Amendment

Offer Letter





EMPLOYMENT AGREEMENT P.A. FRIEDMAN DTD 11/26/01

 

                                                                   EXHIBIT 10.32

 

 

                              EMPLOYMENT AGREEMENT

                              --------------------

 

     THIS EMPLOYMENT AGREEMENT (the "Agreement") by and between INCYTE GENOMICS,

INC., a Delaware corporation (the "Company"), and Paul Friedman (the

"Executive"), dated as of the 26th day of November, 2001.

 

     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 which ensure that the compensation

and benefits expectations of the Executive will be satisfied and which 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.

 

     Therefore, in order to accomplish these objectives, the Board has caused

the Company to enter into this Agreement.

 

     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 which 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:

 

          (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" 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.

 

     (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

 

          (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 or 3 of the

     letter agreement between the Company and the Executive dated November 21,

     2001 (the "Offer Letter") or this Agreement.

 

     (g)  "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 physician selected

by the Company or its insurers and acceptable to the Executive or the

Executive's legal representative.

 

     (h)  "Employment Agreements" shall mean this Agreement and all other

employment agreements with executive officers of the Company similar to this

Agreement that are in effect as of the first Change in Control to occur after

April 1, 2001.

 

     (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)  The Company's requiring the Executive to be based at any office

     or location outside of the East Coast (provided that travel to, and

     frequent stays in, the Company's West Coast headquarters, which is

     currently located in Palo Alto, California, shall not be a Good Reason

     event under this clause (ii)); or

 

          (iii) Any 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

 

          (iv)  A material breach by the Company of this Agreement or of

     Sections 2 or 3 of the Offer Letter.

 

     (k)  "Limitation Amount" shall mean the sum of Payments that constitute

nondeductible "excess parachute payments" under section 280G of the Internal

Revenue Code of 1986, as amended (the "Code"), assuming such Payments constitute

the only payments made on account of a Change in Control, that result in a

deemed Federal income tax cost to the Company, calculated as set forth in the

succeeding sentences, of $15,000,000. The Limitation Amount is based on the

estimated Federal income tax cost to the Company resulting from the

nondeductibility of such excess parachute payments, which tax cost shall not

exceed $15,000,000. The initial Limitation Amount is $42,857,143.07, based on

the Federal corporate income tax rate of 35% for tax years ending in 2001. The

Limitation Amount shall be adjusted if, and when, the Federal corporate income

tax rate changes to such amount as shall equal the quotient obtained by dividing

$15,000,000 by such changed Federal corporate income tax rate; provided,

however, that the Limitation Amount shall not be so adjusted after the first

Change in Control to occur after April 1, 2001. For purposes of computing the

Limitation Amount hereunder, the parachute payments attributable to the vesting

of 20% of the Units shall be excluded.

 

     (l)  "Payment" shall mean any payment or transfer by the Company under this

Agreement to or for the benefit of the Executive (including for this purpose

those made pursuant to Section 3(a)(iii)) or, as the case may be, any such

payment or transfer made to another executive officer of the Company pursuant to

another Employment Agreement. "Payment" shall not include any amount that would

be payable to the Executive or another executive officer of the Company that

would be payable in the event of a Change in Control regardless of the existence

of this Agreement or the relevant Employment Agreement, as the case may be. By

way of example, an amount in respect of an option that by its terms, and not

pursuant to the terms of this Agreement, accelerates upon a Change in Control

shall not be deemed to be a Payment.

 

     (m)  "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 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.

 

     (n)  "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.

 

     (o)  "Units" shall mean the restricted stock units which entitle Executive

to receive shares of common stock of the Company, as described in the Offer

Letter.

 

     (p)  "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.

 

 

     (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 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). 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.

 

     (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, 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 During the Change in Control Employment Period Other Than

          ---------------------------------------------------------------------

for Cause, Death or Disability or for Change in Control Good Reason. If, during

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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 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"); and

 

                (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.

 

          The payments described in this Section 3(a)(i) shall be paid to the

     Executive in a lump sum in cash within 30 days after the Date of

     Termination unless the Executive elected to receive such payments in equal

     installments in accordance with the Company's usual payroll practices over

     the 36-month period following the Date of Termination. Such election may be

     made at any time prior to the Change in Control and may be amended or

     revoked at the sole discretion of the Executive prior to the date of the

     Change in Control.

 

          (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. 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 1991 Stock Plan of Incyte

     Genomics, Inc. or any other stock-based incentive plan of the Company which

     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 and all

     Units 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;

 

          (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 During the Employment Period Other Than for Cause, Death

          --------------------------------------------------------------------

or Disability or 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; and

 

                (B) the amount equal to the product of (1) one 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.

 

          The payments described in this Section 3(b)(i) shall be paid to the

     Executive in a lump sum in cash within 30 days after the Date of

     Termination unless the Executive elected to receive such payments in equal

     installments in accordance with the Company's usual payroll practices over

     the 12-month period following the Date of Termination. Such election may be

     made at any time prior to 180 days before the Date of Termination and may

     be amended or revoked at the sole discretion of the Executive prior to 180

     days before 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. 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 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 1991 Stock

     Plan of Incyte Genomics, Inc. or any other stock-based incentive plan of

     the Company which 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 12 months after the

     Date of Termination and all options shall continue to be exercisable for 90

     days following the Date of Termination and an additional portion of the

     Units which 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 12 months after the Date of Termination (provided that in no

     event will less than 20% of the Units vest) 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

Units, 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

Units, 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

Units, in shares of common stock of the Company, within 30 days of the Date of

Termination.

 

     (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 Units shall

become 100% vested and an additional portion of options acquired under the 1991

Stock Plan of Incyte Genomics, Inc. or any other stock-based incentive plan of

the Company which 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 12 months

after the Date of Termination and all options shall continue to be exercisable

for 12 months following the Date of Termination. 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 or, in the case of Units, in shares of common stock

of the Company, 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 Payments would constitute "excess

parachute payments" within the meaning of section 280G of the Code that in the

aggregate exceed the Limitation Amount, then the Payments made pursuant to this

Agreement shall be reduced (but not below zero) to the Reduced Amount. For

purposes of this Section 4, the "Reduced Amount" shall be the amount, expressed

as a present value, that maximizes the aggregate present value of the Payments

to the Executive without causing the sum of the Payments made hereunder and

under all Employment Agreements to exceed the Limitation Amount. The Payments

for the Executive under this Agreement and for each executive officer under the

other Employment Agreements, as so reduced, shall be determined on a pro rata

basis based on the total Payments payable pursuant to the Employment Agreements,

calculated as of the date of the first Change in Control to occur after April 1,

2001. Notwithstanding anything contained in this Agreement to the contrary, to

the extent that any payment or distribution of any type to or for the benefit of

the Executive by the Company (the "Total Payment") is or will be subject to the

excise tax imposed under Section 4999 of the Code (the "Excise Tax"), then the

Total Payments shall be reduced (but not below zero) if and to the extent that a

reduction in the Total 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 Total Payments. The determination of which 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

          ---------------------

made pursuant to this Agreement would exceed the Limitation Amount because of

section 280G of the Code, 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 the Reduced

Amount, and the Executive may then elect, in the Executive's sole discretion,

which and how much of such Payments shall be eliminated or reduced (as long as

after such election the aggregate present value of such Payments, as so

eliminated or reduced, equals the Reduced Amount) 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 (as long as after such decision the aggregate present value of such

Payments, as so eliminated or reduced, equals the Reduced Amount) 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 pursuant to this Agreement that should not have been made (an

"Overpayment") or that additional Payments that will not have been made by the

Company pursuant to this Agreement could have been made (an "Underpayment"),

consistent in each case with the calculation of the Reduced Amount hereunder. 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, or

that it exceeds the Limitation Amount.

 

     (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.

 

     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 copies of the Employee

Agreement, dated July 1, 1998, between The DuPont Pharmaceutical Company and the

Executive and any other agreements (specifically including any agreements with

The DuPont Pharmaceutical Company or Bristol-Myers Squibb Company) that could

restrict the Executive's activities in the course of the Executive's employment

with the Company. The Executive represents and warrants to the Company that the

Executive has not and will not sign the Bristol-Myers Squibb Company General

Release and Non-Solicitation Agreement or any other agreement that could

restrict his activities in the course of his employment with the Company.

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, 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;

 

          (ii)  personally (or personally direct another to) make or publish any

     statement (orally or in writing) to a current or prospective client of the

     Company or its affiliates or any other entity with whom the Company has a

     collaboration, strategic partnership, joint venture or other similar

     relationship (collectively, a "Customer Entity") that would libel, slander,

     disparage, denigrate, ridicule or criticize the Company or any of its

     affiliates; and

 

          (iii) personally (or personally direct another to) solicit any

     Customer Entity to purchase a gene sequence or genomic database product.

 

     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.

 

     (d)  If at any time prior to the date that is 365 days after the

Executive's Date of Termination, the Executive breaches any provision of

Sections 7(a), 7(b) or 7(c) of this Agreement in more than a minor, deminimus or

trivial manner, then (i) the Executive shall forfeit all of his unexercised

Company stock options or stock appreciation rights, unvested Company restricted

stock and unvested Company restricted stock units 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 of Company restricted stock units (excluding the vesting of 20%

of the Units), or (D) the forgiveness of any loan to the Executive from the

Company, 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 the NASDAQ Stock Market or any other

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.

 

     (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.

 

          If to the Company:

          Incyte Genomics, Inc.

          3160 Porter Drive

          Palo Alto, CA 94304

          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).

 

     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/ Paul A. Friedman

                                    --------------------------------------------

 

                                    COMPANY

 

                                    By   /s/ Roy Whitfield

                                      ------------------------------------------

 

                                    Its      Chief Executive Officer

                                    --------------------------------------------

 

 

                                     - 17 -

#Top of the Document







EX-10.10.2 4 a2190988zex-10_102.htm EXHIBIT 10.10.2

Exhibit 10.10.2

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

This Amendment to the Employment Agreement (this “Amendment”) is effective as of the 1st day of January, 2009 (the “Effective Date”) by and between INCYTE CORPORATION, (f/k/a Incyte Genomics, Inc.), a Delaware corporation (the “Company”), and Paul Friedman (the “Executive”).

 

WHEREAS, the parties entered into that certain Employment Agreement dated as of  November 26, 2001 (the “Employment Agreement”).

 

WHEREAS, the parties desire to amend the Employment Agreement, as set forth below, to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements included in this Amendment and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, agree as follows:

 

1.                                       Section 3(a)(i) of the Employment Agreement is hereby amended by deleting the last paragraph of such section and replacing it with the following:

 

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.”

 

2.                                       Section 3(b)(i) of the Employment Agreement is hereby amended by deleting the last paragraph of such section and replacing it with the following:

 

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.”

 

3.                                       The Employment Agreement is hereby amended to include the following new Section 10:

 

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.

 

(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.”

 

4.                                       The Employment Agreement is and shall continue in full force and effect, except as amended by this Amendment.

 

2


 

5.                                       Any and all capitalized terms which are not explicitly defined herein shall have the meaning ascribed to them in the Employment Agreement.

 

6.                                       This Amendment may be signed in counterpart originals, which collectively shall have the same legal effect as if all signature appeared on the same physical document.  This Amendment may be signed and exchanged by electronic or facsimile transmission, with the same legal effect as if the signatures had appeared in original handwriting on the same physical document.

 

[Remainder of page intentionally left blank]

 

3


 

IN WITNESS WHEREOF, the parties have duly executed and delivered this Amendment effective as of the date written above.

 

 

 

EXECUTIVE

Date:  December 30, 2008

 

  /s/ Paul Friedman

 

 

  Paul Friedman

 

 

 

 

 

INCYTE CORPORATION

Date:  December 30, 2008

 

By:

/s/ Paula J. Swain

 

 

 

 

 

 

Name:

Paula J. Swain

 

 

 

 

 

 

Title:

Executive Vice President

 

4


 

 






<DOCUMENT>
<TYPE>EX-10.30
<SEQUENCE>14
<FILENAME>dex1030.txt
<DESCRIPTION>OFFER EMPLOYMENT LETTER P.A. FRIEDMAN DTD 11/21/01
<TEXT>
<PAGE>


                                                                   EXHIBIT 10.30

November 21, 2001


Paul Friedman
[ADDRESS]

Dear Paul:

It is with great pleasure that we offer you the position of Chief Executive
Officer of Incyte Genomics, Inc. ("Incyte" or the "Company"), reporting to the
Board of Directors of the Company.

1. Salary and Bonus. Should you accept our offer, your salary will be $600,000
   ----------------
per year, payable on a bi-weekly basis. This is a salaried, exempt position, as
your salary covers compensation for all hours worked. Your salary will be
subject to annual review by the Compensation Committee of the Board of
Directors, with the first such review to occur at the Compensation Committee's
regularly scheduled meeting for that purpose in the last quarter of 2002 or the
first quarter of 2003, as applicable. In addition, beginning fiscal year 2002
you will participate together with the Company's other executive officers in the
Company's Corporate Incentive Plan ("CIP"). Under the CIP, your target bonus
will be 50% of your annual salary, with the actual bonus amount determined by
the achievement of performance goals to be determined annually by the Board of
Directors.

2. Stock Options and Restricted Stock Units. Incyte will grant you an option to
   ----------------------------------------
purchase 400,000 shares of Incyte common stock at an exercise price equal to the
fair market value of the common stock on the date of grant, which will occur on
the date of your commencement of employment with the Company. Twenty-five
percent (25%) of this option will vest on the first anniversary of the date of
grant, with the remaining seventy-five percent (75%) of the option vesting
monthly in thirty-six equal increments beginning in the month immediately
following the first anniversary of the date of grant. The specific terms and
conditions of this grant will be set forth in a Stock Option Agreement to be
entered into between you and the Company. Your stock options will be "incentive
stock options" to the maximum extent permitted by law. Upon the commencement of
your employment, you will also receive 100,000 restricted stock units (the
"Units"). Each Unit will enable you to receive one share of Incyte common stock.
The Units will vest fifty percent (50%) on the third anniversary of your
employment and the remaining fifty percent (50%) on the fourth anniversary of
your employment or on such earlier date as provided in the Employment Agreement,
dated November 26, 2001, between the Company and you (the "Employment
Agreement"). Upon your termination of employment, unvested Units will be
forfeited. The Units will be settled in shares of Incyte common stock on the
date of vesting or such later date, but not beyond the earlier of 30 days after
the termination of your employment or the ninth anniversary of the date you
commence your employment with the Company, as you may elect in a timely deferral
election filed with the Company.

3. Place of Performance. You will spend an average of at least 5 business days
   --------------------
per month working at the Company's West Coast headquarters, currently Palo Alto,
California, and the remaining business days working on the East Coast. The
Company will provide you with a furnished one bedroom apartment in the Palo Alto
vicinity.

4. Election to Board of Directors. Upon your acceptance of the position of Chief
   ------------------------------
Executive Officer, subject to the necessary Board of Directors approval and
effective upon





<PAGE>

November 21, 2001
Paul Friedman
Page 2



commencement of your employment, you will be elected as a member of the
Company's Board of Directors.

5. Benefits. Incyte offers employees and their eligible dependents a variety of
   --------
group health insurance benefits. Effective on your first day of employment, you
will be eligible for these benefits which currently include medical, dental,
vision, disability and life insurance. An outline of our benefit package is
enclosed. Incyte offers a 401(k) Plan available for your participation at the
next open enrollment, held quarterly. Information about these programs and other
company benefits along with guidelines concerning employment are contained in
Incyte's Employee Handbook, a copy of which is issued at the time employment
commences.

6. Corporate Policy. As a condition of your employment with Incyte, you are
   ----------------
required to sign the enclosed Confidential Information and Invention Assignment
Agreement ("Confidential Information Agreement") protecting Incyte's proprietary
and competitive information. This offer of employment is subject to your
acceptance of the terms of the Confidential Information Agreement. As an Incyte
employee, you will be responsible for carrying out your duties and upholding all
Company policies as outlined in the Company Employee Handbook and in the
Confidential Information Agreement, as may be modified from time to time.

7. Term of Employment. Please note that your employment with Incyte, if
   ------------------
accepted, will commence on December 3, 2001 and will be on an "at will" basis,
meaning that either you or the Company can terminate the employment relationship
for any reason at any time.

8. Severance. If your employment with the Company is terminated without Cause or
   ---------
for Good Reason or Change in Control Good Reason, you will be entitled to
receive the severance benefits described in the Employment Agreement.

9. Immigration Documentation. This offer of employment is expressly conditioned
   -------------------------
upon your being able to provide Incyte with documentation on the date that you
report to work as evidence that you are fully authorized by the INS to accept
this employment position. This offer of employment is contingent on the Company
receiving satisfactory background checks.

Paul, we would be delighted by your decision to join Incyte and we look forward
to your acceptance of this offer of employment. We believe Incyte offers an
exciting and challenging opportunity.

Please consider our offer and advise me of your decision by December 3, 2001.
The Company does not intend to hold the offer open beyond this date.



<PAGE>

November 21, 2001
Paul Friedman
Page 3





In order to confirm your agreement with and acceptance of these terms, please
sign one copy of this letter and return it to me along with your signed
Employment Agreement, Confidential Information Agreement, Computer Usage Policy,
EEO form and I-9. The Confidential Information Agreement must be returned with a
signed copy of this letter to be considered a valid acceptance. The other copy
of this offer letter is for your records. In the meantime, should you have any
questions about our offer or about the Company more generally, please contact
me.

Sincerely,


/s/ Roy A. Whitfield
Roy A. Whitfield
Chief Executive Officer



------------------------------------------------------------------

I have read and understand the terms of this offer including the attached
Confidential Information Agreement. I agree to the terms of employment set forth
in this letter and Confidential Information Agreement and will be available to
report to work on Monday, December 3, 2001.

                                                   /s/ Paul Friedman
                                                   -----------------------------
                                                   Paul Friedman





</TEXT>
</DOCUMENT>