Exhibit 10.3

 

Notice of Grant of Stock Options and Option Agreement

Incyte Corporation

ID: [                     ]

Experimental Station, Buiding E336

Route 141 & Henry Clay Road

Wilmington, DE 19880

 

[Optionee Name]

 

Option Number:

 

[         ]

[Optionee Address]

 

Plan:

 

2010

 

 

ID:

 

[         ]

 

Effective <Date>, you have been granted an Incentive Stock Option Agreement to
buy [            ] shares of Incyte Corporation (the Company) stock at
$[            ] per share.

 

The total option price of the shares granted is $[              ].

 

Shares in each period will become fully vested on the date shown.

 

Shares

 

Vest Type

 

Full Vest

 

Expiration

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

You and the Company agree that these options are granted under and governed by
the terms and conditions of the Company’s 2010 Stock Incentive Plan, as amended,
and the Stock Option Agreement that can be reviewed by clicking the link
provided above.  By accepting this Notice, you are agreeing to all of those
terms and conditions.

 

By accepting this Notice, you further agree that Incyte may deliver by e-mail
all documents related to the Plan or this award.  You also agree that Incyte may
deliver these documents by posting them on a website maintained by Incyte or by
a third party under contract with Incyte.  If Incyte posts these documents on a
website, it will notify you by e-mail.

 

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INCYTE CORPORATION 2010 STOCK INCENTIVE PLAN:

INCENTIVE STOCK OPTION AGREEMENT
FOR EXECUTIVE OFFICERS

 

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.

 

 

 

Vesting

 

Your right to exercise this option vests in 25 installments over a 3-year
period, as shown on the Notice of Grant of Stock Options (the “grant notice”).
The first installment consists of 33.33% of the total number of shares covered
by this option. It becomes exercisable on the “full vest” date shown on the
grant notice. Each of the subsequent installments consists of 2.77791% of the
total number of shares covered by this option. The subsequent installments
become exercisable at the end of each of the 24 months following the full vest
date of the first installment. The number of shares in each installment will be
rounded to the nearest whole number. No additional shares subject to this option
will vest after your service with Incyte has terminated for any reason, except
as provided below under “Change in Control.”

 

 

 

Term

 

Your option will expire in any event at the close of business at Incyte
headquarters on the day before the 7th anniversary of the Date of Grant, as
shown on the grant notice. (It will expire earlier if your Incyte service
terminates, as described below.)

 

 

 

Regular Termination

or Disability

 

 

If your service as an executive officer or director of Incyte terminates for any
reason other than death, your option will expire at the close of business at
Incyte headquarters on whichever of the following dates applies to you:

 

·      24 months after your service terminates, if the termination occurs
because of your total and permanent disability (as defined below);

 

·      36 months after your service terminates, if the termination occurs
because of your retirement as an employee of Incyte after you have reached a
combined age and years of service totaling 75 and have completed at least 15
years of service as an employee of Incyte (“full retirement”); or

 

·      90 days after your service terminates, if the termination occurs because
of any reason other than your total and permanent disability, full retirement or
death.

 

If your service as an employee (other than as an executive officer), consultant
or advisor of Incyte (or any subsidiary) terminates for any reason other than
death, your option will expire at the close of business

 

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at Incyte headquarters on whichever of the following dates applies to you:

 

·      6 months after your service terminates, if the termination occurs because
of your total and permanent disability (as defined below); or

 

·      90 days after your service terminates, if the termination occurs because
of any reason other than your total and permanent disability or death.
Notwithstanding the foregoing, if after full retirement (as defined above) as an
executive officer or director, your service continues as an employee (other than
an executive officer), consultant or advisor of Incyte or any of its
subsidiaries, and such service terminates for any reason other than your total
and permanent disability, or death, your option will expire at the later of 90
days after your service terminates or 12 months after your full retirement.

 

“Total and permanent disability” means that you are unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted,
or can be expected to last, for a continuous period of not less than one year.

 

Incyte determines when your service terminates for any purpose under this option
award and the Plan.

If you exercise your options more than 1 year after your service terminates due
to total and permanent disability or 90 days after your service terminates due
to full retirement, you should consult a tax advisor before exercising these
options as such options may no longer qualify as incentive stock options.

 

 

 

Death

 

If you die while serving as an executive officer or director of Incyte, then
your option will expire at the close of business at Incyte headquarters on the
date 24 months after the date of death. During that 24-month period, your estate
or heirs may exercise the vested portion of your option.

 

If you die while serving as an employee (other than as an executive officer),
consultant or advisor of Incyte (or any subsidiary), then your option will
expire at the close of business at Incyte headquarters on the date 6 months
after the date of death. During that 6-month period, your estate or heirs may
exercise the vested portion of your option.

 

 

 

Leaves of Absence

 

For purposes of this option, your service does not terminate when you go on a
military leave, a sick leave or another bona fide leave of absence, if the leave
was approved by Incyte in writing and the terms

 

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of the leave or applicable law requires continued service crediting. But your
service terminates in any event when the approved leave ends, unless you
immediately return to active work.

 

Incyte determines which leaves count for this purpose and the date the approved
leave ends.

 

 

 

Restrictions on Exercise

 

 

Incyte will not permit you to exercise this option if the committee designated
by the Board of Directors to administer the Plan (the “Committee”) determines,
in its sole and absolute discretion, that the issuance of shares at that time
could violate any law or regulation.

 

 

 

Notice of Exercise

 

When you wish to exercise this option, you must notify Incyte by filing the
proper “Notice of Exercise” form at the address given on the form. 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 Incyte.

 

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

 

 

 

Form of Payment

 

When you submit your notice of exercise, you must include payment of the option
price for the shares you are purchasing. Payment may be made in one (or a
combination of two or more) of the following forms:

 

·      Your personal check, a cashier’s check or a money order.

 

·      Irrevocable directions to a securities broker approved by Incyte to sell
your option shares and to deliver all or a portion of the sale proceeds to
Incyte in payment of the option price and withholding taxes. (The balance of the
sale proceeds, if any, will be delivered to you.) The directions must be given
by signing a special “Notice of Exercise” form provided by Incyte.

 

·      Certificates for Incyte stock that you have owned for at least 6 months,
along with any forms needed to effect a transfer of the shares to Incyte. The
value of the shares, determined as of the effective date of the option exercise,
will be applied to the option price.

 

A form of payment will not be available if the Committee determines, in its sole
and absolute discretion, that such form of payment could violate any law or
regulation.

 

 

 

Withholding Taxes

 

You will not be allowed to exercise this option unless you make acceptable
arrangements, satisfactory to Incyte, to pay any withholding

 

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taxes that may be due as a result of the option exercise.

 

 

 

Notice of Share Disposition

 

If you sell or dispose of any shares acquired pursuant to this Agreement on or
before the later of (i) 2 years after the Date of Grant, or (ii) 1 year after
the exercise date, you shall immediately notify Incyte in writing of such
disposition.

 

 

 

 

Restrictions on Resale

 

 

By accepting the grant notice, you agree not to sell any option shares at a time
when applicable laws or Incyte policies prohibit a sale. This restriction will
apply as long as you are an employee, director, consultant or advisor of Incyte
(or a subsidiary).

 

 

 

 

Change in Control

 

The following provisions will apply in the event a Change in Control (as defined
in the Plan) occurs while this option is outstanding and you are still
performing service as an employee, director, consultant or advisor of Incyte (or
any parent or subsidiary). For purposes of these provisions, Incyte or any
parent or subsidiary for which you are performing service is referred to as the
“Employer.”

 

If this Agreement is not assumed or replaced with a new comparable award by the
Employer (with the determination of comparability to be made by the Committee),
then there would be full accelerated vesting of this option upon the Change in
Control.

 

If this Agreement is assumed or replaced with a new comparable award, then this
option (or such comparable award) would vest in full if within one year
following the Change in Control your service for the Employer is terminated
without Cause or is Constructively Terminated.

 

For purposes of this Agreement, “Cause” shall mean

 

(i) in the case where there is no employment agreement, consulting agreement,
change in control agreement or similar agreement or plan in effect between
Incyte and you on the date specified in the grant notice (or where there is such
an agreement or plan but it does not define “cause” (or words of like import)):
(A) your continued failure to perform your duties with the Employer (other than
any such failure resulting from incapacity due to physical or mental illness or
total and permanent disability, which incapacity has been recognized as such by
the Committee or its designee); (B) engagement in illegal conduct, gross
misconduct or dishonesty that is injurious to the Employer or its affiliates;
(C) unauthorized disclosure or misuse of any of the Employer’s secret,
confidential or proprietary information, knowledge or data relating to the
Employer or its affiliates; or (D) violation of any of the employee policies or
procedures of the

 

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Employer; or

 

 

 

 

 

(ii) in the case where there is an employment agreement, consulting agreement,
change in control agreement or similar agreement or plan in effect between
Incyte and you on the date specified in the grant notice that defines “cause”
(or words of like import), as defined under such agreement or plan.

 

For purposes of this Agreement, “Constructive Termination” shall mean

 

(i) in the case where there is no employment agreement, consulting agreement,
change in control agreement or similar agreement or plan in effect between
Incyte and you on the date specified in the grant notice (or where there is such
an agreement or plan but it does not define “constructive termination” (or words
of like import)): (A) the assignment to you of any duties fundamentally
inconsistent with your position, authority, duties or responsibilities as in
effect immediately prior to a Change in Control (or any other action by the
Employer that results in a fundamental diminishment in such position, authority,
duties or responsibilities as in effect immediately prior to a Change in
Control), provided that neither a mere change in title alone nor reassignment to
a position that is substantially similar to the position held prior to the
Change in Control shall constitute fundamental diminishment; (B) the Employer
requiring you to be based at any office or location more than 50 miles from the
office or location where you are based immediately prior to the Change in
Control; or (C) any reduction in your annual base salary or target bonus
opportunity (if any) from that which exists immediately prior to a Change in
Control; or

 

(ii) in the case where there is an employment agreement, consulting agreement,
change in control agreement or similar agreement or plan in effect between
Incyte and you on the date specified in the grant notice that defines
“constructive termination” (or words of like import), as defined under such
agreement or plan.

 

 

 

Transfer of Option

 

Prior to your death, only you may exercise this option. You cannot transfer or
assign this option. For instance, you may not sell this option or use it as
security for a loan. If you attempt to do any of these things, this option will
immediately become invalid. You may, however, designate a family member or
family trust as your beneficiary to exercise this option after your death (your
designation must be in writing and delivered to Incyte), or you may dispose of
this option in your will.

 

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

 

 

 

Retention Rights

 

Neither your option nor this Agreement gives you the right to be retained by
Incyte (or any subsidiaries) in any capacity. Incyte (and any subsidiaries)
reserve the right to terminate your service at any time, with or without cause.

 

 

 

Stockholder Rights

 

You, or your estate or heirs, have no rights as a stockholder of Incyte until a
certificate for your option 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.

 

 

 

Recovery and Reimbursement of Option Gain

 

Incyte shall have the right to recover, or receive reimbursement for, any
compensation or profit realized by the exercise of this option or by the
disposition of any option shares to the extent Incyte has such a right of
recovery or reimbursement under applicable securities laws.

 

 

 

Adjustments

 

In the event of a stock split, a stock dividend or a similar change in Incyte
stock, the number of shares covered by this option and the exercise price per
share may be adjusted pursuant to the Plan.

 

 

 

Applicable Law

 

This Agreement will be interpreted and enforced under the laws of the State of
Delaware (without regard to its choice of law provisions).

 

 

 

The Plan and Other Agreements

 

 

The text of the Incyte Corporation 2010 Stock Incentive Plan (the “Plan”) is
incorporated in this Agreement by reference. All capitalized terms not defined
in this Agreement are subject to definition under the Plan. If there is any
discrepancy between the terms and conditions of this Agreement and the terms and
conditions of the Plan, the terms and conditions of the Plan shall control.

 

This Agreement, the grant notice and the Plan constitute the entire
understanding between you and Incyte regarding this option. Any prior
agreements, commitments or negotiations concerning this option are superseded.
This Agreement may be amended by the Committee without your consent; however, if
any such amendment would materially impair your rights or obligations under the
Agreement, this Agreement may be amended only by another written agreement,
signed by you and Incyte.

 

By accepting the grant notice, you agree to all

of the terms and conditions described above and in the Plan.

 

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