10.14.3#

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) by and between INCYTE CORPORATION, a
Delaware corporation (the “Company”), and                                   
(the “Executive”), effective as of the        day of                 , 20      .

 

The Board of Directors of the Company (the “Board”), has determined that it is
in the best interests of the Company and its stockholders to assure that the
Company will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change in Control (as defined below) of
the Company.  The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change in Control and to encourage the
Executive’s full attention and dedication to the Company in the event of any
threatened or pending Change in Control, and to provide the Executive with
compensation and benefits arrangements upon an involuntary termination following
a Change in Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
comparable corporations.  Therefore, in order to accomplish these objectives,
the Board has caused the Company to enter into this Agreement.

 

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

SECTION 1.   DEFINITIONS.

 

(a)           “Annual Base Salary” means the highest rate of annual base salary
paid or payable, including any base salary which has been earned but deferred,
to the Executive by the Company and its affiliated companies in respect of the
12-month period immediately preceding the month in which the Change in Control
occurs.

 

(b)           “Business Unit” means a Subsidiary or a business division of the
Company or Subsidiary in which the Executive is primarily employed.

 

(c)           “Cause” means:

 

(i)            The willful and continued failure of the Executive to perform
substantially the Executive’s duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness or impairment), after a written demand for substantial performance is
delivered to the Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the Board or Chief
Executive Officer believes that the Executive has not substantially performed
the Executive’s duties; or

 

(ii)           The willful engaging by the Executive in illegal conduct, gross
misconduct or dishonesty which is materially and demonstrably injurious to the
Company; or

 

1

--------------------------------------------------------------------------------

 

(iii)          Unauthorized and prejudicial disclosure or misuse of the
Company’s secret, confidential or proprietary information, knowledge or data
relating to the Company or its affiliates.

 

Notwithstanding the foregoing, “Cause” shall not include any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Chief Executive Officer or a senior
officer of the Company to whom the Executive reports or based upon the advice of
counsel for the Company.  If the Executive is an executive officer of the
Company, appointed by the Board, the cessation of employment of the Executive
shall not be deemed to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of the
Board at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is given an
opportunity, together with counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i), (ii) or (iii) above, and specifying the
particulars thereof in detail.

 

(d)           “Change in Control” means the occurrence of any of the following
events:

 

(i)            A change in the composition of the Board, as a result of which
fewer than one-half of the incumbent directors are directors who either:

 

(A)          Had been directors of the Company 24 months prior to such change;
or

 

(B)           Were elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the directors who had been directors
of the Company 24 months prior to such change and who were still in office at
the time of the election or nomination;

 

(ii)           Any “person” (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) by the acquisition or aggregation of securities is or becomes
the beneficial owner, directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company’s then
outstanding securities ordinarily (and apart from rights accruing under special
circumstances) having the right to vote at elections of directors (the “Base
Capital Stock”); except that any change in the relative beneficial ownership of
the Company’s securities by any person resulting solely from a reduction in the
aggregate number of outstanding shares of Base Capital Stock, and any decrease
thereafter in such person’s ownership of securities, shall be disregarded until
such person increases in any manner, directly or indirectly, such person’s
beneficial ownership of any securities of the Company;

 

(iii)          The stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company;

 

(iv)          There is consummated an agreement for the sale or disposition by
the Company of all or substantially all of the Company’s assets, other than a
sale or disposition by the Company to a Subsidiary or to an entity, the voting
securities of which

 

2

--------------------------------------------------------------------------------

 

are owned by stockholders of the Company in substantially the same proportions
as their ownership of the Company immediately prior to such sale; or

 

(v)           The sale, transfer or other disposition of a substantial portion
of the stock or assets of the Company or a Business Unit or a similar
transaction as the Board, in each case, in its sole discretion, may determine to
be a Change in Control.

 

The term “Change in Control” shall not include a transaction, the sole purpose
of which is to change the state of the Company’s incorporation or the initial
public offering of the stock of a Business Unit.

 

(e)           “Disability” means the absence of the Executive from the
Executive’s duties with the Company on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or physical illness or
impairment which is determined to be total and permanent by a physician selected
by the Company or its insurers and acceptable to the Executive or the
Executive’s legal representative.

 

(f)            “Employment Period” means the 24-month period following the
occurrence of a Change in Control.

 

(g)           “Involuntary Termination” means:

 

(i)            The assignment to Executive of any duties substantially
inconsistent with Executive’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as in effect
immediately prior to a Change in Control or any other action by the Company that
results in a substantial diminishment in such position, authority, duties or
responsibilities as in effect immediately prior to a Change in Control; or

 

(ii)           (A) Except as required by law, the failure by the Company to
continue to provide to Executive benefits substantially equivalent or more
beneficial (including in terms of the amount of benefits provided and the level
of participation of Executive relative to other participants), in the aggregate,
to those enjoyed by Executive under the Company’s employee benefit plans
(including, without limitation, any pension, deferred compensation, split-dollar
life insurance, supplemental retirement, retirement or savings plan(s) or
program(s)) and welfare benefits in which Executive was eligible to participate
immediately prior to the Change in Control; or (B) the taking of any action by
the Company that would, directly or indirectly, materially reduce or deprive
Executive of any other benefit, perquisite or privilege enjoyed by Executive
immediately prior to the Change in Control, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and that is
remedied by the Company promptly after receipt of notice thereof given by the
Executive; or

 

(iii)          The Company’s requiring the Executive to be based at any office
or location more than 35 miles from the office or location where the Executive
is based immediately prior to the Change in Control; or

 

(iv)          Any reduction in the Executive’s Base Salary or target bonus
opportunity under the Bonus Plan; or

 

3

--------------------------------------------------------------------------------

 

(v)           Any termination of the Executive by the Company that is not
effected for Cause or Disability; or

 

(vi)          A material breach by the Company of this Agreement.

 

(h)           “Subsidiary” means any other entity, whether incorporated or
unincorporated, in which the Company or any one or more of its Subsidiaries
directly owns or controls (i) 50% or more of the securities or other ownership
interests, including profits, equity or beneficial interests, or (ii) securities
or other interests having by their terms ordinary voting power to elect more
than 50% of the board of directors or others performing similar function with
respect to such other entity that is not a corporation.

 

(i)            “Target Bonus” means the Executive’s target bonus under the
Company’s annual bonus program, or any comparable bonus under any predecessor or
successor plan (“Bonus Plan”), for the year in which the Change in Control
occurs.

 

(j)            “Termination Date” means the date of receipt of any notice of
termination delivered by one party to the other under this Agreement, or such
later effective date specified in the notice.

 

SECTION 2.   OBLIGATIONS OF THE COMPANY UPON TERMINATION.

 

(a)           Involuntary Termination.  If the Executive’s employment with the
Company terminates as a result of an Involuntary Termination during the
Employment Period, then the Executive shall be entitled to the following
severance benefits:

 

(i)            the sum of (1) the Executive’s Annual Base Salary and (2) the
Target Bonus or, if greater, the bonus pursuant to the Bonus Plan in the most
recently completed fiscal year, payable in a lump sum within 30 days after the
Termination Date; and

 

(ii)           the product of (1) the Target Bonus and (2) a fraction, the
numerator of which is the number of days in the current fiscal year through the
Termination Date, and the denominator of which is 365, payable in a lump sum
within 30 days after the Termination Date; and

 

(iii)          reimbursement (or direct payment) by the Company of the cost of
continued life and disability insurance coverage for the Executive under the
Company’s plans or under policies obtained by the Executive, through conversion
to individual coverage or otherwise, at the same levels in effect at the
Termination Date, for twelve (12) months following the Termination Date; and

 

(iv)          Reimbursement by the Company of a portion of the group health
continuation coverage premiums paid by the Executive for coverage for the
Executive and/or the Executive’s eligible dependents under Title X of the
Consolidated Budget Reconciliation Act of 1985, as amended (“COBRA”), equal to
the percentage share of premiums the Company paid for such coverage prior to the
Termination Date, for 12 months following the Executive’s Termination Date
(provided that the Executive shall be solely responsible for properly electing
to continue such coverage under COBRA);

 

4

--------------------------------------------------------------------------------

 

(v)           All options acquired under the Company’s 1991 Stock Plan or any
other stock-based incentive plan of the Company which have not vested in
accordance with the terms and conditions of the options, shall become 100%
vested and all such options shall continue to be exercisable for 12 months
following the Termination Date (and the Executive expressly consents to the
modification of any existing option agreements consistent with this provision);

 

(vi)          If the Termination Date occurs prior to the date on which the
bonuses pursuant to the Bonus Plan are paid for the most recently completed
fiscal year, but after the end of such fiscal year, the Executive shall remain
eligible for the payment of such a bonus notwithstanding the fact that the
Executive is no longer employed on the date of payment.

 

(b)           Other Termination.  If the Executive’s employment with the Company
terminates other than as a result of an Involuntary Termination during the
Employment Period, then the Executive shall not be entitled to receive severance
benefits under this Agreement.

 

(c)           Accrued Wages and Vacation; Other Benefits.  Without regard to the
reason for, or the timing of, the Executive’s termination of employment, the
Company shall pay the Executive (i) any unpaid wages due for periods prior to
the Termination Date; and (ii) all of the Executive’s accrued and unused
vacation through the Termination Date.  These payments shall be made promptly
upon termination and within the period of time mandated by law.  Amounts which
are vested benefits or which the Executive is otherwise entitled to receive
under any plan of or any agreement with the Company or any of its affiliated
companies at or subsequent to the Termination Date shall be payable in
accordance with such plan or program or agreement except as explicitly modified
by this Agreement.

 

SECTION 3.   FULL SETTLEMENT.

 

The Company’s obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Executive or others.  In no event shall the
Executive be obligated to seek other employment or take any other action by way
of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced whether or
not the Executive obtains other employment.  The Company agrees to pay as
incurred, to the full extent permitted by law, all legal fees and expenses which
the Executive may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in section 7872(f)(2)(A) of the Internal Revenue Code.

 

SECTION 4.   SUCCESSORS.

 

(a)           This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of

 

5

--------------------------------------------------------------------------------

 

descent and distribution.  This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal representatives.

 

(b)           This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.

 

(c)           The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company or the relevant
Business Unit to assume expressly and agree to perform this Agreement in the
same manner and to the same extent that the Company or such Business Unit would
be required to perform it if no such succession had taken place.  As used in
this Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.

 

SECTION 5.   MISCELLANEOUS.

 

(a)           This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without reference to principles of
conflict of laws.  The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.  This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.

 

(b)           All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:

at the Executive’s current address as shown on the records of the Company.

 

If to the Company:

Incyte Corporation

Experimental Station

Route 141 & Henry Clay Road

Wilmington, DE 19880

Attention:  General Counsel

 

or to such other address as either party shall have furnished to the other in
writing in accordance herewith.  Notice and communications shall be effective
when actually received by the addressee.

 

(c)           Any termination during the Employment Period by the Company for
Cause or by the Executive as a result of an Involuntary Termination shall be
communicated by notice of termination to the other party hereto given in
accordance with Section 5(b) of this Agreement.  Such notice shall indicate the
specific termination provision in this Agreement relied upon, set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination under the provision so indicated, and specify the Termination Date
(which shall be not more than 30 days after the giving of such notice).  The
failure by the Executive or the Company to set

 

6

--------------------------------------------------------------------------------

 

forth in the notice any fact or circumstance which contributes to a showing of
Involuntary Termination or Cause shall not waive any right of the Executive or
the Company, respectively, hereunder or preclude the Executive or the Company,
respectively, from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights hereunder.

 

(d)           The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

 

(e)           The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

 

(f)            The Executive’s or the Company’s failure to insist upon strict
compliance with any provision of this Agreement or the failure to assert any
right the Executive or the Company may have hereunder shall not be deemed to be
a waiver of such provision or right or any other provision or right of this
Agreement.

 

(g)           The Executive and the Company acknowledge that the employment of
the Executive by the Company is “at will” and, prior to the Change in Control,
the Executive’s employment and/or this Agreement may be terminated by either the
Executive or the Company at any time, in which case the Executive shall have no
further rights under this Agreement except as expressly set forth in Section 2
hereof.  This Agreement represents the entire agreement and understanding
between the parties with respect to the subject matter hereof, and supersedes
any other agreement between the parties with respect thereto (provided that it
shall not supersede the Executive’s obligations under the Confidential
Information and Invention Assignment Agreement).

 

SECTION 6.   CODE SECTION 409A COMPLIANCE.

 

(a)           To the fullest extent applicable, amounts and other benefits
payable under this Agreement are intended to be exempt from the definition of
“nonqualified deferred compensation” under section 409A (“Section 409A”) of the
Internal Revenue Code of 1986, as amended (the “Code”), in accordance with one
or more of the exemptions available under the final Treasury regulations
promulgated under Section 409A and, to the extent that any such amount or
benefit is or becomes subject to Section 409A due to a failure to qualify for an
exemption from the definition of nonqualified deferred compensation in
accordance with such final Treasury regulations, this Agreement is intended to
comply with the applicable requirements of Section 409A with respect to such
amounts or benefits.  This Agreement shall be interpreted and administered to
the extent possible in a manner consistent with the foregoing statement of
intent.

 

(b)           Notwithstanding anything in this Agreement or elsewhere to the
contrary, for purposes of determining the payment date of any amounts that are
treated as nonqualified deferred compensation under Section 409A that become
payable under this Agreement in connection with a termination of employment, the
Termination Date shall be the date on which the Executive has incurred a
“separation from service” within the meaning of Treasury Regulation section
1.409A-1(h), or in subsequent IRS guidance under Code section 409A.

 

7

--------------------------------------------------------------------------------

 

(c)           Notwithstanding anything in this Agreement or elsewhere to the
contrary, if the Company reasonably determines that (A) the Executive is a
“specified employee” (within the meaning of Treasury Regulation
Section 1.409A-1(i)) on the Executive’s Termination Date and (B) commencement of
any payments or other benefits payable under this Agreement in connection with
the Executive’s separation from service, including without limitation, payment
of any of the payments on the scheduled payment dates specified in Section 2,
will subject the Executive to an “additional tax” under
Section 409A(a)(1)(B) (together with any interest or penalties imposed with
respect to, or in connection with, such tax, a “Section 409A Tax”), then the
Company shall withhold payment of any such payments or benefits until the first
business day of the seventh month following the date of the Executive’s
Termination Date or, if earlier, the date of the Executive’s death (the “Delayed
Payment Date”).  In the event that this Section 8(c) requires any payments to be
withheld, such withheld payments shall be accumulated and paid in a single lump
sum, with interest at the applicable federal rate provided in section
7872(f)(2) of the Code, on the Delayed Payment Date.

 

(d)           In each case where this Agreement provides for the payment of an
amount that constitutes nonqualified deferred compensation under Section 409A to
be made to the Executive within a designated period (e.g., within 30 days after
the Termination Date) and such period begins and ends in different calendar
years, the exact payment date within such range shall be determined by the
Company, in its sole discretion, and the Executive shall have no right to
designate the year in which the payment shall be made.

 

(e)           The Company and the Executive may agree to take other actions to
avoid the imposition of a Section 409A Tax at such time and in such manner as
permitted under Section 409A.

 

IN WITNESS WHEREOF, the Executive and the Company, through its duly authorized
Officer, have executed this Agreement to be effective as of the day and year
first above written.

 

 

 

EXECUTIVE

 

 

 

 

 

 

 

COMPANY

 

 

 

 

 

By

 

 

 

 

 

Its

 

 

8

--------------------------------------------------------------------------------