Exhibit 10.2
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of October 1,
2020, is entered into by and among Arcutis Biotherapeutics, Inc., a Delaware
corporation (the “Company”), and each “Purchaser” named in that certain
Securities Purchase Agreement, dated as of October 1, 2020, by and between the
Company and each Purchaser (the “Purchase Agreement”). Capitalized terms used
herein have the respective meanings ascribed thereto in the Purchase Agreement
unless otherwise defined herein.
WHEREAS, the Company and each Purchaser have entered into the Purchase
Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement and the Purchase Agreement, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Company and each Purchaser agree as follows:
SECTION 1.    DEFINITIONS.
In addition to the terms defined elsewhere in this Agreement, the following
terms have the meanings set forth in this Section 1:
“Prospectus” means (i) the prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus, and (ii) any “free writing prospectus” as defined
in Rule 405 under the Securities Act.
“Public Offering” means the offer and sale of Registrable Securities for cash
pursuant to an effective Registration Statement under the Securities Act (other
than a Registration Statement on Form S-4 or Form S-8 or any successor form).
“Purchaser” means each Purchaser identified in the Purchase Agreement and any
affiliate or permitted transferee of any Purchaser who is a subsequent holder of
Registrable Securities.
“Register,” “registered” and “registration” refer to a registration made by
preparing and filing a Registration Statement or similar document in compliance
with the Securities Act, and the declaration or ordering of effectiveness of
such Registration Statement or document.
“Registrable Securities” means (i) the Shares and (ii) all securities directly
or indirectly issued with respect to the Shares by way of a stock dividend or
stock split, or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when (w) a
Registration Statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such Registration Statement, (x) such securities
shall have been transferred pursuant to Rule 144, (y) such holder is able to
immediately sell all of such securities under Rule 144 without any restrictions
on transfer (including without application of paragraphs (c), (d), (e), (f) and
(h) of Rule 144), as reasonably determined by the Company, upon the advice of
counsel to the Company, or (z) such securities shall have ceased to be
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“Registration Statement” means any registration statement of the Company under
the Securities Act that covers the resale of any of the Registrable Securities
pursuant to the provisions of this Agreement, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.
“SEC” means the U.S. Securities and Exchange Commission.
“Underwritten Public Offering” means an underwritten Public Offering, including
any bought deal or block sale to a financial institution conducted as an
underwritten Public Offering.
SECTION 2.    REGISTRATION.
(a)Registration Statement. No later than one hundred twenty-three (123) calendar
days after the Closing (the “Filing Deadline”), the Company shall prepare and
file with the SEC one Registration Statement covering the resale of all of the
Registrable Securities. Each Registration Statement filed hereunder shall be on
Form S-3 and for an offering to be made on a continuous basis pursuant to Rule
415 (except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance herewith, subject to the provisions of
Section 2(d)) and, subject to any SEC comments, such Registration Statement
shall include the plan of distribution attached hereto as Exhibit A; provided,
however, that no Purchaser shall be named as an “underwriter” in such
Registration Statement without such Purchaser’s prior written consent. Such
Registration Statement also shall cover, to the extent allowable under the
Securities Act and the rules promulgated thereunder (including Rule 416), such
indeterminate number of additional shares of Common Stock resulting from stock
splits, stock dividends or similar transactions with respect to the Registrable
Securities. Such Registration Statement (and each amendment or supplement
thereto) shall be provided in accordance with Section 3(c) to each Purchaser
prior to its filing or other submission.
(b)Expenses. All expenses incident to the Company’s performance of or compliance
with this Agreement (excluding any underwriting discounts and selling
commissions, which shall be borne solely by the Purchaser) shall be paid by the
Company, including (i) all registration and filing fees, and any other fees and
expenses associated with filings required to be made with the SEC or FINRA, (ii)
all fees and expenses in connection with compliance with any securities or “Blue
Sky” laws, (iii) all printing, duplicating, word processing, messenger,
telephone, facsimile and delivery expenses (including expenses of printing
certificates for the Registrable Securities in a form eligible for deposit with
The Depository Trust Company and of printing prospectuses), (iv) all fees and
disbursements of counsel for the Company and of all independent certified public
accountants or independent auditors of the Company and any subsidiaries of the
Company (including the expenses of any special audit and comfort letters
required by or incident to such performance), (v) Securities Act liability
insurance or similar insurance if the Company so desires, (vi) all fees and
expenses incurred in connection with the listing of the Registrable Securities
on any securities exchange or quotation of the Registrable Securities on any
inter-dealer quotation system, (vii) all reasonable fees and expenses of any
other Persons retained by the Company in connection with any Registration
Statement or sale, and (viii) all of the Company’s internal expenses (including
all salaries and expenses of its officers and employees performing legal or
accounting duties) and (viii) one legal counsel selected by the Purchasers
holding a majority of the Registrable Securities. To the extent that
underwriting discounts and selling commissions are incurred in connection with
the sale of Registrable Securities in an Underwritten Public Offering hereunder,
such underwriting discounts and selling commissions shall be borne solely by
each Purchaser, as applicable. Except as set forth in clause (viii) of the first
sentence of this Section 2(b), the Company shall not be responsible for legal
fees,
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broker or similar commissions or any other costs incurred by any Purchaser in
connection with the performance of its rights and obligations under this
Agreement.
(c)Effectiveness.
(i)The Company shall use reasonable best efforts to have any Registration
Statement declared effective as soon as practicable after the filing. The
Company shall respond promptly to any and all comments made by the staff of the
SEC on any Registration Statement, and shall submit to the SEC, within two (2)
business days after the Company learns that no review of the Registration
Statement will be made by the staff of the SEC or that the staff of the SEC has
no further comments on such Registration Statement, as the case may be, a
request for acceleration of the effectiveness of such Registration Statement to
a time and date not later than two (2) business days after the submission of
such request. The Company shall notify each Purchaser by facsimile or e-mail as
promptly as practicable, and in any event, within twenty-four (24) hours, after
any such Registration Statement is declared effective and shall, upon request,
provide each Purchaser with copies of any related Prospectus to be used in
connection with the sale or other disposition of the securities covered thereby.
(ii)If, with respect to any Registration Statement covering the Registrable
Securities:
(A) such Registration Statement covering the Registrable Securities is not filed
with the SEC on or prior to the Filing Deadline (a “Filing Failure”),
(B) such Registration Statement covering the Registrable Securities is not
declared effective (an “Effectiveness Failure”) by the SEC prior to earlier of:
(x) seven (7) Business Days after the SEC informs the Company that no review of
such Registration Statement will be made or that the SEC has no further comments
on such Registration Statement, (y) the 175th calendar day following the
Closing, or (z) in the event of a “review” by the SEC, the 205th calendar day
following the Closing (as applicable, the “Effectiveness Deadline”), or
(C) after a Registration Statement has been declared effective by the SEC, sales
cannot be made pursuant to such Registration Statement for any reason (including
without limitation by reason of a stop order, or the Company’s failure to update
such Registration Statement), but excluding any Allowed Delay (as defined below)
or, if the Registration Statement is on Form S-1, for a period of twenty (20)
days following the date on which the Company files a post-effective amendment to
incorporate the Company’s Annual Report on Form 10-K (a “Maintenance Failure”),
then the Company will make pro rata payments to each Purchaser then holding
Registrable Securities, as liquidated damages and not as a penalty, in an amount
equal to 1.0% of the aggregate amount paid pursuant to the Purchase Agreement by
such Purchaser for such Registrable Securities then held by such Purchaser on
each of the following dates: on the initial date of the Filing Failure,
Effectiveness Failure or Maintenance Failure, as applicable, and on every
thirtieth (30th) day thereafter (pro rated for periods less than thirty (30)
days) (the “Blackout Period”). Such payments shall constitute the Purchaser’s
exclusive monetary remedy for such events, but shall not affect the right of the
Purchaser to seek injunctive relief. The amounts payable as liquidated damages
pursuant to this paragraph shall be paid no later than five (5) Business Days
after each such 30-day period following the commencement of the Blackout Period
until the termination of the Blackout Period (the “Blackout Payment Date”). Such
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payments shall be made to each Purchaser in cash. Interest shall accrue at the
rate of 1% per month on any such liquidated damages payments that shall not be
paid by the Blackout Payment Date until such amount is paid in full.
(iii)Notwithstanding anything to the contrary contained herein, the Company may,
upon written notice to any holder of Registrable Securities included in a
Registration Statement, suspend the use of any Registration Statement, including
any Prospectus that forms a part of a Registration Statement, if the Company (X)
determines that it would be required to make disclosure of material information
in the Registration Statement that the Company has a bona fide business purpose
for preserving as confidential, (Y) determines it must amend or supplement the
Registration Statement or the related Prospectus so that such Registration
Statement or Prospectus shall not include an 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, in the case of the Prospectus in light of the
circumstances under which they were made, not misleading or (Z) has experienced
or is experiencing some other material non-public event, including a pending
transaction involving the Company, the disclosure of which at such time, in the
good faith judgment of the Company, would adversely affect the Company;
provided, however, in no event shall holders of Registrable Securities be
suspended from selling Registrable Securities pursuant to the Registration
Statement for a period that exceeds 30 consecutive Trading Days or 60 total
Trading Days in any 360-day period (any such suspension contemplated by this
Section 2(c)(iii), an “Allowed Delay”). Upon disclosure of such information or
the termination of the condition described above, the Company shall provide
prompt notice to holders whose Registrable Securities are included in the
Registration Statement, and shall promptly terminate any suspension of sales it
has put into effect and shall take such other reasonable actions to permit
registered sales of Registrable Securities as contemplated hereby.
(d)If Form S-3 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall (i) register the resale of
the Registrable Securities on another appropriate form and (ii) undertake to
register the Registrable Securities on Form S-3 as soon as such form is
available, provided that the Company shall maintain the effectiveness of the
Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the SEC.
(e)Rule 415; Cutback. If at any time the SEC takes the position that the
offering of some or all of the Registrable Securities in a Registration
Statement is not eligible to be made on a delayed or continuous basis under the
provisions of Rule 415 under the Securities Act, the Company shall (i) remove
from the Registration Statement such portion of the Registrable Securities (the
“Cut Back Shares”) and/or (ii) agree to such restrictions and limitations on the
registration and resale of the Registrable Securities as the SEC may require to
assure the Company’s compliance with the requirements of Rule 415 (collectively,
the “SEC Restrictions”); provided, however, that the Company shall not agree to
name any Purchaser as an “underwriter” in such Registration Statement without
the prior written consent of such Purchaser. No liquidated damages shall accrue
as to any Cut Back Shares until such date as the Company is able to effect the
registration of such Cut Back Shares in accordance with any SEC Restrictions
applicable to such Cut Back Shares (such date, the “Restriction Termination
Date”). From and after the Restriction Termination Date applicable to any Cut
Back Shares, all of the provisions of this Section 2 (including the Company’s
obligations with respect to the filing of a Registration Statement and its
obligations to use reasonable best efforts to have such Registration Statement
declared effective within the time periods set forth herein and the liquidated
damages provisions relating thereto) shall again be applicable to such Cut Back
Shares; provided, however, that the Filing Deadline for the Registration
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Statement including such Cut Back Shares shall be (20) business days after such
Restriction Termination Date and the Effectiveness Deadline for the Registration
Statement including such Cut Back Shares shall be sixty (60) business Days after
such Restriction Termination Date.
(f)Other Limitations. Notwithstanding any other provision herein or in the
Purchase Agreement, (i) the Filing Deadline and each Effectiveness Deadline for
a Registration Statement shall be extended and any Maintenance Failure shall be
automatically waived by no action of a Purchaser, in each case, without default
by or liquidated damages payable by the Company hereunder to such Purchaser in
the event that the Company’s failure to make such filing or obtain such
effectiveness or a Maintenance Failure results solely and directly from the
failure of such Purchaser to timely provide the Company with information
requested by the Company in writing as being necessary to complete a
Registration Statement in accordance with the requirements of the 1933 Act (in
which case any such deadline would be extended, and a Maintenance Failure
waived, with respect to all Registrable Securities during the period from the
date of such written request until such time as such Purchaser provides such
requested information) and (ii) in no event shall the aggregate amount of
liquidated damages (or interest thereon) paid to any Purchaser hereunder exceed,
in the aggregate, 5% of the aggregate purchase price of the Shares purchased by
such Purchaser under the Purchase Agreement.
SECTION 3.    COMPANY OBLIGATIONS.
The Company will use reasonable best efforts to effect the registration of the
Registrable Securities of each Purchaser in accordance with the terms hereof,
and pursuant thereto the Company will, as expeditiously as possible:
(a)use reasonable best efforts to cause each such Registration Statement to
become effective and to remain continuously effective until such time as the
earlier of: (i) there are no longer Registrable Securities held by such
Purchaser, or (ii) all of the Registrable Securities of such Purchaser can be
sold pursuant to Rule 144 without regard to the volume-of-sale limitations
imposed under Rule 144(e) (the “Effectiveness Period”) and advise such Purchaser
promptly in writing when the Effectiveness Period has expired;
(b)prepare and file with the SEC such amendments and post-effective amendments
to such Registration Statement and the related Prospectus as may be necessary to
keep such Registration Statement effective for the Effectiveness Period and to
comply with the provisions of the Securities Act and the Exchange Act with
respect to the distribution of all of the Registrable Securities covered
thereby;
(c)provide copies to such Purchaser and permit such Purchaser’s legal counsel to
review each Registration Statement and all amendments and supplements at least
four (4) business days in advance of their filing with the SEC; provided that
the Company shall duly consider any comments received no later than two (2)
business days prior to the filing of such Registration Statement, amendment or
supplement, but shall not be required to accept any such comments to which it
reasonably objects;
(d)furnish to such Purchaser and its legal counsel (i) immediately after the
same is prepared and publicly distributed, filed with the SEC, or received by
the Company (but not later than twenty-four (24) hours after the filing date,
receipt date or sending date, as the case may be) one (1) copy of any
Registration Statement and any amendment thereto, each preliminary prospectus
and Prospectus and each amendment or supplement thereto, and 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
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for which the Company has sought confidential treatment or it reasonably
believes would constitute material and non-public information) and (ii) such
number of copies of a Prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as such Purchaser
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Purchaser that are covered by the related Registration
Statement;
(e)use reasonable best efforts to (i) prevent the issuance of any stop order or
other suspension of effectiveness and, (ii) if such order is issued, obtain the
withdrawal of any such order at the earliest possible moment and to notify such
Purchaser of the issuance of such order and the resolution thereof;
(f)use reasonable best efforts to register or qualify (unless an exemption from
the registration or qualification exists) or cooperate with such Purchaser and
its counsel in connection with the registration or qualification of such
Registrable Securities for offer and sale under the securities or “Blue Sky”
laws of such domestic jurisdictions as are reasonably requested by such
Purchaser and do any and all other reasonable acts or filings necessary or
advisable to enable a distribution in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided, however, that the
Company shall not be required in connection therewith or as a condition thereto
to (i) qualify to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(f), (ii) subject itself to general
taxation in any jurisdiction where it would not otherwise be so subject but for
this Section 3(f), or (iii) file a general consent to service of process in any
such jurisdictions;
(g)use reasonable best efforts to cause all Registrable Securities covered by a
Registration Statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the
Company are then listed;
(h)promptly notify such Purchaser, at any time prior to the end of the
Effectiveness Period, upon discovery that, or upon the happening of any event as
a result of which, the Prospectus includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and as promptly as reasonably possible prepare,
file with the SEC and furnish to such holder a supplement to or an amendment of
such Prospectus as may be necessary so that such Prospectus shall not include an
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 in
light of the circumstances then existing;
(i)otherwise use reasonable best efforts to comply with all applicable rules and
regulations of the SEC under the Securities Act and the Exchange Act, including,
without limitation, Rule 172 under the Securities Act, file any final
Prospectus, including any supplement or amendment thereof, with the SEC pursuant
to Rule 424 under the Securities Act, promptly inform such Purchaser in writing
if, at any time during the Effectiveness Period, the Company does not satisfy
the conditions specified in Rule 172 and, as a result thereof, such Purchaser is
required to deliver a Prospectus in connection with any disposition of
Registrable Securities and take such other actions as may be reasonably
necessary to facilitate the registration of the Registrable Securities
hereunder;
(j)with a view to making available to such Purchaser the benefits of Rule 144
(or its successor rule) and any other rule or regulation of the SEC that may at
any time permit such Purchaser to sell shares of Common Stock to the public
without registration, the Company covenants and agrees to: (i) make and keep
public information available, as those terms are understood and defined in Rule
144, until the earlier of (A) six (6) months after such date as all of the
Registrable Securities may be sold without
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restriction by the holders thereof pursuant to Rule 144 or any other rule of
similar effect or (B) such date as all of the Registrable Securities shall have
been resold; (ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and (iii) furnish to
such Purchaser upon request, as long as such Purchaser owns any Registrable
Securities, (A) a written statement by the Company that it has complied with the
reporting requirements of the Exchange Act, (B) a copy of the Company’s most
recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such
other information as may be reasonably requested in order to avail Purchaser of
any rule or regulation of the SEC that permits the selling of any such
Registrable Securities without registration; and
(k)if requested by a Purchaser, cooperate with such Purchaser to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to an effective Registration
Statement, which certificates shall be free, to the extent permitted by the
Purchase Agreement and applicable law, of all restrictive legends, and to enable
such certificates to be in such denominations and registered in such names as
any such Purchaser may request.
SECTION 4.    OBLIGATIONS OF EACH PURCHASER.
(a)Such Purchaser shall furnish in writing to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it, as shall be reasonably
required to effect the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request. At least five (5) business days prior to the first
anticipated filing date of any Registration Statement, the Company shall notify
the Purchaser of the information the Company requires from such Purchaser if the
Purchaser is to have any of the Registrable Securities included in such
Registration Statement. Such Purchaser shall provide such information to the
Company at least two (2) business days prior to the first anticipated filing
date of such Registration Statement if such Purchaser is to have any of the
Registrable Securities included in such Registration Statement. If such
Purchaser fails to provide to the Company the information required by this
Section 4(a) by such date, the Company shall not be obligated to include such
Purchaser’s Registrable Securities in such Registration Statement and shall not
be obligated to pay such Purchaser liquidated damages with respect to the lack
of registration of such Registrable Securities under this Agreement.
(b)Such Purchaser, by its acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of a Registration Statement hereunder, unless
such Purchaser has notified the Company in writing of its election to exclude
all of its Registrable Securities from such Registration Statement.
SECTION 5.    INDEMNIFICATION.
(a)Indemnification by the Company. The Company will indemnify and hold harmless
each Purchaser and the officers, directors, members, employees and agents,
successors and assigns of each Purchaser, and each other person, if any, who
controls, or is alleged to control, any such Purchaser within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which they may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement or omission or alleged omission of any material fact contained
in any Registration Statement, any preliminary Prospectus or final Prospectus,
or any amendment or supplement thereof (it being understood that each Purchaser
has approved Exhibit A hereto for this purpose) or (ii) any violation by the
Company of any rule or regulation promulgated under the Securities Act or
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Exchange Act applicable to the Company and relating to action or inaction
required of the Company in connection with such registration, and the Company
will reimburse each Purchaser, and each officer, director or member and each
such controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by such Purchaser or any such controlling person in writing
specifically for use in such Registration Statement or Prospectus, and provided
further that the foregoing indemnity shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or expense if such settlement
is effected without the consent of the Company.
(b)Indemnification by the Purchasers. Each Purchaser, for any Registration
Statement in which it is named as a selling stockholder, agrees to indemnify and
hold harmless, to the fullest extent permitted by law, the Company, its
directors, officers, employees, stockholders and each person who controls the
Company (within the meaning of the Securities Act) against any losses, claims,
damages or liabilities resulting from any untrue statement of a material fact or
any omission of a material fact required to be stated in the Registration
Statement or Prospectus or preliminary Prospectus or amendment or supplement
thereto or necessary to make the statements therein not misleading, to the
extent, but only to the extent that such untrue statement or omission is
contained in any information furnished in writing by such Purchaser to the
Company specifically for inclusion in such Registration Statement or Prospectus
or amendment or supplement thereto and has not been corrected in a subsequent
writing prior to the sale of the Registrable Securities thereunder; provided,
however, that the foregoing indemnity shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or expense if such settlement
is effected without the consent of such Purchaser. In no event shall the
liability of any Purchaser be greater in amount than the dollar amount of the
proceeds (net of all expense paid by such Purchaser in connection with any claim
relating to this Section 5 and the amount of any damages such Purchaser has
otherwise been required to pay by reason of such untrue statement or omission)
received by such Purchaser upon the sale of the Registrable Securities included
in the Registration Statement giving rise to such indemnification obligation.
(c)Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying party
has agreed to pay such fees or expenses, (b) the indemnifying party shall have
failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims (in
which case, if the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); 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 hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties. No
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indemnifying party will, except with the consent of the indemnified party, which
shall not be unreasonably withheld or conditioned, consent to entry of any
judgment or enter into any settlement that 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 of such claim or litigation.
(d)Contribution. If for any reason the indemnification provided for in the
preceding paragraphs (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information provided
by the Company or by a holder of 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 not guilty of
such fraudulent misrepresentation. In no event shall the contribution obligation
of a holder of Registrable Securities be greater in amount than the dollar
amount of the proceeds (net of all expenses paid by such holder in connection
with any claim relating to this Section 5 and the amount of any damages such
holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission) received by it upon the sale
of the Registrable Securities giving rise to such contribution obligation.
SECTION 6.    MISCELLANEOUS.
(a)Amendments and Waivers. Neither this Agreement nor any provision hereof may
be changed, waived, discharged, terminated, modified or amended with respect to
the Company and a Purchaser only with the written consent of the Company and
such Purchaser.
(b)Notices. All notices and other communications provided for or permitted
hereunder shall be made as set forth in the Purchase Agreement.
(c)Assignments and Transfers by a Purchaser. The provisions of this Agreement
shall be binding upon and inure to the benefit of each Purchaser and its
respective successors and assigns. Each Purchaser may transfer or assign, in
whole or from time to time in part, to one or more persons its rights hereunder
in connection with the transfer of Registrable Securities by such Purchaser to
such person, provided that such Purchaser complies with all laws applicable
thereto and provides written notice of assignment to the Company promptly after
such assignment is effected.
(d)Assignments and Transfers by the Company. This Agreement may not be assigned
by the Company (whether by operation of law or otherwise) without the prior
written consent of each Purchaser; provided, however, that in the event that the
Company is a party to a merger, consolidation, share exchange or similar
business combination transaction in which the Common Stock is converted into the
equity securities of another Person, from and after the effective time of such
transaction, such Person shall, by virtue of such transaction, be deemed to have
assumed the obligations of the Company hereunder, the term “Company” shall be
deemed to refer to such Person and the term “Registrable Securities” shall be
deemed to include the securities received by each Purchaser in connection with
such transaction unless such securities are otherwise freely tradable by such
Purchaser after giving effect to such transaction.
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(e)Benefits of the Agreement. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective permitted successors
and assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(f)Counterparts; Faxes. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file
(including pdf or any electronic signature complying with the U.S. federal ESIGN
Act of 2000, e.g., www.docusign.com) or other transmission method, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) the same with the same force and
effect as if such facsimile of “.pdf” signature were the original thereof.
(g)Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
(h)Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof but shall be interpreted as if it were written so as
to be enforceable to the maximum extent permitted by applicable law, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which
renders any provisions hereof prohibited or unenforceable in any respect.
(i)Further Assurances. The parties shall execute and deliver all such further
instruments and documents and take all such other actions as may reasonably be
required to carry out the transactions contemplated hereby and to evidence the
fulfillment of the agreements herein contained.
(j)Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement with respect to the registration of the Shares and
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to the registration of the Shares. For the
avoidance of doubt, this Agreement does not supersede or replace the
registration obligations of the Company to any of the Purchasers, as set forth
in an investors’ rights agreement or registration rights agreement, in respect
of securities of the Company (other than the Shares) held by the Purchasers.
(k)Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
California, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of Los Angeles. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of Los Angeles
for the adjudication of any dispute hereunder or in connection
10

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herewith or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the Transaction Documents),
and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is improper or is an
inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law.
[Signature pages follow]
11

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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.
ARCUTIS BIOTHERAPEUTICS, INC.

By:/s/ John W. SmitherName:John W. SmitherTitle:Chief Financial Officer

[Signature Page to Registration Rights Agreement]

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IN WITNESS WHEREOF, the parties have executed this Agreement or caused their
duly authorized officers to execute this Agreement as of the date first above
written.
ORBIMED PRIVATE INVESTMENTS VII, LP

By:
OrbiMed Capital GP VII LLC,
its General PartnerBy:OrbiMed Advisors LLC,its Managing Member

By:
/s/ Jonathan Silverstein
Name: Jonathan SilversteinTitle: Member

ORBIMED PARTNERS MASTER FUND LIMITED
By: OrbiMed Capital LLC, solely in its
capacity as Investment Advisor

By:
/s/ C. Scotland Stevens
Name: C. Scotland Stevens
Title: Member

WORLDWIDE HEALTHCARE TRUST PLC

By:
OrbiMed Capital LLC, solely in its
capacity as Portfolio Manager

By:
/s/ C. Scotland Stevens
Name: C. Scotland Stevens
Title: Member

[Signature Page to Registration Rights Agreement]

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EXHIBIT A
Plan of Distribution
The selling stockholders and any of their pledgees, donees, transferees,
assignees or other successors-in-interest may, from time to time, sell, transfer
or otherwise dispose of any or all of their shares of common stock or interests
in shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at prices
related to the prevailing market price, at varying prices determined at the time
of sale, or at negotiated prices.
The selling stockholders may use one or more of the following methods when
disposing of the shares or interests therein:
•ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
•block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
•through brokers, dealers or underwriters that may act solely as agents;
•purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;
•an exchange distribution in accordance with the rules of the applicable
exchange;
•privately negotiated transactions;
•through the writing or settlement of options or other hedging transactions
entered into after the effective date of the registration statement of which
this prospectus is a part, whether through an options exchange or otherwise;
•broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;
•a combination of any such methods of disposition; and
•any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 or Rule 904 under
the Securities Act of 1933, as amended, or Securities Act, if available, or
Section 4(a)(1) under the Securities Act, rather than under this prospectus.
Broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.

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The selling stockholders may, from time to time, pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell shares of common stock from time to time under this
prospectus, or under a supplement or amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list
of selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus.
Upon being notified in writing by a selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of common
stock through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, we will file a
supplement to this prospectus, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such selling stockholder and of
the participating broker-dealer(s), (ii) the number of shares involved, (iii)
the price at which such shares of common stock were sold, (iv) the commissions
paid or discounts or concessions allowed to such broker-dealer(s), where
applicable, (v) that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this prospectus,
and (vi) other facts material to the transaction. In addition, upon being
notified in writing by a selling stockholder that a donee or pledge intends to
sell more than 500 shares of common stock, we will file a supplement to this
prospectus if then required in accordance with applicable securities law.
The selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.
In connection with the sale of the shares of common stock or interests in shares
of common stock, the selling stockholders may enter into hedging transactions
after the effective date of the registration statement of which this prospectus
is a part with broker-dealers or other financial institutions, which may in turn
engage in short sales of the common stock in the course of hedging the positions
they assume. The selling stockholders may also sell shares of common stock short
after the effective date of the registration statement of which this prospectus
is a part and deliver these securities to close out their short positions, or
loan or pledge the common stock to broker-dealers that in turn may sell these
securities. The selling stockholders may also enter into option or other
transactions after the effective date of the registration statement of which
this prospectus is a part with broker-dealers or other financial institutions or
the creation of one or more derivative securities which require the delivery to
such broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).
The selling stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. The maximum commission or discount to be
received by any member of the Financial Industry Regulatory Authority (FINRA) or
independent broker-dealer will not be greater than 8% of the initial gross
proceeds from the sale of any security being sold.
We have advised the selling stockholders that they are required to comply with
Regulation M promulgated under the Securities Exchange Act of 1934, as amended,
during such time as they may be engaged in a distribution of the shares. The
foregoing may affect the marketability of the common stock.

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The aggregate proceeds to the selling stockholders from the sale of the common
stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling stockholders reserves the
right to accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this offering.
We are required to pay all fees and expenses incident to the registration of the
shares. We have agreed to indemnify the selling stockholders against certain
losses, claims, damages and liabilities, including liabilities under the
Securities Act or otherwise.
We have agreed with the selling stockholders to keep the registration statement
of which this prospectus constitutes a part effective until the earlier of (a)
such time as all of the shares covered by this prospectus have been disposed of
pursuant to and in accordance with the registration statement or (b) the date on
which the shares of common stock covered by this prospectus may be sold or
transferred by non-affiliates without any volume limitations or pursuant to Rule
144 of the Securities Act.