Exhibit 10.7 


 


Effective: [date of IPO closing]


 


RUTHIGEN
NON-EMPLOYEE DIRECTOR COMPENSATION POLICY


 


The Board of Directors of Ruthigen, Inc.
(the “Company”) has approved the following Non-Employee Director Compensation Policy (this “Policy”)
which establishes compensation to be paid to non-employee directors of the Company, effective as of the closing of the Company’s
initial public offering of common stock (the “Effective Time”), to provide an inducement to obtain and retain
the services of qualified persons to serve as members of the Company’s Board of Directors.


 


Applicable Persons


 


This Policy shall apply to each director
of the Company who is not an employee of, or compensated consultant to, the Company or any Affiliate (each, an “Outside
Director”). “Affiliate” shall mean a corporation which is a direct or indirect parent or subsidiary of the
Company, as determined pursuant to Section 424 of the Internal Revenue Code of 1986, as amended.


 


Stock Option Grants 


 


All stock option amounts set forth herein
shall be subject to automatic adjustment in the event of any stock split or other recapitalization affecting the Company’s
common stock.


 


Annual Stock Option
Grants


 


Each Outside Director shall be granted a
non-qualified stock option to purchase 5,000 shares of the Company’s common stock under the Company’s 2013
Employee, Director and Consultant Equity Incentive Plan (the “Stock Plan”) each year at the annual meeting
of the Board of Directors following the Company’s annual meeting of stockholders; provided that if there has been
no annual meeting of stockholders held by the first day of the third fiscal quarter of the year in which the Effective Time occurs,
each Outside Director will still receive any annual grants of non-qualified stock options provided for under this Policy on the
first day of the third fiscal quarter of such year; and provided further, that if an annual meeting of stockholders is subsequently
held during the year in which the Effective Time occurs, no additional annual grant shall be made.


 


Initial Stock Option
Grant For Newly Appointed or Elected Directors


 


Each new Outside Director shall be granted
a non-qualified stock option to purchase 5,000 shares of the Company’s common stock under the Stock Plan on the date of his
or her initial appointment or election to the Board of Directors.


 


Terms for Initial
and Annual Option Grants


 


Unless otherwise specified by the Board
of Directors or the Compensation Committee at the time of grant, all options granted under this Policy shall (i) vest three years
from the date of the grant, subject to the Outside Director’s continued service on the Board of Directors; provided that
such options shall become exercisable in full immediately prior to a change in control of the Company; (ii) have an exercise price
equal to the fair market value of the Company’s common stock as determined in the Stock Plan on the date of grant; and (iii)
contain such other terms and conditions as the Board of Directors or the Compensation Committee shall determine.


 






    	 



    	 



    

 


Cash Fees 


 


Annual Cash Payments


 


The following annual cash fees shall be
paid to the Outside Directors serving on the Board of Directors and the Audit Committee, Compensation Committee and Nominating
and Governance Committee, as applicable.


 


	Board of Directors or 

Committee of Board of 

Directors	 	Annual Retainer Amount for

 Chair	 	 	Annual Retainer Amount for

 Member	 
	Board of Directors	 	$	40,000	 	 	$	25,000	 
	Audit Committee	 	$	10,000	 	 	$	5,000	 
	Compensation Committee	 	$	5,000	 	 	$	3,000	 
	Nominating and Governance Committee	 	$	5,000	 	 	$	3,000	 



 


Payment Terms for
All Cash Fees


 


Cash payments payable to Outside Directors
shall be paid semi-annually in arrears as of the last business day of each of the fiscal second and fourth quarters (each, a “Payment
Date”). For any portion of a fiscal year in which the Effective Time occurs, annual payments shall be pro rated beginning
on the first day of the fiscal quarter in which the Effective Time occurs.


 


Following an Outside Director’s first
election or appointment to the Board of Directors, such Outside Director shall receive his or her cash compensation pro rated beginning
on the first day of the fiscal quarter in which he or she was initially appointed or elected. If an Outside Director dies, resigns
or is removed during any quarter, he or she shall be entitled to a cash payment on a pro rated basis through his or her last day
of service.


 


Form of Compensation


 


An Outside Director may elect, in lieu of
annual cash payments, to be paid, in part or in full, in the form fully-vested stock options or fully-vested shares of the Company’s
common stock, or a combination of options and/or stock. In such case, an electing Outside Director will receive such number of
options and/or shares of the Company’s common stock equal to the dollar-value of the non-cash portion of their annual compensation,
calculated in accordance with FASB Accounting Standards Codification ASC 718, “Share-Based Payment” on the Payment
Date.


 


Expenses


 


Upon presentation of documentation of such
expenses reasonably satisfactory to the Company, each Outside Director shall be reimbursed for his or her reasonable out-of-pocket
business expenses incurred in connection with attending meetings of the Board of Directors and Committees thereof or in connection
with other business related to the Board of Directors.


 


Amendments


 


The Compensation Committee
or the Board of Directors shall review this Policy from time to time to assess whether any amendments in the type and amount of
compensation provided herein should be adjusted in order to fulfill the objectives of this Policy.


 






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