Document:

ex_194654.htm

Exhibit 10.3

 

July 20, 2020

 

Ladenburg Thalmann & Co. Inc.

277 Park Avenue, 26th Floor

New York, NY 10172

Attention: Nicholas Stergis

 

Re:     Reprice Offer of Common Stock Purchase Warrants

 

To Whom It May Concern:

 

NovaBay Pharmaceuticals, Inc. (the “Company”) is pleased to offer to you the opportunity to amend the exercise price of 167,942 Common Stock purchase warrants (the “Reprice Warrants”) currently held by you (the “Holder”). The shares of common stock, par value $0.01 (“Common Stock”), underlying the Reprice Warrants (“Existing Warrant Shares”) have been registered pursuant to a registration statement on Form S-1 (File No. 333-234330) (the “Registration Statement”). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Reprice Warrants. 

 

The Company hereby offers you a reduction of the exercise price of the Reprice Warrants to $0.99 (as reduced from the current exercise price of $1.25). As such, upon accepting this offer, Section 2(b) of the Reprice Warrants is hereby amended and restated as follows:

 

“Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $0.99, subject to adjustment hereunder (the “Exercise Price”).”

 

Further, upon accepting this offer, Section 3(d) of the Reprice Warrants is hereby amended and restated as provided for in Annex B attached hereto.

 

The Holder may accept this offer by signing this letter below on or before 8:00 a.m. (New York City time) on July 21, 2020.

 

Additionally, the Company agrees to the representations, warranties and covenants set forth on Annex A attached hereto.

 

If this offer is accepted and this letter agreement is executed and delivered to the Company on or before 8:00 a.m. (New York City time) on July 21, 2020, then on or before 9:00 a.m. (New York City time) on the business day following NYSE American approval being received, the Company shall file a Current Report on Form 8-K with the Securities and Exchange Commission disclosing all material terms of the transactions contemplated hereunder, including this letter agreement as an exhibit thereto (“8-K Filing”). The Company shall file a prospectus supplement to the Registration Statement with the Securities and Exchange Commission disclosing the reduced exercise price of the Reprice Warrants within one (1) trading day following the 8-K Filing.

 

 

 

 

By executing and accepting this letter agreement, the Holder acknowledges that the Company is in a trading blackout period as it has not publicly released its financial statements for the quarter ended June 30, 2020. From and after the issuance of the 8-K Filing, the Company represents to the Holder that none of the Company’s directors, officers, employees or agents will provide the Holder with any material, nonpublic information that is not disclosed in the 8-K Filing. Except as set forth herein, the terms of the Reprice Warrants shall remain in effect.

 

The Company acknowledges and agrees that the obligations of the Holder under this letter agreement are several and not joint with the obligations of any other holder of Common Stock purchase warrants of the Company (each, an “Other Holder”) under any other agreement related to the exercise of such warrants (“Other Warrant Exercise Agreement”), and the Holder shall not be responsible in any way for the performance of the obligations of any Other Holder or under any such Other Warrant Exercise Agreement. Nothing contained in this letter agreement, and no action taken by the Holder pursuant hereto, shall be deemed to constitute the Holder and the Other Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holder and the Other Holders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this letter agreement and the Company acknowledges that the Holder and the Other Holders are not acting in concert or as a group with respect to such obligations or the transactions contemplated by this letter agreement or any Other Warrant Exercise Agreement. The Company and the Holder confirm that the Holder has independently participated in the negotiation of the transactions contemplated hereby with the advice of its own counsel and advisors. The Holder shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this letter agreement, and it shall not be necessary for any Other Holder to be joined as an additional party in any proceeding for such purpose.

 

Each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this letter agreement. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Existing Warrant Shares. This letter agreement shall be governed by the laws of the State of New York without regard to the principles of conflicts of law thereof.

 

***************

 

2

 

 

To accept this offer, Holder must counter execute this letter agreement and return the fully executed letter agreement to the Company at e-mail: jhall@novabay.com, attention: Justin Hall, on or before 8:00 am (New York City time) on July 21, 2020.

 

Please do not hesitate to call me if you have any questions.

 

	 	
			Sincerely yours,

			 

			NOVABAY PHARMACEUTICALS, INC.

			 

			By: _______________________

			Name: Justin M. Hall

			Title: President, Chief Executive Officer and General Counsel

			

 

3

 

 

Accepted and Agreed to:

 

Name of Holder: _____________________________________________________________

 

Signature of Authorized Signatory of Holder: ______________________________________

 

Name of Authorized Signatory: ____________________________________________________

 

Title of Authorized Signatory: _____________________________________________________

 

Existing Warrant Shares: _______________________

 

4

 

 

Annex A – Representations and Warranties

 

Representations, Warranties and Covenants of the Company. The Company hereby makes the following representations and warranties to the Holder:

 

(a)     Registration Statement. The Existing Warrant Shares are registered for issuance on a Registration Statement on Form S-1 (File No. 333-234330) (the “Registration Statement”) and the Company knows of no reason why such registration statement shall not remain available for the issuance and resale of such Existing Warrant Shares for the foreseeable future. The Company shall use commercially reasonable efforts to keep the Registration Statement effective and available for use by the Holder until all Existing Warrant Shares underlying the Reprice Warrants are sold by the Holder.

 

(b)     Authorization; Enforcement. The Company will have the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this letter agreement and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this letter agreement by the Company and the consummation by the Company of the transactions contemplated hereby will be duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in connection therewith. This letter agreement has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(c)     No Conflicts. The execution, delivery and performance of this letter agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not: (i) conflict with or violate any provision of the Company’s certificate of incorporation, bylaws or other organizational or charter documents; or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company in connection with, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement, credit facility, debt or other material instrument (evidencing Company debt or otherwise) or other material understanding to which such Company is a party or by which any property or asset of the Company is bound or affected, other than for which a waiver has been obtained by the Company; or (iii) subject to Section (d) below, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected.

 

(d)     NYSE American Corporate Governance. The transactions contemplated under this letter agreement, comply with all rules of the NYSE American LLC.

 

5

 

 

Annex B

 

d) Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction; provided, however, that if the Fundamental Transaction is not within the Company’s control, including not approved by the Board of Directors, the Holder shall only be entitled to receive from the Company or any Successor Entity, the same type or form of consideration (and in the same proportion), at the Black Schole Value of the unexercised portion of the Warrant, that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction.  “Black Scholes Value” means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (ii) the greater of (x) the last VWAP immediately prior to the public announcement of such Fundamental Transaction and (y) the last VWAP immediately prior to the consummation of such Fundamental Transaction, (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds within five Business Days of the Holder’s election (or, if later, on the effective date of the Fundamental Transaction). The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(d) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for the Company (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and the Successor Entity may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

6Exhibit 10.1

 

 

July 16, 2020

 

David P. Meeker, M.D.

 

Dear David:

 

On behalf of Rhythm Pharmaceuticals, Inc.,
(the “Company” or “Rhythm”), I am pleased to offer you employment with the Company on
the following terms.

 

Employment. I am pleased to offer
you the position of President & CEO, beginning July 20, 2020 (the “Start Date”), reporting to
the Board of Directors. You will be responsible for performing the duties and responsibilities as are customarily associated with
the position above or as the Company may otherwise assign to you. Your primary place of employment will be in the Company’s
offices located in Boston, Massachusetts; however, you will be expected to travel as may be necessary to fulfill your responsibilities.
In the course of your employment with the Company, you will be subject to, and required to comply with, all Company policies and
procedures and all applicable laws and regulations.

 

Board Service. You will continue
to serve your current term as Chairman of the Company’s Board of Directors until your earlier resignation or removal. As
an employee of the Company, beginning on the Start Date, you will cease to receive additional compensation for your service as
a member of the Board of Directors, under the Company’s Non-Employee Director Compensation Policy or otherwise. However,
your employment with the Company will constitute continued service for purposes of your outstanding Company stock options in accordance
with the agreements evidencing such stock options.

 

Base Salary. During your employment,
your base salary will be $620,000 annualized, subject to all required and elected taxes and other withholdings. Your salary may
be adjusted from time to time in accordance with normal business practice and in the sole discretion of the Company.

 

Annual Incentive Bonus. Following
the end of each fiscal year and subject to the approval by the Company’s Board of Directors in its sole discretion, you will
be eligible to earn an incentive bonus, based on your performance and the Company’s performance, each during the applicable
fiscal year, and subject to your continued employment in good standing on the date of payment of such incentive bonus. Your target
annual incentive bonus opportunity shall be 60% of your annualized base salary. Your target annual incentive bonus opportunity
for your first fiscal year will be pro-rated in accordance with the Company’s policy.

 

Benefits. You may participate in
any and all benefit programs that the Company establishes and makes available to its similarly situated executive employees from
time to time, subject to the terms and conditions of those programs. The Company’s benefits programs are subject to change
at any time in the Company’s sole discretion.

 

Vacation. You will be eligible for
annual paid vacation of 20 days. Your accrual and use of vacation time will be pursuant and subject to any vacation or time off
policy the Company may establish or modify from time to time. The Company’s vacation policy is subject to change at any time
in the Company’s sole discretion.

 

Equity Grants. Subject to and
upon the approval of the Board of Directors of the Company not later than your Start Date, the Company shall grant to you a
stock option (the “Option”) under the Company’s 2017 Equity Incentive Plan, as it may be amended
from time to time (the “Plan”), to purchase 900,000 shares (subject to any adjustments for any stock
splits, stock dividends, reverse stock splits or recapitalizations that are effected at any time during the period commencing
after the date of this offer letter and ending on the grant date of the Option, the “Option Shares”) of
the Company’s common stock, $0.001 par value per share (the “Common Stock”), at an exercise price
equal to fair market value of the Common Stock, as determined by the Board of Directors of the Company, on the date of the
grant of the Option (the “Grant Date”).

 

    

     

    

 

David P. Meeker, M.D., page 2

July 16, 2020

 

Promptly after the
Grant Date, the Company and you shall execute and deliver to each other the Company’s then standard form of stock option
agreement, evidencing the Option and the terms thereof. 1
The Option shall be subject to, and governed by, the terms, provisions, and restrictions on transfer of the Plan, your stock option
agreement, any other agreement to which you shall become, or are required to become, a party pursuant to the terms of the Plan.

 

Upon termination of
your employment with the Company, you may exercise the Option to the extent then outstanding and exercisable, but only until the
earlier to occur of (i) the expiration of the term of the Option and (ii) the expiration of the limited period of time
set forth in the Plan and/or your stock option agreement for the exercise of the Option following termination of your employment
with the Company.

 

Beginning in 2021,
you will be eligible to be awarded additional equity grants from time to time in accordance with normal business practice and in
the sole discretion of the Company’s Board of Directors. The terms of any future equity grants will be consistent with any
plan under which they are granted and the terms of the applicable agreement under which the awards are granted.

 

Severance.  If the Company terminates
your employment without Cause (as defined below) or you resign your employment with the Company for Good Reason (as defined below)
(in either event, a “Qualifying Termination”), then, subject to your execution of a general release of claims
in a form acceptable to the Company (the “Release”), the expiration of any revocation period provided in the
Release and your continued compliance with the terms of the NDA (as defined below) (collectively, the “Severance Conditions”),
the Company will provide severance pay to you in an amount equal to your then-current base salary rate for a period of 12 months
(the “Severance Amount”). If there is a Qualifying Termination within the three months immediately preceding
or the 12 months immediately following a “Change of Control” (as defined in the Plan), your Severance Amount shall
be increased to an amount equal to your current base salary rate for a period of 18 months (and for the avoidance of doubt, payment
of such increased Severance Amount will be subject to satisfaction of the Severance Conditions).

 

Any Severance Amount
to which you may be entitled under this letter will be paid in substantially equal installments in accordance with the Company’s
ordinary payroll practices, beginning on the first payroll date following the date that is sixty (60) days after the date of your
Separation from Service and with the first installment to include any amounts that would otherwise have been payable prior to such
first payroll date. To be eligible for the Severance Amount, you must execute and deliver the Release to the Company and allow
it to become effective within thirty (30) days of your Separation from Service.

 

In addition, if following
your Separation from Service, you are eligible for and timely elect continued medical insurance coverage pursuant to COBRA, subject
to the satisfaction of the Severance Conditions, the Company will reimburse you for the applicable premiums for you and your eligible
dependents during the period commencing on the date of your Separation from Service and ending on the earlier to occur of (a) the
final day of the applicable severance period and (b) the date you otherwise become ineligible for continued coverage under
COBRA. Notwithstanding the foregoing, if the Company determines that it cannot provide such reimbursement of premiums to you without
potentially violating applicable law, the Company shall not be obligated to make any such payments or reimbursements to you.

 

 

1
The terms to be reflected in the stock option agreement will include the following:

-The Option shall be exercisable for twenty-five percent (25%)
of the Option Shares as of the first anniversary of your Start Date, and the remainder of the Option Shares shall become exercisable
thereafter in a series of twelve (12) equal quarterly installments until such Option shall have become fully vested and exercisable.

-The vesting and exercisability of the Option shall accelerate
in the event the Company terminates your employment without Cause (as defined below) or you resign your employment with the Company
for “Good Reason” (as defined below), in either case, within three months immediately preceding or 12 months immediately
following a “Change of Control” (as defined below).

 

    

     

    

 

David P. Meeker, M.D., page 3

July 16, 2020

 

To the extent permitted
by Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), any severance to which you
are otherwise entitled pursuant to this offer letter shall be (i) reduced by amounts outstanding under any indebtedness, obligations
or liabilities owed by you to the Company; (ii) paid in lieu of any severance pay or benefits under any other severance pay
plan, program, or policy of the Company, and (iii) reduced and offset by any severance pay or benefits, or similar amounts,
payable to you due to your termination of employment under any labor, social or other governmental plan, program, law or policy,
and should such other payments or benefits described above be payable, the Severance Amount shall be reduced accordingly or, alternatively,
payments of Severance Amounts previously made or provided will be treated as having been paid or provided to satisfy such other
obligations.

 

409A Matters.     Each
installment payment provided under this letter shall at all times be considered a separate and distinct payment for purposes of
Section 409A of the Code. Notwithstanding anything in this letter to the contrary, to the extent required to avoid a prohibited
distribution under Section 409A of the Code, the benefits provided under this letter will not be provided to you until the
earlier of (a) the expiration of the six-month period measured from the date of your Separation from Service with the Company
or (b) the date of your death. Upon the first business day after expiration of the relevant period, all payments delayed pursuant
to the preceding sentence will be paid in a lump sum and any remaining payments due will be paid as otherwise provided herein.
In no event may you, directly or indirectly, designate the calendar year of any payment to be made to you under this letter, to
the extent such payment is subject to Section 409A of the Code. The Company makes no representations or warranty and shall
have no liability to you or any other person if any provisions of this letter are determined to constitute deferred compensation
subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, Section 409A of the Code.

 

Withholding Taxes.     All
payments and benefits described in this letter agreement or that you may otherwise be entitled or eligible to receive as a result
of your employment with the Company will be subject to applicable federal, state and local tax withholdings.

 

Definitions

 

Separation from Service.
For purposes of this letter, “Separation from Service” means a “separation from service” within
the meaning of Section 409A of the Code.

 

Cause. “Cause”
shall mean the good faith determination by the Board of Directors that any of the following events have occurred: (i) your
commission of any crime involving the Company, or any crime involving fraud, breach of trust, physical or emotional harm to any
person, moral turpitude or dishonesty; (ii) any unauthorized use or disclosure by you of the Company’s proprietary information
(other than any such use or disclosure that is not intentional and is not material); (iii) any intentional misconduct or gross
negligence by you that has a material adverse effect on the Company’s business or reputation; (iv) any material breach
by you of any agreement between you and the Company that is not cured within thirty (30) days after receipt of written notice from
the Company describing any such breach; or (v) your repeated and willful failure to perform the duties, functions and responsibilities
of your position after a written warning from the Company.

 

Good Reason. “Good
Reason” shall mean your resignation from all positions you then hold with the Company if: (A) without your written
consent (i) there is a material diminution in the nature or scope of your responsibilities, duties, authority, or title, provided
that the cessation of your service as Chairman of the Company’s Board of Directors will not constitute such a diminution;
(ii) there is a material reduction of your base salary; provided, however, that a material reduction in your base salary pursuant
to a salary reduction program affecting all or substantially all of the employees of the Company and that does not adversely affect
you to a proportionally greater extent than other similarly situated employees shall not constitute Good Reason; or (iii) you
are required to relocate your primary work location to a facility or location that would increase your one way commute distance
by more than thirty-five (35) miles from your primary work location as of immediately prior to such change, (B) you provide
written notice outlining such conditions, acts or omissions to the Company’s Chief Financial Officer or General Counsel within
thirty (30) days immediately following such material change or reduction, (C) such material change or reduction is not remedied
by the Company within thirty (30) days following the Company’s receipt of such written notice and (D) your resignation
is effective not later than thirty (30) days after the expiration of such thirty (30) day cure period.

 

    

     

    

 

David P. Meeker, M.D., page 4

July 16, 2020

 

Invention, Non-Disclosure, Non-Competition
and Non-Solicitation Obligations. At or prior to the Start Date, you shall execute and deliver for the benefit of the Company
the Employee Confidentiality, Assignment of Inventions, Non-Competition and Non-Solicitation Agreement in the form attached hereto
as Exhibit A (the “NDA”).

 

At-Will Employment. This letter
shall not be construed as an agreement, either express or implied, to employ you for any stated term, and shall in no way alter
the Company’s policy of employment at-will. Similarly, nothing in this letter shall be construed as an agreement, either
express or implied, to pay you any compensation or grant you any benefit beyond the end of your employment with the Company, except
as otherwise explicitly set forth in this letter. This letter supersedes all prior understandings, whether written or oral, with
respect to the subject matter of this letter.

 

Cooperation. During your employment
with the Company and thereafter, you shall cooperate with the Company and be reasonably available to the Company with respect to
continuing and/or future matters relating to your employment period with the Company and/or its affiliates, whether such matters
are business-related, legal, regulatory or otherwise (including, without limitation, your appearing at the Company’s request
to give testimony without requiring service of a subpoena or other legal process, volunteering to the Company all pertinent information
and turning over to the Company all relevant documents which are or may come into your possession). Following your employment term
with the Company, the Company shall reimburse you for all reasonable out of pocket travel expenses incurred by you in rendering
such services that are approved by the Company.

 

Representations. You hereby represent
and warrant to the Company that the execution, delivery and performance of this offer letter by you do not and shall no conflict
with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which you are
a party or by which you are bound.

 

Entire Agreement. This letter constitutes
the entire agreement and understanding between you and the Company with respect to the subject matter hereof and terminates and
supersedes any and all prior agreements, understandings and representations, whether written or oral, by or between you and the
Company which may have related to the subject matter hereof in any way, any of which are hereby terminated and cancelled and of
no further force or effect without the payment of any consideration by or to either you or the Company.

 

Amendment. The provisions of this
letter may be amended or waived only with the prior written consent of the Company and you, and no course of conduct or course
of dealing or failure or delay by you or the Company in enforcing or exercising any of the provisions of this letter shall affect
the validity, binding effect or enforceability of the letter or be deemed to be an implied waiver of any similar or dissimilar
requirement, provision or condition of this letter at the same or any prior or subsequent time.

 

Parachute Payments. Notwithstanding
any other provisions of this letter, any Company plan or any other agreement, in the event that any payment or benefit by the Company
or otherwise to or for the benefit of you, whether paid or payable or distributed or distributable pursuant to the terms of this
letter or otherwise (all such payments and benefits, including the severance payments and benefits hereunder, being hereinafter
referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999
of the Code (the “Excise Tax”), then the Total Payments shall be reduced (in the order provided below) to the
minimum extent necessary to avoid the imposition of the Excise Tax on the Total Payments, but only if (i) the net amount of
such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income and employment taxes
on such reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable
to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction
(but after subtracting the net amount of federal, state and local income and employment taxes on such Total Payments and the amount
of the Excise Tax to which you would be subject in respect of such unreduced Total Payments and after taking into account the phase
out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).

 

    

     

    

 

David P. Meeker, M.D., page 5

July 16, 2020

 

The Total Payments shall be reduced in
the following order: (i) reduction on a pro-rata basis of any cash severance payments that are exempt from Section 409A
of the Code, (ii) reduction on a pro-rata basis of any non-cash severance payments or benefits that are exempt from Section 409A
of the Code, (iii) reduction on a pro-rata basis of any other payments or benefits that are exempt from Section 409A
of the Code and (iv) reduction of any payments or benefits otherwise payable to you on a pro-rata basis or such other manner
that complies with Section 409A of the Code; provided, in case of clauses (ii), (iii) and (iv), that reduction of any
payments attributable to the acceleration of vesting of Company equity awards shall be first applied to Company equity awards that
would otherwise vest last in time.

 

All determinations regarding the application
of this Parachute Payments section shall be made by an accounting firm or consulting group with experience in performing calculations
regarding the applicability of Section 280G of the Code and the Excise Tax selected by the Company (the “Independent
Advisors”). For purposes of determinations, no portion of the Total Payments shall be taken into account which, in the
opinion of the Independent Advisors, (i) does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of
the Code (including by reason of Section 280G(b)(4)(A) of the Code) or (ii) constitutes reasonable compensation
for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base
amount” (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation. The costs of
obtaining such determination and all related fees and expenses (including related fees and expenses incurred in any later audit)
shall be borne by the Company.

 

In the event it is later determined that
a greater reduction in the Total Payments should have been made to implement the objective and intent of this Parachute Payments
section, you agree to promptly return the excess amount to the Company.

 

David, I look forward to working with
you in your new role on the Rhythm team. Please indicate your acceptance of this letter of employment by signing a copy of this
offer letter and returning it to us.

 

Sincerely,

 

Todd T. Foley

On behalf of the Compensation Committee of the Board

 

The foregoing correctly sets forth the terms of my at-will employment
with Rhythm. I am not relying on any representations other than those set forth above.

 

	    /s/ David P. Meeker	 	7/16/2020
	David P. Meeker, M.D.	 	Date

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