Exhibit 10.4

stitchfixheadera01.jpg [stitchfixheadera01.jpg]
November 6, 2019                        
Elizabeth Spaulding
San Francisco, CA
Re:    Offer of Employment
Dear Elizabeth,
On behalf of Stitch Fix, Inc. (the “Company”), I am pleased to offer you
employment at the Company on the terms set forth in this offer letter agreement
(the “Agreement”). As discussed, the terms of this Agreement govern with respect
to your employment, effective as of the date it is signed by you.
1.Employment by the Company.
(a)    Position and Duties. You will serve as the Company’s President, you will
report to the Company’s Chief Executive Officer and you will have the level of
authority and responsibility and perform those duties as are customary for the
position of President, as are directed by the Chief Executive Officer. For
purposes of this Agreement, your title, your reporting structure and your level
of authority, responsibility and duties, all as described in the preceding
sentence are hereinafter referred to collectively as your “Duties.” During the
term of your employment with the Company, you will devote your best efforts and
substantially all of your business time and attention to the business of the
Company, except for approved vacation periods and reasonable periods of illness
or other incapacities permitted by the Company’s general employment policies.
The Company agrees that you may engage in civic, charitable and philanthropic
activities and, subject to the Company’s prior approval, serve on the board of
directors or as an advisor for up to three for-profit companies, provided that
such activities do not interfere with your ability to fulfill your obligations
to the Company as President. The Company may modify your Duties as it deems
necessary and appropriate in light of the Company’s needs and interests from
time to time; provided, however, that any such modification will not have any
effect on the protections afforded to you in the event of your resignation for
“Good Reason” all as set forth below.
(b)    Location. Your primary office location will be the Company’s offices in
San Francisco, CA. Notwithstanding the foregoing, the Company reserves the right
to reasonably require you to perform your duties at places other than your
primary office location from time to time, and to require reasonable business
travel.

--------------------------------------------------------------------------------

2

(c)    Start Date. We anticipate that your start date will be January 27, 2020
and we look forward to confirming the specific date in the next two weeks.
2.    Base Salary and Employee Benefits.
(a)    Salary. You will receive for services to be rendered hereunder base
salary paid at the rate of $600,000 per year, less standard payroll deductions
and tax withholdings. Your base salary will be paid on the Company’s ordinary
payroll cycle. As an exempt salaried employee, you will be required to work the
Company’s normal business hours, and such additional time as appropriate for
your work assignments and position, and you will not be entitled to overtime
compensation.
(b)    Bonus. You will be eligible to participate in the Company’s executive
bonus program, as such program may be in effect from time to time and subject to
the bonus program terms as determined by the Company’s Compensation Committee.
The target bonus opportunity for your role under our 2020 fiscal year bonus plan
is forty-five percent (45%) of your base salary.
(c)    Benefits. As a regular full-time employee, you will to be eligible to
participate in the Company’s standard employee benefits offered to executive
level employees, as in effect from time to time and subject to plan terms and
generally applicable Company policies. Details about these benefit plans will be
provided, upon request.
3.    Expenses. The Company will reimburse you for reasonable travel,
entertainment or other expenses incurred by you in furtherance or in connection
with the performance of your duties hereunder, in accordance with the Company’s
expense reimbursement policy as in effect from time to time. The Company will
reimburse you for the legal expenses incurred in the review and negotiation of
this Agreement in an amount not to exceed $10,000.00.
4.    Equity Compensation. Following your start date, the Company will recommend
to its Compensation Committee that the Company grant you equity awards valued at
$15,520,000 with fifty percent (50%) of that value granted as a stock option
(the “Option”) and fifty (50%) of that value granted as restricted stock units
(the “RSUs”). The number of Class A Common Stock shares subject to the awards
will be determined in accordance with the Company’s equity grant practices by
the Compensation Committee (or its delegate) in its sole discretion. The
exercise price per share of the Option will be equal to the closing price quoted
on the NASDAQ Global Select Market on the date the Option is granted. Twelve and
one-half percent (12.5%) of the shares subject to the Option shall vest upon
completion of six-months of employment at the Company and the remaining shares
subject to the Option shall vest in equal monthly installments over the next
forty-two (42) months. The RSUs shall vest as to twelve and one-half percent
(12.5%) of the shares subject to the RSUs on the Company’s first quarterly RSU
vesting date that is at least six months following your employment start date.
1/16th of the RSU shares shall vest on each subsequent quarterly RSU vesting
date over the next forty-two (42) months. The Option and RSU award will be made
in accordance with and subject to the Company’s applicable Equity Incentive Plan
(the “Plan”) and related documents, including the award grant notices that you
will be required to sign. Vesting in the awards is subject to your continued
service with the Company through each vesting date, as described in the
applicable award agreement, and

--------------------------------------------------------------------------------

3

no right to any equity is earned or accrued until such time that vesting occurs,
nor does the grant confer any right to continued vesting or employment.
5.    Compliance with Confidentiality Agreement and Company Policies. As a
condition of our employment, you agree to the Company’s At-Will Employment,
Confidential Information, Invention Assignment, and Arbitration Agreement (the
“Confidentiality Agreement”). In addition, you are required to abide by the
Company’s policies and procedures, as modified from time to time within the
Company’s discretion (including without limitation, acknowledging in writing
that you have read and will comply with any applicable Company Employee
Handbook); provided, however, that in the event the terms of this Agreement
differ from or are in conflict with the Company’s general employment policies or
practices, this Agreement shall control.
6.    Protection of Third Party Information. In your work for the Company, you
will be expected not to make any unauthorized use or disclosure of any
confidential or proprietary information, including trade secrets, of any former
employer or other third party to whom you have contractual obligations to
protect such information. Rather, you will be expected to use only that
information which is generally known and used by persons with training and
experience comparable to your own, which is common knowledge in the industry or
otherwise legally in the public domain, or which is otherwise provided or
developed by the Company. You represent that you are able to perform your job
duties within these guidelines, and you are not in unauthorized possession of
any unpublished documents, materials, electronically-recorded information, or
other property belonging to any former employer or other third party to whom you
have a contractual obligation to protect such property. In addition, you
represent and warrant that your employment by the Company will not conflict with
any prior employment or consulting agreement or other agreement with any third
party, that you will perform your duties to the Company without violating any
such agreement(s), and that you have disclosed to the Company in writing any
contract you have signed that may restrict your activities on behalf of the
Company.
7.    At-Will Employment Relationship. 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. The at
will employment relationship between you and the Company may not be changed,
except by a specific written agreement signed by the CEO of the Company. We
request that, in the event of resignation, you give the Company at least two (2)
weeks’ notice.
8.    Severance. You will be eligible for the following severance benefits (the
“Severance Benefits”), each as described and pursuant to the terms and
conditions set forth below.
(a)    Termination without Cause/Resignation for Good Reason Not in Connection
with a Change in Control. If the Company terminates your employment without
Cause (as defined below) (other than as a result of your death or disability) or
you resign for Good Reason (as defined below) (either such termination referred
to as a “Qualifying Termination”) and the Company is not in a Change in Control
Period (as defined in Section 8(b)), and provided such termination or
resignation constitutes a Separation from Service (as defined under Treasury
Regulation Section 1.409A-1(h), without regard to any alternative

--------------------------------------------------------------------------------

4

definition thereunder, a “Separation from Service”), then subject to Sections 10
(“Conditions to Receipt of Severance Benefits”) and 11 (“Return of Property”)
below and your continued compliance with the terms of this Agreement (including
without limitation Section 5 (“Compliance with Confidentiality Agreement and
Company Policies”) above), the Company will provide you with the following as
your sole severance benefits:
1)    Cash Severance. The Company will pay you, as cash severance, six (6)
months of your base salary in effect as of your Separation from Service date,
less standard payroll deductions and tax withholdings. Subject to Section 14,
the Company may pay this severance amount in either a lump sum payment or in
installments in the form of continuation of your base salary payments. The
Company will notify you of its election within ten (10) business days following
the Qualifying Termination. Should the Company elect to pay you in a lump sum,
such payment will be made on the Company’s first regular payroll date that is
more than sixty (60) days following your Separation from Service date. Should
the Company elect to pay you in installments, such installments will be paid on
the Company’s ordinary payroll dates, commencing on the Company’s first regular
payroll date that is more than sixty (60) days following your Separation from
Service date, and shall be for any accrued base salary for the sixty (60)‑day
period plus the period from the sixtieth (60th) day until the regular payroll
date, if applicable, and all salary continuation payments thereafter, if any,
shall be made on the Company’s regular payroll dates.
2)    COBRA Severance. As an additional Severance Benefit, the Company will
continue to pay the cost of your health care coverage in effect at the time of
your Separation from Service, either under the Company’s regular health plan (if
permitted), or by paying your COBRA premiums (the “COBRA Severance”), for a
maximum of six (6) months. The Company’s obligation to pay the COBRA Severance
on your behalf will cease if you obtain health care coverage from another source
(e.g., a new employer or spouse’s benefit plan), unless otherwise prohibited by
applicable law. You must notify the Company within two (2) weeks if you obtain
coverage from a new source. This payment of COBRA Severance by the Company would
not expand or extend the maximum period of COBRA coverage to which you would
otherwise be entitled under applicable law. Notwithstanding the above, if the
Company determines in its sole discretion that it cannot provide the foregoing
COBRA Severance without potentially violating applicable law (including, without
limitation, Section 2716 of the Public Health Service Act), the Company shall in
lieu thereof provide to you a taxable monthly payment in an amount equal to the
monthly COBRA premium that you would be required to pay to continue your group
health coverage in effect on the date of your termination (which amount shall be
based on the premium for the first month of COBRA coverage), which payments
shall be made on the last day of each month regardless of whether you elect
COBRA continuation coverage and shall end on the earlier of (x) the date upon
which you obtain other coverage or (y) the last day of the sixth (6th) calendar
month following your Separation from Service date.
3)    Accelerated Vesting. As an additional Severance Benefit in the eighteen
(18) months following your Start Date, in the event of a Qualifying Termination,
the Company shall accelerate the vesting of any equity awards then held by you
that would have vested if you had remained employed by the Company for an
additional six (6) months and such awards shall be deemed immediately vested
(and, as applicable, exercisable) as of the date of your Separation from
Service.

--------------------------------------------------------------------------------

5

(b)    Termination without Cause/Resignation for Good Reason in Connection with
a Change in Control. In the event of a Qualifying Termination that occurs during
the period beginning one month prior to a Change in Control and ending twelve
(12) months following the closing of such Change in Control (such period, the
“Change in Control Period”), provided such Qualifying Termination constitutes a
Separation from Service, then subject to Sections 10 (“Conditions to Receipt of
Severance Benefits”) and 11 (“Return of Property”) below and your continued
compliance with the terms of this Agreement (including without limitation
Section 5 (“Compliance with Confidentiality Agreement and Company Policies”)
above), then the Company will provide you with the following as your sole
severance benefits:
1)    Cash Severance. The Company will pay you, as cash severance, twelve (12)
months of your base salary in effect as of your Separation from Service date,
less standard payroll deductions and tax withholdings. Subject to Section 14,
the Company may pay this severance amount in either a lump sum payment or in
installments in the form of continuation of your base salary payments. The
Company will notify you of its election within ten (10) business days following
the Qualifying Termination. Should the Company elect to pay you in a lump sum,
such payment will be made on the Company’s first regular payroll date that is
more than sixty (60) days following your Separation from Service date. Should
the Company elect to pay you in installments, such installments will be paid on
the Company’s ordinary payroll dates, commencing on the Company’s first regular
payroll date that is more than sixty (60) days following your Separation from
Service date, and shall be for any accrued base salary for the sixty (60)-day
period plus the period from the sixtieth (60th) day until the regular payroll
date, if applicable, and all salary continuation payments thereafter, if any,
shall be made on the Company’s regular payroll dates.
2)    COBRA Severance. As an additional Severance Benefit, the Company will
provide you COBRA Severance for a maximum of twelve (12) months. The Company’s
obligation to pay the COBRA Severance on your behalf will cease if you obtain
health care coverage from another source (e.g., a new employer or spouse’s
benefit plan), unless otherwise prohibited by applicable law. You must notify
the Company within two (2) weeks if you obtain coverage from a new source. This
payment of COBRA Severance by the Company would not expand or extend the maximum
period of COBRA coverage to which you would otherwise be entitled under
applicable law. Notwithstanding the above, if the Company determines in its sole
discretion that it cannot provide the foregoing COBRA Severance without
potentially violating applicable law (including, without limitation, Section
2716 of the Public Health Service Act), the Company shall in lieu thereof
provide to you a taxable monthly payment in an amount equal to the monthly COBRA
premium that you would be required to pay to continue your group health coverage
in effect on the date of your termination (which amount shall be based on the
premium for the first month of COBRA coverage), which payments shall be made on
the last day of each month regardless of whether you elect COBRA continuation
coverage and shall end on the earlier of (x) the date upon which you obtain
other coverage or (y) the last day of the twelfth (12th) calendar month
following your Separation from Service date.
3)    Accelerated Vesting. As an additional Severance Benefit, the Company shall
accelerate the vesting of any equity awards then held by you such that one
hundred percent (100%) of such awards shall be deemed immediately vested (and,
as applicable, exercisable) as of your Separation from Service date, except to
the extent that the equity award grant documentation relating to an equity award
contains an explicit provision to the contrary.

--------------------------------------------------------------------------------

6

9.    Resignation Without Good Reason; Termination for Cause; Death or
Disability. If, at any time, you resign your employment without Good Reason, or
the Company terminates your employment for Cause, or if either party terminates
your employment as a result of your death or disability, you will receive your
base salary accrued through your last day of employment, as well as any unused
vacation (if applicable) accrued through your last day of employment. Under
these circumstances, you will not be entitled to any other form of compensation
from the Company, including any Severance Benefits, other than any rights to
which you are entitled under the Company’s benefit programs. In addition, under
no circumstance will you receive the Severance Benefits under both Sections 8(a)
and 8(b) above.
10.    Conditions to Receipt of Severance Benefits. Prior to and as a condition
to your receipt of any of the Severance Benefits described above, you shall
execute and deliver to the Company an effective release of claims in favor of
and in a form acceptable (with customary carve outs for continued
indemnification by the Company and rights to vested benefits and equity awards)
to the Company (the “Release”) within the timeframe set forth therein, but not
later than forty-five (45) days following your Separation from Service date, and
allow the Release to become effective according to its terms (by not invoking
any legal right to revoke it) within any applicable time period set forth
therein (such latest permitted effective date, the “Release Deadline”).
11.    Return of Company Property. Upon the termination of your employment for
any reason, as a precondition to your receipt of the Severance Benefits (if
applicable), within five (5) days after your Separation from Service Date (or
earlier if requested by the Company), you will return to the Company all Company
documents (and all copies thereof) and other Company property within your
possession, custody or control, including, but not limited to, Company files,
notes, financial and operational information, customer lists and contact
information, product and services information, research and development
information, drawings, records, plans, forecasts, reports, payroll information,
spreadsheets, studies, analyses, compilations of data, proposals, agreements,
sales and marketing information, personnel information, specifications, code,
software, databases, computer-recorded information, tangible property and
equipment (including, but not limited to, computers, facsimile machines, mobile
telephones, tablets, handheld devices, and servers), credit cards, entry cards,
identification badges and keys, and any materials of any kind which contain or
embody any proprietary or confidential information of the Company, and all
reproductions thereof in whole or in part and in any medium. You further agree
that you will make a diligent search to locate any such documents, property and
information and return them to the Company within the timeframe provided above.
In addition, if you have used any personally-owned computer, server, or e-mail
system to receive, store, review, prepare or transmit any confidential or
proprietary data, materials or information of the Company, then within five (5)
days after your Separation from Service date you must provide the Company with a
computer-useable copy of such information and permanently delete and expunge
such confidential or proprietary information from those systems without
retaining any reproductions (in whole or in part); and you agree to provide the
Company access to your system, as requested, to verify that the necessary
copying and deletion is done. If requested, you shall deliver to the Company a
signed statement certifying compliance with this section prior to the receipt of
the Severance Benefits.
12.    Outside Activities. During your employment by the Company, except on
behalf of the Company, you will not directly or indirectly serve as an officer,
director (except as otherwise provided for in Section

--------------------------------------------------------------------------------

7

1(a) above), stockholder, employee, partner, proprietor, investor, joint
venturer, associate, representative or consultant of any other person,
corporation, firm, partnership or other entity whatsoever known by you to
compete with the Company (or is planning or preparing to compete with the
Company), anywhere in the world, in any line of business engaged in (or planned
to be engaged in) by the Company; provided, however, that you may purchase or
otherwise acquire up to (but not more than) one percent (1%) of any class of
securities of any enterprise (but without participating in the activities of
such enterprise) if such securities are listed on any national or regional
securities exchange.
13.    Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
For purposes of this Agreement, “Cause” for termination will mean your: (a)
conviction (including a guilty plea or plea of nolo contendere) of any felony;
(b) commission or attempted commission of or participation in a fraud or act of
dishonesty or misrepresentation against the Company; (c) willful and continued
failure to follow the lawful directions of the Board or the officers of the
Company to whom you report; (d) deliberate harm or injury, or attempt to
deliberately harm or injure, the Company; (e) willful misconduct that materially
discredits or harms the Company or its reputation; (f) material violation or
breach of any written and fully executed contract or agreement between you and
the Company, including without limitation, material breach of your
Confidentiality Agreement, or of any Company policy, or of any statutory duty
you owe to the Company; (g) gross negligence or willful misconduct; (h) failure
to cooperate with any investigation as requested by the Board or officers of the
Company to whom you report or (i) unauthorized use of confidential information
that causes material harm to the Company; provided, however, that, with respect
to clauses (c), (f) or (h) and if the event giving rise to the claim of Cause is
curable, the Company provides written notice to you of the event within thirty
(30) days of the Company learning of the occurrence of such event, and such
Cause event remains uncured thirty (30) days after the Company has provided such
written notice you. The determination that a termination is for Cause shall be
made by the Company in its sole and reasonable discretion.
For purposes of this Agreement, you shall have “Good Reason” for resigning from
employment with the Company if any of the following actions are taken by the
Company without your prior written consent: (a) a material reduction in your
base salary or target annual bonus (unless pursuant to a salary reduction
program applicable generally to the Company’s similarly situated employees); (b)
a material reduction in your Duties; provided, however, that a change in job
position (including a change in title or change in reporting structure)
resulting from a Change in Control transaction shall not be deemed a “material
reduction” in and of itself unless your new authority, responsibilities and/or
duties are materially reduced from your prior authority, responsibilities and/or
duties; or (c) relocation of your principal place of employment to a place that
increases your one‑way commute by more than thirty-five (35) miles as compared
to your then-current principal place of employment immediately prior to such
relocation. In order to resign for Good Reason, you must provide written notice
to the Company’s Chief Legal Officer within 90 days after the first occurrence
of the event giving rise to Good Reason setting forth the basis for your
resignation, allow the Company at least 30 days from receipt of such written
notice to cure such event, and if such event is not reasonably cured within such
period, you must resign from all positions you then hold with the Company not
later than 30 days after the expiration of the cure period.

--------------------------------------------------------------------------------

8

For purposes of this Agreement, “Change in Control” shall have the meaning
ascribed to such term in the Stitch Fix, Inc. 2017 Incentive Plan, as it may be
amended from time to time.
14.    Compliance with Section 409A. It is intended that the Severance Benefits
set forth in this Agreement satisfy, to the greatest extent possible, the
exemptions from the application of Section 409A of the Internal Revenue Code of
1986, as amended, (the “Code”) (Section 409A, together with any state law of
similar effect, “Section 409A”) provided under Treasury Regulations
1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). For purposes of Section 409A
(including, without limitation, for purposes of Treasury Regulations
1.409A-2(b)(2)(iii)), your right to receive any installment payments under this
Agreement (whether severance payments, reimbursements or otherwise) shall be
treated as a right to receive a series of separate payments and, accordingly,
each installment payment hereunder shall at all times be considered a separate
and distinct payment. Notwithstanding any provision to the contrary in this
Agreement, if the Company (or, if applicable, the successor entity thereto)
determines that any of the Severance Benefits constitute “deferred compensation”
under Section 409A and you are, on the date of your Separation from Service, a
“specified employee” of the Company or any successor entity thereto, as such
term is defined in Section 409A(a)(2)(B)(i) of the Code (a “Specified
Employee”), then, solely to the extent necessary to avoid the incurrence of
adverse personal tax consequences under Section 409A, the timing of such
Severance Benefits shall be delayed until the earliest of: (i) the date that is
six (6) months and one (1) day after your Separation from Service date, (ii) the
date of your death, or (iii) such earlier date as permitted under Section 409A
without the imposition of adverse taxation. Upon the first business day
following the expiration of such applicable Code Section 409A(a)(2)(B)(i)
period, all payments or benefits deferred pursuant to this section shall be paid
in a lump sum or provided in full by the Company (or the successor entity
thereto, as applicable), and any remaining payments due shall be paid as
otherwise provided herein. No interest shall be due on any amounts so deferred.
If any of the Severance Benefits are not covered by one or more exemptions from
the application of Section 409A and the Release could become effective in the
calendar year following the calendar year in which you have a Separation from
Service, the Release will not be deemed effective any earlier than the Release
Deadline. The Severance Benefits are intended to qualify for an exemption from
application of Section 409A or comply with its requirements to the extent
necessary to avoid adverse personal tax consequences under Section 409A, and any
ambiguities herein shall be interpreted accordingly. Notwithstanding anything to
the contrary herein, to the extent required to comply with Section 409A, a
termination of employment shall not be deemed to have occurred for purposes of
any provision of this Agreement providing for the payment of amounts or benefits
upon or following a termination of employment unless such termination is also a
“separation from service” within the meaning of Section 409A. With respect to
reimbursements or in-kind benefits provided to you hereunder (or otherwise) that
are not exempt from Section 409A, the following rules shall apply: (i) the
amount of expenses eligible for reimbursement, or in-kind benefits provided,
during any one of your taxable years shall not affect the expenses eligible for
reimbursement, or in-kind benefit to be provided in any other taxable year, (ii)
in the case of any reimbursements of eligible expenses, reimbursement shall be
made on or before the last day of your taxable year following the taxable year
in which the expense was incurred, (iii) the right to reimbursement or in-kind
benefits shall not be subject to liquidation or exchange for another benefit. If
the Company’s ability to choose between a lump sum severance payment or a series
of severance payments could subject you to adverse taxation under Section 409A,
then such severance payments shall be paid in installments in the case of
payments under Section 8(a)(1), and in a lump sum in the case of payments under
Section 8(b)(1); provided,

--------------------------------------------------------------------------------

9

however, that if this difference in default treatment would subject you to
adverse taxation under Section 409A, then such severance payments shall be made
in a lump sum in the case of payments under Section 8(a)(1) or 8(b)(1).
15.    Section 280G; Parachute Payments.
(a)    If any payment or benefit you will or may receive from the Company or
otherwise (a “280G Payment”) would (i) constitute a “parachute payment” within
the meaning of Section 280G of the Code, and (ii) but for this sentence, be
subject to the excise tax imposed by Section 4999 of the Code (the “Excise
Tax”), then any such 280G Payment provided pursuant to this Agreement (a
“Payment”) shall be equal to the Reduced Amount. The “Reduced Amount” shall be
either (x) the largest portion of the Payment that would result in no portion of
the Payment (after reduction) being subject to the Excise Tax or (y) the largest
portion, up to and including the total, of the Payment, whichever amount (i.e.,
the amount determined by clause (x) or by clause (y)), after taking into account
all applicable federal, state and local employment taxes, income taxes, and the
Excise Tax (all computed at the highest applicable marginal rate), results in
your receipt, on an after-tax basis, of the greater economic benefit
notwithstanding that all or some portion of the Payment may be subject to the
Excise Tax. If a reduction in a Payment is required pursuant to the preceding
sentence and the Reduced Amount is determined pursuant to clause (x) of the
preceding sentence, the reduction shall occur in the manner (the “Reduction
Method”) that results in the greatest economic benefit for you. If more than one
method of reduction will result in the same economic benefit, the items so
reduced will be reduced pro rata (the “Pro Rata Reduction Method”).
(b)    Notwithstanding any provision of subsection (a) above to the contrary, if
the Reduction Method or the Pro Rata Reduction Method would result in any
portion of the Payment being subject to taxes pursuant to Section 409A that
would not otherwise be subject to taxes pursuant to Section 409A, then the
Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall
be modified so as to avoid the imposition of taxes pursuant to Section 409A as
follows: (A) as a first priority, the modification shall preserve to the
greatest extent possible, the greatest economic benefit for you as determined on
an after-tax basis; (B) as a second priority, Payments that are contingent on
future events (e.g., being terminated without Cause), shall be reduced (or
eliminated) before Payments that are not contingent on future events; and (C) as
a third priority, Payments that are “deferred compensation” within the meaning
of Section 409A shall be reduced (or eliminated) before Payments that are not
deferred compensation within the meaning of Section 409A.
(c)    Unless you and the Company agree on an alternative accounting firm or law
firm, the accounting firm engaged by the Company for general tax compliance
purposes as of the day prior to the effective date of the Change in Control
transaction shall perform the foregoing calculations. If the accounting firm so
engaged by the Company is serving as accountant or auditor for the individual,
entity or group effecting the change in control transaction, the Company shall
appoint a nationally recognized accounting or law firm to make the
determinations required by this Section 15 (“Section 280G; Parachute Payments”).
The Company shall bear all expenses with respect to the determinations by such
accounting or law firm required to be made hereunder. The Company shall use
commercially reasonable efforts to cause the accounting or law firm engaged to
make the determinations hereunder to provide its calculations, together

--------------------------------------------------------------------------------

10

with detailed supporting documentation, to you and the Company within
fifteen (15) calendar days after the date on which your right to a 280G Payment
becomes reasonably likely to occur (if requested at that time by you or the
Company) or such other time as requested by you or the Company.
(d)    If you receive a Payment for which the Reduced Amount was determined
pursuant to clause (x) of Section 15(a) and the Internal Revenue Service
determines thereafter that some portion of the Payment is subject to the Excise
Tax, you agree to promptly return to the Company a sufficient amount of the
Payment (after reduction pursuant to clause (x) of Section 15(a)) so that no
portion of the remaining Payment is subject to the Excise Tax. For the avoidance
of doubt, if the Reduced Amount was determined pursuant to clause (y) of Section
15(a), you shall have no obligation to return any portion of the Payment
pursuant to the preceding sentence.
16.    Dispute Resolution. Section 9 of the Confidentiality Agreement
(Arbitration; Legal and Equitable Remedies) shall apply to the terms of this
letter and any disputes that may arise in connection with your employment with
the Company.
17.    Miscellaneous. This Agreement, together with your Confidentiality
Agreement, forms the complete and exclusive statement of your employment
agreement with the Company. It supersedes any other agreements or promises made
to you by anyone, whether oral or written. Changes in your employment terms,
other than those changes expressly reserved to the Company’s or Board’s
discretion in this Agreement, require a written modification approved by the
Company and signed by a duly authorized officer of the Company. This Agreement
will bind the heirs, personal representatives, successors and assigns of both
you and the Company, and inure to the benefit of both you and the Company, their
heirs, successors and assigns. If any provision of this Agreement is determined
to be invalid or unenforceable, in whole or in part, this determination shall
not affect any other provision of this Agreement and the provision in question
shall be modified so as to be rendered enforceable in a manner consistent with
the intent of the parties insofar as possible under applicable law. This
Agreement shall be construed and enforced in accordance with the laws of the
State of California without regard to conflicts of law principles. Any ambiguity
in this Agreement shall not be construed against either party as the drafter.
Any waiver of a breach of this Agreement, or rights hereunder, shall be in
writing and shall not be deemed to be a waiver of any successive breach or
rights hereunder. This Agreement may be executed in counterparts which shall be
deemed to be part of one original, and facsimile and electronic image copies of
signatures shall be equivalent to original signatures.
18.    Conditional Offer. This offer of employment is conditioned upon the
following:
(a)    The Company reserves the right to conduct background investigations, drug
screens, and/or reference checks on all of its potential employees. If we do
conduct a background check using an outside agency, you will be provided a
disclosure and authorization form and a notice of your rights, as applicable.
This job offer is contingent upon our receipt of satisfactory results from such
a background investigation, drug screen, and/or reference check, if any.
(b)    For purposes of federal immigration law compliance, you will be required
to provide to the Company appropriate evidence of your identity and eligibility
for employment in the United States. Such

--------------------------------------------------------------------------------

11

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.
(c)    You will be required to sign an acknowledgment that you have read and
will comply with the Company’s Code of Conduct. As a Company employee, you will
be required to abide by all Company policies and directives.
(d)    You are required to sign and comply with an At-Will Employment,
Confidential Information, Invention Assignment and Arbitration Agreement, a copy
of which will be included with your new hire paperwork. Please note that we must
receive your signed agreement within the first three business days of
employment.
Please sign and date this Agreement and return it to me on or before 5pm pacific
time on November 8, 2019 if you wish to accept employment at the Company under
the terms described above. This offer will expire if I do not receive this
signed letter by that date. I would be happy to discuss any questions that you
may have about these terms.
We are delighted to be making this offer and the Company looks forward to your
favorable reply and to a productive and enjoyable work relationship.
Sincerely,

/s/ Katrina Lake        
Katrina Lake, CEO

Reviewed, Understood, and Accepted:

/s/ Elizabeth Spaulding            November 7, 2019    
Elizabeth Spaulding            Date