Exhibit 10.3

 

	
Notice of Grant of Stock Options and Option Agreement
    	
Incyte   Corporation  

ID: [                       ]  

Experimental   Station, Buiding E336 

Route   141 & Henry Clay Road 

Wilmington,   DE 19880
    


 

	
[Optionee Name]
    	
 
    	
Option Number:
    	
 
    	
[           ]
    
	
[Optionee Address]
    	
 
    	
Plan:
    	
 
    	
2010
    
	
 
    	
 
    	
ID:
    	
 
    	
[         ]
    


 

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

 

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

 

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

 

	
Shares
    	
 
    	
Vest Type
    	
 
    	
Full Vest
    	
 
    	
Expiration
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    


 

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

 

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

 











 

INCYTE CORPORATION 2010 STOCK INCENTIVE PLAN:

INCENTIVE STOCK OPTION AGREEMENT
 FOR EXECUTIVE OFFICERS

 

	
Incentive Stock Option
    	
 
    	
This option is intended to be an incentive stock   option under section 422 of the Internal Revenue Code and will be interpreted   accordingly.
    
	
 
    	
 
    	
 
    
	
Vesting
    	
 
    	
Your right to exercise this option vests in 25   installments over a 3-year period, as shown on the Notice of Grant of Stock   Options (the “grant notice”). The first installment consists of 33.33% of the   total number of shares covered by this option. It becomes exercisable on the   “full vest” date shown on the grant notice. Each of the subsequent   installments consists of 2.77791% of the total number of shares covered by   this option. The subsequent installments become exercisable at the end of   each of the 24 months following the full vest date of the first installment.   The number of shares in each installment will be rounded to the nearest whole   number. No additional shares subject to this option will vest after your   service with Incyte has terminated for any reason, except as provided below   under “Change in Control.”
    
	
 
    	
 
    	
 
    
	
Term
    	
 
    	
Your option will expire in any event at the close   of business at Incyte headquarters on the day before the 7th anniversary of   the Date of Grant, as shown on the grant notice. (It will expire earlier if   your Incyte service terminates, as described below.)
    
	
 
    	
 
    	
 
    
	
Regular Termination

or Disability

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

 

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

 

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

 

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

 

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


 











 

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

 

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

 

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

 

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

 

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

If you exercise your options more than 1 year   after your service terminates due to total and permanent disability or 90   days after your service terminates due to full retirement, you should consult   a tax advisor before exercising these options as such options may no longer   qualify as incentive stock options.
    
	
 
    	
 
    	
 
    
	
Death
    	
 
    	
If you die while serving as an executive officer   or director of Incyte, then your option will expire at the close of business   at Incyte headquarters on the date 24 months after the date of death. During   that 24-month period, your estate or heirs may exercise the vested portion of   your option.

 

If you die while serving as an employee (other   than as an executive officer), consultant or advisor of Incyte (or any   subsidiary), then your option will expire at the close of business at Incyte   headquarters on the date 6 months after the date of death. During that   6-month period, your estate or heirs may exercise the vested portion of your   option.
    
	
 
    	
 
    	
 
    
	
Leaves of Absence
    	
 
    	
For purposes of this option, your service does   not terminate when you go on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by   Incyte in writing and the terms 
    


 

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

 

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

 
    	
 
    	
Incyte will not permit you to exercise this   option if the committee designated by the Board of Directors to administer   the Plan (the “Committee”) determines, in its sole and absolute discretion,   that the issuance of shares at that time could violate any law or regulation.
    
	
 
    	
 
    	
 
    
	
Notice of Exercise
    	
 
    	
When you wish to exercise this option, you must   notify Incyte by filing the proper “Notice of Exercise” form at the address   given on the form. Your notice must specify how many shares you wish to   purchase. Your notice must also specify how your shares should be registered   (in your name only or in your and your spouse’s names as community property   or as joint tenants with right of survivorship). The notice will be effective   when it is received by Incyte.

 

If someone else wants to exercise this option   after your death, that person must prove to Incyte’s satisfaction that he or   she is entitled to do so.
    
	
 
    	
 
    	
 
    
	
Form of Payment
    	
 
    	
When you submit your notice of exercise, you must   include payment of the option price for the shares you are purchasing.   Payment may be made in one (or a combination of two or more) of the following   forms:

 

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

 

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

 

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

 

A form of payment will not be available if the   Committee determines, in its sole and absolute discretion, that such form of   payment could violate any law or regulation.
    
	
 
    	
 
    	
 
    
	
Withholding Taxes
    	
 
    	
You will not be allowed to exercise this option   unless you make acceptable arrangements, satisfactory to Incyte, to pay any   withholding 
    


 

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taxes that may be due as a result of the option   exercise.
    
	
 
    	
 
    	
 
    
	
Notice of Share Disposition
    	
 
    	
If you sell or dispose of any shares acquired   pursuant to this Agreement on or before the later of (i) 2 years after   the Date of Grant, or (ii) 1 year after the exercise date, you shall   immediately notify Incyte in writing of such disposition.

 
    
	
 
    	
 
    	
 
    
	
Restrictions on Resale

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

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

 

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

 

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

 

For purposes of this Agreement, “Cause” shall   mean

 

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


 

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

 

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

 

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

 

(ii) in the case where there is an   employment agreement, consulting agreement, change in control agreement or   similar agreement or plan in effect between Incyte and you on the date   specified in the grant notice that defines “constructive termination” (or   words of like import), as defined under such agreement or plan.
    
	
 
    	
 
    	
 
    
	
Transfer of Option
    	
 
    	
Prior to your death, only you may exercise this   option. You cannot transfer or assign this option. For instance, you may not   sell this option or use it as security for a loan. If you attempt to do any   of these things, this option will immediately become invalid. You may,   however, designate a family member or family trust as your beneficiary to   exercise this option after your death (your designation must be in writing   and delivered to Incyte), or you may dispose of this option in your will.
    


 

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Regardless of any marital property settlement   agreement, Incyte is not obligated to honor a notice of exercise from   your former spouse, nor is Incyte obligated to recognize your former spouse’s   interest in your option in any other way.
    
	
 
    	
 
    	
 
    
	
Retention Rights
    	
 
    	
Neither your option nor this Agreement gives you   the right to be retained by Incyte (or any subsidiaries) in any capacity.   Incyte (and any subsidiaries) reserve the right to terminate your service at   any time, with or without cause.
    
	
 
    	
 
    	
 
    
	
Stockholder Rights
    	
 
    	
You, or your estate or heirs, have no rights as a   stockholder of Incyte until a certificate for your option shares has been   issued. No adjustments are made for dividends or other rights if the   applicable record date occurs before your stock certificate is issued, except   as described in the Plan.
    
	
 
    	
 
    	
 
    
	
Recovery and Reimbursement of Option Gain
    	
 
    	
Incyte shall have the right to recover, or   receive reimbursement for, any compensation or profit realized by the   exercise of this option or by the disposition of any option shares to the   extent Incyte has such a right of recovery or reimbursement under applicable   securities laws.
    
	
 
    	
 
    	
 
    
	
Adjustments
    	
 
    	
In the event of a stock split, a stock dividend   or a similar change in Incyte stock, the number of shares covered by this   option and the exercise price per share may be adjusted pursuant to the Plan.
    
	
 
    	
 
    	
 
    
	
Applicable Law
    	
 
    	
This Agreement will be interpreted and enforced   under the laws of the State of Delaware (without regard to its choice of law   provisions).
    
	
 
    	
 
    	
 
    
	
The Plan and Other Agreements

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

 

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


 

By accepting the grant notice, you agree to all

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

 

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