ICOS CORPORATION 1999 LONG-TERM INCENTIVE PLAN AS AMENDED AND RESTATED

Exhibit 10.1

 

ICOS CORPORATION

 

1999 LONG-TERM INCENTIVE PLAN

 

AS AMENDED AND RESTATED

 

EFFECTIVE AS OF JANUARY 27, 2005

 

(as amended and restated on July 19, 2005)

 

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ICOS CORPORATION

1999 LONG-TERM INCENTIVE PLAN

AS AMENDED AND RESTATED

EFFECTIVE AS OF JANUARY 27, 2005

(as amended and restated on July 19, 2005)

 

SECTION 1.     INTRODUCTION.

 

The Company’s Board of Directors hereby amends, restates and renames the Prior Plan as the ICOS Corporation 1999 Long-Term Incentive Plan effective as of January 27, 2005 (the “Restatement Date”). The Plan is effective on the Restatement Date subject to obtaining Company shareholder approval as provided in Section 15 below.

 

The purpose of the Plan is to promote the long-term success of the Company and the creation of shareholder value by offering Key Employees an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, and to encourage such Key Employees to continue to provide services to the Company and to attract new individuals with outstanding qualifications.

 

The Plan seeks to achieve this purpose by providing for Awards in the form of Options (which may constitute Incentive Stock Options or Nonstatutory Stock Options), Stock Appreciation Rights, Stock Grants and Stock Units.

 

The Plan shall be governed by, and construed in accordance with, the laws of the State of Washington (except its choice-of-law provisions). Capitalized terms shall have the meaning provided in Section 2 unless otherwise provided in this Plan or any related Stock Option Agreement, SAR Agreement, Stock Grant Agreement or Stock Unit Agreement.

 

SECTION 2.     DEFINITIONS.

 

(a)    “Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity. For purposes of determining an individual’s “Service,” this definition shall include any entity other than a Subsidiary, if the Company, a Parent and/or one or more Subsidiaries own not less than 50% of such entity.

 

(b)    “Award” means any award of an Option, SAR, Stock Grant or Stock Unit under the Plan.

 

(c)    “Board” means the Board of Directors of the Company, as constituted from time to time.

 

(d)    “Cashless Exercise” means, to the extent that a Stock Option Agreement so provides and as permitted by applicable law, a program approved by the Committee in which payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price and any applicable tax withholding obligations (up to the maximum amount permitted by applicable law) relating to the Option.

 

(e)    “Cause” means, except as may otherwise be provided in a Participant’s employment agreement or Award agreement, a conviction of a Participant for a felony crime or the failure of a Participant to contest prosecution for a felony crime, or a Participant’s misconduct, fraud or dishonesty (as such terms are defined by the Committee in its sole discretion), or any unauthorized use or disclosure of confidential information or trade secrets, in each case as determined by the Committee, and the Committee’s determination shall be conclusive and binding.

 

(f)    “Change In Control” except as may otherwise be provided in a Participant’s employment agreement or Award agreement, means the occurrence of any of the following:

 

(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

 

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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 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 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;

 

(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.

 

(g)    “Code” means the Internal Revenue Code of 1986, as amended, and the regulations and interpretations promulgated thereunder.

 

(h)    “Committee” means a committee described in Section 3.

 

(i)    “Common Stock” means the Company’s common stock.

 

(j)    “Company” means ICOS Corporation, a Washington corporation.

 

(k)    “Consultant” means an individual who performs bona fide services to the Company, a Parent, a Subsidiary or an Affiliate, other than as an Employee or Director or Non-Employee Director.

 

(l)    “Covered Employees” means those persons who are subject to the limitations of Code Section 162(m).

 

(m)    “Director” means a member of the Board who is also an Employee.

 

(n)    “Disability” means that the Key Employee is classified as disabled under a long-term disability policy of the Company or, if no such policy applies, the Key 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.

 

(o)    “Employee” means any individual who is a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.

 

(p)    “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(q)    “Exercise Price” means, in the case of an Option, the amount for which a Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price,” in

 

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the case of a SAR, means an amount, as specified in the applicable SAR Agreement, which is subtracted from the Fair Market Value in determining the amount payable upon exercise of such SAR.

 

(r)    “Fair Market Value” means the market price of a Share as determined in good faith by the Committee. The Fair Market Value shall be determined by the following:

 

(i) If the Shares were traded over-the-counter or listed with NASDAQ on the date in question, then the Fair Market Value shall be equal to the last transaction price quoted by the NASDAQ system for the date in question or (ii) if the Common Stock is listed on the New York Stock Exchange or the American Stock Exchange on the date in question, the Fair Market Value is the closing selling price for the Common Stock as such price is officially quoted in the composite tape of transactions on such exchange for the date in question; provided, however, that if there is no such reported price for the Common Stock for the date in question under (i) or (ii), then such price on the last preceding date for which such price exists shall be determinative of Fair Market Value.

 

If neither (i) or (ii) are applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

 

Whenever possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in the Western Edition of The Wall Street Journal . Such determination shall be conclusive and binding on all persons.

 

(s)    “Fiscal Year” means the Company’s fiscal year.

 

(t)    “Good Reason” means with respect to a Participant and except as may otherwise be provided in a Participant’s employment agreement or Award agreement, the occurrence (without Participant’s consent) of any of the following events or conditions within one year after a Change in Control: (i) a reduction in the Participant’s annual base salary; (ii) the Company or a successor entity requiring the Participant (without the Participant’s consent) to be based at any place outside a 35-mile radius of his or her place of employment prior to the Change in Control, except for reasonably required travel on the successor entity’s business that is not materially greater than such travel requirements prior to the Change in Control; (iii) a material breach by the Company or by its successor entity of its obligations to Participant under the Plan or an Award agreement; or (iv) a material and substantial diminution in the Participant’s job responsibilities as in effect immediately prior to a Change in Control (as determined by the Committee in its sole discretion) 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 Participant and further provided that neither mere changes in title and/or reporting relationship nor reassignment following a Change in Control to a position that is similar to the position held immediately prior to the Change in Control shall constitute a material and substantial diminution in job responsibilities (and where the Committee shall have sole discretion to determine whether or not the new position is similar to the prior position). Before “Good Reason” has been deemed to have occurred, a Participant must give the Company written notice detailing why the Participant 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.

 

(u)    “Grant” means any grant of an Award under the Plan.

 

(v)    “Incentive Stock Option” or “ISO” means an incentive stock option described in Code Section 422.

 

(w)    “Key Employee” means an Employee, Director, Non-Employee Director or Consultant who has been selected by the Committee to receive an Award under the Plan.

 

(x)    “Non-Employee Director” means a member of the Board who is not an Employee.

 

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(y)    “Nonstatutory Stock Option” or “NSO” means a stock option that is not an ISO.

 

(z)    “Option” means an ISO or NSO granted under the Plan entitling the Optionee to purchase Shares.

 

(aa)    “Optionee” means an individual, estate or other entity that holds an Option.

 

(bb)    “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be considered a Parent commencing as of such date.

 

(cc)    “Participant” means an individual or estate or other entity that holds an Award.

 

(dd)    “Performance Goals” means one or more objective measurable performance factors as determined by the Committee with respect to each Performance Period based upon one or more factors, including, but not limited to: (i) operating income; (ii) earnings before interest, taxes, depreciation and amortization (“EBITDA”); (iii) earnings; (iv) cash flow; (v) market share; (vi) sales or revenue; (vii) expenses; (viii) cost of goods sold; (ix) profit/loss or profit margin; (x) working capital; (xi) return on equity or assets; (xii) earnings per share; (xiii) economic value added (“EVA”); (xiv) stock price; (xv) price/earnings ratio; (xvi) debt or debt-to-equity; (xvii) accounts receivable; (xviii) writeoffs; (xix) cash; (xx) assets; (xxi) liquidity; (xxii) operations; (xxiii) research or related milestones; (xxiv) synthesis of specified materials; (xxv) intellectual property (e.g., patents); (xxvi) product development; (xxvii) regulatory activity; (xxviii) clinical studies; (xxix) manufacturing, production or inventory; (xxx) product quality control; (xxxi) management; (xxxii) human resources; (xxxiii) corporate governance; (xxxiv) compliance program; (xxxv) legal matters; (xxxvi) internal controls; (xxxvii) policies and procedures; (xxxviii) accounting and reporting; (xxxix) information technology; (xl) site, plant or building development; (xli) business development; (xlii) strategic alliances, licensing and partnering; (xliii) mergers and acquisitions or divestitures; and/or (xliv) financings, each with respect to the Company and/or one or more of its affiliates or operating units. Awards issued to persons who are not Covered Employees may take into account other factors.

 

(ee)    “Performance Period” means any period not exceeding 36 months as determined by the Committee, in its sole discretion. The Committee may establish different Performance Periods for different Participants, and the Committee may establish concurrent or overlapping Performance Periods.

 

(ff)    “Plan” means this ICOS Corporation 1999 Long-Term Incentive Plan as it may be amended from time to time.

 

(gg)    “Prior Equity Plans” means the Company’s 1989 Stock Option Plan and its 1991 Stock Option Plan for Nonemployee Directors.

 

(hh)    “Prior Plan” means the ICOS Corporation 1999 Stock Option Plan as amended on January 21, 2004.

 

(ii)    “Re-Price” means that the Company has lowered or reduced the Exercise Price of outstanding Options and/or outstanding SARs for any Participant(s) in a manner described by Item 402(i)(1) of SEC Regulation S-K (or its successor provision).

 

(jj)    “Retirement” means an Employee’s voluntary termination of employment from the Company (or Parent, Subsidiary or Affiliate), by reason other than Disability or death, after all of the following has occurred: (i) the Employee has completed five or more years of continuous employment, (ii) the Employee has attained age 55 and (iii) the sum of the Employee’s age (rounded down to the nearest whole number) and full years of employment (rounded down to the nearest whole number) is at least 65.

 

(kk)    “SAR Agreement” means the agreement described in Section 8 evidencing each Award of a Stock Appreciation Right.

 

(ll)    “SEC” means the Securities and Exchange Commission.

 

(mm)    “Section 16 Persons” means those officers, directors or other persons who are subject to Section 16 of the Exchange Act.

 

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(nn)    “Securities Act” means the Securities Act of 1933, as amended.

 

(oo)    “Service” means service as an Employee, Director, Non-Employee Director or Consultant. A Participant’s Service does not terminate if he or she is a common-law employee and goes on a bona fide leave of absence that was approved by the Company in writing and the terms of the leave provide for continued service crediting, or when continued service crediting is required by applicable law. However, for purposes of determining whether an Option is entitled to continuing ISO status, a common-law employee’s Service will be treated as terminating ninety (90) days after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work. The Committee determines which leaves count toward Service, and when Service terminates for all purposes under the Plan.

 

(pp)    “Share” means one share of Common Stock.

 

(qq)    “Stock Appreciation Right” or “SAR” means a stock appreciation right awarded under the Plan.

 

(rr)    “Stock Grant” means Shares awarded under the Plan.

 

(ss)    “Stock Grant Agreement” means the agreement described in Section 9 evidencing each Award of a Stock Grant.

 

(tt)    “Stock Option Agreement” means the agreement described in Section 6 evidencing each Award of an Option.

 

(uu)    “Stock Unit” means a bookkeeping entry representing the equivalent of one Share, as awarded under the Plan.

 

(vv)    “Stock Unit Agreement” means the agreement described in Section 10 evidencing each Award of a Stock Unit.

 

(ww)    “Shareholder Approval Date” means the date that the Company’s shareholders approve this Plan provided such approval occurs within one year of the Restatement Date.

 

(xx)    “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

 

(yy)    “10-Percent Shareholder” means an individual who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, its Parent or any of its Subsidiaries. In determining stock ownership, the attribution rules of Section 424(d) of the Code shall be applied.

 

SECTION 3.     ADMINISTRATION.

 

(a)    Committee Composition. A Committee appointed by the Board shall administer the Plan. The Board shall designate one of the members of the Committee as chairperson. Unless the Board provides otherwise, the Company’s Compensation Committee shall be the Committee. If no Committee has been appointed, the entire Board shall constitute the Committee. Members of the Committee shall serve for such period of time as the Board may determine and shall be subject to removal by the Board at any time. The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee.

 

The Committee shall have membership composition which enables (i) Awards to Section 16 Persons to qualify as exempt from liability under Section 16(b) of the Exchange Act and (ii) Awards to Covered Employees to qualify as performance-based compensation as provided under Code Section 162(m).

 

The Board may also appoint one or more separate committees of the Board, each composed of two or more directors of the Company who need not qualify under Rule 16b-3 or Code Section 162(m), that may

 

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administer the Plan with respect to Key Employees who are not Section 16 Persons or Covered Employees, respectively, may grant Awards under the Plan to such Key Employees and may determine all terms of such Awards. To the extent permitted by applicable law, the Board may also appoint a committee, composed of one or more officers of the Company, that may authorize Awards to Employees (who are not Section 16 Persons or Covered Employees) within parameters specified by the Board and consistent with any limitations imposed by applicable law.

 

Notwithstanding the foregoing, the Board shall constitute the Committee and shall administer the Plan w