Exhibit 10.4


 


AMENDED AND RESTATED

1993 DIRECTORS’ STOCK OPTION PLAN OF

INCYTE CORPORATION


(As Amended as of May 19,
2005)


 


SECTION 1.         INTRODUCTION.


 


The Plan was adopted on July 28, 1993, amended
and restated as of March 30, 2001, and last amended as of May 19, 2005.  The purpose of the Plan is to offer the
Company’s Nonemployee Directors an opportunity to acquire a proprietary
interest in the success of the Company, or to increase such interest, by
purchasing Shares of the Company’s Stock. 
The Plan seeks to achieve this purpose by providing for the grant of
nonstatutory options to purchase Stock.


 


The Plan is intended to comply in all respects with Rule 16b-3
(or its successor) under the Exchange Act and shall be construed accordingly.


 


SECTION 2.         DEFINITIONS.


 


(a)           “Board of Directors” shall mean the Board of Directors of the
Company, as constituted from time to time.


 


(b)           “Change in Control” shall mean the occurrence of either of
the following events:


 


(i)            A change
in the composition of the Board of Directors, 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 of Directors 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; or


 


(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.


 





















 


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


 


(d)           “Company” shall mean Incyte Corporation (formerly Incyte
Genomics, Inc.), a Delaware corporation.


 


(e)           “Employee” shall mean an employee (within the meaning of section 3401(c) of
the Code and the regulations thereunder) of the Company or of a Subsidiary of
the Company.


 


(f)            “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended.


 


(g)           “Exercise Price” shall mean the amount for which one Share
may be purchased upon exercise of an Option, as specified in the applicable
Stock Option Agreement.


 


(h)           “Fair Market Value” shall mean the market price of Stock,
determined by the Board of Directors as follows:


 


(i)            If Stock
was traded over-the-counter on the date in question but was not traded on The
Nasdaq Stock Market, then the Fair Market Value shall be equal to the mean
between the last reported representative bid and asked prices quoted for such
date by the principal automated inter-dealer quotation system on which Stock is
quoted or, if the Stock is not quoted on any such system, by the “Pink Sheets”
published by the National Quotation Bureau, Inc.;


 


(ii)           If Stock
was traded over-the-counter on the date in question and was traded on The
Nasdaq Stock Market, then the Fair Market Value shall be equal to the
last-transaction price quoted for such date by The Nasdaq Stock Market;


 


(iii)          If
Stock was traded on a stock exchange on the date in question, then the Fair
Market Value shall be equal to the closing price reported for such date by the
applicable composite-transactions report; and


 


(iv)          If none of
the foregoing provisions is applicable, then the Fair Market Value shall be
determined by the Board of Directors in good faith on such basis as it deems
appropriate.


 


In all cases, the
determination of Fair Market Value by the Board of Directors shall be
conclusive and binding on all persons.


 


(i)            “Full Retirement” shall mean the retirement from the Board
of Directors of a member after such member reaches the age of 70.


 


(j)            “Nonemployee Director” shall mean a member of the Board of
Directors who is not an Employee.


 


(k)           “Nonstatutory Option” shall mean a stock option not described
in sections 422(b) or 423(b) of the Code.


 


2





















 


(l)            “Option” shall mean a Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.


 


(m)          “Optionee” shall mean an individual who holds an Option.


 


(n)           “Plan” shall mean this 1993 Directors’ Stock Option Plan of
Incyte Corporation (formerly Incyte Genomics, Inc.), as it may be amended
from time to time.


 


(o)           “Reverse Split” shall mean the one-for-two reverse split of
the Stock authorized by the Board of Directors prior to the initial adoption of
the Plan.


 


(p)           “Service” shall mean service as a member of the Board of
Directors, whether or not as a Nonemployee Director.


 


(q)           “Share” shall mean one share of Stock, as adjusted in
accordance with Section 6 (if applicable). 
All references to numbers of Shares in Section 3 hereof give effect
to the Reverse Split and the 100% stock dividends paid in November 1997
and August 2000.


 


(r)            “Stock” shall mean the Common Stock ($.001 par value) of the
Company.


 


(s)           “Stock Option Agreement” shall mean the agreement between the
Company and an Optionee that contains the terms, conditions and restrictions
pertaining to his or her Option.


 


(t)            “Subsidiary” shall mean any corporation, if the Company
and/or one or more other Subsidiaries own not less than 50 percent of the
total combined voting power of all classes of outstanding stock of such
corporation.  A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.


 


(u)           “Total and Permanent Disability” shall mean that the Optionee
is 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.


 


SECTION 3.      STOCK
SUBJECT TO PLAN.


 


(a)           Basic
Limitation.  Shares offered under the
Plan shall be authorized but unissued Shares or treasury Shares.  The aggregate number of Shares which may be
issued under the Plan shall not exceed 1,500,000 Shares, subject to adjustment
pursuant to Section 6. The number of Shares that are subject to Options at
any time shall not exceed the number of Shares that then remain available for
issuance under the Plan.  The Company,
during the term of the Plan, shall at all times reserve and keep available
sufficient Shares to satisfy the requirements of the Plan.


 


(b)           Additional
Shares.  In the event that any
outstanding Option for any reason expires or is canceled or otherwise
terminated, the Shares allocable to the unexercised portion of such Option
shall again be available for the purposes of the Plan.


 


3





















 


SECTION 4.      TERMS
AND CONDITIONS OF OPTIONS.


 


(a)           Stock
Option Agreement.  Each grant of an
Option under the Plan shall be evidenced by a Stock Option Agreement between
the Optionee and the Company.  Such
Option shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions that are not inconsistent with
the Plan and that the Board of Directors deems appropriate for inclusion in a
Stock Option Agreement.


 


(b)           Initial
Grants.  Each new Nonemployee
Director who first joins the Board of Directors after June 1, 2005 shall
receive an Option covering 35,000 Shares within one business day after his or
her initial election to the Board of Directors. 
The number of Shares included in an Option shall be subject to
adjustment under Section 6.


 


(c)           Annual
Grants.  On the first business day
following the conclusion of each regular annual meeting of the Company’s
stockholders, each Nonemployee Director who will continue serving as a member
of the Board of Directors thereafter shall receive an Option covering 20,000
Shares, subject to adjustment under Section 6.  Each Nonemployee Director who is not
initially elected at a regular annual meeting of the Company’s stockholders
shall receive an Option to purchase a pro rata portion of 20,000 Shares within
ten business days of such Director’s election based on the number of full
months remaining from date of election until the next regular annual meeting of
the Company’s stockholders divided by twelve. 
Any fractional shares resulting from such calculation shall be rounded
up to the nearest whole number.


 


(d)           Exercise
Price.  The Exercise Price under each
Option shall be equal to 100 percent of the Fair Market Value of the Stock
subject to such Option on the date when such Option is granted.  The entire Exercise Price of Shares issued
under the Plan shall be payable in cash when such Shares are purchased, except
as follows:


 


(i)            Payment
may be made all or in part with Shares that have already been owned by the
Optionee or the Optionee’s representative for more than six months and that are
surrendered to the Company in good form for transfer.  Such Shares shall be valued at their Fair
Market Value on the date when the new Shares are purchased under the Plan.


 


(ii)           Payment may
be made all or in part by the delivery (on a form prescribed by the Company) of
an irrevocable direction to a securities broker approved by the Company to sell
Shares and to deliver all or part of the sales proceeds to the Company in
payment of all or part of the Exercise Price and any withholding taxes.


 


(iii)          Payment
may be made all or in part by the delivery (on a form prescribed by the
Company) of an irrevocable direction to pledge Shares to a securities broker or
lender approved by the Company, as security for a loan, and to deliver all or
part of the loan proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.


 


(e)           Vesting.  Each Option granted under Subsection (b) above
shall become exercisable (i) as to one-fourth (1/4) of the total number of
shares covered by such Option on


 


4





















 


the first anniversary of the date of grant and (ii) as
to one-forty-eighth (1/48) of the total number of shares covered by such Option
on each of a series of thirty-six (36) monthly installments
thereafter.  Except as set forth in the
next succeeding sentence and in the last sentence of this Subsection (e),
each Option granted under Subsection (c) above shall become
exercisable in full on the first anniversary of the date of grant; provided,
however, that each such Option shall become exercisable in full immediately
prior to the next regular annual meeting of the Company’s stockholders
following such date of grant in the event such meeting occurs prior to such
first anniversary date.  Except as set
forth in the last sentence of this Subsection (e), each Option granted
under Subsection (c) to Nonemployee Directors who were not initially
elected at a regular annual meeting of the Company’s stockholders shall become
exercisable in full immediately prior to the next regular annual meeting of the
Company’s stockholders following the date of grant.  Notwithstanding the foregoing, each Option
granted under Subsection (c) above that is outstanding shall become
exercisable in full in the event that a Change in Control occurs with respect
to the Company.


 


(f)            Term
of Options.  Subject to Subsections (g) and
(h) below, each Option shall expire on the 10th anniversary of the date
when such Option was granted.


 


(g)           Termination
of Service (Except by Death).  If an
Optionee’s Service terminates for any reason other than death, then his or her
Options shall expire on the earliest of the following occasions (provided,
however, that clause (iii) below shall be applicable only to Options
granted after March 29, 2005):


 


(i)            The
expiration date determined pursuant to Subsection (f) above;


 


(ii)           The date
24 months after the termination of the Optionee’s Service, if the
termination occurs because of his or her Total and Permanent Disability;


 


(iii)          The
date 12 months after the termination of the Optionee’s Service, if the
termination occurs because of his or her Full Retirement; or


 


(iv)          The date
six months after the termination of the Optionee’s Service for any reason
other than Total and Permanent Disability or, if clause (iii) above is
applicable, Full Retirement.


 


The Optionee may exercise
all or part of his or her Options at any time before the expiration of such
Options under the preceding sentence, but only to the extent that such Options
had become exercisable before his or her Service terminated.  The balance of such Options shall lapse when
the Optionee’s Service terminates.  In
the event that the Optionee dies after the termination of his or her Service but
before the expiration of his or her Options, all or part of such Options may be
exercised at any time prior to their expiration by the executors or
administrators of the Optionee’s estate or by any person who has acquired such
Options directly from him or her by bequest, inheritance or beneficiary
designation under the Plan, but only to the extent that such Options had become
exercisable before his or her Service terminated.


 


(h)           Death
of Optionee.  If an Optionee dies
while he or she is in Service, then his or her Options shall expire on the
earlier of the following dates:


 


5





















 


(i)            The
expiration date determined pursuant to Subsection (f) above; or


 


(ii)           The date
24 months after his or her death.


 


All or part of the
Optionee’s Options may be exercised at any time before the expiration of such
Options under the preceding sentence by the executors or administrators of his
or her estate or by any person who has acquired such Options directly from him
or her by bequest, inheritance or beneficiary designation under the Plan.


 


(i)            Nontransferability.  No Option shall be transferable by the
Optionee other than by will, by written beneficiary designation or by the laws
of descent and distribution.  An Option
may be exercised during the lifetime of the Optionee only by the Optionee or by
the Optionee’s guardian or legal representative.  No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during his or
her lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.


 


(j)            Stockholder
Approval.  Subsection (e) above
notwithstanding, no Option shall be exercisable under any circumstances unless
and until the Company’s stockholders have approved the Plan.


 


(k)           Notwithstanding
the foregoing, the Board of Directors may from time to time increase the number
of Shares subject to an initial or annual grant of Options under Subsection (b) or
(c) above to any Nonemployee Director to the extent the Board of Directors
determines necessary to induce a Nonemployee Director to become or remain a
Nonemployee Director or to reflect an increase in the duties or
responsibilities of the Nonemployee Director, subject to all terms and
conditions of the Plan otherwise applicable to grants of Options, except that
the Exercise Price under each such Option may be equal to or greater than one
hundred percent (100%) of the Fair Market Value of the Stock subject to the
Option on the date when such Option is granted and each such Option may become
exercisable on the same schedule as set forth in Subsection (e) or
on a different schedule, as the Board of Directors in each case shall
determine.


 


SECTION 5.      MISCELLANEOUS
PROVISIONS.


 


(a)           No
Rights as a Stockholder.  An
Optionee, or a transferee of an Optionee, shall have no rights as a stockholder
with respect to any Shares covered by his or her Option until he or she becomes
entitled, pursuant to the terms of such Option, to receive such Shares.  No adjustment shall be made, except as
provided in Section 6.


 


(b)          Modification,
Extension and Assumption of Options. 
Within the limitations of the Plan, the Board of Directors may modify,
extend or assume outstanding Options or may accept the cancellation of outstanding
Options (whether granted by the Company or another issuer) in return for the
grant of new Options for the same or a different number of Shares and at the
same or a different Exercise Price; provided, however, that the Board of
Directors may not modify outstanding Options to lower the Exercise Price nor
may the Board of Directors assume or accept the cancellation of outstanding
Options in return for the grant of new Options with a lower Exercise Price,
unless such action has been approved by the Company’s stockholders..  The foregoing notwithstanding, no
modification of an Option shall, without the


 


6





















 


consent of the Optionee, impair such Optionee’s rights
or increase his or her obligations under such Option.


 


(c)           Restrictions
on Issuance of Shares.  Shares shall
not be issued under the Plan unless the issuance and delivery of such Shares
comply with (or are exempt from) all applicable requirements of law, including
(without limitation) the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder, state securities laws and regulations, and
the regulations of any stock exchange on which the Company’s securities may
then be listed.  The Company may impose
restrictions upon the sale, pledge or other transfer of such Shares (including
the placement of appropriate legends on stock certificates) if, in the judgment
of the Company and its counsel, such restrictions are necessary or desirable in
order to achieve compliance with the provisions of the Securities Act of 1933,
as amended, the securities laws of any state or any other law.


 


(d)           Withholding
Taxes.  The Company’s obligation to
deliver Stock upon the exercise of an Option shall be subject to any applicable
tax withholding requirements.


 


(e)           No
Retention Rights.  No provision of
the Plan, nor any Option granted under the Plan, shall be construed as giving
any person the right to be elected as, or to be nominated for election as, a
Nonemployee Director or to remain a Nonemployee Director.


 


SECTION 6.      ADJUSTMENT
OF SHARES.


 


(a)           General.  In the event of a subdivision of the
outstanding Stock, a declaration of a dividend payable in Shares, a declaration
of a dividend payable in a form other than Shares in an amount that has a material
effect on the value of Shares, a combination or consolidation of the
outstanding Stock into a lesser number of Shares, a recapitalization, a
spin-off, a reclassification or a similar occurrence, the Board of Directors
shall make appropriate adjustments in one or more of (i) the number of Shares
available for future grants under Section 3, (ii) the number of
Shares to be covered by each new Option under Section 4, (iii) the
number of Shares covered by each outstanding Option or (iv) the Exercise
Price under each outstanding Option.


 


(b)           Reorganizations.  In the event that the Company is a party to a
merger or other reorganization, outstanding Options shall be subject to the
agreement of merger or reorganization. 
Such agreement shall provide (i) for the assumption of outstanding
Options by the surviving corporation or its parent, (ii) for their
continuation by the Company, if the Company is a surviving corporation, (iii) for
payment of a cash settlement equal to the difference between the amount to be paid
for one Share pursuant to such agreement and the Exercise Price or (iv) for
the acceleration of their exercisability followed by the cancellation of
Options not exercised, in all cases without the Optionees’ consent.  Any cancellation shall not occur until after
such acceleration is effective and Optionees have been notified of such
acceleration.


 


(c)           Reservation
of Rights.  Except as provided in
this Section 6, an Optionee shall have no rights by reason of (i) any
subdivision or consolidation of shares of stock of any class, (ii) the
payment of any dividend or (iii) any other increase or decrease in the
number of shares


 


7





















 


of stock of any class. 
Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. 
The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.


 


SECTION 7.      DURATION
AND AMENDMENTS.


 


(a)           Term
of the Plan.  The Plan shall become
effective on the date of its adoption by the Board of Directors, subject to
approval of the Company’s stockholders. 
The Plan shall remain in effect until it is terminated under Subsection (b) below.


 


(b)           Right
to Amend or Terminate the Plan.  The
Board of Directors may amend, suspend or terminate the Plan at any time and for
any reason, except that the provisions of the Plan relating to the amount, price
and timing of Option grants shall not be amended more than once in any
six-month period.  Any amendment of the
Plan shall be subject to the approval of the Company’s stockholders to the
extent required by applicable laws, regulations, rules, listing standards or
other requirements, including (without limitation) Rule 16b-3 under the
Exchange Act.  Stockholder approval shall
not be required for any other amendment of the Plan.


 


(c)           Effect
of Amendment or Termination.  No
Shares shall be issued or sold under the Plan after the termination thereof,
except upon exercise of an Option granted prior to such termination.  The termination of the Plan, or any amendment
thereof, shall not affect any Option previously granted under the Plan.


 


SECTION 8.      EXECUTION.


 


To record the amendment of the Plan as of May 19,
2005, the Company has caused its authorized officer to execute the same.


 


	
   

  	
  INCYTE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
    /s/
  Paul A. Friedman

  
	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
      President
  & Chief Executive Officer

  
					



 


8