Exhibit 10.4

 

VERACYTE, INC.

6000 Shoreline Court, Suite 300

South San Francisco, CA 94080

 

STRICTLY CONFIDENTIAL

 

March 30, 2016

 

Visium Healthcare Partners, LP

888 7th Avenue, 22nd Floor

New York, NY 10019

 

Re:                             Agreement Regarding Potential Opportunity to
Purchase Common Equity Interests

 

Ladies and Gentleman:

 

Reference is made to the Credit Agreement (as amended, restated, supplemented or
otherwise modified, the “Credit Agreement”), dated as of March 25, 2016 by and
among Veracyte, Inc., a Delaware corporation (the “Company”), as Borrower under
the Credit Agreement, each of the Guarantors party to the Credit Agreement,
Visium Healthcare Partners, LP, a Delaware limited partnership, as
Administrative Agent under the Credit Agreement, and each of the Lenders party
to the Credit Agreement, including their successors and assigns (the
“Purchasers”).

 

In connection with entering into the Credit Agreement, the Company, the
Administrative Agent, and each of the Purchasers desire to enter into this
letter agreement (this “Letter Agreement”) with respect to the potential
opportunity to purchase Common Equity (as defined below) of the Company by the
Purchasers in connection with one or more Equity Offerings (as defined below)
for a period of one year following the Funding Date, subject to the terms and
conditions of this Letter Agreement.  As used in this Letter Agreement, “Common
Equity” means (i) shares of common stock of the Company, (ii) warrants, options
or other rights for the purchase or acquisition from the Company of shares of
common stock of the Company or (iii) securities convertible into or exchangeable
for shares of common stock of the Company.

 

Each of the parties to this Letter Agreement agree that this Letter Agreement is
effective as of the Funding Date. Unless otherwise defined herein, capitalized
terms used in this Letter Agreement shall have the meanings set forth in the
Credit Agreement.

 

In consideration of the foregoing and the mutual promises, representations,
warranties, and covenants hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

 

1.                                      Participation Rights.

 

(a)                                 In the event the Company intends to offer
Common Equity pursuant to one or more Qualifying Follow-On Offerings (as defined
below) no later than one year following the Funding Date, each Purchaser, in its
sole discretion, shall have the right but not the obligation to submit to the
underwriters a non-binding indication of interest to purchase in each Qualifying
Follow-On Offering (the “Public Offering Participation Right”) such Purchaser’s
Pro Rata Percentage (as defined below) of up to an aggregate number of shares or
units of Common Equity equal to (i) the Available Amount (as defined below)
divided by (ii) the price at which each share or unit of Common Equity is issued
and sold to the public in the Qualifying Follow-On Offering (the “Public
Offering Price”), at a price per share or unit equal to the Public Offering
Price in the closing of the Qualifying Follow-On Offering (the “Public Offering
Closing”). Notwithstanding the foregoing, the Public Offering Participation
Right shall be subject to (i) a determination by any of the Company, the
Administrative Agent (on behalf of the Purchasers) or the underwriters, with the
advice of outside counsel, that the Public Offering

 

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Participation Right does not violate applicable Laws and the rules, regulations
and requirements of securities exchanges or securities listing organizations,
including but not limited to any applicable state or federal securities laws or
regulations and any applicable rule, policy or limit imposed by the U.S.
Securities and Exchange Commission, the National Association of Securities
Dealers, or any securities exchange (“Applicable Law”) and (ii) any carve backs,
restrictions and other limitations reasonably requested by the Company’s
underwriters in connection with the Qualifying Follow-On Offering.  For purposes
of this Letter Agreement, “Available Amount”, as determined from time to time,
means (i) Five Million Dollars ($5,000,000) less (ii) the aggregate dollar
amount paid by the Purchasers, if any, to purchase Common Equity in Equity
Offerings prior to when the Available Amount is being calculated.

 

(b)                                 Notwithstanding the foregoing, in the event
(i) any of the Company, the Administrative Agent (on behalf of the Purchasers),
or the underwriters, with the advice of counsel, determine that the Public
Offering Participation Right violates Applicable Laws (including, without
limitation, as a result of the Purchasers having material non-public
information), (ii) the Public Offering Participation Right is limited by carve
backs, restrictions or other limitations reasonably requested by the
underwriters, or (iii) the Purchasers are otherwise not permitted or decline, in
their sole discretion, to participate in a Qualifying Follow-On Offering
pursuant to the terms hereof (each, a “Public Offering Disqualification Event”),
then, each Purchaser, in its sole discretion, shall have the right but not the
obligation (the “Private Placement Participation Right”), to purchase, in a
private placement exempt from the registration requirements of the Securities
Act of 1933, as amended, concurrent to the Qualifying Follow-On Offering, (the
“Private Placement”), such Purchaser’s Pro Rata Percentage (as defined below) of
up to an aggregate number of shares or units of Common Equity equal to (A) the
Available Amount divided by (B) the Equity Purchase Price (as defined below), at
a price per share or unit equal to the Equity Purchase Price (the “Private
Placement Price”) in a closing to be held concurrently with the closing of the
Qualifying Follow-On Offering. Notwithstanding the foregoing, the Participation
Right shall be subject to a determination by the Company or the Administrative
Agent with the advice of outside counsel, that the Private Placement does not
violate Applicable Law.If neither the Public Offering Participation Right nor
the Private Placement Participation Right with respect to a Qualifying Follow-On
Offering can be effected in compliance with Applicable Law, then the Company
shall have no further obligation to the Purchasers pursuant to this Letter
Agreement with respect to such Qualifying Follow-On Offering.

 

(c)                                  In the event the Company intends to offer
or sell Common Equity in one or more transactions in any manner other than
pursuant to a Qualifying Follow-On Offering or Private Placement as set forth
above, including without limitation, any other private placement of Common
Equity solely for cash, but excluding an underwritten Rule 144A offering of
securities convertible into or exchangeable for shares of common stock of the
Company (a “Private Sale”, and together with a Private Placement and a
Qualifying Follow-On Offering, each, an “Equity Offering”), no later than one
year following the Funding Date, then, each Purchaser, in its sole discretion,
shall have the right but not the obligation (the “Private Sale Participation
Right”), to participate in such Private Sale and purchase such Purchaser’s Pro
Rata Percentage of up to an aggregate number of shares or units of Common Equity
equal to (i) the Available Amount divided by (ii) the Equity Purchase Price, at
a price per share or unit equal to the Equity Purchase Price. Notwithstanding
the foregoing, the following shall not be deemed to be Private Sales or offers
or sales of Common Equity:  (i) issuances of equity compensation to employees
and directors of the Company pursuant to the equity compensation plans that have
been approved by shareholders of the Company prior to the Funding Date and
(ii) issuances of Common Equity in connection with strategic transactions
involving the Company and other entities, including joint ventures,
manufacturing, marketing or distribution arrangements, and technology transfer
or development arrangements.

 

(d)                                 For purposes of this Letter Agreement, a
“Qualifying Follow-On Offering” means the issuance by the Company of Common
Equity in an underwritten primary public offering (other than a public offering
pursuant to a registration statement on Form S-8) pursuant to an effective
registration statement filed with the SEC in accordance with the Securities Act
of 1933, as amended, and such Equity Interests are listed on a
nationally-recognized stock exchange in the United States.  For purposes of
clarity, sales of Common Equity pursuant to the Company’s existing Controlled
Equity Offering Sales Agreement shall not constitute a Qualifying Follow-On
Offering.  The “Purchaser’s Pro Rata Percentage” means, with respect to each
Purchaser at the time of the Closing, the percentage of the Outstanding Amount
of all Loans and Commitments under the Credit Agreement represented by the
Outstanding Amount of the Purchaser’s Loans and Commitments at the time of the
Closing.  The “Equity Purchase Price” means (i) in the case of a Qualifying
Follow-On Offering or Private Placement, the Public

 

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Offering Price and (ii) in the case of a Private Sale, the price per share or
unit negotiated in good faith by the Purchasers, any other purchasers of Common
Equity in such Private Sale, and the Company; provided, however, in no event
will the Equity Purchase Price be greater than the purchase price offered to a
third-party purchaser in the applicable Equity Offering.

 

(e)                                  In the event of a Qualifying Follow-On
Offering, at least fifteen (15) business days prior to the anticipated effective
date of the registration statement for the Qualifying Follow-On Offering or, if
the Qualifying Follow-On Offering is to be effected using an existing effective
shelf registration statement (a “Shelf Takedown”), at least twelve (12) business
days prior to the anticipated initial public marketing date for the Shelf
Takedown, the Company shall deliver to the Purchasers written notice (the
“Qualifying Follow-On Offering Notice”) specifying (i) that the Company has
filed a registration statement for a Qualifying Follow-On Offering or, in the
case of a Shelf Takedown, the Company anticipates effecting such Shelf Takedown,
(ii) the anticipated effective date of the registration statement or initial
public marketing date, as the case may be, for the Qualifying Follow-On
Offering, and (iii) any other appropriate information required by Applicable
Law.  In the case of a Private Sale, at least twelve (12) business days prior to
the anticipated closing of any Private Sale, the Company shall deliver to the
Purchasers a written notice (the “Private Sale Offering Notice”) specifying that
the Company intends to offer Common Equity for sale and the anticipated closing
date of the sale of such Common Equity that includes copies of the definitive
documentation pursuant to which the Company intends to offer or sell the Common
Equity as well as any other appropriate information required by Applicable Law.

 

(f)                                   Upon receipt of the Qualifying Follow-On
Offering Notice or Private Sale Offering Notice, as applicable, each Purchaser
shall promptly, but in no event later than twelve (12) business days (eight
(8) business days in the case of a Shelf Takedown) from receipt of such notice
in the case of a Qualifying Follow-On Offering or ten (10) business days from
receipt of such notice in the case of a Private Sale, inform the Company in
writing whether such Purchaser wishes to exercise its (i) Public Offering
Participation Right,or (ii) Private Placement Participation Right or
(iii) Private Sale Participation Right.

 

(g)                                 As a condition to each Purchaser
participating in the Qualifying Follow-On Offering, each such Purchaser shall
execute such other documents as may be required of all participants in the
Qualifying Follow-On Offering or as deemed reasonably necessary by the
underwriter of the Qualifying Follow-On Offering or the Company, as applicable,
including, without limitation a “lock-up” agreement; provided, however, that no
Purchaser will be required to enter into a lock-up agreement unless all
directors, executive officers and significant shareholders of the Company enter
into a significantly similar lock-up agreement.

 

(h)                                 As a condition to each Purchaser
participating in a Private Placement or Private Sale, as applicable, each such
Purchaser shall execute such other documents as may be deemed reasonably
necessary by the Company, including, without limitation a “lock-up” agreement;
provided, however, that no Purchaser will be required to enter into a lock-up
agreement unless, it is for ninety (90) days or less and all directors,
executive officers and significant shareholders of the Company enter into a
significantly similar lock-up agreements.

 

2.                                      Undertakings in Connection with Exercise
of Private Placement Participation Right

 

In the event a Purchaser exercises its Private Placement Participation Right,
the Company and the Purchasers shall, on or before the date of the final
prospectus relating to the registration by the Company of shares or units of
Common Equity in the Qualifying Follow-On Offering (the “Final Prospectus
Date”), execute and deliver such other documents, including a stock purchase
agreement containing representations, warranties and conditions to closing,
that, in each case, are customary for a transaction structured as a concurrent
private placement with a follow-on public offering, that are reasonably
satisfactory to the Company and each Purchaser.

 

3.                                      Undertakings in Connection with Exercise
of Private Sale Participation Right

 

In the event a Purchaser exercises its Private Sale Participation Right, the
Company and the Purchasers shall, on or before the closing date of the Private
Sale (the “Private Sale Closing Date”), execute and deliver the definitive
documents, pursuant to which the Company is selling or issuing the Common
Equity, including a stock purchase agreement containing representations,
warranties and conditions to closing, that, in each case, are customary for a
transaction structured as a similar private sale, that are reasonably
satisfactory to the

 

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Company and each Purchaser.  The terms included in any definitive documentation
between the Company and Purchaser governing a Private Sale shall be no less
favorable than those given to other purchasers of Common Equity in the Private
Sale.

 

4.                                      Termination.  The covenants, rights and
obligations set forth in Sections 1, 2 and 3 of this Letter Agreement shall
terminate and be of no further force or effect upon the earliest to occur of
(i) the Available Amount being zero (0) due to purchases by the Purchasers of
Five Million Dollars ($5,000,000) of Common Equity, or (ii) the date that is one
(1) year from the Funding Date.

 

5.                                      Successors and Assigns.  The provisions
of this Letter Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby,
provided that (i) the Company may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of each
Purchaser, and, (ii) except as otherwise permitted herein, each Purchaser may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Company. Notwithstanding anything to
the contrary herein, each Purchaser shall assign without consent of the Company
(but with notice to the Company) a proportionate part of its rights and
obligations under this Letter Agreement to any successor or assign of such
Purchaser’s rights and obligations under the Credit Agreement, subject to
compliance with Applicable Law, including federal and state securities laws (a
“Required Assignment”). Each Required Assignment hereunder shall be
proportionate and ratable to its corresponding assignment under the Credit
Agreement in accordance with Section 11.06(b)(ii) of the Credit Agreement. 
Notwithstanding anything to the contrary herein, each Purchaser shall be
permitted to assign or transfer any of its rights or obligations hereunder to
any Affiliate of such Purchaser without the consent of the Company.

 

6.                                      Miscellaneous.

 

(a)                                 Governing Law. This Letter Agreement and any
controversy arising out of or relating to this Letter Agreement shall be
governed by and construed under the laws of the State of New York, without
regard to conflict of law principles that would result in the application of any
laws other than the laws of the State of New York.

 

(b)                                 [Reserved]

 

(c)                                  Entire Agreement. This Letter Agreement and
the exhibits and schedules hereto, constitute the full and entire understanding
and agreement between the parties with regard to the subjects hereof and no
party shall be liable for or bound to any other in any manner by any oral or
written representations, warranties, covenants and agreements except as
specifically set forth herein.

 

(d)                                 Severability. In the event one or more of
the provisions of this Letter Agreement should, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Letter Agreement,
and this Letter Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.

 

(e)                                  Amendment and Waiver. This Letter Agreement
may be amended or modified, and the rights and the obligations of the Company
and the rights and obligations of the Purchasers may be waived, only upon the
written consent of the Company and each Purchaser.

 

(f)                                   Delays or Omissions. It is agreed that no
delay or omission to exercise any right, power or remedy accruing to any party,
upon any breach, default or noncompliance by another party under this Letter
Agreement, shall impair any such right, power or remedy, nor shall it be
construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or waiver of or acquiescence in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on any party’s part
of any breach, default or noncompliance under this Letter Agreement or any
waiver on such party’s part of any provisions or conditions of this Letter
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this Letter
Agreement

 

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the organizational documents of the Company, the Credit Agreement or otherwise
afforded to any party, shall be cumulative and not alternative.

 

(g)                                 Notices. All notices required or permitted
hereunder shall be in writing and shall be deemed effectively given when
delivered in compliance with Section 11.02 of the Credit Agreement.

 

(h)                                 Expenses. The Company shall pay all
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates
(including the fees, charges and disbursements of counsel for the Administrative
Agent), in connection with the preparation, negotiation, execution, and delivery
of this Letter Agreement.  Each of the Company, on the one hand, and the
Administrative Agent and its Affiliates, on the other hand, shall bear their own
expenses in connection with the administration of this Letter Agreement or any
amendments, modifications or waivers of the provisions hereof (whether or not
the transactions contemplated hereby shall be consummated).

 

(i)                                    Titles and Subtitles. The titles of the
sections and subsections of this Letter Agreement are for convenience of
reference only and are not to be considered in construing this Letter Agreement.

 

(j)                                    Counterparts. This Letter Agreement may
be executed in any number of counterparts, each of which shall be an original,
but all of which together shall constitute one instrument. Any or all parties
may execute this Letter Agreement by facsimile signature or scanned signature in
PDF format and any such facsimile signature or scanned signature, if identified,
legible and complete, shall be deemed an original signature and each of the
parties is hereby authorized to rely thereon.

 

(k)                                 Broker’s Fees. Each party hereto represents
and warrants that no agent, broker, investment banker, person or firm acting on
behalf of or under the authority of such party hereto is or will be entitled to
any broker’s or finder’s fee or any other commission directly or indirectly in
connection with the transactions contemplated herein. Each party hereto further
agrees to indemnify each other party for any claims, losses or expenses incurred
by such other party as a result of the representation in this Section 6(k) being
untrue.

 

(l)                                    Pronouns. All pronouns contained herein,
and any variations thereof, shall be deemed to refer to the masculine, feminine
or neutral, singular or plural, as to the identity of the parties hereto may
require.

 

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If you are in agreement with the terms set forth above, please sign the Letter
Agreement in the space provided below:

 

 

Very truly yours,

 

 

 

 

 

VERACYTE, INC.

 

 

 

Signature:

/s/ Bonnie Anderson

 

Name: Bonnie Anderson

 

Title: President & CEO

 

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PURCHASERS:

 

 

 

Visium Healthcare Partners, LP,

 

Delaware limited partnership

 

 

 

By:

Visium Healthcare Advisors, LP,

 

 

its General Partner

 

 

 

 

By:

JG Asset II, LLC,

 

 

 

its General Partner

 

 

 

 

By:

/s/ Mark Gottlieb

 

 

Name: Mark Gottlieb

 

 

Title: Authorized Signatory

 

 

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