Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) by and between
INCYTE CORPORATION, a Delaware corporation (the “Company”), and Hervé Hoppenot
(the “Executive”), dated as of the 25th day of October, 2019.

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 currently and in the
event of any threatened or pending Change in Control, and to provide the
Executive with compensation and benefits arrangements upon a Change in Control
and an event of Change in Control Good Reason that ensure that the compensation
and benefits expectations of the Executive will be satisfied and that are
competitive with those of other comparable corporations.  In addition, as an
inducement to the agreement by Executive to be employed by the Company prior to
a Change in Control on an “at will” basis, the Company desires to provide
Executive with certain benefits upon termination of Executive’s employment under
certain circumstances as set forth herein.

In order to accomplish these objectives, the Board caused the Company to enter
into the employment agreement with the Executive dated as of January 11, 2014,
and to amend such agreement as of April 13, 2015 and February 28, 2019.  The
Board has caused the Company to enter into this amended and restated Agreement
in furtherance of the same objectives and to provide additional incentives for
the Executive to remain employed by the Company at least through his retirement
after December 31, 2024 (or such later date after December 31, 2024 as shall be
mutually agreed upon by the parties), specifically, in the form of continued
vesting and exercisability of outstanding equity awards following his
retirement.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

SECTION 1.   DEFINITIONS

(a)  “Annual Base Salary” shall mean the highest rate of annual base salary paid
or payable, including any base salary that 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 or, in the
case of termination other than on account of a Change in Control, the Date of
Termination occurs.

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

(c)  “Cause” shall mean, during the Change in Control Employment Period:

 

(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 of the Company which specifically
identifies the manner in which the Board 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

(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” during the Change in Control Employment
Period shall not include any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the advice of
counsel for the Company.  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.

“Cause” shall mean, during the Employment Period:

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

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

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

(iv)       A material breach by the Executive of Section 7 of this Agreement
which, if curable (as reasonably determined by the Board), the Executive has
failed to remedy after the Board has given the Executive written notice of, and
a reasonable opportunity to cure, such breach.

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Notwithstanding the foregoing, “Cause” during the Employment Period shall not
include any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of counsel for the
Company.  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
two-thirds of the members of the Board then in office excluding, for this
purpose, the Executive, 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),  (iii), (iv) or (v) above, and
specifying the particulars thereof in detail.

(d)  “Change in Control” shall mean 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 are owned by stockholders of the Company in substantially
the same proportions as their ownership of the Company immediately prior to such
sale; or

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

(f)  “Change in Control Good Reason” shall mean:

(i)         The assignment to Executive of any duties 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 diminishment in such position, authority, duties or responsibilities; 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; or

(v)        A material breach by the Company of Sections 2, 3 or 4 of the Offer
Letter or this Agreement.

(g)  “Code” shall mean the Internal Revenue Code of 1986, as amended.

(h)  “Disability” shall mean 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

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physician selected by the Company or its insurers and acceptable to the
Executive or the Executive’s legal representative.

(i)   “Employment Period” means the period the Executive is employed by the
Company prior to the Change in Control Employment Period and the period the
Executive is employed by the Company after the end of a Change in Control
Employment Period.

(j)   “Good Reason” shall mean:

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

(ii)       Any material reduction in the Executive’s Base Salary,  Target Bonus
opportunity or Welfare Benefits, unless such reductions are made proportionally
for all executives of the Company at the same time; or

(iii)      A material breach by the Company of this Agreement or of Sections 2,
3 or 4 of the Offer Letter.

(k)  “Offer Letter” shall mean the letter agreement between the Company and the
Executive dated December 24, 2013.

(l)   “Performance Shares” shall mean awards under the Company’s Amended and
Restated 2010 Stock Incentive Plan or any other stock-based incentive plan which
entitle Executive to receive shares of common stock of the Company upon
achievement of certain performance goals set forth in the applicable award
agreements.

(m) “Retirement” shall mean the Executive’s voluntary termination of employment
with the Company after December 31, 2024 (or such later date after December 31,
2024 as shall have been mutually agreed upon by Executive and the Company
through amendment of this Agreement), provided that he has remained in
continuous employment with the Company through such date.

(n)  “RSUs” shall mean the restricted stock units which entitle Executive to
receive shares of common stock of the Company, as described in the Offer Letter,
or, as the case may be, other restricted stock units awarded under the Company’s
Amended and Restated 2010 Stock Incentive Plan or any other stock-based
incentive plan which entitle Executive to receive shares of common stock of the
Company.

(o)  “Signing Bonus” shall mean the signing bonus payable to the Executive
pursuant to Section 2 of the Offer Letter.

(p)  “Subsidiary” shall mean 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

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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.

(q)  “Target Bonus” shall mean the Executive’s target bonus under the Company’s
annual bonus program, or any comparable bonus under any predecessor or successor
plan for the year prior to the year in which the Change in Control or, in the
case of a termination other than on account of a Change in Control, the Date of
Termination occurs.

(r)  “Welfare Benefits” shall mean welfare benefit plans, practices, policies
and programs provided by the Company and its affiliated companies (including,
without limitation, medical, prescription, dental, disability, employee life,
and group life plans and programs) (i) in effect for the Executive at any time
during the 120-day period immediately preceding (A) the Change in Control or (B)
the Date of Termination (as defined below) or (ii) which are provided at any
time after the Change in Control to peer executives of the Company and its
affiliated companies, whichever of (i)(A), (i)(B) or (ii) provides the most
favorable benefit to the Executive, as determined separately for each such
benefit.

SECTION 2.   TERMINATION OF EMPLOYMENT.

(a)  Death or Disability.  The Executive’s employment shall terminate
automatically upon the Executive’s death during the Employment Period or Change
in Control Employment Period.  If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Period or Change
in Control Employment Period, it may give to the Executive written notice in
accordance with Section 9(b) of this Agreement of its intention to terminate the
Executive’s employment.  In such event, the Executive’s employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by the Executive (the “Disability Effective Date”), provided that, within the 30
days after such receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties.

(b)  Cause.  The Company may terminate the Executive’s employment for Cause
during the Employment Period or Change in Control Employment Period.

(c)  Good Reason.  The Executive’s employment may be terminated by the Executive
for Good Reason during the Employment Period. For purposes of this Section 2(c),
any good faith determination of “Good Reason” made by the Executive shall be
conclusive.

(d)  Change in Control Good Reason. The Executive’s employment may be terminated
by the Executive for Change in Control Good Reason during the Change in Control
Employment Period. For purposes of this Section 2(d), any good faith
determination of “Change in Control Good Reason” made by the Executive shall be
conclusive.  The termination of the Executive’s employment with the Company
prior to, but in anticipation of or in connection with, a Change in Control
shall be deemed to be a termination by the Executive for Change in Control Good
Reason during the Change in Control Employment Period if the Board so determines
in its good faith judgment.

(e)  Notice of Termination.  Any termination by the Company for Cause, or by the
Executive for Good Reason during the Employment Period or for Change in Control
Good

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Reason during the Change in Control Employment Period, shall be communicated by
Notice of Termination to the other party hereto given in accordance with Section
9(b) of this Agreement.  For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive’s employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other than
the date of receipt of such notice, specifies the termination date (which date
shall be not more than 30 days after the giving of such notice or such later
date as provided under this Section 2(e)).  The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason, Change in Control Good Reason 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.  Notwithstanding the foregoing, a termination shall not be treated as
a termination for Good Reason unless (i) the Executive provides a Notice of
Termination or a supplemental written notice asserting existence of the
condition constituting Change in Control Good Reason within 60 days following
the initial existence of the condition, (ii) the Company shall have 60 days from
the date of receiving such notice to remedy the condition (the “Cure Period”),
and (iii) if the Company fails to remedy the condition during the Cure Period,
 the Executive terminates employment no later than 60 days after the end of the
Cure Period.

(f)  Date of Termination.  “Date of Termination” means (i) if the Executive’s
employment is terminated by the Company for Cause, by the Executive for Good
Reason during the Employment Period, or by the Executive for Change in Control
Good Reason during the Change in Control Employment Period, the date of receipt
of the Notice of Termination or any later date specified therein or otherwise
required by Section 2(e) above, as the case may be, (ii) if the Executive’s
employment is terminated by the Company other than for Cause or Disability or by
the Executive other than for Good Reason or Change in Control Good Reason, the
Date of Termination shall be the date on which the Company or the Executive, as
the case may be, notifies the other of such termination, and (iii) if the
Executive’s employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.

SECTION 3.   OBLIGATIONS OF THE COMPANY UPON TERMINATION

(a)  Termination Other Than for Death or Disability During the Change in Control
Employment Period (i) Other Than for Cause or (ii) for Change in Control Good
Reason.  If, during the Change in Control Employment Period, the Company shall
terminate the Executive’s employment other than for Cause or the Executive shall
terminate employment for Change in Control Good Reason (and the Executive’s
employment is not terminated by reason of death or Disability):

(i)         The Company shall pay to the Executive the aggregate of the
following amounts:

(A)       the sum of (1) the Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (2) the product of (x) the

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Target Bonus and (y) a fraction, the numerator of which is the number of days in
the current fiscal year through the Date of Termination, and the denominator of
which is 365 and (3) any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not theretofore paid (the sum of the
amounts described in clauses (1), (2), and (3) shall be hereinafter referred to
as the “Accrued Obligations”);

(B)       the amount equal to the product of  (1) three and (2) the sum of (x)
the Executive’s Annual Base Salary and (y) the Target Bonus or, if greater, the
bonus pursuant to the Company’s management bonus plan in the most recently
completed fiscal year; and

(C)       the Signing Bonus, to the extent not theretofore paid.

Subject to Section 10(c), the payments described in this Section 3(a)(i) shall
be paid to the Executive in a lump sum payment within 30 days after the Date of
Termination.

(ii)       For 36 months after the Executive’s Date of Termination or such
longer period as may be provided by the terms of the appropriate plan, program,
practice or policy, the Company shall continue Welfare Benefits to the Executive
and/or the Executive’s family; provided,  however, that if the Executive becomes
reemployed with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility.  Notwithstanding
the foregoing, if and to the extent providing such continued Welfare Benefits
would result in imposition on the Company of the tax under Section 4980D of the
Code or otherwise violate applicable law, the Company shall provide cash
payments to the Executive sufficient, on an after-tax basis, to enable the
Executive to purchase the affected coverage.  For purposes of determining
eligibility (but not the time of commencement of benefits) of the Executive for
retiree benefits pursuant to such plans, practices, programs and policies, the
Executive shall be considered to have remained employed until 36 months after
the Executive’s Date of Termination and to have retired on the last day of such
period;

(iii)      All options acquired under the Company’s Amended and Restated 2010
Stock Incentive Plan or any other stock-based incentive plan of or agreement
with the Company that have not vested in accordance with the terms and
conditions of the grant, award or purchase, shall become 100% vested and all
options shall continue to be exercisable for 12 months following the Date of
Termination; all Performance Shares shall become 100% vested and shall be
settled assuming the target level of performance has been achieved, with the
resulting shares of common stock of the Company delivered to the Executive
within 30 days after the Date of Termination; and all RSUs, including, without
limitation, the RSUs granted pursuant to Section 4 of the Offer Letter, shall
become 100% vested and the shares of common stock of the Company shall be
delivered to the Executive within 30 days after the Date of Termination;

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(iv)       The Company shall, at its sole expense as incurred, provide the
Executive with outplacement services for a period of 12 months following the
Date of Termination, the scope and provider of which shall be selected by the
Executive in his sole discretion(the “Outplacement Benefits”); and

(v)        To the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required to
be paid or provided or which the Executive is eligible to receive under any
plan, program, policy or practice or contract or agreement of the Company and
its affiliated companies (such other amounts and benefits shall be hereinafter
referred to as the “Other Benefits”).

(b)  Termination Other Than for Death or Disability During the Employment Period
(i) Other Than for Cause or (ii) for Good Reason.  If, during the Employment
Period, the Company shall terminate the Executive’s employment other than for
Cause or the Executive shall terminate employment for Good Reason (and the
Executive’s employment is not terminated by reason of death or Disability):

(i)         The Company shall pay to the Executive the aggregate of the
following amounts:

(A)       The Accrued Obligations;

(B)       the amount equal to the product of  (1) 1.5 and (2) the sum of (x) the
Executive’s Annual Base Salary and (y) the Target Bonus or, if greater, the
bonus pursuant to the Company’s management bonus plan in the most recently
completed fiscal year; and

(C)       the Signing Bonus, to the extent not theretofore paid.

Subject to Section 10(c), the payments described in this Section 3(b)(i) shall
be paid to the Executive in a lump sum payment within 30 days after the Date of
Termination.

(ii)       For 12 months after the Executive’s Date of Termination, if the
Executive properly elects to continue the Company’s group health plan coverage
as is the Executive’s right under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”), the Company shall pay the portion of the
COBRA premiums for Executive and/or the Executive’s family equal to the
percentage share of medical premiums the Company paid for the Executive and/or
the Executive’s family prior to the Date of Termination; provided,  however,
that if the Executive becomes reemployed with another employer and is eligible
to receive medical or other welfare benefits under an other employer provided
plan, the medical and other welfare benefits described herein shall be secondary
to those provided under such other plan during such applicable period of
eligibility.  Notwithstanding the foregoing, if and to the extent providing such
COBRA premium payments would result in imposition on the Company of the tax
under Section 4980D of the Code or otherwise violate applicable law, the Company
shall provide cash payments to the Executive sufficient, on an after-tax basis,
to enable the Executive to purchase the affected coverage.  For purposes of
determining eligibility (but not the time

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of commencement of benefits) of the Executive for retiree benefits pursuant to
such plans, practices, programs and policies, the Executive shall be considered
to have remained employed until 12 months after the Executive’s Date of
Termination and to have retired on the last day of such period;

(iii)      An additional portion of options acquired under the Company’s Amended
and Restated 2010 Stock Incentive Plan or any other stock-based incentive plan
of or agreement with the Company that have not vested in accordance with the
terms and conditions of the grant, award or purchase, shall become vested equal
to the amount of vesting that would have occurred if the Executive had continued
working for the Company for an additional 18 months after the Date of
Termination and all options shall continue to be exercisable for 180 days
following the Date of Termination;  an additional portion of the RSUs  other
than the RSUs granted pursuant to Section 4 of the Offer Letter that have not
vested in accordance with the terms and conditions of such grant shall become
vested equal to the amount of vesting that would have occurred if the Executive
had continued working for the Company for an additional 18 months after the Date
of Termination and the shares of common stock of the Company shall be delivered
to the Executive within 30 days after the Date of Termination; and an additional
portion of the RSUs granted pursuant to Section 4 of the Offer Letter that have
not vested in accordance with the terms and conditions of such grant shall
become vested equal to the 100% of the amount of vesting that would have
occurred if the Executive had continued working for the Company for an
additional 12 months after the Date of Termination and 50% of the amount of
vesting that would have occurred if the Executive had continued working for the
Company for an additional 12 months subsequent to the initial 12 months after
the Date of Termination and the shares of common stock of the Company shall be
delivered to the Executive within 30 days after the Date of Termination; and

(iv)       The Company shall provide to the Executive the Outplacement Benefits
and the Other Benefits.

(c)  Termination for Cause.  If the Executive’s employment shall be terminated
for Cause during the Employment Period or the Change in Control Employment
Period, this Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive (x) the Executive’s
Annual Base Salary through the Date of Termination, (y) the amount of any
compensation previously deferred by the Executive, including vested RSUs, and
(z) Other Benefits, in each case to the extent theretofore unpaid.  In such
case, all amounts due and owing to the Executive pursuant to this Section 3(c)
shall be paid to the Executive in a lump sum in cash or, in the case of RSUs, in
shares of common stock of the Company, within 30 days of the Date of
Termination.

(d)  Voluntary Termination.  If the Executive voluntarily terminates employment
during the Employment Period, other than for Good Reason, or during the Change
in Control Employment Period, other than for Change in Control Good Reason, this
Agreement shall terminate without further obligations to the Executive other
than for Accrued Obligations and the timely payment or provision of Other
Benefits; provided that if such termination occurs during the Employment Period,
the Executive shall not receive a prorated Target Bonus.  In such case, all
amounts due and owing to the Executive pursuant to this Section 3(d) shall be
paid to the Executive in a lump sum in cash or, in the case of RSUs, in shares
of common stock of the

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Company, within 30 days of the Date of Termination.  Notwithstanding the
foregoing, in the event of the Executive’s Retirement,

(i)         The Executive shall be entitled to continued vesting in all of his
outstanding unvested awards that are granted after July 15, 2019 and before
December 31, 2024 (or such later date after December 31, 2024 as shall have been
mutually agreed upon by Executive and the Company through amendment of this
Agreement) under the Company’s Amended and Restated 2010 Stock Incentive Plan
and any other stock-based incentive plan of the Company (including but not
limited to stock option, restricted stock unit and performance share awards),
with such awards to become vested, exercisable and/or payable at the same time
or times and under the same conditions as are provided in the applicable award
agreements as if the Executive continued to be employed by the Company following
the date of his Retirement; and

(ii)       Any outstanding stock option awards that are granted after July 15,
2019 and before December 31, 2024 (or such later date after December 31, 2024 as
shall have been mutually agreed upon by Executive and the Company through
amendment of this Agreement) and that are either vested as of the date of the
Executive’s Retirement or become vested after such date pursuant to clause (i)
above shall be exercisable at any time during the remainder of the original term
of the stock options as set forth in the applicable award agreements;

provided,  however, that the benefits under clauses (i) and (ii) of this
sentence shall be subject in each case to the Executive’s continued compliance
after his Retirement with the covenants in Section 7 of this Agreement.

(e)  Death or Disability. If the Executive’s employment is terminated during the
Employment Period or the Change in Control Employment Period due to the death or
Disability of the Executive, this Agreement shall terminate without further
obligations to the Executive other than for (i) Accrued Obligations and the
timely payment or provision of Other Benefits;  and (ii) the Signing Bonus, to
the extent not theretofore paid.  In such case, all amounts due and owing to the
Executive or the Executive’s estate, as the case may be, pursuant to this
Section 3(e) shall be paid to the Executive or the Executive’s estate in a lump
sum in cash within 30 days of the receipt by the Company of written notice of
the Executive’s death from the executor of the Executive’s estate or the
Disability Effective Date.

SECTION 4.   SECTION 280G

(a)  Basic Rule.  Notwithstanding anything in this Agreement to the contrary, in
the event that the independent auditors most recently selected by the Board (the
“Auditors”) determine that any payment or distribution of any type to or for the
benefit of the Executive by the Company under this Agreement or any other plan
of or agreement with the Company (each a “Payment”) is or will be subject to the
excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then the
Payments shall be reduced (but not below zero) if and to the extent that a
reduction in the Payments would result in the Executive retaining a larger
amount, on an after-tax basis (taking into account federal, state and local
income taxes and the Excise Tax) than if the Executive received the entire
amount of such Payments.  The determination of which of the

11

 

Payments are to be reduced shall be made in a manner consistent with the
provisions of Section 4(b).

 

(b)  Reduction of Payments.  If the Auditors determine that any Payments would
be subject to the Excise Tax, which calculation shall occur at the time of the
Change in Control, then the Company shall promptly give the Executive notice to
that effect and a copy of the detailed calculation thereof and of any reduction
in Payments needed to comply with Section 4(a), and the Executive may then
elect, in the Executive’s sole discretion, which and how much of such Payments
shall be eliminated or reduced and shall advise the Company in writing of the
Executive’s election within 10 days of receipt of notice.  If no such election
is made by the Executive within such 10-day period, then the Company may decide
which and how much of such Payments shall be eliminated or reduced in order to
comply with Section 4(a) and shall notify the Executive promptly of such
decision.  For purposes of this Section 4, present value shall be determined in
accordance with section 280G(d)(4) of the Code.  All determinations made by the
Auditors under this Section 4 shall be binding upon the Company and the
Executive and shall be made within 60 days of the date when a Payment becomes
payable or transferable.  As promptly as practicable following such
determination and the elections hereunder, the Company shall pay or transfer to
or for the benefit of the Executive such amounts as are then due to the
Executive under this Agreement and shall promptly pay or transfer to or for the
benefit of the Executive in the future such amounts as become due to the
Executive under this Agreement.

(c)  Overpayments and Underpayments.  As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Company that should not have been made (an “Overpayment”) or that additional
Payments that will not have been made by the Company could have been made (an
“Underpayment”), consistent in each case with the calculation of the maximum
amount permitted to be paid under Section 4(a).  In the event that the Auditors,
based upon the assertion of a deficiency by the Internal Revenue Service against
the Company or the Executive that the Auditors believe has a high probability of
success, determine that an Overpayment has been made, such Overpayment shall be
treated for all purposes as a loan to the Executive which he or she shall repay
to the Company, together with interest at the applicable federal rate provided
in section 7872(f)(2) of the Code; provided,  however, that no amount shall be
payable by the Executive to the Company if and to the extent that such payment
would not reduce the Company’s Federal income tax liability under section 280G
of the Code.  In the event that the Auditors determine that an Underpayment has
occurred, such Underpayment shall promptly be paid or transferred by the Company
to or for the benefit of the Executive, together with interest at the applicable
federal rate provided in section 7872(f)(2) of the Code.

 

(d)  Waiver of Limitation.  At any time, and in its sole discretion, the
Company’s Compensation Committee of the Board may elect to waive, in whole or in
part, the reduction of a Payment to be made pursuant to this Agreement,
notwithstanding the determination that such Payment will be nondeductible by the
Company for federal income tax purposes because of section 280G of the Code.

(e)  Related Corporations.  For purposes of this Section 4, the term “Company”
shall include affiliated corporations to the extent determined by the Auditors
in accordance with section 280G(d)(5) of the Code.

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SECTION 5.   NON-EXCLUSIVITY OF RIGHTS.

Nothing in this Agreement shall prevent or limit the Executive’s continuing or
future participation in any plan, program, policy or practice provided by the
Company or any of its affiliated companies and for which the Executive may
qualify, nor, subject to Section 9(f), shall anything herein limit or otherwise
affect such rights as the Executive may have under any contract or agreement
with the Company or any of its affiliated companies.  Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the Company or
any of its affiliated companies at or subsequent to the Date of Termination
shall be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.

SECTION 6.   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 (other than pursuant to
Section 7(d) of this Agreement).  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 Code.  Notwithstanding the foregoing, the Company will not pay any legal
fees or expenses which the Executive may incur as a direct result of any contest
or dispute regarding Sections 7(a), 7(b) or 7(d) of this Agreement; provided,
however, that (i) this sentence shall not apply if (A) after a Change in Control
the Executive’s employment with the Company is terminated by the Company without
Cause or by the Executive for Change in Control Good Reason and (B) the
Executive has not, in the good faith determination of the Board, blatantly and
willfully breached Sections 7(a), 7(b) or 7(c) of this Agreement and (ii) if
this sentence applies and there is a contest or dispute regarding Sections 7(a),
7(b) or 7(d) of this Agreement and the Executive is found to have not violated
Section 7 of this Agreement, then the Company will reimburse all such legal fees
and expenses reasonably incurred as a result of such contest or dispute.

SECTION 7.   COVENANTS.

(a)  The Executive represents and warrants to the Company that the performance
of the Executive’s duties will not violate any agreements with or trade secrets
of any other person or entity or previous employers, including without
limitation agreements containing provisions against solicitation or
competition.   The Executive has provided the Company with a copy of the
Employment Agreement, dated April 15, 2010, between Novartis Pharmaceuticals
Corporation and the Executive and any other agreements that could restrict the
Executive’s activities in the

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course of the Executive’s employment with the Company.  The Executive represents
and warrants to the Company that there is no other agreement that could restrict
his activities in the course of his employment with the Company, it being
understood that Executive may execute any document re-affirming Executive’s
confidentiality obligations to Novartis.  The Company’s offer of employment is
based on the accuracy of the Executive’s representation and warranty and a
violation of this Section 7(a) shall be grounds for termination with Cause.

(b)  During the Executive’s employment with the Company and for two (2) years
after the termination of the Executive’s employment for any reason (and in the
event of the Executive’s Retirement, for any additional period during which the
Executive’s equity awards continue to vest after his Retirement pursuant to
Section 3(d) hereof), the Executive agrees that, without the prior express
written consent of the Company, the Executive shall not, anywhere in the world,
for his own benefit or for, with or through any other person, firm, partnership,
corporation or other entity or individual (other than the Company or its
affiliates) as or in the capacity of an owner, shareholder, employee,
consultant, director, officer, trustee, partner, agent, independent contractor
and/or in any other representative capacity or otherwise:

(i)         personally (or personally direct another to) solicit or hire (A) any
employee of the Company or its affiliates at the time of such solicitation or
hiring or (B) any former employee of the Company or its affiliates who had such
relationship within six (6) months prior to the date of such solicitation or
hiring, including but not limited to attempting to induce any such employee of
the Company or its affiliates to leave the employ of the Company; or

(ii)       personally (or personally direct another to) disparage the Company,
any of its products or practices, or any of its directors, officers, agents,
representatives, owners or employees, either orally or in writing; provided,
that the Executive may confer in confidence with his legal representatives and
make truthful statements as required by law.

For purposes of this Section 7(b), the term “solicit” means any communication of
any kind whatsoever, regardless of by whom initiated, inviting, encouraging or
requesting any person or entity to take or refrain from taking any action.

 

(c)  The Executive shall hold in a fiduciary capacity for the benefit of the
Company all secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Executive during the Executive’s
employment by the Company or any of its affiliated companies and which shall not
be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement).  After
termination of the Executive’s employment with the Company, the Executive shall
not, without the prior written consent of the Company or as may otherwise be
required by law or legal process, communicate or divulge any such information,
knowledge or data to anyone other than the Company and those designated by
it.  In no event shall an asserted violation of the provisions of this Section 7
constitute a basis for deferring or withholding any amounts otherwise payable to
the Executive under this Agreement.  The Executive also agrees to comply with
the terms set forth in the Confidential Information and Invention Assignment
Agreement.

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(d)  If at any time prior to the date that is 365 days after the Executive’s
Date of Termination or, in the event of the Executive’s Retirement, any time
after such Retirement and prior to the date on which the Executive’s equity
awards have become fully vested in accordance with Section 3(d) hereof, the
Executive breaches any provision of Sections 7(a), 7(b) or 7(c) of this
Agreement in more than a minor, de minimis or trivial manner, then (i) the
Executive shall forfeit all of his unexercised Company stock options or stock
appreciation rights, unvested Company restricted stock, unvested Company
restricted stock units (including unvested RSUs) and unvested Performance
Shares, and (ii) the gain or income realized within the twenty-four (24) months
prior to such breach from (A) the exercise of any Company stock options or stock
appreciation rights, (B) the vesting of any Company restricted stock or other
Company equity based awards, (C) the vesting and settlement of any Performance
Shares, or (D) the vesting of restricted stock units, by the Executive from such
event shall be paid by the Executive to the Company upon notice from the Company
(for purposes of this Section 7(d), the exercise of incentive stock options and
the vesting of restricted stock units shall be treated as a realization
event).  Such gain shall be determined on a gross basis, without reduction for
any taxes incurred, as of the date of such event, and without regard to any
subsequent change in the Fair Market Value (as defined below) of a share of
Company common stock.  The Company shall have the right to offset such gain
against any amounts otherwise owed to the Executive by the Company (whether as
wages, vacation pay, or pursuant to any benefit plan or other compensatory
arrangement).  For purposes of this Section 7(d), the “Fair Market Value” of a
share of Company common stock on any date shall be (i) the closing sale price
per share of Company common stock during normal trading hours on the national
securities exchange on which the Company common stock is principally traded for
such date or the last preceding date on which there was a sale of such Company
common stock on such exchange or (ii) if the shares of Company common stock are
then traded on any over-the-counter market, the average of the closing bid and
asked prices for the shares of Company common stock during normal trading hours
in such over-the-counter market for such date or the last preceding date on
which there was a sale of such Company common stock in such market, or (iii) if
the shares of Company common stock are not then listed on a national securities
exchange or traded in an over-the-counter market, such value as the Compensation
Committee shall determine in good faith.  Notwithstanding the foregoing, this
Section 7(d) shall not apply in the event that after a Change in Control the
Executive’s employment with the Company is terminated either (i) by the Company
without Cause or (ii) by the Executive for Change in Control Good Reason.

(e)  Any termination of the Executive’s employment or of this Agreement shall
have no effect on the continuing operation of this Section 7.

(f)  The Executive acknowledges and agrees that the Company will have no
adequate remedy at law, and could be irreparably harmed, if the Executive
breaches or threaten to breach any of the provisions of this Section 7.  The
Executive agrees that the Company shall be entitled to equitable and/or
injunctive relief to prevent any breach or threatened breach of this Section 7,
and to specific performance of each of the terms hereof in addition to any other
legal or equitable remedies that the Company may have.  The Executive further
agrees that he shall not, in any equity proceeding relating to the enforcement
of the terms of this Section 7, raise the defense that the Company has an
adequate remedy at law.

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(g)  The terms and provisions of this Section 7 are intended to be separate and
divisible provisions and if, for any reason, any one or more of them is held to
be invalid or unenforceable, neither the validity nor the enforceability of any
other provision of this Agreement shall thereby be affected.  The parties hereto
acknowledge that the potential restrictions on the Executive’s future employment
imposed by this Section 7 are reasonable in both duration and geographic scope
and in all other respects.  If for any reason any court of competent
jurisdiction shall find any provisions of this Section 7 unreasonable in
duration or geographic scope or otherwise, the Executive and the Company agree
that the restrictions and prohibitions contained herein shall be effective to
the fullest extent allowed under applicable law in such jurisdiction.

(h)  The parties acknowledge that the Offer Letter and this Agreement would not
have been entered into and the benefits described herein and therein would not
have been promised in the absence of the Executive’s promises under this Section
7.

SECTION 8.   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 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 9.   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.

 

16

 

If to the Company:

Incyte Corporation

1801 Augustine Cut-Off

Wilmington, DE 19803

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

(d)  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.

(e)  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, including, without limitation, the
right of the Executive to terminate employment for Good Reason pursuant to
Section 2(c) or Change in Control Good Reason pursuant to Section 2(d) of this
Agreement, shall not be deemed to be a waiver of such provision or right or any
other provision or right of this Agreement.

(f)  The Executive and the Company acknowledge that, except as may otherwise be
provided under any other written agreement between the Executive and the
Company, 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 3 hereof.  From and after the closing of a Change
in Control transaction, this Agreement shall supersede any other agreement
between the parties with respect to the subject matter hereof (provided that it
shall not supersede the Company’s obligations in the Offer Letter or the
Executive’s obligations under the Confidential Information and Invention
Assignment Agreement).

(g)  Should any disputes, claims, complaints, or causes of action occur between
Executive and the Company (the “Parties”) which arise out of, are related to, or
connected with, either or directly or indirectly, the interpretation,
application, or alleged violation of this Agreement, or which arise out of any
other professional, personal or business dealings or relationships between the
Parties, they shall all be resolved in arbitration in accordance with the rules
and procedures of JAMS (Judicial Arbitration and Mediation Services), New York
Times Building, 620 8th Avenue, New York, NY 10018  (212-751-2700).  The Parties
voluntarily and knowingly acknowledge their understanding that under this
provision for arbitration they are waiving (i.e., giving up) their right to
bring a law suit in a court of law and to have a judge and a trial by jury to
resolve any of these claims/disputes/causes of action between them. If any
arbitration is brought by any Party under this Agreement and under the Offer
Letter, then both arbitrations shall be consolidated into one and shall be heard
by one arbitrator in a single arbitration proceeding. Any arbitration proceeding
shall be held in Wilmington, Delaware.  Any decision as

17

 

to the scope and nature of Executive’s duties shall be made by the Board, in its
sole discretion, and shall not be subject to any dispute resolution.

SECTION 10.   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 of the Code (“Section 409A”) 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 of the Code that become
payable under this Agreement in connection with a termination of employment, the
Date of Termination 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.

(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 Date of Termination 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 3, 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 Date of Termination or, if earlier, the date of the
Executive’s death (the “Delayed Payment Date”).  In the event that this Section
10(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
Date of Termination) 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.

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(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.

 

This Agreement may be executed in counterparts, each of which is deemed an
original, but all of which constitute one and the same agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

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

 

 

EXECUTIVE

 

 

 

/s/ Hervé Hoppenot

 

 

 

COMPANY

 

 

 

By

/s/ Paula J. Swain

 

 

 

 

Its

Executive Vice President, Human Resources

 

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