March 24, 2017
Re: Executive Chairman of the Board of Directors
Dear Mike Grey:
This letter confirms our understanding regarding the terms of your service as Executive Chairman of the Board of Directors (the Board) of Spruce Biosciences, Inc., a Delaware corporation (the Company) beginning on April 1st, 2017.
Your primary roles and responsibilities as Executive Chairman are set forth in Exhibit A. This letter sets forth our understanding regarding such services to be performed in such capacity, and nothing in this letter nor the services rendered hereunder are meant, or shall be construed in any way or manner, to create between you and the Company a relationship of employer and employee. You may be removed as Executive Chairman by the Board, and nothing in this letter is meant, or shall be construed in any way or manner, to create an ongoing right to serve in such capacity. We agree that you will spend approximately one business days per week performing such services.
Subject to the approval of the Board, you will be granted a stock option to purchase 450,000 shares of the Companys common stock (the Option), which as of the date hereof represents 1.5% of the Companys outstanding shares on a fully diluted basis. This Option will be a non-statutory stock option and will have an exercise price per share that will be equal to the fair market value of the Companys common stock as determined by the Board. The Option will generally be subject to the terms and conditions applicable to options granted under the Companys 2016 Equity Incentive Plan (as amended, the Plan), as described in the Plan and the applicable stock option agreement, and will vest in forty-eight equal monthly installments subject to your continuous service to the Company as a director through each such vesting date. However, if during your service to the Company, the Company completes a Change in Control (within the meaning of the Plan), 100% of any shares subject to this Option that remain unvested shall immediately vest and become exercisable as of immediately prior to the consummation of such merger or Change in Control.
As a member of the Board pursuant to the Delaware General Corporation Law (DGCL) and related case law you will owe fiduciary duties to the corporation and its stockholders, including the duty of care (directors must act in good faith, with the care of a prudent person, and in the best interest of the corporation), duty of loyalty (directors must refrain from self-dealing, usurping corporate opportunities and receiving improper personal benefits) and the duty of disclosure (directors must disclose all material information to their fellow directors and, when stockholder action is sought, to the corporations stockholders). Our certificate of incorporation and bylaws provide that as a director you will be entitled to indemnification to the fullest extent permitted by the DGCL, and further to that upon becoming a member of the Board we will enter into the Companys standard form of indemnification agreement with you. We would be happy to arrange a conference with our outside counsel, Latham & Watkins LLP, if you have any questions about the indemnification agreement or your duties in general under Delaware law.