EXHIBIT 10.26

 

Arcus Biosciences, Inc.
Stock Option Grant Notice
(2020 Inducement Plan)

Arcus Biosciences, Inc. (the “Company”), pursuant to its 2020 Inducement Plan
(the “Plan”), hereby grants to Optionholder an option to purchase the number of
shares of the Company’s Common Stock set forth below.  This option is subject to
all of the terms and conditions as set forth in this notice, in the Option
Agreement, the Plan and the Notice of Exercise, all of which are attached hereto
and incorporated herein in their entirety.  Capitalized terms not explicitly
defined herein but defined in the Plan or the Option Agreement will have the
same definitions as in the Plan or the Option Agreement. If there is any
conflict between the terms in this notice and the Plan, the terms of the Plan
will control.

 

Optionholder:

 

Date of Grant:

 

Vesting Commencement Date:

 

Number of Shares Subject to Option:

 

Exercise Price (Per Share):

 

Total Exercise Price:

 

Expiration Date:

 

 

Type of Grant:Nonstatutory Stock Option

Vesting Schedule:

[__________], subject to Optionholder’s Continuous Service as of each such date.

Additional Terms/Acknowledgements:  Optionholder acknowledges receipt of, and
understands and agrees to, this Stock Option Grant Notice, the Option Agreement
and the Plan.  Optionholder acknowledges and agrees that this Stock Option Grant
Notice and the Option Agreement may not be modified, amended or revised except
as provided in the Plan. Optionholder further acknowledges that as of the Date
of Grant, this Stock Option Grant Notice, the Option Agreement, and the Plan set
forth the entire understanding between Optionholder and the Company regarding
this option award and supersede all prior oral and written agreements, promises
and/or representations on that subject with the exception of (i) options
previously granted and delivered to Optionholder, (ii) any compensation recovery
policy that is adopted by the Company or is otherwise required by applicable law
and (iii) any written employment or severance arrangement that would provide for
vesting acceleration of this option upon the terms and conditions set forth
therein.  

By accepting this option, Optionholder consents to receive such documents by
electronic delivery and to participate in the Plan through an on-line or
electronic system established and maintained by the Company or another third
party designated by the Company.

Optionholder:

 

Signature

Date:

Attachments:  Option Agreement and 2020 Inducement Plan

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Attachment I

Arcus Biosciences, Inc.
2020 Inducement Plan

Option Agreement
(Nonstatutory Stock Option)

Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Option
Agreement (the “Agreement”), Arcus Biosciences, Inc. (the “Company”) has granted
you an option under its 2020 Inducement Plan (the “Plan”) to purchase the number
of shares of the Company’s Common Stock indicated in your Grant Notice at the
exercise price indicated in your Grant Notice.  

The option is granted to you effective as of the date of grant set forth in the
Grant Notice (the “Date of Grant”).  The option is granted in compliance with
Rule 303A.08 of the NYSE Listed Company Manual Rules as a material inducement to
you entering into employment with the Company.  

If there is any conflict between the terms in this Option Agreement and the
Plan, the terms of the Plan will control. Capitalized terms not explicitly
defined in this Option Agreement or in the Grant Notice but defined in the Plan
will have the same definitions as in the Plan.

The details of your option, in addition to those set forth in the Grant Notice
and the Plan, are as follows:

1.Vesting.  Subject to the limitations contained herein, your option will vest
as provided in your Grant Notice, provided that vesting will cease upon the
termination of your Continuous Service. In addition, this option shall vest and
become exercisable in full if the Company is subject to certain corporate
transactions before your Continuous Service terminates and this option is not
continued, assumed or substituted with a new award as set forth in Section 9 of
the Plan. Further, this option shall vest and become exercisable in full if the
Company is subject to a Change in Control before your Continuous Service
terminates, and you are subject to an Involuntary Termination (as defined below)
within 12 months following such Change in Control, subject to your execution and
nonrevocation of a general release of claims against the Company and certain
related parties, in the form provided by the Company. You must execute and
return the release on or before the date specified by the Company, which will in
no event be later than 50 days after your Service terminates. If you fail to
return the release by the deadline or if you revoke the release, you will not be
entitled to the vesting acceleration described in this
paragraph.  Notwithstanding the foregoing, if you are, or become, eligible for
more favorable vesting acceleration provisions pursuant to a written agreement
with the Company (an “Outside Agreement”), the more favorable terms in such
Outside Agreement shall apply instead of the acceleration terms in this
Agreement.

2.

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2.Number of Shares and Exercise Price.  The number of shares of Common Stock
subject to your option and your exercise price per share referenced in your
Grant Notice may be adjusted from time to time for Capitalization Adjustments.

3.Exercise Restriction for Non-Exempt Employees.  In the event that you are an
Employee eligible for overtime compensation under the Fair Labor Standards Act
of 1938, as amended (i.e., a “Non-Exempt Employee”), and except as otherwise
provided in the Plan, you may not exercise your option until you have completed
at least six (6) months of Continuous Service measured from the Date of Grant
specified in your Grant Notice, notwithstanding any other provision of your
option.  

4.Method of Payment.  Payment of the exercise price is due in full upon exercise
of all or any part of your option.  You may elect to make payment of the
exercise price in any of the following methods:

(a)By cash, check, bank draft or money order payable to the Company.

(b)Provided that at the time of exercise the Common Stock is publicly traded,
pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board that, prior to the issuance of Common Stock, results in either the
receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from the sales
proceeds.

(c)Subject to the consent of the Company at the time of exercise, and provided
that at the time of exercise the Common Stock is publicly traded, by delivery to
the Company (either by actual delivery or attestation) of already-owned shares
of Common Stock that are owned free and clear of any liens, claims, encumbrances
or security interests, and that are valued at Fair Market Value on the date of
exercise.  “Delivery” for these purposes, in the sole discretion of the Company
at the time you exercise your option, shall include delivery to the Company of
your attestation of ownership of such shares of Common Stock in a form approved
by the Company.  Notwithstanding the foregoing, you may not exercise your option
by tender to the Company of Common Stock to the extent such tender would violate
the provisions of any law, regulation or agreement restricting the redemption of
the Company’s stock.

(d)Subject to the consent of the Company at the time of exercise, by a “net
exercise” arrangement pursuant to which the Company will reduce the number of
shares of Common Stock issued upon exercise of your option by the largest whole
number of shares with a Fair Market Value that does not exceed the aggregate
exercise price; provided, however, that the Company shall accept a cash or other
payment from you to the extent of any remaining balance of the aggregate
exercise price not satisfied by such reduction in the number of whole shares to
be issued; provided further, however, that shares of Common Stock will no longer
be outstanding under your option and will not be exercisable thereafter to the
extent that (1) shares are used to pay the exercise price pursuant to the “net
exercise,” (2) shares are delivered to you as a result of such exercise, and (3)
shares are withheld to satisfy tax withholding obligations.

5.Whole Shares.  You may exercise your option only for whole shares of Common
Stock.

3.

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6.Securities Law Compliance.  Notwithstanding anything to the contrary contained
herein, you may not exercise your option unless the shares of Common Stock
issuable upon such exercise are then registered under the Securities Act or, if
such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act.  The exercise of your option also must
comply with other applicable laws and regulations governing your option, and you
may not exercise your option if the Company determines that such exercise would
not be in material compliance with such laws and regulations.

7.Term.  You may not exercise your option before the commencement or after the
expiration of its term.  The term of your option commences on the Date of Grant
and expires, subject to the provisions of Section 5(h) of the Plan, upon the
earliest of the following:

(a)immediately upon the termination of your Continuous Service for Cause;

(b)the close of business at Company headquarters on the date that is three (3)
months after the termination of your Continuous Service for any reason other
than Cause, your Disability or death.  If (i) you are a Non-Exempt Employee,
(ii) your Continuous Service terminates within six (6) months after the Date of
Grant specified in your Grant Notice, and (iii) you have vested in a portion of
your option at the time of your termination of Continuous Service, your option
shall not expire until the earlier of (x) the later of (A) the date that is
seven (7) months after the Date of Grant specified in your Grant Notice or (B)
the date that is three (3) months after the termination of your Continuous
Service, or (y) the Expiration Date;

(c)the close of business at Company headquarters on the date that is six (6)
months after the termination of your Continuous Service due to your Disability;

(d)the close of business at Company headquarters on the date that is twelve (12)
months after your death, if you die during your Continuous Service;

(e)the close of business at Company headquarters on the Expiration Date
indicated in your Grant Notice; or

(f)the close of business at Company headquarters on the date that is the day
before the tenth (10th) anniversary of the Date of Grant.

8.Exercise.

(a)You may exercise the vested portion of your option during its term by
delivering a Notice of Exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require. If the Company has
designated a third party to administer the Plan, you must notify such third
party in the manner such third party requires.

(b)By exercising your option you agree that, as a condition to any exercise of
your option, the Company may require you to enter into an arrangement providing
for the payment by you to the Company of any tax withholding obligation of the
Company arising by

4.

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reason of (1) the exercise of your option, (2) the lapse of any substantial risk
of forfeiture to which the shares of Common Stock are subject at the time of
exercise, or (3) the disposition of shares of Common Stock acquired upon such
exercise.

9.Transferability.  Except as otherwise provided in this Section 9, your option
is not transferable, except by will or by the laws of descent and distribution,
and is exercisable during your life only by you.  

(a)Domestic Relations Orders.  Provided that you and the designated transferee
enter into transfer and other agreements required by the Company, you may
transfer your option pursuant to the terms of a domestic relations order,
official marital settlement agreement or other divorce or separation instrument
as permitted by Treasury Regulation 1.421-1(b)(2) that contains the information
required by the Company to effectuate the transfer.  You are encouraged to
discuss the proposed terms of any division of this option with the Company prior
to finalizing the domestic relations order or marital settlement agreement to
help ensure the required information is contained within the domestic relations
order or marital settlement agreement.

(b)Beneficiary Designation.  You may, by delivering written notice to the
Company, in a form provided by or otherwise satisfactory to the Company and any
broker designated by the Company to effect option exercises, designate a third
party who, in the event of your death, shall thereafter be entitled to exercise
this option and receive the Common Stock or other consideration resulting from
such exercise.  In the absence of such a designation, your executor or
administrator of your estate shall be entitled to exercise this option and
receive, on behalf of your estate, the Common Stock or other consideration
resulting from such exercise.

10.Option not a Service Contract.  Your option is not an employment or service
contract, and nothing in your option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company
or an Affiliate, or of the Company or an Affiliate to continue your
employment.  In addition, nothing in your option shall obligate the Company or
an Affiliate, their respective stockholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as an Employee,
Director or Consultant for the Company or an Affiliate.

11.Withholding Obligations.

(a)At the time you exercise your option, in whole or in part, or at any time
thereafter as requested by the Company, you hereby authorize withholding from
payroll and any other amounts payable to you, and otherwise agree to make
adequate provision for (including by means of a “same day sale” pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
to the extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or
an Affiliate, if any, which arise in connection with the exercise of your
option.

(b)Upon your request and subject to approval by the Company, in its sole
discretion, and in compliance with any applicable legal conditions or
restrictions, the Company may withhold from fully vested shares of Common Stock
otherwise issuable to you upon the

5.

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exercise of your option a number of whole shares of Common Stock having a Fair
Market Value, determined by the Company as of the date of exercise.

(c)You may not exercise your option unless the tax withholding obligations of
the Company and/or any Affiliate are satisfied.  Accordingly, you may not be
able to exercise your option when desired even though your option is vested, and
the Company shall have no obligation to issue a certificate for such shares of
Common Stock unless such obligations are satisfied.

12.Tax Consequences.  You hereby agree that the Company does not have a duty to
design or administer the Plan or its other compensation programs in a manner
that minimizes your tax liabilities.  You shall not make any claim against the
Company, or any of its Officers, Directors, Employees or Affiliates related to
tax liabilities arising from your option or your other compensation.  In
particular, you acknowledge that this option is exempt from Section 409A of the
Code only if the exercise price per share specified in the Grant Notice is at
least equal to the “fair market value” per share of the Common Stock on the Date
of Grant and there is no other impermissible deferral of compensation associated
with the option.

13.Other Documents.  You hereby acknowledge receipt or the right to receive a
document providing the information required by Rule 428(b)(1) promulgated under
the Securities Act, which includes the Plan prospectus.  In addition, you
acknowledge receipt of the Company’s insider trading policy[, which restricts
certain individuals from selling shares during certain “window” periods and
which further requires certain individuals to pre-clear all transactions in the
Company’s securities], as in effect from time to time.

14.Notices.  Any notices provided for in your option or the Plan shall be given
in writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by mail by the Company to you, five (5) days after deposit in
the United States mail, postage prepaid, addressed to you at the last address
you provided to the Company.  The Company may, in its sole discretion, decide to
deliver any documents related to participation in the Plan and this option by
electronic means or to request your consent to participate in the Plan by
electronic means.  By accepting this option, you consent to receive such
documents by electronic delivery and to participate in the Plan through an
on-line or electronic system established and maintained by the Company or
another third party designated by the Company.

15.Governing Plan Document.  Your option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your option, and is
further subject to all interpretations, amendments, rules and regulations, which
may from time to time be promulgated and adopted pursuant to the Plan.  In the
event of any conflict between the provisions of your option and those of the
Plan, the provisions of the Plan shall control. In addition, your option (and
any compensation paid or shares issued under your option) is subject to
recoupment in accordance with The Dodd–Frank Wall Street Reform and Consumer
Protection Act and any implementing regulations thereunder, any clawback policy
adopted by the Company and any compensation recovery policy otherwise required
by applicable law.

16.Restrictive Legends.  The shares of Common Stock issued under your option
shall be endorsed with appropriate legends as determined by the Company.

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17.Execution of Documents.  You hereby acknowledge and agree that the manner
selected by the Company by which you indicate your consent to your Grant Notice
is also deemed to be your execution of your Grant Notice and of this Agreement.
You further agree that such manner of indicating consent may be relied upon as
your signature for establishing your execution of any documents to be executed
in the future in connection with your option.

18.Unsecured Obligation.  Your option is unfunded, and you shall be considered
an unsecured creditor of the Company with respect to the Company’s obligation,
if any, to issue shares or other property pursuant to this Agreement.  You shall
not have voting or any other rights as a stockholder of the Company with respect
to the shares to be issued pursuant to this Agreement until such shares are
issued to you.  Upon such issuance, you will obtain full voting and other rights
as a stockholder of the Company.  Nothing contained in this Agreement, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind or a fiduciary relationship between you and the Company or
any other person.

19.Miscellaneous.

(a)The rights and obligations of the Company under your option shall be
transferable to any one or more persons or entities, and all covenants and
agreements hereunder shall inure to the benefit of, and be enforceable by the
Company’s successors and assigns. Your rights and obligations under your option
may only be assigned with the prior written consent of the Company.

(b)You agree upon request to execute any further documents or instruments
necessary or desirable in the sole determination of the Company to carry out the
purposes or intent of your option.

(c)You acknowledge and agree that you have reviewed your option in its entirety,
have had an opportunity to obtain the advice of counsel prior to executing and
accepting your option, and fully understand all provisions of your option.

(d)This Agreement shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

(e)All obligations of the Company under the Plan and this Agreement shall be
binding on any successor to the Company, whether the existence of such successor
is the result of a direct or indirect purchase, merger, consolidation, or
otherwise, of all or substantially all of the business and/or assets of the
Company.

20.Severability.  If all or any part of this Agreement or the Plan is declared
by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity shall not invalidate any portion of this Agreement or
the Plan not declared to be unlawful or invalid. Any Section of this Agreement
(or part of such a Section) so declared to be unlawful or invalid shall, if
possible, be construed in a manner which will give effect to the terms of such
Section or part of a Section to the fullest extent possible while remaining
lawful and valid.

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21.Effect on Other Employee Benefit Plans.  The value of the option subject to
this Agreement shall not be included as compensation, earnings, salaries, or
other similar terms used when calculating the Employee’s benefits under any
employee benefit plan sponsored by the Company or any Affiliate, except as such
plan otherwise expressly provides. The Company expressly reserves its rights to
amend, modify, or terminate any of the Company’s or any Affiliate’s employee
benefit plans.

22.Choice of Law.  The interpretation, performance and enforcement of this
Agreement will be governed by the law of the state of Delaware without regard to
such state’s conflicts of laws rules.

23.Amendment.  This Agreement may not be modified, amended or terminated except
by an instrument in writing, signed by you and by a duly authorized
representative of the Company.  Notwithstanding the foregoing, this Agreement
may be amended solely by the Board by a writing which specifically states that
it is amending this Agreement, so long as a copy of such amendment is delivered
to you, and provided that, except as otherwise expressly provided in the Plan,
no such amendment adversely affecting your rights hereunder may be made without
your written consent.  Without limiting the foregoing, the Board reserves the
right to change, by written notice to you, the provisions of this Agreement in
any way it may deem necessary or advisable to carry out the purpose of the grant
as a result of any change in applicable laws or regulations or any future law,
regulation, ruling, or judicial decision, provided that any such change shall be
applicable only to rights relating to that portion of the option which is then
subject to restrictions as provided herein.

24.Definitions.  

(a)“Involuntary Termination” shall mean either your (i) Termination Without
Cause or (ii) Resignation for Good Reason.

(b)“Resignation for Good Reason” shall mean a Separation as a result of your
resignation within 12 months after one of the following conditions has come into
existence without your consent: (a) a reduction in your base salary by more than
10%, other than a general reduction in base salary that is part of a
cost-reduction program that affects all similarly situated employees in
substantially the same proportions, (b) a relocation of your principal workplace
by more than 25 miles from its location prior to the Change in Control and, with
respect only to employees at the vice-president level or above, (c) a material
reduction of responsibilities, authority, or duties, provided that neither a
mere change in title alone nor reassignment following a Change in Control to a
position that is similar to the position held prior to the Change in Control
shall constitute a material reduction in job responsibilities. A Resignation for
Good Reason will not be deemed to have occurred unless you give the Company
written notice of the condition within 90 days after the condition comes into
existence and the Company fails to remedy the condition within 30 days after
receiving such written notice.

(c)“Termination Without Cause” shall mean a Separation as a result of the
termination of Service by the Company without Cause, provided you are willing
and able to continue performing services within the meaning of Treasury
Regulation 1.409A-1(n)(1).

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(d)“Separation” shall mean a “separation from service,” as defined in the
regulations under Section 409A of the Code.

 

 

 

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Attachment II

2020 Inducement Award Plan

 

 

10.