Exhibit 99.2
ICOS CORPORATION CHANGE IN
CONTROL SEVERANCE AGREEMENT
THIS CHANGE IN CONTROL SEVERANCE AGREEMENT (the
“Agreement”) is entered into pursuant to the ICOS
Corporation Change in Control Severance Plan (the
“Plan”) as of July 19, 2005, (the “Effective
Date”), by and between Paul N. Clark (the
“Employee”) and ICOS Corporation, a Delaware
corporation, (the “Company”). The Plan and this
Agreement constitute the Summary Plan Description required under
the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).
1. Definitions . The following
definitions shall apply for all purposes under this
Agreement:
(a) Change in Control .
“Change in Control” means the occurrence of any one or
more of the following events that occur on or after the Effective
Date:
(i) The consummation of a merger or
consolidation of the Company with or into another entity or any
other corporate reorganization, if more than 50% of the combined
voting power of the continuing or surviving entity’s
securities outstanding immediately after such merger, consolidation
or other reorganization is owned by persons who were not
shareholders of the Company immediately prior to such merger,
consolidation or other reorganization;
(ii) The sale, transfer or other
disposition of all or substantially all of the Company’s
assets;
(iii) A change in the composition of
the Company’s Board of Directors (“Board”), as a
result of which fewer than one-half of the incumbent directors are
directors who either (i) had been directors of the Company on the
date 24 months prior to the date of the event that may constitute a
Change in Control (the “original directors”) or (ii)
were elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the aggregate of the
original directors who were still in office at the time of the
election or nomination and the directors whose election or
nomination was previously so approved;
(iv) Any transaction as a result of
which any person becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934
(the “Exchange Act”), directly or indirectly, of
securities of the Company representing at least 20% of the total
voting power represented by the Company’s then outstanding
voting securities. For purposes of this Paragraph (iv), the term
“person” shall have the same meaning as when used in
Sections 13(d) and 14(d) of the Exchange Act but shall
exclude:
(A) A trustee or other fiduciary
holding securities under an employee benefit plan of the Company or
a subsidiary of the Company;
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(B) A corporation owned directly or
indirectly by the shareholders of the Company in substantially the
same proportions as their ownership of the common stock of the
Company; and
(C) The Company; or
(v) A complete liquidation or
dissolution of the Company.
A transaction shall not constitute a
Change in Control if its sole purpose is to change the state of the
Company’s incorporation or to create a holding company that
will be owned in substantially the same proportions by the persons
who held the Company’s securities immediately before such
transactions.
(b) Employment Agreement .
“Employment Agreement” means the employment agreement,
dated June 11, 1999, by and between the Company and Employee, as
may be amended from time to time by the parties.
(c) Just Cause . “Just
Cause” means any one or more of the following:
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(i)
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A conviction of
an Employee for a felony crime or the failure of an Employee to
contest prosecution for a felony crime;
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(ii)
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An
Employee’s misconduct, fraud or dishonesty that causes
material harm or damage to the Company; or
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(iii)
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Any
unauthorized use or disclosure of confidential information or trade
secrets by an Employee.
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(d) Total Disability .
“Total Disability” shall be deemed to have occurred if
the Employee is classified as disabled under a long-term disability
policy of the Company or, if no such policy applies, the Employee
is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment which
can be expected to result in death or which has lasted or can be
expected to last for a continuous period of not less than 12
months.
(e) Good Reason . “Good
Reason” shall mean that, on or after the effective date of a
Change in Control, the Employee (without the Employee’s
written consent):
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(i)
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Has incurred a
material and substantial diminution reduction in his or her job
responsibilities as in effect immediately prior to the public
announcement of the Change in Control (the
“Announcement”) or any other action by the Company or a
successor entity which results in such material and substantial
diminution, excluding for this purpose an isolated and inadvertent
action not taken in bad faith and which is remedied by the Company
or successor entity within thirty days after receipt of notice
thereof given by the Employee and further provided that neither
mere changes in title and/or reporting relationship nor
reassignment following a Change in Control to a position
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that is similar to the position held
immediately prior to the Change in Control shall constitute a
material and substantial diminution in job
responsibilities.
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(ii)
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Has incurred
one or more reductions in his or her “total
compensation” which is defined as follows:
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(A) any reduction in base salary
or
(B) any reduction in the target
annual bonus percentage of base salary; or
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(iii)
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Has been
notified that his or her principal place of work will be relocated
by a distance of 35 miles or more; or
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(iv)
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a material
breach by the Company or by its successor entity of its obligations
to Employee under the Plan or this Agreement.
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Before “Good Reason” has been deemed
to have occurred, Employee must give the Company written notice
detailing why the Employee believes a Good Reason event has
occurred and such notice must be provided to the Company within
sixty days of the initial occurrence of such alleged Good Reason
event(s). The Company shall then have thirty days after its receipt
of written notice to cure the items cited in the written notice so
that “Good Reason” will have not formally occurred with
respect to the event(s) in question.
2. Severance .
(a) The Employee shall be entitled
to receive a cash severance payment from the Company (the
“Severance Payment”) if within the first 18 month
period after the occurrence of a Change in Control,
either:
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(i)
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The Employee
resigns his or her employment for Good Reason within ninety-one
(91) days after the Employee becomes aware of the occurrence of an
event specified in Section 1(e); or
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(ii)
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The Company
terminates the Employee’s employment for any reason other
than Just Cause, death or Total Disability.
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The occurrence of either Section 2(a)(i) or
2(a)(ii) is a “Qualifying Termination”. For all
purposes under this Agreement, the amount of the Severance Payment
shall be equal to three times the sum of the Employee’s
annual base salary and annual target bonus, as in effect on the
date of the termination of the Employee’s employment (or if
the Employee’s salary or annual target bonus, were greater,
on the date of the Announcement). The Severance Payment shall be
made to the Employee in a single lump sum cash payment not later
than fifteen (15) business days following the date that the
Employee becomes entitled to a Severance Payment. In the event of a
Qualifying Termination and notwithstanding anything to the contrary
herein or in the Employment Agreement, Employee may elect to
receive either (x) the Severance Payment under this Section 2(a)
or (y) the cash severance under Item 8(a) of the
Employment Agreement, but not both. Employee must
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provide his written election to the Company
within seven (7) business days following termination of his
employment and if no such written election is timely received by
the Company then the Severance Payment under this Section 2(a)
shall be deemed to have been elected by Employee.
(b) Health Coverage . If the
Employee is entitled to a Severance Payment under Section 2(a), the
Company shall also pay for or reimburse the Employee for the
employer’s portion of the cost of any group health
continuation coverage that the Company is otherwise required to
offer under the Consolidated Omnibus Budget Reconciliation Act of
1985 (“COBRA”) until the earlier of the date that (i)
the Employee becomes covered by comparable health coverage, offered
by another employer, or (ii) is 36 months after the date of
termination of Employee’s employment. While the Company is
providing COBRA coverage and paying its portion of the premium
costs, the Employee shall continue to be responsible to pay for the
cost of the employee portion of COBRA coverage (with such employee
portion to be equal to the rates charged to active employees). The
Company’s obligation to continue to provide health coverage
pursuant to this Section 2(b) shall not be relieved merely because
the legally required minimum period for providing COBRA
continuation coverage is for a shorter period than 36 months. In
the event of a Qualifying Termination and notwithstanding anything
to the contrary herein or in the Employment Agreement, Employee may
elect to receive either (x) the group health continuation coverage
under this Section 2(b) or (y) the continuation of
health care benefits under Item 8(d) of the Employment Agreement,
but not both. Employee must provide his written election to the
Company within seven (7) business days following termination of his
employment and if no such written election is timely received by
the Company then the group health continuation coverage under this
Section 2(b) shall be deemed to have been elected by
Employee.
(c) Mitigation . To the
extent Employee receives cash severance and/or health coverage
benefits under the Employment Agreement (with the exception of Item
8(b)) or any other Company plan, program, agreement, policy,
practice, or the like, severance payments and benefits due to
Employee under this Agreement will be correspondingly reduced (but
not below zero). Except as may be expressly provided in this
Agreement, (i) the Employee shall not be required to mitigate the
amount of any payment or benefit contemplated by this
