Document:

EXHIBIT 10.2

 

THE SECURITIES REPRESENTED
HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
REGISTRATION OR AN EXEMPTION THEREFROM. RIGEL PHARMACEUTICALS, INC. MAY REQUIRE
AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT THAT A PROPOSED TRANSFER OR
SALE IS IN COMPLIANCE WITH THE ACT.

 

THE SALE, TRANSFER OR VOTING OF
THE SECURITIES REPRESENTED HEREBY IS RESTRICTED BY THE TERMS OF A SECOND
INVESTOR RIGHTS AGREEMENT BY AND AMONG RIGEL PHARMACEUTICALS, INC. AND THE
INVESTORS NAMED THEREIN. COPIES OF THE AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDERS OF RECORD OF THIS CERTIFICATE TO THE SECRETARY
OF RIGEL PHARMACEUTICALS, INC. AT THE PRINCIPAL EXECUTIVE OFFICES OF RIGEL
PHARMACEUTICALS, INC.

 

RIGEL PHARMACEUTICALS, INC.

 

COMMON
STOCK PURCHASE WARRANT

 

	
  Warrant No. CS-[      ]

  	
   

  	
  [           ]
  Shares

  
	
  [                            ,]
  2003

  	
   

  	
   

  

 

1.              Issuance.  For value received, this Warrant is issued
to [Holder], by Rigel Pharmaceuticals, Inc.,
a Delaware corporation (hereinafter with its successors called the “Company”),
pursuant to the terms and conditions of that certain Common Stock and Warrant
Purchase Agreement, dated as of April 29, 2003, by and among the Company and
the investors listed on Schedule A thereto (the “Purchase Agreement”).

 

2.              Purchase Price; Number of Shares.  The registered holder of this Warrant (the “Holder”),
commencing on the date hereof, is entitled upon surrender of this Warrant, with
the subscription form annexed hereto duly executed, at the principal office of
the Company, to purchase from the Company
[            (            )]
[To be 20% of the Holder’s shares under the
Purchase Agreement] fully paid and nonassessable shares (the “Shares”)
of common stock, $.001 par value per share, of the Company (the “Common
Stock”), at a price per share of $0.64 (the “Warrant Price”).  Until such time as this Warrant is exercised
in full or expires, the Warrant Price and the securities issuable upon exercise
of this Warrant are subject to adjustment as hereinafter provided.  The person or persons under whose name or
names any certificate representing Shares shall be deemed to have become the
holder of record of the Shares represented thereby as at the close of business
on the date this Warrant is exercised with respect to such Shares, whether or
not the transfer books of the Company shall be closed.

 

3.              Payment of Purchase Price.  The Purchase Price (as defined below) may be
paid: (i) by certified or bank check or by wire transfer of immediately
available funds to an account designated by the Company; (ii) by the surrender
by the Holder to the Company of any promissory notes or other obligations
issued by the Company, with all such notes and obligations 

 

1

 

so surrendered being credited
against the Purchase Price in an amount equal to the principal amount thereof
plus accrued interest to the date of surrender; (iii) exercise of the “net
issue election” right provided for in Section 4; or (iv) by any combination of
the foregoing. The “Purchase Price”
shall mean the amount equal to the then applicable Warrant Price multiplied by
the number of Shares then being purchased.

 

4.              Net Issue Election.  The Holder may elect to receive, without the
payment by the Holder of any additional consideration, shares of Common Stock
equal to the value of this Warrant or any portion hereof by the surrender of
this Warrant or such portion to the Company, with the net issue election notice
annexed hereto duly executed, at the principal office of the Company.  Thereupon, the Company shall issue to the
Holder such number of fully paid and nonassessable shares of Common Stock as is
computed using the following formula:

 

	
  X =

  	
  Y(A – B)

  
	
  A

  

 

where:                                                             X
=                             the
number of shares of Common Stock to be issued to the Holder pursuant to this
Section 4.

 

Y =                              the
number of shares of Common Stock covered by this Warrant in respect of which
the net issue election is made pursuant to this Section 4.

 

A =                            the
Fair Market Value (defined below) of one share of Common Stock, as determined
at the time the net issue election is made pursuant to this Section 4.

 

B =                              the
Warrant Price in effect under this Warrant at the time the net issue election
is made pursuant to this Section 4.

 

“Fair Market Value” of a
share of Common Stock as of a particular date (the “Determination Date”) shall mean the average of the closing
or last reported sale prices of the Common Stock as reported on the Nasdaq
National Market over the 30-day period ending five business days prior to the
Determination Date; provided, however, that if (i) the Common
Stock is neither traded on the Nasdaq National Market nor on a national
securities exchange, then Fair Market Value shall be the average of the closing
or last reported sale prices of the Common Stock over the 30-day period ending
five business days prior to the Determination Date reflected in the
over-the-counter market, as reported by the National Quotation Bureau, Inc. or
any organization performing a similar function, or if closing prices are not
then routinely reported for the over-the-counter market, the average of the
last bid and asked prices of the Common Stock over the 30-day period ending
five business days prior to the Determination Date and (ii) if there is no
public market for the Common Stock, then Fair Market Value shall be determined
in good faith by the Company’s Board of Directors.

 

5.              Partial Exercise.  This Warrant may be exercised in part, and
the Holder shall be entitled to receive a new warrant, which shall be dated as
of the date of this Warrant, covering the number of Shares in respect of which
this Warrant shall not have been exercised.

 

2

 

6.              Fractional Shares.  In no event shall any fractional share of
Common Stock be issued upon any exercise of this Warrant.  If, upon exercise of this Warrant as an
entirety, the Holder would, except as provided in this Section 6, be entitled
to receive a fractional share of Common Stock, then the Company shall pay in
lieu thereof, the Fair Market Value of such fractional share in cash.

 

7.              Expiration Date; Early Termination.  This Warrant or any Successor Warrant (as
defined in Section 10 below) shall expire on the close of business on
[           
   ,] 2008 [to be the fifth
anniversary of the date of issuance] (the “Expiration Date”), and shall be void
thereafter.

 

8.              Reserved Shares; Valid Issuance.  The Company covenants that it will at all
times from and after the date hereof reserve and keep available such number of
its authorized shares of Common Stock, free from all preemptive or similar
rights therein, as will be sufficient to permit the exercise of this Warrant in
full into shares of Common Stock upon such exercise.  If at any time prior to the Expiration Date the number of
authorized but unissued shares of Common Stock shall not be sufficient to
permit exercise of this Warrant, the Company shall take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock  to such
number of shares as shall be sufficient for such purposes. The Company further
covenants that such shares as may be issued pursuant to such exercise will,
upon issuance, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges with respect to the issuance thereof.

 

9.              Stock Splits and Dividends.  If after the date hereof the Company shall
subdivide the Common Stock, by split-up or otherwise, combine the Common Stock
or issue additional shares of Common Stock in payment of a stock dividend on
the Common Stock, then the number of Shares issuable upon the exercise of this
Warrant shall forthwith be proportionately increased in the case of a
subdivision or stock dividend, or proportionately decreased in the case of a
combination, and the Warrant Price shall forthwith be proportionately decreased
in the case of a subdivision or stock dividend, or proportionately increased in
the case of a combination.

 

10.       Mergers and Reclassifications.

 

(a)          If after the date hereof
the Company shall enter into any Reorganization (as hereinafter defined), then,
as a condition of such Reorganization, lawful provisions shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder (a “Successor
Warrant”), so that the Holder shall thereafter have the right to
purchase, at a total price not to exceed that payable upon the exercise of this
Warrant in full, the kind and amount of shares of stock and other securities
and property receivable upon such Reorganization by a holder of the number of
shares of Common Stock that might have been purchased by the Holder immediately
prior to such Reorganization, and in any such case appropriate provisions shall
be made with respect to the rights and interest of the Holder to the end that
the provisions hereof (including without limitation, provisions for the
adjustment of the Warrant Price and the number of shares issuable hereunder and
the provisions relating to the net issue election) shall thereafter be
applicable in relation to any shares of stock or other securities and property
thereafter deliverable upon exercise hereof.

 

3

 

(b)          For the purposes of this
Section 10, the term “Reorganization” shall include without limitation any
reclassification, capital reorganization or change of the Common Stock (other
than as a result of a subdivision, combination or stock dividend provided for
in Section 9 hereof), any consolidation of the Company with, or merger of the
Company into, another corporation or other business organization (other than a
merger in which the Company is the surviving corporation and which does not
result in any reclassification or change of the outstanding Common Stock), or
any sale or conveyance to another corporation or other business organization of
all or substantially all of the assets of the Company

 

11.       Certificate of Adjustment. Whenever
the Warrant Price is adjusted, as herein provided, the Company shall promptly
deliver to the Holder a certificate of the Company’s Chief Financial Officer
setting forth the Warrant Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment.

 

12.       Notices of Record Date, Etc.  In the event of:

 

(a)          any taking by the
Company of a record of the holders of any class of securities for the purpose
of determining the holders thereof who are entitled to receive any dividend or
other distribution, or any right to subscribe for, purchase, sell or otherwise
acquire or dispose of any shares of stock of any class or any other securities
or property, or to receive any other right;

 

(b)          any reclassification of
the capital stock of the Company, capital reorganization of the Company,
consolidation or merger involving the
Company or sale or conveyance of all or substantially all of its assets; or

 

(c)           any voluntary or
involuntary dissolution, liquidation or winding-up of the Company;

then in each such event the Company will provide or cause to be
provided to the Holder a written notice thereof.  Such notice shall be provided at least 15 calendar days prior to
the date specified in such notice on which any such action is to be taken.

 

13.       Representations, Warranties and
Covenants.  This Warrant is
issued and delivered by the Company and accepted by each Holder on the basis of
the following representations, warranties and covenants made by the Company:

 

(a)          The Company has all
necessary authority to issue, execute and deliver this Warrant and to perform
its obligations hereunder.  This Warrant
has been duly authorized, issued, executed and delivered by the Company and is
the valid and binding obligation of the Company, enforceable in accordance with
its terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws of general application affecting the enforcement of the
Holder’s rights or by general equity principals or public policy concerns.

 

(b)          The Shares have been
duly authorized and reserved for issuance by the Company and, when issued in
accordance with the terms hereof, will be validly issued, fully paid and
nonassessable.

 

4

 

14.       Amendment and Waiver.  The terms of this Warrant may be amended,
modified or waived only with the written consent of the party against which enforcement
of the same is sought.

 

15.       Representations and Covenants of the
Holder.  This Warrant has
been entered into by the Company in reliance upon the following representations
and covenants of the Holder, which by its execution hereof the Holder hereby
confirms:

 

(a)          The Holder is an
“accredited investor” as defined in Regulation D under the Securities Act of
1933, as amended (the “Securities Act”),
and the Holder is knowledgeable, sophisticated and experienced in making, and
is qualified to make decisions with respect to, investments in shares presenting an investment
decision like that involved in the purchase of the Shares and the Warrant,
including investments in securities issued by the Company and investments in
comparable companies, and has requested, received, reviewed and considered all
information it deemed relevant in making an informed decision to purchase the
Warrant;

 

(b)          The Holder is acquiring
the Warrant in the ordinary course of its business and for its own account for
investment only and with no present intention of distributing the Warrant or
any of the Shares or any arrangement or understanding with any other persons
regarding the distribution of the Warrant or the Shares; and

 

(c)          The Holder will not,
directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) the Warrant or any of the Shares except in compliance with the Securities
Act, applicable state securities laws and the respective rules and regulations
promulgated thereunder.

 

16.       Notices, Transfers, Etc.

 

(a)          Any notice or written
communication required or permitted to be given to the Holder may be given by
certified mall or delivered to the Holder at the address most recently provided
by the Holder to the Company.

 

(b)          Subject to compliance
with applicable federal and state securities laws and any other contractual
restrictions between the Company and the Holder contained in the Purchase
Agreement or that certain Second Investor Rights Agreement, dated as of the
date hereof, by and among the Company and the investors named therein, this
Warrant may be transferred by the Holder with respect to any or all of the
Shares purchasable hereunder.  Upon
surrender of this Warrant to the Company, together with the assignment notice
annexed hereto duly executed, for transfer of this Warrant as an entirety by
the Holder, the Company shall issue a new warrant of the same denomination to
the assignee.  Upon surrender of this
Warrant to the Company, together with the assignment hereof properly endorsed,
by the Holder for transfer with respect to a portion of the Shares, the Company
shall issue a new warrant to the assignee, in such denomination as shall be
requested by the Holder hereof, and shall issue to such Holder a new warrant
covering the number of Shares in respect of which this Warrant shall not have
been transferred.

 

5

 

(c)          The Company acknowledges
and agrees that an opinion of counsel shall not be required upon the transfer
by the Holder of any securities to an “Affiliate” (as defined in Rule 12b-2 of
the rules and regulations promulgated under the Securities and Exchange Act of
1934, as amended) of such Holder.

 

(d)          In case this Warrant
shall be mutilated, lost, stolen or destroyed, the Company shall issue a new
warrant of like tenor and denomination and deliver the same (i) in exchange and
substitution for and upon surrender and cancellation of any mutilated Warrant
or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of an
affidavit of the Holder or other evidence reasonably satisfactory to the
Company of the loss, theft or destruction of such Warrant and an
indemnification of loss by the Holder in favor of the Company.

 

17.       Transfer to Comply with the Securities Act.   This Warrant may not
be exercised and neither this Warrant nor any of the Shares, nor any interest
in either, may be offered, sold, assigned, pledged, hypothecated, encumbered or
in any other manner transferred or disposed of, in whole or in part, except in
compliance with applicable United States federal and state securities laws and
the terms and conditions hereof.  Each
Warrant shall bear a legend in substantially the same form as the legend set
forth on the first page of this Warrant. 
Each certificate for Shares issued upon exercise of this Warrant, unless
at the time of exercise such Shares are acquired pursuant to a registration
statement that has been declared effective under the Securities Act and
applicable blue sky laws, shall bear legends substantially in the following
form:

 

“THE SHARES
REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. RIGEL
PHARMACEUTICALS, INC. MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE
TO IT THAT A PROPOSED TRANSFER OR SALE IS IN COMPLIANCE WITH THE ACT.”

 

“THE SALE,
TRANSFER OR VOTING OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED
BY THE TERMS OF A SECOND INVESTOR RIGHTS AGREEMENT BY AND AMONG RIGEL
PHARMACEUTICALS, INC. AND THE INVESTORS NAMED THEREIN. COPIES OF THE AGREEMENT
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDERS OF RECORD OF
THIS CERTIFICATE TO THE SECRETARY OF RIGEL PHARMACEUTICALS, INC. AT THE
PRINCIPAL EXECUTIVE OFFICES OF RIGEL PHARMACEUTICALS, INC.”

 

6

 

Any certificate for any Shares
issued at any time in exchange or substitution for any certificate for any Shares
bearing such legends (except a new certificate for any Shares issued after the
acquisition of such Shares pursuant to a registration statement that has been
declared effective under the Securities Act) shall also bear such legends
unless, in the opinion of counsel for the Company, the Shares represented
thereby need no longer be subject to the restriction contained herein.  The provisions of this Section 17 shall be
binding upon all subsequent holders of certificates for Shares bearing the
above legends and all subsequent holders of this Warrant, if any.

 

18.       Rights of the Holder.  The Holder shall not, by virtue hereof, be entitled to any rights
of a stockholder of the Company, either at law or equity, and the rights of the
Holder are limited to those expressed in this Warrant.  Nothing contained in this Warrant shall be
construed as conferring upon the Holder hereof the right to vote, to consent or
to receive notice as a stockholder of the Company on any matters or with
respect to any rights whatsoever as a stockholder of the Company.  No dividends or interest shall be payable or
accrued in respect of this Warrant or the interest represented hereby or the
Shares purchasable hereunder until, and only to the extent that, this Warrant
shall have been exercised in accordance with its terms.

 

19.       No Impairment.  The Company will not, by amendment of its
Amended and Restated Certificate of Incorporation or through any
reclassification, capital reorganization, consolidation, merger, sale or
conveyance of assets, dissolution, liquidation, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance of
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all
such action as may be necessary or appropriate in order to protect the rights
of the Holder.

 

20.       Governing Law.  The provisions and terms of this Warrant
shall be governed by and construed in accordance with the internal laws of the
State of California.

 

21.       Successors and Assigns.  This Warrant shall be binding upon the
Company’s successors and assigns and shall inure to the benefit of the Holder’s
successors, legal representatives and permitted assigns.

 

22.       Business Days.  If the last or appointed day for the taking
of any action required or the expiration of any rights granted herein shall be
a Saturday or Sunday or a legal holiday in California, then such action may be
taken or right may be exercised on the next succeeding day that is not a
Saturday or Sunday or such a legal holiday.

 

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

 

7

 

In Witness Whereof, the Company has duly
caused this Warrant to be signed by its duly authorized officer and to be dated
as of the date first written above.

 

 

	
   

  	
  Company:  

  
	
   

  	
   

  
	
   

  	
  Rigel Pharmaceuticals, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

8

 

Notice of Exercise

 

(1)                                  The undersigned hereby:

 

[          ]                                  elects
to purchase
             
shares of Common Stock of the Company pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full, together with all applicable transfer taxes, if any.

 

[          ]                                  elects
to exercise its net issuance rights pursuant to Section 4 of the attached
Warrant with respect to
             
shares of Common Stock, and shall tender payment of all applicable transfer
taxes, if any.

 

(2)                                  Please issue a
certificate or certificates representing said shares of Common Stock in the
name of the undersigned or in such other name as is specified below:

 

	
   

  
	
  (Name)

  
	
   

  
	
   

  
	
   

  
	
   

  
	
  (Address)

  

 

(3)                                  The undersigned
represents that the aforesaid shares are being acquired for the account of the
undersigned for investment and not with a view to, or for resale in connection
with, the distribution thereof
and that the undersigned has no present intention of distributing or reselling
such shares, all except as in compliance with applicable securities laws. 

 

	
   

  	
   

  	
   

  
	
  (Date)

  	
  (Signature)

  
	
   

  	
   

  
	
   

  	
  (Print name)

  

 

 

 

Assignment

 

	
  For value received

  	
   

  	
   hereby sells, assigns and transfers unto

  	
   

  
	
   

  	
   

  	
   

  
	
  [Please print or type the name and address of Assignee]

  
	
   

  
	
  the within Warrant, and does hereby irrevocably constitute and
  appoint

  	
   

  	
   its attorney to

  
	
  transfer the within Warrant on the books of the within named Company
  with full power of substitution on the premises.

  
						

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  
	
   

  
	
  In the Presence of:EXHIBIT
10.3

 

RIGEL
PHARMACEUTICALS, INC.

 

SECOND INVESTOR RIGHTS AGREEMENT

 

[                   ]
[   ], 2003

 

 

Table of Contents

 

	
  SECTION 1.

  	
  GENERAL.

  
	
   

  	
  1.1

  	
  Definitions.

  
	
  SECTION 2.

  	
  REGISTRATION; ADDITIONAL REGISTRATION
  RIGHTS; ETC.

  
	
   

  	
  2.1

  	
  Registration of the Securities.

  
	
   

  	
  2.2

  	
  Suspension Periods

  
	
   

  	
  2.3

  	
  Piggyback Registrations.

  
	
   

  	
  2.4

  	
  Demand Registration.

  
	
   

  	
  2.5

  	
  Certain Obligations of the Company for
  Piggyback and Demand Registrations.

  
	
   

  	
  2.6

  	
  Restrictions on Transfer.

  
	
   

  	
  2.7

  	
  Termination of Registration Rights.

  
	
   

  	
  2.8

  	
  Delay of Registration; Furnishing
  Information.

  
	
   

  	
  2.9

  	
  Indemnification.

  
	
   

  	
  2.10

  	
  Assignment of Registration Rights.

  
	
   

  	
  2.11

  	
  Amendment of Registration Rights.

  
	
  SECTION 3.

  	
  CERTAIN COVENANTS OF THE PARTIES.

  
	
   

  	
  3.1

  	
  Reservation of Common Stock.

  
	
   

  	
  3.2

  	
  Rule 144 Reporting.

  
	
   

  	
  3.3

  	
  Observation Rights.

  
	
   

  	
  3.4

  	
  Board of Directors Matters.

  
	
   

  	
  3.5

  	
  Limitation on Subsequent Registration
  Rights.

  
	
   

  	
  3.6

  	
  Participation Rights.

  
	
   

  	
  3.7

  	
  Nasdaq
  Listing.

  
	
  SECTION 4.

  	
  MISCELLANEOUS.

  
	
   

  	
  4.1

  	
  Governing
  Law.

  
	
   

  	
  4.2

  	
  No Inconsistent Agreements.

  
	
   

  	
  4.3

  	
  Successors and Assigns.

  
	
   

  	
  4.4

  	
  Entire
  Agreement.

  
	
   

  	
  4.5

  	
  Specific Enforcement.

  
	
   

  	
  4.6

  	
  Severability.

  
	
   

  	
  4.7

  	
  Amendment and Waiver.

  
	
   

  	
  4.8

  	
  Notices.

  
	
   

  	
  4.9

  	
  Attorneys’
  Fees.

  
	
   

  	
  4.10

  	
  Headings.

  
	
   

  	
  4.11

  	
  Counterparts.

  
	
   

  	
  4.12

  	
  Aggregation of Stock.

  
	
   

  	
  4.13

  	
  Pronouns.

  

 

i

 

RIGEL PHARMACEUTICALS, INC.

SECOND INVESTOR RIGHTS AGREEMENT

 

This Second Investor Rights Agreement (the “Agreement”) is
entered into as of
[               ],
2003 by and among Rigel Pharmaceuticals, Inc.,
a Delaware corporation (the “Company”), and the
investors listed on Exhibit A
hereto, referred to hereinafter as the “Investors” and each individually as an
“Investor.”

 

Recitals

 

Whereas, the Investors are purchasing shares
of the Company’s common stock, par value $.001 per share (the “Common Stock”), and
warrants to purchase shares of Common Stock pursuant to that certain Common
Stock and Warrant Purchase Agreement (the “Purchase Agreement”) dated as of April 29,
2003 (the “Financing”);

 

Whereas, the obligations in the Purchase
Agreement are conditioned upon the execution and delivery of this Agreement;
and

 

Whereas, in connection with the consummation
of the Financing, the parties desire to enter into this Agreement in order to
grant registration and other rights to the Investors as set forth below.

 

Now, Therefore, in consideration of the
foregoing recitals 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:

 

SECTION
1.  General.

 

1.1                               Definitions.  Capitalized terms used but not
otherwise defined herein shall have the meanings given them in the Purchase
Agreement.  As used in this Agreement
the following terms shall have the following respective meanings:

 

(a)                                  “Common Warrants”  means those certain
warrants to purchase Common Stock issued pursuant to the Purchase Agreement and
held by the Investors listed on Exhibit A hereto and their permitted
assigns.

 

(b)                                  “Exchange Act”  means the Securities
Exchange Act of 1934, as amended.

 

(c)                                  “Form S-3” means such
form under the Securities Act as in effect on the date hereof or any successor
or similar registration form under the Securities Act subsequently adopted by
the SEC that permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.

 

(d)                                  “Holder”  means any person
owning of record or having the right to acquire Registrable Securities, or any
assignee of record thereof in accordance with Section 2.10 hereof, which
have not been sold to the public.

 

1

 

(e)                                  “Initiating Holders”  means the Holders of
at least thirty percent (30%) of
the Registrable Securities then outstanding.

 

(f)                                    “Prior Investor Rights Agreement”  means that certain
Amended and Restated Investor Rights Agreement, dated as of [April
    ], 2003, by and among the Company and the investors
named therein.

 

(g)                                 “Prior Registrable Securities”  means the “Registrable
Securities” (as defined in the Prior Investor Rights Agreement) then
outstanding under the Prior Investor Rights Agreement, such Prior Rights
Holders and their associated amounts of Prior Registrable Securities are as set
forth hereto on Exhibit B.

 

(h)                                 “Prior Rights Holders”  means the “Holders”
of “Registrable Securities” (each as defined in the Prior Investor Rights
Agreement) then outstanding under the Prior Investor Rights Agreement.

 

(i)                                    “Register,” “registered”
and “registration”  refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of
effectiveness of such registration statement or document.

 

(j)                                    “Registrable Securities”  means: (i) the
Shares; (ii) the Warrant Shares; and (iii) any shares of Common Stock
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security that is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, the Shares and Warrant Shares.
Notwithstanding the foregoing, Registrable Securities shall not include any
shares of Common Stock: (A) sold by a person to the public either pursuant to a
registration statement or Rule 144; (B) sold in a private transaction in which
the transferor’s rights under Section 2 of this Agreement are not
assigned; or (C) held by a Holder (together with its affiliates) during such
periods in which all of such shares may be sold by the Holder pursuant to Rule
144 within 90 days.

 

(k)                                “Registration Expenses”  means all expenses
incurred by the Company in complying with Sections 2.1, 2.3 and 2.4
hereof, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company,
reasonable fees and disbursements not to exceed $25,000  of a single special counsel
for the Holders, blue sky fees and expenses and the expense of any special
audits incident to, or required by, any such registration (but excluding the
compensation of regular employees of the Company that shall be paid in any
event by the Company).

 

(l)                                    “SEC” or “Commission”  means the Securities
and Exchange Commission.

 

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

 

(n)                                 “Selling Expenses”  means all
underwriting discounts and selling commissions applicable to a sale of
Registrable Securities.

 

2

 

(o)                                  “Shares”  means the shares of
Common Stock issued pursuant to the Purchase Agreement and held by the
Investors listed on Exhibit A
hereto and their permitted assigns.

 

(p)                                   “Special Registration Statement”
means: (i) a registration statement relating to any employee benefit plan; (ii)
a registration statement relating to any corporate reorganization or
transaction under Rule 145 of the Securities Act, including any
registration statements related to the issuance or resale of securities issued
in such a transaction; or (iii) a registration statement in which the only
securities being registered are shares of stock issuable upon conversion of debt
securities.

 

(q)                                  “Warrant Shares”
means the shares of Common Stock issuable or issued upon exercise of the Common
Warrants.

 

SECTION
2.  Registration; Additional Registration Rights; etc.

 

2.1                               Registration
of the Securities.  The Company shall:

 

(a)                                  prepare
and file with the SEC, as soon as practicable, but in no event later than 10
business days after the Closing Date (as defined in the Purchase Agreement), a
registration statement on Form S-3 (the “Registration Statement”) for an offering to
be made on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act registering the resale from time to time by the Investors of the
Registrable Securities;

 

(b)                                  use
its commercially reasonable best efforts to cause the Registration Statement to
become effective as soon as practicable and no later than five business days
after the receipt of a notice of “no review” from the SEC or, in the event of
SEC review, no later than 90 days after the Registration Statement is initially
filed by the Company with the SEC;

 

(c)                                  subject
to Section 2.2, use its commercially reasonable best efforts to prepare and
file with the SEC such amendments and supplements to the Registration Statement
and the related prospectus used in connection therewith (the “Prospectus”) as may
be necessary to keep the Registration Statement current and effective for a
period not exceeding the earlier of: (i) the second anniversary of the initial
effectiveness of the Registration Statement; (ii) the date on which all Holders
may sell all Registrable Securities then held by such Holders without
restriction under Rule 144 of the Securities Act; or (iii) such time as all Registrable
Securities  have been sold (together,
the “Registration Period”);

 

(d)                                  furnish
to the Holders with respect to the Registrable Securities registered under the
Registration Statement such number of copies of the Registration Statement and
Prospectuses (including any preliminary prospectuses) in conformity with the
requirements of the Securities Act and such other documents as the Holders may
reasonably request, in order to facilitate the sale or other disposition of all
or any of the Registrable Securities by the Holders;

 

(e)                                  use
its commercially reasonable best efforts to register and qualify the
Registrable Securities covered by the Registration Statement under such other
securities or Blue Sky laws of such jurisdictions in the United States as shall
be reasonably requested by the Holders; provided, however, that the Company shall
not be required in connection therewith or

3

 

as a condition thereto to
qualify to do business or consent to service of process in any jurisdiction in
which it is not now so qualified or has not so consented;

 

(f)                                    advise
the Holders promptly after it shall receive notice or obtain knowledge of the
issuance of any stop order by the SEC delaying or suspending the effectiveness
of the Registration Statement or of the initiation of any proceeding for that
purpose; and it will promptly use its commercially reasonable best efforts to
prevent the issuance of any stop order or to obtain its withdrawal at the
earliest possible moment if such stop order should be issued;

 

(g)                                 notify
each Holder of securities registered by such Registration Statement at any time
when a Prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of which the
Prospectus included in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing; and

 

(h)                                 bear
all Registration Expenses in connection with the procedures in paragraphs (a)
through (g) of this Section 2.1 and the registration of the Registrable
Securities pursuant to the Registration Statement.

 

2.2                               Suspension Periods.

 

(a)                                  Except
in the event that paragraph (b) below applies, the Company shall: (i) if
necessary to keep the Registration Statement current and effective, promptly
prepare and file from time to time with the SEC post-effective amendments to
the Registration Statement or supplements to the related Prospectus or
supplements or amendments to any document incorporated therein by reference or
file any other required document so that the Registration Statement will not
contain 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, and so that, as thereafter delivered to purchasers of the Registrable
Securities being sold thereunder, such Prospectus will not contain 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 light of the
circumstances under which they were made, not misleading; (ii) provide the
Holders with copies of any documents filed pursuant to Section 2.2(a)(i); and
(iii) inform the Holders that the Company has complied with its obligations in
Section 2.2(a)(i) (or that, if the Company has filed a post-effective amendment
to the Registration Statement that has not yet been declared effective, the
Company will notify the Holders to that effect, will use its commercially
reasonable best efforts to secure the effectiveness of such post-effective
amendment as promptly as possible and will promptly notify the Holders pursuant
to Section 2.2(a)(i) hereof when the amendment has become effective).

 

(b)                                  Subject
to Section 2.2(c) below, in the event: (i) of any request by the SEC or any
other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to
the Registration Statement or related Prospectus or for additional information
so that the Registration Statement will not contain 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 or otherwise fail to
comply with the

4

 

applicable rules and
regulations of the federal securities laws; (ii) of the issuance by the SEC or
any other federal or state governmental authority of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose; (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, provided
that, considering the advice of counsel, the Company reasonably believes that
it must qualify in such jurisdiction; (iv) of any event or circumstance that,
considering the advice of counsel, the Company reasonably believes necessitates
the making of any changes in the Registration Statement or related Prospectus,
or any document incorporated or deemed to be incorporated therein by reference,
so that, in the case of the Registration Statement, it will not contain any
untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and that in the case of a related Prospectus, it will not contain
any untrue statement of a material fact or any omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
or (v) that the Company reasonably believes, considering the advice of counsel,
that the Company may, in the absence of a suspension described hereunder, be
required under state or federal securities laws to disclose any corporate
development, the disclosure of which could reasonably be expected to have a
material adverse effect upon the Company, its stockholders, a potentially
material transaction or event involving the Company, or any negotiations,
discussions or proposals directly relating thereto; then the Company shall
deliver a certificate in writing to each Holder (the “Suspension Notice”)
to the effect of the foregoing and, upon receipt of such Suspension Notice, the
Holder will refrain from selling any Registrable Securities pursuant to the
Registration Statement (a “Suspension”)
until the Holder’s receipt of copies of a supplemented or amended Prospectus
prepared and filed by the Company or until the Holder is advised in writing by
the Company that the current Prospectus may be used and the Holder has received
copies of any additional or supplemental filings that are incorporated or
deemed incorporated by reference in any such Prospectus.  In the event of any Suspension, the Company
will use its commercially reasonable best efforts to cause the use of the
Prospectus so suspended to be resumed as soon as reasonably practicable after
delivery of a Suspension Notice to the Holders. In the event that the Company
shall exercise its right to suspend the effectiveness of the Registration
Statement hereunder, the Registration Period during which the Registration
Statement is to remain effective shall be extended by a period of time equal to
the duration of any Suspensions.

 

(c)                                  Notwithstanding
the foregoing paragraphs of this Section 2.2, the Holders shall not be
prohibited from selling Registrable Securities under the Registration Statement
as a result of Suspensions on more than two occasions of not more than 45 days
each in any 12-month period; provided,
however, that in no event shall any Suspension pursuant to Section
2.2(b)(iv) exceed ten business days.

 

(d)                                  Provided
that a Suspension is not then in effect, each Holder may sell Registrable
Securities under the Registration Statement, provided that it arranges for
delivery of a current Prospectus to the transferee of such Registrable
Securities.  Upon receipt of a request
therefor, the Company will provide an adequate number of current Prospectuses
to the Holder and supply copies to any other parties requiring such
Prospectuses.

 

5

 

2.3                               Piggyback Registrations.

 

(a)                                  The Company shall notify all Holders
of Registrable Securities then outstanding in writing at least ten  days prior to the filing of
any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to, registration
statements relating to secondary offerings of securities of the Company, but
excluding Special Registration Statements) and shall afford each such Holder an
opportunity to include in such registration statement all or part of such
Registrable Securities held by such Holder. 
Each Holder desiring to include in any such registration statement all
or any part of the Registrable Securities held by it shall, within ten days
after the above-described notice from the Company, so notify the Company in writing.  Such notice shall state the intended method
of disposition of the Registrable Securities by such Holder.  If a Holder decides not to include all of
its Registrable Securities in any registration statement thereafter filed by
the Company, such Holder shall nevertheless continue to have the right to
include any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to
offerings of its securities, all upon the terms and conditions set forth
herein.

 

(b)                                  If
the registration statement under which the Company gives notice under this
Section 2.3 is for an underwritten public offering, the Company shall so
advise the Holders of Registrable Securities then outstanding.  In such event, the right of any such Holder
to be included in a registration pursuant to this Section 2.3 shall be
conditioned upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in the underwriting to the extent
provided herein.  All Holders proposing
to distribute their Registrable Securities through such underwriting shall
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company.  Notwithstanding any other provision of this
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated: first, to
the Company; second, to the Holders and the Prior Rights Holders on a pro rata
basis based on the aggregate of the Registrable Securities then held by the
Holders under this Agreement and the Prior Registrable Securities then held by
the Prior Rights Holders under the Prior Investor Rights Agreement; and third,
to any stockholders of the Company (other than a Holder or Prior Rights Holder)
on a pro
rata basis; provided, however,
that: (i) no such reduction shall reduce the aggregate amount of securities of
the selling Holders, together with the securities of the Prior Rights Holders,
included in the registration below thirty percent (30%) of the total amount of
securities included in such registration; and (ii) no such reduction shall
reduce the amount of Registrable Securities of the selling Holders included in
the registration unless all Prior Rights Holders exercising piggyback
registration rights in such registration are subject to such reduction in their
Prior Registrable Securities.  Except as
provided above, in no event will shares of any other selling stockholder of the
Company be included in such registration that would reduce the number of shares
that may be included by the Holders and the Prior Rights Holders without the
written consent of the holders of not less than a majority of the aggregate of
the Registrable Securities and the Prior Registrable Securities proposed to be
sold in the offering.  If any
participating Holder disapproves of the terms of any such underwriting, such
participating Holder may elect to withdraw therefrom by written notice to the
Company and the underwriter, delivered prior to the effective date of the
registration statement.  Any Registrable
Securities excluded or withdrawn from such underwriting shall be excluded and
withdrawn from the

6

 

registration.  For any Holder that is a partnership,
corporation, venture capital fund or limited liability company, the partners,
retired partners, members, retired members and stockholders of such Holder, or
the estates and family members of any such partners, retired partners, members,
retired members and any trusts for the benefit of any of the foregoing person
shall be deemed to be a single “Holder,” and any pro rata reduction with
respect to such “Holder” shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included in
such “Holder,” as defined in this sentence.

 

(c)                                  The
Company shall have the right to
terminate or withdraw any registration initiated by it under this
Section 2.3 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration.

 

2.4                               Demand
Registration.

 

(a)                                  In
the event that: (i) the Registration Statement is not declared effective by the
SEC as set forth in Section 2.1(b); (ii) the Holders still hold Registrable
Securities at the end of the Registration Period; or (iii) subject to Section
2.2, the Registration Statement does not remain effective during the Registration
Period, and the Initiating Holders intend to distribute Registrable Securities,
then the Initiating Holders may deliver a written request to the Company that
the Company file a registration statement under the Securities Act covering the
registration of at least $3 million of the Registrable Securities then
outstanding in an underwritten offering. The Company shall, within 20 business
days of the receipt of such request, give written notice of such request to all
Holders, and subject to the limitations of this Section 2.4, effect, as
expeditiously as reasonably possible, the registration under the Securities Act
of all Registrable Securities that all Holders request to be registered on the
form of registration statement then available to the Company.

 

(b)                                  If
the Initiating Holders intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise the Company
as a part of their request made pursuant to this Section 2.4, and the Company
shall include such information in the written notice referred to in Section
2.4(a). In such event, the right of any Holder to include its Registrable
Securities in such registration under this Section 2.4 shall be conditioned
upon such Holder’s participation in such underwriting and the inclusion of such
Holder’s Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein.  All Holders
proposing to distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders (which underwriter or underwriters shall be reasonably
acceptable to the Company). 
Notwithstanding any other provision of this Section 2.4, if the
underwriter advises the Company that marketing factors require a limitation on
the number of securities underwritten (including Registrable Securities), then
the Company shall so advise all Holders of Registrable Securities that would
otherwise be underwritten pursuant hereto, and the number of shares that may be
included in the underwriting shall be allocated to the Holders of such Registrable
Securities pro
rata based on the number of Registrable Securities held by all such
Holders (including the Initiating Holders). In no event shall any Registrable Securities be excluded from
such underwriting unless all other securities

7

 

are first excluded. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.

 

(c)                                  The
Company shall not be required to effect a registration pursuant to this
Section 2.4:

 

(i)                                    after
the Company has effected three registrations
pursuant to this Section 2.4, and such registrations have been declared or
ordered effective;

 

(ii)                                during
the period starting with the date of filing of, and ending on the date one
hundred eighty (180) days following the effective date of, a registration
statement pertaining to a public
offering as described in Section 2.3, other than pursuant to a Special
Registration Statement; provided that the Company makes reasonable
good faith efforts to cause such registration statement to become effective;

 

(iii)                            if
within 30 days of receipt of a written request from the Initiating Holders
pursuant to Section 2.4(a), the Company gives notice to the Holders of the
Company’s intention to file a registration statement for a public offering as described in Section
2.3, other than pursuant to a Special Registration Statement,  within
90 days; provided
that if the Company does not file such registration statement within such
90-day period, the Company shall then effect the registration requested by the
Initiating Holders pursuant to Section 2.4;

 

(iv)                               if the Company shall
file a registration statement pursuant to this Section 2.3 and then furnish to
the Initiating Holders requesting such registration statement pursuant to this
Section 2.4 a certificate signed by the Chairman of the Board of the
Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
stockholders for such registration statement to become effective at such time,
in which event the Company shall have the right to defer seeking acceleration
of effectiveness of such filing for a period of not more than 30 days after
receipt of a notice of “no review” or completion of the review process from the
SEC; provided
that such right to delay effectiveness of a requested registration shall be
exercised by the Company not more than once
in any 12-month period; and provided
further that the Company shall not register any securities for the
account of itself or any other stockholder during such period (other than
pursuant to a Special Registration Statement); and

 

(v)                                   in
any particular jurisdiction in which the Company would be required to qualify
to do business or to execute a general consent to service of process in
effecting such registration, qualification or compliance.

 

2.5                               Certain
Obligations of the Company for Piggyback and Demand Registrations.

 

(a)                                  Whenever
required to effect the registration of any Registrable Securities pursuant to
Section 2.3 or Section 2.4, the Company shall, as expeditiously as reasonably
possible:

 

8

 

(i)                                    prepare
and file with the SEC a registration statement with respect to such Registrable
Securities, and use its commercially reasonable best efforts to cause such
registration statement to become effective as soon as practicable;

 

(ii)                                subject
to Section 2.5(b), use its commercially reasonable best efforts to prepare and
file with the SEC such amendments and supplements to a registration statement
and prospectus used in connection therewith as may be necessary to keep such
registration statement effective for a period not exceeding, with respect to
each Holder’s Registrable Securities included in such registration, the earlier
of: (i) the second anniversary of the initial effectiveness of such
registration statement; (ii) the date on which the Holder may sell all Registrable
Securities then held by the Holder without restriction under Rule 144 of the
Securities Act; or (iii) such time as all Registrable Securities held by such
Holder have been sold;

 

(iii)                            furnish
to the Holders with respect to the Registrable Securities registered under a
registration statement such number of copies of such registration statement,
and related prospectuses, including preliminary prospectuses, in conformity
with the requirements of the Securities Act, and such other documents as such
Holders may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Securities by the Holders;

 

(iv)                               use
its commercially reasonable best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions in the United States as shall be reasonably
requested by the Holders; provided, however, that the Company shall
not be required in connection therewith or as a condition thereto to qualify to
do business or consent to service of process in any jurisdiction in which it is
not now so qualified or has not so consented;

 

(v)                                   advise
the Holders promptly after it shall receive notice or obtain knowledge of the
issuance of any stop order by the SEC delaying or suspending the effectiveness
of a registration statement or of the initiation of any proceeding for that
purpose; and it will promptly use its commercially reasonable best efforts to
prevent the issuance of any stop order or to obtain its withdrawal at the
earliest possible moment if such stop order should be issued;

 

(vi)                               in
the event of any underwritten public offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form, with the managing
underwriter(s) of such offering; each Holder participating in such underwriting
shall also enter into and perform its obligations under such an agreement;

 

(vii)                           notify each
Holder of securities registered by such registration statement at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act of the happening of any event as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing;

 

9

 

(viii)                       cause all
such Registrable Securities registered under such registration statement to be
listed on each securities exchange on which similar securities issued by the
Company are then listed;

 

(ix)                              provide
a transfer agent and registrar for all Registrable Securities registered under
the registration statement and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such
registration; and

(x)                                  use
its commercially reasonable efforts to furnish, at the request of any Holder
requesting registration of Registrable Securities under the registration
statement, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration under the registration
statement, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (A)
an opinion, dated such date, of the counsel for the Company, in form and
substance as is customarily requested by the underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities and (B) a letter dated such
date, from the independent certified public accountants of the Company and any
company acquired by the Company, in form and substance as is customarily given
by independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.

 

(b)                                  Subject
to Section 2.5(c) below, in the event: (i) of any request by the SEC or any
other federal or state governmental authority during the period of
effectiveness of a registration statement filed pursuant to Section 2.3 or
Section 2.4 for amendments or supplements to such registration statement or
related prospectus or for additional information so that the Registration Statement
will not contain 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 or otherwise fail to comply with the applicable rules
and regulations of the federal securities laws; (ii) of the issuance by the SEC
or any other federal or state governmental authority of any stop order
suspending the effectiveness of such registration statement or the initiation
of any proceedings for that purpose; (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation of any proceeding for such purpose, provided
that, considering the advice of counsel, the Company reasonably believes that
it must qualify in such jurisdiction; (iv) of any event or circumstance that,
considering the advice of counsel, the Company reasonably believes necessitates
the making of any changes in such registration statement or related prospectus,
or any document incorporated or deemed to be incorporated therein by reference,
so that, in the case of such registration statement, it will not contain any
untrue statement of a material fact or any omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and that in the case of a related prospectus, it will not contain
any untrue statement of a material fact or any omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
or (v) that the Company reasonably believes, considering the advice of counsel,
that the Company may, in the absence of a suspension described hereunder, be
required under state or federal securities laws to disclose any corporate
development, the disclosure of

10

 

which could reasonably be
expected to have a material adverse effect upon the Company, its stockholders,
a potentially material transaction or event involving the Company, or any
negotiations, discussions or proposals directly relating thereto; then the
Company shall deliver a Suspension Notice to each Holder to the effect of the
foregoing and, upon receipt of such Suspension Notice, the Holder will refrain
from selling any Registrable Securities pursuant to such registration statement
until the Holder’s receipt of copies of a supplemented or amended prospectus
prepared and filed by the Company or until the Holder is advised in writing by
the Company that the current prospectus may be used and the Holder has received
copies of any additional or supplemental filings that are incorporated or
deemed incorporated by reference in any such prospectus.  In the event of any Suspension, the Company
will use its commercially reasonable best efforts to cause the use of the
prospectus so suspended to be resumed as soon as reasonably practicable after
delivery of a Suspension Notice to the Holders. In the event that the Company
shall exercise its right to suspend the effectiveness of such registration
statement hereunder, the period during which such registration statement is to
remain effective pursuant to Section 2.5(a)(ii) shall be extended by a period
of time equal to the duration of any Suspensions.

 

(c)                                  Notwithstanding
the foregoing paragraphs of this Section 2.5, the Holders shall not be
prohibited from selling Registrable Securities under a registration statement
filed pursuant to Section 2.4 as a result of Suspensions on more than two
occasions of not more than 45 days each in any 12-month period (it being
understood that (i) any delay in effectiveness of a registration statement
pursuant to Section 2.4(c)(iv) shall be counted as an occasion of Suspension
for purposes of this Section 2.5(c) and (ii) any days of delayed effectiveness
of a registration statement pursuant to Section 2.4(c)(iv) shall be counted as
part of the 45-day total allowed for Suspension under this Section 2.5(c)); provided, however, that in no event shall
any Suspension pursuant to Section 2.5(b)(iv) of a registration statement filed
under Section 2.4 exceed ten business days.

 

(d)                                  Except
as specifically provided herein, all Registration Expenses incurred in
connection with any registration under Section 2.3 or Section 2.4
shall be borne by the Company.  All
Selling Expenses incurred in connection with any registrations under Section
2.3 or Section 2.4 shall be borne by the holders of the securities so registered
pro rata
on the basis of the number of shares so registered.  The Company shall not, however, be required to pay the
Registration Expenses of any registration proceeding begun pursuant to
Section 2.4, the request of which has been subsequently withdrawn by the
Initiating Holders unless: (i) the withdrawal is based upon material
adverse information concerning the Company of which the Initiating Holders were
not aware at the time of such request; or (ii) the Holders of a majority
of the Registrable Securities then outstanding agree to forfeit their right to
one requested registration pursuant to Section 2.4 (in which event such
right shall be deemed forfeited by all Holders).  If the Holders are required to pay the Registration Expenses,
such expenses shall be borne by the holders of securities (including
Registrable Securities) requesting such registration in proportion to the
number of shares for which registration was requested.

 

2.6                               Restrictions
on Transfer.

 

(a)                                  Each
Investor agrees that it will not sell, offer to sell, solicit offers to buy,
dispose of, loan, pledge or grant any right with respect to (collectively, a “Disposition”) all or
any portion of the Registrable Securities unless and until:

 

11

 

(i)                                    there
is then in effect a registration statement under the Securities Act covering
such proposed Disposition and such Disposition is made in accordance with such
registration statement; or

 

(ii)                                (A)
if rights under this Agreement are assigned to the transferee, the
transferee has agreed in writing to be bound by the terms of this Agreement,
(B) such Holder shall have notified the Company of the proposed
Disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed Disposition and (C) if reasonably
requested by the Company, such Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
Disposition will not require registration of such shares under the Securities
Act.

 

(b)                                  Notwithstanding
the provisions of Section 2.6(a) above, no such restriction shall apply to a
transfer by a Holder that is: (i) a partnership transferring to its
partners or former partners in accordance with partnership interests;
(ii) a corporation transferring to a wholly-owned subsidiary or a parent
corporation that owns all of the capital stock of the Holder;  (iii) a limited liability company
transferring to its members or former members in accordance with their interest
in the limited liability company; (iv) an affiliated venture fund
transferring to another affiliated venture fund; or (v) an individual
transferring to the Holder’s family member or trust for the benefit of an
individual Holder; provided that in each case the transferee
will agree in writing to be subject to the terms of this Agreement to the same
extent as if the transferee were an original Holder hereunder.

 

(c)                                  Each
certificate representing the Shares or Warrant Shares shall be stamped or
otherwise imprinted with legends substantially similar to the following (in
addition to any legend required under applicable state securities laws):

 

“THE SHARES
REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).  SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM. RIGEL
PHARMACEUTICALS, INC. MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE
TO IT THAT A PROPOSED TRANSFER OR SALE IS IN COMPLIANCE WITH THE ACT.”

 

“THE SALE,
TRANSFER OR VOTING OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS RESTRICTED
BY THE TERMS OF A SECOND INVESTOR RIGHTS AGREEMENT BY AND AMONG RIGEL
PHARMACEUTICALS, INC. AND THE INVESTORS NAMED THEREIN. COPIES OF THE AGREEMENT
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDERS OF RECORD OF
THIS CERTIFICATE TO THE SECRETARY OF RIGEL PHARMACEUTICALS, INC. AT

 

12

 

THE PRINCIPAL
EXECUTIVE OFFICES OF RIGEL PHARMACEUTICALS, INC.”

 

(d)                                  The
Company shall be obligated to reissue promptly unlegended certificates at the
request of any Holder thereof if the Holder shall have (i) sold Registrable
Securities pursuant to an effective registration statement or (ii) obtained an
opinion of counsel (which counsel may be counsel to the Company) reasonably
acceptable to the Company to the effect that the securities proposed to be
disposed of may lawfully be so disposed of without registration, qualification
and legend.

 

(e)                                  Any
legend endorsed on an instrument pursuant to applicable state securities laws
and the stop-transfer instructions with respect to such securities shall be
removed upon receipt by the Company of an order of the appropriate blue sky
authority authorizing such removal.

 

2.7                               Termination of Registration Rights.  All registration rights
granted under this Section 2 shall terminate and be of no further force and
effect upon the earlier of: (i) the date on which the Holders may sell all Registrable
Securities then held by the Holders without restriction under Rule 144 of the
Securities Act; or (ii) such time as all Registrable Securities purchased by
the Investors in the Financing have been sold.

 

2.8                               Delay of Registration; Furnishing Information.

 

(a)                                  No
Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any controversy that
might arise with respect to the interpretation or implementation of this
Section 2.

 

(b)                                  It
shall be a condition precedent to the obligations of the Company to register a
Holder’s Registrable Securities pursuant to Section 2.1, Section 2.3 or
Section 2.4 that such Holder shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them and the intended
method of disposition of such securities as shall be reasonably required to
effect the registration of such Holder’s Registrable Securities.  Upon receipt of such information, the
Company shall promptly update any registration statement (whether or not such
registration statement has been declared effective) used or to be used to
register Registrable Securities.

 

2.9                               Indemnification. 
In the event any Registrable Securities are included in a
registration statement under Section 2.1, Section 2.3 or Section 2.4:

 

(a)                                  To
the extent permitted by law, the Company shall indemnify and hold harmless each
Holder, the partners, members, officers and directors of each Holder, any
underwriter (as defined in the Securities Act) for such Holder and each person,
if any, who controls such Holder or underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of, or are based upon, any of the following statements, omissions or
violations (collectively a “Violation”) by the Company: (i) any untrue
statement or alleged untrue statement of a material fact contained

13

 

in such registration statement
or incorporated by reference therein, including any preliminary prospectus or
final prospectus contained therein or any amendments or supplements thereto;
(ii) the 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 (iii) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law in connection with the offering covered by such registration
statement; and the Company shall reimburse each such Holder, partner, member,
officer, director, underwriter or 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 as such expenses
are incurred; provided however, that the indemnity agreement contained in
this Section 2.9(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 shall not be unreasonably
withheld, nor shall the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of, or is
based upon, a Violation that occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by or on behalf of such Holder, partner, member, officer,
director, underwriter or controlling person of such Holder.

 

(b)                                  To
the extent permitted by law, each Holder shall, if Registrable Securities held
by such Holder are included in such registration statement, indemnify and hold
harmless the Company, each of its directors, its officers and each person, if
any, who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder’s partners, directors or officers or any
person who controls such Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, or partner,
director, officer or controlling person of such other Holder may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of, or are based upon, any of the following statements:
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement or incorporated by reference therein,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto; (ii) the 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 (iii) any
violation or alleged violation by the Company of the Securities Act  (collectively, a “Holder Violation”), in each case to the
extent (and only to the extent) that such Holder Violation occurs in reliance
upon and in conformity with written information furnished by such Holder under
an instrument duly executed by such Holder and stated to be specifically for
use in connection with such registration; and each such Holder shall reimburse
any legal or other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or other Holder, or partner,
officer, director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Holder Violation; provided,
however, that the indemnity agreement contained in this
Section 2.9(b) 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 Holder, which consent shall not be unreasonably withheld; provided
further, that in no event

 

14

 

shall any
indemnity under this Section 2.9 exceed the net  proceeds from the offering received by such Holder.

 

(c)                                  Promptly
after receipt by an indemnified party under this Section 2.9 of notice of
the commencement of any action (including any governmental action), such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 2.9, deliver to the indemnifying
party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the
parties; provided,
however, that an indemnified party shall have the right to retain
its own counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding.  The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of liability to the indemnified party under this
Section 2.9 to the extent of such prejudice, but the omission so to
deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 2.9.

 

(d)                                  If
the indemnification provided for in this Section 2.9 is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect
to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall to the extent permitted by applicable law contribute to the amount paid
or payable by such 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 indemnifying party on the one hand and of the indemnified party on the
other in connection with the Violation(s) or Holder Violation(s) that resulted
in such loss, claim, damage or liability, as well as any other relevant
equitable considerations.  The relative
fault of the indemnifying party and of the indemnified party shall be
determined by a court of law by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state
a material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission; provided,
that in no event shall any contribution by a Holder hereunder, when combined
with amounts paid pursuant to Section 2.9(b), exceed the net proceeds from the offering
received by such Holder.

 

(e)                                  The
obligations of the Company and the Holders under this Section 2.9 shall
survive completion of any offering of Registrable Securities pursuant to a
registration statement under Section 2 and the termination of this
Agreement.  No indemnifying party, in
the defense of any such claim or litigation, shall, except with the consent of
each indemnified party, consent to the 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 to such claim or litigation.

 

15

 

2.10                        Assignment of Registration Rights.  The rights to cause the Company
to register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder to a transferee or assignee of Registrable Securities
that: (a) is a subsidiary, parent, general partner, limited partner, retired
partner, member or retired member, stockholder or affiliated venture fund of a
Holder; (b) is a Holder’s family member or trust for the benefit of an
individual Holder; (c) acquires at least 100,000  shares of Registrable
Securities (as adjusted for stock splits and combinations); or (d) is an entity affiliated by common
control (or other related entity) with such Holder;  provided, however, that: (i)
the transferor shall, within ten days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee
and the securities with respect to which such registration rights are being
assigned; and (ii) such transferee shall agree to be subject to all
restrictions set forth in this Agreement.

 

2.11                        Amendment of Registration Rights.  Any provision of this
Section 2 may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Holders of
at least  a majority of the Registrable Securities
then outstanding.  Any amendment or
waiver effected in accordance with this Section 2.11 shall be binding upon
each Holder and the Company.  By
acceptance of any benefits under this Section 2, the Holders of
Registrable Securities hereby agree to be bound by the provisions hereunder.

 

SECTION 3. CERTAIN COVENANTS OF THE
PARTIES.

 

3.1                               Reservation of Common Stock.  The Company will at all times
reserve and keep available, solely for issuance and delivery upon the exercise
of the Common Warrants, the Warrant Shares issuable from time to time upon such
exercise.

 

3.2                               Rule 144 Reporting.  With
a view to making available to each Holder the benefits of Rule 144 under the
Securities Act (or its successor rule) and any other rule or regulation of the
SEC that may at any time permit the Holder to sell Registrable Securities to
the public without registration or pursuant to Form S-3, the Company covenants
and agrees to:  (a) make and keep public
information available, as those terms are understood and defined in Rule 144,
until such time as all Registrable Securities purchased by the Investors in the
Financing have been sold; (b) file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Exchange Act; and (c) furnish to the Holder upon request, as long as the Holder
owns any Registrable Securities, (i) a written statement by the Company that it
has complied with the reporting requirements of Rule 144 of the Securities Act
and the Exchange Act or that it qualifies as a registrant whose securities may
be registered on Form S-3, (ii) a copy of the Company’s most recent Annual
Report on Form 10-K or Quarterly Report on Form 10-Q and (iii) such other
information as may be reasonably requested in order to avail the Holder of any
rule or regulation of the SEC that permits the selling of any such Registrable
Securities without registration or pursuant to such form.

 

3.3                               Observation Rights.  For so long as MPM BioVentures
III, L.P. or its affiliates (“MPM Capital”) shall own Registrable Securities
representing not less than 10% of the total shares of Common Stock then
outstanding, the Company shall allow Ms. Ashley Ledbetter (or such other
representative that may be designated by MPM Capital in accordance with this
Section 3.3) to serve as a representative designated by MPM Capital (the “Representative”) to

 

16

 

attend all regularly scheduled meetings of the Company’s Board of
Directors in a nonvoting capacity, and in connection therewith, the Company
shall give such Representative copies of all notices, minutes, consents and
other materials, financial or otherwise, which the Company provides to its
Board of Directors; provided, however,
that: (a) MPM Capital shall not change or substitute its Representative without
providing the Company with 20 days’ prior notice of such change or
substitution;  (b) the Representative
shall agree to hold in confidence and trust and to act in a fiduciary manner
with respect to all information so provided; and (c) the Company reserves the
right to exclude such Representative from access to any material or meeting or
portion thereof if the Company believes that such exclusion is reasonably
necessary: (i) to preserve the attorney-client privilege; (ii) to protect
highly confidential information; or (iii) to prevent the disclosure of trade
secrets to a competitor.

 

3.4                               Board of Directors Matters.  For so long as MPM Capital shall own Registrable Securities representing not less than
10% of the total shares of Common Stock then outstanding:

 

(a)                                  the
Company’s Board of Directors shall consist of nine members, and the Company’s
Board of Directors shall be divided into three classes, with each class having
a three-year term;

 

(b)                                  the
Company shall: (i) use its commercially reasonable best efforts to cause Mr.
Dennis Henner, as designated by MPM Capital (the “Class II Designee”), to be nominated and
elected to Class II of the Company’s Board of Directors at each meeting or
pursuant to each consent of the Company’s stockholders for the election of
Class II directors; (ii) use its commercially reasonable best efforts to cause
Mr. Nick Simon, as designated by MPM Capital (the “Class III Designee”
and collectively with the Class II Designee, the “MPM Designees”), to be nominated and
elected to Class III of the Company’s Board of Directors at each meeting or
pursuant to each consent of the Company’s stockholders for the election of
Class III directors; and (iii) if any MPM Designee elected to the Company’s
Board of Directors ceases to be a member of the Company’s Board of Directors
during such person’s term as a director due to such person’s resignation, death
or removal, the Company shall use its commercially reasonable best efforts,
subject to applicable laws and regulations, to cause such vacancy to be filled
by a replacement designated by MPM Capital, and such designee shall be an MPM
Designee for purposes of this Agreement;

 

(c)                                  as long as an MPM Designee remains on the
Company’s Board of Directors pursuant to Section 3.4(b), then: (i) the Company shall use its
commercially reasonable best efforts to appoint one of the MPM Designees to the
Nominating Committee of the Company’s Board of Directors; and (ii) the Company
shall not materially amend or modify the Charter of the Nominating Committee of
the Company’s Board of Directors as in effect as of the date of this Agreement;
provided, however, that the
Company shall not be required to make any appointment to a committee of the
Company’s Board of Directors if such appointment could reasonably be expected
to conflict with federal securities laws or any other rules or regulations then
in effect of  Nasdaq or any exchange on
which the Company’s securities are listed for trading; and provided further that the Company shall be
able to amend or modify the Charter of the Nominating Committee of the
Company’s Board of Directors as is necessary to not conflict with any
applicable federal securities laws, state laws or any other rules or
regulations then in effect of  Nasdaq or
any exchange on which the Company’s securities are listed for trading;

 

17

 

(d)                                  as long as an MPM Designee remains on
the Company’s Board of Directors pursuant to Section 3.4(b), then the Company shall use its
commercially reasonable best efforts to appoint one of the MPM Designees to the
Compensation Committee of the Company’s Board of Directors; provided, however, that the Company shall
not be required to make any appointment to a committee of the Company’s Board
of Directors if such appointment could reasonably be expected to conflict with
federal securities laws or any other rules or regulations then in effect
of  Nasdaq or any exchange on which the
Company’s securities are listed for trading; and

 

(e)                                  the
Company shall use its commercially reasonable efforts to maintain the Company’s
amended and restated certificate of incorporation and bylaws, as amended, to
permit the Company to indemnify its directors and officers to the fullest
extent permitted by law (including to seek to amend such certificate and bylaws
to the extent the law permits greater indemnification than then permitted by
such certificate and bylaws).

 

3.5                               Limitation on Subsequent Registration Rights.  For so long as any Registrable Securities
remain outstanding, after the date of this Agreement, the Company shall not,
without the prior written consent of the holders of at least a majority  of the aggregate of (a) the
Registrable Securities then outstanding under this Agreement and (b) the Prior
Registrable Securities then outstanding under the Prior Investor Rights
Agreement, enter into any agreement, other than in connection with a Special
Registration Statement, with any holder or prospective holder of any securities
of the Company that would grant such holder registration rights on a parity with, or senior to, those
granted to the Holders hereunder.

 

3.6                               Participation
Rights.

 

(a)                                  The
parties hereby agree that each Investor, so long as such Investor and its
respective affiliates beneficially own at least 10% of all of the outstanding
shares of Common Stock, shall have the right (the “Participation Right”),
but not the obligation, to purchase its Pro Rata Share (as defined below) of
all (or any part) of any New Securities (as defined below). “Pro Rata Share”
equals a fraction, (i) the numerator of which shall be the number of shares of
Common Stock then owned by such Investor (or receivable by such Investor upon
conversion or exercise of all then outstanding convertible or exercisable
securities held by such Investor) and (ii) the denominator of which shall be
the total number of shares of Common Stock then outstanding.

 

(b)                                  For
purposes of this Agreement, “New Securities” shall mean any shares of, or securities
convertible into or exchangeable or exercisable for any shares of, the
Company’s capital stock; provided, however,
that the term “New Securities” does not include:

 

(i)                                    any
securities, including shares of Common Stock, to be issued pursuant to a
“public offering” (as such term is determined by the rules, regulations and
guidelines of the National Association of Securities Dealers) of such
securities, or issued pursuant to a registration statement on a Form S-4 or S-8
or substantially equivalent successor form, or, upon the approval of a majority
of the entire Board of Directors of the Company (i.e., a majority of the total
number of directors then in office), any shares issued pursuant to registration
statement and offered publicly (the parties hereto agree that merely because an
offering is to be

 

18

 

undertaken as
a “take-down” from a shelf registration statement, that factor will not be the
sole determinative factor as to whether such offering is a “public offering”);

 

(ii)                                shares
of Common Stock (or options therefor) issued or issuable to employees,
officers, directors, consultants or other service providers of the Company
pursuant to stock options or other stock incentive agreements or plans approved
by a majority of the Company’s Board of Directors and not for capital-raising
transactions;

 

(iii)                            any
securities issued upon the conversion or exercise of an convertible or
exercisable securities outstanding as of the date hereof;

 

(iv)                               any
shares of Common Stock (or any other security) issued in connection with any
stock split, stock dividend, combination, recapitalization or similar corporate
action for which no consideration is paid or payable;

 

(v)                                   any
shares of Common Stock (or any other security) issued in connection with (A)
any corporate collaboration agreement, (B) any 
licensing agreement, (C) any payment or settlement of any obligation
under a material contract and (D) as compensation for any services rendered to
the Company;

 

(vi)                               any
securities issued pursuant to an acquisition of the Company approved by its
Board of Directors by means of (A) merger or other form of corporate
reorganization in which outstanding shares of the Company are exchanged for
securities or other consideration issued, or caused to be issued, by the
acquiring corporation or its subsidiary and pursuant to which the holders of
the outstanding voting securities of the Company immediately prior to such
merger or other form of corporate reorganization fail to hold equity securities
representing a majority of the voting power of the Company or surviving entity
immediately following such merger or other form of corporate reorganization or
(B) a sale of all or substantially all the assets of the Company approved by
the Company’s Board of Directors;

 

(vii)                           any
shares of Common Stock or Warrants issued pursuant to the Financing;

 

(viii)                       any
securities issued in connection with bona fide equipment financings or bona
fide lease agreements; or

 

(ix)                              any
securities issued in transactions approved by the Board of Directors (i.e., a
majority of the total number of directors then in office) as being excluded
from the provisions of this Section 3.6.

 

(c)                                  If
the Company proposes to undertake any issuance of New Securities, it shall,
prior to any such issuance, give written notice to the Investors of its bona
fide intention to issue New Securities (the “Company Notice”), describing the type of
New Securities proposed to be issued, the total number or quantity of New
Securities proposed to be issued, and the price and the general terms upon
which the Company proposes to issue such New Securities. Each Investor may
elect to purchase or acquire its Pro Rata Share of such New Securities (an “Electing Party”) by
delivering written notice (the “Participation Notice”) of its election to so purchase or
acquire such New Securities at the price and upon the general terms specified
in the

 

19

 

Company Notice
and stating the quantity of New Securities to be purchased (not to exceed its
Pro Rata Share). The Participation Notice shall be delivered to the Company
within five (5) business days after the date of delivery of the Company Notice,
and the obligations of the Electing Party thereunder to purchase the elected
number or percentage of New Securities, and the obligations of the Company to
sell such New Securities to the Electing Party, shall be contingent upon the
consummation of the sale or other transaction pursuant to which the New
Securities are proposed to be issued. 
The number or amount of New Securities specified in the Participation
Notice shall be subject to automatic and proportionate reduction in the event
that the total number or quantity of New Securities sold by the Company is
reduced below the number or quantity specified in the Company Notice. If any
Investor fails to give the Participation Notice to the Company within such five
business-day period, or specifies in the Participation Notice that such Investor
will only purchase part, but not all, of such Investor’s Pro Rata Share (a “Nonpurchasing Investor”),
then such Nonpurchasing Investor shall forfeit the right hereunder to purchase
that part of its Pro Rata Share of such New Securities that it did not so agree
to purchase, and the Company shall promptly give each Investor (if any) who has
timely agreed to purchase its full Pro Rata Share of such offering of New
Securities (a “Purchasing
Investor”) written notice of the failure of any Nonpurchasing
Investor to purchase such Nonpurchasing Investor’s full Pro Rata Share of such
offering of New Securities (the “Overallotment Notice”).  Such Overallotment Notice shall be given to
each Purchasing Investor within three business days of the expiration of the
five business-day period. Each Purchasing Investor shall have a right of
overallotment such that such Purchasing Investor may agree to purchase a
portion of the Nonpurchasing Investor’s unpurchased Pro Rata Share of such
offering on a pro rata basis according to the relative Pro Rata Shares of the
Purchasing Investor at any time within three business days after receiving the
Overallotment Notice.

 

(d)                                  If
the Investors fail to exercise in full the Participation Right within such five
plus three plus three business-day period, then the Company shall have 180
calendar days thereafter to sell the New Securities with respect to which the
Investors’ Participation Rights hereunder were not exercised, at a price not
less than, and upon general terms not more favorable than those specified in
the Company Notice. If the Company has not issued and sold the New Securities
within such 180 calendar-day period, then the Company shall not thereafter
issue or sell any New Securities without again first offering such New Securities
to the Investors pursuant to this Section 3.6.

 

(e)                                  From
and after the date of this Agreement, the Company shall not enter into any
agreement with any holder or prospective holder of any securities that would
allow such holder or prospective holder a participation right, right of first
refusal, right of first offer or other similar right which is on terms
materially more favorable to such holder or prospective holder than, or in
preference to, the Participation Right granted to the Investors hereunder.

 

3.7                               Nasdaq Listing.  The
Company shall use its commercially reasonable best efforts to maintain the
listing of the Registrable Securities on Nasdaq.

 

SECTION
4. MISCELLANEOUS.

 

4.1                               Governing Law. 
This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of California, without giving effect to
the

 

20

 

principles of
conflicts of law. The parties
agree that any action brought by either party under or in relation to this
Agreement, including without limitation to interpret or enforce any provision
of this Agreement, shall be brought in, and each party agrees to and does
hereby submit to the jurisdiction and venue of, any state or federal court
located in the County of San Francisco, California.

 

4.2                               No Inconsistent
Agreements.  The Company
has not entered, as of the date hereof, into any agreement with respect to any
of its securities that is inconsistent with, diminishes or otherwise limits,
the rights granted to the Holders of Registrable Securities in this Agreement
or otherwise conflicts with the provisions hereof.

 

4.3                               Successors and Assigns.  Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the parties hereto and their respective successors, assigns,
heirs, executors and administrators and shall inure to the benefit of, and be
enforceable by, each person who shall be a Holder of Registrable Securities
from time to time; provided, however, that prior to the
receipt by the Company of adequate written notice of the transfer of any
Registrable Securities specifying the full name and address of the transferee,
the Company may deem and treat the person listed as the holder of such shares
in its records as the absolute owner and holder of such shares for all
purposes, including the payment of dividends or any redemption price.

 

4.4                               Entire Agreement. 
This Agreement, including the Exhibits hereto, constitutes
the full and entire understanding and agreement between the parties with regard
to the subject hereof and no party shall be liable or bound to any other in any
manner by any oral or written representations, warranties, covenants and
agreements except as specifically set forth herein.  Each party expressly represents and warrants that it is not relying
on any oral or written representations, warranties, covenants or agreements
outside of this Agreement; provided, however,
that the parties hereto acknowledge that the Investors have relied on those
certain Consents, Waivers and Agreements, dated as of April 29, 2003, executed
by holders of a majority of the “Registrable Securities” outstanding under (and
as defined in) that certain Amended and Restated Investor Rights Agreement,
dated as of February 3, 2000, by and among the Company and the investors named
therein.

 

4.5                               Specific Enforcement.  It is agreed and understood that monetary
damages would not adequately compensate an injured party for the breach of
Section 3.4 of this Agreement by any other party, that Section 3.4 of this
Agreement shall be specifically enforceable, and that any breach or threatened
breach of Section 3.4 of this Agreement shall be the proper subject of a
temporary or permanent injunction or restraining order.  Further, each party hereto waives any claim
or defense that there is an adequate remedy at law for such breach or
threatened breach Section 3.4 of this Agreement.

 

4.6                               Severability. 
In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby.

 

21

 

4.7                               Amendment and Waiver.

 

(a)                                  Except
as otherwise expressly provided, this Agreement may be amended or modified only
upon the written consent of the Company and the Holders of at least a majority
of the Registrable Securities then outstanding.

 

(b)                                  Except
as otherwise expressly provided, the obligations of the Company and the rights
of the Holders under this Agreement may be waived only with the written consent
of the Holders of at least a majority
of the Registrable Securities then outstanding.

 

(c)                                  For
the purposes of determining the number of Holders entitled to vote or exercise
any rights hereunder, the Company shall be entitled to rely solely on the list
of record holders of its stock as maintained by or on behalf of the Company.

 

4.8                               Notices.  All notices, requests, consents and other
communications hereunder shall be in writing; shall be mailed (a) if within the
domestic United States, by first-class registered or certified airmail, by
nationally recognized overnight express courier, postage prepaid, or by
facsimile or (b) if delivered from outside the United States, by International
Federal Express or facsimile; shall be deemed given: (i) if delivered by
first-class registered or certified mail domestic, three business days after so
mailed; (ii) if delivered by nationally recognized overnight carrier, one
business day after so mailed; (iii) if delivered by International Federal
Express, two business days after so mailed; or (iv) if delivered by facsimile,
upon electric confirmation of receipt; and shall be delivered as addressed as
follows:

 

(a)                                  if
to the Company, to:

 

Rigel Pharmaceuticals, Inc.

1180 Veterans Boulevard

South San Francisco, CA  94080

Attn: 
James M. Gower

Chairman and Chief Executive Officer

Phone: 
(650) 624-1100

Telecopy: 
(650) 624-1133

 

with a copy
to:

 

Cooley Godward llp

Five Palo Alto Square

3000 El Camino Real

Palo Alto, CA  94306

Attn: Suzanne Sawochka Hooper

Phone: (650) 843-5000

Telecopy: (650) 849-7400

 

(b)                                  if
to the Investors, at the addresses as set forth on Exhibit A hereto, or at such other address or addresses as may
have been furnished to the Company in writing.

 

4.9                               Attorneys’ Fees. 
In the event that any suit or action is instituted under or
in relation to this Agreement, including without limitation to enforce any
provision in this Agreement, the prevailing party in such dispute shall be
entitled to recover from the losing party

 

22

 

all fees,
costs and expenses of enforcing any right of such prevailing party under or
with respect to this Agreement, including without limitation, such reasonable
fees and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.

 

4.10                        Headings.  The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement.

 

4.11                        Counterparts. 
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.

 

4.12                        Aggregation of Stock.  All shares of Registrable Securities held or acquired by affiliated
entities or persons or persons or entities under common management or control
shall be aggregated together for the purpose of determining the availability of
any rights under this Agreement.

 

4.13                        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.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK.]

 

23

 

In Witness Whereof, the parties hereto have
executed this Second
Investor Rights Agreement as of the date set forth
in the first paragraph hereof.

 

	
  COMPANY:

  	
  INVESTORS:

  
	
   

  	
   

  	
   

  
	
  RIGEL PHARMACEUTICALS, INC.

  	
  MPM BIOVENTURES III, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  MPM BioVentures III GP, L.P.,

  
	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  By:

  	
  MPM BioVentures III LLC,

  
	
   

  	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Series A Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MPM BIOVENTURES III-QP, L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  MPM BioVentures III GP, L.P.,

  
	
   

  	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  MPM BioVentures III LLC,

  
	
   

  	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Series A Member

  
										

 

SECOND INVESTOR RIGHTS AGREEMENT

SIGNATURE PAGE

 

 

 

	
   

  	
   

  	
   

  	
  MPM BIOVENTURES III GMBH & CO.

  
	
   

  	
   

  	
   

  	
  PARALLEL-BETEILIGUNGS KG

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  MPM BioVentures III GP, L.P., in its

  
	
   

  	
   

  	
   

  	
   

  	
  capacity as the Managing Limited

  
	
   

  	
   

  	
   

  	
   

  	
  Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  MPM BioVentures III LLC,

  
	
   

  	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Series A Member

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MPM BIOVENTURES III PARALLEL

  
	
   

  	
   

  	
   

  	
  FUND, L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  MPM BioVentures III GP, L.P.,

  
	
   

  	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  MPM BioVentures III LLC,

  
	
   

  	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Series A Member

  
							

 

 

 

	
   

  	
   

  	
   

  	
  MPM ASSET MANAGEMENT

  
	
   

  	
   

  	
   

  	
  INVESTORS 2003 BVIII LLC

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Manager

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  MPM BIOEQUITIES MASTER FUND,

  
	
   

  	
   

  	
   

  	
  L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  MPM BioEquities GP, L.P.,

  
	
   

  	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  MPM BioEquities GP LLC,

  
	
   

  	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  General Partner

  
							

 

 

 

	
   

  	
   

  	
   

  	
  ALTA BIOPHARMA PARTNERS II, L.P.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Alta BioPharma Management Partners

  
	
   

  	
   

  	
   

  	
   

  	
  II, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  ALTA EMBARCADERO BIOPHARMA

  
	
   

  	
   

  	
   

  	
  PARTNERS II, LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  V.P.
  of Finance & Admin.

  
						

 

 

 

	
   

  	
   

  	
   

  	
  FRAZIER HEALTHCARE IV, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  FHM IV, LP, its General Partner

  
	
   

  	
   

  	
   

  	
  By:

  	
  FHM IV, LLC, its General
  Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  , Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  FRAZIER AFFILIATES IV, L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  FHM IV, LP, its General
  Partner

  
	
   

  	
   

  	
   

  	
  By:

  	
  FHM IV, LLC, its General
  Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  , Member

  
							

 

 

 

	
   

  	
   

  	
   

  	
  HBM BIOVENTURES (CAYMAN) LTD.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  John Arnold

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chairman and Managing Director

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00051-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00051-of-00352.parquet"}]]