsidiaries which has been sustained which could,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or (vii) any other event which could reasonably be expected to adversely affect the validity or
enforceability of, or the authority or the ability of the Company to perform its obligations under, this Agreement or the Warrants. 

        3.8.    Litigation.    Except as disclosed in the Disclosure Documents, there is no action, suit, proceeding, claim,
arbitration or investigation ("Action") pending (or, to the Company's knowledge, currently threatened) against the Company or any of the Subsidiaries,
or their respective activities, properties or assets, which (i) might prevent the consummation of the transactions contemplated hereby or (ii) if adversely resolved against the Company
or such Subsidiary could adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its obligations under, this Agreement, or could, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. 

        3.9    NASDAQ Listing.    The Company's Common Stock is registered pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and is listed on The Nasdaq Stock Market, Inc. National Market (the
"Nasdaq National Market"). The Company will use all commercially reasonable efforts to comply with all requirements of the National Association of
Securities Dealers, Inc. with respect to the issuance of the Purchased Shares and Warrant Shares and the listing thereof on the Nasdaq National Market; provided, however, that the Company makes
no representations that it will continue to meet all of the requirements for listing of the Common Stock on the Nasdaq National Market. The Company shall use its best efforts to take actions as may be
necessary to file with the Nasdaq National Market any documents that are required by Nasdaq in order to list the Purchased Shares and Warrant Shares on the market on which they are traded and to pay
any required listing fees within the required time. 

        3.10.    Commission Filings.    The Company has filed in a timely manner all reports and other information required to
be filed (as the same may be amended before the date of this Agreement, the "Filings") with the Commission pursuant to the Exchange Act during the
preceding twelve calendar months. On their respective dates of filing, to the Company's knowledge the Filings complied 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 

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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) and the Filings 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 and the Subsidiaries 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 could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. To the Company's knowledge, the Company
and the Subsidiaries are in compliance with the
terms of all Authorizations and all laws, ordinances, regulations and decrees which are applicable to the Business, except for such non-compliance which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. 

        3.13    Insurance.    The Company and the Subsidiaries are covered by, and will continue to be covered by, insurance
with companies the Company believes to be responsible and in such amounts and covering such risks as it believes to be adequate for the conduct of the Business and the value of the Company's and the
Subsidiaries' properties and as is customary for companies engaged in similar businesses in similar industries, all of which insurance is in full force and effect. The Company has no knowledge that
any such carrier has grounds or intends to cancel or fail to renew such policies on terms acceptable to the Company. 

        3.14.    Intellectual Property.    The Company or one of the Subsidiaries owns or possesses the patents, patent
rights, licenses, inventions, copyrights, trademarks, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or
procedures) and other rights or interests in items of intellectual property that are material to the Business as operated by the Company and the Subsidiaries, and as expected to be operated by the
Company and the Subsidiaries in the next 12 months with respect to the Company's Cellegesic and Tostrex product candidates (collectively, the "Patent and Proprietary
Rights"); neither the Company nor any of the Subsidiaries has received notice of any asserted material rights with respect to any of the Patent and Proprietary Rights; and
neither the Company nor any of the Subsidiaries has received notice of any asserted infringement of or material conflict with asserted rights of others with respect to any of the Patent and
Proprietary Rights. To the Company's knowledge, neither the Company nor any of the Subsidiaries infringes upon the proprietary rights of others in any material respect. 

        3.15.    Financial Statements.    The financial statements of the Company and the related notes thereto included in
the Disclosure Documents present fairly, in accordance with generally accepted accounting principles, the financial position of the Company as of the dates indicated, and the results of its operations
and cash flows for the periods therein specified (except that the unaudited financial statements do not contain all notes required by generally accepted accounting principles and are subject to normal
year-end audit adjustments). Such financial statements (including the related notes) have been prepared in accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods therein specified ("GAAP"), subject in the case of unaudited financial statements, to normal year-end audit
adjustments. Except as set forth in the financial statements included in the Disclosure Documents, neither the Company nor any of the Subsidiaries has any material liabilities of any nature (whether
accrued, absolute, contingent or otherwise) that are required by GAAP to be included in such financial statements other than liabilities arising after the date of the 

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most
recent balance sheet included in such financial statements which were incurred in the ordinary course of business consistent with past practice. 

        3.16.    Internal Accounting Controls.    The Company maintains a system of internal accounting controls sufficient,
in the judgment of the Company's board of directors, to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to any differences. 

        3.17.    Title.    The Company or one of the Subsidiaries has good and marketable title in fee simple to all real
property and personal property owned by them which is material to the business of the Company and the Subsidiaries, taken as a whole, in each case free and clear of all liens and encumbrances, except
for liens that do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or such Subsidiary or for equipment
leases or operating leases entered into in the ordinary course of the Company's or a Subsidiary's business. Any real property and facilities held under lease by the Company or a Subsidiary are held by
it under valid, subsisting and enforceable leases, with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and facilities by the
Company or such Subsidiary. 

        3.18.    Form S-3.    The Company meets the requirements for the use of Form S-3
for the registration of the resale of the Purchased Shares and Warrant Shares and will use its best efforts to maintain S-3 status with the Commission during the Registration Period (as
defined in Section 7.2(a)). The Company does not know of any current facts or circumstances that would prohibit the preparation and filing of a registration statement on
Form S-3 with respect to the Registrable Securities (as defined in Section 7.1(d)). 

        3.19.    Tax Matters.    The Company and the Subsidiaries have filed all federal, state and local income and franchise
and other tax returns required to be filed and have paid all taxes due, and no tax deficiency has been determined adversely to the Company or any of the Subsidiaries which, individually or in the
aggregate, has had (nor does the Company or any of the Subsidiaries have any knowledge of any tax deficiency which, if determined adversely to the Company or a Subsidiary, could, individually or in
the aggregate, reasonably be expected to have) a Material Adverse Effect. 

        3.20.    Investment Company.    The Company is not an "investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations of the Commission thereunder. 

        3.21.    No General Solicitation; No Integration.    No form of general solicitation or general advertising was used
by the Company or, to its knowledge, any other person acting on behalf of the Company, in respect of the Purchased Shares or in connection with the offer and sale of the Purchased Shares. The Company
has not sold, offered to sell, solicited offers to buy or otherwise negotiated in respect of any "security" (as defined in the Act) that is or could be integrated with the sale of the Purchased Shares
in a manner that would require the registration of the Purchased Shares under the Act. 

        3.22.    No Registration.    Assuming the accuracy of the representations and warranties made by, and compliance with
the covenants of, the Investors in Section 4 hereof, no registration of the Purchased Shares or the Warrants under the Act is required in connection with the sale of the Purchased Shares or the
Warrants to the Investors as contemplated by this Agreement. 

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        3.23.    FDA Matters and Clinical Trials.    

        (a)   Neither
the Company nor any of the Subsidiaries has received any notices or correspondence from any federal, state, local or foreign regulatory body that regulates the
types of matters subject to the jurisdiction of the U.S. Food and Drug Administration ("Health Authorities") which have not been resolved requiring or
threatening the termination, suspension or modification of any animal studies, preclinical tests or clinical trials conducted by or on behalf of the Company or any of the Subsidiaries or in which the
Company or any of the Subsidiaries has participated that are described in the Disclosure Documents or the results of which are referred to in the Disclosure Documents. To the knowledge of the Company,
the currently pending clinical trials, studies and other preclinical tests conducted by or on behalf of the Company or any of the Subsidiaries or in which the Company or any of the Subsidiaries has
participated and that are described in the Disclosure Documents or the results of which are referred to in the Disclosure Documents, are being conducted in accordance with experimental protocols,
procedures and controls generally used by qualified experts in the preclinical or clinical study of new drugs. 

        (b)   The
Company has no knowledge of any adverse event that has resulted from any of such studies, tests or trials that was not disclosed as required to any Health Authority. 

        3.24.    Material Contracts.    All material contracts of the Company and the Subsidiaries that are required by
applicable rules and regulations of the Commission to be filed as exhibits to the Filings ("Material Contracts") have been so filed and, except for the
Material Contracts that have been terminated or are no longer in effect in accordance with their terms, are valid, subsisting, in full force and effect and binding upon the Company or one of the
Subsidiaries and the other parties thereto (subject to the exceptions set forth in the first sentence of Section 3.4 above), and the Company or one of the Subsidiaries has paid in full or
accrued all amounts due thereunder and have satisfied in full or provided for all of its liabilities and obligations thereunder in all material respects. Neither the Company nor any of the
Subsidiaries has received notice of a default and is not in default under, or with respect to, any Material Contract. To the knowledge of the Company, no other party to any Material Contract is in
default thereunder, nor does any condition exist that with notice or lapse of time or both would constitute a default by such other party thereunder. 

        4.    REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF INVESTORS.    Each Investor hereby severally and not
jointly represents and warrants to, and agrees with, the Company, that: 

        4.1.    Authorization.    All action (corporate or otherwise) 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 and the Warrant has been taken or will be
taken prior to the Closing, and each of this Agreement and the Warrant constitutes a valid and legally binding obligation of the Investor, enforceable against the Investor in accordance with its
terms, except as enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of
creditors' rights generally and (ii) the effect of rules of law governing the availability of equitable remedies. 

        4.2.    Purchase for Own Account.    The Purchased Shares to be purchased by such Investor hereunder, and the Warrant
and any Warrant Shares acquired upon exercise of the Warrant issued to the Investor, 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 in
violation of the Act. If not an individual, such Investor also represents that such Investor has not been formed for the specific purpose of acquiring the Securities. 

        4.3.    Disclosure of Information.    The Investor has received and/or had full access to a copy of the Disclosure
Documents and has received or has had full access to all the information it considers 

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necessary
or appropriate to make an informed investment decision with respect to the Purchased Shares and the Warrant to be purchased by the Investor under this Agreement. The 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 the Warrant 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. In connection with its decision to purchase the
Purchased Shares and the Warrant, the Investor has relied solely on the Disclosure Documents, the representations, warranties and agreements of the Company set forth in this Agreement, as well as any
investigation of the Company completed by the Investor or its advisors; and the Investor has not relied on any oral statement made by the Company. 

        4.4.    Investment Experience.    Such Investor understands that the purchase of the Purchased Shares and the Warrant
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 the Warrant 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 the Warrant and protecting its own interests in connection with this investment, and/or (ii) has a preexisting
personal or business relationship with the Company or one or more of its officers or directors. 

        4.5.    Accredited Investor Status.    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, the Warrant and the Warrant
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 and understands that the Shelf Registration Statement (as defined in
Section 7.2(a)) and any other registration statement contemplated by this Agreement to effect the registration of the Purchased Shares and Warrant Shares for purposes of resale thereunder may
never become effective under the Act. 

        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, Warrant or Warrant 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 for any routine sale of any Purchased Shares or Warrant Shares in compliance with Rule 144 (except that an opinion of counsel may
be required for other than routine Rule 144 transactions), provided that the Investor furnishes the Company with customary documentation regarding compliance with Rule 144. 

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        4.8.    Legends.    It is understood that the certificates evidencing the Purchased Shares, the Warrant and any
Warrant 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. 

        The
legends set forth in (a) and (b) above shall, upon the request of an Investor, be promptly removed by the Company from any certificate evidencing Purchased Shares or
Warrant 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 or Warrant Shares; provided, however, that no such opinion shall be required in connection with
routine sales of Purchased Shares or Warrant Shares pursuant to the Shelf Registration Statement (as defined below) (provided that customary forms of brokers' and sellers' representation letters are
provided in connection with such sales) or routine requests for legend removal where the Purchased Shares or Warrant Shares can be sold by an Investor pursuant to the provisions of Rule 144. In
connection with any such opinion, the Investor shall provide such certifications as may be reasonably be deemed necessary for the delivery of such opinion. 

        4.9.    Resale Restrictions.    Except as provided in Section 4.7, the Investor will not, prior to the
effectiveness of the Shelf Registration Statement (as defined below), directly or indirectly offer, sell, contract or grant an option to sell, pledge, encumber, or otherwise dispose of or otherwise
transfer, or enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of (whether any such transaction described above is
to be settled by delivery of Common Stock or such other securities, in cash or otherwise) (a "Disposition"), any Purchased Shares or Warrant Shares
(other than to donees, shareholders or partners of the Investor who agree to be similarly bound), and after the effective date of the Shelf Registration Statement the
Investor will not make any Disposition of Purchased Shares, the Warrant or any Warrant Shares in violation of the Act. 

        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 and the Warrant at the Closing are subject to the fulfillment or waiver, on or 

9

 

before
the Closing, of each of the following conditions, and the Company shall use its best 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 qualified as to materiality shall be true and correct and those not so qualified shall be true and correct in all material respects 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 in all material respects 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 and the Warrants to the
Investors pursuant to this Agreement shall be exempt from the registration requirements under the Act and the registration and/or qualification requirements of all other applicable state securities
laws. 

        5.1.5    No Material Change.    There shall have been no Material Adverse Effect on the Business from the date of this
Agreement. 

        5.1.6    Opinion of Counsel.    The Investors shall have received an opinion of counsel to the Company substantially
in the form of Exhibit A 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 and the Warrant
to the Investors at the Closing are subject to the fulfillment or waiver, on or before the Closing, of the following condition by the Investor, and each Investor shall use its best 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 qualified as to materiality shall be true and correct and those not so qualified shall be true and correct in all material respects 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 and the Warrant specified for such Investor on the Schedule of Investors, in accordance with the provisions of Section 2, subject to the Company's delivery of certificates for
such Purchased Shares and the Warrant. 

        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 that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the Commission. 

10

  

        (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) all Warrant Shares that are issued upon exercise of the Warrants, and (3) any shares of Common Stock of the Company issued or issuable,
from time to time, upon any reclassification, share combination, share subdivision, stock split, share dividend, or similar transaction or event, or otherwise as a distribution on, in exchange for or
with respect to any of the foregoing; 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 restriction (including, without limitation, as to volume, but by complying with the manner of sale and Form 144 filing requirements, if applicable) 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 45 days following the
Closing and use its best efforts (i) to have declared effective as soon as practicable thereafter (but in any event within 90 days after filing), 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"), and (ii) to provide a transfer agent and registrar for all securities registered
pursuant to the Shelf Registration Statement. The Shelf Registration Statement may include securities other than those held by Holders. The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective (subject to Section 7.2(b)), pursuant to the Act and the Rules and Regulations promulgated thereunder, until the earliest to occur of (i) as
to the Purchased Shares, the second anniversary of the Closing Date and as to particular Warrant Shares, the second anniversary of the date of issuance of such Warrant Shares, (ii) as to a
particular Holder, the date on which the Holder may sell all Registrable Securities then held by the Holder without restriction (including, without limitation, as to volume, but by complying with the
manner of sale and Form 144 filing requirements, if applicable) within a three-month period pursuant to Rule 144 and (iii) as to a particular Holder, such time as all Registrable
Securities held by such Holder have been sold (A) pursuant to the Shelf Registration Statement, (B) to or through a broker or dealer or underwriter in a public distribution or a public
securities transaction, and/or (C) in a transaction 

11

 

exempt
from the registration and prospectus delivery requirements of the Act under Section 4(1) thereof so that all transfer restrictions and restrictive legends with respect thereto, if any,
are removed upon the consummation of such sale (such period, the "Registration Period"). In the event that the Shelf Registration Statement shall cease
to be effective during the Registration Period, the Company shall promptly prepare and file a new registration statement covering all 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)    Delay in Effectiveness of Shelf Registration Statement.    In the event that the Shelf Registration Statement
(i) is not reviewed by the Commission or, if it has been selected for review, that the Company is not using all commercially reasonable efforts to have the Shelf Registration Statement declared
effective, and (ii) has not been declared effective prior to the six-month anniversary of the Closing, then the Company (i) shall immediately pay to the Investors, pro rata
based on the number of Purchase Shares held by each Investor, an aggregate of $100,000 in cash (such payment, the "Damages"), by wire transfer to an
account or accounts and in such respective percentages as the Investor instructs the Company in writing. The Company and the Investors agree that, in the event that under the circumstances described
above the Shelf Registration Statement is not declared effective within six months of the Closing, it would be impracticable or extremely difficult to fix or determine the Investor's actual damages.
Therefore, the Company and the Investors each agree that the amount of the Damages has been agreed upon after negotiation as to the parties' reasonable estimate of the Investors' damages. The Company
and the Investors agree that the amount of Damages is reasonable in light of the circumstances existing at the execution of this Agreement. The Company and the Investors each acknowledge that the
payment of such Damages is not intended as a forfeiture or penalty. If the Company fails to immediately pay to the Investors any amounts due under this Section 7.2(b), then in addition to any
amounts paid or payable pursuant to this Section, the Company shall also pay all costs and expenses (including legal fees and expenses) in connection with any action, including the filing of any
lawsuit or other legal action, taken to enforce or collect payment, together with interest on such payment at the maximum rate permitted by applicable law, from the date such
payment was required to be paid. Nothing in this Section shall be deemed to restrict or prohibit an Investor from bringing a breach of contract or other action against the Company for damages in
excess of the amount of Damages based on a breach of the Company's obligations hereunder relating to the Shelf Registration Statement. 

	Initialed by              for the Investor	 	Initialed by              for the Company

        (c)    Permitted Window.    

          (i)  The
Holders agree that they will sell the Registrable Securities pursuant to such registration only during a "Permitted Window" (as defined below). 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 bona fide present intention to sell part or all of the Registrable Securities pursuant to such registration (a
"Notice of Resale"). Upon delivery of such Notice of Resale, the Company will give written notice to the Holders as soon as practicable, but in no event
not more than two (2) business days after such delivery, that (A) the Permitted Window will commence on the date such notice is delivered to the Holder, or (B) the Company
believes it is appropriate for the Company to supplement the Prospectus or make an appropriate filing under the Exchange Act 

12

 

so
as to cause the Prospectus to become current (unless a certificate of the President or Chief Executive Officer is delivered as provided in subparagraph (ii) below), or (C) the Company
believes it 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 subparagraph (ii) below). 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
subparagraph (ii) below and paragraph (d) 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. 

         (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
Company, there exists (A) a material development or potential material development involving the Company which the Company would be obligated to disclose in the Prospectus contained in the
Shelf Registration Statement, which disclosure would, in the good faith judgment of the President or Chief Executive Officer or the Board of Directors of the Company, be premature or otherwise
inadvisable at such time or (B) a concurrent public filing by the Company with the Commission of a registration statement (other than on Form S-8) registering the offer and
sale of shares by the Company, then the Company will have the right (the "Deferral Right") to defer the commencement of a Permitted Window for a period
of not more than 30 days after the date of delivery of the Notice of Resale; provided, however, that the Company will not utilize the Deferral Right more than four (4) times in any
twelve month period, that the total number of days covered by exercise of the Deferral Rights in any twelve month period shall not exceed 90 days, and that the Company will exercise all good
faith efforts to minimize the period of such delays, consistent with the Company's good faith business judgment, including without limitation concerning premature public disclosure of confidential or
sensitive information; and provided further, however, that the Company may defer the commencement of the Permitted Window for up to 30 days if so requested by an underwriter in connection with
an underwritten offering by the Company 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). In connection with any such underwritten offering described in the
preceding sentence where commencement of a Permitted Window is deferred, the Holders shall be given the opportunity to participate in the first three such offerings that may occur after the Closing
Date by including all or any of their Registrable Securities for sale in any such offering, provided that the right to include any Registrable Securities in any such offering shall be subject to
(i) the rights of other shareholders of the Company 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
the Company (with any such exclusion to be pro rata among all Holders who are requested to sell Registrable Securities in such registration), and (iii) the execution by the Holders of the
underwriting agreement and other customary documents 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 the Company 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 

13

 

underwriters'
and brokers' discounts and commissions relating to any Registrable Securities included in such registration. 

        (d)    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 7.2(c)(ii) hereof or (ii) that, in the judgment of the President, Chief Executive Officer or the Company's Board of Directors, it is
advisable to suspend use of the Prospectus for a discrete period of time due to undisclosed pending corporate developments or pending public filings with the Commission (which need not be described in
detail), the Company shall deliver a certificate in writing to the Holder to the effect of the foregoing and, upon delivery 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 30 days after it has been terminated
pursuant to this Section. 

        (e)    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 any Blackout Notice, including, without limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration, shall be borne by
the Company. Each Holder shall be responsible for any fees and expenses of its counsel or other advisers. 

        7.3.    Obligations of the Company.    The Company shall 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 (including supplements or prospectus amendments) as the Holder may reasonably request in
order to facilitate the public sale or other disposition of the Registrable Securities owned by it that are included in such registration. In addition, whenever required to effect the registration of
any Registrable Securities under this Agreement, the Company shall, as expeditiously as reasonably possible: 

        (a)   Use
its best efforts to (i) 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, (ii) to keep such registration or qualification in effect for so long as the Shelf Registration
Statement remains in effect, and (iii) to take any other action which may be reasonably necessary or advisable to enable the Holders to consummate the disposition in such jurisdictions of the
securities to be sold by the Holders, consistent with the plan of distribution described in the prospectus included in the Shelf Registration Statement, except that the Company shall not for any such
purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where it is not so qualified, or to subject itself to taxation in any such jurisdiction, or to
execute a general consent to service of process in effecting such registration, qualification or compliance, unless the Company is already subject to service in such jurisdiction and except as may be
required by the Act or applicable rules or regulations thereunder. 

        (b)   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 

14

 

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 Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. 

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

        (d)   Subject
to the limitations described in the second sentence of Section 3.9, use all commercially reasonable efforts to cause all Registrable Securities to be
listed continuously throughout the Registration Period on each securities exchange or market, if any, on which equity securities issued by the Company are then listed. 

        (e)   Subject
to the provisions of Section 7.2(b), promptly file such amendments to the Shelf Registration Statement and the Prospectus, file such documents as may be
required to be incorporated by reference in any of such documents, and take all other actions as may be necessary to ensure to the holders of Registrable Securities the ability to effect the public
resale of their Registrable Securities (including, without limitation, taking any actions necessary to ensure the availability of a Prospectus meeting the requirements of Section 10(a) of the
Act) continuously throughout the Registration Period; and provide each holder of Registrable Securities copies of any documents prepared pursuant to the foregoing promptly after such preparation. 

        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.    For the purposes of this Section 7.5, the term "registration statement" shall
include any final Prospectus, exhibit, supplement, amendment or other document included in, filed as part of, deemed to be a part of, incorporated by reference in, or otherwise relating to the Shelf
Registration Statement referred to in this Section 7. 

        (a)    By the Company.    To the extent permitted by law, the Company will indemnify and hold harmless each Investor,
each Holder, the officers and directors, trustees, each person, if any, who controls any Holder and any underwriter for each (as defined in the Act) (such persons and entities collectively referred to
as "Holder Indemnified Parties"), against any losses, expenses (including, without limitation, reasonable legal fees and expenses), damages or
liabilities (including in settlement of any claim) 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 (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 the statements therein not misleading; 

        (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 

15

 

Exchange
Act or any federal or state securities law, in each case in connection with the offering of Registrable Securities covered by the Shelf Registration Statement; or 

        (iv)  any
failure by the Company to fulfill any undertaking included in the Shelf 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 or settling,
compromising or paying an award granted in any proceeding relating to 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 caused by reliance upon and in conformity with written information furnished expressly for use in connection with such registration statement by the Holder Indemnified
Party; and provided further, that the Company will not be liable for the reasonable legal fees and expenses of more than one counsel to the Holder Indemnified Parties. 

        (b)    By the Holder.    To the extent permitted by law, each Holder (severally and not jointly with any other Holder)
will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the Shelf Registration Statement, and each person, if any, who controls the Company
within the meaning of the 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 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 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 expenses of more than one counsel to the Company 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 (i.e., proceeds net of
underwriting discounts, fees and commissions payable by such Holder) 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, and only to the extent that, such
delay caused material prejudice to the 

16

 

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.    If the indemnification provided for in this Section 7.5 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages, liabilities or expenses (or actions or proceedings in
respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and the Holder on the other in connection with the statements
or omissions or other matters which resulted in such losses, claims, damages, liabilities or expenses (or actions in respect thereof), as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, in the case of an untrue statement, whether the untrue statement relates to information supplied by the Company on the one hand
or a Holder on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement. The Company and the Investors agree that it
would not be just and equitable if contribution pursuant to this subsection (e) were determined by pro rata allocation (even if all Holders were treated as one entity for such purpose) or by
any other method of allocation which does not take into account the equitable considerations referred to above in this subsection (e). The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (e) shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (e), no Holder shall be required to contribute any
amount in excess of the net amount of proceeds (i.e., proceeds net of underwriting discounts, fees and commissions payable by such Holder) received by the Holder from the sale of the Registrable
Securities. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Contribution (together with any indemnification or other obligations under this Agreement) by any Holder (including any Indemnified Person associated with such
Holder) shall be limited in amount to the net amount of proceeds (i.e., proceeds net of underwriting discounts, fees and commissions payable by such Holder) received by such Holder from the sale of
the Registrable Securities 

        (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. 

17

 

        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, the Company agrees to: 

          (i)  Make
and keep adequate, current public information available, as those terms are understood and defined in Rule 144 under the Act, at all times; 

         (ii)  File
with the Commission in a timely manner all reports and other documents required of the Company under the Exchange Act; and 

        (iii)  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 Company's Obligations.    The Company shall have no obligation to register, or maintain, a
registration statement governing Registrable Securities and the restrictive legend described in Section 4.8 will be removed from any certificate representing the Purchased Shares, (i) if
all Registrable Securities have been registered and sold pursuant to registrations effected pursuant to this Agreement, or (ii) with respect to any particular Holder, at such time as all
Registrable Securities held by such Holder may be sold without restriction (including, without limitation, as to volume, but by complying with the manner of sale and Form 144 filing
requirements, if applicable) within a three-month period pursuant to 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. 

        8.    ASSIGNMENT.    Notwithstanding anything herein to the contrary, the registration rights of the Holder under
Section 7 hereof shall be automatically assigned by such Investor to any transferee of all or any portion of such Investor's Registrable Securities who is a Permitted Transferee (as defined
below); 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. For purposes of this
Agreement, a "Permitted Transferee" shall mean any person who (a) is (i) an "accredited investor" as that term is defined in
Rule 501(a) of Regulation D under the Act; (ii) a partner of such Holder, an affiliate of such Holder or a partner of an affiliate or any corporation, partnership, limited
liability company or other entity or person controlling, controlled by, or under common control with, such Holder; or (iii) any other direct transferee from such Holder of at least 25% of the
Registrable Securities held by such Holder and (b) is a transferee of the Registrable Securities as permitted under the securities laws of the United States. 

        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. 

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        9.3.    Governing Law; Consent to Jurisdiction.    This Agreement shall be governed by and construed under the
internal laws of the State of California as applied to agreements among California residents entered into and to be performed entirely within California, without reference to principles of conflict of
laws or choice of laws. 

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

        9.5.    Headings.    The headings and captions used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. All references in this Agreement to sections, paragraphs, exhibits, and schedules shall, unless otherwise provided, refer to sections and
paragraphs hereof and exhibits and schedules attached hereto, all of which exhibits and schedules are incorporated herein by this reference. 

        9.6.    Notices.    Unless otherwise provided, any notice required or permitted under this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery to the party to be notified, by telecopier or upon deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified in the case of the Company, at 349 Oyster Point Boulevard, South San Francisco, CA 94080, Attention: President, with a copy to C. Kevin Kelso,
Weintraub Genshlea Chediak Sproul, a law corporation, 400 Capitol Mall, 11th floor, Sacramento, CA 95814, or in the case of Investor, at the record address for such Investor as reflected
on the books of the Company, with copies to such additional persons as the Investor may notify the Company in writing, 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.    Except as may be disclosed by the Company in the Disclosure Schedule: 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 such Investor or any of its officers, partners,
employees, or representatives is responsible; and the Company agrees to indemnify and to hold harmless each Investor from any liability for any commission or compensation in the nature of a finder's
or broker's
fee (and any asserted liability) for which the Company or any of its officers, employees or representatives is responsible. 

        9.8.    Costs, Expenses.    Each party's costs in connection with the preparation, execution delivery and performance
of this Agreement (including without limitation legal fees) shall be borne by that party. 

        9.9.    Amendments and Waivers.    Any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investors holding a majority of the
Purchased Shares purchased hereunder; provided, however, that no amendment or waiver of the Company's obligations under Section 7 of this Agreement that materially and adversely affects the
rights of a holder of Purchased Shares shall be binding upon that holder unless that holder has consented in writing to such amendment or waiver; and provided further, that no amendment or waiver that
by its terms adversely affects an Investor in a manner different in material respect from other Investors shall be binding upon such Investor unless that Investor has consented in writing to such
amendment or waiver. Subject to the limitations set forth in the preceding sentence, any amendment or waiver effected in accordance with this Section shall be binding upon each holder of any Purchased
Shares at the time outstanding (even if such Investor or other holder did not vote with respect to, or voted against, such amendment or waiver), each future holder of such securities, and the 

19

 

Company.
The Investors acknowledge that by virtue of this provision, holders of a majority of the Purchased 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. 

        9.13.    Termination.    

        (a)    By the Investor.    The Investor may terminate this Agreement immediately if, at any time prior to the Closing,
(i) the Company shall cease conducting business in the normal course; become insolvent or become unable to meet its obligations as they become due; make a general assignment for the benefit of
creditors; petition, apply for, suffer or permit with or without its consent the appointment of a custodian, receiver, trustee in bankruptcy or similar officer for all or any substantial part of its
business or assets; avail itself or become subject to any proceeding under the Federal Bankruptcy Code or any similar state, federal or foreign statute relating to bankruptcy, insolvency,
reorganization, receivership, arrangement, adjustment of debts, dissolutions or liquidation or (ii) the Company shall have breached or failed to perform any of its representations, warranties,
covenants or agreements set forth in this Agreement, which breach or failure to perform (A) would give rise to the failure of a condition set forth in Section 5.1.1 or
Section 5.1.2 and (B) is incapable of being cured or has not been cured by the Company within 10 calendar days following receipt of written notice of such breach or failure to perform
from the Investor. 

        (b)    By the Company or the Investor.    The Company or the Investor may terminate this Agreement at any time after
August 1, 2004, if the Closing has not occurred prior to such date, or such later date as the Company and the Investor shall have agreed to extend the offering. 

        (c)    By the Company.    The Company may terminate this Agreement if the Investor shall have breached or failed to
perform any of its representations, warranties, covenants or agreements set forth in this Agreement, which breach or failure to perform (i) would give rise to the failure of a condition set
forth in Section 6.1.1 and (ii) is incapable of being cured or has not been cured by the Investor within 10 calendar days following receipt of written notice of such breach or failure to
perform from the Company. 

        9.14.    Public Announcements.    The Investors shall not issue any press release or public statement concerning the
transactions contemplated by this Agreement without the prior consent of the Company, and shall consult with the Company before issuing any press release or public statement primarily relating to the
transactions contemplated by this Agreement. The Company agrees that promptly after the Closing, it will issue a press release and/or file a current report on Form 8-K with
the Commission, concerning the transactions contemplated by this Agreement. The Company agrees to provide the Investors a copy of such press release for review and comment before the press release is
publicly disseminated. 

[Remainder of page intentionally left blank]

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        IN
WITNESS WHEREOF, the parties hereto have executed this Common Stock Purchase Agreement as of the date first above written. 

	

THE COMPANY:	
 	

INVESTOR:
	

By:	
 	

	
 	

By:	
 	

	

Its:	
 	

	
 	

Its:	
 	

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QuickLinks

Exhibit 4.04

CELLEGY PHARMACEUTICALS, INC.

COMMON STOCK AND WARRANT PURCHASE AGREEMENTQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 4.05    
    

 
 

WARRANT    
    

        THE SECURITIES EVIDENCED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OR PURSUANT TO A TRANSACTION WHICH IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. 

JULY 27, 2004

        Warrant
to Purchase up to            shares of Common Stock of Cellegy Pharmaceuticals, Inc. (the "Company"). 

        In
consideration for the party whose signature appears on the signature page hereof (the "Investor") agreeing to pay the purchase price of
$            for this Warrant and agreeing to enter into that certain Common Stock and Warrant Purchase Agreement, dated as of the date hereof, by and among the Company, the Investor and the
other
parties identified therein as "Investors" (the "Agreement"), the Company hereby agrees that the Investor or any other Warrant Holder (as defined below)
is entitled, on the terms and conditions set forth below, to purchase from the Company at any time during the Exercise Period (as defined below) up to            fully paid and nonassessable
shares of common stock, no par value, of the Company (the "Common Stock") at a price per share equal to the Exercise Price (hereinafter defined), as the
same may be adjusted from time to time pursuant to Section 5.1 hereof. The resale of the shares of Common Stock or other securities issuable upon exercise or exchange of this Warrant is subject
to the provisions of this Warrant and the Agreement. 

        Section 1.    Definitions.    

        "Affiliate" shall mean any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by, or is
under direct or indirect common control with any other Person. For the purposes of this definition, "control," when used with respect to any Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the term "controls" and "controlled" have meanings correlative to the
foregoing. 

        "Exercise Period" shall mean that period beginning on the date of this Warrant and continuing until the expiration of the
five-year period thereafter. 

        "Exercise Price" as of the date hereof shall mean $4.62, subject to adjustment for the events specified in Section 5.1 below. 

        "Investors" shall mean the purchasers of Common Stock pursuant to the Agreement, including the Investor. 

        "Person" shall mean an individual, a corporation, a partnership, a limited liability company, an association, a trust or other entity or
organization, including a government or political subdivision or an agency or instrumentality thereof. 

        "Principal Market" shall mean the Nasdaq National Market, the Nasdaq SmallCap Market, the American Stock Exchange the New York Stock
Exchange, or other exchange or market, whichever is at the time the principal trading exchange or market for the Common Stock. 

 

        "SEC" shall mean the United States Securities and Exchange Commission. 

        "Trading Day" shall mean any day other than a Saturday or a Sunday on which the Principal Market is open for trading in equity securities. 

        "Transaction Warrants" shall mean those warrants (including this Warrant) issued pursuant to the Agreement. 

        "Transaction Warrant Shares" shall mean those shares of Common Stock underlying the Transaction Warrants. 

        "Warrant Holder" shall mean the Investor or any permitted assignee or permitted transferee of all or any portion of this Warrant. 

        "Warrant Shares" shall mean those shares of Common Stock received upon exercise of this Warrant. 

        Section 2.    Exercise.    

        (a)    Method of Exercise.    This Warrant may be exercised in whole or in part (but not as to a fractional share of
Common Stock), at any time and from time to time during the Exercise Period, by the Warrant Holder by (i) surrender of this Warrant, with the form of exercise attached hereto as
Exhibit A completed and duly executed by the Warrant Holder (the "Exercise Notice"), to the Company at the address set forth in Section 12
hereof, accompanied by payment of the Exercise Price multiplied by the number of shares of Common Stock for which this Warrant is being exercised (the "Aggregate Exercise
Price") or (ii) telecopying an executed and completed Exercise Notice to the Company and delivering to the Company within five (5) business days thereafter the
original Exercise Notice, this Warrant and the Aggregate Exercise Price. Each date on which an Exercise Notice is received by the Company in accordance with clause (i) and each date on which
the Exercise Notice is telecopied to the Company in accordance with clause (ii) above shall be deemed an "Exercise Date." 

        (b)    Payment of Aggregate Exercise Price.    Payment of the Aggregate Exercise Price shall be made by wire transfer
of immediately available funds to an account designated by the Company. If the amount of the payment received by the Company is less than the Aggregate Exercise Price, the Warrant Holder will be
notified of the deficiency and shall make payment in that amount within three (3) Trading Days. In the event the payment exceeds the Aggregate Exercise Price, the Company will refund the excess
to the Warrant Holder within five (5) Trading Days of receipt. 

        (c)    Replacement Warrant.    In the event that the Warrant is not exercised in full, the number of Warrant Shares
shall be reduced by the number of such Warrant Shares for which this Warrant is exercised, and
the Company, at its expense, shall forthwith issue and deliver to or upon the order of the Warrant Holder a new Warrant of like tenor in the name of the Warrant Holder, reflecting such adjusted number
of Warrant Shares. 

        Section 3.    Delivery of Stock Certificates.    

        (a)   Subject
to the terms and conditions of this Warrant, as soon as practicable after the exercise of this Warrant in full or in part, and in any event within five
(5) Trading Days thereafter, the Company at its expense (including, without limitation, the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to
the Warrant Holder, or as the Warrant Holder may lawfully direct, a certificate or certificates for the number of validly issued, fully paid and non-assessable Warrant Shares to which the
Warrant Holder shall be entitled on such exercise, together with any other stock or other securities or property (including cash, where applicable) to which the Warrant Holder is entitled upon such
exercise in accordance with the provisions hereof. 

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        (b)   This
Warrant may not be exercised as to fractional shares of Common Stock. In the event that the exercise of this Warrant, in full or in part, would result in the
issuance of any fractional share of Common Stock, then in such event the Warrant Holder shall receive the number of shares rounded to the nearest whole share. 

        Section 4.    Representations, Warranties and Covenants of the Company.    

        (a)   The
Warrant Shares, when issued in accordance with the terms hereof, will be duly authorized and, when paid for or issued in accordance with the terms hereof, shall be
validly issued, fully paid and non-assessable. 

        (b)   The
Company shall take all commercially reasonable actions and proceedings as may be required and permitted by applicable law, rule and regulation for the legal and
valid issuance of this Warrant and the Warrant Shares to the Warrant Holder. 

        (c)   The
Company has authorized and reserved for issuance to the Warrant Holder the requisite number of shares of Common Stock to be issued pursuant to this Warrant. The
Company shall at all times reserve and keep available, solely for issuance and delivery as Warrant Shares hereunder, such shares of Common Stock as shall from time to time be issuable as Warrant
Shares. 

        (d)   From
the date hereof through the last date on which this Warrant is exercisable, the Company shall take all commercially reasonable actions to ensure that the Common
Stock remains listed or quoted on the Principal Market. 

        Section 5.1.    Adjustment of the Exercise Price.    The Exercise Price and, accordingly, the number of Warrant
Shares issuable upon exercise of the Warrant, shall be subject to adjustment from time to time upon the happening of certain events as follows: 

        (a)    Reclassification, Consolidation, Merger, Mandatory Share Exchange, Sale or Transfer.    

          (i)  Upon
occurrence of any of the events specified in subsection (a)(ii) below (the "Adjustment Events") while this
Warrant is unexpired and not exercised in full, the Warrant Holder may in its sole discretion require the Company, or any successor or purchasing corporation, as the case may be, without payment of
any additional consideration therefor, to execute and deliver to the Warrant Holder a new Warrant providing that the Warrant Holder shall have the right to exercise such new Warrant (upon terms not
less favorable to the Warrant Holder than those then applicable to this Warrant) and to receive upon such exercise, in lieu of each share of Common Stock theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock, other securities, money or property receivable upon such Adjustment Event by the holder of one share of Common Stock issuable upon exercise of this
Warrant had this Warrant been exercised immediately prior to such Adjustment Event. Such new Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 5.1. 

         (ii)  The
Adjustment Events shall be (1) any reclassification or change of Common Stock (other than a change in par value, as a result of a subdivision or combination
of Common Stock or in connection with an Excluded Merger or Sale), (2) any consolidation, merger or mandatory share exchange of the Company with or into another corporation (other than a merger
or mandatory share exchange with another corporation in which the Company is a continuing corporation and which does not result in any reclassification or change other than a change in par value or as
a result of a subdivision or combination of Common Stock), other than (each of the following referred to as an "Excluded Merger or Sale") a transaction
involving (A) sale of all or substantially all of the assets of the Company, (B) any merger, consolidation or similar transaction where the consideration payable to the shareholders of
the Company by the acquiring Person consists substantially of cash, or where the acquiring Person 

3

 

does
not agree to assume the obligations of the Company under outstanding warrants (including this Warrant). In the event of an Excluded Merger or Sale Transaction, if the surviving, successor or
purchasing Person does not agree to assume the obligations under this Warrant, then the Company shall deliver a notice to the Warrant Holder at least ten (10) days before the consummation of
such Excluded Merger or Sale, the Warrant Holder may exercise this Warrant at any time before the consummation of such Excluded Merger or Sale (and such exercise may be made contingent upon the
consummation of such Excluded Merger or Sale), and any portion of this Warrant that has not been exercised before consummation of such Excluded Merger or Sale shall terminate and expire, and shall no
longer be outstanding. 

        (b)    Subdivision or Combination of Shares.    The number and kind of securities purchasable upon the exercise of
this Warrant, and the Exercise Price, shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) subdivide its outstanding shares
of Common Stock into a greater number of shares, or (ii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then the number of Warrant Shares
purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Warrant Holder shall be entitled to receive the kind and number of Warrant Shares which it would have
owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares which are purchasable hereunder, the
Warrant Holder shall thereafter be entitled to purchase the number of Warrant Shares resulting from such adjustment at an Exercise Price per Warrant Share obtained by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares resulting from
such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. 

        (c)    Stock Dividends.    If the Company, at any time while this Warrant is unexpired and not exercised in full,
shall pay a dividend or other distribution in shares of Common Stock to all holders of Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior
thereto shall be adjusted so that the Warrant Holder shall be entitled to receive the kind and number of Warrant Shares which it would have owned or have been entitled to receive had such Warrant been
exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares which are purchasable hereunder, the Warrant Holder shall thereafter be entitled to purchase the number
of Warrant Shares resulting from such adjustment at an Exercise Price per Warrant Share
obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing
by the number of Warrant Shares resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to
the record date, if any, for such event. The provisions of this subsection (c) shall not apply under any of the circumstances for which an adjustment is provided in subsections (a) or
(b). 

        (d)    Liquidating Dividends, Etc.    If the Company, at any time while this Warrant is unexpired and not exercised in
full, makes a distribution of its assets or evidences of indebtedness to the holders of its Common Stock as a dividend in liquidation or by way of return of capital or other than as a dividend payable
out of earnings or surplus legally available for dividends under applicable law or any distribution to such holders made in respect of the sale of all or substantially all of the Company's assets
(other than under the circumstances provided for in the foregoing subsections (a) through (c)), then the Warrant Holder shall be entitled to receive upon exercise of this Warrant in addition to
the Warrant Shares receivable in connection therewith, and without payment of any consideration other than the Exercise Price, the kind and amount of such 

4

 

distribution
per share of Common Stock multiplied by the number of Warrant Shares that, on the record date for such distribution, are issuable upon such exercise of the Warrant (with no further
adjustment being made following any event which causes a subsequent adjustment in the number of Warrant Shares issuable), and an appropriate provision therefor shall be made a part of any such
distribution. The value of a distribution that is paid in other than cash shall be determined in good faith by the Board of Directors of the Company. Notwithstanding the foregoing, in the event of a
proposed dividend in liquidation or distribution to the shareholders made in respect of the sale of all or substantially all of the Company's assets, the Company shall deliver a notice to the Warrant
Holder at least ten (10) days before the consummation of such event, the Warrant Holder may exercise this Warrant at any time before the consummation of such event (and such exercise may be
made contingent upon the consummation of such event), and any portion of this Warrant that has not been exercised before consummation of such event shall terminate and expire, and shall no longer be
outstanding. 

        Section 5.2    Notice of Adjustments.    Whenever the Exercise Price or number of Warrant Shares shall be
adjusted pursuant to Section 5.1 hereof, the Company shall promptly prepare a certificate signed by its President or Chief Financial Officer setting forth in reasonable detail the event
requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Company's Board of Directors made any
determination hereunder), and the Exercise Price and number of Warrant Shares purchasable at that Exercise Price after giving effect to such adjustment, and shall promptly cause copies of such
certificate to be sent to the Warrant Holder. In the event the Company shall, at a time while the Warrant is unexpired and not exercised in full, take any action that pursuant to subsections
(a) through (c) of Section 5.1 may result in an adjustment of the Exercise Price, the Company shall give to the Warrant Holder at its last address known to the Company written
notice of such action ten (10) days in advance of its effective date in order to afford to the Warrant Holder an opportunity to exercise the Warrant prior to such action becoming effective. 

        Section 6.    No Impairment.    The Company will not, by amendment of its Amended and Restated Articles of
Incorporation or By-Laws or through any reorganization, transfer of assets, consolidation, merger, dissolution or issue or sale of securities, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Warrant Holder against impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any
Warrant Shares above the amount payable therefor on such exercise, and (b) will take all such action as may be reasonably necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares on the exercise of this Warrant. 

        Section 7.    Rights As Stockholder.    Except as set forth in Section 5 above, prior to exercise of
this Warrant, the Warrant Holder shall not be entitled to any rights as a stockholder of the Company with respect to the Warrant Shares, including (without limitation) the right to vote such shares,
receive dividends or other distributions thereon or be notified of stockholder meetings. 

        Section 8.    Replacement of Warrant.    Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction or mutilation of the Warrant and, in the case of any such loss, theft or destruction of the Warrant, upon delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of such Warrant, the Company at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor. 

        Section 9.    Choice of Law.    This Warrant shall be construed under the laws of the State of California. 

5

 

        Section 10.    Amendment; Waiver.    

        Any
term of this Warrant may be amended and the observance of any term of this Warrant waived (either generally or in a particular instance and either retroactively or prospectively),
with the written consent of the Company and the holders of Transaction Warrants representing at least a majority of the aggregate number of Transaction Warrant Shares then issuable upon exercise of
the Transaction Warrants (the "Majority Warrantholders"). Any amendment or waiver effected in accordance with this section shall be binding upon all
"Holders" of Transaction Warrants and any future Holder of this Warrant, regardless of whether or not such person consents thereto. Holder acknowledges and agrees that the Majority Warrantholders may
consent to such waivers and/or amendments to the Transaction Warrants as they may elect, acting in their sole discretion, and that such waivers and/or amendments may materially adversely affect the
rights of Holder hereunder. 

        Section 11.    Restricted Securities.    

        (a)    Registration or Exemption Required.    This Warrant has been issued in a transaction exempt from the
registration requirements of the Securities Act of 1933, as amended, in reliance upon the provisions of Section 4(2) thereof. This Warrant and the Warrant Shares issuable upon exercise of this
Warrant may not be resold except pursuant to an effective registration statement or an exemption to the registration requirements of the Securities Act of 1933 and applicable state laws. In connection
with any proposed sale or transfer of this Warrant or Warrant Shares, the Company may require an opinion of counsel to the Warrant Holder, in form and substance reasonably satisfactory to the Company,
regarding compliance with applicable federal and state securities laws. 

        (b)    Legend.    Any Warrant Shares or other Company securities issued upon exercise hereof, shall bear the legends
described in Section 4.8 of the Agreement. 

        (c)    Assignment.    Assuming the conditions of Section 11(a) above regarding registration or exemption have
been satisfied, the Warrant Holder may sell, transfer, assign, pledge or otherwise dispose of this Warrant (each of the foregoing, a "Transfer"), in
whole or in part, but only to an Affiliate of the Warrant Holder and only after such transferee agrees to be bound by the provisions of the Agreement. The Warrant Holder shall deliver a written notice
to Company, substantially in the form of the Assignment attached hereto as Exhibit B, indicating the person or persons to whom the Warrant shall be Transferred and the respective number of
Warrant Shares issuable to the transferee pursuant to the Transfer. The Company shall effect the Transfer within fifteen (15) days, and shall deliver to the Transferee(s) designated by the
Warrant Holder a Warrant or Warrants of like tenor and terms for the appropriate number of shares. In connection with and as a condition of any such proposed Transfer, the Company may request the
Warrant Holder to provide an opinion of counsel to the Warrant Holder in form and substance reasonably satisfactory to the Company to the effect that the proposed Transfer complies with all applicable
federal and state securities laws. 

        (d)    Investor's Compliance.    Nothing in this Section 11 shall affect in any way the  Investor's obligations under any
agreement to comply with all applicable securities laws upon resale of the Common Stock. 

        Section 12.    Notices.    All notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid,
(iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram or facsimile, addressed as set forth below or to such other address
as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand
delivery, (b) one business day after transmission by facsimile (with accurate confirmation generated by the transmitting facsimile 

6

 

machine)
at the address or number designated below, or (c) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be: 

	 	 	If to the Company:
	

 	
 	

Cellegy Pharmaceuticals, Inc.

349 Oyster Point Boulevard

Suite 200

South San Francisco, California 94080

Telephone: (650) 616-2200

Facsimile: (650) 616-2222

Attention: Chief Financial Officer	

 
	

with a copy (which shall not constitute notice) to:	

 
	

 	
 	

Weintraub Genshlea Chediak & Sproul

400 Capitol Mall, Eleventh Floor

Sacramento, CA 95814

Telephone: (916) 558-6000

Facsimile: (916) 446-1611

Attention: C. Kevin Kelso, Esq.	

 
	

if to the Investor:	

 
	

 	
 	

	

 
	 	 	
	 
	 	 	
	 
	 	 	Telephone:	 	 	 
	 	 	 	 	
	 
	 	 	Facsimile:	 	 	 
	 	 	 	 	
	 
	 	 	Attention:	 	 	 
	 	 	 	 	
	 
	

with a copy (which shall not constitute notice) to:	

 
	

 	
 	

	

 
	 	 	
	 
	 	 	
	 
	 	 	Telephone:	 	 	 
	 	 	 	 	
	 
	 	 	Facsimile:	 	 	 
	 	 	 	 	
	 
	 	 	Attention:	 	 	 
	 	 	 	 	
	 

        Either
party hereto may from time to time change its address or facsimile number for notices under this Section 12 by giving at least ten (10) days prior written notice of
such changed address or facsimile number to the other party hereto. 

        Section 13.    Miscellaneous.    The headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. 

[Remainder of page intentionally left blank]

7

 

        IN
WITNESS WHEREOF, this Warrant was duly executed by the undersigned, thereunto duly authorized, as of the date first set forth above. 

	
CELLEGY PHARMACEUTICALS, INC.	
 	

 
	

By:	

 	

 	
 	

 
	 	
    Name:

    Title:	 	 	 
	

Acknowledged and Accepted by	

 	
 	

 
	
INVESTOR	
 	

 
	

By:	

 	

 	
 	

 
	 	
    Name:

    Title:	 	 	 

8

 
 

EXHIBIT A TO THE WARRANT
  
    EXERCISE FORM    
    

CELLEGY PHARMACEUTICALS, INC. 

        The
undersigned hereby irrevocably exercises the right to purchase                        shares of Common Stock of Cellegy
Pharmaceuticals, Inc., evidenced by the attached Warrant, and
tenders herewith payment of the
Aggregate Exercise Price with respect to such shares in full, in the amount of $            , in cash, by certified or official bank check or by wire transfer for the account of the Company.

        The
undersigned requests that stock certificates for such Warrant Shares be issued, and a Warrant representing any unexercised portion hereof be issued, pursuant to this Warrant, in the
name of the registered Warrant Holder and delivered to the undersigned at the address set forth below. 

Dated:                        ,
200    

	

    
 Signature of Registered Holder	
 	

 
	

    
 Name of Registered Holder (Print)	
 	

 
	

Address:	
 	

 
	

	
 	

 
	

	
 	

 
	

	
 	

 

 
 

EXHIBIT B TO THE WARRANT
  ASSIGNMENT    
    

(To
be executed by the registered Warrant Holder desiring to transfer the Warrant) 

        FOR
VALUED RECEIVED, the undersigned Warrant Holder of the attached Warrant hereby sells, assigns and transfers unto the persons below named the right to
purchase                        shares
of Common Stock of Cellegy Pharmaceuticals, Inc. evidenced by the attached Warrant and does hereby irrevocably constitute and appoint the Secretary of the Company as attorney to transfer the
said Warrant on the books of the Company, with full power of substitution in the premises. 

Dated:                        ,
200            

	

    
 Signature	
 	

 
	

Fill in for new Registration of Warrant:	
 	

 
	

    
 Name	
 	

 
	

    
 Address	
 	

 
	

    
 Please print name and address of assignee (including zip code number)	
 	

 

QuickLinks

Exhibit 4.05

WARRANT

EXHIBIT A TO THE WARRANT EXERCISE FORM

EXHIBIT B TO THE WARRANT ASSIGNMENT

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