EX-10.7



 Exhibit 10.7 

ARMO BIOSCIENCES 
 September 5, 2017 

Joseph Leveque, MD 
 [Address] 

 

	Re:	Employment Offer: Employment Agreement 

 Dear Joe: 

ARMO BioSciences, Inc. (the “Company”) is pleased to offer you employment on the following terms: 

1.    Position. Your initial title will be Chief Medical Officer, and you will initially report to the
Company’s Chief Executive Officer. This is a full-time position. You will be responsible for the establishment of a highly competitive team and supervise all activities related to clinical and regulatory development at the Company. As the
company grows, your responsibilities may change. While you render services to the Company, you will not engage in any other employment, consulting or other business activity (whether full-time or part-time) that would create a conflict of interest
with the Company. By signing this letter agreement, you confirm to the Company that you have no contractual commitments or other legal obligations that would prohibit you from performing your duties for the Company. 

2.    Cash Compensation. You will earn a monthly salary in the gross amount of $37,500, which is equivalent
to $450,000 on an annualized basis. At the start date of your employment you will receive a sign.-on bonus of $200,000 (the “Sign-on Bonus”). You will receive
an additional payment of $145,000 that will be paid at the time of the pay-out of the 2017 performance bonus (the “2017 Bonus”). In the event that you resign from your position at the Company or if
you are terminated for Cause prior to January 1, 2019, you agree to return the 11111 amount of the Sign-on Bonus and the 2018 Bonus. 

For fiscal year 2018 and each fiscal year thereafter, you will be eligible to earn an annual bonus up to 40% of the amount of base salary actually paid to you
during that calendar year. The precise amount of such bonus will be determined by the Board, based on the extent to which the Company meets minimum and exceeds minimum performance-related goals proposed by management and approved by the Board for
the Company’s fiscal year ending December 31. The determinations of the Company’s Board of Directors with respect to your bonus will be final and binding. 








 Dr. Leveque 

September 4, 2017 
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 Any bonus for a fiscal year will be paid within 21/2 months after the close of that fiscal year, but only if
you are still employed by the Company at the time of payment. 
 In addition to your regular salary, the Company will pay you an amount equal to $3,500 per
month from the time you start employment at the Company until December 31, 2018. 
 3.    Employee
Benefits. As a regular employee of the Company, you will be eligible to participate in a number of Company-sponsored benefits. In addition, you will be entitled to paid vacation in accordance with the Company’s vacation policy, as in
effect from time to time. 
 4.    Stock Options. Subject to the approval of the Company’s Board of
Directors or its Compensation Committee, you Swill be granted an option to purchase 1,359,997 shares of the Company’s Common Stock (the “Option”). The exercise price per share of the Option will be determined by the Board of Directors
or the Compensation Committee when the Option is granted. The Option will be subject to the terms and conditions applicable to options granted under the Company’s Stock Plan (the “Plan”), as described in the Plan and the applicable
Stock Option Agreement. You will vest 25% of the Option shares after 12 months of continuous service, and the balance will vest in equal monthly installments over the next 36 months of continuous service, as described in the applicable Stock Option
Agreement. You will vest in 100% of your remaining unvested Option shares if (a) the Company is subject to a Change in Control before your service with the Company terminates and (b) you are subject to an Involuntary Termination within 12
months after that Change in Control. The Option will be immediately exercisable, but in the event that your service terminates for any reason before you vest in the shares, the unvested portion of the purchased shares will be subject to repurchase
by the Company pursuant to the terms of the Plan. 
 5.    Proprietary Information and
Inventions Agreement. Like all Company employees, you will be required, as a condition of your employment with the Company, to sign the Company’s standard Proprietary Information and Inventions Agreement, a copy of which is
attached hereto as Exhibit A. 
 6.    Employment Relationship. Employment with the Company is for no
specific period of time. Your employment with the Company will be “at will,” meaning that either you or the Company may terminate your employment at any time and for any reason, with or without cause. Any contrary representations that may
have been made to you are superseded by this letter agreement. This is the full and complete agreement between you and the Company on this term. Although your job duties, title, compensation and benefits, as well as the Company’s personnel
policies and procedures, may change from time to time, the “at will” nature of your employment may only be changed in an express written agreement signed by you and a duly authorized officer of the Company (other than you). 








 Dr. Leveque 

September 4, 2017 
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 7.    Tax Matters. 

(a)    Withholding. All forms of compensation referred to in this letter agreement are subject to reduction to
reflect applicable withholding and payroll taxes and other deductions required by law. 
 (b)    Tax
Advice. You are encouraged to obtain your own tax advice regarding your compensation from the Company. You agree that the Company does not have a duty to design its compensation policies in a manner that minimizes your tax liabilities, and
you will not make any claim against the Company or its Board of Directors related to tax liabilities arising from your compensation. 

8.    Interpretation, Amendment and Enforcement. This letter agreement and Exhibit A supersede
and replace any prior agreements, representations or understandings (whether written, oral, implied or otherwise) between you and the Company and constitute the complete agreement between you and the Company regarding the subject matter set forth
herein. This letter agreement may not be amended or modified, except by an express written agreement signed by both you and a duly authorized officer of the Company. The terms of this letter agreement and the resolution of any disputes as to the
meaning, effect, performance or validity of this letter agreement or arising out of, related to, or in any way connected with, this letter agreement, your employment with the Company or any other relationship between you and the Company (the
“Disputes”) will be governed by California law, excluding laws relating to conflicts or choice of law. You and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in California in connection
with any Dispute or any claim related to any Dispute. 
 9.    Definitions. The following terms have the meaning
set forth below wherever they are used in this letter agreement: 
 “Cause” means a determination by the Board that your
employment be terminated for any of the following reasons: (i) failure or refusal to comply in any material respect with lawful policies, standards or regulations of Company; (ii) a violation of a federal or state law or regulation
applicable to the business of the Company; (iii) conviction or plea of no contest to a felony under the laws of the United States or any State; (iv) fraud or misappropriation, of property belonging to the Company or its affiliates;
(v) a breach in any material respect of the terms of any confidentiality, invention assignment or proprietary information agreement with the Company or with a former employer, (vi) your failure to perform your material duties after having
received written notice of such failure and at least thirty (30) days to cure such failure; or (vii) your misconduct or gross negligence in connection with the performance of your duties. 

“Change in Control” means (i) the consummation of a sale, merger or consolidation of the Company with or
into another entity or (ii) the dissolution, liquidation or winding up of the Company. The foregoing notwithstanding, a sale, merger or consolidation of the Company shall not constitute a “Corporate Transaction” if immediately after
such sale, 








 Dr. Leveque 

September 4, 2017 
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merger or consolidation a majority of the voting power of the capital stock of the continuing or surviving entity, or any direct or indirect parent corporation of such continuing or surviving
entity, will be owned by the persons who were the Company’s stockholders immediately prior to such sale, merger or consolidation in substantially the same proportions as their ownership of the voting power of the Company’s capital stock
immediately prior to such merger or consolidation.. 
 “Involuntary Termination” means either (a) your
Termination Without Cause or (b) your Resignation for Good Reason. 
 “Resignation for Good
Reason” means that you resign within 12 months after one of the following conditions has come into existence without your consent: (i) a reduction in your base salary by more than 10%; (ii) a material, diminution of your authority,
duties or responsibilities; or (iii) a relocation of your principal workplace by more than 30 miles. A condition shall not be considered “Good Reason” unless you give the Company written notice of such condition within 90 days after
such condition comes into existence and the Company fails to remedy such condition within 30 days after receiving your written notice_ 

“Separation” means a “separation from service,” as defined in the regulations under Section 409A of the Code.

 “Termination Without Cause” means a Separation as a result of a termination of your employment by the
Company without Cause, provided you are willing and able to continue performing services within the meaning of Treasury Regulation 1A09A-1(n)(1). 

* * * * * 
 We hope that you will
accept our offer to join the Company. You may indicate your agreement with these terms and accept this offer by signing and dating both the enclosed duplicate original of this letter agreement and the enclosed Proprietary Information and Inventions
Agreement and returning them to me. As required by law, your employment with the Company is contingent upon your providing legal proof of your identity and authorization to work in the United States. 

The start date of your employment at the Company is October 1, 2017. Please discuss with the CEO in case this date is not feasible. 

 

	
	Very truly yours,
	
	ARMO BIOSCIENCES, INC.
	
	             /s/ Peter Van
Vlasselaer

	Peter Van Vlasselaer, President and CEO










 Dr. Leveque 

September 4, 2017 
  Page
 5
 
  

 I have read and accept this employment offer: 

 

	
	 /s/ Joseph A. Leveque

	Signature of Joseph A. Leveque, MD
	Dated: September 5, 2017








 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT 

The following confirms and memorializes an agreement that ARMO Biosciences, Inc., a Delaware corporation (the “Company”) and I
(Joseph A. Leveque, MD) have had since the commencement of my employment (which term, for purposes of this agreement, shall be deemed to include any relationship of service to the Company that I may have had prior to actually becoming an employee)
with the Company in any capacity and that is and has been a material part of the consideration for my employment by Company: 

1.    I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict with
this Agreement or my employment with Company. I will not violate any agreement with or rights of any third party or, except as expressly authorized by Company in writing hereafter, use or disclose my own or any third party’s confidential
information or intellectual property when acting within the scope of my employment or otherwise on behalf of Company. Further, I have not retained anything containing any confidential information of a prior employer or other third party, whether or
not created by me. 
 2.    Company shall own all right, title and interest (including patent rights, copyrights, trade
secret rights, mask work rights, sun generis database rights and all other intellectual property rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know-how, ideas and information made or conceived or reduced to practice, in whole or in part, by me during the term of my employment with Company to and only to the fullest extent allowed by California Labor Code
Section 2870 (which is attached as Appendix A) (collectively “Inventions”) and I will promptly disclose all Inventions to Company. Without disclosing any third party confidential information, I will also disclose anything I believe is
excluded by Section 2870 so that the Company can make an independent assessment I hereby make all assignments necessary to accomplish the foregoing. I shall further assist Company, at Company’s expense, to further evidence, record and
perfect such assignments, and to perfect, obtain, maintain, enforce, and defend any rights specified to be so owned or assigned. I hereby irrevocably designate and appoint Company as my agent and attorney-in-fact, coupled with an interest and with full power of substitution, to act for and in my behalf to execute and file any document and to do all other lawfully permitted acts to further the purposes
of the foregoing with the same legal force and effect as if executed by me. Without limiting Section 1 or Company’s other rights and remedies, if, when acting within the scope of my employment or otherwise on behalf of Company, I use or
disclose my own or any third party’s confidential information or intellectual property (or if any Invention cannot be fully made, used, reproduced, distributed and otherwise exploited without using or violating the foregoing), Company will have
and I hereby grant Company a perpetual, irrevocable, worldwide royalty-free, non-exclusive, sublicensable right and license to exploit and exercise all such confidential information and intellectual property
rights. 
 3.    To the extent allowed by law, paragraph 2 includes all rights of paternity, integrity, disclosure and
withdrawal and any other rights that may be known as or referred to as “moral rights,” “artist’s rights,” “droit moral,” or the like (collectively “Moral Rights”). To the extent I retain any such Moral
Rights under applicable law, I hereby ratify and consent to any action that may be taken with respect to such Moral Rights by or authorized by Company and agree not to assert any Moral Rights with respect thereto. I will confirm any such
ratifications. consents and agreements from time to time as requested by Company. 







 4.    I agree that all Inventions and all other business, technical and
financial information (including, without limitation, the identity of and information relating to customers or employees) I develop, learn or obtain during the term of my employment that relate to Company or the business or demonstrably anticipated
business of Company or that are received by or for Company in confidence, constitute “Proprietary Information.- I will hold in confidence and not disclose or, except within the scope of my employment, use any Proprietary Information. However, I
shall not be obligated under this paragraph with respect to information I can document is or becomes readily publicly available without restriction through no fault of mine. Upon termination of my employment, I will promptly return to Company all
items containing or embodying Proprietary Information (including all copies), except that I may keep my personal copies of (1) my compensation records, (ii) materials distributed to shareholders generally and (iii) this Agreement. I
also recognize and agree that I have no expectation of privacy with respect to Company’s telecommunications, networking or information processing systems (including, without limitation, stored computer files, email messages and voice messages)
and that my activity and any files or messages on or using any of those systems may be monitored at any time without notice. 

5.    Until one year after the term of my employment, I will not encourage or solicit any employee or consultant of
Company to leave Company for any reason (except for the bona fide firing of Company personnel within the scope of my employment). 

6.    I agree that during the term of my employment with Company (whether or not during business hours), I will not engage
in any activity that is in any way competitive with the business or demonstrably anticipated business of Company, and I will not assist any other person or Organization in competing or in preparing to compete with any business or demonstrably
anticipated business of Company. 
 7.    I agree that this Agreement is not an employment contract for any particular
term and that I have the right to resign and Company has the right to terminate my employment at will, at any time, for any or no reason, with or without cause. In addition, this Agreement does not purport to set forth all of the terms and
conditions of my employment, and, as an employee of Company, I have obligations to Company which are not set forth in this Agreement. However, the terms of this Agreement govern over any inconsistent terms and can only be changed by a subsequent
written agreement signed by the President of Company. 
 8.    I agree that my obligations under paragraphs 2, 3, 4 and
5 of this Agreement shall continue in effect after termination of my employment, regardless of the reason or reasons for termination, and whether such termination is voluntary or involuntary on my part, and that Company is entitled to communicate my
obligations under this Agreement to any future employer or potential employer of mine. My obligations under paragraphs 2, 3 and 4 also shall be binding upon my heirs, executors, assigns, and administrators and shall inure to the benefit of Company,
its subsidiaries, successors and assigns. 







 9.    Any dispute in the meaning, effect or validity of this Agreement shall
be resolved in accordance with the laws of the State of California without regard to the conflict of laws provisions thereof. I further agree that if one or more provisions of this Agreement are held to be illegal or unenforceable under applicable
California law, such illegal or unenforceable portion(s) shall be limited or excluded from this Agreement to the minimum extent required so that this Agreement shall otherwise remain in -MI force and effect
and enforceable in accordance with its terms. This Agreement is fully assignable and transferable by Company, but any purported assignment or transfer by me is void. I also understand that any breach of this Agreement will cause irreparable harm to
Company for which damages would not be an adequate remedy, and, therefore, Company will be entitled to injunctive relief with respect thereto in addition to any other remedies and without any requirement to post bond_ 

NOTICE: This agreement does not affect any immunity under 18 USC Sections 1833(b) (1) or (2), which read as follows (note that for purposes of this
statute only, individuals performing work as contractors or consultants are considered to be employees): 
 (1)    An
individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either
directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing
is made under seal. 
 (2)    An individual who files a lawsuit for retaliation by an employer for reporting a suspected
violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual (A) files any document containing the trade secret under seal; and (B) does
not disclose the trade secret, except pursuant to court order. 
 I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE
OBLIGATIONS WHICH IT IMPOSES UPON ME WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT. I SIGN THIS AGREEMENT VOLUNTARILY AND FREELY, IN DUPLICATE, WITH THE UNDERSTANDING THAT THE COMPANY
WILL RETAIN ONE COUNTERPART AND THE OTHER COUNTERPART WILL BE RETAINED BY ME. 








					
	September 5, 2017	 		 	Employee
			
		 		 	 /s/ Joseph A. Leveque

		 		 	Signature
			
		 		 	 Joseph A. Leveque, MD

		 		 	Name (Printed)

  

			
	Accepted and Agreed to:
		
	By:	 	 /s/ Peter Van Vlasselaer

	Name:	 	Peter Van Vlasselaer, PhD
	Title:	 	President and CEO








 APPENDIX A 

California Labor Code Section 2870. Application of provision providing that employee shall assign or offer to assign rights in invention
to employer. 
 (a)    Any provision in an employment agreement which provides that an employee shall assign, or offer
to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret
information except for those inventions that either: 
 (1)    Relate at the time of conception or reduction to
practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or 

(2)    Result from any work performed by the employee for his employer. 

(b)    To the extent a provision in an employment agreement purports to require an employee to assign an invention
otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.