Exhibit 10.5

 

INCYTE CORPORATION 2010 STOCK INCENTIVE PLAN:

INCENTIVE STOCK OPTION AGREEMENT

 

	
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 three-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 will vest after your Incyte service 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
    	
 
    	
If your service as an employee, director,   consultant or advisor of Incyte (or any subsidiary) terminates for any reason   except death or total and permanent disability, then your option will expire   at the close of business at Incyte headquarters on the 90th day after your   termination date.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Incyte determines when your service terminates   for this purpose.
    
	
 
    	
 
    	
 
    
	
Death
    	
 
    	
If you die as an employee, director, 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.
    


 

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Disability
    	
 
    	
If your service as an employee, director,   consultant or advisor of Incyte (or any subsidiary) terminates because of   your total and permanent disability, then your option will expire at the   close of business at Incyte headquarters on the date 6 months after your   termination date.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Incyte determines when your service terminates   for this purpose.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
“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.
    
	
 
    	
 
    	
 
    
	
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 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 
    


 

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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.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
·                  Irrevocable   directions to a securities broker approved by Incyte to pledge your option   shares for a margin loan and to deliver all or a portion of the loan proceeds   to Incyte in payment of the option price and withholding taxes.  (The balance of the loan 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 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 
    


 

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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 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 
    


 

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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.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
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.
    


 

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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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