EXHIBIT 10.2

 

GRANT NO.                     

 

ICOS CORPORATION

1999 LONG-TERM INCENTIVE PLAN

 

INCENTIVE STOCK OPTION AGREEMENT

 

ICOS Corporation, a Delaware corporation (the “Company”), hereby grants an
Option to purchase shares of its common stock (the “Shares”) to the Optionee
named below. The terms and conditions of the Option are set forth in this cover
sheet, in the attachment and in the Company’s 1999 Long-Term Incentive Plan (the
“Plan”).

 

Date of Option Grant:                     , [YEAR]

 

Name of Optionee:                                                              

 

Optionee’s Social Security Number:              -              -             

 

Number of Shares Covered by Option:                         

 

Exercise Price per Share: $            .        

 

Vesting Start Date:                     , [YEAR]

 

Vesting Schedule:

 

Subject to all the terms of the attached Agreement, your right to purchase
Shares under this Option incrementally vests as to one-forty-eighth (1/48) of
the total number of Shares covered by this Option, as shown above, on each of
the forty-eight monthly anniversaries of the Vesting Start Date. Notwithstanding
the previous sentence, in the event that you are also being granted a
Nonstatutory Stock Option on the Date of Option Grant, your right to purchase
the aggregate number of Shares under both this Option and the Nonstatutory Stock
Option incrementally vests as to one-forty-eighth (1/48) of the total number of
Shares covered by both Options on each of the forty-eight monthly anniversaries
of the Vesting Start Date, this Option may vest in unequal amounts by month, and
the separate vesting schedule for this Option is available to you upon request
of the Company (attention: Manager, Payroll). The resulting aggregate number of
vested Shares will be rounded down to the nearest whole number. In addition,
this Option shall become fully vested if, within twenty-four months after a
Change in Control, your Service is terminated (i) without Cause by the Company
or (ii) by Optionee for Good Reason. No additional Shares will vest after your
Service has terminated for any reason except in the case of your Retirement as
described in the attached Agreement.

 

By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is also
enclosed.

 

Optionee:

 

 

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    (Signature)

Company:

 

 

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    (Signature)    

Title:                                                                  

Attachment

   

 

 

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ICOS CORPORATION

1999 LONG-TERM INCENTIVE PLAN

 

INCENTIVE STOCK OPTION AGREEMENT

 

The Plan and

Other Agreements

     The text of the Plan is incorporated in this Agreement by reference.
Certain capitalized terms used in this Agreement are defined in the Plan.       
This Agreement and the Plan constitute the entire understanding between you and
the Company regarding this Option. Any prior agreements, commitments or
negotiations concerning this Option are superseded. Incentive Stock Option     
This Option is intended to be an Incentive Stock Option under section 422 of the
Internal Revenue Code and will be interpreted accordingly. If you cease to be an
employee of the Company, a Subsidiary or of a Parent but continue to provide
Service, this Option will be deemed to be a Nonstatutory Stock Option three
months and one day after you cease to be such an employee. In addition, to the
extent that all or part of this Option exceeds the $100,000 rule of section
422(d) of the Code, this Option or the lesser excess part will be treated as a
Nonstatutory Stock Option. Vesting      This Option is only exercisable before
it expires and then only with respect to the vested portion of the Option. This
Option will vest according to the Vesting Schedule on the attached cover sheet
and as provided in the Plan and this Agreement. Term      Your Option will
expire in any event at the close of the NASDAQ National Market on the day before
the 10th anniversary of the Date of Option Grant, as shown on the cover sheet.
Your Option will expire earlier if your Service terminates, as described below.
Regular Termination      If your Service terminates for any reason, other than
death, Disability, Cause or Retirement, then your Option will expire at the
close of the NASDAQ National Market on the date that is three months after your
termination date.

Termination for

Cause

     If your Service is terminated for Cause or if you commit an act(s) of Cause
while this Option is outstanding, as determined by the Company in its sole
discretion, then you shall immediately forfeit all rights to your Option and the
Option shall immediately expire.

 

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       The definition of Cause provided in the Plan shall not restrict in any
way the Company’s or any Parent’s, Subsidiary’s or Affiliate’s right to
discharge you for any other reason, nor shall this definition be deemed to be
inclusive of all the acts or omissions which constitute “cause” for purposes
other than this Agreement. Retirement      If your Service terminates because of
your Retirement, then your Option will expire at the close of the NASDAQ
National Market on the date that is thirty-six (36) months after the date of
your Retirement. This Option will be deemed to be a Nonstatutory Stock Option
three months and one day after your termination of Service as an employee of the
Company, Subsidiary or Parent. In addition, the vesting of your Option will be
determined as if you had rendered Service for an additional one year after your
date of Retirement. Death      If your Service terminates because of your death,
then your Option will expire at the close of the NASDAQ National Market on the
date that is eighteen (18) months after the date of your death. During that
eighteen (18) month period, your estate or heirs may exercise the vested portion
of your Option. Disability      If your Service terminates because of your
Disability, then your Option will expire at the close of the NASDAQ National
Market on the date that is eighteen (18) months after your termination date.
This Option will be deemed to be a Nonstatutory Stock Option one year and one
day after your termination of Service as an employee of the Company, Subsidiary
or Parent. Leaves of Absence     

For purposes of this Option, your Service does not terminate when you go on a
bona fide leave of absence that was approved by the Company in writing, if the
terms of the leave provide for continued Service crediting, or when continued
Service crediting is required by applicable law. However, for purposes of this
Option, your Service will be treated as terminating ninety (90) days after you
went on leave, unless your right to return to active work is guaranteed by law
or by a contract. Your Service terminates in any event when the approved leave
ends unless you immediately return to active work.

 

The Company determines which leaves count for this purpose, and when your
Service terminates for all purposes under the Plan.

Notice of Exercise      When you wish to exercise this Option, you must notify
the Company by filing the proper “Notice of Exercise” form at the

 

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address given on the form or by using a website designated by the Company. Your
notice must specify how many Shares you wish to purchase. Your notice must also
specify how your Shares should be registered (in your name only or in your and
your spouse’s names as community property or as joint tenants with right of
survivorship). The notice will be effective when it is received by the Company.

 

If someone else wants to exercise this Option after your death, that person must
prove to the Company’s satisfaction that he or she is entitled to do so.

Form of Payment

    

When you submit your notice of exercise, you must include full payment of the
Exercise Price for the Shares you are purchasing. Payment may be made in one (or
a combination) of the following forms:

 

•      Cash, your personal check, a cashier’s check or a money order.

 

•      Shares which have already been owned by you for more than six (6) months
and which are surrendered to the Company. The Fair Market Value of the Shares,
determined as of the last date of trading on the NASDAQ National Market
preceding the effective date of the Option exercise, will be applied to the
Exercise Price.

 

•      To the extent a public market for the Shares exists as determined by the
Company, by delivery (on a form prescribed by the Company) of an irrevocable
direction to a securities broker to sell Shares and to deliver all or part of
the sale proceeds to the Company in payment of the aggregate Exercise Price.

Withholding Taxes

     You will not be allowed to exercise this Option unless you make acceptable
arrangements to pay any withholding or other taxes that may be due as a result
of the Option exercise or sale of Shares acquired under this Option.
Restrictions on Exercise and Resale      By signing this Agreement, you agree
not to exercise this Option or sell any Shares acquired under this Option at a
time when applicable laws, regulations or Company or underwriter trading
policies prohibit exercise, sale or issuance of Shares. The Company will not
permit you to exercise this Option if the issuance of Shares at that time would
violate any law or regulation. The Company shall have the right to designate one
or more periods of time, each of which shall not exceed one

 

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hundred eighty (180) days in length, during which this Option shall not be
exercisable if the Company determines (in its sole discretion) that such
limitation on exercise could in any way facilitate a lessening of any
restriction on transfer pursuant to the Securities Act or any state securities
laws with respect to any issuance of securities by the Company, facilitate the
registration or qualification of any securities by the Company under the
Securities Act or any state securities laws, or facilitate the perfection of any
exemption from the registration or qualification requirements of the Securities
Act or any applicable state securities laws for the issuance or transfer of any
securities. Such limitation on exercise shall not alter the vesting schedule set
forth in this Agreement other than to limit the periods during which this Option
shall be exercisable.

 

If the sale of Shares under the Plan is not registered under the Securities Act,
but an exemption is available which requires an investment or other
representation, you shall represent and agree at the time of exercise that the
Shares being acquired upon exercise of this Option are being acquired for
investment, and not with a view to the sale or distribution thereof, and shall
make such other representations as are deemed necessary or appropriate by the
Company and its counsel.

 

You may also be required, as a condition of exercise of this Option, to enter
into any Company shareholders agreement or other agreements that are applicable
to shareholders.

Transfer of Option     

Prior to your death, only you may exercise this Option. You shall not assign,
alienate, pledge, attach, sell, transfer or encumber this option. If you attempt
to do any of these things, this Option will immediately become invalid and will
then expire without consideration. You may, however, dispose of this Option in
your will or it may be transferred by the laws of descent and distribution.

 

Regardless of any marital property settlement agreement, the Company is not
obligated to honor a notice of exercise from your spouse, nor is the Company
obligated to recognize your spouse’s interest in your Option in any other way.

Retention Rights      Your Option or this Agreement does not give you the right
to be retained by the Company (or any Parent or any Subsidiaries or Affiliates)
in any capacity. The Company (or any Parent and any Subsidiaries or Affiliates)
reserves the right to terminate your Service at any time and for any reason.

 

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Shareholder Rights      You, or your estate or heirs, have no rights as a
shareholder of the Company until a certificate for your Option’s Shares has been
issued. No adjustments are made for dividends or other rights if the applicable
record date occurs before your stock certificate is issued, except as described
in the Plan. Adjustments      In the event of a stock split, a stock dividend or
a similar change in the Company stock, the number of Shares covered by this
Option and the exercise price per Share may be adjusted (and rounded down to the
nearest whole number) pursuant to the Plan. Your Option shall be subject to the
terms of the agreement of merger, liquidation or reorganization in the event the
Company is subject to such corporate activity. Legends      All certificates
representing the Shares issued upon exercise of this Option may, where
applicable, have endorsed thereon the following legends:       

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN
INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE.”

      

“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED.”

Applicable Law      This Agreement will be interpreted and enforced under the
laws of the State of Washington.

 

By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.

 

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