Exhibit 10.5
ICOS CORPORATION
RETENTION, SALE AND SPECIAL
RECOGNITION BONUS PLAN
(Effective as of October 16,
2006)
1. Purpose . The purposes of
this ICOS Corporation Retention, Sale and Special Recognition Bonus
Plan (the “ Plan ”) are (i) to reinforce
and encourage the continued attention and dedication of certain key
employees of ICOS Corporation, a Washington corporation (the
“ Company ”), (ii) to help incentivize such
individuals to remain in the employ of the Company or its successor
in order to provide transition assistance for a period of time
following a “Change in Control” (as defined below),
(iii) to reward such individuals for their efforts to ensure
the increased performance of the Company and/or delivering
significant value to shareholders in a transaction constituting a
Change in Control and (iv) to compensate such individuals for
compensation and benefits forgone, subject to certain terms and
conditions.
2. Definitions . Wherever the
following terms (in addition to the defined terms set forth above)
are used in the Plan they shall have the meanings specified, unless
the context clearly indicates otherwise. The singular pronoun shall
include the plural where the context so indicates.
2.1 “ Announcement
” means the initial public announcement by the Company of a
Change in Control.
2.2 “ Award ”
shall mean a Retention Bonus, a Sale Bonus or a Special Recognition
Bonus.
2.3 “ Board ”
shall mean the Board of Directors of the Company, as constituted
from time to time.
2.4 “ Change in Control
” shall mean the first occurrence of any one or more of the
following events that occur on or after the Effective
Date:
(a) 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;
(b) The sale, transfer or other
disposition of all or substantially all of the Company’s
assets;
(c) 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 (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
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were still in office at the time of
the election or nomination and the directors whose election or
nomination was previously so approved;
(d) 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 Section 2.3(d), 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:
(i) A trustee or other fiduciary
holding securities under an employee benefit plan of the Company or
a subsidiary of the Company;
(ii) 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
(iii) The Company; or
(e) Shareholder approval of 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. For purposes of Section 2.3(a) above, the
calculation of voting power shall be made as if the date of the
acquisition were a record date for a vote of the Company’s
shareholders, and for purposes of Section 2.3(d) above, the
calculation of voting power shall be made as if the date of the
consummation of the transaction were a record date for a vote of
the Company’s shareholders In no event shall there occur more
than one Change in Control for purposes of the Plan.
2.5 “ Code ”
shall mean the Internal Revenue Code of 1986, as amended from time
to time.
2.6 “ Compensation
Committee ” shall mean the Compensation Committee of the
Board, as constituted from time to time.
2.7 “ Good Reason
” shall mean the occurrence of any one or more of the
following (without the Participant’s express written consent
which specifically references the Plan) which, in the case of a
Retention Bonus, occurs on or after the effective date of a Change
in Control and, in the case of a Sale Bonus or Special Recognition
Bonus, occurs on or after the date such Sale Bonus or Special
Recognition Bonus is approved by the Administrator:
(a) a material and substantial
diminution in the nature or status of the Participant’s
position, authority, title, reporting relationships, duties or
responsibilities, in each case as in effect immediately prior to
the Announcement or any other action by the Company or a successor
entity which results in such a material and substantial diminution,
excluding for this
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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 Participant;
(b) one or more reductions in the
Participant’s “total compensation,” which is
defined as follows:
(i) any reduction in the
Participant’s base salary, except for across-the-board base
salary reductions similarly affecting all management personnel of
the Company and all management personnel of the
“person” (within the meaning of Sections 13(d) and
14(d) of the Exchange Act) in control of the Company; or
(ii) any reduction in the
Participant’s target annual bonus percentage of base
salary;
(c) the failure to grant to the
Participant stock options, stock units, performance shares, or
other equity-based compensation during each twelve (12) month
period following the Change in Control having a substantially
similar value in the aggregate as those rights granted to the
Participant on an annualized average basis, and having all other
material terms (including vesting requirements) at least as
favorable to the Participant, as those rights granted to him or her
during the three-year period immediately prior to the Change in
Control;
(d) the delivery of notification to
the Participant that his or her principal place of work will be
relocated by a distance of 35 miles or more;
(e) the Company’s failure to
continue to provide the Participant with benefits substantially
similar in the aggregate to those enjoyed by the Participant under
any of the Company’s life insurance, medical, health and
accident, disability, pension, retirement, or other welfare benefit
plans in which the Participant and his or her eligible family
members were participating at the time of the Change in Control,
the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits, or the failure
by the Company to provide the Participant with the number of paid
vacation days to which the Participant is entitled on the basis of
his or her years of service with the Company in accordance with the
Company’s normal vacation policy in effect at the time of the
Change in Control; or
(f) the material breach by the
Company or by its successor entity of any material obligation owed
to Participant under the Plan or any other written compensation
agreement with the Participant.
Before “Good Reason” has
been deemed to have occurred, the Participant must give the Company
written notice detailing why the Participant believes a Good Reason
event has occurred. The Company shall then have 30 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.
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2.8 “ Just Cause
” shall mean any one or more of the following:
(a) The Participant’s willful
and continued failure to substantially perform the
Participant’s duties with the Company, as reasonably
determined by the Board in good faith (other than any such failure
resulting from the Participant’s incapacity due to any
physical or mental illness of the Participant or any such actual or
anticipated failure after the Participant’s issuance of a
notice of termination for Good Reason), after a written demand for
substantial performance is delivered to the Participant by the
Board, which demand specifically identifies the manner in which the
Board believes that the Participant has not substantially performed
the Participant’s duties;
(b) The Participant’s willful
and continued failure to substantially follow and comply with the
specific and lawful directives of the Board, as reasonably
determined by the Board in good faith (other than any such failure
resulting from the Participant’s incapacity due to any
physical or mental illness of the Participant or any such actual or
anticipated failure after the Participant’s issuance of a
notice of termination for Good Reason), after a written demand for
substantial performance is delivered to the Participant by the
Board, which demand specifically identifies the manner in which the
Board believes that the Participant has not substantially performed
the Participant’s duties;
(c) The conviction of the
Participant by a court of competent jurisdiction (or the entering
of a plea of nolo contendere or guilty by the Participant) for a
felony crime;
(d) The Participant’s
misconduct, fraud or dishonesty that causes material harm or damage
to the Company; or
(e) Any unauthorized use or
disclosure of confidential information or trade secrets by the
Participant.
For purposes of this
Section 2.7, no act, or failure to act, on the
Participant’s part shall be deemed “willful”
unless done, or omitted to be done, by the Participant not in good
faith.
2.9 “ Participant
” shall mean any employee (including any executive officer)
of the Company or any affiliate who has been selected by the
Administrator to receive a Retention Bonus, a Sale Bonus and/or a
Special Recognition Bonus.
2.10 “ Retention Bonus
” shall mean a bonus payable to a Participant pursuant to
Section 6 of the Plan.
2.11 “ Sale Bonus
” shall mean a bonus payable to a Participant pursuant to
Section 7 of the Plan.
2.12 “ Special Bonus
Committee ” shall mean a committee comprised of Paul N.
Clark, J
