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EXHIBIT 4.1    
  

 
 

REGISTRATION RIGHTS AGREEMENT    
  

    THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of October 1, 2001 by and
between Cygnus, Inc., a Delaware corporation with offices at 400 Penobscot Drive, Redwood City, California 94063 (the "Company"), and Cripple Creek Securities, LLC (the "Investor"). 

W I T N E S S E T H:  

    WHEREAS, pursuant to that certain Structured Equity Line Flexible Financing Agreement by and between the Company and the Investor dated as of October 1,
2001 (the "Equity Line Agreement"), the Company may elect to issue to the Investor, and the Investor shall purchase from the Company, from time to time as provided in the Agreement, shares of the
Company's common stock, par value $0.001 per share (the "Common Stock"), for a maximum aggregate purchase price of $29,000,000; and 

    WHEREAS,
pursuant to the terms of, and in partial consideration for, the Investor's agreement to enter into the Equity Line Agreement, the Company has agreed to issue to the Investor
one or more warrants, each in the form attached as Exhibit A to the Equity Line Agreement (each a "Warrant" or the "Final Warrant," as applicable, and collectively, the "Warrants") to purchase
shares of Common Stock (the "Common Shares") in amounts and at prices determined pursuant to the Equity Line Agreement upon the occurrence, if any, of certain circumstances set forth in the Equity
Line Agreement; and 

    WHEREAS,
pursuant to the terms of and in partial consideration for, the Investor's commitment to enter into the Equity Line Agreement, the Company has agreed to provide the Investor
with certain registration rights with respect to the Common Shares as set forth in this Agreement; 

    NOW,
THEREFORE, in consideration of the mutual promises, representations, warranties, covenants and conditions set forth in the Equity Line Agreement, the Warrants and this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, intended to be legally bound hereby, the Company and the Investor agree as follows: 

    1.  Definitions.  Capitalized terms used herein and not otherwise defined shall have the meaning ascribed
thereto in the Equity Line Agreement or the Warrants. As used in this Agreement, the following terms shall have the following respective meanings: 

    "Commission" or "SEC" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act. 

    "Holder" and "Holders" shall include the Investor and any transferee of the Warrants,
Common Stock or other Registrable Securities which have not been sold to the public to whom the registration rights conferred by this Agreement have been transferred in compliance with this Agreement. 

    "Issuance Date" shall mean each date a Warrant is issued to the Investor. 

    The
terms "register", "registered" and
"registration" shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and
applicable rules and regulations thereunder, and the declaration or ordering by the SEC of the effectiveness of such registration statement. 

    "Registrable Securities" shall mean: (i) the Common Stock issued to each Holder or its permitted transferee or designee upon
exercise of each respective Warrant, or upon any stock split, stock dividend, recapitalization or similar event with respect to such Common Stock; (ii) any securities issued or issuable to each
Holder upon the exercise or exchange of such Warrant, or Common Shares; and (iii) any other security of the Company issued as a dividend or other distribution with respect to, or upon
conversion or exchange of or in replacement of such Registrable Securities. 

 

    "Registration Expenses" shall mean all reasonable expenses to be incurred by the Company in connection with the Holder's registration
rights under this Agreement, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses, and the
expense of any audited financial statements incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which
shall be paid in any event by the Company; provided that Registration Expenses shall not include Selling Expenses). 

    "Registration Statement" shall have the meaning set forth in Section 2(a)(i) herein. 

    "Regulation D" shall mean Regulation D as promulgated pursuant to the Securities Act, and as subsequently amended. 

    "Securities Act" or "Act" shall mean the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder. 

    "Selling Expenses" shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities and
all fees and disbursements of counsel for Holders. 

    2.  Registration Requirements.  The Company shall use reasonable commercial efforts to effect the
registration of the Registrable Securities (including, without limitation, an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky or other
state securities laws and appropriate compliance with applicable regulations issued under the Securities Act) as would permit or facilitate the sale or distribution of all the Registrable Securities
in the manner (including manner of sale) and in all states reasonably requested by the Holder on a Principal Market. Such reasonable commercial efforts by the Company shall include the following: 

    (a) The
Company shall, as expeditiously as reasonably practicable after each Issuance Date: 

     (i) Prepare
and file a registration statement with the Commission pursuant to Rule 415 under the Securities Act on Form S-3 under the
Securities Act (or such other form as the Company is eligible to use under the Securities Act) covering the Registrable Securities underlying the Warrant issued on such Issuance Date ("Registration
Statement") which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein, or necessary to make the statements therein not misleading. Such Registration Statement shall initially register for resale a number of shares of Common
Stock equal the number of shares of Common Stock issuable upon exercise of the Warrants. Such Registration Statement shall, in addition and without limitation, register (pursuant to Rule 416
under the Securities Act, or otherwise) such additional indeterminate number of Registrable Securities as shall be necessary to permit exercise of the Warrants to prevent dilution resulting from stock
splits, stock dividends or similar transactions. Thereafter, the Company shall use reasonable commercial efforts to cause such Registration Statement and other filings to be declared effective as soon
as possible, and in any event within to 90 days following the applicable Issuance Date (the "Effective Date"); provided, however, that,
notwithstanding Sections 2(a)(ii) and 2(a)(v) below, the Company's obligations hereunder to file a Registration Statement and to keep a registration statement
continuously in effect under the Securities Act shall be suspended if (A) the fulfillment of such obligations would require the Company to make a disclosure that would, in the reasonable
judgment of the Company's Board of Directors, have a Material Adverse Effect (as such term is defined in the Equity Line Agreement) on the Company or a material adverse effect on the future prospects
of the Company or its stockholders, (B) the Company has filed or proposes to file a registration statement with respect to any of its securities to be distributed in an underwritten
public offering and it is advised by its lead or managing underwriter that an offering by a Holder of 

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Registrable Securities would materially adversely affect the distribution of such securities, or (C) the fulfillment of such obligations would require the Company to prepare financial
statements under the Securities Act that would not otherwise be required to be prepared by the Company in order to comply with its obligations under the Exchange Act. Such obligations shall be
reinstated (x) in the case of clause (A) above, upon the making of such disclosure by the Company (or, if earlier, when such disclosure would either no longer be necessary for the
fulfillment of such obligations or no longer be detrimental), (y) in the case of clause (B) above, upon the conclusion of any period during which the Company would not, pursuant to the
terms of its underwriting arrangements, be permitted to sell Registrable Securities for its own account and (z) in the case of clause (C) above, as soon as it would no longer be
necessary to prepare such financial statements to comply with the Securities Act. 

    (ii) Prepare
and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement
as may be necessary to keep the Registration Statement effective, subject to Section 2(a)(i) above, and to comply with the provisions of the Act with respect to the disposition of all
securities covered by such Registration Statement until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Registration Statement and notify the Holders of the filing and effectiveness of such Registration Statement and any amendments or supplements. 

    (iii) Furnish
to each Holder such numbers of copies of a current prospectus conforming with the requirements of the Act, copies of the Registration Statement, any
amendment or supplement thereto and any documents incorporated by reference therein and such other documents as such Holder may reasonably require in order to facilitate the disposition of Registrable
Securities owned by such Holder and, in the case of the Registration Statement referred to in Section 2(a)(i), each letter written by or on behalf of the Company to the SEC or the staff of the
SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion of any thereof which contains information for
which the Company has sought confidential treatment). The Company will immediately notify the Holder by facsimile of the effectiveness of the Registration Statement or any post-effective
amendment. The Company will promptly respond to any and all comments received from the SEC, with a view towards causing the Registration Statement or any amendment thereto to be declared effective by
the SEC as soon as reasonably practicable and shall promptly file an acceleration request as soon as practicable following the resolution or clearance of all SEC comments or, if applicable, following
notification by the SEC that the Registration Statement or any amendment thereto will not be subject to review. 

    (iv) (a)
If legally required, register and qualify, or obtain an appropriate exemption from registration or qualification, the securities covered by such Registration
Statement under such other securities or "Blue Sky" laws of such jurisdictions as shall be reasonably requested by each Holder (b) prepare and file in those jurisdictions such supplements
(including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof, (c) take such other actions
as may be necessary to maintain such registrations and qualifications in effect at all times, and (d) take all other actions reasonably necessary or advisable to qualify the Registrable
Securities for sale in such jurisdictions; 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, and shall not be required to register or qualify in 

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any jurisdiction where such registration or qualification is not permitted or approved by such jurisdiction following the Company's reasonable efforts to obtain such permission or approval. 

    (v) Notify
each Holder immediately of the happening of any event as a result of which the prospectus (including any supplements thereto or thereof) included in such
Registration Statement, as then in effect, includes an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and use its best efforts to promptly update and/or correct such prospectus to correct such untrue statement or omission, and deliver such number
of copies of such supplement or amendment to each Holder as such Holder may reasonably request. 

    (vi) Notify
each Holder immediately of the issuance by the Commission or any state securities commission or agency of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose. The Company shall use reasonable efforts to prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest practicable time. 

   (vii) Permit
a single firm of counsel, designated as Holders' counsel by the Holders of a majority of the Registrable Securities included in the Registration Statement
(the fees and expenses of which shall be paid in their entirety by the Holders not withstanding Section 3 below), to review the Registration Statement and all amendments and supplements thereto
within a reasonable period of time prior to each filing, and shall not request acceleration of the Registration Statement without prior notice to such counsel. The sections of the Registration
Statement covering information with respect to the Investor, the Investor's beneficial ownership of securities of the Company or the Investor's intended method of disposition of Registrable Securities
shall conform in all material respects to the information provided to the Company by the Investor. 

   (viii) List
the Registrable Securities covered by such Registration Statement with all securities exchange(s) and/or markets on which the Common Stock is then listed
and prepare and file any
required filings with the National Association of Securities Dealers, Inc. or any exchange or market where the Common Shares are then traded. 

    (ix) If
applicable, take all reasonable steps necessary to enable Holders to avail themselves of the prospectus delivery mechanism set forth in Rule 153 (or
successor thereto) under the Act. 

    (x) The
Company shall hold in confidence and not make any disclosure of information concerning the Investor provided to the Company unless (a) disclosure of such
information is reasonably necessary in the Company's good faith judgment to comply with federal or state securities laws, (b) the disclosure of such information is reasonably necessary in the
Company's good faith judgment to avoid or correct a misstatement or omission in any Registration Statement, (c) the release of such information is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction, or (d) such information has been made generally available to the public other than by disclosure in violation of this or any other
agreement. The Company agrees that it shall, upon learning that disclosure of such information concerning the Investor is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Investor prior to making such disclosure, and allow the Investor, at its expense, to undertake appropriate action to prevent disclosure of, or obtain a
protective order for, such information. 

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    (xi) The Company shall provide a transfer agent (the "Transfer Agent") and registrar, which may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement. 

   (xii) The
Company shall cooperate with the Investor who holds Registrable Securities being offered to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates to be in such denominations or amounts, as the case may be, as the Investor may
reasonably request and registered in such names as the Investor may request. 

   (xiii) From
and after the date of this Agreement, the Company shall not, and shall not agree to, allow the holders of any securities of the Company to include any of
their securities in any Registration Statement under this Section 2(a) without the consent of the holders of a majority-in-interest of the Registrable Securities. 

   (xiv) The
Company shall take all other reasonable actions necessary to allow disposition by the Investor of Registrable Securities pursuant to the Registration
Statement. 

    (b) Delay in Effectiveness

     (i) If
the Registration Statement has not become effective on or before ninety (90) days from the applicable Issuance Date, the Investor shall have, in addition
to and without limiting any other rights it may have in equity, for breach of the Equity Line Agreement, or this Agreement (including the right to specific performance), the right to receive, as
liquidated damages, the payments as provided in subparagraph (ii) of this section. 

    (ii) In
the event the Company fails to obtain the effectiveness of a Registration Statement within the time period set forth in Section 2(a)(i), the Company
shall pay to the Investor an amount equal to (A) $100, in cash, for each day of the thirty (30) day period following the date by which such Registration Statement was required to have
been declared effective and (B) $500, in cash, for each day after such first thirty (30) day period until the earlier of (x) the date such Registration Statement has been declared
effective or (y) the date which this Agreement has terminated. In addition to the foregoing, but subject to Section 2(c) below, in the event the Company fails to maintain the
effectiveness of a Registration Statement (or the use of the underlying prospectus) throughout the period set forth in Section 5(a), other than suspensions as set forth in Section 2, the
Company shall pay to the Investor an amount equal to $500, in cash, per day, in which a suspension has occurred. 

    (c)  Blackout Periods.  The Company may suspend dispositions under the Registration Statement and notify
the Investor that it may not sell the Registrable Securities pursuant to any Registration Statement or prospectus (a "Blocking Notice") as a result of the circumstances described in Sections
2(a)(i)(A), 2(a)(i)(B) or 2(a)(i)(C); provided that such suspension pursuant to a Blocking Notice may not exceed ninety (90) days (whether or not consecutive) in any twelve (12) month
period. If the Investor's ability to sell under the Registration Statement is suspended for more than the ninety (90) days period described above, the Investor may elect, in its sole and
absolute discretion, to terminate the Agreement pursuant to Section 10.4(b)(i) in the Agreement. 

    3.  Expenses of Registration.  All Registration Expenses incurred in connection with any registration,
qualification or compliance with registration pursuant to this Agreement shall be borne by the Company, and all Selling Expenses of a Holder shall be borne by such Holder. 

    4.  Registration on Form S-3.  The Company shall seek to qualify for registration on
Form S-3 or any comparable or successor form or forms, or in the event that the Company is ineligible to use such form, such form as the Company is eligible to use under the
Securities Act. 

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    5.  Registration Period.  In the case of the registration effected by the Company pursuant to this
Agreement, the Company will use its best efforts to keep such registration effective until all the Holders have completed the sales or distribution described in the Registration Statement relating
thereto, provided that the Company shall not be required to keep such Registration Statement effective after the earlier of (i) the sale by the Holder of the Common Stock under the Registration
Statement and (ii) two (2) years after the acquisition by the Holder from the Company of such Common Stock; provided, however, that if Rule 144 is amended, the obligations of the
Company under this Section 5 will terminate at such time as the Common Shares are freely tradable under such amended Rule 144. 

    6.  Indemnification  

    (a)  The Company Indemnity.  The Company will indemnify each Holder, each of its officers, directors and
partners, and each person controlling each Holder, within the meaning of Section 15 of the Securities Act and the rules and regulations thereunder, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Company of the Securities Act or any state securities law or in either case, any rule or regulation thereunder applicable to the Company and
relating to action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse each Holder, each of its officers, directors and
partners, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any reasonable legal and any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to a Holder to the extent that any such
claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by such Holder or the underwriter (if
any) therefor and stated to be specifically for use therein. The indemnity agreement contained in this Section 6(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent of the Company (which consent will not be unreasonably withheld). 

    (b)  Holder Indemnity.  Each Holder will, severally and not jointly, if Registrable Securities held by or
issuable to it are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company, each of its directors, officers and partners, each
person who controls the Company within the meaning of Section 15 of the Securities Act and the rules and regulations thereunder, each other Holder (if any), and each of their officers,
directors and partners, and each person controlling such other Holder(s), against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and such other Holder(s) and their respective
directors, officers and partners, underwriters or control persons for any reasonable legal or any other expenses reasonably incurred in connection with investigating and defending any such claim,
loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be 

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specifically for use therein, and provided that the maximum amount for which such Holder shall be liable under this indemnity shall not exceed the net proceeds received by such Holder from the sale of
the Registrable Securities. The indemnity agreement contained in this Section 6(b) shall not apply to amounts paid in settlement of any such claims, losses, damages or liabilities if such
settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld). 

    (c)  Procedure.  Each party entitled to indemnification under this Article (the "Indemnified Party")
shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any such claim in any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the
defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate
in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations
under this Article except to the extent that the Indemnifying Party is prejudiced by such failure to provide notice. No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Each Indemnified Party shall furnish such information regarding itself or the claim in
question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with the defense of such claim and litigation resulting therefrom. 

    7.  Contribution.  If the indemnification provided for in Section 6 herein is unavailable to the
Indemnified Parties in respect of any losses, claims, damages or liabilities referred to herein (other than by reason of the exceptions provided therein), then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities as between the Company on the
one hand and any Holder on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of such Holder in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of any Holder on the other shall be
determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder. 

    In
no event shall the obligation of any Indemnifying Party to contribute under this Section 7 exceed the amount that such Indemnifying Party would have been obligated to pay by
way of indemnification if the
indemnification provided for under Section 6(a) or 6(b) hereof had been available under the circumstances. 

    The
Company and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Holders or the underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding paragraphs. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraphs shall be deemed to include, subject to the limitations set forth above, 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 section, no Holder shall be required to contribute any amount in 

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excess of the amount by which the net proceeds received by such Holder from the sale of Registrable Securities exceeds, in any such case, the amount of any damages that such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person liable for or 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 liable for or guilty of such fraudulent misrepresentation. 

    8.  Survival.  The indemnity and contribution agreements contained in Sections 6 and 7 shall remain
operative and in full force and effect regardless of any termination of this Agreement or the Purchase Agreement. 

    9.  Information by Holders.  Each Holder shall furnish to the Company such information regarding such
Holder and the distribution and/or sale proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification
or compliance referred to in this Agreement. The intended method or methods of disposition and/or sale (Plan of Distribution) of such securities as so provided by such Holder shall be included without
alteration in the Registration Statement covering the Registrable Securities, subject to any reasonable objection of the Company and shall not be changed without written consent of such Holder or its
designated representative. 

    10.  Nasdaq Limit on Stock Issuances.  Notwithstanding anything to the contrary herein, the Company shall
not be obligated to issue or register with the SEC any shares of Common Stock to the extent that such issuance or registration is prohibited by any rule, regulation or policy of Nasdaq or any exchange
or market upon which the Common Stock may be traded. 

    11.  Transfer or Assignment.  Except as otherwise provided herein, this Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted assigns. The rights granted to the Investor by the Company under this Agreement to cause the Company to register Registrable
Securities may be transferred or assigned (in whole or in part) to a transferee or assignee which transfer has been effected in compliance with the Debentures and Warrants; provided in each case that
the Company must be given written notice by the such Investor at the time of or within a reasonable time after said transfer or assignment, stating the name and address of said transferee or assignee
and identifying the securities with respect to which such registration rights are being transferred or assigned; and provided further that the transferee or assignee of such rights agrees in writing
to be bound by the registration provisions of this Agreement. 

    12.  Miscellaneous  

    (a)  Remedies.  The Company and the Investor acknowledge and agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or equity. 

    (b)  Notices.  Any notice or other communication required or permitted to be given hereunder shall be in
writing by facsimile, mail or personal delivery and shall be effective upon actual receipt of such notice. The addresses for such communications shall be: 

to
the Company: 

Cygnus, Inc.

400 Penobscot Drive

Redwood City, California 94063

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Attention: Chief Executive Officer

Facsimile: (650) 599-3972 

with
copies to: 

Cygnus, Inc.

400 Penobscot Drive

Redwood City, California 94063

Attention: General Counsel

Facsimile: (650) 599-3913 

to
the Holder: 

Cripple
Creek Securities, LLC

c/o The Palladin Group, L.P.

195 Maplewood Avenue

Maplewood, New Jersey 07040

Attention: Robert L. Chender

Facsimile: (973) 313-6490 

with
copies to: 

Arnold &
Porter

1600 Tysons Blvd.

McLean, Virginia 22102

Attention: Steve Parker

Facsimile: (703) 720-7399 

Any
party hereto may from time to time change its address for notices by giving at least 10 days' written notice of such changed address to the other parties hereto. 

    (c)  Waivers.  No waiver by any party of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party
to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter. The representations and warranties and the agreements and covenants of the Company and
each Investor contained herein shall survive the Closing. 

    (d)  Execution.  This Agreement may be executed in two or more counterparts, all of which shall be
considered one and the same agreement, it being understood that all parties need not sign the same counterpart. 

    (e)  Publicity.  The Company agrees that it will not disclose, and will not include in any public
announcement, the name of the Investor without its consent, unless and until such disclosure is required by law or applicable regulation, and then only to the extent of such requirement. 

    (f)  Entire Agreement.  This Agreement, together with the Purchase Agreement, the Debentures and the
Warrants and the agreements and documents contemplated hereby and thereby, contains the entire understanding and agreement of the parties, and may not be modified or terminated except by a written
agreement signed by both parties. 

    (g)  Governing Law; Consent of Jurisdiction.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS TO BE EXECUTED AND PERFORMED ENTIRELY WITHIN SUCH STATE. EACH PARTY (I) HEREBY IRREVOCABLY SUBMITS TO THE
EXCLUSIVE JURISDICTION OF THE 

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STATE AND FEDERAL COURTS LOCATED IN SAN FRANCISCO COUNTY, CALIFORNIA FOR THE PURPOSES OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT AND (II) HEREBY WAIVES, AND
AGREES NOT TO ASSERT IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM OR THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF TO SUCH
PARTY AS PROVIDED HEREIN AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR LIMIT ANY RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. 

    (h)  Jury Trial.  EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY. 

    (i)  Titles.  The titles used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. 

[Signature page follows]

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    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. 

	 	 	CYGNUS, INC.
	

 	
 	

By:	
 	

  /s/ JOHN C HODGMAN   

	 	 	 	 	Name:	 	  John C Hodgman

	 	 	 	 	Title:	 	  President & Chief Executive Officer

	

 	
 	
INVESTOR:
	

 	
 	
CRIPPLE CREEK SECURITIES, LLC
	

 	
 	

By:	
 	

  /s/ ROBERT L. CHENDER   

	 	 	 	 	Name:	 	Robert L. Chender
	 	 	 	 	Title:	 	Principal

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EXHIBIT 4.1

REGISTRATION RIGHTS AGREEMENTPrepared by MERRILL CORPORATION

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EXHIBIT 10.32  

Pages
where confidential treatment has been requested are stamped "Confidential Treatment Requested. The redacted material has been separately filed with the Commission." The appropriate section has
been marked at the appropriate place with a star [*]. 

  

 
 

DISTRIBUTOR AGREEMENT    
  

    This agreement is entered into this 28th day of May, 2001 by and between Alcide Corporation, a Delaware corporation whose offices are located at 8561 154th
Ave. N.E., Redmond, Washington, U.S.A. (hereinafter "Supplier") and SFAN LABORATOIRE whose offices are located in Rue des Rainettes, Ranes, FRANCE (hereinafter "Distributor"), and supersedes all
previous agreements between the parties. 

    NOW,
THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows: 

    1.  Definitions

    As
used herein, the term 

    1.1 "Contract
Term" shall mean that period stated on Schedule A attached hereto. 

    1.2 "Products"
shall mean Alcide® external udder care products, including UDDERgold® Germicidal Barrier Teat Dip, UDDERgold
Platinum® Barrier Teat Dip and 4XLA® Pre and Post Milking Teat Dip. 

    1.3 "Territories"
shall be as defined by the attached Schedule B. 

    2.  Appointment of Distributor

    2.1 Subject
to the terms and conditions of this Agreement, Supplier hereby appoints Distributor as exclusive Distributor for the Products for the Territories.
Distributor hereby accepts said appointment and agrees to actively promote and sell the Products. 

    2.2 In
accepting this appointment, Distributor agrees that it and its subsidiaries shall not, directly or indirectly, sell or distribute in the Territories, or develop: 

    (a) Any
other external udder disinfectant product during the Contract Term except for Cleaniode® (2% Providine Iodine teat dip) and Trempiode®. 

    (b) Any
product containing acidified chlorite, chlorous acid or chlorine dioxide as its active ingredients or degradents during the Contract Term and for a period of
two (2) years thereafter. 

    (c) Alcide
products sourced through other Alcide distributors unless approved in writing by Alcide. 

    2.3 Distributor
may appoint agents, dealers or sales representatives to act on Distributor's behalf for sales of the Products in the Territories, provided that any
compensation to such agents, dealers or representatives shall be solely Distributor's responsibility. 

    2.4 Subject
to the terms and conditions of this Agreement, Distributor is authorized to sell the Products purchased from Supplier in such manner, at such prices and
upon such terms as Distributor shall determine. Distributor is an independent contractor, not an agent or representative of Supplier. Distributor shall not assume or create any obligation in the name
of Supplier or make any representation, warranty or guarantee on behalf of or in the name of Supplier. 

    2.5 Labeling
of the Products shall be determined exclusively by Supplier. Distributor will have the right to review all Product labels prior to final approval by
Supplier, and Distributor's name and trademark shall be displayed on all labels for Product delivered in the Territories. Distributor shall reimburse Supplier for art work related to labels making
specific reference to Distributor or sub-distributors and, upon termination of this Agreement, Distributor shall purchase such labels 

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from Supplier at the cost incurred by Supplier. When sub-distributor changes, Distributor shall purchase old labels from Supplier. 

    2.6 In
any of the Distributor's activities relating to the promotion and sale of the Products, Supplier's name and trademark shall always be prominently displayed in
order to protect Supplier's rights and goodwill in the same. Whenever Supplier's name and trademark are used in advertising and promotional programs, Supplier retains the right to review and approve
same. 

    2.7 All
registrations, trade names, trademarks and product names under which the Products are sold shall be the property of Supplier. In the event any registrations
(e.g., Product registrations) are taken or issued in the name of Distributor, Distributor shall, upon request, but in any event no later than upon termination of this Agreement, transfer such
registrations to Supplier or Supplier's designee and provide any documents and assistance reasonably required in connection therewith. 

    2.8 This
Agreement shall not be construed as establishing a franchise. 

    2.9 Supplier
and Distributor each represent and warrant to the other that it is authorized to enter into and perform this Agreement and that this Agreement does not and
shall not conflict with any other agreements it may have. 

    3.  Terms and Conditions of Sale

    3.1 All
of Distributor's orders for the Products shall be subject to the terms and conditions set forth in this Section 3 and in the attached Schedule D
which provides Product pricing. No additional or different terms set forth in Distributor or Supplier's purchase order, acknowledgment or other forms of correspondence (other than an amendment to this
Agreement pursuant to Section 8.1 hereof) shall govern any sales of the Products by Supplier to Distributor. 

    3.2 Supplier
shall be responsible for labeling, packing and shipping all Products ordered in a form agreed upon between Supplier and Distributor as being appropriate
for the Territory and suitable for ready sale to the end user in the Territory. All deliveries shall be Ex Works Manufacturing Plant location. 

    3.3 Schedule A
(attached) sets forth a firm commitment of dollar volume to be purchased by Distributor from Supplier. [*] 

    Ninety
(90) days prior to the start of the contract year, Distributor will provide Supplier with a twelve (12) month forecast of anticipated Product purchases by month,
of which the first three (3) months shall be a firm purchase order. The twelve (12) month forecast will be updated each ninety (90) days to facilitate Supplier's planning. 

    Monthly
purchase orders will be issued by Distributor to Supplier ninety (90) days in advance. 

    3.4 Distributor
shall make payments to Supplier within sixty (60) days following invoice of Products ordered by Distributor on all orders except those placed
during the first Quarter of fiscal year 2002. Distributor shall make payments to Supplier within ninety (90) days following invoice of Products ordered by Distributor and shipped during the
first Quarter of fiscal year 2002. Invoice will not be issued by Supplier until Product is manufactured and ready for shipment with proper notification of availability provided to Distributor.
Distributor agrees and understands that interest will be charged for all amounts not paid within sixty (60) days from date of shipment except on those orders shipped during the first Quarter of
fiscal year 2002. Distributor agrees and understands that interest will be charged for all amounts not paid within ninety (90) days from date of shipment for those orders shipped during the
first Quarter of fiscal year 2002. [*] 

    3.5 Supplier
provides the Limited Warranty as described in Schedule C. 

Confidential
Treatment requested. The redacted material has been separately filed with the Commission. 

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    3.6 Prices
shown in Schedule D may be revised by Supplier annually at the anniversary date of this Agreement. 

    3.7 Supplier
shall have Distributor named as an additional insured under Supplier's Product Liability Insurance policy at all times during the term of this Agreement. 

    3.8 Upon
termination of the Agreement, Distributor shall purchase from Supplier all unused labels and Product inventory which has been manufactured for Distributor. 

    4.  Promotional Activities

    4.1 Distributor
shall undertake such advertising and promotional activity relating to Products as is deemed appropriate by Distributor to actively promote sales. Such
advertising and promotional activity shall be solely at Distributor's expense unless otherwise agreed to in writing by Supplier. All advertising and promotional materials developed by Distributor
shall be in accordance with descriptions of Products provided by Supplier and, to the best of Distributor's knowledge, shall be accurate in all material respects. Upon request, Supplier shall have the
right to review and approve all advertising and
promotional materials developed by Distributor. Such approval will not be unreasonably withheld and will automatically be given if Supplier does not respond to the request within seven
(7) working days. 

    4.2 Distributor's
marketing plans shall be provided to Supplier annually on or before the start of each contract year. A list of major meetings, annual shows, seminars
and training programs at which Supplier's participation is desired shall be submitted ninety (90) days in advance by Distributor. 

    4.3 A
tabulation of Distributor sales by Product and Territory shall be provided by Distributor to Supplier at the end of each fiscal quarter. Distributor shall
maintain records of sales to sub-distributors or customers for a period of at least two years and, upon request, provide Supplier with copies of such records. 

    5.  Term and Termination

    5.1 This
Agreement may be terminated by either party, effective immediately upon notice to the other, in the event the party to which such notice is sent becomes the
subject of any bankruptcy or insolvency proceedings. 

    5.2 In
any case where a party claims the other party is in breach of the provisions of this Agreement (other than a failure to purchase at least the commitment goals
set forth in Schedule A), the injured party shall give written notice of the breach. The party in breach must commence curing the breach within sixty (60) days of receiving notice
thereof. If the breach is not cured within one hundred and twenty (120) days, this Agreement may be terminated by the party claiming breach. 

    5.3 The
provisions of Sections 2.2, 2.6, and 7 and any accrued obligations shall survive termination of this Agreement. 

    5.4 No
later than six (6) months prior to expiration of this Agreement, Distributor and Supplier shall meet to discuss their intentions regarding a new or
extended agreement. 

    6.  Applicable Law.

    This
Agreement shall be governed by and construed in accordance with the laws of the State of Washington, regardless of its or any other jurisdiction's choice of law principles. The
1980 U.N. Convention on Contracts for the International Sale of Goods shall not apply to this Agreement.
Settlement of disputes relating to this Agreement shall be resolved according to the Rules of Arbitration of the International Chamber of Commerce. 

3

 

    7.  Confidential Information

    (a) Supplier
and Distributor agree, with respect to any confidential information received from the other and identified as confidential information, that: 

	(i)
	the
receiving party shall use reasonable care to prevent disclosure of the confidential information to any third party without the prior written
consent of the disclosing party, and the degree of care taken by the receiving party shall be at least as great as the degree of care which the receiving party takes in protecting its own confidential
information; and

	(ii)
	receiving
party shall not use confidential information disclosed by the other party for any commercial purpose other than pursuant to this
Agreement, or publish or disclose it to third persons without the prior written consent of the disclosing party. 

    (b) Neither
party shall have any obligation with respect to any information disclosed by the other party: 

	(i)
	which
is already in the possession of the receiving party at the time of its receipt from the disclosing party;

	(ii)
	which
the receiving party lawfully receives from another person whose disclosure thereof to the receiving party does not violate any rights of the
disclosing party; or

	(iii)
	which
is or becomes published or otherwise publicly available through no act or omission of the receiving party. 

    (c) Upon
expiration or termination of this Agreement, Distributor and Supplier shall each, upon the written request of the other, return or destroy all materials,
copies thereof and extracts therefrom
which include any information designated as confidential by the other pursuant to Section 7. Each may, however, retain for legal archival purposes only, one (1) copy of all such
material. 

    (d) The
provisions of this Section 7 and Section 2.2 shall survive termination of this Agreement and remain in full force and effect for a period of three
(3) years following termination as to any item of confidential information. 

    8.  Miscellaneous

    8.1 This
Agreement constitutes the entire agreement between Distributor and Supplier and may be amended only by a written document signed by both parties hereto. 

    8.2 All
notices, requests or other communications under this Agreement shall be given in the English language and will be deemed properly given if in writing and
delivered in person, sent via international courier service or by confirmed facsimile transmission to the intended recipient at the address specified below, or to such other address as a party may
specify in writing: 

	If to Supplier:	 	Alcide Corporation

Attn.: Joseph A. Sasenick

8561 154th Avenue N.E.

Redmond, WA 98052 U.S.A.
	 	 	 
	If to Distributor:	 	SFAN Laboratoire

Attn.: Eric Ebstein

13, Rue des Rainettes

61150 Ranes, France

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    8.3 The
failure by either party to enforce any term or provision of this Agreement shall not constitute a waiver of the same. 

    8.4 This
Agreement may be executed in any number of counterparts, each of which shall be deemed an original and one and the same document. 

    8.5 The
rights of Distributor hereunder shall not be assigned or transferred, either voluntarily or by operation of law, without the prior written consent of Supplier,
nor shall the duties of Distributor hereunder be delegated in whole or in part. Any such assignment, transfer or delegation shall be of no force or effect. Any change in control of Distributor shall
be deemed an impermissible assignment and entitle Supplier to terminate this Agreement. This Agreement shall be binding upon and inure to the benefit of Supplier, its successors and assigns. 

    8.6 If
any provision of this Agreement is or becomes invalid, illegal or unenforceable, the remaining provisions shall remain in full force and effect, and for the
invalid, illegal or unenforceable provision shall be substituted a valid, legal and enforceable provision which shall be as similar as possible in economic and business objectives as intended by the
parties. 

    8.7 Distributor
shall comply with all applicable laws and regulations in performing under this Agreement, including the U.S. Foreign Corrupt Practices Act. 

    8.8 Neither
party shall be responsible for non-performance or delay in performance arising from force majeure except the term of this Agreement shall not be
extended as a consequence thereof. Force Majeure shall be deemed to include, but not be limited to, those circumstances, if any, whereby Distributor shall be prevented from meeting minimum purchase
requirements set forth in Schedule A as a consequence of acts and omissions of Supplier. 

    9.  Addendum

    9.1 The
Distributor accepts the terms of this Agreement with the Supplier, without prejudice: 

    (a) The
Distributor will be named on the AMM registration for UDDERgold® as the Exploitant (distributor). 

    (b) UDDERgold
Platinum® will be submitted for homologation to the AFQA, i.e. Agence Française de la Qualité Alimentaire, when
the application procedure will be defined by the DGAL. 

    9.2 The
Distributor can use the Product trademarks named hereafter freely and unconditionally in the Territories listed in Schedule B within the auspices of this
Agreement: 

    (a) UDDERgold®

    (b) UDDERgold
Platinum® 

    (c) 4XLA®

    IN
WITNESS WHEREOF, the parties have executed this Agreement on the date first above written. 

	ALCIDE CORPORATION

(Supplier)	 	SFAN LABORATORIES

(Distributor)
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	By:	 	/s/ JOHN P. RICHARDS   	 	By:	 	/s/ ERIC EBSTEIN   
	Its:	 	President	 	Its:	 	General Manager
	 	 	 	 	 	 	 
	By:	 	/s/ JOSEPH A. SASENICK   	 	 	 	 
	Its:	 	Chairman, CEO	 	 	 	 

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   SCHEDULE A  

(1)
Contract Term 

(2)
Commitments to purchase Product 

	(1)
	The
Contract Term shall be a three year period commencing June 1, 2001, and ending May 31, 2004 (Fiscal Year 2002 through Fiscal Year 2004).

	(2)
	[*] Confidential
Treatment requested. The redacted material has been separately filed with the Commission. 

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   SCHEDULE B  

 Territories  

France

Algeria

Morocco

Tunisia 

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   SCHEDULE C

Limited Warranty  

    Alcide Corporation warrants to all purchasers of this Product that it has been manufactured in accordance with U.S. regulatory requirements, is free of defects
and is as described in all labeling affixed hereto. Alcide's sole obligation under this warranty and buyer's sole remedy for any defect or failure to meet such requirements or labeling shall be
limited to replacement without cost (except all costs for shipping and handling which shall be Distributor's responsibility) of any quantity of the Product sold. 

    THE
WARRANTY PROVIDED HEREIN AND THE OBLIGATIONS AND LIABILITIES OF ALCIDE CORPORATION HEREUNDER ARE EXCLUSIVE AND IN LIEU OF, AND BUYER HEREBY WAIVES ALL OTHER REMEDIES, WARRANTIES,
GUARANTIES OR LIABILITIES, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE (INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY AND ANY
REMEDIES OR LIABILITIES FOR LOST PROFITS OR CONSEQUENTIAL DAMAGES). BUYER ACKNOWLEDGES THAT HE IS NOT RELYING ON THE JUDGMENT OF ALCIDE CORPORATION TO SELECT OR FURNISH COMPONENTS OR MATERIALS
SUITABLE FOR ANY PARTICULAR PURPOSE AND THAT ALCIDE CORPORATION MAKES NO WARRANTIES OTHER THAN ON THE FACE HEREOF. 

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   SCHEDULE D  

    [*]
Confidential Treatment requested. The redacted material has been separately filed with the Commission. 

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DISTRIBUTOR AGREEMENT

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