Document:

Exhibit 4.2

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

	
No. CS-
    	
June 29, 2011
    

 

WARRANT TO PURCHASE COMMON STOCK

 

OF

 

RECEPTOS, INC.

 

This certifies that, for value received,                                                                or its registered assigns (“Holder”) is entitled, subject to the terms and conditions set forth below, to purchase from RECEPTOS, INC., a Delaware corporation (the “Company”), in whole or in part,                                                                                (              ) fully paid and nonassessable shares (the “Warrant Shares”) of the Company’s Common Stock, $0.001 par value per share (the “Stock”).  This Warrant shall be exercisable at a per share exercise price initially equal to $0.01, although such price may be adjusted as provided in Section 12 below (the “Exercise Price”).

 

The number and character of, and the Exercise Price for, the Warrant Shares are subject to adjustment as provided herein and all references to “Warrant Shares” and “Exercise Price” herein shall be deemed to include any such adjustment or series of adjustments.  The term “Warrant” as used herein shall mean this Warrant and any warrants delivered in substitution or exchange for this Warrant as provided herein.

 

1.                                      Term of Warrant.  Subject to the terms and conditions set forth herein, this Warrant shall be exercisable, in whole or in part, during the term (the “Exercise Period”) commencing upon the close of business on June 29, 2011, and shall no longer be exercisable and shall terminate upon the earliest to occur of (i) the consummation of any Deemed Liquidation Event (as such term is defined in the Company’s Amended and Restated Certificate of Incorporation as in effect on the effective date of the Purchase Agreement), (ii) the date of the closing of the first sale of Common Stock in the Company’s first underwritten public offering of its Common Stock under the Securities Act of 1933, as amended (the “Act”), or (iii) the close of business on June 29, 2018.

 

2.                                      Exercise of Warrant.

 

(a)                                 Cash Exercise.  This Warrant may be exercised by the Holder, in whole or in part, during the Exercise Period by (i) the surrender of this Warrant to the Company, with the Notice of Exercise annexed hereto as Attachment A (the “Exercise Form”) duly completed and

 

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executed on behalf of the Holder, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company) and (ii) the delivery of payment to the Company, for the account of the Company, by cash, wire transfer of immediately available funds to a bank account specified by the Company, or by certified or bank cashier’s check, of the Exercise Price for the number of Warrant Shares specified in the Exercise Form in lawful money of the United States of America.  The Company agrees that such Warrant Shares shall be deemed to be issued to the Holder as the record holder of such Warrant Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for the Warrant Shares as aforesaid.  A stock certificate or certificates for the Warrant Shares specified in the Exercise Form shall be delivered to the Holder as promptly as practicable, and in any event within thirty (30) days, thereafter.  If this Warrant shall have been exercised only in part, the Company shall, at the time of delivery of the stock certificate or certificates, deliver to the Holder a new Warrant evidencing the rights to purchase the remaining Warrant Shares, which new Warrant shall in all other respects be identical with this Warrant.  Except as provided in Section 12 below, no adjustments shall be made on Warrant Shares issuable on the exercise of this Warrant for any dividends or distributions paid or payable to holders of record of Stock prior to the date as of which the Holder shall be deemed to be the record holder of such Warrant Shares.

 

(b)                                 Net Issue Exercise.  In lieu of exercising this Warrant pursuant to Section 2(a) above, this Warrant may be exercised by the Holder, in whole or in part, by the surrender of this Warrant to the Company, with a duly executed Exercise Form marked to reflect a “Net Issue Exercise” and specifying the number of Warrant Shares to be purchased, during normal business hours on any business day during the Exercise Period.  The Company agrees that such Warrant Shares shall be deemed to be issued to the Holder as the record holder of such Warrant Shares as of the close of business on the date on which this Warrant shall have been surrendered as aforesaid.  Upon such exercise, the Holder shall be entitled to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant to the Company together with notice of such election in which event the Company shall issue to the Holder a number of Warrant Shares computed as of the date of surrender of this Warrant to the Company using the following formula (appropriately adjusted in the event of a partial Net Issue Exercise):

 

	
 
    	
 
    	
X = Y(A-B)
    	
 
    
	
 
    	
 
    	
             A
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Where
    	
 
    	
X =
    	
the number of shares of Stock to be issued to   the Holder under this Section 2(b);
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Y =
    	
the number of shares of Stock otherwise   purchasable under this Warrant (as adjusted to the date of such calculation);
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
A =
    	
the fair market value of one share of the   Stock at the date of such calculation;
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
B =
    	
the Exercise Price (as adjusted to the date   of such calculation).
    
					

 

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(c)                                  Fair Market Value.  For purposes of the above calculation, fair market value of one share of Stock shall be determined by the Company’s Board of Directors (the “Board”) in good faith; provided, however, that where there exists a public market for the Stock at the time of such exercise, the fair market value per share shall be the average of the closing bid and asked prices of the Stock quoted in the Over-The-Counter Market Summary or the last reported sale price of the Stock or the closing price quoted on any exchange on which the Stock is listed, whichever is applicable, as published in the Western Edition of The Wall Street Journal for the five (5) trading days prior to the date of determination of fair market value.  Notwithstanding the foregoing, in the event the Warrant is exercised in connection with the Company’s initial public offering of Stock, the fair market value per share shall be the per share offering price to the public in the Company’s initial public offering.

 

3.                                      No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the fair market value of a share of Stock multiplied by such fraction.

 

4.                                      Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

 

5.                                      Rights of Stockholders.  Except as provided in Section 12 below, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of any capital stock of the Company for any purpose, and nothing contained herein shall be construed to confer upon the Holder, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, or change of stock to or from no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant shall have been exercised as provided herein.

 

6.                                      Registration Rights.  The Stock issuable upon exercise of this Warrant may be entitled to the registration rights provided in that certain Second Amended and Restated Investors’ Rights Agreement, dated as of November 9, 2009, by and among the Company and certain investors.

 

7.                                      Transfer of Warrant.

 

(a)                                 Warrant Register.  The Company will maintain a register (the “Warrant Register”) containing the name and address of the Holder.  Any Holder of this Warrant or any portion thereof may change such Holder’s address as shown on the Warrant Register by written notice to the Company requesting such change.  Any notice or written communication required or permitted to be given to the Holder may be delivered or given by mail to such Holder as shown on the Warrant Register and at the address shown on the Warrant Register.  Until this

 

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Warrant is transferred on the Warrant Register of the Company, the Company may treat the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary.

 

(b)                                 Warrant Agent.  The Company may, by written notice to the Holder, appoint an agent for the purpose of maintaining the Warrant Register referred to in Section 7(a) above, issuing the Warrant Shares or other securities then issuable upon the exercise of this Warrant, exchanging this Warrant, replacing this Warrant or any or all of the foregoing.  Thereafter, any such registration, issuance, exchange or replacement, as the case may be, shall be made at the office of such agent.

 

(c)                                  Transferability and Nonnegotiability of Warrant.  This Warrant may not be transferred or assigned in whole or in part without compliance with all applicable federal and state securities laws by the transferor and the transferee (including the delivery of legal opinions reasonably satisfactory to the Company, if such are requested by the Company); provided, however, that no opinion of counsel shall be required for any transfer of this Warrant (or any portion hereof) or any Warrant Shares issued upon exercise hereof in compliance with Rule 144 promulgated under the Act.  Any transfer of this Warrant shall be subject to (i) the transferee’s agreement in writing to be subject to the terms of this Warrant, (ii) the transferee’s execution and delivery to the Company of the Representation Statement attached hereto as Attachment C and (iii) the transferor’s execution and delivery to the Company of the Assignment Form annexed hereto as Attachment B (the “Assignment Form”).

 

(d)                                 Exchange of Warrant Upon a Transfer.  On surrender of this Warrant for exchange, properly endorsed on the Assignment Form and subject to the provisions of this Warrant with respect to compliance with the Act and with the limitations on assignments and transfers and contained in this Section 7, the Company at its expense shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof.

 

8.                                      Holder’s Representations, Warranties and Covenants.  Holder, by its acceptance of this Warrant, is deemed to make the representations, warranties and covenants set forth on the Representation Statement annexed hereto as Attachment C, as of the date hereof and as of the date of any exercise of this Warrant, as though such representations, warranties and covenants were fully set forth herein.

 

9.                                      Reservation of Stock.  The Company covenants that during the term this Warrant is exercisable, the Company will reserve from its authorized and unissued Stock a sufficient number of shares to provide for the issuance of Stock upon the exercise of this Warrant and, from time to time, will take all steps necessary to amend the Articles to provide sufficient reserves of shares of Stock for issuance upon exercise of this Warrant.  The Company further covenants that all shares that may be issued upon the exercise of rights represented by this Warrant and payment of the Exercise Price, all as set forth herein, will be free from all taxes, liens and charges caused or created solely by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein).

 

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10.                               Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given at the earlier of (i) the time of actual delivery, (ii) the next business day after deposit with a nationally recognized overnight courier specifying next day delivery, with written verification of receipt, (iii) when sent by facsimile, if receipt is confirmed, or (iv) on the fifth (5th) business day following the date deposited with the United States Postal Service, postage prepaid, certified with return receipt requested.

 

11.                               Amendments.  This Warrant and any term hereof may be changed, waived, discharged or terminated by either (i) an instrument in writing signed by the Company and the party against which enforcement of such change, waiver, discharge or termination is sought or (ii) the consent or approval of the Company and the holders of at least sixty-three point fifty percent (63.50%) of the 2nd Tranche Shares (as defined in the Purchase Agreement) then outstanding.  Thus, without limitation (and whether or not the Holder is a holder of 2nd Tranche Shares), this Warrant may be terminated, and any provision herein may be amended or waived, at any time by the holders of at least sixty-three point fifty percent (63.50%) of the outstanding 2nd Tranche Shares (acting together with the Company).

 

12.                               Adjustments.  The Exercise Price and the number of shares purchasable hereunder are subject to adjustment from time to time as follows:

 

(a)                                 Reclassification, etc.  If, at any time while this Warrant or any portion hereof remains unexpired, the Stock, by conversion, reclassification of securities or otherwise, shall change into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such conversion, reclassification or other change and the Exercise Price therefor (unless modified in respect of such conversion, reclassification or other change pursuant to the provisions of Section 12(a) above) shall be appropriately modified in the good faith discretion of the Board, all subject to further adjustment as provided in this Section 12.

 

(b)                                 Split, Subdivision or Combination of Shares.  If the Company, at any time while this Warrant or any portion hereof remains unexpired, shall split, subdivide or combine the outstanding shares of Stock into a different number of shares of Stock, then (i) in the case of a split or subdivision, the Exercise Price (unless modified in respect of such split or subdivision pursuant to the provisions of Section 12(a) above) shall be proportionately decreased and the Warrant Shares issuable upon exercise of this Warrant shall be proportionately increased, and (ii) in the case of a combination, the Exercise Price (unless modified in respect of such combination pursuant to the provisions of Section 12(a) above) shall be proportionately increased and the Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased.

 

(c)                                  Adjustments for Dividends in Stock or Other Securities or Property.  If, while this Warrant or any portion hereof remains unexpired, the holders of Stock shall receive, or, on or after the record date fixed for the determination of eligible stockholders, shall become entitled to receive, without payment therefor, additional shares of Stock by way of a dividend (“Additional Shares”), then and in each case, this Warrant shall represent the right to acquire, in addition to the number of Warrant Shares receivable upon exercise of this Warrant, and without payment of

 

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any additional consideration therefor, the amount of such Additional Shares that the Holder would hold on the date of such exercise had it been the holder of record of that number of Warrant Shares receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such Warrant Shares and/or all other Additional Shares available to it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 12.

 

(d)                                 Certificate as to Adjustments.  Upon the occurrence of each adjustment or readjustment pursuant to this Section 12, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder of this Warrant a certificate signed by an executive officer setting forth the event requiring the adjustment or readjustment and showing in reasonable detail the facts upon which such adjustment or readjustment is based, the method by which such adjustment was calculated and the Exercise Price and number of Warrant Shares purchasable hereunder after giving effect to such adjustment.  The Company shall, upon the written request, at any time, of any such Holder, furnish or cause to be furnished to such Holder a like certificate setting forth:  (i) such adjustments and readjustments; (ii) the Exercise Price at the time in effect; and (iii) the number of Warrant Shares and the amount, if any, of other property that at the time would be received upon the exercise of the Warrant.

 

(e)                                  No Impairment.  The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment.

 

13.                               Miscellaneous.

 

(a)                                 This Warrant shall be governed by the laws of the State of California as applied to agreements entered into in the State of California by and among residents of the State of California.

 

(b)                                 This Warrant shall be exercisable as provided for herein, except that in the event that the expiration date of this Warrant shall fall on a Saturday, Sunday or United States federally recognized holiday, the expiration date for this Warrant shall be extended to 5:00 p.m. Pacific Time on the business day following such Saturday, Sunday or United States federally recognized holiday.

 

(c)                                  This Warrant may be executed in counterparts which, together, shall constitute but one original.

 

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IN WITNESS WHEREOF, RECEPTOS, INC. has caused this Warrant to be executed by its officer thereunto duly authorized.

 

Dated:  June 29, 2011

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
RECEPTOS, INC.
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name: Faheem Hasnain
    
	
 
    	
 
    	
Title: Chief Executive Officer
    

 

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ATTACHMENT A TO WARRANT

 

NOTICE OF EXERCISE

 

To:                             RECEPTOS, INC.

 

1.                                      The undersigned hereby:

 

elects to purchase                                      shares of Stock of RECEPTOS, INC. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price for such shares in full; or

 

elects to exercise the Net Issue Exercise features of the attached Warrant with respect to                                          shares of Stock of RECEPTOS, INC. pursuant to the terms of such Warrant.

 

2.                                      In exercising the attached Warrant, the undersigned hereby confirms and acknowledges the provisions of Attachment C (i.e., the Representation Statement) to such Warrant, which are incorporated herein by reference.

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Name)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Date)
    	
 
    	
(Signature)
    

 

 

ATTACHMENT B TO WARRANT

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant, with respect to the number of shares of Stock set forth below:

 

	
Name of Assignee
    	
 
    	
Address
    	
 
    	
No. of
   Shares
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

and does hereby irrevocably constitute and appoint the Secretary of the Company to make such transfer on the books of RECEPTOS, INC. maintained for such purpose, with full power of substitution in the premises.

 

The undersigned also represents that, by assignment hereof, the Assignee agrees to execute, and to abide by the provisions of, the Representation Statement attached to the Warrant as Attachment C thereto.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature of Holder
    

 

 

ATTACHMENT C TO WARRANT

 

REPRESENTATION STATEMENT

 

The undersigned Holder represents, covenants and agrees as follows:

 

(i)                                    Purchase for Own Account.  The Warrant issued by RECEPTOS, INC., a Delaware corporation (the “Company”) to the Holder (the “Warrant”) and the shares of common stock of the Company issued upon exercise of the Warrant (the “Shares”) (together, the “Securities”) will be acquired for investment for Holder’s own account, not as a nominee or agent, and not with a view to the public resale or distribution thereof within the meaning of the Securities Act of 1933, as amended, (the “1933 Act”), and Holder has no present intention of selling, granting any participation in, or otherwise distributing the same.  Holder also represents that Holder has not been formed for the specific purpose of acquiring the Securities.

 

(ii)                                Disclosure of Information.  Holder believes it has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the Securities to be received by Holder under the Warrant.  Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the investment in the Securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder had access.

 

(iii)                            Investment Experience.  Holder understands that the investment in the Securities involves substantial risk.  Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder is able to fend for itself, can bear the economic risk of Holder’s investment in the Securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of this investment in the Securities and protecting its own interests in connection with this investment.

 

(iv)                             Accredited Investor Status.  Holder is an “accredited investor” within the meaning of Regulation D promulgated under the 1933 Act.

 

(v)                                 Restricted Securities.  Holder understands that the Securities will be characterized as “restricted securities” under the 1933 Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under the 1933 Act and applicable regulations thereunder, such securities may be resold without registration under the 1933 Act only in certain limited circumstances.  In this connection, Holder represents that Holder is familiar with Rule 144 promulgated by the Securities and Exchange Commission, as presently in effect, and understands the resale limitations imposed thereby and by the 1933 Act.  Holder understands that the Company is under no obligation to register any of the Securities except as may be provided in that certain Second Amended and Restated Investors’ Rights Agreement, dated as of November 9, 2009, by and among the Company and certain investors, as amended or amended and restated from time to time (the “Rights Agreement”).  Holder understands that no public market now exists for any of the Securities and that it is uncertain whether a public market will ever exist for the Securities.

 

 

(vi)                             Legends.  It is understood that the certificates evidencing the Securities will bear the legends set forth below:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

The legend set forth above shall be removed by the Company from any certificate evidencing the Securities upon delivery to the Company of an opinion by counsel, reasonably satisfactory to the Company, that a registration statement under the 1933 Act is at that time in effect with respect to the legended security or that such security can be freely transferred in a public sale without such a registration statement being in effect; provided, however, that no opinion of counsel shall be required for such a transfer in compliance with Rule 144.

 

(vii)                           “Market Stand-Off” Agreement.  Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company of shares of its Common Stock or any other equity securities under the 1933 Act on a registration statement on Form S-1, Form S-2, or Form S-3, and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days, although such period may be extended upon agreement of any managing underwriter and the Company for up to seventeen (17) additional days), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired) or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise.  The foregoing provisions of this paragraph (vii) shall apply only to the Company’s first underwritten public offering of its Common Stock under the 1933 Act, shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, and shall be applicable to the Holders only if all officers and directors of the Company are subject to the same restrictions and the Company uses commercially reasonable efforts to obtain a similar agreement from all stockholders individually owning more than five percent (5%) of the Company’s outstanding Common Stock (after giving effect to conversion into Common Stock of all outstanding shares of the Company’s Preferred Stock).  The underwriters in connection with such registration are intended third-party beneficiaries of this paragraph (vii) and shall have the right, power, and authority to enforce the provisions hereof as though they were a party hereto.  Each Holder further agrees to execute such 

 

 

agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this paragraph (vii) or that are necessary to give further effect thereto.  Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all Holders subject to such agreements, based on the number of shares subject to such agreements.

 

 

	
 
    	
HOLDER
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Date)
    	
 
    	
(Name)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Signature)
    

 

 

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

	
No. CS-
    	
December 23, 2011
    

 

WARRANT TO PURCHASE COMMON STOCK

 

OF

 

RECEPTOS, INC.

 

This certifies that, for value received,                                                                or its registered assigns (“Holder”) is entitled, subject to the terms and conditions set forth below, to purchase from RECEPTOS, INC., a Delaware corporation (the “Company”), in whole or in part,                                                                                (              ) fully paid and nonassessable shares (the “Warrant Shares”) of the Company’s Common Stock, $0.001 par value per share (the “Stock”).  This Warrant shall be exercisable at a per share exercise price initially equal to $0.01, although such price may be adjusted as provided in Section 12 below (the “Exercise Price”).

 

The number and character of, and the Exercise Price for, the Warrant Shares are subject to adjustment as provided herein and all references to “Warrant Shares” and “Exercise Price” herein shall be deemed to include any such adjustment or series of adjustments.  The term “Warrant” as used herein shall mean this Warrant and any warrants delivered in substitution or exchange for this Warrant as provided herein.

 

1.                                      Term of Warrant.  Subject to the terms and conditions set forth herein, this Warrant shall be exercisable, in whole or in part, during the term (the “Exercise Period”) commencing upon the close of business on December 23, 2011, and shall no longer be exercisable and shall terminate upon the earliest to occur of (i) the consummation of any Deemed Liquidation Event (as such term is defined in the Company’s Amended and Restated Certificate of Incorporation as in effect on the effective date of the Purchase Agreement), (ii) the date of the closing of the first sale of Common Stock in the Company’s first underwritten public offering of its Common Stock under the Securities Act of 1933, as amended (the “Act”), or (iii) the close of business on June 29, 2018.

 

2.                                      Exercise of Warrant.

 

(a)                                 Cash Exercise.  This Warrant may be exercised by the Holder, in whole or in part, during the Exercise Period by (i) the surrender of this Warrant to the Company, with the Notice of Exercise annexed hereto as Attachment A (the “Exercise Form”) duly completed and

 

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executed on behalf of the Holder, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company) and (ii) the delivery of payment to the Company, for the account of the Company, by cash, wire transfer of immediately available funds to a bank account specified by the Company, or by certified or bank cashier’s check, of the Exercise Price for the number of Warrant Shares specified in the Exercise Form in lawful money of the United States of America.  The Company agrees that such Warrant Shares shall be deemed to be issued to the Holder as the record holder of such Warrant Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for the Warrant Shares as aforesaid.  A stock certificate or certificates for the Warrant Shares specified in the Exercise Form shall be delivered to the Holder as promptly as practicable, and in any event within thirty (30) days, thereafter.  If this Warrant shall have been exercised only in part, the Company shall, at the time of delivery of the stock certificate or certificates, deliver to the Holder a new Warrant evidencing the rights to purchase the remaining Warrant Shares, which new Warrant shall in all other respects be identical with this Warrant.  Except as provided in Section 12 below, no adjustments shall be made on Warrant Shares issuable on the exercise of this Warrant for any dividends or distributions paid or payable to holders of record of Stock prior to the date as of which the Holder shall be deemed to be the record holder of such Warrant Shares.

 

(b)                                 Net Issue Exercise.  In lieu of exercising this Warrant pursuant to Section 2(a) above, this Warrant may be exercised by the Holder, in whole or in part, by the surrender of this Warrant to the Company, with a duly executed Exercise Form marked to reflect a “Net Issue Exercise” and specifying the number of Warrant Shares to be purchased, during normal business hours on any business day during the Exercise Period.  The Company agrees that such Warrant Shares shall be deemed to be issued to the Holder as the record holder of such Warrant Shares as of the close of business on the date on which this Warrant shall have been surrendered as aforesaid.  Upon such exercise, the Holder shall be entitled to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant to the Company together with notice of such election in which event the Company shall issue to the Holder a number of Warrant Shares computed as of the date of surrender of this Warrant to the Company using the following formula (appropriately adjusted in the event of a partial Net Issue Exercise):

 

X = Y(A-B)
              A

 

Where                                                             X =                 the number of shares of Stock to be issued to the Holder under this Section 2(b);

 

Y =                 the number of shares of Stock otherwise purchasable under this Warrant (as adjusted to the date of such calculation);

 

A =                 the fair market value of one share of the Stock at the date of such calculation;

 

B =                 the Exercise Price (as adjusted to the date of such calculation).

 

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(c)                                  Fair Market Value.  For purposes of the above calculation, fair market value of one share of Stock shall be determined by the Company’s Board of Directors (the “Board”) in good faith; provided, however, that where there exists a public market for the Stock at the time of such exercise, the fair market value per share shall be the average of the closing bid and asked prices of the Stock quoted in the Over-The-Counter Market Summary or the last reported sale price of the Stock or the closing price quoted on any exchange on which the Stock is listed, whichever is applicable, as published in the Western Edition of The Wall Street Journal for the five (5) trading days prior to the date of determination of fair market value.  Notwithstanding the foregoing, in the event the Warrant is exercised in connection with the Company’s initial public offering of Stock, the fair market value per share shall be the per share offering price to the public in the Company’s initial public offering.

 

3.                                      No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant.  In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the fair market value of a share of Stock multiplied by such fraction.

 

4.                                      Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

 

5.                                      Rights of Stockholders.  Except as provided in Section 12 below, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of any capital stock of the Company for any purpose, and nothing contained herein shall be construed to confer upon the Holder, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, or change of stock to or from no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until this Warrant shall have been exercised as provided herein.

 

6.                                      Registration Rights.  The Stock issuable upon exercise of this Warrant may be entitled to the registration rights provided in that certain Second Amended and Restated Investors’ Rights Agreement, dated as of November 9, 2009, by and among the Company and certain investors.

 

7.                                      Transfer of Warrant.

 

(a)                                 Warrant Register.  The Company will maintain a register (the “Warrant Register”) containing the name and address of the Holder.  Any Holder of this Warrant or any portion thereof may change such Holder’s address as shown on the Warrant Register by written notice to the Company requesting such change.  Any notice or written communication required or permitted to be given to the Holder may be delivered or given by mail to such Holder as shown on the Warrant Register and at the address shown on the Warrant Register.  Until this

 

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Warrant is transferred on the Warrant Register of the Company, the Company may treat the Holder as shown on the Warrant Register as the absolute owner of this Warrant for all purposes, notwithstanding any notice to the contrary.

 

(b)                                 Warrant Agent.  The Company may, by written notice to the Holder, appoint an agent for the purpose of maintaining the Warrant Register referred to in Section 7(a) above, issuing the Warrant Shares or other securities then issuable upon the exercise of this Warrant, exchanging this Warrant, replacing this Warrant or any or all of the foregoing.  Thereafter, any such registration, issuance, exchange or replacement, as the case may be, shall be made at the office of such agent.

 

(c)                                  Transferability and Nonnegotiability of Warrant.  This Warrant may not be transferred or assigned in whole or in part without compliance with all applicable federal and state securities laws by the transferor and the transferee (including the delivery of legal opinions reasonably satisfactory to the Company, if such are requested by the Company); provided, however, that no opinion of counsel shall be required for any transfer of this Warrant (or any portion hereof) or any Warrant Shares issued upon exercise hereof in compliance with Rule 144 promulgated under the Act.  Any transfer of this Warrant shall be subject to (i) the transferee’s agreement in writing to be subject to the terms of this Warrant, (ii) the transferee’s execution and delivery to the Company of the Representation Statement attached hereto as Attachment C and (iii) the transferor’s execution and delivery to the Company of the Assignment Form annexed hereto as Attachment B (the “Assignment Form”).

 

(d)                                 Exchange of Warrant Upon a Transfer.  On surrender of this Warrant for exchange, properly endorsed on the Assignment Form and subject to the provisions of this Warrant with respect to compliance with the Act and with the limitations on assignments and transfers and contained in this Section 7, the Company at its expense shall issue to or on the order of the Holder a new warrant or warrants of like tenor, in the name of the Holder or as the Holder (on payment by the Holder of any applicable transfer taxes) may direct, for the number of shares issuable upon exercise hereof.

 

8.                                      Holder’s Representations, Warranties and Covenants.  Holder, by its acceptance of this Warrant, is deemed to make the representations, warranties and covenants set forth on the Representation Statement annexed hereto as Attachment C, as of the date hereof and as of the date of any exercise of this Warrant, as though such representations, warranties and covenants were fully set forth herein.

 

9.                                      Reservation of Stock.  The Company covenants that during the term this Warrant is exercisable, the Company will reserve from its authorized and unissued Stock a sufficient number of shares to provide for the issuance of Stock upon the exercise of this Warrant and, from time to time, will take all steps necessary to amend the Articles to provide sufficient reserves of shares of Stock for issuance upon exercise of this Warrant.  The Company further covenants that all shares that may be issued upon the exercise of rights represented by this Warrant and payment of the Exercise Price, all as set forth herein, will be free from all taxes, liens and charges caused or created solely by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein).

 

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10.                               Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given at the earlier of (i) the time of actual delivery, (ii) the next business day after deposit with a nationally recognized overnight courier specifying next day delivery, with written verification of receipt, (iii) when sent by facsimile, if receipt is confirmed, or (iv) on the fifth (5th) business day following the date deposited with the United States Postal Service, postage prepaid, certified with return receipt requested.

 

11.                               Amendments.  This Warrant and any term hereof may be changed, waived, discharged or terminated by either (i) an instrument in writing signed by the Company and the party against which enforcement of such change, waiver, discharge or termination is sought or (ii) the consent or approval of the Company and the holders of at least sixty-three point fifty percent (63.50%) of the 2nd Tranche Shares (as defined in the Purchase Agreement) then outstanding.  Thus, without limitation (and whether or not the Holder is a holder of 2nd Tranche Shares), this Warrant may be terminated, and any provision herein may be amended or waived, at any time by the holders of at least sixty-three point fifty percent (63.50%) of the outstanding 2nd Tranche Shares (acting together with the Company).

 

12.                               Adjustments.  The Exercise Price and the number of shares purchasable hereunder are subject to adjustment from time to time as follows:

 

(a)                                 Reclassification, etc.  If, at any time while this Warrant or any portion hereof remains unexpired, the Stock, by conversion, reclassification of securities or otherwise, shall change into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such conversion, reclassification or other change and the Exercise Price therefor (unless modified in respect of such conversion, reclassification or other change pursuant to the provisions of Section 12(a) above) shall be appropriately modified in the good faith discretion of the Board, all subject to further adjustment as provided in this Section 12.

 

(b)                                 Split, Subdivision or Combination of Shares.  If the Company, at any time while this Warrant or any portion hereof remains unexpired, shall split, subdivide or combine the outstanding shares of Stock into a different number of shares of Stock, then (i) in the case of a split or subdivision, the Exercise Price (unless modified in respect of such split or subdivision pursuant to the provisions of Section 12(a) above) shall be proportionately decreased and the Warrant Shares issuable upon exercise of this Warrant shall be proportionately increased, and (ii) in the case of a combination, the Exercise Price (unless modified in respect of such combination pursuant to the provisions of Section 12(a) above) shall be proportionately increased and the Warrant Shares issuable upon exercise of this Warrant shall be proportionately decreased.

 

(c)                                  Adjustments for Dividends in Stock or Other Securities or Property.  If, while this Warrant or any portion hereof remains unexpired, the holders of Stock shall receive, or, on or after the record date fixed for the determination of eligible stockholders, shall become entitled to receive, without payment therefor, additional shares of Stock by way of a dividend (“Additional Shares”), then and in each case, this Warrant shall represent the right to acquire, in addition to the number of Warrant Shares receivable upon exercise of this Warrant, and without payment of

 

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any additional consideration therefor, the amount of such Additional Shares that the Holder would hold on the date of such exercise had it been the holder of record of that number of Warrant Shares receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such Warrant Shares and/or all other Additional Shares available to it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 12.

 

(d)                                 Certificate as to Adjustments.  Upon the occurrence of each adjustment or readjustment pursuant to this Section 12, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to the Holder of this Warrant a certificate signed by an executive officer setting forth the event requiring the adjustment or readjustment and showing in reasonable detail the facts upon which such adjustment or readjustment is based, the method by which such adjustment was calculated and the Exercise Price and number of Warrant Shares purchasable hereunder after giving effect to such adjustment.  The Company shall, upon the written request, at any time, of any such Holder, furnish or cause to be furnished to such Holder a like certificate setting forth:  (i) such adjustments and readjustments; (ii) the Exercise Price at the time in effect; and (iii) the number of Warrant Shares and the amount, if any, of other property that at the time would be received upon the exercise of the Warrant.

 

(e)                                  No Impairment.  The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder against impairment.

 

13.                               Miscellaneous.

 

(a)                                 This Warrant shall be governed by the laws of the State of California as applied to agreements entered into in the State of California by and among residents of the State of California.

 

(b)                                 This Warrant shall be exercisable as provided for herein, except that in the event that the expiration date of this Warrant shall fall on a Saturday, Sunday or United States federally recognized holiday, the expiration date for this Warrant shall be extended to 5:00 p.m. Pacific Time on the business day following such Saturday, Sunday or United States federally recognized holiday.

 

(c)                                  This Warrant may be executed in counterparts which, together, shall constitute but one original.

 

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IN WITNESS WHEREOF, RECEPTOS, INC. has caused this Warrant to be executed by its officer thereunto duly authorized.

 

	
Dated: December 23, 2011
    	
 
    
	
 
    	
 
    
	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
RECEPTOS, INC.
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name: Faheem Hasnain
    
	
 
    	
 
    	
Title: Chief Executive Officer
    

 

7

 

ATTACHMENT A TO WARRANT

 

NOTICE OF EXERCISE

 

To:                             RECEPTOS, INC.

 

1.                                      The undersigned hereby:

 

elects to purchase                                      shares of Stock of RECEPTOS, INC. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price for such shares in full; or

 

elects to exercise the Net Issue Exercise features of the attached Warrant with respect to                                          shares of Stock of RECEPTOS, INC. pursuant to the terms of such Warrant.

 

2.                                      In exercising the attached Warrant, the undersigned hereby confirms and acknowledges the provisions of Attachment C (i.e., the Representation Statement) to such Warrant, which are incorporated herein by reference.

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Name)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Date)
    	
 
    	
(Signature)
    

 

 

ATTACHMENT B TO WARRANT

 

ASSIGNMENT FORM

 

FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant, with respect to the number of shares of Stock set forth below:

 

	
Name of Assignee
    	
 
    	
Address
    	
 
    	
No. of
   Shares
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

and does hereby irrevocably constitute and appoint the Secretary of the Company to make such transfer on the books of RECEPTOS, INC. maintained for such purpose, with full power of substitution in the premises.

 

The undersigned also represents that, by assignment hereof, the Assignee agrees to execute, and to abide by the provisions of, the Representation Statement attached to the Warrant as Attachment C thereto.

 

	
Dated:
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Signature of Holder
    

 

 

ATTACHMENT C TO WARRANT

 

REPRESENTATION STATEMENT

 

The undersigned Holder represents, covenants and agrees as follows:

 

(i)                                    Purchase for Own Account.  The Warrant issued by RECEPTOS, INC., a Delaware corporation (the “Company”) to the Holder (the “Warrant”) and the shares of common stock of the Company issued upon exercise of the Warrant (the “Shares”) (together, the “Securities”) will be acquired for investment for Holder’s own account, not as a nominee or agent, and not with a view to the public resale or distribution thereof within the meaning of the Securities Act of 1933, as amended, (the “1933 Act”), and Holder has no present intention of selling, granting any participation in, or otherwise distributing the same.  Holder also represents that Holder has not been formed for the specific purpose of acquiring the Securities.

 

(ii)                                Disclosure of Information.  Holder believes it has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the Securities to be received by Holder under the Warrant.  Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the investment in the Securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder had access.

 

(iii)                            Investment Experience.  Holder understands that the investment in the Securities involves substantial risk.  Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder is able to fend for itself, can bear the economic risk of Holder’s investment in the Securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of this investment in the Securities and protecting its own interests in connection with this investment.

 

(iv)                             Accredited Investor Status.  Holder is an “accredited investor” within the meaning of Regulation D promulgated under the 1933 Act.

 

(v)                                 Restricted Securities.  Holder understands that the Securities will be characterized as “restricted securities” under the 1933 Act inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under the 1933 Act and applicable regulations thereunder, such securities may be resold without registration under the 1933 Act only in certain limited circumstances.  In this connection, Holder represents that Holder is familiar with Rule 144 promulgated by the Securities and Exchange Commission, as presently in effect, and understands the resale limitations imposed thereby and by the 1933 Act.  Holder understands that the Company is under no obligation to register any of the Securities except as may be provided in that certain Second Amended and Restated Investors’ Rights Agreement, dated as of November 9, 2009, by and among the Company and certain investors, as amended or amended and restated from time to time (the “Rights Agreement”).  Holder understands that no public market now exists for any of the Securities and that it is uncertain whether a public market will ever exist for the Securities.

 

 

(vi)                             Legends.  It is understood that the certificates evidencing the Securities will bear the legends set forth below:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE.  THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

The legend set forth above shall be removed by the Company from any certificate evidencing the Securities upon delivery to the Company of an opinion by counsel, reasonably satisfactory to the Company, that a registration statement under the 1933 Act is at that time in effect with respect to the legended security or that such security can be freely transferred in a public sale without such a registration statement being in effect; provided, however, that no opinion of counsel shall be required for such a transfer in compliance with Rule 144.

 

(vii)                           “Market Stand-Off” Agreement.  Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company of shares of its Common Stock or any other equity securities under the 1933 Act on a registration statement on Form S-1, Form S-2, or Form S-3, and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days, although such period may be extended upon agreement of any managing underwriter and the Company for up to seventeen (17) additional days), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired) or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise.  The foregoing provisions of this paragraph (vii) shall apply only to the Company’s first underwritten public offering of its Common Stock under the 1933 Act, shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, and shall be applicable to the Holders only if all officers and directors of the Company are subject to the same restrictions and the Company uses commercially reasonable efforts to obtain a similar agreement from all stockholders individually owning more than five percent (5%) of the Company’s outstanding Common Stock (after giving effect to conversion into Common Stock of all outstanding shares of the Company’s Preferred Stock).  The underwriters in connection with such registration are intended third-party beneficiaries of this paragraph (vii) and shall have the right, power, and authority to enforce the provisions hereof as though they were a party hereto.  Each Holder further agrees to execute such

 

 

agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this paragraph (vii) or that are necessary to give further effect thereto.  Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all Holders subject to such agreements, based on the number of shares subject to such agreements.

 

 

	
 
    	
 
    	
HOLDER
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Date)
    	
 
    	
(Name)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Signature)Exhibit 4.3

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

THIS THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT is made as of February 3, 2012, by and among RECEPTOS, INC., a Delaware corporation (the “Company”) and each of the parties listed on Schedule A hereto, each of which is referred to in this Agreement as an “Investor.”

 

RECITALS

 

WHEREAS, the Company previously entered into that certain Second Amended and Restated Investors’ Rights Agreement, dated as of November 9, 2009 (the “Prior Agreement”), with certain of the Investors in connection with the issuance and sale of the Company’s Series A Preferred Stock (“Series A Preferred Stock”);

 

WHEREAS, the parties desire to amend and restate the Prior Agreement in connection with the issuance and sale of the Company’s Series B Preferred Stock (“Series B Preferred Stock”) pursuant to the Series B Preferred Stock Purchase Agreement of even date herewith by and among the Company and certain of the Investors (the “Purchase Agreement”); and

 

WHEREAS, the obligations in the Purchase Agreement are conditioned on the execution and delivery of this Agreement.

 

NOW, THEREFORE, the parties agree as follows:

 

1.                                      Definitions.  For purposes of this Agreement:

 

1.1                               “Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

 

1.2                               “Common Stock” means shares of the Company’s common stock, par value $0.001  per share.

 

1.3                               “Damages” means any loss, damage, or liability (joint or several) to which a party hereto may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such loss, damage, or liability (or any action in respect thereof) arises out of or is based upon: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement of the Company, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; (ii) an 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 indemnifying party (or any of its agents or Affiliates) 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.

 

 

1.4                               “Derivative Securities” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly), Common Stock, including options and warrants.

 

1.5                               “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

1.6                               “Excluded Registration” means: (i) a registration relating to the sale of securities to employees of the Company or a subsidiary pursuant to a stock option, stock purchase, or similar plan; (ii) a registration relating to an SEC Rule 145 transaction; (iii) a registration on any form that does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities; or (iv) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered.

 

1.7                               “Form S-1” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

 

1.8                               “Form S-2” means such form under the Securities Act as in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC.

 

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

 

1.10                        “GAAP” means generally accepted accounting principles in the United States.

 

1.11                        “Holder” means any holder of Registrable Securities who is a party to this Agreement.

 

1.12                        “Immediate Family Member” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, of a natural person referred to herein.

 

1.13                        “Initiating Holders” means, collectively, Holders who properly initiate a registration request under this Agreement.

 

1.14                        “IPO” means the Company’s first underwritten public offering of its Common Stock under the Securities Act.

 

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1.15                        “Major Investor” means any Investor that, individually or together with such Investor’s Affiliates, holds at least 1,000,000 shares of Registrable Securities issued or issuable upon the conversion of Series A Preferred Stock or Series B Preferred Stock (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification effected after the date hereof).

 

1.16                        “New Securities” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.

 

1.17                        “Person” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

 

1.18                        “Registrable Securities” means the Common Stock issuable or issued upon conversion of the Series A Preferred Stock or Series B Preferred Stock and any other Common Stock acquired by an Investor as well as any 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, such Common Stock; excluding in all cases, however, (i) any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Section 6.1 and (ii) any shares of Common Stock issued or issuable as equity-based compensation by the Company (including, without limitation, (x) shares issued or issuable pursuant to any stock option plan or similar arrangement or (y) shares which entail vesting based upon service to the Company or any of its Affiliates); and further excluding, for purposes of Section 2, any shares for which registration rights have terminated pursuant to Section 2.13.

 

1.19                        “Registrable Securities then outstanding” means the number of shares determined by adding the number of shares of outstanding Common Stock that are Registrable Securities and the number of shares of Common Stock issuable (directly or indirectly) pursuant to then exercisable and/or convertible securities that are Registrable Securities.

 

1.20                        “Restricted Securities” means the securities of the Company required to bear the legend set forth in Section 2.12(b).

 

1.21                        “SEC” means the Securities and Exchange Commission.

 

1.22                        “SEC Rule 144” means Rule 144 promulgated by the SEC under the Securities Act.

 

1.23                        “SEC Rule 144(k)” means Rule 144(k) promulgated by the SEC under the Securities Act.

 

1.24                        “SEC Rule 145” means Rule 145 promulgated by the SEC under the Securities Act.

 

1.25                        “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

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1.26                        “Selling Expenses” means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder, except for the fees and disbursements of the Selling Holder Counsel borne and paid by the Company as provided in Section 2.6.

 

1.27                        “Series Preferred Director” has the meaning for such term as set forth in the Company’s Certificate of Incorporation.

 

2.                                      Registration Rights.  The Company covenants and agrees as follows:

 

2.1                               Demand Registration.

 

(a)                                 Form S-1 Demand.  If at any time after the earlier of (i) five (5) years after the date of this Agreement or (ii) one hundred eighty (180) days after the effective date of the registration statement for the IPO, the Company receives a request from Holders of at least sixty percent (60%) of the Registrable Securities issued or issuable upon the conversion of Series A Preferred Stock and Series B Preferred Stock then outstanding that the Company file a Form S-1 registration statement with respect to the Registrable Securities then outstanding, then the Company shall (i) within ten (10) days after the date such request is given, give notice thereof (the “Demand Notice”) to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within sixty (60) days after the date such request is given by the Initiating Holders, file a Form S-1 registration statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Section 2.1(c) and Section 2.3.  The Company is obligated to effect only two (2) such registrations pursuant to this Section 2.1(a).

 

(b)                                 Form S-3 Demand.  If at any time when it is eligible to use a Form S-3 registration statement the Company receives a request from Holders of the Registrable Securities issued or issuable upon the conversion of Series A Preferred Stock or Series B Preferred Stock then outstanding that the Company file a Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price, net of Selling Expenses, of at least $2,000,000, then the Company shall (i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within forty-five (45) days after the date such request is given by the Initiating Holders, file a Form S-3 registration statement under the Securities Act covering all Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Section 2.1(c) and Section 2.3.    The Company is obligated to effect only two (2) such registrations in any twelve (12) month period pursuant to this Section 2.1(b).

 

(c)                                  Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Section 2.1 a certificate signed by the Company’s chief executive officer stating that in the good faith judgment of the Company’s

 

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Board of Directors it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would: (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than forty-five (45) days after the request of the Initiating Holders is given; provided, however, that the Company may not invoke this right more than twice in any twelve (12) month period.

 

(d)                                 The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1(a): (i) during the one hundred eighty (180) day period commencing with the effective date of a Company-initiated registration; (ii) if within thirty (30) days of receiving a request for registration from the Initiating Holders, the Company provides written notice to the Holders of its intent to file a Company-initiated registration within (90) days; (iii) after the Company has effected two (2) registrations pursuant to Section 2.1(a); or (iv) if the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 2.1(b).  A registration shall not be counted as “effected” for purposes of this Section 2.1(d) until such time as the applicable registration statement has been declared effective by the SEC, unless the Initiating Holders withdraw their request for such registration, elect not to pay the registration expenses therefor, and forfeit their right to one demand registration statement pursuant to Section 2.6, in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Section 2.1(d).

 

2.2                               Company Registration.  If the Company proposes to register (including, for this purpose, a registration effected by the Company for stockholders other than the Holders) any of its securities under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at such time, promptly give each Holder notice of such registration.  Upon the request of each Holder given within twenty (20) days after such notice is given by the Company, the Company shall, subject to the provisions of Section 2.3, cause to be registered all of the Registrable Securities that each such Holder has requested to be included in such registration.  The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 2.2 before the effective date of such registration, whether or not any Holder has elected to include Registrable Securities in such registration.  The expenses (other than Selling Expenses) of such withdrawn registration shall be borne by the Company in accordance with Section 2.6.

 

2.3                               Underwriting Requirements.

 

(a)                                 If, pursuant to Section 2.1, 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 Section 2.1, and the Company shall include such information in the Demand Notice.  The underwriter(s) will be

 

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selected by the Company and shall be reasonably acceptable to a majority in interest of the Initiating Holders.  In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration 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 securities through such underwriting shall (together with the Company as provided in Section 2.4(e)) enter into an underwriting agreement in customary form with the underwriter(s) selected for such underwriting.  Notwithstanding any other provision of this Section 2.3, if the underwriter(s) advise(s) the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities that otherwise would be underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be allocated among such Holders of Registrable Securities, including the Initiating Holders, in proportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as shall mutually be agreed to by all such selling Holders; provided, however, that the number of Registrable Securities held by the Holders to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting.  To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares.

 

(b)                                 In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Section 2.2, the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company.  If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters and the Company in their sole discretion determine will not jeopardize the success of the offering.  If the underwriters determine that less than all of the Registrable Securities requested to be registered can be included in such offering, then the Registrable Securities that are included in such offering shall be allocated among the selling Holders in proportion (as nearly as practicable) to the number of Registrable Securities owned by each selling Holder or in such other proportions as shall mutually be agreed to by all such selling Holders.  To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any Holder to the nearest 100 shares.  Notwithstanding the foregoing, in no event shall (i) the number of Registrable Securities included in the offering be reduced unless all other securities (other than securities to be sold by the Company) are first entirely excluded from the offering or (ii) the number of Registrable Securities included in the offering be reduced below twenty-five percent (25%) of the total number of securities included in such offering, unless such offering is the IPO, in which case the selling Holders may be excluded further if the underwriters make the determination described above and no other stockholder’s securities are included in such offering.  For purposes of the provision in this Section 2.3(b) concerning apportionment, for any selling Holder that is a partnership, limited liability company, or corporation, the partners,

 

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members, retired partners, retired members, stockholders, and Affiliates of such Holder, or the estates and Immediate Family Members of any such partners, retired partners, members, and retired members and any trusts for the benefit of any of the foregoing Persons, shall be deemed to be a single “selling Holder,” and any pro rata reduction with respect to such “selling Holder” shall be based upon the aggregate number of Registrable Securities owned by all Persons included in such “selling Holder,” as defined in this sentence.

 

2.4                               Obligations of the Company.  Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

 

(a)                                 prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided, however, that (i) such one hundred twenty (120) day period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration, and (ii) in the case of any registration of Registrable Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred twenty (120) day period shall be extended for up to one hundred eighty (180) days, if necessary, to keep the registration statement effective until all such Registrable Securities are sold;

 

(b)                                 prepare and file with the SEC such amendments and supplements to such registration statement, and the prospectus used in connection with such registration statement, as may be necessary to comply with the Securities Act in order to enable the disposition of all securities covered by such registration statement;

 

(c)                                  furnish to the selling Holders such numbers of copies of a prospectus, including a preliminary prospectus, as required by the Securities Act, and such other documents as the Holders may reasonably request in order to facilitate their disposition of their Registrable Securities;

 

(d)                                 use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or blue-sky laws of such jurisdictions as shall be reasonably requested by the selling Holders; provided  that the Company shall not be required to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

 

(e)                                  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 underwriter(s) of such offering;

 

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(f)                                   use its commercially reasonable efforts to cause all such Registrable Securities covered by such registration statement to be listed on a national securities exchange or trading system and each securities exchange and trading system (if any) on which similar securities issued by the Company are then listed;

 

(g)                                  provide a transfer agent and registrar for all Registrable Securities registered pursuant to this Agreement and provide a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

 

(h)                                 promptly make available for inspection by the selling Holders, any underwriter(s) participating in any disposition pursuant to such registration statement, and any attorney or accountant or other agent retained by any such underwriter or selected by the selling Holders, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company’s officers, directors, employees, and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent, in each case, as necessary or advisable to verify the accuracy of the information in such registration statement and to conduct appropriate due diligence in connection therewith;

 

(i)                                     notify each selling Holder, promptly after the Company receives notice thereof, of the time when such registration statement has been declared effective or a supplement to any prospectus forming a part of such registration statement has been filed; and

 

(j)                                    after such registration statement becomes effective, notify each selling Holder of any request by the SEC that the Company amend or supplement such registration statement or prospectus.

 

2.5                               Furnish Information.  It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as is reasonably required to effect the registration of such Holder’s Registrable Securities.

 

2.6                               Expenses of Registration.  All expenses (other than Selling Expenses) incurred in connection with registrations, filings, or qualifications pursuant to Section 2, including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable fees and disbursements, not to exceed $30,000, of one counsel for the selling Holders (“Selling Holder Counsel”), shall be borne and paid by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of at least sixty percent (60%) of the Registrable Securities agree to forfeit their right to one registration pursuant to Section 2.1(a) or Section 2.1(b), as the case may be; provided  further that if, at the time of such withdrawal, the Holders

 

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shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information, then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one registration pursuant to Section 2.1(a) or Section 2.1(b).  All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.

 

2.7                               Delay of Registration.  No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any registration pursuant to this Agreement as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

 

2.8                               Indemnification.  If any Registrable Securities are included in a registration statement under this Section 2:

 

(a)                                 To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder, and the partners, members, officers, directors, and stockholders of each such Holder; legal counsel and accountants for each such Holder; any underwriter (as defined in the Securities Act) for each 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 Damages, and the Company will pay to each such Holder, underwriter, controlling Person, or other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such claim or proceeding if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable for any Damages to the extent that they arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of any such Holder, underwriter, controlling Person, or other aforementioned Person expressly for use in connection with such registration.

 

(b)                                 To the extent permitted by law, each selling Holder, severally and not jointly, will indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each Person (if any), who controls the Company within the meaning of the Securities Act, legal counsel and accountants for the Company, any underwriter (as defined in the Securities Act), any other Holder selling securities in such registration statement, and any controlling Person of any such underwriter or other Holder, against any Damages, in each case only to the extent that such Damages arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration; and each such selling Holder will pay to the Company and each other aforementioned Person any legal or other expenses reasonably incurred thereby in connection with investigating or defending any claim or proceeding from which Damages may result, as such expenses are incurred; provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such claim or proceeding if

 

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such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided  further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution under Sections 2.8(b) and 2.8(d) exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

 

(c)                                  Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, give the indemnifying party notice of the commencement thereof.  The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate 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 action.  The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8, to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action.  The failure to give 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 2.8.

 

(d)                                 To provide for just and equitable contribution to joint liability under the Securities Act in any case in which either (i) any party otherwise entitled to indemnification hereunder makes a claim for indemnification pursuant to this Section 2.8 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case, notwithstanding the fact that this Section 2.8 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any party hereto for which indemnification is provided under this Section 2.8, then, and in each such case, such parties will contribute to the aggregate losses, claims, damages, liabilities, or expenses to which they may be subject (after contribution from others) in such proportion as is appropriate to reflect the relative fault of each of the indemnifying party and the indemnified party in connection with the statements, omissions, or other actions that resulted in such loss, claim, damage, liability, or expense, as well as to reflect any other relevant equitable considerations.  The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact, or the omission or alleged omission of 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, however, that, in any such case, (x) no Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities offered and sold by such Holder pursuant to such registration statement,

 

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and (y) no Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation; and provided  further that in no event shall a Holder’s liability pursuant to this Section 2.8(d), when combined with the amounts paid or payable by such Holder pursuant to Section 2.8(b), exceed the proceeds from the offering received by such Holder (net of any Selling Expenses) paid by such Holder), except in the case of willful misconduct or fraud by such Holder.

 

(e)                                  Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

(f)                                   Unless otherwise superseded by an underwriting agreement entered into in connection with the underwritten public offering, the obligations of the Company and Holders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration under this Section 2, and otherwise shall survive the termination of this Agreement.

 

2.9                               Reports Under Exchange Act.  With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:

 

(a)                                 make and keep available adequate current public information, as those terms are understood and defined in SEC Rule 144, at all times after the effective date of the registration statement filed by the Company for the IPO;

 

(b)                                 use commercially reasonable efforts to 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 (at any time after the Company has become subject to such reporting requirements); and

 

(c)                                  furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request: (i) to the extent accurate, a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the registration statement filed by the Company for the IPO), the Securities Act, and the Exchange Act (at any time after the Company has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after the Company so qualifies); (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company; and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration (at any time after the Company has become subject to the reporting requirements under the Exchange Act) or pursuant to Form S-3 (at any time after the Company so qualifies to use such form).

 

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2.10                        Limitations on Subsequent Registration Rights.  From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of at least sixty percent (60%) of the shares of Series A Preferred Stock and Series B Preferred Stock then outstanding (taken together as one class) or, if none, the Holders of at least sixty percent (60%) of the Registrable Securities issued upon conversion of the Series A Preferred Stock and Series B Preferred Stock, enter into any agreement with any holder or prospective holder of any securities of the Company that would allow such holder or prospective holder to include such securities in any registration unless, under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of such securities will not reduce the number of the Registrable Securities of the Holders that are included; provided that this limitation shall not apply to any additional Investor who becomes a party to this Agreement in accordance with Section 6.9.

 

2.11                        “Market Stand-off” Agreement.  Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the registration by the Company of shares of its Common Stock or any other equity securities under the Securities Act on a registration statement on Form S-1, Form S-2, or Form S-3, and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days, although such period may be extended upon agreement of any managing underwriter and the Company for up to seventeen (17) additional days), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option, right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock (whether such shares or any such securities are then owned by the Holder or are thereafter acquired) or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise.  The foregoing provisions of this Section 2.11 shall apply only to the IPO, shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement, and shall be applicable to the Holders only if all officers and directors are subject to the same restrictions and the Company uses commercially reasonable efforts to obtain a similar agreement from all stockholders individually owning more than five percent (5%) of the Company’s outstanding Common Stock (after giving effect to conversion into Common Stock of all outstanding Series A Preferred Stock and Series B Preferred Stock).  The underwriters in connection with such registration are intended third-party beneficiaries of this Section 2.11 and shall have the right, power, and authority to enforce the provisions hereof as though they were a party hereto.  Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Section 2.11 or that are necessary to give further effect thereto.  Any discretionary waiver or termination of the restrictions of any or all of such agreements by the Company or the underwriters shall apply pro rata to all Holders subject to such agreements, based on the number of shares subject to such agreements.

 

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2.12                        Restrictions on Transfer.

 

(a)                                 The Series A Preferred Stock, the Series B Preferred Stock and the Registrable Securities shall not be sold, pledged, or otherwise transferred, and the Company shall not recognize and shall issue stop-transfer instructions to its transfer agent with respect to any such sale, pledge, or transfer, except upon the conditions specified in this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act.  A transferring Holder will cause any proposed purchaser, pledgee, or transferee of the Series A Preferred Stock, the Series B Preferred Stock and the Registrable Securities held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement.

 

(b)                                 Each certificate or instrument representing (i) the Series A Preferred Stock, (ii) the Series B Preferred Stock, (iii) the Registrable Securities, and (iv) any other securities issued in respect of the securities referenced in clauses (i), (ii) and (iii) upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the provisions of Section 2.12(c)) be stamped or otherwise imprinted with a legend substantially in the following form:

 

THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  SUCH SHARES MAY NOT BE SOLD, PLEDGED, OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR A VALID EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

 

THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

 

The Holders consent to the Company making a notation in its records and giving instructions to any transfer agent of the Restricted Securities in order to implement the restrictions on transfer set forth in this Section 2.12.

 

(c)                                  The holder of each certificate representing Restricted Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 2.  Before any proposed sale, pledge, or transfer of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transaction, the Holder thereof shall give notice to the Company of such Holder’s intention to effect such sale, pledge, or transfer.  Each such notice shall describe the manner and circumstances of the proposed sale, pledge, or transfer in sufficient detail and, if reasonably requested by the Company, shall be accompanied at such Holder’s expense by either: (i) a written opinion of legal counsel who shall, and whose legal opinion shall, be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transaction may be effected without registration under the Securities Act; (ii) a “no action” letter from the SEC to the effect that the proposed sale, pledge, or transfer of such Restricted Securities without registration will not result in a

 

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recommendation by the staff of the SEC that action be taken with respect thereto; or (iii) any other evidence reasonably satisfactory to counsel to the Company to the effect that the proposed sale, pledge, or transfer of the Restricted Securities may be effected without registration under the Securities Act, whereupon the Holder of such Restricted Securities shall be entitled to sell, pledge, or transfer such Restricted Securities in accordance with the terms of the notice given by the Holder to the Company.  The Company will not require such a legal opinion or “no action” letter (x) in any transaction in compliance with SEC Rule 144 or (y) in any transaction in which such Holder distributes Restricted Securities to an Affiliate of such Holder for no consideration (it being understood that for any Holder that is a partnership or limited liability company, such an Affiliate includes, for this purpose, (A) a partner of such partnership or a member of such limited liability company or any of their respective officers or directors; (B) an Affiliate of such partnership or limited liability company, including any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Affiliate; (C) a retired partner of such partnership who retires after the date hereof; or (D) the estate of any such partner or member); provided that each transferee agrees in writing to be subject to the terms of this Section 2.12.  Each certificate or instrument evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Section 2.12(b), except that such certificate shall not bear such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act.

 

2.13                        Termination of Registration Rights.  The right of any Holder to request registration or inclusion of Registrable Securities in any registration pursuant to Section 2.1 or Section 2.2 shall terminate upon the earliest to occur of:

 

(a)                                 the closing of a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation; and

 

(b)                                 when all of such Holder’s Registrable Securities could be sold without restriction under SEC Rule 144 during any ninety (90) day period; and

 

(c)                                  the fifth anniversary of the IPO.

 

3.                                      Information and Observer Rights.

 

3.1                               Delivery of Financial Statements.  The Company shall deliver to each Major Investor (and, in the case of clause (b)  and clause (g) below, each Investor):

 

(a)                                 as soon as practicable, but in any event within thirty (30) days after the end of each fiscal year of the Company (or such later date as approved by the Company’s Board of Directors, including at least a majority of the Series Preferred Directors), the following preliminary unaudited financial statements: (i) a balance sheet as of the end of such year, (ii) statements of income and of cash flows for such year, and a comparison between (x) the actual amounts as of and for such fiscal year and (y) the comparable amounts for the prior year and as included in the Budget (as defined in Section 3.1(f)) for such year, with an explanation of any material differences between such amounts and a schedule as to the sources and applications of funds for such year, and (iii) a statement of stockholders’ equity as of the end of such year (collectively, the “Annual Financial Statements”);

 

14

 

(b)                                 as soon as practicable, but in any event within one hundred twenty (120) days after the end of each fiscal year of the Company (or such later date as approved by the Company’s Board of Directors, including at least a majority of the Series Preferred Directors), the Annual Financial Statements audited and certified by independent public accountants of nationally recognized standing selected by the Company; provided, however, the Company’s Board of Directors (including a majority of the Series Preferred Directors) may waive the requirement that the Annual Financial Statements delivered pursuant to this clause (b) be audited;

 

(c)                                  as soon as practicable, but in any event within thirty (30) days after the end of each of the first three (3) quarters of each fiscal year of the Company, unaudited statements of income and of cash flows for such fiscal month and quarter, respectively, and an unaudited balance sheet and a statement of stockholders’ equity as of the end of such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP);

 

(d)                                 as soon as practicable, but in any event thirty (30) days before the end of each fiscal year, a budget and business plan for the next fiscal year (collectively, the “Budget”), prepared on a monthly basis, including balance sheets, income statements, and statements of cash flow for such months and, promptly after prepared, any other budgets or revised budgets prepared by the Company (with such final Budget to be approved by the Company’s Board of Directors prior to such next fiscal year);

 

(e)                                  with respect to the financial statements called for in Section 3.1(b) and Section 3.1(c), an instrument executed by the chief financial officer of the Company certifying that such financial statements were prepared in accordance with GAAP consistently applied with prior practice for earlier periods (except as otherwise set forth in Section 3.1(c)) and fairly present the financial condition of the Company and its results of operation for the periods specified therein;

 

(f)                                   such other information relating to the financial condition, business, prospects, or corporate affairs of the Company as any Major Investor may from time to time reasonably request; provided, however, that the Company shall not be obligated under this Section 3.1 to provide information (i) that the Company reasonably determines in good faith to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in form acceptable to the Company) or (ii) the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel; and

 

(g)                                  upon request, a then-current capitalization table of the Company setting forth in reasonable detail the outstanding shares of the Company’s capital stock, including with respect to class and series, and the percentage ownership of such capital stock represented by shares held by any requesting Investor.

 

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If, for any period, the Company has any subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial statements delivered pursuant to the foregoing sections shall be the consolidated and consolidating financial statements of the Company and all such consolidated subsidiaries.

 

Notwithstanding anything else in this Section 3.1 to the contrary, the Company may cease providing the information set forth in this Section 3.1 during the period starting with the date thirty (30) days before the Company’s good-faith estimate of the date of filing of a registration statement if it reasonably concludes it must do so to comply with the SEC rules applicable to such registration statement and related offering; provided that the Company’s covenants under this Section 3.1 shall be reinstated at such time as the Company is no longer actively employing its commercially reasonable efforts to cause such registration statement to become effective.

 

3.2                               Inspection.  The Company shall permit each Major Investor, at such Major Investor’s expense, to visit and inspect the Company’s properties; examine its books of account and records; and discuss the Company’s affairs, finances, and accounts with its officers, during normal business hours of the Company as may be reasonably requested by the Major Investor; provided, however, that the Company shall not be obligated pursuant to this Section 3.2 to provide access to any information that it reasonably and in good faith considers to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in form acceptable to the Company) or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

 

3.3                               Observer Rights of Certain Major Investors.  For so long as an Investor owns at least 5% of the then outstanding shares of capital stock of the Company (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification effected after the date hereof) calculated on a fully diluted basis, the Company shall invite a representative of such Investor to attend all meetings of its Board of Directors in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents, and other materials that it provides to its directors at the same time and in the same manner as provided to such directors; provided, however, that such representative shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided; and provided  further, that the Company reserves the right to withhold any information and to exclude such representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, or if such Investor or any person or entity affiliated with such Investor or its representative is (or is affiliated with) a competitor of the Company.

 

3.4                               Termination of Information and Observer Rights.  The covenants set forth in Section 3.1, Section 3.2, and Section 3.3 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO or (ii) upon a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation, whichever event occurs first.

 

3.5                               Confidentiality.  Each Investor agrees that such Investor will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant

 

16

 

to the terms of this Agreement (including notice of the Company’s intention to file a registration statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 3.5 by such Investor), (b) is or has been independently developed or conceived by the Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that an Investor may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from such Investor, if such prospective purchaser agrees to be bound by the provisions of this Section 3.5; (iii) to any Affiliate, partner, member, stockholder, or wholly owned subsidiary of such Investor in the ordinary course of business, provided that such Investor informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; or (iv) as may otherwise be required by law, provided that the Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure.

 

3.6                               Indemnification.  The Company agrees to indemnify and hold harmless each Investor who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that (i) such Investor’s Affiliate or nominee is or was a director of the Company or, while a director of the Company, is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, limited liability company, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, or (ii) such Investor is a security holder, creditor, director, agent, representative or controlling person of the Company or is otherwise involved with the Company (including, without limitation, any and all losses under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, which relate directly or indirectly to the registration, purchase, sale or ownership of any securities of the Company or to any fiduciary obligation owed with respect thereto), including, without limitation, in connection with any third party or governmental action or claim relating to any action taken or omitted to be taken or alleged to have been taken or omitted to have been taken by any Investor as security holder, creditor, director, agent, representative or controlling person of the Company or otherwise, alleging so called control person liability or securities law liability, in each instance against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such Investor in such Proceeding.  Notwithstanding the preceding sentence: (x) except in the case of such Investor filing suit to recover unpaid amounts pursuant to the preceding sentence, the Company shall be required to indemnify such Investor in connection with a Proceeding (or part thereof) commenced by such Investor only if the commencement of such Proceeding (or part thereof) by such Investor was authorized in advance by the Company’s Board of Directors; (y) the Company shall have no liability to an Investor for any Proceeding arising out of the gross negligence or willful misconduct of such Investor or its Affiliate or nominee; and (z) the Company shall have no liability to an Investor with respect to any Proceeding by any taxing authority or that relates to any representation or warranty of such Investor with respect to any secondary sale of securities.

 

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4.                                      Rights to Future Stock Issuances.

 

4.1                               Right of First Offer.  Subject to the terms and conditions of this Section 4.1 and applicable securities laws, if the Company proposes to offer or sell any New Securities, the Company shall first offer such New Securities to each Major Investor.  A Major Investor shall be entitled to apportion the right of first offer hereby granted to it among itself and its Affiliates in such proportions as it deems appropriate.

 

(a)                                 The Company shall give notice (the “Offer Notice”) to each Major Investor, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

 

(b)                                 By notification to the Company within twenty (20) days after the Offer Notice is given, each Major Investor may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Series A Preferred Stock, Series B Preferred Stock and any other Derivative Securities then held, by such Major Investor bears to the total Common Stock of the Company then outstanding (assuming full conversion and/or exercise, as applicable, of all Series A Preferred Stock, Series B Preferred Stock and other Derivative Securities).  At the expiration of such twenty (20) day period, the Company shall promptly notify each Major Investor that elects to purchase or acquire all the shares available to it (each, a “Fully Exercising Investor”) of any other Major Investor’s failure to do likewise.  During the ten (10) day period commencing after the Company has given such notice, each Fully Exercising Investor may, by giving notice to the Company, elect to purchase or acquire, in addition to the number of shares specified above, up to that portion of the New Securities for which Major Investors were entitled to subscribe but that were not subscribed for by the Major Investors which is equal to the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of Series A Preferred Stock, Series B Preferred Stock and any other Derivative Securities then held, by such Fully Exercising Investor bears to the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Series A Preferred Stock, Series B Preferred Stock and any other Derivative Securities then held, by all Fully Exercising Investors who wish to purchase such unsubscribed shares.  The closing of any sale pursuant to this Section 4.1(b) shall occur within the later of ninety (90) days of the date that the Offer Notice is given and the date of initial sale of New Securities pursuant to Section 4.1(c).

 

(c)                                  If all New Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Section 4.1(b), the Company may, during the ninety (90) day period following the expiration of the periods provided in Section 4.1(b), offer and sell the remaining unsubscribed portion of such New Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice.  If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Major Investors in accordance with this Section 4.1.

 

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(d)                                 The right of first offer in this Section 4.1 shall not be applicable to: (i) Exempted Securities (as defined in the Company’s Certificate of Incorporation); (ii) shares of Common Stock issued in a Qualified IPO (as such term is defined in the Company’s Certificate of Incorporation); (iii) any issuance of securities where (or with respect to which) such right is waived by the holders of at least sixty percent (60%) of the Series A Preferred Stock and Series B Preferred Stock then held by Major Investors (taken together as one class); and (iv) shares of Series B Preferred Stock issued pursuant to the Purchase Agreement (as it may be amended from time to time).

 

4.2                               Termination.  The covenants set forth in Section 4.1 shall terminate and be of no further force or effect (i) immediately before the consummation of a Qualified IPO (as such term is defined in the Company’s Certificate of Incorporation), (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation, whichever event occurs first and, as to each Major Investor, in accordance with Section 4.1(e).

 

5.                                      Additional Covenants.

 

5.1                               Employee Agreements.  The Company will cause each person now or hereafter employed by it or by any subsidiary with access to confidential information and/or trade secrets to enter into a nondisclosure and proprietary rights assignment agreement.  In addition, the Company shall not amend, modify, terminate, waive, or otherwise alter, in whole or in part, any of the above-referenced agreements between the Company and any employee, without the consent of the Board of Directors (including at least a majority of the Series Preferred Directors).

 

5.2                               Employee Stock.  Unless otherwise approved by the Board of Directors, including at least a majority of the Series Preferred Directors, all future employees of the Company who purchase, receive options to purchase, or receive awards of shares of the Company’s capital stock after the date hereof shall be required to execute restricted stock or option agreements, as applicable, providing for (i) vesting of shares over a four (4) year period, with the first twenty-five percent (25%) of such shares vesting following twelve (12) months of continued employment or service, and the remaining shares vesting in equal monthly installments over the following thirty-six (36) months, and (ii) a market stand-off provision substantially similar to that in Section 2.11.  In addition, unless otherwise approved by the Board of Directors, including at least a majority of the Series Preferred Directors, the Company shall retain a “right of first refusal” on employee transfers until the Company’s IPO and shall have the right to repurchase unvested shares at the lesser of (i) cost and (ii) the then fair market value of such shares upon termination of employment of a holder of restricted stock.  Notwithstanding any provision contained herein, performance based stock and stock equivalents granted after the date hereof based on the achievement of certain performance based milestones, shall be subject to vesting as determined by the Board at the time of grant.  Stock and stock equivalents held by consultants of the Company or research institutions with which the Company has entered into a

 

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licensing agreement shall be subject to a “right of first refusal” in favor of the Company.  If the Company elects not to exercise any right of first refusal or other repurchase right granted under this Section 5.2, then the Company shall assign such right to the Major Investors on a pro rata basis.

 

5.3                               Management Rights Letter.  Upon the written request of any Major Investor, the Company will enter into a management rights letter with such Major Investor in any customary form provided by such Major Investor and reasonably acceptable to the Company.

 

5.4                               Successor Indemnification.  If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as in effect immediately before such transaction, whether such obligations are contained in the Company’s Bylaws, its Certificate of Incorporation, or elsewhere, as the case may be.

 

5.5                               Termination of Covenants.  The covenants set forth in this Section 5, except for Section 5.4, shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) upon a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation, whichever event occurs first.

 

6.                                      Miscellaneous.

 

6.1                               Successors and Assigns.  The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that: (i) is an Affiliate of a Holder; (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; or (iii) after such transfer, holds at least 1,000,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations); provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Section 2.11.  For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee: (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together with those of the transferring Holder; provided, further, that all transferees who would not qualify individually for assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement.  The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party

 

20

 

other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

 

6.2                               Governing Law.  This Agreement and any controversy arising out of or relating to this Agreement shall be governed by and construed in accordance with the General Corporation Law of the State of Delaware as to matters within the scope thereof, and as to all other matters shall be governed by and construed in accordance with the internal laws of State of California, without regard to conflict of law principles that would result in the application of any law other than the law of the State of California.

 

6.3                               Counterparts; Facsimile.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

6.4                               Titles and Subtitles.  The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

 

6.5                               Notices.  All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or:  (i) personal delivery to the party to be notified; (ii) when sent, if sent by electronic mail or facsimile during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt.  All communications shall be sent to the respective parties at their addresses as set forth on their respective signature page hereto, or to the principal office of the Company and to the attention of the Chief Executive Officer, in the case of the Company, or to such email address, facsimile number, or address as subsequently modified by written notice given in accordance with this Section 6.5. If notice is given to the Company, a copy (which shall not constitute notice) shall also be sent to Pillsbury Winthrop Shaw Pittman, LLP, Attn: Mike Hird, 12255 El Camino Real, Suite 300, San Diego, CA 92130, Tel: (858) 509-4024, Fax: (858) 509-4010.

 

6.6                               Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the Holders of at least sixty percent (60%) of the shares of Series A Preferred Stock and Series B Preferred Stock then outstanding (taken together as one class) or, if none, the Holders of at least sixty percent (60%) of the Registrable Securities issued upon conversion of the Series A Preferred Stock and Series B Preferred Stock; provided, however, that (i) the Company may in its sole discretion waive compliance with Section 2.12(c) and (ii) Schedule A hereto may be amended by the Company from time to time to add information regarding additional parties as contemplated hereby without the consent of the other parties hereto; and provided  further that any provision hereof may be waived by any waiving party on such party’s

 

21

 

own behalf, without the consent of any other party.  Notwithstanding the foregoing, this Agreement may not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written consent of such Investor, unless such amendment, termination, or waiver applies to all Investors in the same fashion (it being agreed that a waiver of the provisions of Section 4 with respect to a particular transaction shall be deemed to apply to all Major Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Major Investors may nonetheless, by agreement with the Company, purchase securities in such transaction).  The Company shall give prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver.  Any amendment, termination, or waiver effected in accordance with this Section 6.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto.  No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

 

6.7                               Severability.  In case any one or more of the provisions contained in this Agreement is for any reason held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, and such invalid, illegal, or unenforceable provision shall be reformed and construed so that it will be valid, legal, and enforceable to the maximum extent permitted by law.

 

6.8                               Aggregation of Stock.  All shares of Registrable Securities held or acquired by Affiliates shall be aggregated together for the purpose of determining the availability of any rights under this Agreement and such Affiliated persons may apportion such rights as among themselves in any manner they deem appropriate.

 

6.9                               Additional Investors.  Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of the Company’s Series B Preferred Stock or Registrable Securities after the date hereof, whether pursuant to the Purchase Agreement or otherwise, any such purchaser or acquirer of shares of Series B Preferred Stock or Registrable Securities may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement, and thereafter shall be deemed an “Investor” or “Holder,” as applicable, for all purposes hereunder.  No action or consent by the Investors shall be required for such joinder to this Agreement by such additional Investor.

 

6.10                        Entire Agreement.  When this Agreement is effective (i.e., when it shall have been executed by the parties necessary to amend and restate the Prior Agreement), this Agreement shall amend and restate, and thereby supersede, the Prior Agreement.  This Agreement (including any Schedules and Exhibits hereto) constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.

 

6.11                        Delays or Omissions.  No delay or omission to exercise any right, power, or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power, or remedy of such nonbreaching or nondefaulting party, nor shall it be construed to be a waiver of or acquiescence to any such

 

22

 

breach or default, or to any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring.  All remedies, whether under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

 

[SIGNATURE PAGES FOLLOW]

 

23

 

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

 

 

	
 
    	
RECEPTOS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Faheem Hasnain
    
	
 
    	
Name:
    	
Faheem   Hasnain
    
	
 
    	
Title:
    	
Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    	
10835   Road to the Cure, #205
    
	
 
    	
 
    	
San   Diego, CA  92121
    
				

 

24

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

	
 
    	
POLARIS VENTURE PARTNERS VI, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
POLARIS   VENTURE MANAGEMENT CO. VI, L.L.C.
    
	
 
    	
 
    	
  ITS   GENERAL PARTNER
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   William E. Bilodeau
    
	
 
    	
 
    	
  William E. Bilodeau
    
	
 
    	
 
    	
  Attorney-in-fact
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

	
 
    	
POLARIS VENTURE PARTNERS FOUNDERS’ FUND VI, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
POLARIS   VENTURE MANAGEMENT CO. VI, L.L.C.
    
	
 
    	
 
    	
  ITS   GENERAL PARTNER
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   William E. Bilodeau
    
	
 
    	
 
    	
  William E. Bilodeau
    
	
 
    	
 
    	
  Attorney-in-fact
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

	
 
    	
BMV Direct LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Greg N. Lubushkin
    
	
 
    	
Name:
    	
Greg   N. Lubushkin
    
	
 
    	
Title:
    	
CFO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address For Notice:
    
	
 
    	
 
    
	
 
    	
17190 Bernardo Center Drive
    
	
 
    	
San Diego, CA 92128
    
	
 
    	
Attn:  Bruce   Sleel — Corporate Legal
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

	
 
    	
OSAGE UNIVERSITY PARTNERS I, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
OSAGE   UNIVERSITY GP, LP,
    
	
 
    	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    
	
 
    	
 
    	
BY:
    	
OSAGE   PARTNERS, LLC, 
    
	
 
    	
 
    	
 
    	
ITS   GENERAL PARTNER
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
BY:
    	
/s/   William Harrington
    
	
 
    	
 
    	
NAME:
    	
William   Harrington
    
	
 
    	
 
    	
ITS:
    	
Authorized   Signer
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address:  c/o Osage Partners
    
	
 
    	
  50 Monument Rd, Ste 201
    
	
 
    	
  Bala Cynwyd, PA 19004
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
FLAGSHIP VENTURES FUND 2007, L.P.
    
	
 
    	
 
    
	
 
    	
By   its General Partner
    
	
 
    	
Flagship   Ventures 2007 General Partner LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Noubar Afeyan
    
	
 
    	
 
    	
Manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

	
 
    	
LILLY   VENTURES FUND I, LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   S. Edward Torres
    
	
 
    	
Name:
    	
S.   Edward Torres
    
	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
115 W. Washington St
    
	
 
    	
Suite 1680 - South
    
	
 
    	
Indianopolis, IN   46204
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
ARCH   VENTURE FUND VII, L.P.
    
	
 
    	
 
    
	
 
    	
By:    ARCH Venture Partners VII, L.P.,
    
	
 
    	
its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    	
By:    ARCH Venture Partners VII, LLC,
    
	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
  /s/ Keith Crandell
    
	
 
    	
 
    	
Name:
    	
Keith   Crandell
    
	
 
    	
 
    	
Title:
    	
Managing Director
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
8725 West Higgins Road
    
	
 
    	
Suite 290
    
	
 
    	
Chicago, IL 60631
    
	
 
    	
Attn: Mark McDonnell
    
	
 
    	
Telecopy No. (773) 380-6606
    
					

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
ARCH   VENTURE FUND VI, L.P.
    
	
 
    	
 
    
	
 
    	
By:    ARCH Venture Partners VI, L.P.,
    
	
 
    	
its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    	
By:    ARCH Venture Partners VI, LLC,
    
	
 
    	
 
    	
its   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
By:
    	
  /s/ Keith Crandell
    
	
 
    	
 
    	
Name:
    	
Keith   Crandell
    
	
 
    	
 
    	
Title:
    	
Managing   Director
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
8725 West Higgins Road
    
	
 
    	
Suite 290
    
	
 
    	
Chicago, IL 60631
    
	
 
    	
Attn: Mark McDonnell
    
	
 
    	
Telecopy No. (773) 380-6606
    
					

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
VENROCK   ASSOCIATES V, L.P.
    
	
 
    	
 
    
	
 
    	
By:   Venrock Management V, LLC
    
	
 
    	
Its:   General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David L. Stepp
    
	
 
    	
 
    	
Authorized   Signatory
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
3340 Hillview Avenue
    
	
 
    	
Palo Alto, CA 94304
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
VENROCK   ENTREPRENEURS FUND V, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
VEF   Management V, LLC
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David L. Stepp
    
	
 
    	
 
    	
Authorized   Signatory
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
3340 Hillview Avenue
    
	
 
    	
Palo Alto, CA 94304
    

 

 

SIGNATURE PAGE TO

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

	
 
    	
VENROCK PARTNERS V, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
Venrock   Partners Management V, LLC
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David L. Stepp
    
	
 
    	
 
    	
Authorized   Signatory
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
3340 Hillview Avenue
    
	
 
    	
Palo Alto, CA 94304
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
ORBIMED ASSOCIATES III, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
OrbiMed   Advisors LLC
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael Sheffey
    
	
 
    	
 
    	
Name:
    	
Michael   Sheffey
    
	
 
    	
 
    	
Title:
    	
Member
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
601 Lexington Avenue 54th Floor
    
	
 
    	
NY NY 10022
    
					

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
ORBIMED PRIVATE INVESTMENTS III, LP
    
	
 
    	
 
    
	
 
    	
By:
    	
OrbiMed   Capital GP III, LLC
    
	
 
    	
Its:
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
By:
    	
OrbiMed Advisors LLC
    
	
 
    	
Its:
    	
Managing Member
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael Sheffey
    
	
 
    	
 
    	
Name:
    	
Michael   Sheffey
    
	
 
    	
 
    	
Title:
    	
Member
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
601 Lexington Avenue 54th Floor
    
	
 
    	
NY NY 10022
    
					

 

 

SIGNATURE PAGE TO

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
/s/   Marcus F. Boehm
    
	
 
    	
Marcus   F. Boehm
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
2811   Maple Street
    
	
 
    	
San   Diego, CA 92104
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
William   H. Rastetter and Marisa G. Rastetter
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   William H. Rastetter
    
	
 
    	
Name:
    	
William   H. Rastetter
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Marisa G. Rastetter
    
	
 
    	
Name:
    	
Marisa   G. Rastetter
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address For Notice:
    
	
 
    	
 
    
	
 
    	
PO Box 1401
    
	
 
    	
Rancho Santa Fe, CA 92067
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

	
 
    	
/s/   Raymond Stevens
    
	
 
    	
Raymond   Stevens
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
7096 Caminito Valverde
    
	
 
    	
La Jolla, CA 92037
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
/s/   Faheem Hasnain
    
	
 
    	
Faheem   Hasnain
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
760   4th St.
    
	
 
    	
Encinitas,   CA 92024
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

	
 
    	
/s/   Robert Peach
    
	
 
    	
Robert   Peach
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
12848 Via Caballo Rojo
    
	
 
    	
San Diego, CA 92129
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

	
 
    	
/s/   Sheila Gujrathi
    
	
 
    	
Sheila   Gujrathi
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
c/o   Receptos, Inc.
    
	
 
    	
10835   Road to the Cure, #205
    
	
 
    	
San   Diego, CA 92121
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
/s/   Chrysa Mineo
    
	
 
    	
Chrysa   Mineo
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
3749   Elliott St.
    
	
 
    	
San   Diego, CA 92106
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
Chrysa   Mineo and Mark Stephenson
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Chrysa Mineo
    
	
 
    	
Name:   Chrysa Mineo
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mark Stephenson
    
	
 
    	
Name:   Mark Stephenson
    
	
 
    	
 
    
	
 
    	
Address   For Notice:
    
	
 
    	
 
    
	
 
    	
3749   Elliott St.
    
	
 
    	
San   Diego, CA 92106
    

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
WASHINGTON   RESEARCH FOUNDATION
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jeff Eby
    
	
 
    	
Name:
    	
Jeff   Eby
    
	
 
    	
Title:
    	
CFO
    
	
 
    	
 
    
	
 
    	
Address:   
    	
2815   Eastlake Ave E #300
    
	
 
    	
 
    	
Seattle,   WA 98102
    
				

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
WS   INVESTMENT COMPANY, LLC (2012A)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James A. Terraman
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
Address:
    	
 
    
				

 

 

SIGNATURE PAGE TO

 

RECEPTOS, INC.

 

THIRD AMENDED AND RESTATED

 

INVESTORS’ RIGHTS AGREEMENT

 

DATED AS OF FEBRUARY 3, 2012

 

The undersigned hereby executes and delivers the Third Amended and Restated Investors’ Rights Agreement (the “Agreement”) to which this Signature Page is attached, which, together with all counterparts thereto and Signature Pages of the other parties with respect thereto, shall constitute one and the same document in accordance with the terms of such Agreement.

 

 

	
 
    	
ALTITUDE LIFE SCIENCE VENTURES, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Maki
    
	
 
    	
Name:
    	
David   Maki
    
	
 
    	
Title:
    	
General   Partner
    
	
 
    	
 
    
	
 
    	
Address:
    	
701   Fifth Avenue
    
	
 
    	
 
    	
Suite 5400
    
	
 
    	
 
    	
Seattle,   WA 98104
    
				

 

 

SCHEDULE A

 

Investors

 

Polaris Venture Partners VI, L.P.
 Polaris Venture Partners Founders’ Fund VI, L.P.

ARCH Venture Fund VII, L.P.

ARCH Venture Fund VI, L.P.

Advanced Technology Ventures VIII, L.P.

Venrock Associates V, L.P.

Venrock Entrepreneurs Fund V, L.P.

Venrock Partners V, L.P.

OrbiMed Associates III, L.P.

OrbiMed Private Investments III, LP

Marcus F. Boehm

William H. Rastetter and Marisa G. Rastetter

Flagship Ventures

Lilly Ventures Fund I, LLC

Raymond Stevens

Chrysa Mineo and Mark Stephenson

WS Investment Company, LLC (2009A)

WS Investment Company, LLC (2009C)

Faheem Hasnain

Robert Peach

Sheila Gujrathi

Chrysa Mineo

BMV Direct LLC
 Washington Research Foundation

WS Investment Company, LLC (2012A)

Osage University Partners I, L.P.

Altitude Life Science Ventures, L.P.

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