Document:

Founder's Vesting Agreement - Thomas Schreck

 Exhibit 10.12 
 FOUNDER’S VESTING AGREEMENT 
 THIS FOUNDER’ S VESTING AGREEMENT
(this “Agreement”) is made as of the 15th day of August, 2006 by and between AcelRx Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and Thomas A. Schreck (“Founder”). 

WHEREAS, Founder holds 1,000,000 shares of the common stock of the Company (the “Founder Shares”). 

WHEREAS, the Company intends to sell shares of preferred stock to outside investors and such investors require as a condition to such
transaction that the Founder accept certain restrictions with respect to the Shares as set forth herein; 
 NOW, THEREFORE, in
consideration for the mutual promises and covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows: 

1.       Unvested Share Repurchase Option. Upon the termination of the Founder’s service to the
Company as an employee or consultant, for any reason, or no reason, with or without Cause, including Involuntary Termination (as defined in the Employment Agreement between the Company and Founder dated August    , 2006
(the “Employment Agreement”)), death or temporary or permanent disability, the Company shall have a right (but not an obligation) (the “Unvested Share Repurchase Option”) to repurchase any shares of Stock to the extent
they have not vested pursuant to subsections 1(a) and (b) (“Unvested Shares”) under the terms set forth below. 
 (a)      Vesting of Unvested Shares. Fifty percent (50%) of the Founder Shares initially shall be Unvested Shares. 1/48 of the initial number of Unvested Shares
will vest September 15, 2006 and 1/48 of the initial number of Unvested Shares shall vest on the 15th day of each month thereafter, subject to the Founder’s continuous service to the Company as an employee or consultant. Acceleration of
vesting for the Founder’s shares is as set forth in the Employment Agreement. 

(b)      Exercise of Unvested Share Repurchase Option. The Company may exercise the Unvested Share
Repurchase Option by written notice to Founder or the Founder’s legal representative within sixty (60) days after such termination. 
 (c)      Payment for Stock and Return of Stock. Payment by the Company to the Founder or the Founder’s legal representative shall be made in cash or by check
within sixty (60) days after the date of the mailing of the written notice of exercise of the Unvested Share Repurchase Option. For purposes of the foregoing, cancellation of any promissory note of the Founder to the Company shall be treated as
payment to the Founder in cash to the extent of the unpaid principal and any accrued interest canceled. The purchase price per share for the shares being repurchased by the Company shall be equal to the original purchase price for such shares, as
appropriately adjusted for any stock split, reverse stock split, recapitalization or the like. If not otherwise held in escrow by the Company pursuant to Section 1(g) below, within thirty (30) days after payment by the Company, the Founder
shall deliver to the Company for cancellation 

 
the shares of Stock that the Company has repurchased. If the Company holds any vested shares in escrow, such shares will be promptly delivered to Founder following the Company’s exercise of
its right to repurchase any unvested shares. Upon delivery of notice and payment of the purchase price in any of the ways described above, the Company shall become the legal and beneficial owner of the Shares being repurchased and all rights and
interest therein or related thereto, and the Company shall have the right to transfer to its own name the number of Shares being repurchased by the Company, without further action by Founder. 

(d)      Transfers Not Subject to the Unvested Share Repurchase Option. The Unvested Share
Repurchase Option shall not apply to a transfer to the Founder’s ancestors, descendants or spouse or to a trustee for their benefit or the benefit of the Founder, provided that such transferee agrees in writing (in a form satisfactory to the
Company) to take the Stock subject to all the terms and conditions of this Section 1. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject to the provisions of this Agreement. In the event of
any purchase by the Company hereunder where the Shares or interest are held by a transferee, the transferee shall be obligated, if requested by the Company, to transfer the Shares or interest to the Founder for consideration equal to the amount to
be paid by the Company hereunder. In the event the Repurchase Option is exercised by the Company pursuant to Section 1 hereof, the Company may deem any transferee to have transferred the Shares or interest to Founder prior to their purchase by
the Company, and payment of the purchase price by the Company to such transferee shall be deemed to satisfy Founder’s obligation to pay such transferee for such Shares or interest and also to satisfy the Company’s obligation to pay Founder
for such Shares or interest. Any sale or transfer of the Shares shall be void unless the provisions of this Agreement are satisfied. 
 (e)      Legends. The Company may place a legend referencing the Unvested Share Repurchase Option on any certificate representing Stock subject to the Unvested Share
Repurchase Option. 
 (g)      Escrow. As security for the Founder’s faithful
performance of the terms of this Agreement and to insure the availability for delivery of the Shares upon exercise of the Unvested Share Repurchase Option herein provided for, the Founder agrees to deliver to and deposit with DLA Piper Rudnick Gray
Cary US LLP, counsel to the Company (the “Escrow Agent”), as Escrow Agent in this transaction, two Stock Assignments duly endorsed (with date and number of shares blank) in the form attached hereto as Exhibit A, together with
the certificate or certificates evidencing the Shares; such documents are to be held by the Escrow Agent pursuant to the Joint Escrow Instructions of the Company and the Founder set forth in Exhibit B attached hereto and incorporated by this
reference, which instructions shall also be delivered to the Escrow Agent at the closing hereunder. 

2.      Legends. All certificates representing any shares of Stock subject to the provisions of this
Agreement shall have endorsed thereon the following legends: 

  
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 (a)      “THE TRANSFER OF THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE RESTRICTED PURSUANT TO AN AGREEMENT BETWEEN THE COMPANY AND THE HOLDER OF THESE SHARES, OR HIS OR HER PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS COMPANY.” 

(b)      “THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SUCH ACT.” 
 (c)      Any legend required to be placed thereon under applicable state
securities laws. 
 3.       Miscellaneous. 

(a)      Further Instruments. The parties agree to execute such further instruments and to take
such further action as may reasonably be necessary to carry out the intent of this Agreement. 

(b)      Notice. All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given (i) upon personal delivery, (ii) when sent by confirmed facsimile, if sent during normal business hours of recipient, or if not, then on the next business day, or (iii) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address as set forth on the signature pages hereof or at such other
address as such party may designate by ten (10) days advance written notice to the other parties hereto. 

(c)      Successors and Assigns. This Agreement shall inure to the benefit of the successors and
assigns of the Company and, subject to the restrictions on transfer herein set forth, be binding upon the Founder, the Founder’s heirs, executors, administrators, successors and assigns. 

(d)      Applicable Law; Entire Agreement; Amendments. This Agreement, together with the exhibits
hereto, shall be governed by and construed in accordance with the laws of the State of California as it applies to agreements between California residents, entered into and to be performed entirely within California and constitutes the entire
agreement of the parties with respect to the subject matter hereof superseding all prior written or oral agreements, and no amendment or addition hereto shall be deemed effective unless agreed to in writing by the parties hereto. 

  
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 (e)      Right to Specific Performance. The Founder
agrees that the Company shall be entitled to a decree of specific performance of the terms hereof or an injunction restraining violation of this Agreement, said right to be in addition to any other remedies available to the Company. 

(f)      Severability. If any provision of this Agreement is held by a court to be invalid, void or
unenforceable, the remaining provisions shall nevertheless continue in full force and effect without being impaired or invalidated in any way and shall be construed in accordance with the purposes and tenor and effect of this Agreement. 

(g)      Arbitration. Any dispute or claim arising out of this agreement will be subject to final
and binding arbitration. One arbitrator who is a member of the American Arbitration Association (“AAA”), and will be governed by the Commercial Arbitration Rules of the AAA will conduct the arbitration. The arbitration will be held
in San Francisco, California, and the arbitrator will apply California substantive law in all respects. The arbitrator shall have all authority to determine the arbitrability of any claim and enter a final, binding judgment at the conclusion of any
proceedings. Any final judgment only may be appealed on the grounds of improper bias or improper conduct of the arbitrator. The party prevailing in the resolution of any claim will be entitled, in addition to such other relief as may be granted, to
an award of all attorneys’ fees and costs incurred in the claim, without regard to any statute, schedule, or rule of court purported to restrict such award. 
 (h)      Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

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 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
above written. 
  

			
	“COMPANY”	  	“FOUNDER”

 ACELRX PHARMACEUTICALS, INC.,

 a Delaware corporation 
  

									
	 By:
	 	 /s/ THOMAS A. SCHRECK 
	 		 	 /s/ THOMAS A. SCHRECK

	 Title:
	 	CEO	 		 	THOMAS A. SCHRECK
					
	 Address:
	 	  
	 		 	Address:	 	  

		 	  
	 		 		 	 

 SIGNATURE PAGE 
 FOUNDER’S VESTING AGREEMENT 

 EXHIBIT A 
 ASSIGNMENT SEPARATE FROM CERTIFICATE 
 FOR VALUE RECEIVED,
                                , hereby sells, assigns and transfers unto
                            
                             shares of the Common Stock of AcelRx Pharmaceuticals, Inc., a
Delaware corporation (the “Company”), standing in the undersigned’s name on the books of said Company represented by Certificate No.
                     herewith, and does hereby irrevocably constitute and appoint
                             attorney to transfer the said stock on the books of the said Company with
full power of substitution in the premises. 
 Dated:
                                        

  

					
	 	 	  

			
	 	 	Name of Purchaser:	 	  

 Instruction: Please sign but do not fill in any other blanks. The purpose of this assignment is to enable the Company to exercise its repurchase rights as set forth in the Agreement without
requiring additional signatures on the part of the Stockholder. 

 EXHIBIT A 
 ASSIGNMENT SEPARATE FROM CERTIFICATE 
 FOR VALUE RECEIVED,
                                , hereby sells, assigns and transfers unto
                            
                             shares of the Common Stock of AcelRx Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), standing in the undersigned’s name on the books of said Company represented by Certificate No.
                     herewith, and does hereby irrevocably constitute and appoint
                             attorney to transfer the said stock on the books of the said Company with
full power of substitution in the premises. 
 Dated:
                             

 

			
	  

 

		
	 Name of Purchaser:
	  	  

 Instruction: Please sign but do not fill in any other blanks. The purpose of this assignment is to enable the Company to exercise its repurchase rights as set forth in the Agreement without
requiring additional signatures on the part of the Stockholder. 

 EXHIBIT B 
 JOINT ESCROW INSTRUCTIONS 
 August 15, 2006 

DLA Piper Rudnick Gray Cary US LLP 
 153
Townsend Street, Suite 800 
 San Francisco, CA 94107 
 Ladies and Gentlemen: 
 As Escrow Agent for both AcelRx Pharmaceuticals, Inc., a
Delaware corporation (“Company”), and the undersigned purchaser of Stock (the “Stock”) of the Company (“Purchaser”), you are hereby authorized and directed to hold the documents delivered to you
pursuant to the terms of that certain Common Stock Purchase Agreement (“Agreement”), dated as of the date hereof, to which a copy of these Joint Escrow Instructions is attached as Exhibit B, in accordance with the following
instructions: 
 1.      In the event the Company and/or any assignee of the Company (referred to
collectively for convenience herein as the “Company”) shall elect to exercise the Unvested Share Repurchase Option set forth in the Agreement, the Company shall give to Purchaser and you a written notice specifying the number of
shares of Stock to be purchased, the purchase price, and the time for a closing hereunder at the principal office of the Company. Purchaser and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such
notice in accordance with the terms of such notice. 
 2.      At the closing of a transaction
pursuant to Paragraph 1, you are directed (a) to date the stock assignments necessary for the transfer in question, (b) to fill in the number of shares of Stock being transferred, and (c) to deliver same, together with the
certificates evidencing the shares of Stock to be transferred, to the Company against the simultaneous delivery to you of the purchase price (by check) for the number of shares of Stock being purchased pursuant to the exercise of the Unvested Share
Repurchase Option. 
 3.      Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of Stock to be held by you hereunder and any additions and substitutions to said shares as defined in the Agreement. Purchaser does hereby irrevocably constitute and appoint you as the Purchaser’s attorney-in-fact
and agent for the term of this escrow to execute with respect to such securities all stock certificates, stock assignments, or other documents necessary or appropriate to make such securities negotiable and complete any transaction herein
contemplated. Subject to the provisions of this paragraph 3, Purchaser shall exercise all rights and privileges of a stockholder of the Company while the Stock is held by you. 
 SIGNATURE PAGE 
 FOUNDER’S VESTING AGREEMENT 

 4.      This escrow shall terminate at such time as there are
no longer any shares of stock subject to the Unvested Share Repurchase Option. 
 5.      If at
the time of termination of this escrow you should have in your possession any documents, securities, or other property belonging to Purchaser, you shall deliver all of it to Purchaser and shall be discharged of all further obligations hereunder.

 6.      Your duties hereunder may be altered, amended, modified or revoked only by writing
signed by all of the parties hereto. 
 7.      You shall be obligated only for the performance of
such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties.
You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith and in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence to such good faith. 

8.      You are hereby expressly authorized to disregard any and all warnings given by any of the parties
hereto or by any other person or Company, excepting only orders or process of courts of law, and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case you obey or comply with any such order,
judgment or decree of any court, you shall not be liable to any of the parties hereto or to any other person, firm or Company by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified,
annulled, set aside, vacated or found to have been entered without jurisdiction. 
 9.      You
shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder. 

10.      You shall not be liable for the outlawing of any rights under the statute of limitations with
respect to these Joint Escrow Instructions or any documents deposited with you. 
 11.      You
shall be entitled to employ such legal counsel and other experts as you may deem necessary or proper to advise you in connection with your obligations hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable
compensation therefor. 
 12.      Your responsibilities as Escrow Agent hereunder shall terminate
if you shall cease to be counsel to the Company or if you shall resign by written notice to each party. In the event of any such termination, the Company shall appoint a successor Escrow Agent. 

13.      If you reasonably require other or further instructions in connection with these Joint Escrow
Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments. 

14.      It is understood and agreed that should any dispute arise with respect to the delivery and/or
ownership or rights of possession of the securities held by you hereunder, you are 

  
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authorized and directed to retain in your possession without liability to any one all or any part of said securities until such dispute shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree, or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such
proceedings. 
 15.      Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given (i) upon personal delivery, (ii) when sent by confirmed facsimile, if sent during normal business hours of recipient, or if not, then on the next business day, or (iii) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the following address or at such other address as such party may
designate by ten (10) days advance written notice to the other parties hereto. 
  

			
	 Company:
	  	AcelRx Pharmaceuticals, Inc.
		  	10201 Bubb Road
		  	Cupertino, California 95014
		  	Attn: Thomas A. Schreck, President
		
	 Purchasers:
	  	For each Purchaser, the addresses shown on the signature page of the Agreement.
		
	 Escrow Agent:
	  	DLA Piper Rudnick Gray Cary US LLP
		  	153 Townsend Street, Suite 800
		  	San Francisco, CA 94107
		  	Attn.: Robb A. Scott

16.      By signing these Joint Escrow Instructions, you become a party hereto only for the purpose of said
Joint Escrow Instructions; you do not become a party to the Agreement. 
  
  

 
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 17.    This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns. 
  

	
	 Very truly yours,

	
	 AcelRx Pharmaceuticals, Inc.,

a Delaware corporation

 

			
	By:	 	 /s/ Thomas A. Schreck

		 	     Thomas A. Schreck, President
	
	“FOUNDER”

  

	
	 /s/ THOMAS A. SCHRECK

	     THOMAS A. SCHRECK

  

			
	 Address:
	 	  

		
		 	  

  

			
	Accepted and agreed as of the date set forth above:
	
	DLA PIPER RUDNICK GRAY CARY US LLP
		
	 By:
	 	 /s/ Robb A. Scott

		 	     Robb A. Scott, PartnerOffer Letter - Thomas Schreck

 Exhibit 10.13 
 ACELRX PHARMACEUTICALS, INC. 
 EMPLOYMENT AGREEMENT 

This Employment Agreement (the “Agreement”) is made and entered into effective as of August 15, 2006 (the “Effective
Date”), by and between Thomas A. Schreck (the “Employee”) and AcelRx Pharmaceuticals, Inc., a Delaware corporation (the “Company”). Certain capitalized terms used in this Agreement are defined in Section 1 below.

 RECITALS 
 A. Employee is a founder of the Company and the Company’s Chief Executive Officer. The Company is raising $20 million through the sale of Series A Preferred Stock to venture capital investors.

 B. As a condition to such investment, the Company, the investors and Mr. Schreck have agreed to enter into this
Employment Agreement to provide Mr. Schreck enhanced financial security and sufficient encouragement to remain with the Company notwithstanding the possibility of a Change of Control, and to provide Mr. Schreck with certain benefits in the
event of his termination from the Company, either before or after a Change of Control. 
 AGREEMENT 

In consideration of the mutual covenants herein contained and the continued employment of Employee by the Company, the parties agree as
follows: 
 1. Definition of Terms. The following terms referred to in this Agreement shall have the following meanings:

 (a) Cause. “Cause” shall mean (i) Employee’s gross negligence or willful failure substantially to
perform his or her duties and responsibilities to the Company or deliberate violation of a Company policy; (ii) Employee’s commission of any act of fraud, embezzlement, dishonesty or any other willful misconduct that has caused or is
reasonably expected to result in material injury to the Company; (iii) unauthorized use or disclosure by Employee of any proprietary information or trade secrets of the Company or any other party to whom the Employee owes an obligation of
nondisclosure as a result of his or her relationship with the Company; (iv) Employee’s willful breach of any of his or her obligations under any written agreement or covenant with the Company, which if capable of being cured shall not have
been cured within thirty (30) days after the Company shall have advised Employee in writing of its intention to terminate Employee’s employment for Cause (such notice which shall contain the grounds for such termination with reasonable
particularity) or (v) Employee’s commission of a felony or commission of a crime of moral turpitude. The determination as to whether an 

 
Employee is being terminated for Cause shall be made in good faith by the Company’s Board of Directors and shall be final and binding on the Employee. 

(b) Change of Control. “Change of Control” shall mean the occurrence of any of the following events: 

(i) a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the total
voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or 
 (ii) the approval by the stockholders of the Company of a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the
Company’s assets. 
 (c) “Involuntary Termination” shall mean Employee’s
voluntary termination of employment with the Company within thirty (30) days following the occurrence of any of the following without Employee’s consent: (i) a material reduction or change in job duties, reporting relationships,
responsibilities and requirements inconsistent with Employee’s position with the Company and prior duties, reporting relationships, responsibilities and requirements prior to the Change in Control, provided that neither a mere change in title
alone nor reassignment following a Change of Control to a position that is substantially similar to the position held prior to the Change of Control in terms of job duties, responsibilities or requirements shall constitute a material reduction in
job responsibilities; (ii) a reduction in Employee’s then-current base salary by at least 20%, provided that an across-the-board reduction in the salary level of all other senior executives by the same percentage amount as part of a
general salary level reduction shall not constitute such a salary reduction or (iii) Employee’s refusal to relocate the principal place for performance of Company duties to a location more than thirty (30) miles from the
Company’s then current location at the time of the Change in Control. 
 (d) Termination Date. “Termination
Date” shall mean the effective date of any notice of termination delivered by one party to the other hereunder. 
 2. 2.
Compensation and Term of Agreement. 
 (a)        As compensation for the
services to be rendered by Employee hereunder, the Company agrees to pay Employee, and Employee agrees to accept, a base salary (“Base Salary”) during employment hereunder at the annual rate of $250,000. The Base Salary shall be payable in
equal installments by the Company according to its normal payroll practices. In addition, Employee may be eligible to receive from time to time during the Term hereof, bonus compensation as determined by the Company’s Board of Directors or the
Compensation Committee of the Board of Directors. 

  
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 (b)        This Agreement shall terminate upon the
earlier of (i) two (2) years after a Change of Control, or (ii) the date that all obligations of the parties hereto under this Agreement have been satisfied. 
 3. At-Will Employment. The Company and the Employee acknowledge that the Employee’s employment is and shall continue to be at-will, as defined under applicable law. If the Employee’s
employment terminates for any reason, the Employee shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided by this Agreement, or as may otherwise be established under the Company’s then existing
employee benefit plans or policies at the time of termination. 
 4. Severance Benefits. 

(a) Termination Following a Change of Control. If the Employee’s employment with the Company terminates as a result of an
Involuntary Termination or termination without Cause at any time within eighteen (18) months after a Change of Control, and the Employee signs a general release of claims against the Company, Employee shall be entitled to the following
severance benefits: 
 (1) Six months of Employee’s base salary as in effect as of the date of the Termination Date less
applicable withholding, payable in a lump sum within thirty (30) days of the Involuntary Termination or termination without Cause; 
 (2) all stock options and other equity compensation granted under the Company’s 2006 Stock Plan to the Employee prior to the Change of Control shall accelerate and become vested under the applicable
award agreements to the extent such awards are outstanding and, if applicable, unexercisable at the time of such termination and all stock subject to a right of repurchase by the Company (or its successor) that was purchased prior to the Change of
Control shall have such right of repurchase lapse; and 
 (3) the same level of Company-paid health (i.e., medical, vision and
dental) coverage and benefits for such coverage as in effect for the Employee (and any eligible dependents) on the day immediately preceding the Employee’s Termination Date; provided, however, that (i) the Employee
constitutes a qualified beneficiary, as defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as amended; and (ii) Employee elects continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended (“COBRA”), within the time period prescribed pursuant to COBRA. The Company shall continue to provide Employee with such Company-paid coverage until the earlier of (i) the date Employee (and his/her eligible dependents) is
no longer eligible to receive continuation coverage pursuant to COBRA, or (ii) six (6) months from the Termination Date. 

  
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 (b) Termination Apart from a Change of Control. If the Employee’s employment
with the Company is terminated without Cause before a Change of Control, and the Employee signs a general release of claims against the Company, the Employee shall be entitled to severance benefits as set forth in Sections 4(a)(1) and 4(a)(3) above.

 (c) Accrued Wages and Vacation, Expenses. Without regard to the reason for, or the timing of, Employee’s
termination of employment: (i) the Company shall pay the Employee any unpaid base salary due for periods prior to the Termination Date; (ii) the Company shall pay the Employee all of the Employee’s accrued and unused vacation through
the Termination Date; and (iii) following submission of proper expense reports by the Employee, the Company shall reimburse the-Employee for all expenses reasonably and necessarily incurred by the Employee in connection with the business of the
Company prior to the Termination Date. These payments shall be made promptly upon termination and within the period of time mandated by law. 
 5. Limitation on Payments. In the event that the severance and other benefits provided for in this Agreement or otherwise payable to the Employee (i) constitute “parachute payments”
within the meaning of Section 280G of the Code, and (ii) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then Employee’s benefits under this Agreement shall be either

 (a) delivered in full, or 
 (b) delivered as to such lesser extent which would result in no portion of such benefits being subject to the Excise Tax, 
 whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the Excise Tax, results in the receipt by Employee on an after-tax basis, of the greatest
amount of benefits, notwithstanding that all or some portion of such benefits may be taxable under Section 4999 of the Code. 
 Unless the Company and the Employee otherwise agree in writing, any determination required under this Section shall be made in- writing by the Company’s independent public accountants (the
“Accountants”), whose determination shall be conclusive and binding upon the Employee and the Company for all purposes. For purposes of making the calculations required by this Section, the Accountants may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Section 280G and 4999 of the Code. The Company and the Employee shall furnish to the Accountants such information
and documents as the Accountants may reasonably request in order to make a determination under this Section. The Company shall bear all costs the Accountants may reasonably incur in connection with any calculations contemplated by this Section.

  
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 The Company shall prepare a proposal to be voted on by the stockholders of the Company in
accordance with the terms of Section 280G(b)(5)(B) of the Code (the “280G Proposal”) so as to render the parachute payment provisions of Section 280G of the Code inapplicable to such payment, an shall seek to obtain such
stockholders approval in a manner which satisfies all applicable requirements of such Section 280G(b)(5)(B) of the Code and the Treasury Regulations thereunder, including Q-7 of Section 1.280G-1 of such Treasury Regulations. 

6. Successors. 
 (a) Company’s Successors. Any successor to the Company (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all
of the Company’s business and/or assets shall assume the Company’s obligations under this Agreement and agree expressly to perform the Company’s 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” shall include any successor to the Company’s business and/or assets which executes and delivers
the assumption agreement described in this subsection (a) or which becomes bound by the terms of this Agreement by operation of law. 
 (b) Employee’s Successors. Without the written consent of the Company, Employee shall not assign or transfer this Agreement or any right or obligation under this Agreement to any other person
or entity. Notwithstanding the foregoing, the terms of this Agreement and all rights of Employee hereunder shall inure to the benefit of, and be enforceable by, Employee’s personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. 
 7. Notices. 

(a) General. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have
been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to Employee at the home address which
Employee most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters. 
 (b) Notice of Termination. Any termination by the Company for Cause or by the Employee as a result of a voluntary resignation shall be communicated by a notice of termination to the other party
hereto given in accordance with this Section. Such notice shall indicate the specific termination provision in this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination
under the provision so indicated, and shall specify the Termination Date (which shall be not more than 30 days after the giving of such notice). The failure by the Employee to provide the notice or to include in the notice any fact or circumstance
which contributes to a showing of Involuntary Termination shall 

  
 5 

 
not waive any right of the Employee hereunder or preclude the Employee from asserting such fact or circumstance in enforcing his rights hereunder. 

8. Arbitration. 
 (a) Any dispute or controversy arising out of, relating to, or in connection with this Agreement, or the interpretation, validity, construction, performance, breach, or termination thereof, shall be
settled by binding arbitration to be held in Santa Clara, California, in accordance with the National Rules for the Resolution of Employment Disputes then in effect of the American Arbitration Association (the “Rules”). The arbitrator may
grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final, conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court having
jurisdiction. The arbitrator may require one party to pay the costs and attorney fees of the prevailing party. 
 (b) The
arbitrator(s) shall apply California law to the merits of any dispute or claim, without reference to conflicts of law rules. The arbitration proceedings shall be governed by federal arbitration law and by the Rules, without reference to state
arbitration law. Employee hereby consents to the personal jurisdiction of the state and federal courts located in California for any action or proceeding arising from or relating to this Agreement or relating to any arbitration in which the parties
are participants. 
 (c) Employee understands that nothing in this Section modifies Employee’s at-will employment status.
Either Employee or the Company can terminate the employment relationship at any time, with or without Cause. 
 (d) EMPLOYEE HAS
READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES ARBITRATION. EMPLOYEE UNDERSTANDS THAT SUBMITTING ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE, BREACH OR
TERMINATION THEREOF TO BINDING ARBITRATION, CONSTITUTES A WAIVER OF EMPLOYEE’S RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THE EMPLOYER/EMPLOYEE RELATIONSHIP, INCLUDING BUT NOT LIMITED TO, THE
FOLLOWING CLAIMS: 
         (i) ANY AND ALL CLAIMS FOR WRONGFUL DISCHARGE OF
EMPLOYMENT; BREACH OF CONTRACT, BOTH EXPRESS AND IMPLIED; BREACH OF THE COVENANT OF GOOD FAITH AND FAIR DEALING, BOTH EXPRESS AND IMPLIED; NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS; NEGLIGENT OR INTENTIONAL MISREPRESENTATION;
NEGLIGENT OR INTENTIONAL INTERFERENCE WITH CONTRACT OR PROSPECTIVE ECONOMIC ADVANTAGE; AND DEFAMATION. 

  
 6 

         (ii) ANY AND ALL CLAIMS FOR VIOLATION OF
ANY FEDERAL STATE OR MUNICIPAL STATUTE, INCLUDING, BUT NOT LIMITED TO, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE CIVIL RIGHTS ACT OF 1991, 1 AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE FAIR
LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, AND LABOR CODE SECTION 20 1, et seq; 

        (iii) ANY AND ALL CLAIMS ARISING OUT OF ANY OTHER LAWS AND REGULATIONS RELATING TO
EMPLOYMENT OR EMPLOYMENT DISCRIMINATION. 
 9. Miscellaneous Provisions. 

(a) Effect of Statutory Benefits. To the extent that any severance benefits are required to be paid to the Employee upon
termination of employment with the Company as a result of any requirement of law or any governmental entity in any applicable jurisdiction, the aggregate amount of severance benefits payable pursuant to Section 4 hereof shall be reduced by such
amount. 
 (b) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of any payment
contemplated by this Agreement, nor shall any such payment be reduced by any earnings that the Employee may receive from any other source. 
 (c) Waiver. No provision of this Agreement may be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized
officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or
of the same condition or provision at another time. 
 (d) Integration. This Agreement and any outstanding stock option
agreements and any restricted stock purchase agreements referenced herein represent the entire agreement and understanding between the parties as to the subject matter herein and supersede all prior or contemporaneous agreements, whether written or
oral, with respect to this Agreement and any stock option agreement or any restricted stock purchase agreement, provided, that, for clarification purposes, this agreement shall not affect any agreements between the Company and Employee
regarding intellectual property matters or confidential information of the Company. 
 (e) Choice of Law. The validity,
interpretation, construction and performance of this Agreement shall be governed by the internal substantive laws, but not the conflicts of law rules, of the State of California. 

  
 7 

 (f) Severability. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect. 
 (g) Employment Taxes. All payments made pursuant to this Agreement shall be subject to withholding of applicable income and employment taxes. 

(h) Counterparts. This Agreement may be executed in counterparts, each of which shall 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 first above written. 
  

					
	COMPANY:	 	AcelRx Pharmaceuticals, Inc..
			
		 	 By:
  
	 	 /s/ Thomas A. Schreck

			
		 	 Title:
  
	 	 CEO

		
	 EMPLOYEE:
  
	 	 /s/ Thomas A. Schreck

		 	Signature
		
		 	  

		 	Thomas A. Schreck

  
 8

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