Document:

Exhibit

Exhibit 10.4

SUBLEASE

THIS SUBLEASE (this “Sublease”) is dated for reference purposes as of September 19, 2017, and is made by and between Relypsa, Inc., a Delaware corporation (“Sublessor”), and Menlo Therapeutics, Inc., a Delaware corporation (“Sublessee”).  Sublessor and Sublessee hereby agree as follows:
1.Recitals:  This Sublease is made with reference to the fact that HCP LS REDWOOD CITY, LLC, as landlord (“Master Lessor”), and Sublessor, as tenant, entered into that certain lease, dated as of June 26, 2014 as amended by that First Amendment to Lease, dated as of July 10, 2015 (as amended, the “Master Lease”), with respect to certain premises consisting of approximately 79,675 rentable square feet of space (the “100 Premises”) of a building located at 100 Cardinal Way, Redwood City, California (the “100 Building”) and 13,904 rentable square feet of space (the “200 Premises”) of a building located at 200 Cardinal Way, Redwood City, California  (the “200 Building”).  A copy of the Master Lease is attached hereto as Exhibit A.
2.    Premises:  
A.    Subleased Premises.  Sublessor hereby subleases to Sublessee, and Sublessee hereby subleases from Sublessor, the entire 200 Premises (hereinafter, the “Subleased Premises”).  The Subleased Premises are more particularly described on Exhibit B attached hereto.  
3.    Term:
A.    Term.  The term (the “Term”) of this Sublease shall be for the period commencing upon the later of (a) receipt of Master Lessor’s written consent to this Sublease and (b) October 1, 2017 (the “Commencement Date”), and ending on the last day of the thirtieth (30th) month after the Commencement Date (the “Expiration Date”), unless this Sublease is sooner terminated pursuant to its terms or the Master Lease is sooner terminated pursuant to its terms.
B.    Early Possession.  Upon the full execution and delivery of this Sublease, Sublessor shall permit Sublessee to enter the Subleased Premises solely for the purpose of preparing the Subleased Premises for occupancy and not for the purpose of conducting business therein, provided (i) Master Lessor’s written consent to this Sublease has been received, (ii) Sublessee has delivered to Sublessor the Security Deposit and first month’s Base Rent as required under Paragraph 4 and (iii) Sublessee has delivered to Sublessor evidence of all insurance required under this Sublease.  Such occupancy shall be subject to all of the provisions of this Sublease, except for the obligation to pay Base Rent, Direct Expenses and utilities and shall not advance the Expiration Date of this Sublease.
4.    Rent:
A.    Base Rent.  Sublessee shall pay to Sublessor as base rent for the Subleased Premises for each month during the Term (“Base Rent”):
	
			
	Period
	 
	Base Rent

	Commencement Date – Month 12
	 
	$54,225.60

	Month 13 – Month 24
	 
	$55,852.37

	Month 25 – Expiration Date
	 
	$57,527.94

Base Rent and Additional Rent, as defined in Paragraph 4.B below, shall be paid on or before the first (1st) day of each month.  Base Rent and Additional Rent shall be payable without notice or demand 

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and without any deduction, offset, or abatement, in lawful money of the United States of America.  Base Rent and Additional Rent shall be paid directly to Sublessor at the applicable address set forth below Sublessor’s signature to this Sublease or such other address as may be designated in writing by Sublessor.
B.    Additional Rent.  All monies other than Base Rent required to be paid by Sublessor under the Master Lease as to the Subleased Premises, including, without limitation, any amounts payable by Sublessor to Master Lessor as “Direct Expenses” (as defined in Section 4.2.2 of the Master Lease) and costs of utilities under Section 6.1 of the Master Lease, as incorporated herein, with respect to the Subleased Premises shall be paid by Sublessee hereunder as and when such amounts are due under the Master Lease, as incorporated herein.  All such amounts shall be deemed additional rent (“Additional Rent”).  Base Rent and Additional Rent hereinafter collectively shall be referred to as “Rent”.  Sublessee and Sublessor agree, as a material part of the consideration given by Sublessee to Sublessor for this Sublease, that Sublessee shall pay all costs, expenses, taxes, insurance, maintenance and other charges of every kind and nature arising in connection with this Sublease, the Master Lease as to the Subleased Premises, or the Subleased Premises, such that Sublessor shall receive, as a net consideration for this Sublease, the Base Rent payable under Paragraph 4.A hereof. Notwithstanding anything in this Sublease to the contrary, Additional Rent shall not include, and Sublessee shall have no obligation to pay for: (a) any charges that apply solely to the 100 Premises/100 Building (e.g., real estate taxes on leasehold improvements therein), (b) late fees or penalties assessed against Sublessor as a result of Sublessor’s acts or omissions, (c) charges incurred as a result of excess or additional services specifically requested by Sublessor for the 100 Premises/100 Building or for or including the Subleased Premises without Sublessee’s consent or as a result of Sublessee’s actions (including after hours utilities), and (d) the cost of utilities and services consumed by Sublessor in the 100 Premises in excess of the reasonable and normal use of a comparable office user in the Project (such as for labs or server rooms in the 100 Premises/100 Building), in which event Sublessor shall reasonably apportion the utilities portion of the Direct Expenses payable by Sublessee.
C.    Payment of First Month’s Rent.  Upon execution hereof by Sublessee, Sublessee shall pay to Sublessor the sum of Fifty-Four Thousand Two Hundred Twenty-Five and 60/100 Dollars ($54,225.60), which shall constitute Base Rent for the first month of the Term.
5.    Security Deposit:  Upon execution hereof by Sublessee, Sublessee shall deposit with Sublessor the sum of Fifty-Four Thousand Two Hundred Twenty-Five and 60/100 Dollars ($54,225.60) (the “Security Deposit”), in cash, as security for the performance by Sublessee of the terms and conditions of this Sublease.  If Sublessee fails to pay Rent or other charges due hereunder or otherwise defaults with respect to any provision of this Sublease (beyond applicable notice and cure periods), then Sublessor may draw upon, use, apply or retain all or any portion of the Security Deposit for the payment of any Rent or other charge in default, for the payment of any other sum which Sublessor has become obligated to pay by reason of Sublessee’s default, or to compensate Sublessor for any loss or damage which Sublessor has suffered thereby.  If Sublessor so uses or applies all or any portion of the Security Deposit, then Sublessee, within ten (10) days after demand therefor, shall deposit cash with Sublessor in the amount required to restore the Security Deposit to the full amount stated above.  Upon the expiration of this Sublease, if Sublessee is not in default, Sublessor shall return to Sublessee so much of the Security Deposit as has not been applied by Sublessor pursuant to this paragraph, or which is not otherwise required to cure Sublessee’s defaults.  
6.    Holdover:  In the event that Sublessee does not surrender the Subleased Premises by the Expiration Date in accordance with the terms of this Sublease, Sublessee shall indemnify, defend, protect and hold harmless Sublessor from and against all loss and liability resulting from Sublessee’s delay in surrendering the Subleased Premises and pay Sublessor holdover rent as provided in Section 16 of the Master Lease, as incorporated herein.
7.    Repairs:  Sublessor shall deliver the Subleased Premises to Sublessee in broom-clean condition.  The parties acknowledge and agree that Sublessor has made no representations or warranties with respect to the condition of the Subleased Premises, except as set forth in this section.  Sublessor shall have no obligation whatsoever to make or pay the cost of any alterations, improvements or repairs to the 

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Subleased Premises, including, without limitation, any improvement or repair required to comply with any law.  Master Lessor shall be solely responsible for performance of any repairs required to be performed by Master Lessor under the terms of the Master Lease.
8.    Assignment and Subletting.  Sublessee may not assign this Sublease, sublet the Subleased Premises, transfer any interest of Sublessee therein or permit any use of the Subleased Premises by another party (collectively, “Transfer”), without the prior written consent of Sublessor, not to be unreasonably withheld, and Master Lessor; provided, however, notwithstanding Section 18(A) of the Master Lease, Sublessor’s consent shall not be required for a transfer as described in the first sentence of Section 14.8 of the Master Lease, as incorporated herein.  Sublessee acknowledges that the Master Lease contains a “recapture” right in Section 14.4. and that Sublessor may withhold consent to a proposed Transfer in its sole discretion unless Master Lessor confirms in writing that the recapture right does not apply to the Subleased Premises or otherwise waives such right.  Any Transfer shall be subject to the terms of Section 14 of the Master Lease, as incorporated herein.
9.    Use:  Sublessee may use the Subleased Premises only for general office use, research and development and sales and marketing, and in compliance with, and subject to, applicable laws and the terms of the Master Lease and this Sublease.  Sublessee shall not use, store, transport or dispose of any Hazardous Materials (as defined in the Master Lease) in or about the Premises except Hazardous Materials contained in normal office products in accordance with the Master Lease.  Sublessee shall comply with all reasonable rules and regulations promulgated from time to time by Sublessor and Master Lessor.
10.    Delivery and Acceptance:  If Sublessor fails to deliver possession of the Subleased Premises to Sublessee on or before the date set forth in Paragraph 3.A hereof for any reason whatsoever, then this Sublease shall not be void or voidable, nor shall Sublessor be liable to Sublessee for any loss or damage; provided, however, that in such event, the Commencement Date shall be delayed until Sublessor delivers possession of the Subleased Premises to Sublessee.  By taking possession of the Subleased Premises, Sublessee conclusively shall be deemed to have accepted the Subleased Premises in their as-is, then-existing condition, without any warranty whatsoever of Sublessor with respect thereto, except as otherwise expressly set forth in this Sublease.  Notwithstanding the foregoing, if Master Lessor’s consent to this Sublease has not been obtained, and the Subleased Premises have not been delivered to Sublessee, by October 31, 2017, then Sublessee shall have the right, upon written notice to Sublessor, to terminate this Sublease, and upon such termination, Sublessor shall return the Security Deposit and all advance Rent to Sublessee, and the parties shall be released from all liability and obligations hereunder.
11.    Improvements:  No alteration or improvements shall be made to the Subleased Premises, except in accordance with the Master Lease, and with the prior written consent of both Sublessor, not to be unreasonably withheld, and Master Lessor.
12.    Insurance; Waiver of Subrogation:  Sublessee shall obtain and keep in full force and effect, at Sublessee’s sole cost and expense, during the Term, the insurance required under Section 10 of the Master Lease.  Sublessee shall name Master Lessor and Sublessor as additional insureds under its liability insurance policy.  The release and waiver of subrogation set forth in Section 10.5 of the Master Lease, as incorporated herein, shall be binding on the parties.
13.    Default; Remedies:  Sublessee shall be in material default of its obligations under this Sublease if Sublessee commits any act or omission which constitutes an event of default under the Master Lease, which has not been cured after delivery of written notice and passage of any applicable grace period provided in the Master Lease as modified, if at all, by the provisions of this Sublease.  In the event of any material default by Sublessee beyond any applicable notice and cure periods, Sublessor shall have all remedies provided pursuant to Section 19.2 of the Master Lease and by applicable law.  
14.    Surrender:  Prior to expiration of this Sublease, Sublessee shall remove all of its trade fixtures and shall surrender the Subleased Premises to Sublessor in good condition, free of Hazardous Materials caused by Sublessee, reasonable wear and tear, casualty and condemnation excepted.  If the 

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Subleased Premises are not so surrendered, then Sublessee shall be liable to Sublessor for all costs incurred by Sublessor in returning the Subleased Premises to the required condition.
15.    Broker:  Sublessor and Sublessee each represent to the other that they have dealt with no real estate brokers, finders, agents or salesmen other than Savills Studley representing Sublessor and Sublessee, in connection with this transaction.  Each party agrees to hold the other party harmless from and against all claims for brokerage commissions, finder’s fees or other compensation made by any other agent, broker, salesman or finder as a consequence of such party’s actions or dealings with such agent, broker, salesman, or finder.
16.    Notices:  Unless at least five (5) days’ prior written notice is given in the manner set forth in this paragraph, the address of each party for all purposes connected with this Sublease shall be the applicable address set forth below its signature at the end of this Sublease.  All notices, demands or communications in connection with this Sublease shall be (a) personally delivered; or (b) properly addressed and (i) submitted to an overnight courier service, charges prepaid, or (ii) deposited in the mail (certified, return receipt requested, and postage prepaid).  Notices shall be deemed delivered upon receipt or refusal to accept delivery. All notices given to Master Lessor under the Master Lease shall be considered received only when delivered in accordance with the Master Lease.
17.    Miscellaneous:  Sublessor has not had an inspection of the Premises performed by a Certified Access Specialist as described in California Civil Code § 1938.  A Certified Access Specialist (CASp) can inspect the Subleased Premises and determine whether the Subleased Premises complies with all of the applicable construction-related accessibility standards under state law.  Although state law does not require a CASp inspection of the Subleased Premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the Subleased Premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant.  The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the Subleased Premises.
18.    Other Sublease Terms:
A.    Incorporation by Reference.  Except as set forth below, the terms and conditions of this Sublease shall include all of the terms of the Master Lease and such terms are incorporated into this Sublease as if fully set forth herein, except that: (i) each reference in such incorporated sections to “Lease” shall be deemed a reference to “Sublease”; (ii) each reference to the “Building”, “Premises”, “Lease Term” and “Base Rent” shall be deemed a reference to the “200 Building”, “Subleased Premises”, “Term” and Base Rent under this Sublease, respectively; (iii) each reference to “Landlord” and “Tenant” shall be deemed a reference to “Sublessor” and “Sublessee”, respectively, except as otherwise expressly set forth herein; (iv) with respect to work, services, repairs, restoration, insurance, indemnities, representations, warranties or the performance of any other obligation of Master Lessor under the Master Lease, the sole obligation of Sublessor shall be to request the same in writing from Master Lessor as and when requested to do so by Sublessee, and to use Sublessor’s reasonable efforts (without requiring Sublessor to spend more than a nominal sum) to obtain Master Lessor’s performance; (v) with respect to any obligation of Sublessee to be performed under this Sublease, wherever the Master Lease grants to Sublessor a specified number of days to perform its obligations under the Master Lease, except as otherwise provided herein, Sublessee shall have three (3) fewer days to perform the obligation, including, without limitation, curing any defaults; (vi) with respect to any approval required to be obtained from the “Landlord” under the Master Lease, such consent must be obtained from both Master Lessor and Sublessor, and the approval of Sublessor may be withheld if Master Lessor’s consent is not obtained; (vii) in any case where the “Landlord” reserves or is granted the right to manage, supervise, control, repair, alter, regulate the use of, enter or use the Premises or any areas beneath, above or adjacent thereto, perform any actions or cure any failures, such reservation or right shall be deemed to be for the benefit of 

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both Master Lessor and Sublessor; (viii) in any case where “Tenant” is to indemnify, release or waive claims against “Landlord”, such indemnity, release or waiver shall be deemed to run from Sublessee to both Master Lessor and Sublessor; (ix) in any case where “Tenant” is to execute and deliver certain documents or notices to “Landlord”, such obligation shall be deemed to run from Sublessee to both Master Lessor and Sublessor; (x) all payments shall be made to Sublessor; and (xi) Sublessee shall pay all consent and review fees set forth in the Master Lease to both Master Lessor and Sublessor and any caps shall apply separately to Master Lessor and Sublessor.
Notwithstanding the foregoing, (a) the following provisions of the Master Lease shall not be incorporated herein:  Summary of Basic Lease Information, Sections 1.1.1 (the first two sentences and last two sentences), 1.1.2 (the first sentence), 1.2, 1.3, 2.1 (the first sentence), 2.2, 4.6, 5.3.1.4.3, 6, 7, 8.1 (the second sentence), 8.5 (the last four sentences), 14.8, 18 (first and third sentences), 21, 23.1, 29.18 and 29.24 and Exhibits B and F-H, and the First Amendment to Lease (except the addition of 200 Premises/200 Building, Section 8 and Exhibit C, but not incorporating the last sentence of Section 6.2 or Section 7.3 of Exhibit C); (b) references in the following provisions to “Landlord” shall mean Master Lessor only:  Sections 1.1.2(iv), 1.1.3, 4.2.4, 4.3, 8.4 (the last reference in the first sentence), 10.2, 11.1 (the second and third sentences), 11.2 (except the last reference), 13 (the first sentence), 29.26 (the first sentence), 29.29, and the First Amendment to Lease Exhibit C Sections 6.1 (the first sentence and the first reference in the last sentence), 6.4 (the second sentence), and 7.2; (c) references in the following provisions to “Landlord” shall mean Master Lessor and Sublessor:  Sections 4.5, 5.3.1.2-4, 5.3.2, 10.4, 17, 24 (the third sentence) and 26.2, and the First Amendment to Lease Exhibit C Section 6.1 (the fifth sentence); (d) references to the “Permitted Use” shall mean the use permitted under Section 9 above; (e) the number of parking spaces in Section 9 of the Summary of Basic Lease Information (as referenced in Section 28 of the Master Lease) shall be 48; (f) Tenant’s Share shall mean 16.61% as to the Building; (g) subject to Master Lessor’s approval, Sublessor agrees that Menlo Therapeutics is not an Objectionable Name; and (h) in Section 14.3, Sublessee shall pay Sublessor the entire premium payable to Master Lessor under the Master Lease, plus fifty percent (50%) of any remaining Transfer Premium.
B.    Assumption of Obligations.  This Sublease is and at all times shall be subject and subordinate to the Master Lease and the rights of Master Lessor thereunder.  Sublessee hereby expressly assumes and agrees: (i) to comply with all provisions of the Master Lease which are incorporated hereunder; and (ii) to perform all the obligations on the part of the “Tenant” to be performed under the terms of the Master Lease during the Term of this Sublease which are incorporated hereunder.  In the event the Master Lease is terminated for any reason whatsoever, this Sublease shall terminate simultaneously with such termination without any liability of Sublessor to Sublessee, unless such termination is a result of a Sublessor default thereunder, which default is not due to Sublessee’s act or omission.  In the event of a conflict between the provisions of this Sublease and the Master Lease, as between Sublessor and Sublessee, the provisions of this Sublease shall control.  In the event of a conflict between the express provisions of this Sublease and the provisions of the Master Lease, as incorporated herein, the express provisions of this Sublease shall prevail. 
C.    Preservation of Sublease.  Sublessor covenants that, unless Master Lessor agrees to allow Sublessee to remain in the Subleased Premises for substantially the remainder of the Term of this Sublease on substantially the same terms as this Sublease after any termination of the Master Lease as to the Subleased Premises, it will maintain in effect the Master Lease as to the Subleased Premises during the entire Term of this Sublease, subject, however, to any earlier termination of the Master Lease without the fault of Sublessor or due to a termination pursuant to an exercise by Sublessor or Master Lessor of an express termination right in the Master Lease.  Subject to the foregoing, Sublessor further agrees to comply with or perform or cause to be performed Sublessor’s obligations under the Master Lease with respect to the Subleased Premises not assumed or agreed to be performed by Sublessee hereunder (collectively, “Sublessor’s Remaining Obligations”), and to indemnify Sublessee against and hold Sublessee harmless from all claims arising out of (i) Sublessor’s failure to comply with or perform Sublessor’s Remaining Obligations, and (ii) termination or forfeiture of the Master Lease resulting from Sublessor’s default thereunder, which default is not due to Sublessee’s act or omission. Sublessor shall, 

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upon Sublessee’s written request, use commercially reasonable efforts to cause the Master Lessor to perform its obligations under the Master Lease, without requiring Sublessor to expend more than a nominal sum.  Sublessor hereby covenants, except as permitted in this Paragraph 18(C) above, (A) not to voluntarily surrender the Master Lease to Master Lessor as to the Subleased Premises, and (B) not enter into any amendment or other agreement with respect to the Master Lease that will prevent or adversely affect the use by Sublessee of the Subleased Premises in accordance with the terms of this Sublease, materially increase the obligations of Sublessee or materially decrease the rights of Sublessee under this Sublease, materially shorten the term of this Sublease or materially increase the rental or any other sums required to be paid by Sublessee under this Sublease.
19.    Conditions Precedent:  This Sublease and Sublessor’s and Sublessee’s obligations hereunder are conditioned upon the written consent of Master Lessor.  If Sublessor fails to obtain Master Lessor’s consent by October 31, 2017, then Sublessor or Sublessee may terminate this Sublease by giving the other party written notice thereof, and Sublessor shall return to Sublessee its payment of the first month’s Rent paid by Sublessee pursuant to Paragraph 4 hereof and the Security Deposit.
20.    Termination; Recapture:  Notwithstanding anything to the contrary herein, Sublessee acknowledges that, under the Master Lease, both Master Lessor and Sublessor have certain termination and recapture rights, including, without limitation, in Sections 11, 13 and 14.   Nothing herein shall prohibit Master Lessor or Sublessor from exercising any such rights and neither Master Lessor nor Sublessor shall have any liability to Sublessee as a result thereof.  In the event Master Lessor or Sublessor exercise any such termination or recapture rights, this Sublease shall terminate without any liability to Master Lessor or Sublessor. 
21.    Parking and Signage.  Sublessee shall have the right to park in 48 unreserved parking spaces in the parking facility that serves the 200 Building as provided in Section 28 of the Master Lease, as incorporated herein.  Subject to Master Lessor’s and Sublessor’s consent, Sublessee, at Sublessee’s sole cost and expense, shall have the right to place building standard suite signage at the entrance of the Subleased Premises as well as in the lobby directory.
22.    Furniture, Fixtures and Equipment:  Sublessee shall have the right to use during the Term the furnishings within the Subleased Premises which are identified on Exhibit C attached hereto (the “Furniture”) at no additional cost to Sublessee.  The Furniture is provided in its “AS IS, WHERE IS” condition, without representation or warranty whatsoever.  Sublessee shall insure the Furniture under the property insurance policy required under the Master Lease, as incorporated herein, and pay all taxes with respect to the Furniture.  Sublessee shall maintain the Furniture in the condition and repair existing as of the date hereof, reasonable wear and tear excepted, and shall be responsible for any loss or damage to the same occurring during the Term.  Sublessee shall surrender the Furniture to Sublessor upon the termination of this Sublease in the same condition as exists as of the date hereof, reasonable wear and tear excepted.  Sublessee shall not remove any of the Furniture from the Subleased Premises.  Notwithstanding anything to the contrary herein or in the Master Lease, Sublessor shall not be required to provide any personal property (other than the Furniture) or any data-related service to Sublessee. 

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IN WITNESS WHEREOF, the parties have executed this Sublease as of the day and year first above written.
	
					
	SUBLESSOR:    
	 
	SUBLESSEE:

	 
	 
	 
	 
	 

	Relypsa, Inc.,
	 
	Menlo Therapeutics, Inc.,

	a Delaware corporation
	 
	a Delaware corporation

	 
	 
	 
	 
	 

	By:
	/s/ Scott Garland
	 
	By:
	/s/ Steven Basta

	Name:
	Scott Garland
	 
	Name:
	Steven Basta

	Its:
	President
	 
	Its:
	Chief Executive Officer

	 
	 
	 
	 
	 

	Address for Notices:
	 
	Address for Notices:

	 
	 
	 
	 
	 

	Before the Commencement Date:
	 
	Before the Commencement Date:

	 
	 
	 
	 
	 

	Relypsa, Inc.
	 
	 
	Menlo Therapeutics Inc.

	Attn:  General Counsel
	 
	 
	[***]

	[***]
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 
	 

	After the Commencement Date:
	 
	After the Commencement Date:

	 
	 
	 
	 
	 

	Relypsa, Inc.
	 
	 
	Menlo Therapeutics Inc.

	Attn:  General Counsel
	 
	 
	[***]

	[***]
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 
	 

	Address for Payments:
	 
	 
	 

	 
	 
	 
	 
	 

	[***]
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

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EXHIBIT A

MASTER LEASE

[***]

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EXHIBIT B

SUBLEASED PREMISES
[***]

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EXHIBIT C

FURNITURE
[***]

-10-Exhibit

Exhibit 10.8

Tigercat Pharma, Inc.
400 Oyster Point Boulevard, Suite 202
South San Francisco, CA 94080

August 17, 2015

Steven L. Basta
[***]

[***]

Dear Steve:

We are pleased to confirm our offer to you of employment with Tigercat Pharma, Inc., a Delaware corporation (the "Company"), in the position of President and Chief Executive Officer.

Position. As Chief Executive Officer, you will be responsible for managing the day to day operations and strategy of the Company and you will report directly to the Board of Directors of the Company. In addition, you will be appointed to the Board of Directors upon your commencement of employment, and will retain a seat on the Board of Directors for the duration of your employment with the Company. It is anticipated that your employment with the Company will begin the week of September 1, 2015, it being understood that this date will be confirmed following discussions with your current employer. In connection with your employment you will enter into an indemnification agreement with customary terms and conditions. The Company will at all times keep in full force directors and officers insurance, and such other insurance as is customary similarly situated companies, as determined by the Board of Directors in its reasonable discretion with the advice of counsel and the Company's insurance broker.

You agree to devote your full business time and attention to your work for the Company. Except upon the prior written consent of the Board of Directors, you will not, during your employment with the Company, (i) accept or maintain any other employment, (ii) engage, directly or indirectly, in any other business activity (whether or not pursued for pecuniary advantage) that might reasonably be expected to interfere with your duties and responsibilities as a Company employee or create a conflict of interest with the Company, (iii) serve on the board of directors of any other company, except for your current directorships at AlterG, Inc. (including a possible role as chairman of the Board), Carbylan Therapeutics Inc., and RF Surgical Systems, Inc. Notwithstanding the foregoing it is agreed that you may (a) provide transition services to AlterG for not more than six (6) months from the commencement of your employment with the Company and for not more than ten percent (10%) of your business time overall, and (ii) provide consulting services to other entities, including current arrangements with Neodyne and SpindleTop, that are not competitive with the Company, not to exceed five percent (5%) of your business time in the aggregate; provided that in no event will these consulting services materially interfere with, conflict with or prevent performance of your obligations to the Company pursuant to this letter agreement or any proprietary information agreement.

Salary. Your initial base salary will be $545,000 per year, less applicable withholdings. Your salary will be reviewed from time to time by the Board of Directors or its compensation committee, and may be adjusted in the sole discretion of the Board of Directors or its compensation committee.

Equity Award. Promptly after the start of your employment with the Company, the Board of Directors will grant you an option to purchase a number of shares of Common Stock of the Company equal to six percent (6%) of the then current fully diluted number of shares of Common Stock, including shares available for issuance pursuant to the Company's 2011 Stock Incentive Plan (the "Plan") and assuming the exercise and/or conversion of all outstanding securities that are exercisable and/or convertible, directly or indirectly, for Common Stock (such calculation the "Fully-Diluted Capitalization") (after giving effect to such grant). The exercise price of such option will be the fair market value of the Company's Common Stock on the date of grant, as determined by the Board of Directors based on an independent valuation intended to satisfy the safe harbor requirements of Section 409 A of the Internal Revenue Code. If no recent independent valuation has been completed as of the start of your employment, your option grant will still be approved promptly after the start date of your employment with the Company (the "Start Date"), subject to determination of the exercise price to be later established by the Board of Directors based on the valuation's assessment of the fair market value of the Company's Common Stock as of the date of grant. The options shall vest with respect to 25% of the total number of shares on the one-year anniversary of your Start Date, and thereafter with respect to 1I48th of the total number of shares on each monthly anniversary of your Start Date. Vesting will also accelerate with respect to 100% of the remaining unvested shares on the consummation of a "change of control" transaction, as will be defined in your option agreement with the Company. The option shall be subject to the terms and conditions of the Plan and the option agreement to be entered between you and the Company. The Company will also provide you the opportunity to exercise your option with respect to unvested shares, subject to a "reverse vesting" schedule for the Company to repurchase unvested shares at the option exercise price according to the schedule set forth above.

It is currently contemplated that the existing investors of the Company will provide a bridge financing in the amount of not less than $10,000,000 within thirty days of the date hereof and that the Company will actively seek funding in an private equity financing with one or more closings during the twelve (12) months following the commencement of your employment (the
"Financing").

Following each closing of the Financing, you will be granted an additional option under the Plan if required such that your total ownership potential for all equity or options issued under the Plan represents at least the Target Post Financing Ownership Percentage of the Fully Diluted Capitalization (after giving effect to such grant). For these purposes, the "Target Post Financing Ownership Percentage" equals (x) 5.7% plus (y) (a) 0.10% times (b) the excess of the Financing Pre Money Valuation over $50,000,000 divided by (c) $10,000,000. The vesting schedule of such additional grant will commence as of your employment and will otherwise have the same terms and conditions as your original option grant, it 

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being understood that the exercise price will be the fair market value of the Common Stock on the date of grant.

The table below shows several examples of this calculation:

	
					
	Financing
Pre Money Valuation
	Set %
	Incremental %
	Target Post Financing
Ownership Percentage

	 
	 
	 
	 

	$50,000,000.00
	5.70%
	0
	%
	5.70%

	$55,000,000.00
	5.70%
	0.05
	%
	5.75%

	$60,000,000.00
	5.70%
	0.10
	%
	5.80%

	$65,000,000.00
	5.70%
	0.15
	%
	5.85%

	$70,000,000.00
	5.70%
	0.20
	%
	5.90%

	$85,000,000.00
	5.70%
	0.35
	%
	6.05%

	$90,000,000.00
	5.70%
	0.40
	%
	6.10%

	$100,000,000.00
	5.70%
	0.50
	%
	6.20%

For these purposes, the Financing Pre Money Valuation means the Fully-Diluted Capitalization of the Company immediately before the first closing of the Financing multiplied by the price per share paid in the Financing for each share of Common Stock issued or issuable on conversion of the equity issued in the Financing (plus any increase in the number of shares reserved for issuance under the company's equity incentive plans in connection with the Financing).

Benefits: You will be eligible to participate in the benefits made generally available by the Company to its senior executives, in accordance with the benefit plans established by the Company, and as may be amended from time to time in the Company's sole discretion. Without limiting the foregoing, you will be entitled to: (i) if and when the Company is offering health insurance to its employees, paid health insurance benefits for you and your immediate family 100% of the premium for which will be paid in full by the Company or (ii) otherwise, prompt reimbursement of 100% of all health insurance premiums incurred by you to obtain health insurance for you and your immediate family with terms and conditions consistent with your position as a senior executive of the company (including without limitation any insurance made available to you by COBRA) as applicable under (i) or (ii), "Health Insurance Benefits"). The Health Insurance Benefits shall be deemed taxable compensation paid by the Company to you if such payments would constitute a discriminatory benefit under Internal Revenue Code Section 105(h) absent such tax treatment.

You are entitled to paid holidays and vacation days each year, in an amount determined in accordance with and subject to the Company's applicable policies in effect, and as may be amended from time to time. Unless another number is established by the Board in its sole discretion as applicable to all Company executives, you will be entitled to twenty (20) days of vacation per calendar year, which will be pro-rated for any year in which you are only employed with the Company for a portion of the year or for any period in which you are not a full-time employee. Any unused portion of your yearly paid 

3

vacation will carry over to the following year; provided that the maximum accrual of vacation days is twenty (20). Subject to the foregoing limits, all remaining vacation that has accrued but was unused will be paid within ten (10) days following your separation from service based on Executive's base salary in effect on the date of such separation.

At-Will Employment; Severance: The Company is an "at-will" employer. Accordingly, either you or the Company may terminate the employment relationship at any time, with or without advance notice, and with or without cause. Upon any termination of your employment, you will be deemed to have resigned, and you hereby resign, from the Company's Board of Directors and from all offices and directorships then held with the Company or any subsidiary. In the event the Company terminates your employment without Cause,l or you terminate your employment for Good Reason,2 you will be eligible to receive (i) an amount equal to the base salary that would have been earned during the Severance Period (defined below) in one lump sum, (ii)
_______________________
1 For purposes of this paragraph, "Cause" means if it that has caused or is reasonably expected to result in material injury to the Company: (i) your gross negligence or willful failure substantially to perform your duties and responsibilities to the Company or deliberate violation of a Company policy; which failure is not corrected within 30 days after the Board of Directors has given you written notice specifYing the failure in reasonable detail, and you have had an opportunity to address the Board of Directors with, at your option, counsel present, (ii) your intentional commission of any act of fraud, embezzlement or dishonesty against the Company or any other willful misconduct; (iii) your improper, unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom you owe an obligation of nondisclosure as a result of your relationship with the Company; or (iv) your willful breach of any material obligations under any written agreement or covenant with the Company, which failure is not corrected within 30 days after the Board of Directors has given you written notice specifYing the failure in reasonable detail, and you have had an opportunity to address the Board of Directors with, at your option, counsel present.

2 For the purposes of this paragraph, "Good Reason" means the occurrence at any time of any of the following without your prior written consent: (a) removal from the position of Chief Executive Officer with respect to the Company resulting in the material diminution in your authority, duties or responsibilities (other than a mere change in title following any merger or consolidation of the Company with another entity); (b) the assignment of duties or responsibilities materially inconsistent with those customarily associated with the position of Chief Executive Officer or a material diminution of your position, authority, duties or responsibilities (other than a mere change in title following any merger or consolidation of the Company with another entity); (c) a material reduction in your base salary; (d) any willful failure or willful breach by the Company of any of the material obligations of this Agreement or (e) a requirement that you relocate your principal place of business by more than fifty (50) miles. For purposes of this subsection, no act, or failure to act, on the Company's part shall be deemed "willful" unless done, or omitted to be done, by the Company not in good faith and without reasonable belief that the Company's act, or failure to act, was in the best interest of the Company. You may terminate your employment under this Agreement for Good Reason at any time on or prior to the 180th day after the initial occurrence of any of the foregoing Good Reason events; provided, however, that, within ninety (90) days of any such events having first occurred, you shall have provided the Company with notice that such event(s) have occurred and afforded the Company thirty (30) days to cure same continuation of your Health Insurance Benefits during the Severance Period, and (iii) accelerated vesting with respect to the number of shares underlying any equity incentives or options that are subject to vesting and that would have otherwise vested during the Severance Period had you remained an employee of the Company (collectively, "Severance Benefits"). 

4

Your eligibility for these Severance Benefits is conditioned upon your execution of a release of claims in a form provided by the Company with a general release of claims as set forth in Exhibit A (the "Release") within forty-five (45) days following your termination date and your non-revocation of the Release during any applicable statutory revocation period. If you comply with these conditions, the Severance payments will commence on the sixtieth (60th) day following your termination date. For the purposes hereof, the "Severance Period" will equal six (6) months for a termination occurring within the first six (6) months after your Start Date, and thereafter will equal the number of full months between the Start Date and the date of termination, up to a maximum of twelve (12) months.

Taxes: All amounts paid under this letter shall be paid less all applicable state and federal tax withholdings (if any) and any other withholdings required by any applicable jurisdiction or authorized by you. Notwithstanding any other provision of this letter whatsoever, the Company, in its sole discretion, shall have the right to provide for the application and effects of Section 409 A of the Code (relating to deferred compensation arrangements) and any related administrative guidance issued by the Internal Revenue Service. The Company shall have the authority to delay the payment of any amounts under this Agreement to the extent it deems necessary or appropriate to comply with Section 409A(a)(2)(B)(i) of the Code (relating to payments made to certain "key employees" of publicly-traded companies); in such event, any such amount to which you would otherwise be entitled during the six (6) month period immediately following your termination of employment with the Company will be paid in a lump sum on the date six (6) months and one (1) day following the date of your termination of employment with the Company (or the next business day if such date is not a business day), provided that you have complied with the requirements for such payment. You shall be treated as having a termination of employment under this Agreement only if such termination meets the requirements of a "separation from service" as that term is defined in Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the "Code") and Treas. Regs. Section 1.409A-1(h), and as amplified by any other official guidance. This Agreement is intended to comply with the provisions of Code Section 409A; provided, however, that the Company makes no representation that the amounts payable under this Agreement will comply with Code Section 409A and makes no undertaking to prevent Code Section 409A from applying to amounts payable under this Agreement or to mitigate its effects on any deferrals or payments made under this Agreement.

In the event that the severance and other benefits provided for in this offer letter or otherwise payable to you (i) constitute "parachute payments" within the meaning of Section 280G of the Code, and (ii) but for this paragraph would be subject to the excise tax imposed by Section 4999 of the Code (the "Excise Tax"), then your benefits under this offer letter shall be either (a) delivered in full, or (b) delivered as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by you on an after-tax basis, of the greatest amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code.

Expenses. You are entitled to receive prompt reimbursement for all reasonable fees and expenses you incur in performing services to the Company, in accordance with the policies and procedures then in 

5

effect and established by the Company for its senior executive officers. In addition, upon execution hereof, you will be reimbursed up to $5,000.00 in legal expenses you incur in connection with this agreement. You are also entitled to receive prompt reimbursement for all reasonable fees and expenses you incur (not to exceed $5,000.00 in any specific instance unless otherwise approved by the Board of Directors in it is good faith judgment as to the reasonableness of any such fees): (i) in connection with any amendment, waiver or termination of this agreement or (ii) in connection with the review and execution of any other agreement you are being asked by the Company to sign in your personal, individual capacity. Reimbursement payments must be made by December 31 of the year following the year in which the expense was incurred, and you must submit all documentation prior to such date.

Entire Agreement. Please let us know of your decision to join the Company by signing a copy of this offer letter and returning it to us not later than August 191\ 2015. This letter sets forth our entire agreement and understanding regarding the terms of your employment with the Company and supersedes any prior representations or agreements, whether written or oral. This letter may not be modified in any way except in a writing signed by a duly authorized member of the Company's Board of Directors and you. It shall be governed by California law, without regard to principles of conflicts of laws. Your employment is contingent upon your execution of the Company's Proprietary Information and Invention Assignment Agreement.

Sincerely,
	
	
	/s/ James W. Larrick

	 

	James W. Larrick

	
	
	ACCEPTED AND AGREED:

	 

	/s/ Steven L. Basta

	Steven L. Basta

	 

	Aug. 18, 2015

	Date

6

Exhibit A

Release Language:

You ("Executive") shall release the Company'sParties, as applicable, as set forth below.

Executive agrees, for himself, his spouse, heirs, executor or administrator, assigns, insurers, attorneys, and other persons or entities acting or purporting to act on his behalf (the "Executive'sParties"), to irrevocably and unconditionally release, acquit, and forever discharge the Company, its affiliates, subsidiaries, directors, officers, employees, shareholders, partners, agents, representatives, predecessors, successors, assigns, insurers, attorneys, benefit plans sponsored by the Company, and said plans' fiduciaries, agents and trustees (the "Company'sParties"), from any and all actions, causes of action, suits, claims, obligations, liabilities, debts, demands, contentions, damages, judgments, levies, and executions of any kind, whether in law or in equity, known or unknown, which the Executive's Parties have, have had, or may in the future claim to have against the Company's Parties as of [termination date]. This release specifically includes without limitation any claims arising in tort or contract, any claim based on wrongful discharge, any claim based on breach of contract, any claim arising under federal, state or local law prohibiting race, sex, age, religion, national origin, handicap, disability, or other forms of discrimination, any claim arising under federal, state, or local law concerning employment practices, and any claim relating to compensation or benefits. This specifically includes, without limitation, any claim that the Executive has or has had under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as amended, the Americans with Disabilities Act, as amended, and the Employee Retirement Income Security Act of 1974, as amended. Notwithstanding the foregoing, it is understood and agreed that the waiver of benefits and claims contained in this section does not include a waiver of the right to payment of any vested, nonforfeitable benefits to which the Executive or a beneficiary of the Executive may be entitled under the terms and provisions of any employee benefit plan of the company which have accrued as of the Date of Termination, and does not include a waiver of the right to benefits and payment of consideration to which Executive may be entitled under this Agreement or any of the agreements contemplated by this Agreement (including the indemnification agreement and the stock option agreement).

Executive hereby acknowledges his understanding that under this Agreement he is releasing any known or unknown claims he may have. He therefore acknowledges that he has read and understands Section 1542 of the California Civil Code, which reads as follows:

"A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor."

Executive expressly waives and relinquishes all rights and benefits under that section and any law of any jurisdiction of similar effect with respect to his release of claims.

7

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