Document:

irtc-ex1033_95.htm

Exhibit 10.33

June 12, 2018

 

 

 

Karim Karti

1735 East Wedgewood Dr. 

Elm Grove, WI  53122

 

Dear Karim:

We are pleased to offer you the position of Chief Operating Officer with iRhythm Technologies, Inc. (the “Company”).  If you decide to join us, you will receive a salary and certain employee benefits as explained in Exhibit A.  You should note that the Company may modify job titles, salaries, and benefits from time to time as it deems necessary.  

In addition, if you decide to join the Company, it will be recommended at the first meeting of the Compensation Committee (the “Compensation Committee”) of the Company's Board of Directors (the “Board”) following your start date that the Company grant you equity awards with an aggregate value of $2 million.  Fifty percent of the value of the award will be an option to purchase shares of the Company's Common Stock at a price per share equal to the fair market value per share of the Common Stock on the date of grant, as determined by the Compensation Committee (the “Option”). The other fifty percent of the value of the award will be an award of restricted stock units (“RSUs”).  The proposed vesting schedule for the Option will be to have twenty-five percent of the shares subject to the Option to vest 12 months after the date your vesting begins, and the remaining shares subject to the Option to vest monthly over the next 36 months in equal monthly amounts subject to your continuing employment with the Company through each vesting date. The proposed vesting schedule for the award of RSUs will be to have twenty-five percent of the RSUs to vest on each annual anniversary of the date your vesting begins, subject to your continuing employment with the Company through each vesting date.  Each equity award will be subject to the terms and conditions of the Company's 2016 Equity Incentive Plan (as amended from time to time, the “2016 Plan”) and a Stock Option and RSU Agreement provided by the Company, including vesting requirements.  

For purposes of this letter, the value of each award will be determined in accordance with the Company’s standard equity grant practice, which typically means that (i) with respect to the Option, its grant date value calculated in accordance with the Black-Scholes option valuation methodology (using the thirty (30) day average closing price of the Company’s Common Stock as reported on the Nasdaq Global Select Market for the calendar month prior to your start date) or such other methodology the Board or Compensation Committee may determine prior to the grant of the Option becoming effective, and (ii) with respect to the RSUs, the thirty (30) day average closing price of the Company’s Common Stock as reported on the Nasdaq Global Select Market for the calendar month prior to your start date, or such other methodology the Board or Compensation Committee may determine prior to the grant of the RSUs becoming effective. 

No right to any stock is earned or accrued until such time that vesting occurs, nor does the grant of the Option or the RSUs confer any right to continue vesting or employment.

The Company is excited about your joining and looks forward to a beneficial and productive relationship.  Nevertheless, you should be aware that your employment with the Company is for no specified period and constitutes at‐will employment.  As a result, you are free to resign at any time, for any reason or for no reason.  Similarly, the Company is free to conclude its employment relationship with you at any time, with or without cause, and with or without notice.  We request that, in the event of resignation, you give the Company at least two weeks’ notice.

iRhythm Technologies, Inc.    •    650 Townsend Street, Suite 500    •    San Francisco, CA  94103

phone: 415.632.5700    •    fax: 415.632.5701    •     irhythmtech.com

 

As a new employee, you will work on an introductory basis for the first ninety (90) calendar days after your date of hire. This introductory period is intended to give you the opportunity to demonstrate your ability to achieve a satisfactory level of performance and to determine whether the new position meets your expectations.  The Company uses this period to evaluate your capabilities, work habits, and overall performance. It is also a time to get to know your fellow employees, your manager, company culture and the tasks involved in your job position, as well as to become familiar with the Company’s products and services.  This introductory period does not affect your at-will employment status, meaning that the employment relationship may be terminated at any time and for any non-discriminatory reason by either party.

The Company reserves the right to conduct background investigations and/or reference checks on all of its potential employees.  Your job offer, therefore, is contingent upon a clearance of such a background investigation and/or reference check, if any.

For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States.  Such documentation must be provided to us within three (3) business days of your date of hire, or our employment relationship with you may be terminated.

We also ask that, if you have not already done so, you disclose to the Company any and all agreements relating to your prior employment that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed.  It is the Company's understanding that any such agreements will not prevent you from performing the duties of your position and you represent that such is the case.  Moreover, you agree that, during the term of your employment with the Company, you will not engage in any other employment, occupation, consulting or other business activity directly related to the business in which the Company is now involved or becomes involved during the term of your employment, nor will you engage in any other activities that conflict with your obligations to the Company.  Similarly, you agree not to bring any third party confidential information to the Company, including that of your former employer, and that in performing your duties for the Company you will not in any way utilize any such information.

As a Company employee, you will be expected to abide by the Company's rules and standards.  As a condition of your employment, you are also required to sign and comply with an At‐Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement (“CIIAA”) which requires, among other provisions, the assignment of patent rights to any invention made during your employment at the Company, and non‐disclosure of Company proprietary information.  In the event of any dispute or claim relating to or arising out of our employment relationship, you and the Company agree that (i) any and all disputes between you and the Company will be fully and finally resolved by binding arbitration, (ii) you are waiving any and all rights to a jury trial but all court remedies will be available in arbitration, (iii) all disputes will be resolved by a neutral arbitrator who will issue a written opinion, (iv) the arbitration will provide for adequate discovery, and (v) the Company will pay all the arbitration fees, except an amount equal to the filing fees you would have paid had you filed a complaint in a court of law.  Please note that we must receive your signed CIIAA before your first day of employment.

To accept the Company's offer, please sign and date this letter in the space provided below. If you accept our offer, we anticipate your first day of employment will be no later than Monday, August 6, 2018. This letter, along with any agreements relating to proprietary rights between you and the Company, set forth the terms of your employment with the Company and supersede any prior representations or agreements including, but not limited to, any representations made during your recruitment, interviews or pre‐employment negotiations, whether written or oral.  This letter, including, but not limited to, its at‐will employment provision, may not be modified or amended except by a written agreement signed by the President of the Company and you.  This offer of employment will terminate if it is not accepted, signed and returned by Friday, June 15, 2018. An At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement will follow in a separate communication should you decide to accept.

We look forward to your favorable reply and to working with you at iRhythm Technologies, Inc.

 

	
 
	
Sincerely,

	
 
	
 

 

 

	
 
	
/s/ Kevin M. King

	
 
	
Kevin M. King

	
 
	
President & Chief Executive officer

 

Agreed to and accepted:

 

	
Signature:
	
/s/ Karim Karti
	
 

	
Printed Name: Karim Karti
	
 

	
Date: June 13, 2018
	
 

 

 

Exhibit A

 

Services and Benefits for Karim Karti

 

 

Position: Chief Operating Officer

Base Pay Rate: You will be a full-time employee, with a base rate of $450,000 annually, which will be earned and payable in accordance with the Company’s payroll policy. This rate is based on your geographical work location at the time of hire, and should your work location change due to relocation, your rate of pay may be reevaluated to align with geographical market rates.

Bonus:  Each calendar year, you will be eligible to earn a bonus of 90% of your annual base salary at the time of bonus payment.  The bonus will be based on achievement of financial targets and/or other performance objectives set by the Company, and the earned bonus will generally be paid within 60 days after the close of a calendar year.  The eligible bonus amount will be prorated for any calendar quarter in which you are not employed for an entire quarter, and you must be employed on the date that your bonus, if any, is paid in order to earn and be eligible to receive the bonus. 

Benefits and Expenses: You will be entitled to participate in the benefit plans and programs generally available from time to time to employees of the Company, subject to the terms of such plans and programs.  This includes four weeks per year of Paid Time Off, in addition to specified Holidays, among other benefits.

Severance: You will be eligible to receive severance benefits in the event your employment is terminated under certain conditions pursuant to the terms of the Change of Control and Severance Agreement attached hereto as Exhibit B.

Relocation Assistance:  You will receive a one-time grossed up sum in the amount of $1,000,000 to use related to your relocation to the Bay Area. This bonus will be paid in one lump sum on the next regularly scheduled pay date after you start employment with the Company.

In addition, the Company will reimburse you up to $50,000 for expenses, plus gross up for taxes if applicable for a pre-approved taxable expense, related to relocating to San Francisco, California or the Bay Area. Relocation Assistance expenses can generally be incurred within the first four months of your employment. Eligible items for reimbursement generally include costs for a trip to look for housing (ie: airfare, meals, hotel), movement of household goods, hotel for overnight trips prior to your relocation, closing costs on the sale of a home. All eligible expenses will be reimbursed with copies of receipts via our standard expense reimbursement process.  

In the event you leave the Company within 24 months of your date of hire due to (1) voluntary departure, (2) termination for cause, or (3) involuntary termination because of significant lack of performance, you will be responsible for reimbursing the Company for any and all Relocation Assistance payments received. By your signature on this offer of employment, you authorize the Company to withhold this amount ($1,000,000 plus any Relocation Assistance expenses received) from any severance and/or other final pay you receive upon termination of employment, per the provision above.

 

 

 

Exhibit B

IRHYTHM TECHNOLOGIES, INC. 

CHANGE OF CONTROL AND SEVERANCE AGREEMENT

This Change of Control and Severance Agreement (the “Agreement”) is made and entered into by and between Karim Karti (“Executive”) and iRhythm Technologies, Inc. (the “Company”, and collectively with the Executive, the “Parties”) as of the date the Company and Executive have each executed this Agreement, as set forth below (the “Effective Date”).  The terms of this Agreement will become effective on the Effective Date.

RECITALS

1.The Parties previously entered into a certain employment offer letter dated June 12, 2018 (as amended, the “Offer Letter”). 

2.The Board of Directors of the Company (the “Board”) believes that it is in the best interests of the Company and its stockholders to provide Executive with severance benefits if Executive’s employment with the Company terminates for certain reasons in the ordinary course of business, and to provide Executive with additional severance benefits if such termination occurs following a Change of Control.  

3.These severance benefits will provide Executive with enhanced financial security and incentive and encouragement to remain with the Company and to stay focused on the Company’s business.

4.Certain capitalized terms used in the Agreement are defined in Section 9 below. 

AGREEMENT 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Parties hereto agree as follows:

5.Term of Agreement.  This Agreement will have a term of two (2) years following the Effective Date.  If Executive’s employment terminates for any reason during the term or if the Company experiences a Change of Control, including (without limitation) any termination not set forth in Section 6, Executive will not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, notwithstanding any provision to the contrary in the Offer Letter or any other prior agreement entered into by the Parties (including, but not limited to, any Equity Award agreements).  Following the expiration of the two (2) year period without a written agreement by the Parties to renew or extend this Agreement, this Agreement will terminate and cease to be of any force or effect.  Notwithstanding the foregoing, in the event that the Company enters into an agreement or understanding regarding a Change of Control which limits its ability to extend this Agreement when there are fewer than twelve (12) months remaining in the term, the term of the Agreement will be extended through the twelve (12) month anniversary of such Change of Control. 

6.Severance Benefits.  

(a)Termination Outside the Change of Control Period.  If, outside the Change of Control Period, the Company or its Affiliates terminate Executive’s employment with the Company or its Affiliates, respectively, other than for Cause, death or Disability, or Executive resigns from such employment for Good Reason, then, subject to Section 7, Executive will receive the following severance benefits:

(i)Salary Severance.  Continuing payments of severance pay at a rate equal to Executive’s annual base salary, at the highest rate in effect during the term of this Agreement, for nine (9) 

 

 

months from the date of Executive’s termination of employment, which will be paid in accordance with the Company’s regular payroll procedures.

(ii)Continued Employee Benefits.  If Executive elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) within the time period prescribed pursuant to COBRA for Executive and Executive’s eligible dependents, the Company will pay Executive’s group health insurance provider the premiums necessary to continue group health insurance benefits for Executive and Executive’s eligible dependents (at the coverage levels in effect immediately prior to Executive’s termination) until the earlier of (A) a period of nine (9) months from the date of Executive’s termination of employment, (B) the date upon which Executive and/or Executive’s eligible dependents becomes covered under similar plans or (C) the date upon which Executive ceases to be eligible for coverage under COBRA (such payments, the “COBRA Premiums”).  However, if the Company determines in its sole discretion that it cannot pay the COBRA Premiums without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company will in lieu thereof provide to Executive a taxable monthly payment payable on the last day of a given month (except as provided by the following sentence), in an amount equal to the monthly COBRA premium that Executive would be required to pay to continue Executive’s group health coverage in effect on the date of Executive’s termination of employment (which amount will be based on the premium for the first month of COBRA coverage), which payments will be made regardless of whether Executive elects COBRA continuation coverage and will commence on the month following Executive’s termination of employment and will end on the earlier of (x) the date upon which Executive obtains other employment or (y) the date the Company has paid an amount equal to nine (9) payments.  For the avoidance of doubt, the taxable payments in lieu of COBRA Premiums may be used for any purpose, including, but not limited to continuation coverage under COBRA, and will be subject to all applicable tax withholdings.  Notwithstanding anything to the contrary under this Agreement, if at any time the Company determines in its sole discretion that it cannot provide the payments contemplated by the preceding sentence without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), Executive will not receive such payment or any further reimbursements for COBRA premiums.

(b)Termination within the Change of Control Period.  If, within the Change of Control Period, the Company or its Affiliates terminate Executive’s employment with the Company or its Affiliates, respectively, other than for Cause, death or Disability or Executive resigns from such employment for Good Reason, then, subject to Section 9, Executive will receive the following severance benefits from the Company:

(i)Salary Severance. A lump sum severance payment equal to fifteen (15) months of Executive’s annual base salary, at the highest rate in effect during the term of this Agreement, which will be paid in accordance with the Company’s regular payroll procedures.  For the avoidance of doubt, if (A) Executive incurred a termination prior to a Change of Control that qualifies Executive for severance payments under Section 6(a)(i); and (y) a Change of Control occurs within the three (3)-month period following Executive’s termination of employment that qualifies Executive for the superior benefits under this Section 6(b)(i), then Executive shall be entitled to a lump-sum payment of the amount calculated under this Section 6(b)(i), less amounts already paid under Section 6(a)(i).

(ii)Bonus Severance. Executive will receive a lump-sum payment, payable in accordance with the Company’s regular payroll procedures, equal to one hundred percent (100%) of Executive’s target bonus as in effect for the fiscal year in which Executive’s termination of employment occurs.  For avoidance of doubt, the amount paid to Executive pursuant to this Section 6(b)(ii) will not be prorated based on the actual amount of time Executive is employed by the Company during the fiscal year (or the relevant performance period if something different than a fiscal year) during which the termination occurs.

(iii)Continued Employee Benefits.  If Executive elects continuation coverage pursuant to COBRA within the time period prescribed pursuant to COBRA for Executive and Executive’s eligible dependents, the Company will pay Executive’s group health insurance provider the premiums necessary to continue group health insurance benefits for Executive and Executive’s eligible dependents (at 

 

 

the coverage levels in effect immediately prior to Executive’s termination) until the earlier of (A) a period of fifteen (15) months from the date of Executive’s termination of employment, (B) the date upon which Executive and/or Executive’s eligible dependents becomes covered under similar plans or (C) the date upon which Executive ceases to be eligible for coverage under COBRA (such payments, the “COC Premiums”).  However, if the Company determines in its sole discretion that it cannot pay the COC Premiums without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company will in lieu thereof provide to Executive a taxable monthly payment payable on the last day of a given month (except as provided by the following sentence), in an amount equal to the monthly COBRA premium that Executive would be required to pay to continue Executive’s group health coverage in effect on the date of Executive’s termination of employment (which amount will be based on the premium for the first month of COBRA coverage), which payments will be made regardless of whether Executive elects COBRA continuation coverage and will commence on the month following Executive’s termination of employment and will end on the earlier of (x) the date upon which Executive obtains other employment or (y) the date the Company has paid an amount equal to fifteen (15) payments.  For the avoidance of doubt, the taxable payments in lieu of COBRA Premiums may be used for any purpose, including, but not limited to continuation coverage under COBRA, and will be subject to all applicable tax withholdings.  Notwithstanding anything to the contrary under this Agreement, if at any time the Company determines in its sole discretion that it cannot provide the payments contemplated by the preceding sentence without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), Executive will not receive such payment or any further reimbursements for COBRA premiums.

(iv)Equity.  Executive will be entitled to accelerated vesting as one hundred percent (100%) of the then unvested portion of all of Executive’s outstanding Equity Awards.  If, however, an outstanding Equity Award is to vest and/or the amount of the Equity Award to vest is to be determined based on the achievement of performance criteria, then the Equity Award will vest as to one hundred percent (100%) of the amount of the Equity Award assuming the performance criteria had been achieved at target levels for the relevant performance period(s).

(c)Voluntary Resignation; Termination for Cause.  If Executive’s employment with the Company or its Affiliates terminates (i) voluntarily by Executive (other than for Good Reason) or (ii) for Cause by the Company, then Executive will not be entitled to receive severance or other benefits except for those (if any) as may then be established under the Company’s then existing severance and benefits plans and practices.

(d)Disability; Death.  If the Company terminates Executive’s employment as a result of Executive’s Disability, or Executive’s employment terminates due to Executive’s death, then Executive will not be entitled to receive severance or other benefits except for those (if any) as may then be established under the Company’s then existing written severance and benefits plans and practices.

(e)Accrued Compensation.  For the avoidance of any doubt, in the event of a termination of Executive’s employment with the Company or its Affiliates, Executive will be entitled to receive all accrued but unpaid vacation, expense reimbursements, wages, and other benefits due to Executive under any Company-provided plans, policies, and arrangements.

(f)Transfer between the Company and Affiliates.  For purposes of this Section 6, if Executive’s employment with the Company or one of its Affiliates terminates, Executive will not be determined to have been terminated other than for Cause, provided Executive continues to remain employed by the Company or one of its Affiliates (e.g., upon transfer from on Affiliate to another); provided, however, that the parties understand and acknowledge that any such termination could potentially result in Executive’s ability to resign for Good Reason.

(g)Exclusive Remedy.  In the event of a termination of Executive’s employment with the Company or its Affiliates, the provisions of this Section 6 are intended to be and are exclusive and in lieu of any other rights or remedies to which Executive or the Company may otherwise be entitled, whether at law, 

 

 

tort or contract, in equity.  Executive will be entitled to no benefits, compensation or other payments or rights upon termination of employment or in connection with a Change of Control other than those benefits expressly set forth in this Section 6.

7.Conditions to Receipt of Severance.

(a)Separation Agreement and Release of Claims.  The receipt of any severance pursuant to Sections 6(a) or (b) will be subject to Executive signing and not revoking a separation agreement and release of claims in a form reasonably satisfactory to the Company (the “Release”) and provided that such Release becomes effective and irrevocable no later than sixty (60) days following the termination date (such deadline, the “Release Deadline”).  If the Release does not become effective and irrevocable by the Release Deadline, Executive will forfeit any rights to severance or benefits under this Agreement.  In no event will severance payments or benefits be paid or provided until the Release becomes effective and irrevocable.  Except as required by Section 7(b), any severance payments or benefits under this Agreement will be paid on, or, in the case of installments, will not commence until, a date within the ten (10) business day period following the date the Release becomes effective and irrevocable.  Except as required by Section 7(b), any installment payments that would have been made to Executive prior to the Release becoming effective and irrevocable but for the preceding sentence will be paid to Executive within ten (10) business days following the date the Release becomes effective and irrevocable, and the remaining payments will be made as provided in the Agreement.  

(b)Section 409A.

(i)Notwithstanding anything to the contrary in this Agreement, no Deferred Payments will be paid or otherwise provided until Executive has a “separation from service” within the meaning of Section 409A.  Similarly, no severance payable to Executive, if any, pursuant to this Agreement that otherwise would be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9) will be payable until Executive has a “separation from service” within the meaning of Section 409A.

(ii)Any severance payments or benefits under this Agreement that would be considered Deferred Payments will be paid on, or, in the case of installments, will not commence until, the sixtieth (60th) day following Executive’s separation from service, or, if later, such time as required by Section 7(b)(iii).  Except as required by Section 7(b)(iii), any installment payments that constitute Deferred Payments that would have been made to Executive during the sixty (60) day period immediately following Executive’s separation from service but for the preceding sentence will be paid to Executive on the sixtieth (60th) day following Executive’s separation from service and the remaining payments shall be made as provided in this Agreement.  In no event will Executive have discretion to determine the taxable year of payment for any Deferred Payments.

(iii)Notwithstanding anything to the contrary in this Agreement, if Executive is a “specified employee” within the meaning of Section 409A at the time of Executive’s separation from service (other than due to death), then the Deferred Payments that are payable within the first six (6) months following Executive’s separation from service, will, to the extent required to be delayed pursuant to Section 409A(a)(2)(B) of the Code, become payable on the date six (6) months and one (1) day following the date of Executive’s separation from service.  All subsequent Deferred Payments, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit.  Notwithstanding anything herein to the contrary, if Executive dies following Executive’s separation from service, but prior to the six (6) month anniversary of the separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other Deferred Payments will be payable in accordance with the payment schedule applicable to each payment or benefit.  Each payment and benefit payable under this Agreement is intended to constitute a separate payment for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

 

 

(iv)Any amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Payments. 

(v)Any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit (as defined below) will not constitute Deferred Payments. 

(vi)The foregoing provisions and all compensation and benefits provided for under this Agreement are intended to comply with or be exempt from the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities or ambiguous terms herein will be interpreted to be exempt or so comply.  The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Executive under Section 409A.  In no event will the Company reimburse Executive for any taxes that may be imposed on Executive as a result of Section 409A.

8.Limitation on Payments.  In the event that the severance and other benefits provided for in this Agreement or otherwise payable to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) but for this Section 8, would be subject to the excise tax imposed by Section 4999 of the Code, then Executive’s severance benefits under Section 6 will be either:

(a)delivered in full, or

(b)delivered as to such lesser extent which would result in no portion of such severance benefits being subject to excise tax under Section 4999 of the Code,

whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999 of the Code, results in the receipt by Executive on an after-tax basis, of the greatest amount of severance benefits, notwithstanding that all or some portion of such severance benefits may be taxable under Section 4999 of the Code.  If a reduction in severance and other benefits constituting “parachute payments” is necessary so that benefits are delivered to a lesser extent, reduction will occur in the following order: (i) reduction of cash payments; (ii) cancellation of awards granted “contingent on a change in ownership or control” (within the meaning of Code Section 280G); (iii) cancellation of accelerated vesting of Equity Awards; or (iv) reduction of employee benefits. In the event that acceleration of vesting of Equity Award compensation is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of the Equity Awards.

Unless the Company and Executive otherwise agree in writing, any determination required under this Section will be made in writing by a nationally recognized certified professional services firm selected by the Company, the Company’s legal counsel or such other person or entity to which the parties mutually agree (the “Firm”) immediately prior to Change of Control, whose determination will be conclusive and binding upon Executive and the Company for all purposes.  For purposes of making the calculations required by this Section, the Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code.  The Company and Executive will furnish to the Firm such information and documents as the Accountants may reasonably request in order to make a determination under this Section.  The Company will bear all costs the Firm may reasonably incur in connection with any calculations contemplated by this Section.

9.Definition of Terms.  The following terms referred to in this Agreement will have the following meanings:

 

 

(a)Affiliate.  “Affiliate” means the Company and any other parent or subsidiary corporation of the Company, as such terms are defined in Section 424(e) and (1) of the Code.

(b)Cause.  “Cause” means (i) Executive’s conviction of, or plea of guilty or nolo contendre to, a felony or a crime involving moral turpitude; (ii) Executive’s admission or conviction of, or plea of guilty or nolo contendre to, an intentional act of fraud, embezzlement or theft in connection with Executive’s duties or in the course of employment with the Company or an Affiliate; (iii) Executive’s intentional wrongful damage to property of the Company or an Affiliate; (iv) intentional unauthorized or wrongful use or disclosure of secret processes or of proprietary or confidential information of the Company or an Affiliate (or any other party to whom Executive owes an obligation of nonuse or nondisclosure as a result of Executive’s employment relationship with the Company or an Affiliate), including but not limited to trade secrets and customer lists; (iv) Executive’s violation of any agreement not to compete with the Company or an Affiliate or to solicit either its customers or employees on behalf of competitors while remaining employed with the Company or an Affiliate; (v) Executive’s intentional violation of any policy or policies regarding ethical conduct; (vi) an act of dishonesty made by Executive in connection with Executive’s responsibilities as an employee which materially harms the Company or an Affiliate, or (vii) Executive’s intentional or continued failure to perform Executive’s duties with the Company or an Affiliate, as determined in good faith by the Company or an Affiliate after being provided with notice of such failure, such notice specifying in reasonable detail the tasks which must be accomplished and a timeline for the accomplishment to avoid termination for Cause, and an opportunity to cure within thirty (30) days of receipt of such notice.

(c)Change of Control.  “Change of Control” means the occurrence of any of the following events:

(i)A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than fifty percent (50%) of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection, the acquisition of additional stock by any one Person, who is considered to own more than fifty percent (50%) of the total voting power of the stock of the Company will not be considered a Change of Control; or 

(i)Any action or event occurring within an one‐year period, as a result of which less than a majority of the members of the Board are Incumbent Directors.  “Incumbent Directors” will mean members of the Board who either (A) are members of the Board as of the date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of members of the Board); or

(iii)A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3).  For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

 

For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.

Notwithstanding the foregoing, a transaction will not be deemed a Change of Control unless the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time.

Further and for the avoidance of doubt, a transaction will not constitute a Change of Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.

(d)Change of Control Period.  “Change of Control Period” means the period beginning on the date three (3) months prior to, and ending on the date that is twelve (12) months following, a Change of Control. 

(e)Code.  “Code” means the Internal Revenue Code of 1986, as amended.

(f)Deferred Payment.  “Deferred Payment” means any severance pay or benefits to be paid or provided to Executive (or Executive’s estate or beneficiaries) pursuant to this Agreement and any other severance payments or separation benefits, that in each case, when considered together, are considered deferred compensation under Section 409A.

(g)Disability.  “Disability” means that the Executive has been unable to perform Executive’s Company duties as the result of Executive’s incapacity due to physical or mental illness, and such inability, at least twenty-six (26) weeks after its commencement or 180 days in any consecutive twelve (12) month period, is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to Executive or Executive’s legal representative (such agreement as to acceptability not to be unreasonably withheld).  Termination resulting from Disability may only be effected after at least thirty (30) days’ written notice by the Company of its intention to terminate the Executive’s employment.  In the event that the Executive resumes the performance of substantially all of Executive’s duties hereunder before the termination of Executive’s employment becomes effective, the notice of intent to terminate will automatically be deemed to have been revoked.

(h)Equity Awards.  “Equity Awards” means Executive’s outstanding stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance stock units and any other Company equity compensation awards.

(i)Good Reason. “Good Reason” means Executive’s resignation within thirty (30) days following the expiration of any Company cure period (discussed below) following the occurrence of one or more of the following, without Executive’s express written consent:  (i) a material reduction by the Company of Executive’s base salary in effect immediately prior to such reduction; (ii) a material reduction of Executive’s duties or responsibilities relative to Executive’s duties or responsibilities in effect immediately prior to such reduction; or (iii) Executive’s relocation at the Company’s direction to a facility or location more than fifty (50) miles from Executive’s then present location of providing services.  Executive’s resignation will not be deemed to be for Good Reason unless Executive has first provided the Company with written notice of the acts or omissions constituting the grounds for “Good Reason” within ninety (90) days of the initial existence of the grounds for “Good Reason” and a reasonable cure period of not less than thirty (30) days following the date the Company receives such notice, and such condition has not been cured during such period.

 

 

(j)Section 409A.  For purposes of this Agreement, “Section 409A” means Section 409A of the Code and any final regulations and guidance thereunder and any applicable state law equivalent, as each may be amended or promulgated from time to time.

(k)Section 409A Limit.  For purposes of this Agreement, “Section 409A Limit” will mean two (2) times the lesser of: (i) Executive’s annualized compensation based upon the annual rate of pay paid to Executive during the Executive’s taxable year preceding the Executive’s taxable year of Executive’s separation from service as determined under Treasury Regulation Section 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Internal Revenue Code for the year in which Executive’s separation from service occurred

10.Successors. 

(a)The Company’s Successors.  Any successor to the Company (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets will assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession.  For all purposes under this Agreement, the term “Company” will include any successor to the Company’s business and/or assets which executes and delivers the assumption agreement described in this Section or which becomes bound by the terms of this Agreement by operation of law.

(b)Executive’s Successors.  The terms of this Agreement and all rights of Executive hereunder will inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

11.Notice. 

(a)General.  All notices and other communications required or permitted hereunder shall be in writing and shall be deemed effectively given (i) upon actual delivery to the party to be notified, (ii) twenty four (24) hours after confirmed facsimile transmission, (iii) one business day after deposit with a recognized overnight courier or (iv) three business days after deposit with the U.S. Postal Service by first class certified or registered mail, return receipt requested, postage prepaid, addressed (a) if to Executive, at the address Executive shall have most recently furnished to the Company in writing, (b) if to the Company, at the following address:

iRhythm Technologies, Inc.

650 Townsend Street, Suite 500

San Francisco, CA  94103

Attention: Chief Financial Officer

 (b)Notice of Termination.  Any termination by the Company for Cause or by Executive for Good Reason will be communicated by a notice of termination to the other party hereto given in accordance with Section 11 of this Agreement.  Such notice will indicate the specific termination provision in this Agreement relied upon, will set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and will specify the termination date (which will be not more than thirty (30) days after the giving of such notice).  The failure by Executive to include in the notice any fact or circumstance which contributes to a showing of Good Reason will not waive any right of Executive hereunder or preclude Executive from asserting such fact or circumstance in enforcing Executive’s rights hereunder.

12.Resignation. Upon the termination of Executive’s employment for any reason, Executive will be deemed to have resigned from all officer and/or director positions held at the Company and its Affiliates 

 

 

voluntarily, without any further required action by Executive, as of the end of Executive’s employment and Executive, at the Board’s request, will execute any documents reasonably necessary to reflect Executive’s resignation.

13.Miscellaneous Provisions.

(a)No Duty to Mitigate.  Executive will not be required to mitigate the amount of any payment contemplated by this Agreement, nor will any such payment be reduced by any earnings that Executive may receive from any other source.

(b)Waiver.  No provision of this Agreement will be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive).  No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party will be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(c)Headings.  All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

(d)Entire Agreement.  This Agreement, together with the terms of the Offer Letter and any Equity Award or Equity Award agreements that do not pertain to the provision of payments or benefits in connection with a termination of employment and/or an event that constitutes a Change of Control, constitutes the entire agreement of the parties hereto and supersedes in their entirety all prior representations, understandings, undertakings or agreements (whether oral or written and whether expressed or implied) of the parties with respect to the subject matter hereof, including, but not limited to, the terms within the Offer Letter that provide for payments or benefits in connection with a termination of employment and/or an event that constitutes a Change of Control.  No waiver, alteration, or modification of any of the provisions of this Agreement will be binding unless in writing and signed by duly authorized representatives of the parties hereto and which specifically mention this Agreement.

(e)Choice of Law.  The validity, interpretation, construction and performance of this Agreement will be governed by the laws of the State of California (with the exception of its conflict of laws provisions).  Any claims or legal actions by one party against the other arising out of the relationship between the parties contemplated herein (whether or not arising under this Agreement) will be commenced or maintained in any state or federal court located in the jurisdiction where Executive resides, and Executive and the Company hereby submit to the jurisdiction and venue of any such court.

(f)Severability.  The invalidity or unenforceability of any provision or provisions of this Agreement will not affect the validity or enforceability of any other provision hereof, which will remain in full force and effect.

(g)Withholding.  All payments made pursuant to this Agreement will be subject to withholding of applicable income and employment taxes.

(h)Counterparts.  This Agreement may be executed in counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

 

 

 

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below.

 

 

 

			
	
COMPANY
	
 
	
IRHYTHM TECHNOLOGIES, INC.

	
 
	
By:
	
Kevin M. King

	
 
	
Title:
	
Chief Executive Officer

	
 
	
 
	
 

	
EXECUTIVE
	
 
	
/s/ Karim Karti

	
 
	
 
	
Karim Kartiirtc-ex1034_154.htm

Exhibit 10.34

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE (“Amendment”), dated for reference purposes only as of June 5, 2018, is made between WARLAND INVESTMENTS COMPANY, a California limited partnership (“Landlord”), and IRHYTHM TECHNOLOGIES, INC., a Delaware corporation (“Tenant”), with reference to the following facts:

A.Landlord and Tenant are parties to that certain Warland Business Park Lease dated April 20, 2015 (“Lease”), whereby Landlord leases to Tenant certain premises consisting of approximately 9,866 square feet and commonly known as 11085 Knott Avenue, Suite “B”, Cypress, California (“Existing Premises”).  Except as otherwise expressly defined in this Amendment, all initially capitalized terms in this Amendment shall have the same meanings as given to them in the Lease.

 

B.Tenant now desires to expand the Existing Premises to include certain additional space consisting of approximately 4,750 square feet of space and commonly known as 11095 Knott Avenue, Suite “ABC”, Cypress, California, which is depicted on attached Exhibit “A” (“Expansion Premises”).  

 

C.Landlord and Tenant also desire to further amend the Lease as set forth below.  

 

NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree to amend the Lease as follows:

 

1.Expansion Premises.  Subject to the terms and conditions of this Amendment, effective as of the Expansion Premises Commencement Date (as defined below), (a) Tenant hereby leases the Expansion Premises, (b) the definition of “Premises” in the Lease shall be amended to mean and include, collectively, the Existing Premises and the Expansion Premises, (c) the Premises Project Percentage (as defined in Section 1.8 of the Lease) for the Expansion Premises shall be 2.04%, (d) the total approximate square footage of the Premises shall be 14,616 square feet, (e) except as specifically provided in this Amendment, all terms and conditions of the Lease shall apply to the Expansion Premises, and (f) references in the Lease to “Building” shall mean, as to the Expansion Premises, the building in which the Expansion Premises are located.   

 

2.Expansion Premises Term.  The Term of the Lease with respect to the Expansion Premises (“Expansion Premises Term”) shall be approximately twenty-eight (28) months, commencing on the later of (a) June 1, 2018, and (b) Substantial Completion of the Landlord Work (as such terms are defined in the Premises Preparation Agreement, as defined below) (“Expansion Premises Commencement Date”), and ending on September 30, 2020.  Upon determination of the actual Expansion Premises Commencement Date, Landlord shall issue a Commencement Date Memorandum in the form attached hereto as Exhibit “B”, which Tenant shall promptly countersign and return to Landlord and which shall become a part of the Lease as amended hereby.  However, neither Landlord’s failure to issue nor Tenant’s failure to execute such Commencement Date Memorandum shall affect the actual Expansion Premises Commencement Date.  

 

3.Base Monthly Rent.  Tenant’s obligation to pay Base Monthly Rent for the Expansion Premises shall commence upon the Expansion Premises Commencement Date.  Beginning on the Expansion Premises Commencement Date, the Base Monthly Rent payable by Tenant for the Expansion Premises shall be Four Thousand Eight Hundred Forty-Five and 00/100 Dollars ($4,845.00) (i.e., approximately $1.02 per square foot of the Expansion Premises) NNN, subject to adjustment in accordance with Section 4 below.  

 

4.Rental Adjustments.  The Base Monthly Rent for the Expansion Premises shall be increased on each annual anniversary of the Expansion Premises Commencement Date (or if the Expansion Premises Commencement Date is not the first day of a calendar month, then the first day of the first calendar month following the Expansion Premises Commencement Date) by three percent (3%), calculated by multiplying the then payable Base Monthly Rent by 1.03.

 

5.Additional Rent for Common Area Charges.  Beginning on the Expansion Premises Commencement Date, (a) Tenant shall pay Additional Rent for Common Area Charges for the Expansion Premises in accordance with the terms of the Lease, and (b) Tenant’s monthly installment of Additional Rent for Common Area Charges for the Expansion Premises shall be One Thousand Seven Hundred Ten and 00/100 Dollars ($1,710.00) (i.e., approximately $0.36 per square foot of the Expansion Premises) per month.  Beginning on January 1, 2019 and on each January 1 thereafter during the Expansion Premises Term, Tenant’s monthly installment of Additional Rent for Common Area Charges for the Expansion Premises shall be increased by five percent (5.0%) in accordance with the terms of the Lease.

 

 

 

6.Landlord Work.  On or before the Extended Term Commencement Date, Landlord shall, at its sole cost and expense, complete the work Landlord has agreed to do or cause to be done as set forth in the Premises Preparation Agreement attached hereto as Exhibit “C” (“Premises Preparation Agreement”).  

 

7.Security Deposit and Prepaid Rent.  

 

a.Landlord currently holds an amount equal to Twenty-Four Thousand Eight Hundred Sixty-Two and 32/100 Dollars ($24,862.32) (“Existing Security Deposit”) as the Security Deposit under the Lease.  Concurrently with execution of this Amendment, and as a condition for Landlord’s benefit and the execution of this Amendment, Tenant shall pay to Landlord Six Thousand Five Hundred Fifty-Five and 00/100 Dollars ($6,555.00) (“Additional Security Deposit”) to be added to the Existing Security Deposit for all purposes under the Lease.  The Additional Security Deposit when added to the Existing Security Deposit shall be the “Security Deposit” in the aggregate amount of Thirty‐One Thousand Four Hundred Seventeen and 32/100 Dollars ($31,417.32) under the Lease.  Tenant expressly waives the benefits of any statute now or hereafter in effect which would prevent Landlord from applying all or any portion of the Security Deposit, as increased hereby, to offset any future rent owing to Landlord at the termination of the Lease prior to the expiration of the term of the Lease, including, without limitation, California Civil Code Section 1950.7. 

b.Additionally, concurrently with Tenant’s execution of this Amendment, Tenant shall deliver to Landlord the amount of Six Thousand Five Hundred Fifty-Five and 00/100 Dollars ($6,555.00) (“Prepaid Rent”) as Base Monthly Rent and Additional Rent for Common Area Charges for the Expansion Premises for the first (1st) full calendar month following the Expansion Premises Commencement Date.  

 

8.Parking; Signage.  Effective as of the Extended Term Commencement Date, in addition to the parking spaces available to Tenant pursuant to Section 1.17 of the Lease, Tenant shall be entitled to use three (3) non‐reserved parking spaces located in front of the Expansion Premises and fourteen (14) non‐reserved parking spaces located elsewhere in the Project as generally depicted on attached Exhibit “D” attached to the Lease, for the specific purposes only set forth in Section 10 of the Lease.  All parking shall be in common and unreserved.  Tenant shall be entitled to signage on the building in which the Expansion Premises are located as described in Section 8 of the Lease.

9.Expansion Premises Delivery Warranty; Compliance Warranty.  As of the Expansion Premises Commencement Date only, Landlord warrants that the existing plumbing, electrical, mechanical and fire sprinkler systems servicing the Expansion Premises shall be in good condition (“Expansion Premises Delivery Warranty”).  If Landlord does not receive a reasonably detailed written notice of any breach of the Expansion Premises Delivery Warranty (“Remedy Notice”) within thirty (30) days after the Expansion Premises Commencement Date, then the Expansion Premises Delivery Warranty and all of Landlord’s obligations thereunder shall automatically expire.  Time is of the essence.  To the extent Landlord does receive a Remedy Notice within the forgoing thirty (30) day period, then Landlord shall, at Landlord’s sole cost and expense, promptly remedy such breach of the Expansion Premises Delivery Warranty.  Notwithstanding the foregoing, the Expansion Premises Delivery Warranty shall not apply to any damage or operational failure to the extent any such damage or operational failure results from the acts or omissions of Tenant, its agents, contractors, subcontractors, employees, agents and/or licensees.  Landlord additionally represents and warrants, as of the Expansion Premises Commencement Date only, that the Existing Improvements and the building in which the Premises is located was constructed in compliance with all applicable laws in effect as of the date any building permit(s) for construction thereof or modifications thereto were issued (“Compliance Warranty”).  Notwithstanding anything in the Lease or this Amendment to the contrary, the Compliance Warranty shall be voided to the extent the foregoing components of the Existing Improvements or the building in which the Premises is located is damaged or altered by or through Tenant or any of its agents, contractors, subcontractors, employees and/or licensees.

10.Expansion Premises Surrender.  Upon the expiration of the Expansion Premises Term, Tenant shall surrender to Landlord the Expansion Premises in the condition required by this Section 10.  Unless Landlord, in Landlord’s sole and absolute discretion, elects otherwise, upon the expiration or earlier termination of the Lease, Tenant shall, at Tenant’s sole cost using Landlord’s approved contractor, remove (a) all tenant improvements existing within the Expansion Premises as of the Expansion Premises Commencement Date and identified on attached Exhibit “D” (“Existing Improvements”), and (b) alterations to the Expansion Premises constructed by, through or on behalf of Tenant (other than the work Landlord has agreed to do or cause to be done as set forth in the Premises Preparation Agreement), and restore the Expansion Premises to the condition existing before construction of the Existing Improvements and any such alterations, leaving the Expansion Premises in as good condition as received and broom clean, subject only to ordinary wear and tear, casualty and repairs that are not Tenant’s responsibility under the Lease.  “Ordinary wear and tear” shall not include any damage or 

2

 

 

deterioration that would have been prevented by good maintenance practice or by Tenant performing all of its obligations under the Lease, as amended by this Amendment.  Additionally, upon the expiration of the Expansion Premises Term, Tenant shall (i) pay Landlord for the costs incurred by Landlord to remove any of Tenant’s signage, and (ii) remove all personal property from the Expansion Premises.  Landlord can elect to retain or dispose of in any manner Tenant’s personal property not removed from the Expansion Premises by Tenant prior to the expiration of the Expansion Premises Term.  Tenant waives all claims against Landlord for any damage to Tenant resulting from Landlord’s retention or disposition of Tenant’s personal property.  Tenant shall be liable to Landlord for Landlord’s costs for storage, removal or disposal of Tenant’s personal property.  Upon the expiration of the Expansion Premises Term, Tenant shall, at Landlord’s sole option and at Tenant’s sole cost and expense, remove all then-existing Building Cable within the Expansion Premises and within the common ducts and shafts of the building in which the Expansion Premises is located using all necessary care in removing such Building Cable in order to avoid any damage to the building.

 

11.Condition of Premises.  Tenant confirms that it is currently occupying the Existing Premises and hereby accepts the Existing Premises and the Expansion Premises in their “AS-IS” condition, with all faults and defects, if any, without any representation or warranty, whether express or implied, and, except as otherwise provided in the Premises Preparation Agreement, the Lease or this Amendment, without any obligation on the part of Landlord to construct any alterations or other improvements within the Existing Premises or the Expansion Premises or to contribute any improvement allowance for the benefit of Tenant.  Tenant shall not be required to restore any of the improvements located in the Existing Premises as of the date of this Amendment.

 

12.Right of First Notice.  Provided that no Default exists, if during the Expansion Premises Term, Landlord decides to market to the public (i) the space located adjacent to the Existing Premises consisting of approximately 9,525 square feet and designated as Suite “A” (“Adjacent Space”), or (ii) space in the Project consisting of approximately 18,000 – 25,000 contiguous square feet (“Replacement Space”), Landlord shall first give written notice to Tenant of the material terms and conditions upon which Landlord is willing to offer to lease the Adjacent Space or the Replacement Space, as applicable (“Landlord’s Notice”).  Tenant shall have ten (10) business days after Landlord’s Notice is given within which to give written unconditional notice to Landlord that Tenant agrees to lease all (and not less than all) of the Adjacent Space or the Replacement Space, as applicable, on all the terms and conditions set forth in Landlord’s Notice (“Tenant’s Notice”).  

a.Any Tenant’s Notice which contains terms or conditions that materially differ from or otherwise propose to materially modify the terms set forth in Landlord’s Notice shall be deemed a counteroffer by Tenant and shall not be deemed to be an unconditional acceptance of Landlord’s Notice as provided above, in which case, Landlord shall have the right, in Landlord’s sole and absolute discretion, to either accept or reject such counteroffer.  If Landlord rejects such counteroffer, or if Tenant fails to deliver Tenant’s Notice to Landlord within the above ten (10) business day period, Landlord shall have no further obligation to lease the Adjacent Space or the Replacement Space to Tenant and Landlord shall have the right to lease such spaces to any third parties on the terms and conditions set forth in Landlord’s Notice or on any other terms and conditions that Landlord thereafter negotiates.  

b.If Tenant timely delivers the Tenant’s Notice, then Tenant shall enter into an amendment to the Lease or a new lease, as applicable (each, “ROFN Document”), pursuant to which Tenant shall lease from Landlord the Adjacent  Space or the Replacement Space, as applicable, on the terms and conditions set forth in Landlord’s Notice and otherwise on the same terms and conditions of the Lease, as amended by this Amendment, except that (i) with respect to a lease of the Adjacent Space, the Premises shall be modified to consist of the Existing Premises and the Adjacent Space only, and (ii) with respect to the lease of the Replacement Space, the Lease, as amended by this Amendment, shall be automatically terminated effective as of the commencement of such new lease.  Landlord and Tenant shall work together in good-faith to reach agreement on the terms and conditions of the ROFN Document as soon as reasonably practicable under the circumstances.  If Tenant fails to duly execute and return the ROFN Document to Landlord within fifteen (15) business days after Landlord and Tenant have reached agreement on the form of such ROFN Document, Tenant’s acceptance of Landlord’s Notice may, at Landlord’s sole option, be deemed void, in which case, Landlord shall have no further obligation to lease the Adjacent Space or the Replacement Space to Tenant and Landlord shall have the right to lease such spaces to any third parties on the terms and conditions set forth in Landlord’s Notice or on any other terms and conditions that Landlord thereafter negotiates.  

c.The obligation to deliver Landlord’s Notice is a one‐time obligation on the part of Landlord only.  Upon delivery of Landlord’s Notice with respect to either the Adjacent Space or the Replacement Space, Landlord shall thereafter have no further obligation to notify Tenant of any proposal to lease the Adjacent Space or the Replacement Space.  

3

 

 

d.This Section 12 shall not apply to (i) offers from any third parties to lease the Adjacent Space or the Replacement Space, (ii) leases or transfers among entities or persons related to Landlord (including, but not limited to, partners if Landlord is a partnership, and members if Landlord is a limited liability company), and (iii) any proposed sale or purchase of the Project or any portion thereof, including, without limitation, a proposed sale‐and‐leaseback.  The rights of Tenant set forth in this Section 12 are personal to Tenant.  If Tenant assigns any of Tenant’s interest in the Lease other than to a Permitted Transferee before the permitted exercise of such rights, such rights shall not be transferred to any transferee but shall instead automatically lapse, and Landlord’s obligations under this Section 12 shall automatically terminate.  This Section 12 shall automatically expire without notice on the expiration of the Expansion Premises Term or sooner termination of the Lease or upon any Transfer or sublease by Tenant of all or any part of the Premises to any party other than a Permitted Transferee.

 

13.Brokers.  Tenant warrants that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Amendment, except CB Richard Ellis, which represents Landlord (“Broker”).  Tenant agrees to indemnify and defend Landlord from any cost, expense or liability for any compensation, fee, commission or charge claimed by any other party claiming by, through or on behalf of Tenant with respect to this Amendment.  Under no circumstances shall any broker, including the Broker, be third party beneficiaries to the Lease, as amended by this Amendment.  Similarly, Landlord warrants that it has had no dealings with any real estate broker or agent in connection with the negotiation of this Amendment, except the Broker.  Landlord agrees to indemnify and defend Tenant from any cost, expense or liability for any compensation, fee, commission or charge claimed by any other party claiming by, through or on behalf of Landlord with respect to this Amendment.

14.Other Terms and Conditions; Ratification; Integration.  Section 31 of the Lease is hereby deleted in its entirety.  Except as expressly modified in this Amendment, all other terms and conditions of the Lease shall apply to this Amendment and shall be in full force and effect and is hereby ratified and reaffirmed, including Section 32, which shall apply as to the Premises as expanded under this Agreement.  In the event of a conflict between the Lease and this Amendment, the terms of this amendment will prevail.  The Lease, as modified by this Amendment, contains the entire agreement between the parties with respect to the subject matter hereof, and may be further modified only by a written instrument signed by and delivered to all of the parties.

 

15.Effective Date.  This Amendment shall be effective on and as of the date hereof.

16.Severability.  If any covenant or agreement of this Amendment or the application thereof to any person or circumstance shall be held to be invalid or unenforceable, then and in each such event the remainder of this Amendment or the application of such covenant or agreement to any other person or any other circumstance shall not be thereby affected, and each covenant and agreement hereof shall remain valid and enforceable to the fullest extent permitted by law.

17.Further Assurances.  Each of the parties hereto agrees that it will without further consideration execute and deliver such other documents and take such other action as may be reasonably requested by the other party to consummate more effectively the purposes or subject matter of this Amendment, so long as such actions do not adversely and materially affect the rights hereunder of the party to whom such action is required.

18.Attorneys’ Fees.  In the event of any controversy, claim or dispute between the parties affecting or relating to the purposes or subject matter of this Amendment, the prevailing party shall be entitled to recover from the nonprevailing party all of its reasonable expenses, including attorneys’ and accountants’ fees.

19.Authority.  Tenant represents and warrants for the benefit of Landlord that each individual executing this Amendment is duly authorized to execute and deliver this Amendment, the consent of a non-party is not required to render this Amendment effective, and this Amendment is binding upon Tenant in accordance with its terms.  Landlord shall use commercially reasonable efforts to obtain from its existing Lender any consent to this Amendment required thereby.  “Commercially reasonable efforts” shall mean that Landlord shall submit to Lender for consent a fully executed copy of this Amendment.  Landlord and Tenant shall each pay one-half (1/2) of any and all fees required by Lender in connection with Lender’s review and approval of this Amendment.  Notwithstanding the foregoing, under no circumstances shall Lender’s refusal to consent to this Amendment affect the continuing effectiveness and enforceability of the Lease or this Amendment.

 

 

[Signatures Appear on Following Page(s)]

 

4

 

 

IN WITNESS WHEREOF, the parties hereto have entered into this Amendment as of the date first above written. 

 

	
Landlord:
	
 

	
 
	
 

	
WARLAND INVESTMENTS COMPANY,

a California limited partnership
	
 

	
 
	
 
	
 

	
By:
	
Robertson Management Company, LLC,

a California limited liability company,

Co-Managing Director
	
 

	
 
	
 
	
 

	
 
	
By:
	
/s/ Carl W. Robertson
	
 

	
 
	
 
	
Carl W. Robertson, Jr., Manager 
	
 

	
 
	
 
	
 
	
 

	
By: 
	
Law Warschaw Management LLC,

a California limited liability company,

Co-Managing Director
	
 

	
 
	
 
	
 
	
 

	
 
	
By:
	
/s/ Hope I. Warschaw
	
 

	
 
	
 
	
Hope I. Warschaw, Manager
	
 

 

	
Tenant:
	
 

	
 
	
 

	
IRHYTHM TECHNOLOGIES, INC.,

a Delaware corporation 
	
 

	
 
	
 
	
 

	
By:
	
/s/ Matthew C. Garrett
	
 

	
Name:
	
Matthew C. Garrett
	
 

	
Title:
	
Chief Financial Officer
	
 

 

 

 

 

 

5

 

 

EXHIBIT “A”

EXPANSION PREMISES

 

 

Exhibit “A”

Page 1 of 1

 

Exhibit “B”

 

Form of Commencement Date Memorandum

 

		
	
To:

	
Date:, 2018

	
Re:
	
First Amendment to Lease dated June 5, 2018 (“Amendment”), between Warland Investments Company, a California limited partnership (“Landlord”), and iRhythm Technologies, Inc., a Delaware corporation (“Tenant”), concerning Suite “ABC” at 11095 Knott Avenue, Cypress, California (“Expansion Premises”).

In accordance with Section 2 of the Amendment, we wish to confirm as follows:

	
1.
	
Tenant has accepted possession of the Expansion Premises. 

	
2.
	
The term with respect to the Expansion Premises commenced on , 2018 and will end on September 30, 2020.

	
3.
	
In accordance with the Amendment, Base Monthly Rent with respect to the Expansion Premises is $4,845.00 and commenced to accrue on , 2018.

	
4.
	
Rent is due and payable in advance on the first (1st) day of every calendar month during the Expansion Premises Term (as defined in the Amendment).  Your rent checks should be made payable to “Warland Investments Company” at 1299 Ocean Avenue, Suite 300, Santa Monica, California 90401.

		
	
 
	
WARLAND INVESTMENTS COMPANY, 

a California limited partnership

 

By: Robertson Management Company, LLC,

a California limited liability company, 

Co-Managing Director  

By:  

Carl W. Robertson, Jr., Manager 

 

By: Law Warschaw Management LLC,

a California limited liability company, 

Co-Managing Director 

By:  

Hope I. Warschaw, Manager

 

	
Acknowledged and Agreed to by Tenant:

 

IRHYTHM TECHNOLOGIES, INC., 

a Delaware corporation 

 

 

By:
Name:
Title:

By:
Name:
Title:
	
 

 

Exhibit “B”

Page 1 of 1

 

Exhibit “c”

Premises Preparation Agreement

This Premises Preparation Agreement (“Agreement”) is attached to and made a part of that certain First Amendment to Lease dated June 5, 2018 (“Amendment”) between Warland Investments Company, a California limited partnership (“Landlord”), and iRhythm Technologies, Inc., a Delaware corporation (“Tenant”), which amends the Lease (as defined in the Amendment).  Except as otherwise expressly defined below, all initially capitalized terms in this Agreement shall have the same meanings as given to them in the Lease, as amended by the Amendment.  To the extent of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of the Lease, as amended by the Amendment, the terms and conditions of this Agreement shall control.   

	
1.
	
As soon as reasonably practicable following the mutual execution of the Amendment, Landlord, at its sole cost and expense, shall perform certain work in the Premises, which is more particularly depicted and described as follows (collectively, “Landlord Work”):

	
 
	
a.
	
Install new carpet and paint;

	
 
	
b.
	
Janitorial cleanup throughout Expansion Premises and grout cleaning of restroom floors.

	
 
	
c.
	
Mechanically grind and caulk expansion joints and apply clear sealer to warehouse slab.

	
 
	
d.
	
Replace (1) damaged countertop in coffee bar area and repair the closet doors.

	
 
	
e.
	
Replace warehouse door closures.

	
 
	
f.
	
Stain (4) scratched interior doors.

	
 
	
g.
	
Remove “Pandridge” sign from exterior wall panel, glass entry door and interior reception wall.

	
 
	
h.
	
Repaint (2) warehouse doors and frames.

	
 
	
i.
	
Replace any burnt out light bulbs or non-functioning ballasts throughout the Expansion Premises.

	
 
	
j.
	
Replace 1-3’ section of vertical PVC blinds near reception area that are not functioning properly.

	
 
	
k.
	
Replace faucets in restrooms.  

	
 
	
l.
	
Replace (2) existing bar sinks and faucets in both coffee bar areas.  

	
2.
	
All of the Landlord Work shall be performed using Building standard materials in a good and workmanlike manner, in accordance with applicable laws.

	
3.
	
Notwithstanding anything to the contrary contained herein, Tenant shall be solely responsible for the costs of (i) any changes orders initiated by Tenant, and (ii) constructing any improvements or alterations in the Premises other than the Landlord Work.  

4.For purposes of the Amendment, substantial completion of the Landlord Work (“Substantial Completion”) shall be the date on which Landlord accurately certifies that the Landlord Work has been substantially completed such that Tenant can reasonably occupy or otherwise utilize the Expansion Premises for the use for which it is intended and Landlord has tendered possession of the Expansion Premises to Tenant under the Amendment in the required condition. The target date for Substantial Completion shall be the date that is fourteen (14) days after mutual execution and delivery of the Amendment (“Target Completion Date”).  The Target Completion Date is a non-binding estimate that is subject to any delays caused by or through Tenant and any delays outside of Landlord’s control, including, without limitation, strikes, non-availability of materials or labor through ordinary sources, rain, fire, flood or any other inclement weather conditions, delays in governmental or quasi governmental approvals.  Tendered possession shall mean that Landlord has notified Tenant that the keys to the Expansion Premises are ready to be picked up; provided, however, that in no event shall Landlord be required to give Tenant the keys or access to the Expansion Premises until Tenant has (a) delivered to Landlord Additional Security Deposit and the Prepaid Rent, and (b) given Landlord written proof of insurance for the Expansion Premises that meets the requirements of the Lease.

 

Exhibit “C”

Page 1 of 1

 

EXHIBIT “d”

Existing Improvements

	
1.
	
All existing security and access control systems, including, without limitation, hardware, conduits, wiring and devices, must be removed and all resulting damage repaired to Landlord’s satisfaction.

	
2.
	
The existing storefront suite entry door to the Expansion Premises, which includes push-bar hardware for the access control system, must be replaced with a Building standard storefront glass door.  

	
3.
	
Metal gates and bars on the roll up door in the warehouse portion of the Expansion Premises must be removed and all resulting damage repaired to Landlord’s satisfaction.

 

Exhibit “D”

Page 1 of 1

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