Exhibit 10.2

ARCUS BIOSCIENCES, INC.

SEVERANCE AND CHANGE IN CONTROL AGREEMENT

This Severance and Change in Control Agreement (the “Agreement”) is made and
entered into by and between _________ (“Executive”) and Arcus Biosciences, Inc.,
a Delaware corporation (the “Company”), effective as of the date specified in
Section 1 below.

This Agreement provides severance and acceleration benefits in connection with
certain qualifying terminations of Executive’s employment with the Company.

Certain capitalized terms are defined in Section 8.

The Company and Executive agree as follows:

1.Term.  This Agreement shall become effective on the date on which it is signed
by Executive (the “Effective Date”).  

2.Certain Involuntary Termination Benefits.

(a)Involuntary Termination Following a Change in Control.  If Executive is
subject to an Involuntary Termination that occurs within twelve months following
a Change in Control and Executive satisfies the conditions described in Section
2(b) below, then:

(i)the Company shall continue to pay such Executive’s Base Salary for a period
of twelve months following such Executive’s Separation, generally in accordance
with the Company’s standard payroll procedures;

(ii)the Company shall pay the Executive a lump-sum cash amount equal to
Executive’s annual target bonus established by the Company for the fiscal year
in which Executive’s Separation occurs, prorated based on the number of days
that Executive was employed by the Company during such fiscal year;

(iii)If Executive timely elects continued coverage under COBRA, the Company
shall pay the same portion of the monthly premium under COBRA as it pays for
active employees and their eligible dependents until the earliest of (a) the
last day of the period ending on the date that is 12 months following such
Executive’s Separation, (b) the expiration of Executive’s continuation coverage
under COBRA or (c) the date when Executive becomes eligible for substantially
equivalent health insurance coverage in connection with new
employment.  Notwithstanding the foregoing, if the Company determines in its
sole discretion that it cannot provide the foregoing subsidy of COBRA coverage
without potentially violating or causing the Company to incur additional expense
as a result of noncompliance with applicable law (including, without limitation,
Section 2716 of the Public Health Service Act), the Company instead will pay
Executive a taxable monthly payment in an amount equal to the monthly COBRA
premium that Executive would be required to pay to continue the group health
coverage in effect on the date of

 

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Executive’s Separation for Executive and Executive’s eligible dependents
pursuant to the Company’s health insurance plans in which Executive or
Executive’s eligible dependents participated as of the day of Executive’s
Separation (which amount shall be based on the premium for the first month of
COBRA coverage), which payments shall be made regardless of whether Executive
elects COBRA continuation coverage; and

(iv)Executive shall vest in all of Executive’s remaining unvested equity awards.

(b)Preconditions to Severance and Vesting Acceleration Benefits / Timing of
Benefits.  As a condition to Executive’s receipt of any benefits described in
Section 2(a), Executive shall execute and allow to become effective a general
release of claims in substantially the form attached hereto and, if requested by
the Company’s Board of Directors, must immediately resign as a member of the
Company’s Board of Directors and as a member of the board of directors of any
subsidiaries of the Company.  Executive 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 Executive’s employment terminates.  If Executive fails to
return the release by the deadline or if Executive revokes the release, then
Executive will not be entitled to the benefits described in this Section 2.  All
such benefits will be provided, paid or commence within 60 days after
Executive’s Involuntary Termination (and, where applicable, will include at such
time any amounts accrued from the date of Executive’s Separation).  If such
60-day period spans two calendar years, then such benefit will in any event be
provided, paid or commence in the second calendar year.  

3.Section 409A.  The Company intends that all payments and benefits provided
under this Agreement or otherwise are exempt from, or comply with, with the
requirements of Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”) so that none of the payments or benefits will be subject to the
additional tax imposed under Code Section 409A, and any ambiguities herein will
be interpreted in accordance with such intent.  For purposes of Code Section
409A, each payment, installment or benefit payable under this Agreement is
hereby designated as a separate payment.  In addition, if the Company determines
that Executive is a “specified employee” under Code Section 409A(a)(2)(B)(i) at
the time of Executive’s Separation, then (i) any severance payments or benefits,
to the extent that they are subject to Code Section 409A, will not be paid or
otherwise provided until the first business day following the earlier of (A)
expiration of the six-month period measured from Executive’s Separation or (B)
the date of Executive’s death and (ii) any installments that otherwise would
have been paid or provided prior to such date will be paid or provided in a lump
sum when the severance payments or benefits commence.

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4.Section 280G.  

(a)Notwithstanding anything contained in this Agreement to the contrary, in the
event that the payments and benefits provided pursuant to this Agreement,
together with all other payments and benefits received or to be received by
Executive (“Payments”), constitute “parachute payments” within the meaning of
Code Section 280G, and, but for this Section 4, would be subject to the excise
tax imposed by Code Section 4999 (the “Excise Tax”), then the Payments shall be
made to Executive either (i) in full or (ii) as to such lesser amount as would
result in no portion of the Payments being subject to the Excise Tax (a “Reduced
Payment”), whichever of the foregoing amounts, taking into account applicable
federal, state and local income taxes and the Excise Tax, results in Executive’s
receipt on an after-tax basis, of the greatest amount of benefits,
notwithstanding that all or some portion of the Payments may be subject to the
Excise Tax.  For the avoidance of doubt, the Payments shall include acceleration
of vesting of equity awards granted by the Company that vest based on service to
the Company and that accelerate in connection with a Change in Control of the
Company, but only to the extent such acceleration of vesting is deemed a
parachute payment with respect to a Change in Control of the Company.

(b)For purposes of determining whether to make a Reduced Payment, if applicable,
the Company shall cause to be taken into account all federal, state and local
income and employment taxes and excise taxes applicable to the Executive
(including the Excise Tax).  If a Reduced Payment is made, the Company shall
reduce or eliminate the Payments in the following order, unless (to the extent
permitted by Section 409A of the Code) Executive elects to have the reduction in
payments applied in a different order: (1) cancellation of accelerated vesting
of options with no intrinsic value, (2) reduction of cash payments, (3)
cancellation of accelerated vesting of equity awards other than options, (4)
cancellation of accelerated vesting of options with intrinsic value and (5)
reduction of other benefits paid to the Executive.  In the event that
acceleration of vesting is reduced, such acceleration of vesting shall be
cancelled in the reverse order of the date of grant of the Executive’s equity
awards.  In the event that cash payments or other benefits are reduced, such
reduction shall occur in reverse order beginning with payments or benefits which
are to be paid farthest in time from the date of the determination.  For
avoidance of doubt, an option will be considered to have no intrinsic value if
the exercise price of the shares subject to the option exceeds the fair market
value of such shares.

(c)All determinations required to be made under this Section 4 (including
whether any of the Payments are parachute payments and whether to make a Reduced
Payment) will be made by a nationally recognized independent accounting firm
selected by the Company.  For purposes of making the calculations required by
this section, the accounting firm may make reasonable assumptions and
approximations concerning applicable taxes and may rely on reasonably, good
faith interpretations concerning the application of Code Sections 280G and
4999.  The Company will bear the costs that the accounting firm may reasonably
incur in connection with the calculations contemplated by this Section 4.  The
accounting firm’s determination will be binding on both Executive and the
Company absent manifest error.

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(d)As a result of uncertainty in the application of Sections 4999 and 280G of
the Code at the time of the initial determination by the accounting firm
hereunder, it is possible that payments will have been made by the Company which
should not have been made (an “Overpayment”) or that additional payments which
will not have been made by the Company could have been made (an “Underpayment”),
consistent in each case with the calculation of whether and to what extent a
Reduced Payment shall be made hereunder.  In either event, the accounting firm
shall determine the amount of the Underpayment or Overpayment that has
occurred.  In the event that the accounting firm determines that an Overpayment
has occurred, the Executive shall promptly repay, or transfer, to the Company
the amount of any such Overpayment; provided, however, that no amount shall be
payable, or transferable, by the Executive to the Company if and to the extent
that such payment or transfer would not reduce the amount that is subject to
taxation under Section 4999 of the Code.  In the event that the accounting firm
determines that an Underpayment has occurred, such Underpayment shall promptly
be paid or transferred by the Company to or for the benefit of the Executive,
together with interest at the applicable federal rate provided in Section
7872(f)(2) of the Code.

(e)If this Section 4 is applicable with respect to an Executive’s receipt of a
Reduced Payment, it shall supersede any contrary provision of any plan,
arrangement or agreement governing the Executive’s rights to the Payments.

5.Company’s Successors.  Any successor to the Company or 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.

6.Miscellaneous Provisions.

(a)Modification or 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 Executive and by an authorized officer of the Company
(other than Executive).  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.

(b)Integration.  This Agreement represents the entire agreement and
understanding between the parties as to the subject matter herein and supersedes
all prior or contemporaneous agreements, whether written or oral, with respect
to the subject matter of this Agreement.

(c)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.

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(d)Tax Withholding.  Any payments provided for hereunder are subject to
reduction to reflect applicable withholding and payroll taxes and other
reductions required under federal, state or local law.

(e)Notices.  Any notice required by the terms of this Agreement shall be given
in writing.  It shall be deemed effective upon (i) personal delivery,
(ii) deposit with the United States Postal Service, by registered or certified
mail, with postage and fees prepaid or (iii) deposit with nationally recognized
overnight courier, with shipping charges prepaid.  Notice shall be addressed to
the Company at its principal executive office (attention General Counsel) and to
Executive at the address that he or she most recently provided to the Company in
accordance with this Subsection (e).

(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)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.

7.At-Will Employment. Nothing contained in this Agreement shall (a) confer upon
Executive any right to continue in the employ of the Company, (b) constitute any
contract or agreement of employment, or (c) interfere in any way with the
at-will nature of Executive’s employment with the Company.

8.Definitions.  The following terms referred to in this Agreement shall have the
following meanings:

(a)“Base Salary” means Executive’s annual base salary as in effect immediately
prior to an Involuntary Termination; provided, however, that in the event of a
Resignation for Good Reason due to a material reduction in Executive’s base
salary, “Base Salary” means Executive’s annual base salary as in effect
immediately prior to such reduction.

(b)“Cause” means Executive’s (i) unauthorized use or disclosure of the Company’s
confidential information or trade secrets, which use or disclosure causes
material harm to the Company, (ii) material breach of any agreement with the
Company, (iii) material failure to comply with the Company’s written policies or
rules, (iv) conviction of, or plea of “guilty” or “no contest” to, a felony
under the laws of the United States or any State, (v) gross negligence or
willful misconduct, (vi) continuing failure to perform assigned duties after
receiving written notification of the failure from the Company or its Board of
Directors or (vii) failure to cooperate in good faith with a governmental or
internal investigation of the Company or its directors, officers or employees,
if the Company has requested such cooperation.  

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(c)“Change in Control” means (i) a sale, conveyance or other disposition of all
or substantially all of the assets, property or business of the Company, except
where such sale, conveyance or other disposition is to a wholly owned subsidiary
of the Company, (ii) a merger or consolidation of the Company with or into
another corporation, entity or person, other than any such transaction in which
the holders of voting capital stock of the Company outstanding immediately prior
to the transaction continue to hold a majority of the voting capital stock of
the Company (or the surviving or acquiring entity) outstanding immediately after
the transaction (taking into account only stock of the Company held by such
stockholders immediately prior to the transaction and stock issued on account of
such stock in the transaction), or (iii)  the direct or indirect acquisition
(including by way of a tender or exchange offer) by any person, or persons
acting as a group, of beneficial ownership or a right to acquire beneficial
ownership of shares representing a majority of the voting power of the then
outstanding shares of capital stock of the Company; provided, however, that a
Change in Control shall not include any transaction or series of related
transactions (1) principally for bona fide equity financing purposes or (2)
effected exclusively for the purpose of changing the domicile of the Company.  A
series of related transactions shall be deemed to constitute a single
transaction for purposes of determining whether a Change in Control has
occurred. In addition, if a Change in Control constitutes a payment event with
respect to any amount that is subject to Code Section 409A, then the transaction
must also constitute a “change in control event” as defined in Treasury
Regulation Section 1.409A-3(i)(5) to the extent required by Code Section 409A.

(d) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.

(e)“Involuntary Termination” means either Executive’s (i) Termination without
Cause or (ii) Resignation for Good Reason.

(f)“Resignation for Good Reason” means a Separation as a result of Executive’s
resignation from employment within 12 months after one of the following
conditions has come into existence without Executive’s consent:  (i) a reduction
in Executive’s annual Base Salary by more than 10%, other than a general
reduction that is part of a cost-reduction program that affects all similarly
situated employees in substantially the same proportions, (ii) a relocation of
Executive’s principal workplace by more than 25 miles from its location prior to
such Change in Control or (iii) 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 the employee gives 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.

(g)“Separation” means a “separation from service” as defined in the regulations
under Code Section 409A.

(h)“Termination Without Cause” means a Separation as a result of the termination
of Executive’s employment by the Company without Cause, provided the individual
is willing and able to continue performing services within the meaning of
Treasury Regulation 1.409A-1(n)(1).

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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 indicated
below.

 

 

COMPANY

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

Date:

 

 

 

 

 

 

 

EXECUTIVE

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

Date:

 

 

 

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GENERAL RELEASE OF ALL CLAIMS

In consideration of the severance benefits to be paid to ____________
(“Executive”) by Arcus Biosciences, Inc. (the “Company”), as described in
Paragraph 1 below, Executive, on Executive’s own behalf and on behalf of
Executive’s heirs, executors, administrators and assigns, to the fullest extent
permitted by applicable law, hereby fully and forever releases and discharges
the Company and its directors, officers, employees, agents, successors,
predecessors, subsidiaries, parent, shareholders, employee benefit plans and
assigns (together called “the Releasees”), from all known and unknown claims and
causes of action including, without limitation, any claims or causes of action
arising out of or relating in any way to Executive’s employment with the
Company, including the termination of that employment.

1.If Executive signs [(and does not revoke)] this General Release of All Claims
(“Release”), the Company will provide Executive with the severance benefits
described in Section __ of the Severance and Change in Control Agreement, dated
_______ __, 20__, between the Company and Executive (the “Severance Agreement”).

2.Executive’s Company equity awards, to the extent vested (for the avoidance of
doubt, including pursuant to the Severance Agreement) and outstanding as of
Executive’s employment termination date, will be treated as provided in the
applicable equity plan and the related award agreements.  Such agreements will
remain in effect in accordance with their terms, and Executive acknowledges that
Executive will remain bound by them.  Any Company equity awards that are
unvested as of Executive’s employment termination date will be automatically
forfeited, and Executive will have no further rights to such awards.  Executive
acknowledges that the enclosed report accurately reflects a summary of
Executive’s outstanding equity awards.

3.Executive understands and agrees that this Release is a full and complete
waiver of all claims including, without limitation, claims of wrongful
discharge, constructive discharge, breach of contract, breach of the covenant of
good faith and fair dealing, harassment, retaliation, discrimination, violation
of public policy, defamation, invasion of privacy, interference with a leave of
absence, personal injury or emotional distress and claims under Title VII of the
Civil Rights Act of 1964, the Fair Labor Standards Act, the Equal Pay Act of
1963, the Americans With Disabilities Act, the Civil Rights Act of 1866, the Age
Discrimination in Employment Act of 1967 (ADEA), the California Labor Code, the
California Fair Employment and Housing Act, the California Family Rights Act,
the Family Medical Leave Act or any other federal or state law or regulation
relating to employment or employment discrimination.  Executive further
understands and agrees that this waiver includes all claims, known and unknown,
to the greatest extent permitted by applicable law.  However, this release
covers only those claims that arose prior to the execution of this
Release.  Execution of this Release does not bar any claim that arises
hereafter, including (without limitation) a claim for breach of this
Release.  In addition, this Release does not cover any claim for indemnification
Executive may have pursuant to the Company’s bylaws, [Executive’s
Indemnification Agreement dated ____] or applicable law or Executive’s right to
coverage under any applicable D&O insurance policy with the Company.

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4.Executive also hereby agrees that nothing contained in this Release shall
constitute or be treated as an admission of liability or wrongdoing by the
Releasees or Executive.

5.In addition, Executive hereby expressly waives any and all rights and benefits
conferred upon Executive by the provisions of Section 1542 of the Civil Code of
the State of California, which states as follows:

A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.

6.If any provision of this Release is found to be unenforceable, it shall not
affect the enforceability of the remaining provisions and the court shall
enforce all remaining provisions to the full extent permitted by law.

7.This Release constitutes the entire agreement between Executive and Releasees
with regard to the subject matter of this Release.  It supersedes any other
agreements, representations or understandings, whether oral or written and
whether express or implied, which relate to the subject matter of this
Release.  Executive understands and agrees that this Release may be modified
only in a written document signed by Executive and a duly authorized officer of
the Company.

8.Executive understands and agrees that the Company shall have no obligation to
provide to Executive any severance benefits described in the Severance and
Change in Control Agreement unless and until Executive has complied with the
requirements described in Section 2(b) of the Severance and Change in Control
Agreement, including executing this Release within the time period specified in
Paragraph 13 below.  

9.Executive understands and agrees that at all times in the future Executive
shall remain bound by Executive’s Proprietary Information and Inventions
Agreement, a copy of which is enclosed herewith.  [List any other agreements
that should survive termination of employment.]

10.[Executive agrees not to disclose to others the terms of the Severance
Agreement or this Release, except that Executive may disclose such information
to Executive’s spouse and to Executive’s attorney or accountant in order for
such attorney or accountant to render services to Executive related to the
Employment Agreement or this Release.]1

11.Executive agrees that Executive will never make any disparaging statements
(orally or in writing) about the Company or its stockholders, directors,
officers, employees, products, services or business practices. The Company
agrees to instruct its officers and directors not to disparage Executive in any
manner likely to be harmful to Executive’s personal or business
reputation.  Nothing in this Section 11 is intended to, and shall not, prohibit
the Executive and the Company (and its officers and directors) from responding
accurately and fully to any question, inquiry or request for information when
required by legal process.

 

1.

Not applicable to an executive officer whose agreement has been publicly filed.

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12.This Release shall be governed by and its provisions interpreted under the
laws of the state of California.

13.[INSERT FOR EMPLOYEES 40 OR OVER ONLY: Executive understands that Executive
has the right to consult with an attorney before signing this
Release.  Executive also understands that Executive has 21 days after receipt of
this Release to review and consider this Release, discuss it with an attorney of
Executive’s own choosing, and decide whether to execute it or not.  Executive
also understands that Executive may revoke this Release during a period of 7
days after Executive signs it and that this Release will not become effective
until after the 7-day revocation period has expired (and then only if Executive
has not revoked this Release).  In order to revoke this Release, within 7 days
after Executive executes this Release Executive must deliver to _____________ at
the Company a letter stating that Executive is revoking it.  Executive
understands that if Executive chooses to revoke this Release within 7 days after
Executive signs it, Executive will not receive any severance benefits and the
Release will have no effect.]  [INSERT FOR EMPLOYEES UNDER 40 – Executive has __
days after receipt of this Release to review and consider this Release, discuss
it with an attorney of Executive’s own choosing, and decide whether to execute
it or not.]

14.Executive states that before signing this Release, Executive:

 

•

Has read it,

 

•

Understands it,

 

•

Knows that he or she is giving up important rights,

 

•

Is aware of his or her right to consult an attorney before signing it, and

 

•

Has signed it knowingly and voluntarily.

 

Date:

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Print Full Name

 

 

 

 

 

 

Enclosures:

Equity Report

Proprietary Information and Inventions Agreement

[Indemnification Agreement]

[LIST ANY OTHERS]

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