Exhibit 10.1

 

PLEDGE AND ESCROW AGREEMENT

 

by and among

 

INCYTE CORPORATION, as Pledgor,

 

U.S. BANK NATIONAL ASSOCIATION, as Trustee,

 

and

 

U.S. BANK NATIONAL ASSOCIATION, as Escrow Agent

 

Dated as of September 30, 2009

 

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PLEDGE AND ESCROW AGREEMENT

 

THIS PLEDGE AND ESCROW AGREEMENT (this “Agreement”), dated as of September 30,
2009, is by and among Incyte Corporation (the “Company”), as pledgor, U.S. Bank
National Association, as trustee under the Indenture referred to below (the
“Trustee”), and U.S. Bank National Association, in its capacity as securities
intermediary and escrow agent (the “Escrow Agent”).

 

RECITALS

 

The Company and the Trustee have entered into an Indenture dated as of
September 30, 2009 (as the same may be supplemented and amended from time to
time, the “Indenture”) pursuant to which the Company will issue $400,000,000 in
aggregate principal amount of its 4.75% Convertible Senior Notes due 2015 (the
“Notes”).

 

The Company desires to establish an escrow account with the Escrow Agent into
which certain sums, as fully described in Section 2(a) below, will be,
simultaneously with the original issuance of the Notes, deposited by the Company
to be held and distributed in accordance with the terms and conditions set forth
herein, and the Escrow Agent is willing to establish such an account and to
accept such funds in accordance with the terms hereinafter set forth.

 

Capitalized terms used but not defined herein shall have the meanings assigned
to such terms in the Indenture.

 

AGREEMENT

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

 

SECTION 1.                                ESTABLISHMENT OF ESCROW ACCOUNT. THE
ESCROW AGENT SHALL ESTABLISH ON THE DATE HEREOF AND MAINTAIN IN THE TRUSTEE’S
NAME A “SECURITIES ACCOUNT” (WITHIN THE MEANING OF ARTICLE 8 OF THE UNIFORM
COMMERCIAL CODE OF THE STATE OF NEW YORK AS IN EFFECT FROM TIME TO TIME (THE
“NEW YORK UCC”)) IDENTIFIED AS ABA NUMBER: 091000022; ACCOUNT NUMBER: 134507001;
ACCOUNT NAME : INCYTE CSN 2009 SECURED INTEREST ACCT (THE “ESCROW ACCOUNT”) TO
WHICH THERE SHALL BE IMMEDIATELY CREDITED AND HELD AMOUNTS RECEIVED BY THE
ESCROW AGENT FROM THE COMPANY IN ACCORDANCE WITH SECTION 3 HEREOF. THE FUNDS
CREDITED TO THE ESCROW ACCOUNT SHALL BE APPLIED AND DISBURSED ONLY AS PROVIDED
HEREIN. THE ESCROW AGENT SHALL SEGREGATE THE FUNDS CREDITED TO THE ESCROW
ACCOUNT FROM ITS OTHER FUNDS HELD AS AN AGENT OR IN TRUST. THE ESCROW AGENT
SHALL TREAT ALL PROPERTY HELD BY IT IN THE ESCROW ACCOUNT AS “FINANCIAL ASSETS”
(AS DEFINED IN SECTION 8-L02(A)(9) OF THE NEW YORK UCC) IN ACCORDANCE WITH
SECTION 8-501 (OR SUCCESSOR SECTION) OF THE NEW YORK UCC.

 

SECTION 2.                                DEPOSIT TO THE ESCROW ACCOUNT;
INVESTMENTS.

 

(A)                                  (I) SIMULTANEOUSLY WITH THE ORIGINAL
ISSUANCE OF THE NOTES, THE COMPANY SHALL DELIVER TO THE ESCROW AGENT FOR DEPOSIT
IN THE ESCROW ACCOUNT “PERMITTED SECURITIES” (AS DEFINED BELOW) WITH AN ORIGINAL
PURCHASE PRICE EQUAL TO $56,268,631.42 (THE “ESCROW FUNDS”).

 

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A DESCRIPTION OF THE PERMITTED SECURITIES THAT ARE BEING DEPOSITED IN THE ESCROW
ACCOUNT AS OF THE DATE OF THIS AGREEMENT IS CONTAINED ON EXHIBIT A HERETO.

 

(ii)                                  [Intentionally omitted].

 

(iii)                               All amounts to be deposited with the Escrow
Agent shall be transferred by wire transfer of immediately available funds to
the following account:

 

U.S. Bank National Association
ABA No.  91000022
Account No. 180121167365
Acct Name: U.S. Bank Corporate Trust Department
Attn: Brad. E. Scarbrough

 

(iv)                              The Escrow Agent may assume without inquiry
that all amounts deposited by the Company under this Section 2 have been
correctly computed in accordance with the requirements of the Indenture, that no
additional amounts are required to be so delivered and that the Escrow Agent is
not required under the Indenture to hold in the Escrow Account any additional
amounts other than income earned on investments made in accordance with this
Section 2.

 

(B)                                 TO THE EXTENT IMMEDIATELY AVAILABLE FUNDS
ARE DEPOSITED IN THE ESCROW ACCOUNT, PROMPTLY FOLLOWING THE DEPOSIT OF ANY SUCH
FUNDS INTO THE ESCROW ACCOUNT, THE COMPANY, AFTER CONSULTING WITH THE INITIAL
PURCHASERS, SHALL PROVIDE WRITTEN INSTRUCTIONS TO THE ESCROW AGENT AS TO THE
SPECIFIC PERMITTED SECURITIES IN WHICH FUNDS ARE TO BE INVESTED AND UNTIL SUCH
INSTRUCTIONS ARE GIVEN BY THE COMPANY, THE ESCROW AGENT SHALL NOT INVEST SUCH
FUNDS. FOR PURPOSES OF THIS AGREEMENT, “PERMITTED SECURITIES” SHALL MEAN “MONEY
MARKET SECURITIES” AND/OR “GOVERNMENT SECURITIES.” “MONEY MARKET SECURITIES “
SHALL MEAN MONEY MARKET SECURITIES ISSUED BY MONEY MARKET FUNDS. “MONEY MARKET
FUND” MEANS ANY REGISTERED INVESTMENT COMPANY THAT MEETS THE CONDITIONS OF
PARAGRAPHS (C)(2), (C)(3) AND (C)(4) OF RULE 2A-7 UNDER THE INVESTMENT COMPANY
ACT OF 1940, AS AMENDED, THAT INVESTS EXCLUSIVELY IN SECURITIES OF THE U.S.
GOVERNMENT, SECURITIES OF GOVERNMENT-SPONSORED ENTERPRISES CREATED BY THE U.S.
CONGRESS AND PRIVATELY ISSUED MONEY MARKET SECURITIES THAT HAVE BEEN RATED BY AT
LEAST ONE “NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION” (AS THAT TERM
IS USED IN SECTION 15E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED) AND
RECEIVED THE HIGHEST CREDIT RATING (AS OF THE DATE HEREOF, A1 IN THE CASE OF
STANDARD & POOR’S RATINGS SERVICE AND P1 IN THE CASE OF MOODY’S INVESTOR
SERVICE, INC.) FROM EACH NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION
THAT HAS RATED THEM. “GOVERNMENT SECURITIES “ SHALL MEAN NONCALLABLE DIRECT
OBLIGATIONS OF, OR NONCALLABLE OBLIGATIONS THE PAYMENT OF PRINCIPAL OF AND
INTEREST ON WHICH ARE UNCONDITIONALLY GUARANTEED BY, THE UNITED STATES OF
AMERICA. ALL SUCH AMOUNTS SHALL REMAIN SO INVESTED UNTIL THE CLOSE OF BUSINESS
ON THE BUSINESS DAY PRIOR TO ANY WITHDRAWAL BY THE ESCROW AGENT PURSUANT TO
SECTION 4 HEREOF. ALL INTEREST ACCRUED ON THE ESCROW FUNDS SHALL BE ADDED TO THE
ESCROW ACCOUNT AND BE PART OF THE ESCROW ACCOUNT FOR ALL PURPOSES HEREUNDER. 
THE ESCROW AGENT SHALL NOT BE LIABLE FOR ANY LOSS INCURRED BY THE ACTIONS OF
THIRD PARTIES OR FOR ANY LOSS ARISING BY ERROR, FAILURE OR DELAY IN THE MAKING
OF AN INVESTMENT OR REINVESTMENT, AND THE ESCROW AGENT SHALL NOT BE LIABLE FOR
ANY LOSS OF PRINCIPAL OR INCOME IN CONNECTION THEREWITH, UNLESS SUCH ERROR,
FAILURE OR DELAY RESULTS FROM THE ESCROW AGENT’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.  AS AND WHEN THE ESCROW

 

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FUNDS AND ANY INTEREST OR INCOME THEREON IS TO BE RELEASED UNDER THIS AGREEMENT,
THE ESCROW AGENT SHALL CAUSE THE PERMITTED SECURITIES TO BE CONVERTED INTO CASH
IN ACCORDANCE WITH ITS CUSTOMARY PROCEDURES AND SHALL NOT BE LIABLE FOR ANY LOSS
OF PRINCIPAL OR INCOME IN CONNECTION THEREWITH.  THE ESCROW AGENT SHALL NOT BE
LIABLE FOR ANY LOSS OF PRINCIPAL OR INCOME DUE TO THE CHOICE OF PERMITTED
SECURITIES AS INVESTMENTS OR THE CHOICE OF PERMITTED SECURITIES CONVERTED INTO
CASH PURSUANT TO THIS SECTION 2.  ALL PERMITTED SECURITIES FROM TIME TO TIME
CREDITED TO THE ESCROW ACCOUNT CONSTITUTING A “SECURITY ENTITLEMENT” AS DEFINED
IN SECTION 8-102(A)(17) OF THE NEW YORK UCC SHALL BE HELD IN THE NAME OF THE
TRUSTEE OR THE ESCROW AGENT (OR EITHER OF THEIR NOMINEE NAMES) AND IN NO EVENT
SHALL THE COMPANY BE OR BE DEEMED TO BE THE “ENTITLEMENT HOLDER” (AS SUCH TERM
IS DEFINED IN SECTION 8-102(A)(7) OF THE NEW YORK UCC) WITH RESPECT THERETO.

 

SECTION 3.                                SECURITY INTEREST.

 

(A)                                 PLEDGE AND ASSIGNMENT. AS SECURITY FOR THE
SECURED OBLIGATIONS (AS DEFINED BELOW), THE COMPANY HEREBY IRREVOCABLY PLEDGES,
ASSIGNS AND GRANTS TO THE TRUSTEE, FOR THE EQUAL AND RATABLE BENEFIT OF THE
HOLDERS OF THE NOTES, A FIRST PRIORITY CONTINUING SECURITY INTEREST IN, AND
CONTROL OF, ALL OF THE COMPANY’S RIGHT, TITLE AND INTEREST IN AND TO ALL OF THE
FOLLOWING WHETHER NOW OWNED OR EXISTING OR HEREAFTER ACQUIRED OR CREATED
(COLLECTIVELY, THE “COLLATERAL”):

 

(i)                                     the Escrow Account, all security
entitlements from time to time carried in the Escrow Account, all funds from
time to time held in the Escrow Account, including, without limitation, the
Escrow Funds and all certificates and instruments, if any, from time to time,
representing or evidencing the Escrow Account or the Escrow Funds;

 

(ii)                                  all investments of funds in the Escrow
Account, all of which shall constitute Permitted Securities, and whether held by
or registered in the name of the Escrow Agent or any nominee, all certificates
and instruments, if any, from time to time representing or evidencing any such
Permitted Securities and all security entitlements to such Permitted Securities;

 

(iii)                               all promissory notes, certificates of
deposit, deposit accounts, checks and other instruments evidencing Permitted
Securities from time to time hereafter delivered to or otherwise possessed by
the Escrow Agent, for or on behalf of the Company, in substitution for or in
addition to any or all of the then existing Collateral;

 

(iv)                              all interest, dividends, cash, instruments,
securities and other properties from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the then
existing Collateral; and

 

(v)                                 all proceeds of the foregoing.

 

The Trustee hereby appoints the Escrow Agent to act as the Trustee’s agent, on
behalf of the Holders of the Notes, for purposes of perfecting the foregoing
pledge, assignment and security interest in the Collateral, and the Escrow Agent
hereby accepts such appointment. For so long as the foregoing pledge, assignment
and security interest remains in effect, the Escrow Agent hereby waives any
right of set off or banker’s lien that it, in its individual capacity or in its

 

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capacity as an agent for Persons other than the Trustee and the Holders of the
Notes, may have with respect to any or all of the Collateral.

 

(B)                                 SECURED OBLIGATIONS. THIS AGREEMENT SECURES
THE DUE AND PUNCTUAL PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS OF THE COMPANY,
WHETHER NOW OR HEREAFTER EXISTING, UNDER THE NOTES, THE INDENTURE AND THIS
AGREEMENT, INCLUDING, WITHOUT LIMITATION, INTEREST AND PREMIUM, IF ANY, ACCRUED
ON THE NOTES AFTER THE COMMENCEMENT OF A BANKRUPTCY, REORGANIZATION OR SIMILAR
PROCEEDING INVOLVING THE COMPANY TO THE EXTENT PERMITTED BY APPLICABLE LAW
(COLLECTIVELY, THE “SECURED OBLIGATIONS”).

 

(C)                                  DELIVERY OF COLLATERAL. ALL CERTIFICATES OR
INSTRUMENTS, IF ANY, REPRESENTING OR EVIDENCING ALL OR ANY PORTION OF THE
COLLATERAL SHALL BE HELD BY THE ESCROW AGENT ON BEHALF OF THE TRUSTEE PURSUANT
HERETO AND SHALL BE IN SUITABLE FORM FOR TRANSFER BY DELIVERY, OR SHALL BE
ACCOMPANIED BY DULY EXECUTED INSTRUMENTS OF TRANSFER OR ASSIGNMENTS IN BLANK,
ALL IN FORM AND SUBSTANCE SUFFICIENT TO CONVEY A VALID SECURITY INTEREST IN SUCH
COLLATERAL TO THE TRUSTEE. ALL SECURITIES IN UNCERTIFICATED OR BOOK-ENTRY FORM
AND ALL SECURITY ENTITLEMENTS, IF ANY, IN EACH CASE REPRESENTING OR EVIDENCING
THE COLLATERAL SHALL BE REGISTERED IN THE NAME OF THE TRUSTEE (OR ANY OF ITS
NOMINEES) AS THE REGISTERED OWNER THEREOF, BY BOOK-ENTRY OR AS OTHERWISE
APPROPRIATE SO AS TO PROPERLY IDENTIFY THE INTEREST OF THE TRUSTEE THEREIN.  IN
ADDITION, THE ESCROW AGENT SHALL HAVE THE RIGHT, AT ANY TIME FOLLOWING THE
OCCURRENCE OF AN EVENT OF DEFAULT, TO TRANSFER TO OR TO REGISTER IN THE NAME OF
THE TRUSTEE OR ANY OF ITS NOMINEES ANY OR ALL OF THE OTHER COLLATERAL. EXCEPT AS
OTHERWISE PROVIDED HEREIN, ALL COLLATERAL SHALL BE DEPOSITED AND HELD IN THE
ESCROW ACCOUNT.  THE ESCROW AGENT SHALL HAVE THE RIGHT AT ANY TIME TO EXCHANGE
CERTIFICATES OR INSTRUMENTS REPRESENTING OR EVIDENCING ALL OR ANY PORTION OF THE
COLLATERAL FOR CERTIFICATES OR INSTRUMENTS OF SMALLER OR LARGER DENOMINATIONS IN
THE SAME AGGREGATE AMOUNT.

 

(D)                                MAINTAINING THE ESCROW ACCOUNT. SO LONG AS
THIS AGREEMENT IS IN FULL FORCE AND EFFECT:

 

(i)                                     subject to the other terms and
conditions of this Agreement, all Collateral held by the Escrow Agent pursuant
to this Agreement shall be held in the Escrow Account, which shall be subject to
the exclusive dominion and control of the Trustee for the benefit of the Trustee
and the equal and ratable benefit of the Holders of the Notes;

 

(ii)                                  the Escrow Account and all Collateral from
time to time therein shall remain segregated from all other funds or other
property otherwise held by the Trustee or the Escrow Agent, as applicable;

 

(iii)                               all amounts (including, without limitation,
any Escrow Funds or interest on or other proceeds of the Escrow Funds or any
Permitted Securities held in the Escrow Account) shall remain on deposit in the
Escrow Account until withdrawn in accordance with this Agreement;

 

(iv)                              the parties intend that the Trustee is the
holder or entitlement holder (as the case may be) of all of the Collateral and
that either the Trustee for the equal and ratable benefit of the Holders of the
Notes or, to the extent required by applicable law, the Escrow Agent, for the
benefit of the Trustee and the equal and ratable benefit of the

 

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Holders of the Notes, is the holder or entitlement holder of all Permitted
Securities and other uncertificated securities on the books of the applicable
Federal Reserve Bank or other applicable securities intermediary; and

 

(v)                                 notwithstanding anything to the contrary
herein, the Escrow Agent shall comply with all instructions from the Trustee
with respect to the Escrow Account and the security entitlements carried therein
without further consent from the Company.

 

(E)                                 FURTHER ASSURANCES. THE COMPANY SHALL, AT
THE COMPANY’S EXPENSE, EXECUTE AND DELIVER TO THE TRUSTEE OR ITS DESIGNEE SUCH
OTHER INSTRUMENTS AND DOCUMENTS, AND TAKE ALL FURTHER ACTION AS THE TRUSTEE
DEEMS REASONABLY NECESSARY OR ADVISABLE OR MAY REASONABLY REQUEST TO CONFIRM OR
PERFECT THE SECURITY INTEREST OF THE TRUSTEE GRANTED OR PURPORTED TO BE GRANTED
HEREBY OR TO ENABLE THE TRUSTEE TO EXERCISE AND ENFORCE ITS RIGHTS AND REMEDIES
HEREUNDER WITH RESPECT TO ANY COLLATERAL, AND THE COMPANY SHALL TAKE ALL
NECESSARY ACTION TO PRESERVE AND PROTECT THE SECURITY INTEREST CREATED HEREBY AS
A FIRST PRIORITY, PERFECTED LIEN AND ENCUMBRANCE UPON THE COLLATERAL.

 

SECTION 4.                                DISTRIBUTIONS FROM ESCROW ACCOUNT.
ASSETS ON DEPOSIT IN THE ESCROW ACCOUNT SHALL BE WITHDRAWN BY THE ESCROW AGENT
AND TRANSFERRED ONLY IN ACCORDANCE WITH THIS SECTION 4:

 

(A)                                 EVENT OF DEFAULT.

 

(i)                                    For so long as an Event of Default has
occurred and is continuing under the Indenture, no amounts shall be disbursed
from the Escrow Account, except as provided in Section 4(a)(ii) below.

 

(ii)                                 If any Event of Default has occurred and is
continuing under Section 6.01 of the Indenture:

 

(1)                                 The Trustee may, without notice to the
Company except as required by applicable law and at any time or from time to
time, direct the Escrow Agent to redeem or sell all Collateral and transfer all
proceeds thereof to the Paying Agent to apply such funds in accordance with
Section 6.06 of the Indenture.

 

(2)                                 If requested by the Holders of the
Securities pursuant to Section 6.12 of the Indenture, the Trustee (and/or the
Escrow Agent at its direction and on its behalf) may also, in addition to the
other rights and remedies provided for herein, exercise in respect of the
Collateral all the rights and remedies of a secured party upon default under the
New York UCC, and may also, without notice except as specified below, redeem or
sell the Collateral or any part thereof in one or more parcels at public or
private sales, at any of the Trustee’s or the Escrow Agent’s offices or
elsewhere, for cash, on credit or for future delivery, and upon such other terms
as the Trustee may deem commercially reasonable. The Company agrees that, to the
extent notice of sale shall be required by law, at least ten (10) days’ notice
to the Company of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable

 

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notification. The Trustee and the Escrow Agent shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. The
Trustee (or the Escrow Agent on its behalf) may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned.

 

(3)                                  Any cash held by the Escrow Agent as
Collateral and all net cash proceeds received by the Trustee or the Escrow Agent
in respect of any sale or liquidation of, collection from, or other realization
upon all or any part of the Collateral may, in the discretion of the Trustee, be
held by the Trustee or the Escrow Agent as collateral for, and then or at any
time thereafter be applied (after payment of any costs and expenses incurred in
connection with any redemption, sale, liquidation or disposition of or
realization upon the Collateral and the payment of any amounts payable to the
Trustee or the Escrow Agent) in whole or in part by the Trustee for the equal
and ratable benefit of the Holders of the Notes against all or any part of the
Secured Obligations in such order as described in Section 6.06 of the Indenture.

 

(B)                                 SCHEDULED INTEREST PAYMENTS. PURSUANT TO THE
NOTES, THE COMPANY IS OBLIGATED TO MAKE PAYMENTS OF INTEREST (EXCLUDING ANY
ADDITIONAL INTEREST, RESERVE INTEREST AND QUALIFYING TENDER OFFER INTEREST, IF
APPLICABLE) ON THE NOTES ON EACH OF APRIL 1, 2010, OCTOBER 1, 2010, APRIL 1,
2011, OCTOBER 1, 2011, APRIL 1, 2012 AND OCTOBER 1, 2012 (EACH, A “SCHEDULED
INTEREST PAYMENT”). THE SCHEDULED INTEREST PAYMENTS DUE ON THE NOTES ARE TO BE
MADE, AT THE ELECTION OF THE COMPANY, FROM (1) AMOUNTS HELD IN THE ESCROW
ACCOUNT IN ACCORDANCE WITH THE PROCEDURES SET FORTH IN SECTION 4(B)(I) BELOW OR
(2) OTHER SOURCES OF FUNDS AVAILABLE TO THE COMPANY, AS ANTICIPATED IN
SECTION 4(B)(II) BELOW, OR FROM ANY COMBINATION OF (1) AND (2) ABOVE; PROVIDED,
HOWEVER, THAT NOTHING HEREIN SHALL BE CONSTRUED AS LIMITING THE COMPANY’S
OBLIGATION TO MAKE ALL INTEREST PAYMENTS DUE ON THE NOTES AT THE TIMES AND IN
THE AMOUNTS REQUIRED BY THE NOTES, WHICH OBLIGATION SHALL BE ABSOLUTE AND
UNCONDITIONAL.

 

(i)                                                 Payment of Interest. If the
Company elects to cause a Scheduled Interest Payment to be made using funds held
in the Escrow Account, then, not later than five (5) Business Days prior to the
date of the applicable Scheduled Interest Payment, the Company shall direct the
Escrow Agent in writing pursuant to the form of notice attached hereto as
Exhibit B (upon which the Escrow Agent may conclusively rely) to transfer from
the Escrow Account to the Trustee funds (or Permitted Securities that are
scheduled to mature or that can be liquidated on or before the date of the
applicable Scheduled Interest Payment) in a specified amount necessary to
provide for payment in full (or, if the Company intends to make a portion of
such interest payment with funds or Permitted Securities in the Escrow Account
and the remainder of such interest payment with funds other than those in the
Escrow Account, such portion) of the next Scheduled Interest Payment on the
Notes. At or prior to 1:00 p.m., New York City time, on the day that is no later
than one (1) Business Day following receipt of such notice, the Escrow Agent
shall transfer such funds (or such Permitted Securities, as applicable) to the
Paying Agent as set forth in Section 4(d)(ii) hereof, and shall notify the
Company in writing that it has made such transfer to the Paying Agent. If the
Company does not

 

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intend to utilize the funds (or Permitted Securities) in the Escrow Account to
make any such Scheduled Interest Payment in full, or does not direct the Escrow
Agent in writing to make any such Scheduled Interest Payment, then the Company
shall make the Scheduled Interest Payment from Company Funds (as defined in
Section 4(b)(ii) below).

 

(ii)                                              Release of Funds to the
Company Due to Direct Payment of Interest by the Company. If the Company makes
any Scheduled Interest Payment or a portion of any Scheduled Interest Payment
from a source of funds other than the Escrow Account (“ Company Funds “), the
Company may, after payment in full of such Scheduled Interest Payment and upon
at least five (5) Business Days’ prior notice, direct the Escrow Agent in
writing pursuant to the form of notice attached hereto as Exhibit B (upon which
the Escrow Agent may conclusively rely), so long as no Event of Default has
occurred and is continuing, to release to the Company (or at the direction of
the Company, to release to a designated third party) an amount of funds or
Permitted Securities from the Escrow Account, the sum of the cumulative interest
payments which is less than or equal to the amount of Company Funds so expended
in making the Scheduled Interest Payment. Upon receipt of such notice, the
Escrow Agent shall pay over or transfer to the Company the requested amount.

 

(C)                                  EXCESS ESCROW FUNDS.  IF, (X) IN THE COURSE
OF FUNDING THE ESCROW ACCOUNT PURSUANT TO SECTION 2(A) HEREOF, THE COMPANY
EITHER ELECTS OR IS REQUIRED TO DEPOSIT IN THE ESCROW ACCOUNT FUNDS IN AN AMOUNT
GREATER THAN THAT WHICH IS REQUIRED TO FUND THE PAYMENT OF THE SUM OF (A) ALL
REMAINING SCHEDULED INTEREST PAYMENTS AND (B) ANY ADDITIONAL INTEREST, RESERVE
INTEREST AND QUALIFYING TENDER INTEREST, IF APPLICABLE, IN RESPECT OF ALL
OUTSTANDING NOTES (SUCH SUM, THE “REMAINING INTEREST PAYMENTS”) (IN ORDER TO
PERMIT THE ESCROW AGENT TO PURCHASE AN AMOUNT OF PERMITTED SECURITIES EQUAL TO
OR GREATER THAN THAT WHICH IS REQUIRED TO FUND THE PAYMENT OF THE REMAINING
INTEREST PAYMENTS OR OTHERWISE) OR (Y) THE BALANCE OF THE ESCROW ACCOUNT EXCEEDS
THE REMAINING INTEREST PAYMENTS AS A RESULT OF CUMULATIVE INTEREST PAYMENTS ON
THE PERMITTED SECURITIES HELD IN THE ESCROW ACCOUNT (ANY SUCH EXCESS AMOUNTS
UNDER CLAUSES (X) AND (Y) BEING HEREINAFTER REFERRED TO AS “ EXCESS ESCROW FUNDS
“), THE COMPANY MAY, UPON AT LEAST FIVE (5) BUSINESS DAYS’ PRIOR WRITTEN NOTICE
PURSUANT TO THE FORM OF NOTICE ATTACHED HERETO AS EXHIBIT B (UPON WHICH THE
ESCROW AGENT MAY CONCLUSIVELY RELY), DIRECT THE ESCROW AGENT, SO LONG AS NO
EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, TO RELEASE TO THE COMPANY (OR
AT THE DIRECTION OF THE COMPANY, TO RELEASE TO A DESIGNATED THIRD PARTY) AN
AMOUNT OF FUNDS OR PERMITTED SECURITIES FROM THE ESCROW ACCOUNT, THE SUM OF
WHICH (INCLUDING AGGREGATE PRINCIPAL AMOUNT OF SUCH PERMITTED SECURITIES) IS
LESS THAN OR EQUAL TO THE AMOUNT OF THE EXCESS ESCROW FUNDS. UPON RECEIPT OF
SUCH NOTICE, THE ESCROW AGENT SHALL PAY OVER OR TRANSFER TO THE COMPANY (OR ITS
DESIGNATED THIRD PARTY, AS THE CASE MAY BE) THE REQUESTED AMOUNT OR PERMITTED
SECURITIES.

 

(D)                                 WIRE TRANSFER.

 

(i)                                     All funds distributed from the Escrow
Account to the Company shall be transferred by wire transfer of immediately
available funds to the following account:

 

Account Name:

Incyte Corporation

Account No.:

200131160-01

Routing No.:

122000496

 

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Bank Name:

Union Bank of California, N.A.

Bank Address:

Monterey Park, CA 91755

 

(ii)                                  All funds (or Permitted Securities that
are scheduled to mature or that can be liquidated on or before the date of the
applicable Scheduled Interest Payment) distributed from the Escrow Account to
the Paying Agent for payment on the Notes shall be transferred by an
account-to-account transfer of immediately available funds to the following
account:

 

U.S. Bank National Association
ABA No.  91000022
Account No. 180121167365
Acct Name: U.S. Bank Corporate Trust Department
Attn: Brad. E. Scarbrough

 

(E)                                  WRITTEN INSTRUCTIONS; CERTIFICATES. THE
COMPANY SHALL, UPON REQUEST BY THE ESCROW AGENT, EXECUTE AND DELIVER TO THE
ESCROW AGENT SUCH ADDITIONAL WRITTEN INSTRUCTIONS AND CERTIFICATES HEREUNDER AS
MAY BE REASONABLY REQUIRED BY THE ESCROW AGENT TO GIVE EFFECT TO THIS SECTION 4.

 

SECTION 5.                                TERMINATION OF SECURITY INTEREST. UPON
PAYMENT IN FULL OF THE SCHEDULED INTEREST PAYMENTS, THE SECURITY INTEREST
EVIDENCED BY THIS AGREEMENT IN ANY COLLATERAL REMAINING IN THE ESCROW ACCOUNT
SHALL AUTOMATICALLY TERMINATE AND BE OF NO FURTHER FORCE AND EFFECT.
FURTHERMORE, UPON THE RELEASE OF ANY COLLATERAL FROM THE ESCROW ACCOUNT IN
ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, WHETHER UPON RELEASE OF SUCH
COLLATERAL TO HOLDERS OF NOTES AS PAYMENT OF INTEREST ON THE NOTES OR TO THE
COMPANY PURSUANT TO SECTIONS 4(B)(II) OR 4(C), THE SECURITY INTEREST EVIDENCED
BY THIS AGREEMENT IN SUCH COLLATERAL SO RELEASED SHALL AUTOMATICALLY TERMINATE
AND BE OF NO FURTHER FORCE AND EFFECT. THE TRUSTEE AND THE ESCROW AGENT SHALL,
UPON REQUEST BY THE COMPANY, EXECUTE AND DELIVER TO THE COMPANY SUCH ADDITIONAL
WRITTEN INSTRUCTIONS AND CERTIFICATES HEREUNDER AS MAY BE REASONABLY REQUIRED BY
THE COMPANY TO GIVE EFFECT TO THIS SECTION 5.

 

SECTION 6.                                ATTORNEYS-IN-FACT. THE COMPANY HEREBY
IRREVOCABLY APPOINTS EACH OF THE TRUSTEE AND THE ESCROW AGENT AS THE COMPANY’S
ATTORNEY-IN-FACT, COUPLED WITH AN INTEREST, WITH FULL AUTHORITY IN THE PLACE AND
STEAD OF THE COMPANY AND IN THE NAME OF THE COMPANY OR OTHERWISE, FROM TIME TO
TIME TO TAKE ANY ACTION AND TO EXECUTE ANY INSTRUMENT THAT MAY BE NECESSARY OR
ADVISABLE TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, TO RECEIVE, ENDORSE AND COLLECT ALL INSTRUMENTS MADE PAYABLE TO THE
COMPANY REPRESENTING ANY INTEREST PAYMENT, DIVIDEND OR OTHER DISTRIBUTION IN
RESPECT OF THE COLLATERAL OR ANY PART THEREOF AND TO GIVE FULL DISCHARGE FOR THE
SAME, AND THE EXPENSES OF THE TRUSTEE AND THE ESCROW AGENT INCURRED IN
CONNECTION THEREWITH SHALL BE PAYABLE BY THE COMPANY; PROVIDED THAT NEITHER THE
TRUSTEE NOR THE ESCROW AGENT IS UNDER ANY OBLIGATION OR DUTY TO EXERCISE ANY
AUTHORITY UNDER THIS SECTION 6.

 

SECTION 7.                                TRUSTEE OR ESCROW AGENT MAY PERFORM.
WITHOUT LIMITING THE AUTHORITY GRANTED UNDER SECTION 6 HEREOF, IF THE COMPANY
FAILS TO PERFORM ANY AGREEMENT CONTAINED HEREIN, THE TRUSTEE OR THE ESCROW AGENT
MAY, BUT SHALL NOT BE OBLIGATED TO, ITSELF PERFORM, OR CAUSE

 

8

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PERFORMANCE OF, SUCH AGREEMENT, AND THE EXPENSES OF THE TRUSTEE OR THE ESCROW
AGENT INCURRED IN CONNECTION THEREWITH SHALL BE PAYABLE BY THE COMPANY AND SHALL
BE SECURED BY THE COLLATERAL.

 

SECTION 8.                                REPRESENTATIONS, WARRANTIES AND
AGREEMENTS.

 

(A)                                  THE COMPANY REPRESENTS AND WARRANTS THAT:

 

(i)                                     The execution, delivery and performance
by the Company of this Agreement are within its corporate power, have been duly
authorized by all necessary corporate action of the Company, and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of any judgment, injunction or order or of any material agreement
or other material instrument binding upon the Company or of the certificate of
incorporation or by-laws of the Company or result in the creation or imposition
of any Lien on any assets of the Company other than the Lien contemplated
hereby.

 

(ii)                                  The Company (A) is duly organized, validly
existing and in good standing under the laws of the State of Delaware, (B) has
full corporate power and authority to enter into this Agreement and (C) has the
right to pledge and grant a security interest in the Collateral as provided by
this Agreement.

 

(iii)                               This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar laws affecting
creditors’ rights generally and by general principles of equity.

 

(iv)                              Upon the execution and delivery of this
Agreement by the parties hereto and the delivery to the Escrow Agent of the
Collateral, the pledge of the Collateral pursuant to this Agreement creates a
valid and perfected first priority security interest in the Collateral, securing
the payment of the Secured Obligations for the benefit of the Trustee, the
Escrow Agent and the Holders of the Notes, enforceable as such against all
creditors of the Company and any persons purporting to purchase any of the
Collateral from each of them.

 

(v)                                 Other than the filing of a UCC financing
statement in respect of the security interest granted hereunder, no consent of
any other person and no consent, authorization, approval, or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required either (A) for the pledge by the Company of the Collateral pursuant
to this Agreement or for the execution, delivery or performance of this
Agreement by the Company or (B) for the exercise by the Trustee or the Escrow
Agent of the remedies in respect of the Collateral pursuant to this Agreement.

 

(vi)                              No litigation, investigation or proceeding of
or before any arbitrator or governmental authority is pending or, to the best
knowledge of the Company, threatened by or against the Company or against any of
its properties or revenues with respect to this Agreement or any of the
transactions contemplated hereby.

 

9

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(vii)                           The pledge of the Collateral pursuant to this
Agreement is not prohibited by any applicable law or governmental regulation,
release, interpretation or opinion of the Board of Governors of the Federal
Reserve System or other regulatory agency (including, without limitation,
Regulations T, U and X of the Board of Governors of the Federal Reserve System).

 

(viii)                        All information set forth herein relating to the
Collateral is accurate and complete in all material respects.

 

(B)                                 THE COMPANY COVENANTS AND AGREES THAT:

 

(i)                                     it will not (and will not purport to)
(A) sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option or warrant with respect to, any of the Collateral nor
(B) create or permit to exist any Lien upon or with respect to any of the
Collateral (except for the liens and security interests granted under this
Agreement) and at all times will have the right to pledge the Collateral, free
and clear of any Lien or adverse claims (except for the liens and security
interests granted under this Agreement);

 

(ii)                                  it will not (A) enter into any agreement
or understanding (other than the Indenture) that restricts or inhibits or
purports to restrict or inhibit the Trustee’s or the Escrow Agent’s rights or
remedies hereunder, including, without limitation, their right to sell or
otherwise dispose of the Collateral or (B) fail to pay or discharge any tax,
assessment or levy of any nature with respect to the Collateral not later than
three Business Days prior to the date of any proposed sale under any judgment,
writ or warrant of attachment with respect to the Collateral; and

 

(iii)                               it will not change its jurisdiction of
incorporation without 30 days’ prior written notice to the Trustee.

 

(C)                                  THE ESCROW AGENT REPRESENTS AND WARRANTS
THAT IT IS A BANK WITH TRUST POWERS THAT IN THE ORDINARY COURSE OF ITS BUSINESS
MAINTAINS SECURITIES ACCOUNTS FOR OTHERS AND IS ACTING SOLELY IN SUCH CAPACITY
IN RESPECT OF THE ESCROW ACCOUNT.  THE ESCROW AGENT FURTHER REPRESENTS AND
WARRANTS THAT IT IS A “SECURITIES INTERMEDIARY” WITHIN THE MEANING OF
SECTION 8-102(A)(14) OF THE NEW YORK UCC.

 

(D)                                 FOR PURPOSES OF THIS SECTION, “LIEN” MEANS,
WITH RESPECT TO ANY ASSET, ANY MORTGAGE, DEED OF TRUST, LIEN, PLEDGE,
HYPOTHECATION, ENCUMBRANCE, CHARGE OR SECURITY INTEREST IN, ON OR OF SUCH ASSET.

 

SECTION 9.                                FEES AND EXPENSES OF ESCROW AGENT.

 

(A)                                  THE COMPANY AGREES TO PAY THE ESCROW AGENT
ITS AGREED-UPON COMPENSATION FOR ITS SERVICES AS ESCROW AGENT HEREUNDER PROMPTLY
UPON REQUEST THEREFOR, AND TO REIMBURSE THE ESCROW AGENT FOR ALL REASONABLE AND
DOCUMENTED EXPENSES OF OR DISBURSEMENTS INCURRED BY THE ESCROW AGENT IN THE
PERFORMANCE OF ITS DUTIES HEREUNDER, INCLUDING THE REASONABLE FEES, EXPENSES AND
DISBURSEMENTS OF LEGAL COUNSEL TO THE ESCROW AGENT, ALL AS PROVIDED IN THE FEE
SCHEDULE ATTACHED AS ANNEX A HERETO.

 

10

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(B)                                 THE ESCROW AGENT SHALL HAVE A LIEN UPON ANY
INVESTMENT INCOME ON DEPOSIT IN THE ESCROW ACCOUNT SOLELY FOR ANY COSTS,
EXPENSES AND FEES THAT MAY ARISE HEREUNDER AND MAY RETAIN THAT PORTION OF THE
INVESTMENT INCOME IN THE ESCROW ACCOUNT EQUAL TO SUCH UNPAID AMOUNTS, UNTIL ALL
SUCH COSTS, EXPENSES AND FEES HAVE BEEN PAID.

 

SECTION 10.                          RIGHTS, DUTIES AND IMMUNITIES OF ESCROW
AGENT. ACCEPTANCE BY THE ESCROW AGENT OF ITS DUTIES UNDER THIS AGREEMENT IS
SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS, WHICH ALL PARTIES TO THIS
AGREEMENT HEREBY AGREE SHALL GOVERN AND CONTROL THE RIGHTS, DUTIES AND
IMMUNITIES OF THE ESCROW AGENT:

 

(A)                                  THE DUTIES AND OBLIGATIONS OF THE ESCROW
AGENT SHALL BE DETERMINED SOLELY BY THE EXPRESS PROVISIONS OF THIS AGREEMENT AND
THE ESCROW AGENT SHALL NOT BE LIABLE EXCEPT FOR THE PERFORMANCE OF SUCH DUTIES
AND OBLIGATIONS AS ARE SPECIFICALLY SET OUT IN THIS AGREEMENT. THE ESCROW AGENT
SHALL NOT BE REQUIRED TO INQUIRE AS TO THE PERFORMANCE OR OBSERVATION OF ANY
OBLIGATION, TERM OR CONDITION UNDER ANY AGREEMENT OR ARRANGEMENT BETWEEN THE
COMPANY AND THE TRUSTEE. THE ESCROW AGENT IS NOT A PARTY TO, AND IS NOT BOUND
BY, ANY AGREEMENT OR OTHER DOCUMENT OUT OF WHICH THIS AGREEMENT MAY ARISE. THE
ESCROW AGENT SHALL BE UNDER NO LIABILITY TO ANY PARTY HERETO BY REASON OF ANY
FAILURE ON THE PART OF ANY PARTY HERETO (OTHER THAN THE ESCROW AGENT) OR ANY
MAKER, GUARANTOR, ENDORSER OR OTHER SIGNATORY OF ANY DOCUMENT OR ANY OTHER
PERSON TO PERFORM SUCH PERSON’S OBLIGATIONS UNDER ANY SUCH DOCUMENT. THE ESCROW
AGENT SHALL NOT BE BOUND BY ANY WAIVER, MODIFICATION, TERMINATION OR RESCISSION
OF THIS AGREEMENT OR ANY OF THE TERMS HEREOF, UNLESS EVIDENCED BY A WRITING
DELIVERED TO THE ESCROW AGENT SIGNED BY THE PROPER PARTY OR PARTIES AND, IF THE
DUTIES OR RIGHTS OF THE ESCROW AGENT ARE AFFECTED, UNLESS IT SHALL GIVE ITS
PRIOR WRITTEN CONSENT THERETO. THIS AGREEMENT SHALL NOT BE DEEMED TO CREATE A
FIDUCIARY RELATIONSHIP BETWEEN THE PARTIES HERETO UNDER STATE OR FEDERAL LAW.

 

(B)                                 THE ESCROW AGENT SHALL NOT BE RESPONSIBLE IN
ANY MANNER FOR THE VALIDITY OR SUFFICIENCY OF THIS AGREEMENT OR OF ANY PROPERTY
DELIVERED HEREUNDER, OR FOR THE VALUE OR COLLECTIBILITY OF ANY NOTE, CHECK OR
OTHER INSTRUMENT, IF ANY, SO DELIVERED, OR FOR ANY REPRESENTATIONS MADE OR
OBLIGATIONS ASSUMED BY ANY PARTY OTHER THAN THE ESCROW AGENT. NOTHING HEREIN
CONTAINED SHALL BE DEEMED TO OBLIGATE THE ESCROW AGENT TO DELIVER ANY CASH,
INSTRUMENTS, DOCUMENTS OR ANY OTHER PROPERTY REFERRED TO HEREIN, UNLESS THE SAME
SHALL HAVE FIRST BEEN RECEIVED BY THE ESCROW AGENT PURSUANT TO THIS AGREEMENT.

 

(C)                                  THE COMPANY SHALL REIMBURSE AND INDEMNIFY
THE ESCROW AGENT FOR, AND HOLD IT HARMLESS AGAINST, ANY LOSS, LIABILITY OR
EXPENSE, INCLUDING BUT NOT LIMITED TO REASONABLE LEGAL COUNSEL FEES, INCURRED
WITHOUT BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT ON THE PART OF THE
ESCROW AGENT, ARISING OUT OF OR IN CONJUNCTION WITH ITS ACCEPTANCE OF, OR THE
PERFORMANCE OF ITS DUTIES AND OBLIGATIONS UNDER, THIS AGREEMENT, AS WELL AS THE
COSTS AND EXPENSES OF DEFENDING AGAINST ANY CLAIM OR LIABILITY ARISING OUT OF OR
RELATING TO THIS AGREEMENT.

 

(D)                                 THE ESCROW AGENT SHALL BE FULLY PROTECTED IN
ACTING ON AND RELYING UPON ANY WRITTEN NOTICE, DIRECTION, REQUEST, WAIVER,
CONSENT, RECEIPT OR OTHER PAPER OR DOCUMENT WHICH THE ESCROW AGENT IN GOOD FAITH
BELIEVES TO HAVE BEEN SIGNED AND PRESENTED BY THE COMPANY.

 

(E)                                  THE ESCROW AGENT SHALL NOT BE LIABLE FOR
ANY ERROR OF JUDGMENT, OR FOR ANY ACT DONE OR STEP TAKEN OR OMITTED BY IT IN
GOOD FAITH OR FOR ANY MISTAKE IN ACT OR LAW, OR FOR ANYTHING

 

11

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

 

WHICH IT MAY DO OR REFRAIN FROM DOING IN CONNECTION HEREWITH, EXCEPT ITS OWN
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

(F)            THE ESCROW AGENT MAY SEEK THE ADVICE OF LEGAL COUNSEL IN THE
EVENT OF ANY DISPUTE OR QUESTION AS TO THE CONSTRUCTION OF ANY OF THE PROVISIONS
OF THIS AGREEMENT OR ITS DUTIES HEREUNDER, AND EXCEPT FOR ITS OWN BAD FAITH,
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IT SHALL INCUR NO LIABILITY AND SHALL BE
FULLY PROTECTED IN RESPECT OF ANY ACTION TAKEN, OMITTED OR SUFFERED BY IT IN
GOOD FAITH IN ACCORDANCE WITH THE ADVICE OR OPINION OF SUCH COUNSEL.

 

(G)           THE AGREEMENTS SET FORTH IN THIS SECTION 10 SHALL SURVIVE THE
RESIGNATION OR REMOVAL OF THE ESCROW AGENT, THE TERMINATION OF THIS AGREEMENT
AND THE PAYMENT OF ALL AMOUNTS HEREUNDER.

 

SECTION 11.         MISCELLANEOUS.

 

(A)           WAIVER. NO WAIVER OF ANY PROVISION OF THIS AGREEMENT NOR CONSENT
TO ANY DEPARTURE BY ANY PARTY THEREFROM SHALL IN ANY EVENT BE EFFECTIVE UNLESS
THE SAME SHALL BE IN WRITING AND SIGNED BY EACH OF THE NON-BREACHING PARTIES AND
THEN SUCH WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND
FOR THE SPECIFIC PURPOSE FOR WHICH GIVEN.

 

(B)           SEVERABILITY. IF, FOR ANY REASON WHATSOEVER, ANY ONE OR MORE OF
THE PROVISIONS OF THIS AGREEMENT SHALL BE HELD OR DEEMED TO BE INOPERATIVE,
UNENFORCEABLE OR INVALID IN A PARTICULAR CASE OR IN ALL CASES, SUCH
CIRCUMSTANCES SHALL NOT HAVE THE EFFECT OF RENDERING ANY OF THE OTHER PROVISIONS
OF THIS AGREEMENT INOPERATIVE, UNENFORCEABLE OR INVALID, AND THE INOPERATIVE,
UNENFORCEABLE OR INVALID PROVISION SHALL BE CONSTRUED AS IF IT WERE WRITTEN SO
AS TO EFFECTUATE, TO THE MAXIMUM EXTENT POSSIBLE, THE PARTIES’ INTENT.

 

(C)           BINDING EFFECT. THIS AGREEMENT SHALL INURE TO AND BE BINDING UPON
THE PARTIES AND THEIR RESPECTIVE SUCCESSORS AND PERMITTED ASSIGNS; PROVIDED,
HOWEVER, THAT THE COMPANY MAY NOT ASSIGN ITS RIGHTS OR OBLIGATIONS HEREUNDER
WITHOUT THE EXPRESS PRIOR WRITTEN CONSENT OF THE TRUSTEE.

 

(D)           CHOICE OF LAW. THE EXISTENCE, VALIDITY, CONSTRUCTION, OPERATION
AND EFFECT OF ANY AND ALL TERMS AND PROVISIONS OF THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF
NEW YORK, INCLUDING WITHOUT LIMITATION THE NEW YORK UCC, WITHOUT GIVING EFFECT
TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE. THE SECURITIES INTERMEDIARY’S
JURISDICTION FOR PURPOSES OF SECTION 8-110 OF THE NEW YORK UCC SHALL BE THE
STATE OF NEW YORK.

 

(E)           ENTIRE AGREEMENT. THIS AGREEMENT, THE PURCHASE AGREEMENT, THE
NOTES AND THE INDENTURE CONTAIN THE ENTIRE AGREEMENT AMONG THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY AND ALL PRIOR AGREEMENTS,
UNDERSTANDINGS AND COMMITMENTS WITH RESPECT THERETO, WHETHER ORAL OR WRITTEN;
PROVIDED, HOWEVER, THAT THIS AGREEMENT IS EXECUTED AND ACCEPTED BY THE TRUSTEE
AND THE ESCROW AGENT SUBJECT TO ALL TERMS AND CONDITIONS OF ITS ACCEPTANCE OF
THE TRUST UNDER THE INDENTURE, AS FULLY AS IF SAID TERMS AND CONDITIONS WERE SET
FORTH AT LENGTH HEREIN.

 

12

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

 

(F)            AMENDMENTS. THIS AGREEMENT MAY BE AMENDED ONLY BY A WRITING
SIGNED BY DULY AUTHORIZED REPRESENTATIVES OF ALL PARTIES. THE TRUSTEE AND THE
ESCROW AGENT MAY EXECUTE AN AMENDMENT TO THIS AGREEMENT ONLY IF THE CONSENT OF
EACH OF THE HOLDERS OF THE NOTES REQUIRED BY SECTION 9.02 OF THE INDENTURE HAS
BEEN OBTAINED OR IS NOT REQUIRED PURSUANT TO THE TERMS THEREOF.

 

(G)           NOTICES. ALL NOTICES, REQUESTS, INSTRUCTIONS, ORDERS AND OTHER
COMMUNICATIONS REQUIRED OR PERMITTED TO BE GIVEN OR MADE UNDER THIS AGREEMENT TO
ANY PARTY HERETO SHALL BE DELIVERED IN WRITING BY HAND DELIVERY OR OVERNIGHT
DELIVERY, OR SHALL BE DELIVERED BY FACSIMILE WITH MACHINE CONFIRMATION OF FULL
DELIVERY NOT MORE THAN 24 HOURS FOLLOWING SUCH FACSIMILE NOTICE. A NOTICE GIVEN
IN ACCORDANCE WITH THE PRECEDING SENTENCE SHALL BE DEEMED TO HAVE BEEN DULY
GIVEN UPON THE SENDING THEREOF NOTICES SHOULD BE ADDRESSED AS FOLLOWS:

 

To the Company:

 

Incyte Corporation

Route 141 and Henry Clay Road

Building E336

Wilmington, DE 19880

Attention:  Chief Financial Officer

Facsimile number: (302) 425-2707

 

To the Trustee or the Escrow Agent:

 

U.S. Bank National Association

Corporate Trust Services

633 West Fifth Street, 24th Floor

Los Angeles, CA 90071

Attn: Bradley Scarbrough (Incyte 2009 Escrow)

Fax: (213) 615-6197

 

or at such other address or facsimile number as the specified entity most
recently may have designated in writing in accordance with this paragraph to the
other parties. Notwithstanding the foregoing, notices to the Escrow Agent shall
be effective only upon receipt.

 

(H)           COUNTERPARTS. THIS AGREEMENT MAY BE EXECUTED IN ONE OR MORE
COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL BUT ALL OF WHICH
TOGETHER SHALL CONSTITUTE ONE AND THE SAME INSTRUMENT. DELIVERY OF AN EXECUTED
COUNTERPART OF A SIGNATURE PAGE TO THIS AGREEMENT BY FACSIMILE SHALL BE
EFFECTIVE AS DELIVERY OF A MANUALLY EXECUTED COUNTERPART OF THIS AGREEMENT.

 

(I)            INTERPRETATION. THE HEADINGS OF THE SECTIONS CONTAINED IN THIS
AGREEMENT ARE SOLELY FOR CONVENIENCE OF REFERENCE AND SHALL NOT AFFECT THE
MEANING OR INTERPRETATION OF THIS AGREEMENT.

 

(J)            TAX MATTERS.  THE PARTIES ACKNOWLEDGE THAT, FOR TAX REPORTING
PURPOSES, ALL INTEREST ATTRIBUTABLE TO THE ESCROW FUNDS SHALL BE ALLOCABLE TO
THE COMPANY.  THE COMPANY AGREES TO PROVIDE THE ESCROW AGENT WITH CERTIFIED TAX
IDENTIFICATION NUMBERS BY FURNISHING APPROPRIATE FORM W-9 (OR FORM W-8, IN THE
CASE OF NON-U.S. PERSONS) AND OTHER FORMS AND DOCUMENTS THAT

 

13

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THE ESCROW AGENT MAY REASONABLY REQUEST.  THE COMPANY ACKNOWLEDGES THAT FAILURE
TO SUPPLY SUCH INFORMATION MAY OBLIGATE THE ESCROW AGENT TO WITHHOLD A PORTION
OF ANY PAYMENTS MADE TO THE COMPANY PURSUANT TO THIS AGREEMENT UNDER THE
APPLICABLE PROVISIONS OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED FROM TIME
TO TIME.

 

(K)           USA PATRIOT ACT INFORMATION.   TO HELP THE GOVERNMENT FIGHT THE
FUNDING OF TERRORISM AND MONEY LAUNDERING ACTIVITIES, FEDERAL LAW REQUIRES ALL
FINANCIAL INSTITUTIONS TO OBTAIN, VERIFY AND RECORD INFORMATION THAT IDENTIFIES
EACH PERSON WHO OPENS AN ACCOUNT.  FOR A NON-INDIVIDUAL PERSON SUCH AS A
BUSINESS ENTITY, A CHARITY, A TRUST OR OTHER LEGAL ENTITY THE ESCROW AGENT WILL
ASK FOR DOCUMENTATION TO VERIFY ITS FORMATION AND EXISTENCE AS A LEGAL ENTITY. 
THE ESCROW AGENT MAY ALSO ASK TO SEE FINANCIAL STATEMENTS, LICENSES,
IDENTIFICATION AND AUTHORIZATION DOCUMENTS FROM INDIVIDUALS CLAIMING AUTHORITY
TO REPRESENT THE ENTITY OR OTHER RELEVANT DOCUMENTATION.  THE COMPANY AGREES TO
PROVIDE ALL SUCH INFORMATION AND DOCUMENTATION AS REQUESTED BY ESCROW AGENT TO
ENSURE COMPLIANCE WITH UNITED STATES FEDERAL LAW.

 

[Signature pages follow]

 

14

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day first written above.

 

 

 

INCYTE CORPORATION,
as Pledgor

 

 

 

 

 

By:

/s/ David C. Hastings

 

 

 

Name: David C. Hastings

 

 

 

Title: Executive Vice President and Chief Financial Officer

 

 

 

 

 

U.S. BANK NATIONAL ASSOCIATION,
as Trustee

 

 

 

 

 

By:

/s/ Brad E. Scarbrough

 

 

 

Name: Brad E. Scarbrough

 

 

 

Title: Vice President

 

 

 

 

 

U.S. BANK NATIONAL ASSOCIATION,
as Escrow Agent

 

 

 

 

 

By:

/s/ Brad E. Scarbrough

 

 

 

Name: Brad E. Scarbrough

 

 

 

Title: Vice President

 

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

 

EXHIBIT A

 

Description of Permitted Securities

 

Bond Payment
Dates

 

Day Count

 

Payment

 

STRIP
Maturity

 

CUSIP

 

Price

 

Tenor

 

Price ($)

 

1-Apr-10

 

0.50278

 

9,552,777.78

 

2/15/2010

 

912820EM5

 

99.969

 

0.38

 

9,549,816.42

 

1-Oct-10

 

0.50000

 

9,500,000.00

 

8/15/2010

 

912820FT9

 

99.750

 

0.87

 

9,476,250.00

 

1-Apr-11

 

0.50000

 

9,500,000.00

 

2/15/2011

 

912820GC5

 

99.301

 

1.38

 

9,433,595.00

 

1-Oct-11

 

0.50000

 

9,500,000.00

 

8/15/2011

 

912820GL5

 

98.625

 

1.87

 

9,369,375.00

 

1-Apr-12

 

0.50000

 

9,500,000.00

 

2/15/2012

 

912820GV3

 

97.578

 

2.38

 

9,269,910.00

 

1-Oct-12

 

0.50000

 

9,500,000.00

 

8/15/2012

 

912820HF7

 

96.523

 

2.88

 

9,169,685.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

57,052,777.78

 

 

 

 

 

 

 

Total

 

56,268,631.42

 

 

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

 

EXHIBIT B

 

[Incyte Letterhead]

 

 

[Date]

 

U.S. Bank National Association

Corporate Trust Services

633 West Fifth Street, 24th Floor

Los Angeles, CA 90071

ATTENTION:  Bradley Scarbrough (Incyte 2009 Escrow)

 

RE:                              Pledge and Escrow Agreement dated September 30,
2009 among Incyte   Corporation, U.S. Bank National Association as Trustee under
the Indenture and U.S. Bank National Association as Escrow Agent under the
Pledge and Escrow Agreement

 

Ladies and Gentlemen:

 

Reference is made to Section 2 of the Pledge and Escrow Agreement.  The Company
hereby directs the Escrow Agent to make the following disbursements:

 

Section 4(b)(i)

$

 

 

Section 4(b)(ii)

$

 

 

Section 4(c)

$

 

The Company hereby certifies to the Escrow Agent (and for the benefit of the
Trustee under the Indenture), that such any disbursement made by the Escrow
Agent in reliance on this direction is permitted by and complies with the Pledge
and Escrow Agreement.

 

 

 

INCYTE CORPORATION

 

 

 

 

 

 

 

Name

 

Title

 

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ANNEX A

 

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