Document:

EX-10.16

 Exhibit 10.16 
  

 
 Rules of the Mereo BioPharma Group plc Deferred Bonus Share Plan 

Adopted by the board of directors of Mereo BioPharma Group plc on 4 March 2016 

Amended by the board of directors of Mereo BioPharma Group plc on 20 March 2018 

Expiry date: 9 June 2026 

 Contents 
  

							
	1	 	DEFINITIONS AND INTERPRETATION	 	 	1	 
			
	2	 	GRANT OF AWARDS	 	 	3	 
			
	3	 	RESTRICTIONS ON TRANSFER AND BANKRUPTCY	 	 	3	 
			
	4	 	DIVIDEND EQUIVALENTS	 	 	3	 
			
	5	 	INDIVIDUAL LIMIT	 	 	3	 
			
	6	 	REDUCTION OF AWARDS AND CLAWBACK	 	 	3	 
			
	7	 	VESTING AND EXERCISE	 	 	5	 
			
	8	 	TAXATION AND REGULATORY ISSUES	 	 	5	 
			
	9	 	CASH EQUIVALENT	 	 	5	 
			
	10	 	CESSATION OF EMPLOYMENT	 	 	6	 
			
	11	 	CORPORATE EVENTS	 	 	6	 
			
	12	 	ADJUSTMENTS	 	 	8	 
			
	13	 	AMENDMENTS	 	 	8	 
			
	14	 	LEGAL ENTITLEMENT	 	 	8	 
			
	15	 	GENERAL	 	 	8	 
		
	 SCHEDULE
	 	 	10	 
			
	1	 	CASH AWARDS	 	 	10	 

					
	THE MEREO BIOPHARMA GROUP PLC DEFERRED BONUS SHARE PLAN
	
	 1   DEFINITIONS AND INTERPRETATION

	
	 1.1  In this Plan, unless otherwise stated, the words and expressions
below have the following meanings:

  

			
	“Admission Date”	  	the day on which the Shares are admitted to the Official List
of the UKLA and to trading on AIM;
		
	“AIM”	  	the Alternative Investment Market of the London Stock
Exchange;
		
	“AIM Rules”	  	the rules of AIM, as amended from time to time;
		
	“Award”	  	a Conditional Award or a Nil-Cost Option;
		
	“Board”	  	subject to rule 11.8, the board of the Company or any duly
authorised committee of the board;
		
	“Bonus”	  	the bonus payable (if any) to an Eligible Employee pursuant
to an annual bonus plan operated by any Group Member;
		
	“Company”	  	Mereo BioPharma Group Plc registered in England and Wales
under number 9481161;
		
	“Conditional Award”	  	a right to acquire Shares in accordance with the rules of the
Plan with no Exercise Period;
		
	“Control”	  	the meaning given by section 995 of the Income Tax Act
2007;
		
	“Dealing Day”	  	any day on which the London Stock Exchange is open for
business;
		
	“Dealing Restrictions”	  	restrictions imposed by the Company’s share dealing code,
the AIM Rules or any applicable laws or regulations which
impose restrictions on share dealing;
		
	“Deferred Bonus”	  	the amount of Bonus which is to be delivered in the form of
an Award under rule 2;
		
	“Eligible Employee”	  	an employee (including an executive director) of the
Company or any of its Subsidiaries;
		
	“Exercise Period”	  	the period during which a Nil-Cost Option may be exercised;
		
	“Financial Year”	  	a financial year of the Company within the meaning of
section 390 of the Companies Act 2006;
		
	“Grant Date”	  	the date on which an Award is granted;
		
	“Group Member”	  	the Company, any Subsidiary of the Company, any company
which is (within the meaning of section 1159 of the
Companies Act 2006) the Company’s holding company or a
Subsidiary of the Company’s holding company or,
if the
Board so determines, any body corporate in relation to which
the Company is able to exercise at least 20% of the equity
voting rights and “Group” will be construed accordingly;

  
 1 

			
		
	 “Internal Reorganisation”
	  	where immediately after a change of Control of the Company, all or substantially all of the issued share capital of the acquiring company is owned directly or indirectly by the persons who were shareholders in the Company
immediately before the change of Control;
		
	 “Nil-Cost Option”
	  	a right to acquire Shares in accordance with the rules of the Plan during an Exercise Period;
		
	 “Normal Vesting Date”
	  	the date on which an Award will normally Vest, which will be the third anniversary of the Grant Date (or such other date determined by the Board at the Grant Date);
		
	 “Participant”
	  	any person who holds an Award (or, in respect of rules 6.4 and 6.6, any person to whom Shares have been issued or transferred or to whom cash is paid in respect of an Award) or following his death, his personal
representatives;
		
	 “Plan”
	  	the Mereo BioPharma Group Plc Deferred Bonus Share Plan in its present form or as from time to time amended;
		
	 “Share”
	  	a fully paid ordinary share in the capital of the Company;

  

					
	 “Subsidiary”
	  	the meaning given by section 1159 of the Companies Act 2006;
		
	 “Tax Liability”
	  	any tax or social security contributions liability in connection with an Award for which the Participant is liable and for which any Group Member or former Group Member is obliged to account to any relevant
authority;
		
	 “Trustee”
	  	the trustee or trustees for the time being of any employee benefit trust, the beneficiaries of which include Eligible Employees;
		
	 “UKLA”
	  	the United Kingdom Listing Authority or any successor body;
			
	 “Vest”
	  	i)	  	 in relation to a Conditional Award, the point at which a

Participant becomes entitled to receive the Shares; and

		  		  
			
		  	ii)	  	 in relation to a Nil-Cost Option, the point at which it

becomes capable of exercise,

		  		  
		
		  	and “Vesting”, “Vested” and “Vesting Date” will be construed
		  	accordingly.

  

	1.2	References in the Plan to: 

  

	 	1.2.1	any statutory provisions are to those provisions as amended or re-enacted from time to time; 

  

	 	1.2.2	the singular include the plural and vice versa; and 

  

	 	1.2.3	the masculine include the feminine and vice versa. 

  

	1.3	Headings do not form part of the Plan. 

  
 2 

	2	GRANT OF AWARDS 

  

	2.1	Subject to rule 2.2 and 2.3, the Board may grant an Award to an Eligible Employee in its discretion subject to the rules of the Plan and upon such additional terms as the Board may determine. 

 

	2.2	The grant of an Award will be subject to obtaining any approval or consent required by AIM (or other relevant authority), any Dealing Restrictions and any other applicable laws or regulations (whether in the UK or
overseas). 

  

	2.3	An Award may only be granted to an Eligible Employee who has earned a Bonus for the Financial Year immediately preceding the Financial Year in which the Grant Date occurs. 

 

	2.4	An Award will be granted over such number of Shares as have at the Grant Date a market value (as determined by the Board) equal to the Deferred Bonus. 

 

	2.5	To the extent any Award exceeds the limit in rule 2.4 it will be scaled back accordingly. 

  

	2.6	Awards must be granted by deed and, as soon as reasonably practicable after the Grant Date, Participants must be notified of the terms of their Award. 

 

	2.7	No Award may be granted under the Plan after the tenth anniversary of the Admission Date. 

  

	3	RESTRICTIONS ON TRANSFER AND BANKRUPTCY 

  

	3.1	An Award must not be transferred, assigned, charged or otherwise disposed of in any way (except in the event of the Participant’s death, to his personal representatives) and will lapse immediately on any attempt to
do so. 

  

	3.2	An Award will lapse immediately if the Participant is declared bankrupt or, if the Participant is outside the UK, any analogous event occurs. 

 

	4	DIVIDEND EQUIVALENTS 

  

	4.1	The Board may decide at any time prior to the issue or transfer of the Shares in respect of which an Award Vests that the Participant will receive an amount (in cash and/or additional Shares) equal in value to any
dividends that would have been paid on those Shares on such terms and over such period (ending no later than the Vesting Date) as the Board may determine. This amount may assume the reinvestment of dividends (on such basis as the Board may
determine) and may exclude or include special dividends. 

  

	4.2	Any such amount will be payable as soon as reasonably practicable after Vesting or, in the case of a Nil-Cost Option, exercise, of the relevant Award. 

 

	5	INDIVIDUAL LIMIT 

  

	5.1	No Eligible Employee may be granted Awards which would, at the time they are granted, cause the market value (as determined by the Board) of all the Shares subject to Awards granted to that Eligible Employee in respect
of a particular financial year of the Company to exceed 100 per cent. of salary, and to the extent any Award exceeds this limit it will be scaled back accordingly. 

 

	6	REDUCTION OF AWARDS AND CLAWBACK 

  

	6.1	Notwithstanding any other rule of the Plan, this rule 6 applies to any Award and will continue to apply after the termination of a Participant’s office or employment with a Group Member for any reason whether or
not the termination is lawful. 

  

	6.2	The circumstances in which rules 6.3 and 6.4 may apply are: 

  
 3 

	 	6.2.1	a material misstatement of the Company’s accounts; or 

  

	 	6.2.2	an error in assessing the information or assumptions by reference to which the Bonus was determined, such that the Bonus payable was in excess of the Bonus that would have been payable should the circumstances not have
occurred; or 

  

	 	6.2.3	fraudulent or material misconduct on the part of the Participant 

 occurring, unless rule 6.5
applies, within the period ending on the third anniversary of the Grant Date applying to an Award. 
  

	6.3	The Board may, in its discretion, determine at any time prior to the earlier of the delivery of cash or shares comprised in an Award and, unless rule 6.5 applies, the third anniversary of the Grant Date applying to an
Award, to: 

  

	 	6.3.1	reduce (including to zero) the number of Shares to which an Award relates; and/or 

  

	 	6.3.2	impose further conditions on an Award. 

  

	6.4	The Board may, in its discretion, determine at any time after the delivery of cash or Shares comprised in an Award, and unless, rule 6.5 applies, prior to the third anniversary of the Grant Date applying to an Award,
to: 

  

	 	6.4.1	require a Participant to make a cash payment to the Company in respect of some or all of the Shares or cash delivered to him under the Award; and/or 

 

	 	6.4.2	require a Participant to transfer for nil consideration some or all of the Shares delivered to him under the Award 

and the Board will have the discretion to determine the basis on which the amount of cash or Shares is calculated, including whether and if so
to what extent to take account of any tax or social security liability applicable to the Award. 
  

	6.5	If the action or conduct of any Participant, Group Member or relevant business unit is under investigation prior to the third anniversary of the Grant Date applying to an Award pursuant to this rule 6 and such
investigation has not yet been concluded by that date, the period referred to in rules 6.2, 6.3 and 6.4 will end on such later date as the Board considers appropriate to allow such investigation to be concluded. 

 

	6.6	The Board may decide to: 

  

	 	6.6.1	reduce (including to zero) the number of Shares to which an Award relates; 

  

	 	6.6.2	impose further conditions on an Award; and/or 

  

	 	6.6.3	require a Participant to transfer for nil consideration some or all of the Shares delivered to him under an Award or make a cash payment to the Company in respect of some or all of the Shares delivered to him under an
Award 

 to effect the recovery of sums paid or Shares delivered under any provisions similar to this rule 6 which are included
in any bonus plan or share plan (other than the Plan) operated by any Group Member and if the Board decides to apply rule 6.6.3, the Board will have the discretion to determine the basis on which the amount of cash or Shares is calculated, including
whether and if so to what extent to take account of any tax or social security liability applicable to the Award. 
  

	6.7	For the purposes of this rule 6, references to Group Member or a relevant business unit include references to any former Group Member or former business unit. 

  
 4 

	6.8	If the Board exercises its discretion in accordance with this rule 6, it will confirm this in writing to each Participant and, if necessary, the Trustee. 

 

	7	VESTING AND EXERCISE 

  

	7.1	Subject to rules 8.2, 10 and 11, an Award will Vest: 

  

	 	7.1.1	on the Normal Vesting Date; or 

  

	 	7.1.2	if on the Normal Vesting Date (or on any other date on which an Award is due to Vest under rule 10 or 11) a Dealing Restriction applies to the Award, on the date on which such Dealing Restriction lifts; and

 a Nil-Cost Option may then be exercised during the period ending on the first anniversary of the date on which it Vested (or
such shorter period as the Board may determine on or prior to the Grant Date) in such manner as the Board determines, after which time it will lapse. 
  

	7.2	Subject to rules 8 and 9, where a Conditional Award has Vested or a Nil-Cost Option has been exercised, the number of Shares in respect of which the Award has Vested or been exercised together with any additional Shares
or cash to which a Participant becomes entitled under rule 4 will be issued, transferred or paid (as applicable) to the Participant as soon as reasonably practicable thereafter. 

 

	8	TAXATION AND REGULATORY ISSUES 

  

	8.1	A Participant will be responsible for and indemnifies each relevant Group Member and the Trustee against any Tax Liability relating to his Award. Any Group Member and/or the Trustee may withhold an amount equal to such
Tax Liability from any amounts due to the Participant (to the extent such withholding is lawful) and/or make any other arrangements as it considers appropriate to ensure recovery of such Tax Liability including, without limitation, the sale of
sufficient Shares acquired subject to the Award to realise an amount equal to the Tax Liability. 

  

	8.2	The Vesting of a Conditional Award, the exercise of a Nil-Cost Option and the issue or transfer of Shares under the Plan will be subject to obtaining any approval or consent required by AIM (or any other relevant
authority), any Dealing Restrictions, or any other applicable laws or regulations (whether in the UK or overseas). 

  

	9	CASH EQUIVALENT 

  

	9.1	Subject to rule 9.2, at any time prior to the date on which Shares in respect of which an Award has Vested or, in the case of a Nil-Cost Option, has been exercised and, in both cases, Shares have been issued or
transferred to a Participant, the Board may determine that, in substitution for his right to acquire some or all of the Shares to which his Award relates, the Participant will instead receive a cash sum. The cash sum will be equal to the market
value (as determined by the Board) of that number of the Shares which would otherwise have been issued or transferred and for these purposes: 

  

	 	9.1.1	in the case of a Conditional Award, market value will be determined on the date of Vesting; 

  

	 	9.1.2	in the case of a Nil-Cost Option, market value will be determined on the date of exercise; and 

  

	 	9.1.3	in either case the cash sum will be paid to the Participant as soon as practicable after the Vesting of the Conditional Award or the exercise of the Nil-Cost Option, net of any deductions (including but not limited to
any Tax Liability or similar liabilities) as may be required by law. 

  

	9.2	The Board may determine that this rule 9 will not apply to an Award or any part of it. 

  
 5 

	10	CESSATION OF EMPLOYMENT 

  

	10.1	Except where a Participant is summarily dismissed and unless the Board determines that an Award will Vest in accordance with rule 10.2, an Award which has not yet Vested as at the date of cessation will continue and,
subject to rule 11, Vest on the Normal Vesting Date. 

  

	10.2	If the Board determines that an Award which has not yet Vested at the date of cessation will Vest in accordance with this rule 10.2, it will Vest as soon as reasonably practicable following the date of cessation.

  

	10.3	A Nil-Cost Option that Vests under rule 10 may, subject to rule 11, be exercised for a period of 12 months (or such other period as the Board may determine) from the date of Vesting, after which time it will lapse.

  

	10.4	Except where a Participant is summarily dismissed, a Nil-Cost Option which has Vested prior to the date of cessation may, subject to rule 11, be exercised during the remainder of the original Exercise Period applicable
to his Award, after which time it will lapse. 

  

	10.5	For the purposes of the Plan, no person will be treated as ceasing to hold office or employment with a Group Member until that person no longer holds: 

 

	 	10.5.1	an office or employment; or 

  

	 	10.5.2	a right to return to work 

 with any Group Member. 

 

	11	CORPORATE EVENTS 

  

	11.1	Where any of the events described in rule 11.2 occur, then subject to rules 11.5 and 11.7, all Awards which have not yet Vested will Vest at the time of such event. Nil-Cost Options (whether Vested pursuant to this rule
or otherwise) will be exercisable for one month (or such other period as the Board may determine) from the date of the relevant event, after which time all Nil-Cost Options will lapse. 

 

	11.2	The events referred to in rule 11.1 are: 

  

	 	11.2.1	General offer 

 If any person (either alone or together with any person acting in concert with
him): 
  

	 	(i)	obtains Control of the Company as a result of making a general offer to acquire Shares; or 

  

	 	(ii)	already having Control of the Company, makes an offer to acquire all of the Shares other than those which are already owned by him 

and such offer becomes wholly unconditional. 
  

	 	11.2.2	Scheme of arrangement 

 A compromise or arrangement in accordance with section 899 of the
Companies Act 2006 (or any similar legislation or rules in a jurisdiction outside the United Kingdom) for the purposes of a change of Control of the Company which is sanctioned by the Court. 

 

	11.3	Winding-up 

 On the passing of a resolution for the voluntary winding-up or the making of an
order for the compulsory winding-up of the Company, the Board will determine: 

  
 6 

	 	11.3.1	whether and to what extent Awards which have not yet Vested will Vest, unless the Board determines otherwise, taking into account the period of time from the Grant Date to the date of the relevant event; and

  

	 	11.3.2	the period of time during which any Vested Nil-Cost Option may be exercised, after which time it will lapse. 

To the extent that an Award does not Vest, it will lapse immediately. 

 

	11.4	Other events 

 If the Company is or may be affected by a demerger, delisting, special dividend
or other event which in the opinion of the Board, may affect the current or future value of Shares, the Board will determine: 
  

	 	11.4.1	whether and to what extent Awards which have not yet Vested will Vest, unless the Board determines otherwise, taking into account the period of time from the Grant Date to the date of the relevant event; and

  

	 	11.4.2	the period of time during which any Vested Nil-Cost Option may be exercised, after which time it will lapse. 

To the extent that an Award does not Vest, it will lapse immediately. 

 

	11.5	Exchange – unvested Awards 

 An unvested Award will not Vest under rule 11.1 but will be
exchanged on the terms set out in rule 11.7 to the extent that: 
  

	 	11.5.1	an offer to exchange the Award is made and accepted by a Participant; or 

  

	 	11.5.2	there is an Internal Reorganisation. 

  

	11.6	Exchange - Vested Nil-Cost Options 

 To the extent that there is an Internal Reorganisation, a
Vested Nil-Cost Option will be exchanged on the terms set out in rule 11.7. 
  

	11.7	Exchange terms 

 If this rule 11.7 applies, the Existing Award will not Vest but will be
exchanged in consideration of the grant of a new award (“the New Award”) which, in the opinion of the Board, is equivalent to the Existing Award, but relates to shares in a different company (whether the acquiring company or a
different company). Unless the Board determines otherwise, the rules of this Plan will be construed in relation to the New Award as if: 
  

	 	11.7.1	the New Award were an Award granted under the Plan at the same time as the Award; 

  

	 	11.7.2	references to the Company were references to the company whose shares are subject to the New Award; and 

  

	 	11.7.3	references to Shares were references to shares in the company whose shares are subject to the New Award. 

  

	11.8	Meaning of Board 

 Any reference to the Board in this rule 11 means the members of the Board
immediately prior to the relevant event. 

  
 7 

	12	ADJUSTMENTS 

  

	12.1	The number of Shares subject to an Award may be adjusted in such manner as the Board determines, in the event of: 

  

	 	12.1.1	any variation of the share capital of the Company; or 

  

	 	12.1.2	a demerger, delisting, special dividend, rights issue or other event which may, in the opinion of the Board, affect the current or future value of Shares. 

 

	13	AMENDMENTS 

  

	13.1	Except as described in this rule 13, the Board may at any time amend the rules of the Plan or the terms of any Award. 

  

	13.2	No amendment to the material disadvantage of existing rights of Participants will be made under rule 13.1 unless: 

  

	 	13.2.1	every Participant who may be affected by such amendment has been invited to indicate whether or not he approves the amendment; and 

  

	 	13.2.2	the amendment is approved by a majority of those Participants who have so indicated. 

  

	13.3	No amendment will be made under this rule 13 if it would prevent the Plan from being an employees’ share scheme in accordance with section 1166 of the Companies Act 2006. 

 

	14	LEGAL ENTITLEMENT 

  

	14.1	This rule 14 applies during a Participant’s employment with any Group Member and after the termination of such employment, whether or not the termination is lawful. 

 

	14.2	Nothing in the Plan or its operation forms part of the terms of employment of a Participant and the rights and obligations arising from a Participant’s employment with any Group Member are separate from, and are
not affected by, his participation in the Plan. Participation in the Plan does not create any right to continued employment with a Group Member for any Participant. 

 

	14.3	The grant of any Award to a Participant does not create any right for that Participant to be granted any further Awards or to be granted Awards on any particular terms, including the number of Shares to which Awards
relate. 

  

	14.4	By participating in the Plan, a Participant waives all rights to compensation for any loss in relation to the Plan, including: 

  

	 	14.4.1	any loss or reduction of any rights or expectations under the Plan in any circumstances or for any reason (including lawful or unlawful termination of the Participant’s employment); 

 

	 	14.4.2	any exercise of a discretion or a decision taken in relation to an Award or to the Plan, or any failure to exercise a discretion or take a decision; and 

 

	 	14.4.3	the operation, suspension, termination or amendment of the Plan. 

  

	15	GENERAL 

  

	15.1	The Plan will terminate upon the date stated in rule 2.7, or at any earlier time by the passing of a resolution by the Board or an ordinary resolution of the Company in general meeting. Termination of the Plan will be
without prejudice to the existing rights of Participants 

  
 8 

	

	15.2	Shares issued or transferred from treasury under the Plan will rank equally in all respects with the Shares then in issue, except that they will not rank for any voting, dividend or other rights attaching to Shares by
reference to a record date preceding the date of issue or transfer from treasury. 

  

	15.3	By participating in the Plan, Participants resident outside of the European Economic Area consent to the collection, holding, processing and transfer of his personal data by any Group Member or any third party for all
purposes relating to the operation of the Plan, including but not limited to, the administration and maintenance of Participant records, providing information to future purchasers of the Company or any business in which the Participant works and to
the transfer of information about the Participant to a country or territory outside the European Economic Area or elsewhere. 

  

	15.4	The Plan will be administered by the Board. The Board will have full authority, consistent with the Plan, to administer the Plan, including authority to interpret and construe any provision of the Plan and to adopt
regulations for administering the Plan. Decisions of the Board will be final and binding on all parties. 

  

	15.5	Any notice or other communication in connection with the Plan may be delivered personally or sent by electronic means or post, in the case of a company to its registered office (for the attention of the company
secretary), and in the case of an individual to his last known address, or, where he is a director or employee of a Group Member, either to his last known address or to the address of the place of business at which he performs the whole or
substantially the whole of the duties of his office or employment. Where a notice or other communication is given by post, it will be deemed to have been received 72 hours after it was put into the post properly addressed and stamped, and if by
electronic means, when the sender receives electronic confirmation of delivery or if not available, 24 hours after sending the notice. 

  

	15.6	No third party will have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of the Plan (without prejudice to any right of a third party which exists other than under that Act).

  

	15.7	The rules of the Plan will be governed by and construed in accordance with the laws of England and Wales. Any person referred to in the Plan submits to the exclusive jurisdiction of the Courts of England and Wales.

  
 9 

 SCHEDULE 
  

	1	CASH AWARDS 

 The rules of the Mereo BioPharma Group Plc Deferred Bonus Share Plan will apply to a right
to receive a cash sum granted under this Schedule as if it was either a Conditional Award (a “Cash Conditional Award”) or a Nil-Cost Option (a “Cash Option”), except as set out in this Schedule. Where there is any conflict
between the rules of the Plan and this Schedule, the terms of this Schedule will prevail. 
  

	1.1	Each Cash Conditional Award or Cash Option will relate to a certain number of notional Shares. 

  

	1.2	On the Vesting of a Cash Conditional Award or the exercise of a Cash Option the Participant will be entitled to receive a cash sum, calculated by reference to the value of the number of notional Shares to which the Cash
Conditional Award or the Cash Option relates, on the following basis: 

  

	 	1.2.1	in the case of a Cash Conditional Award the cash sum will be equal to the market value (as determined by the Board) of the notional Shares to which the Cash Conditional Award relates on the date of Vesting; and

  

	 	1.2.2	in the case of a Cash Option the cash sum will be equal to the market value (as determined by the Board) of the notional Shares to which the Cash Option relates on the date of exercise. 

 

	1.3	The cash sum payable under paragraph 1.2 above will be paid to the Participant as soon as reasonably practicable after the Vesting of the Cash Conditional Award or the exercise of the Cash Option, net of any deductions
(including, but not limited to, any Tax Liability or similar liabilities) as may be required by law. 

  

	1.4	A Cash Conditional Award or Cash Option will not confer any right on the holder to receive Shares or any interest in Shares. 

 © 2018 Deloitte LLP. All rights reserved. 

Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street
Square, London EC4A 3BZ, United Kingdom. 
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private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.EX-10.17

 Exhibit 10.17 
  

 
 Rules of the Mereo BioPharma Group 

plc Share Option Scheme for Non- 

Executive Directors 
 Approved by the board of directors of
Mereo 
 BioPharma Group plc on 20 March 2018 
 Expiry
date: 20 March 2028 

  

 Rules of the Mereo BioPharma Group plc Share Option Scheme for
Non-Executive Directors 
 CONTENTS 
  

							
		
	 THE MEREO BIOPHARMA GROUP PLC SHARE OPTION SCHEME FOR NON-EXECUTIVE DIRECTORS
	  	 	3	 
			
	1.	  	DEFINITIONS AND INTERPRETATION	  	 	3	 
			
	2.	  	GRANT OF OPTIONS	  	 	4	 
			
	3.	  	RESTRICTIONS ON TRANSFER AND BANKRUPTCY	  	 	5	 
			
	4.	  	VESTING AND EXERCISE	  	 	5	 
			
	5.	  	TAXATION AND REGULATORY ISSUES	  	 	5	 
			
	6.	  	CASH EQUIVALENT	  	 	5	 
			
	7.	  	CESSATION OF OFFICE	  	 	6	 
			
	8.	  	CORPORATE EVENTS	  	 	7	 
			
	9.	  	ADJUSTMENTS	  	 	8	 
			
	10.	  	AMENDMENTS	  	 	8	 
			
	11.	  	LEGAL ENTITLEMENT	  	 	9	 
			
	12.	  	GENERAL	  	 	9	 

  
 2 

 Rules of the Mereo BioPharma Group plc Share Option Scheme for
Non-Executive Directors 
 THE MEREO BIOPHARMA GROUP PLC SHARE OPTION SCHEME FOR
NON-EXECUTIVE DIRECTORS 
  

	1.	DEFINITIONS AND INTERPRETATION 

  

	1.1	In this Scheme, unless otherwise stated, the words and expressions below have the following meanings: 

  

			
	“AIM”	  	the Alternative Investment Market of the London Stock Exchange;
		
	“AIM Rules”	  	the rules of AIM, as amended from time to time;
		
	“Board”	  	subject to rule 8.8, the board of directors of the Company or any duly authorised committee of the board;
		
	“Company”	  	Mereo BioPharma Group plc registered in England and Wales under number 9481161;
		
	“Control”	  	the meaning given by section 995 of the Income Tax Act 2007;
		
	“Dealing Day”	  	any day on which the London Stock Exchange is open for business;
		
	“Dealing Restrictions”	  	restrictions imposed by the Company’s share dealing code, the AIM Rules or any applicable laws or regulations which impose restrictions on share dealing;
		
	“Eligible Director”	  	a non-executive director of the Company;
		
	“Exercise Period”	  	the period during which an Option may be exercised, which will be determined by the Board at the Grant Date, ending no later than the tenth anniversary of the Grant Date;
		
	“Exercise Price”	  	the price per Share payable to exercise an Option as determined by the Board in accordance with rule 2.5, as adjusted from time to time in accordance with the rules of the Scheme;
		
	“Grant Date”	  	the date on which an Option is granted;
		
	“Group Member”	  	the Company, any Subsidiary of the Company, any company which is (within the meaning of section 1159 of the Companies Act 2006) the Company’s holding company or a Subsidiary of the Company’s holding company or, if the
Board so determines, any body corporate in relation to which the Company is able to exercise at least 20% of the equity voting rights and “Group” will be construed accordingly;
		
	“Internal Reorganisation”	  	where immediately after a change of Control of the Company, all or substantially all of the issued share capital of the acquiring company is owned directly or indirectly by the persons who were shareholders in the Company
immediately before the change of Control;
		
	“Market Value”	  	the market value as determined by the Board on the relevant date;
		
	“Normal Vesting Date”	  	the date on which the Board determines, on or prior to the Grant Date that an Option will normally Vest, or to the extent that the Option is

  
 3 

 Rules of the Mereo BioPharma Group plc Share Option Scheme for
Non-Executive Directors 
  

			
		  	subject to a Vesting Schedule, the date determined by the Board on or prior to the Grant Date for the relevant tranche of the Option as set out in the Vesting Schedule;
		
	“Option”	  	a right to acquire Shares in accordance with the rules of the Scheme during an Exercise Period;
		
	“Participant”	  	any person who holds an Option or following his death, his personal representatives;
		
	“Scheme”	  	the Mereo BioPharma Group Plc Share Option Scheme for Non-Executive Directors in its present form or as from time to time amended;
		
	“Share”	  	a fully paid ordinary share in the capital of the Company or an American Depository Share representing such a share or a number of such shares;
		
	“Subsidiary”	  	the meaning given by section 1159 of the Companies Act 2006;
		
	“Tax Liability”	  	any tax or social security contributions liability in connection with an Option for which the Participant is liable and for which any Group Member or former Group Member is obliged to account to any relevant authority;
		
	“Vest”	  	the point at which an Option becomes exerciseable, and “Vested” and “Vesting” will be construed accordingly; and
		
	“Vesting Schedule”	  	in relation to an Option that is divided into tranches, the series of Normal Vesting Dates on which the Board determines on the Grant Date that those tranches will usually normally Vest.

  

	1.2	References in the Scheme to: 

  

	 	1.2.1	any statutory provisions are to those provisions as amended or re-enacted from time to time; 

 

	 	1.2.2	the singular include the plural and vice versa; and 

  

	 	1.2.3	the masculine include the feminine and vice versa. 

  

	1.3	Headings do not form part of the Scheme. 

  

	2.	GRANT OF OPTIONS 

  

	2.1	Subject to rule 2.2, the Board may grant an Option to an Eligible Director in its discretion subject to the rules of the Scheme and upon such additional terms as the Board may determine. 

 

	2.2	The grant of an Option will be subject to obtaining any approval or consent required by AIM (or other relevant authority), any Dealing Restrictions and any other applicable laws or regulations (whether in the UK or
overseas). 

  

	2.3	Options must be granted by deed and, as soon as practicable after the Grant Date, Participants must be notified of the terms of their Option. 

 

	2.4	No Option may be granted under the Scheme after the tenth anniversary of its adoption by the Board. 

  
 4 

 Rules of the Mereo BioPharma Group plc Share Option Scheme for
Non-Executive Directors 
  

	2.5	On the grant of an Option, the Board will determine the Exercise Price which applies to that Option which may not be less than the greater of: 

 

	 	2.5.1	the Market Value of a Share on the Grant Date; and 

  

	 	2.5.2	if the Shares are to be subscribed, the nominal value of a Share. 

  

	2.6	The Exercise Price applying to an Option may be adjusted in accordance with rule 9. 

  

	3.	RESTRICTIONS ON TRANSFER AND BANKRUPTCY 

  

	3.1	Unless the Board determines otherwise, an Option must not be transferred, assigned, charged or otherwise disposed of in any way (except in the event of the Participant’s death, to his personal representatives) and
will lapse immediately on any attempt to do so. 

  

	3.2	An Option will lapse immediately if the Participant is declared bankrupt, or if the Participant is outside the UK, any analogous event occurs. 

 

	4.	VESTING AND EXERCISE 

  

	4.1	Subject to rules 5, 7 and 8, an Option will Vest: 

  

	 	4.1.1	on the Normal Vesting Date; or 

  

	 	4.1.2	if on the Normal Vesting Date (or on any other date on which an Option is due to Vest under rule 7 or 8) a Dealing Restriction applies to the Option, on the date on which such Dealing Restriction lifts; and

  

	 	4.1.3	an Option may then be exercised during the Exercise Period, after which time it will lapse. 

  

	4.2	Subject to rules 5 and 6, an Option may be exercised pursuant to this rule 4 or rules 7 and 8 in such form and manner as the Board may determine, provided that exercise of an Option will not take effect until the
Company receives: 

  

	 	4.2.1	notice of exercise of the Option; and 

  

	 	4.2.2	payment of the aggregate Exercise Price (or an undertaking to pay that amount). 

  

	4.3	Subject to rules 5 and 6, where an Option has been exercised, the number of Shares in respect of which it has been exercised will be issued (or where rule 5 applies the cash amount paid) to the Participant as soon as
reasonably practicable thereafter. No Shares may be acquired in the market or transferred from treasury to satisfy Options under the Scheme 

  

	5.	TAXATION AND REGULATORY ISSUES 

  

	5.1	A Participant will be responsible for and indemnifies each relevant Group Member against any Tax Liability relating to his Option. Any Group Member may withhold an amount equal to such Tax Liability from any amounts due
to the Participant (to the extent such withholding is lawful) and/or make any other arrangements as it considers appropriate to ensure recovery of such Tax Liability including, without limitation, the sale of sufficient Shares acquired subject to
the Option to realise an amount equal to the Tax Liability. 

  

	5.2	The exercise of an Option and the issue of Shares under the Scheme will be subject to obtaining any approval or consent required by AIM (or other relevant authority), any Dealing Restrictions, or any other applicable
laws or regulations (whether in the UK or overseas). 

  

	6.	CASH EQUIVALENT 

  

	6.1	Subject to rule 8.5, at any time prior to the date on which Shares in respect of which an Option has been exercised have been issued to a Participant, the Board may determine that, in substitution for his right to
acquire some or all of the Shares to which his Option relates, the Participant will instead receive a cash sum in accordance with rule 6.2. 

  
 5 

 Rules of the Mereo BioPharma Group plc Share Option Scheme for
Non-Executive Directors 
  

	6.2	A cash sum to which a Participant becomes entitled under this rule 6.2 will be equal to the Market Value of that number of the Shares which would otherwise have been issued, less the aggregate Exercise Price payable in
respect of the exercise of the Option in relation to those Shares and for these purposes: 

  

	 	6.2.1	Market Value will be determined on the date of exercise; and 

  

	 	6.2.2	the cash sum will be paid to the Participant as soon as reasonably practicable after exercise of the Option, net of any deductions (including, but not limited to, any Tax Liability or similar liabilities) as may be
required by law. 

  

	6.3	Any Exercise Price paid by a Participant will be refunded to him to the extent an Option he has exercised is settled by a payment of cash in accordance with rule 6.2. 

 

	6.4	The Board may determine that this rule 6 will not apply to an Option, or any part of it. 

  

	7.	CESSATION OF OFFICE 

 Bad leavers 

 

	7.1	If a Participant ceases to hold office with the Company as a result of the termination of his appointment for gross misconduct, any Option that he holds (whether or not Vested) will lapse at that time.

 Good leavers 
  

	7.2	If a Participant ceases to hold office with the Company for any reason other than as a result of the termination of his appointment for gross misconduct: 

 

	 	7.2.1	to the extent that his Option has Vested on the date of such cessation, it will be exercisable from the date of cessation in accordance with rule 7.3; and 

 

	 	7.2.2	to the extent that his Option has not Vested on the date of such cessation, it will become exercisable on the Normal Vesting Date (unless the Board determines that it will be exercisable on the date of cessation) in
accordance with rule 7.3 to the extent determined by the Board (taking into account the period of time that has elapsed from the Grant Date to the date of cessation, unless the Board determines otherwise). 

To the extent that an Option does not Vest, the remainder will lapse immediately. 

 

	7.3	An Option may, subject to rule 8, then be exercised for a period of six months or, in the case of the Participant’s death, 12 months (or such other period as the Board may determine) from the date of cessation
(where rule 7.2.1 applies or where the Board has determined that it will be exercisable on the date of cessation pursuant to rule 7.2.2) or the Normal Vesting Date (where rule 7.2.2 applies) after which time it will lapse. 

 

	7.4	For the purposes of the Scheme, no person will be treated as ceasing to hold office with the Company, if immediately after such cessation, he is an employee or an executive director of any a Group Member, in which case
he will only be treated as ceasing to hold office with the Company pursuant to this rule 7 when he no longer holds: 

  

	 	7.4.1	any office or employment; or 

  

	 	7.4.2	a right to return to work 

 With any Group Member. 

  
 6 

 Rules of the Mereo BioPharma Group plc Share Option Scheme for
Non-Executive Directors 
  

	8.	CORPORATE EVENTS 

  

	8.1	Where any of the events described in rule 8.3 occur, then subject to rules 8.5 and 8.7, all Options which have not yet Vested will Vest in accordance with rule 8.2 at the time of such event. Options (whether Vested
pursuant to this rule or otherwise) will be exercisable for one month (or such longer period as the Board may determine, not exceeding six months) from the date of the relevant event, after which time all Options will lapse. 

 

	8.2	The number of Shares in respect of which the Option Vests pursuant to rule 8.1 will be determined by the Board and unless the Board determines otherwise, will take into account the period of time that has elapsed from
the Grant Date to the date of the relevant event. To the extent that an Option does not Vest in full or is not exchanged in accordance with rules 8.5 and 8.7, the remainder will lapse immediately. 

 

	8.3	The events referred to in rule 8.1 are: 

 General offer 

 

	 	8.3.1	If any person (either alone or together with any person acting in concert with him): 

  

	 	i.	obtains Control of the Company as a result of making a general offer to acquire Shares; or 

  

	 	ii.	already having Control of the Company, makes an offer to acquire all of the Shares other than those which are already owned by him 

  and such offer becomes wholly unconditional. 

Scheme of arrangement 
  

	 	8.3.2	A compromise or arrangement in accordance with section 899 of the Companies Act 2006 (or any similar legislation or rules in a jurisdiction outside the United Kingdom) for the purposes of a change of Control of the
Company which is sanctioned by the Court. 

 Winding-up 

 

	 	8.3.3	On the passing of a resolution for the voluntary winding-up or the making of an order for the compulsory winding up of the Company, the Board will determine: 

 

	 	i.	whether and to what extent Options which have not yet Vested will Vest, unless the Board determines otherwise, taking into account the period of time from the Grant Date to the date of the relevant event; and

  

	 	ii.	the period during which a Vested Option may be exercised, after which time it will lapse. 

 To
the extent that an Option does not Vest, it will lapse immediately. 
 Other events 

 

	8.4	If the Company is or may be affected by a demerger, delisting, special dividend or other event which, in the opinion of the Board, may affect the current or future value of Shares the Board may determine:

  

	 	8.4.1	whether and to what extent Options which have not yet Vested will Vest, unless the Board determines otherwise, taking into account the period of time from the Grant Date to the date of the relevant event; and

  

	 	8.4.2	the period of time during which any Vested Option may be exercised, after which time it will lapse. 

To the extent that an Option does not Vest it will lapse immediately. 

Exchange – unvested Options 

  
 7 

 Rules of the Mereo BioPharma Group plc Share Option Scheme for
Non-Executive Directors 
  

	8.5	An unvested Option will not Vest under rule 8.1 but will be exchanged on the terms set out in rule 8.7 to the extent that: 

  

	 	8.5.1	an offer to exchange the Option is made and accepted by a Participant; or 

  

	 	8.5.2	there is an Internal Reorganisation. 

 Exchange – Vested Options 

 

	8.6	Where there is an Internal Reorganisation, unless the Board determines otherwise, a Vested Option will not lapse under rule 8.1 but will be exchanged on the terms set out in rule 8.7. 

Exchange terms 
  

	8.7	If this rule 8.7 applies, the Option will be released in consideration of the grant of a new option (“New Option”) which, in the opinion of the Board, is equivalent to the Option, but relates to shares in a
different company (whether the acquiring company or a different company). Unless the Board determines otherwise, the rules of this Scheme will be construed in relation to the New Option as if: 

 

	 	8.7.1	the New Option were an Option granted under the Scheme at the same time as the Option; 

  

	 	8.7.2	references to the Company were references to the company whose shares are subject to the New Option; and 

  

	 	8.7.3	references to Shares were references to shares in the company whose shares are subject to the New Option. 

Meaning of Board 
  

	8.8	Any reference to the Board in this rule 8 means the members of the Board immediately prior to the relevant event. 

  

	9.	ADJUSTMENTS 

  

	9.1	The number of Shares subject to an Option and/or the Exercise Price may be adjusted in such manner as the Board determines, in the event of: 

 

	 	9.1.1	any variation of the share capital of the Company; or 

  

	 	9.1.2	a demerger, delisting, special dividend, rights issue or other event which may, in the Board’s opinion, affect the current or future value of Shares. 

 

	10.	AMENDMENTS 

  

	10.1	Except as described in this rule 10 the Board may at any time amend the rules of the Scheme. 

  

	10.2	No amendment to the material disadvantage of existing rights of Participants will be made under rule 12.1 unless: 

  

	 	10.2.1	every Participant who may be affected by such amendment has been invited to indicate whether or not he approves the amendment; and 

  

	 	10.2.2	the amendment is approved by a majority of those Participants who have so indicated. 

  
 8 

 Rules of the Mereo BioPharma Group plc Share Option Scheme for
Non-Executive Directors 
  

	11.	LEGAL ENTITLEMENT 

  

	11.1	Nothing in the Scheme or its operation forms part of the terms on which a Participant holds office with the Company and participation in the Scheme does not create any right for any Participant to continue to hold such
office. 

  

	11.2	The grant of any Option to a Participant does not create any right for that Participant to be granted any further Options or to be granted Options on any particular terms, including the number of Shares to which Options
relate. 

  

	11.3	By Participating in the Scheme, a Participant waives all rights to compensation for any loss in relation to the Scheme, including: 

  

	 	11.3.1	any loss or reduction of any rights or expectations under the Scheme in any circumstances or for any reason (including termination of the Participant’s office); 

 

	 	11.3.2	any exercise of a discretion or a decision taken in relation to an Option or to the Scheme, or any failure to exercise a discretion or take a decision; and 

 

	 	11.3.3	the operation, suspension, termination or amendment of the Scheme. 

  

	12.	GENERAL 

  

	12.1	The Scheme will terminate upon the date stated in rule 2.4, or at any earlier time by the passing of a resolution by the Board or an ordinary resolution of the Company in general meeting. Termination of the Scheme will
be without prejudice to the existing rights of Participants. 

  

	12.2	Shares issued under the Scheme will rank equally in all respects with the Shares then in issue, except that they will not rank for any voting, dividend or other rights attaching to Shares by reference to a record date
preceding the date of issue. 

  

	12.3	By participating in the Scheme, Participants resident outside of the European Economic Area consent to the collection, holding, processing and transfer of his personal data by any Group Member or any third party for all
purposes relating to the operation of the Scheme, including but not limited to, the administration and maintenance of Participant records, providing information to future purchasers of the Company or any business in which the Participant works and
to the transfer of information about the Participant to a country or territory outside the European Economic Area or elsewhere. 

  

	12.4	The Scheme will be administered by the Board. The Board will have full authority, consistent with the Scheme, to administer the Scheme, including authority to interpret and construe any provision of the Scheme and to
adopt regulations for administering the Scheme. Decisions of the Board will be final and binding on all parties. 

  

	12.5	Any notice or other communication in connection with the Scheme may be delivered personally or sent by electronic means or post, in the case of a company to its registered office (for the attention of the company
secretary), and in the case of an individual to his last known address, or, where he is a director of the Company, either to his last known address or to the address of the place of business at which he performs the whole or substantially the whole
of the duties of his office. Where a notice or other communication is given by post, it will be deemed to have been received 72 hours after it was put into the post properly addressed and stamped, and if by electronic means, when the sender receives
electronic confirmation of delivery or if not available, 24 hours after sending the notice. 

  

	12.6	No third party will have any rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Scheme (without prejudice to any right of a third party which exists other than under that Act).

  

	12.7	These rules will be governed by and construed in accordance with the laws of England and Wales. Any person referred to in this Scheme submits to the exclusive jurisdiction of the Courts of England and Wales.

  
 9 

 © 2018 Deloitte LLP. All rights reserved. 

Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street
Square, London EC4A 3BZ, United Kingdom. 
 Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK
private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms. 

 [“Initial NED Options”] 

THE MEREO BIOPHARMA GROUP PLC SHARE OPTION SCHEME FOR NON-EXECUTIVE DIRECTORS 

(THE “NED SCHEME”) 

GLOBAL DEED OF GRANT 
 On the date of this
deed (“Grant Date”), Mereo BioPharma Group Plc (the “Company”) hereby grants options (“NED Options”) over such number of ordinary shares in the Company (“Shares”) as specified in
the Appendix, to the individuals (“Participants”) named therein, subject to the rules of the NED Scheme and the terms of this deed. 

Unless otherwise defined, capitalised terms used in this deed have the same meaning as in the rules of the NED Scheme. 

TERMS OF THE NED OPTIONS 
 Subject to the rules of the NED
Scheme, the following Vesting Schedule will apply to the NED Options (each vesting date a “Normal Vesting Date”): 
  

	 	a)	one-third of the Shares subject to the NED Option, rounding down to the nearest whole Share will Vest on the first anniversary of the Grant Date; 

 

	 	b)	1/36th of the Shares subject to the NED Option, rounding down to the nearest whole Share will Vest each month following the first anniversary of the Grant Date for 23
months; and 

  

	 	c)	the remaining Shares subject to the NED Option will Vest on the third anniversary of the Grant Date. 

 Each
tranche of the NED Option will normally then be exercisable from the relevant Normal Vesting Date until the tenth anniversary of the Grant Date after which, subject to the rules of the NED Scheme, the NED Option will lapse. 

The NED Option is personal to the Participant and is not transferable except as permitted by the rules of the NED Scheme. Subject to the rules of the NED
Scheme, Shares in respect of a NED Option which has been exercised will be delivered to the Participant as soon as reasonably practicable thereafter, subject to payment of any Tax Liability relating to the NED Option. 

Executed as a deed on [Insert date] by 
 Mereo BioPharma Group
Pic 
 acting by [Name] a director, 
  

	
	  

	[Name]
	in the presence of:

 [“Initial NED Options”] 

 

	
	  

	[SIGNATURE OF WITNESS]
	
	  

	
	  

	
	  

	
	  

	
	  

	[NAME, ADDRESS AND OCCUPATION OF WITNESS]

 [“Initial NED Options”] 

Appendix 
  

			
	 Name of Participant
	  	Number of Shares subject to
NED Option
	[ ● ]	  	[ ● ]
		
	[ ● ]	  	[ ● ]
		
	[ ● ]	  	[ ● ]
		
	[ ● ]	  	[ ● ]

 [“Initial NED Options”] 

MEREO BIOPHARMA GROUP PLC SHARE OPTION SCHEME 

FOR NON-EXECUTIVE DIRECTORS (THE “NED SCHEME”) 

NED OPTION CERTIFICATE 
 This is to
certify that on [ ● ] 2018 (the “Grant Date”), [name] (the “Participant”) was granted an option (“NED Option”) under the rules of the NED Scheme over [ ● ] ordinary shares in
Mereo BioPharma Group plc (“Shares”). 
 Subject to the rules of the NED Scheme, the following Vesting Schedule will apply to the NED
Option (each vesting date a “Normal Vesting Date”): 
  

	 	a)	one-third of the Shares subject to the NED Option, rounding down to the nearest whole Share will Vest on the first anniversary of the Grant Date; 

 

	 	b)	1/36th of the Shares subject to the NED Option, rounding down to the nearest whole Share will Vest each month following the first anniversary of the Grant Date for 23
months; and 

  

	 	c)	the remaining Shares subject to the NED Option will Vest on the third anniversary of the Grant Date. 

 Each
tranche of the NED Option will normally then be exercisable from the relevant Normal Vesting Date until the tenth anniversary of the Grant Date after which, subject to the rules of the NED Scheme, the NED Option will lapse. 

The NED Option is personal to the Participant and is not transferable except as permitted by the rules of the NED Scheme. Subject to the rules of the NED
Scheme, Shares in respect of a NED Option which has been exercised will be delivered to the Participant as soon as reasonably practicable thereafter, subject to payment of any Tax Liability relating to the NED Option. 

Unless otherwise defined, capitalised terms used in this Option Certificate have the same meaning as in the rules of the NED Scheme. In the event of a
conflict with this Option Certificate, the rules of the NED Scheme prevail. 
 PLEASE KEEP THIS CERTIFICATE IN A SAFE PLACE 

 [“On-going NED Options”] 

THE MEREO BIOPHARMA GROUP PLC SHARE OPTION SCHEME FOR NON-EXECUTIVE DIRECTORS 

(THE “NED SCHEME”) 

GLOBAL DEED OF GRANT 
 On the date of this
deed (“Grant Date”), Mereo BioPharma Group Plc (the “Company”) hereby grants options (“NED Options”) over such number of ordinary shares in the Company (“Shares”) as specified in
the Appendix, to the individuals (“Participants”) named therein, subject to the rules of the NED Scheme and the terms of this deed. 

Unless otherwise defined, capitalised terms used in this deed have the same meaning as in the rules of the NED Scheme. 

TERMS OF THE NED OPTIONS 
 Subject to the rules of the NED
Scheme, the following Vesting Schedule will apply to the NED Options (each vesting date a “Normal Vesting Date”): 
  

	 	a)	1/12th of the Shares subject to the NED Option, rounding down to the nearest whole Share will Vest each month following the Grant Date for 11 months; and

  

	 	b)	the remaining Shares subject to the NED Option will Vest on the first anniversary of the Grant Date. 

 Each
tranche of the NED Option will normally then be exercisable from the relevant Normal Vesting Date until the tenth anniversary of the Grant Date after which, subject to the rules of the NED Scheme, the NED Option will lapse. 

The NED Option is personal to the Participant and is not transferable except as permitted by the rules of the NED Scheme. Subject to the rules of the NED
Scheme, Shares in respect of a NED Option which has been exercised will be delivered to the Participant as soon as reasonably practicable thereafter, subject to payment of any Tax Liability relating to the NED Option. 

Executed as a deed on [Insert date] by 

Mereo BioPharma Group Plc 

acting by [Name] a director, 
  

	
	      

	[Name]
	in the presence of:
	
	  

	[SIGNATURE OF WITNESS]

 [“On-going NED Options”] 

 

	
	
	  

	
	  

	
	  

	
	  

	
	  

	[NAME, ADDRESS AND OCCUPATION OF WITNESS]

 [“On-going NED Options”] 

Appendix 
  

			
	 Name of Participant
	  	 Number of Shares subject to

NED Option

	[ ● ]	  	[ ● ]
		
	[ ● ]	  	[ ● ]
		
	[ ● ]	  	[ ● ]
		
	[ ● ]	  	[ ● ]

 [“On-going NED Options”] 

MEREO BIOPHARMA GROUP PLC SHARE OPTION SCHEME 

FOR NON-EXECUTIVE DIRECTORS (THE “NED SCHEME”) 

NED OPTION CERTIFICATE 
 This is to
certify that on [ ● ] 2018 (the “Grant Date”), [name] (the “Participant”) was granted an option (“NED Option”) under the rules of the NED Scheme over [ ● ] ordinary shares in
Mereo BioPharma Group plc (“Shares”). 
 Subject to the rules of the NED Scheme, the following Vesting Schedule will apply to the NED
Option (each vesting date a “Normal Vesting Date”): 
  

	 	a)	1/12th of the Shares subject to the NED Option, rounding down to the nearest whole Share will Vest each month following the Grant Date for 11 months; and

  

	 	b)	the remaining Shares subject to the NED Option will Vest on the first anniversary of the Grant Date. 

 Each
tranche of the NED Option will normally then be exercisable from the relevant Normal Vesting Date until the tenth anniversary of the Grant Date after which, subject to the rules of the NED Scheme, the NED Option will lapse. 

The NED Option is personal to the Participant and is not transferable except as permitted by the rules of the NED Scheme. Subject to the rules of the NED
Scheme, Shares in respect of a NED Option which has been exercised will be delivered to the Participant as soon as reasonably practicable thereafter, subject to payment of any Tax Liability relating to the NED Option. 

Unless otherwise defined, capitalised terms used in this Option Certificate have the same meaning as in the rules of the NED Scheme. In the event of a
conflict with this Option Certificate, the rules of the NED Scheme prevail. 
 PLEASE KEEP THIS CERTIFICATE IN A SAFE PLACE

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