Exhibit 10.4

 

INCYTE CORPORATION 2010 STOCK INCENTIVE PLAN:

NONSTATUTORY STOCK OPTION AGREEMENT

 

	
Nonstatutory   Stock Option
    	
 
    	
This   option is not intended to be an incentive stock option under section 422 of   the Internal Revenue Code.
    
	
 
    	
 
    	
 
    
	
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.
    
	
 
    	
 
    	
 
    
	
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 
    


 

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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 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 
    


 

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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.
    
	
 
    	
 
    	
 
    
	
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 
    


 

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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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