Form 8-K

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PBUU8WDwgxVTPSNuzTHGtDYy5SpH2SMRINoDz69a3vb9IukMUEoMG4wA4MchDGPF Afdb0z1pHclbuOTsSI8g9A== 0001193125-05-148053.txt : 20050725 0001193125-05-148053.hdr.sgml : 20050725 20050725163629 ACCESSION NUMBER: 0001193125-05-148053 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050719 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050725 DATE AS OF CHANGE: 20050725 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ICOS CORP / DE CENTRAL INDEX KEY: 0000874294 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 911463450 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19171 FILM NUMBER: 05971724 BUSINESS ADDRESS: STREET 1: 22021-20TH AVENUE S.E., CITY: BOTHELL STATE: WA ZIP: 98021 BUSINESS PHONE: 2064851900 MAIL ADDRESS: STREET 1: 22021 20TH AVE SE CITY: BOTHELL STATE: WA ZIP: 98021 8-K 1 d8k.htm FORM 8-K Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

July 19, 2005

Date of Report

(Date of earliest event reported)

ICOS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

0-19171

91-1463450

(State or other jurisdiction

of incorporation)

(Commission File No.)

(IRS Employer

Identification No.)

22021 20th Avenue SE, Bothell, WA 98021

(Address of principal executive offices, including Zip Code)

(425) 485-1900

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-14(c)).

Item 1.01 Entry into a Material Definitive Agreement.

Adoption of Change in Control Severance Plan

On July 19, 2005, the Compensation Committee (the “Committee”) of the ICOS Corporation (the “Company”) Board of Directors (the “Board”) recommended and the Board approved the adoption of the ICOS Corporation Change in Control Severance Plan (the “Plan”). The Plan is intended to provide for appropriate retention of Company employees in the event that the Company were to consider entering into a corporate transaction that would constitute a change in control. A description of the material terms of the Plan follows below. This description is only a summary and is qualified in its entirety by reference to the Plan, which is filed as an exhibit hereto.

Eligible Participants

All Company employees, including executive officers, are eligible to participate in the Plan. An eligible employee must be affirmatively selected by the Company in order to become a participant in the Plan. An officer who has been selected to become a Plan participant must execute a Change in Control Severance Agreement with the Company (the “Agreement”). Those selected to become participants in the Plan include Paul N. Clark (Chairman, President and Chief Executive Officer), Leonard M. Blum (Senior Vice President, Sales and Marketing), David A. Goodkin (Senior Vice President, Development and Chief Medical Officer), Michael A. Stein (Senior Vice President and Chief Financial Officer), Thomas P. St. John (Vice President, Therapeutic Development), Clifford J. Stocks (Vice President, Business Development), Gary L. Wilcox (Executive Vice President, Operations) and Michele Yetman (Vice President, Human Resources) to become participants in the Plan. Forms of the Agreement for the Company’s Chief Executive Officer and the other Company executive officers are attached as exhibits hereto.

Administration, Amendment and Termination

The Company has full and sole discretionary authority to amend or terminate the Plan and to administer and interpret the Plan. The officers and employees and the members of the Board will generally be indemnified by the Company in connection with the administration of the Plan. The Plan and Agreement will generally continue in effect until the Company gives the participant at least two years’ written notice of amendment or cancellation that would adversely affect the participant. The individual participant’s Agreement terminates if the participant’s employment is terminated prior to a change in control.

Plan Benefits for Executive Officers

An eligible executive officer may be entitled to receive a cash severance payment in an amount equal to two times the sum of the officer’s annual base salary and annual target bonus if, within the 18 months after the occurrence of a change in control of the Company, either:

(i)

The officer resigns his or her employment for good reason; or

(ii)

The Company terminates the officer’s employment for any reason other than just cause, death or total disability.

In the event of such a termination of employment, the Company will also provide continuing group health coverage to the officer for up to 24 months. All payments and benefits provided under the terms of the Plan are conditioned on the officer’s continuing compliance with the Plan and their individual Agreement, and the effectiveness of the officer’s signed release of claims and covenant not to sue the Company.

- 2 -

Plan Benefits for President and Chief Executive Officer

The Plan benefits for the Company’s Chairman, President and Chief Executive Officer, Paul N. Clark, are generally the same as the above benefits for officers with the exception that Mr. Clark can receive a cash severance payment of three times the sum of his annual base salary and annual target bonus and his continuing health coverage can extend for up to 36 months after termination of employment. In addition, Mr. Clark is eligible to receive payment to cover any golden parachute excise taxes. The Plan benefits will be coordinated with Mr. Clark’s employment agreement so that Mr. Clark can elect to receive either these Plan benefits or the cash/health continuation benefits under the employment agreement, but not both.

Restricted Stock Awards

On July 19, 2005, with input from an independent compensation consulting firm, the Committee approved the award of restricted stock retention awards to the executive officers listed below. The awards were granted pursuant to the Company’s shareholder-approved 1999 Long-Term Incentive Plan (the “Stock Plan”) and Restricted Stock Grant Agreement (the “Stock Agreement”), the form of which is attached as an exhibit hereto. Each stock award is subject to continued service by the grantee and the shares will vest in their entirety as shown below. The stock award may also vest earlier in the event that, after a Company change in control, the officer’s employment terminates for good reason or without cause within 24 months after the change in control. In addition, Mr. Clark’s employment agreement with the Company provides for full vesting of restricted stock awards upon termination of his employment for good reason or without cause. The foregoing description is only a summary and is qualified in its entirety by reference to the Stock Plan and Stock Agreement.


Name of Grantee	Number of Restricted Shares Awarded	Vesting Date
Paul N. Clark	128,600	July 19, 2010
Leonard M. Blum	55,000	July 19, 2010
David A. Goodkin	62,100	July 19, 2010
Michael A. Stein	63,600	July 19, 2010
Thomas P. St. John	37,600	July 19, 2009
Clifford J. Stocks	32,400	July 19, 2009
Gary L. Wilcox	75,000	July 19, 2010
Michele Yetman	23,800	July 19, 2009

Item 9.01. Financial Statements and Exhibits.


Exhibit		Description
99.1		ICOS Corporation Change in Control Severance Plan

99.2		Change in Control Severance Agreement – Chief Executive Officer

99.3		Change in Control Severance Agreement – Other Executive Officers

99.4		Form of Restricted Stock Grant Agreement – Executive Officers

- 3 -

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	ICOS CORPORATION

Date: July 25, 2005	By:	/S/ MICHAEL A. STEIN
		Michael A. Stein
		Vice President and Chief Financial Officer

- 4 -

EXHIBIT INDEX


Exhibit No.		Description
99.1		ICOS Corporation Change in Control Severance Plan

99.2		Change in Control Severance Agreement – Chief Executive Officer

99.3		Change in Control Severance Agreement – Other Executive Officers

99.4		Form of Restricted Stock Grant Agreement – Executive Officers

EX-99.1 2 dex991.htm ICOS CORPORATION CHANGE IN CONTROL SEVERANCE PLAN ICOS Corporation Change in Control Severance Plan

Exhibit 99.1

ICOS CORPORATION

CHANGE IN CONTROL SEVERANCE PLAN

AND

SUMMARY PLAN DESCRIPTION

Plan Effective Date: July 19, 2005

ICOS CORPORATION CHANGE IN CONTROL SEVERANCE PLAN

AND

SUMMARY PLAN DESCRIPTION

ICOS Corporation Change in Control Severance Plan (the “Plan”) provides severance benefits to certain employees (“Covered Employees”) of ICOS Corporation (“ICOS”). The Plan is effective for eligible employees who receive either a Change in Control Severance Agreement or Change in Control Severance Plan Participation Notice (each, an “Agreement”) and who otherwise satisfy the conditions set forth in such Agreement and the provisions of this Plan.

This Plan is designed to be an “employee welfare benefit plan,” as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). This Plan is governed by ERISA and, to the extent applicable, the laws of the State of Washington, without reference to the conflict of law provisions thereof.

This document and your Agreement constitute both the official plan document and the required summary plan description under ERISA.

I. ELIGIBILITY

You will become a Covered Employee in the Plan only: (i) if you are selected by ICOS to be eligible to participate in this Plan; (ii) if you receive an Agreement (the provisions of which are incorporated by reference); and (iii) if you receive a Change in Control Severance Agreement (rather than a Change in Control Severance Plan Participation Notice), you sign the Agreement indicating your agreement to be bound by the terms of this Plan; and you return a copy of the Agreement to ICOS.

If you are a Covered Employee, you shall be eligible for severance benefits at such times and in such amounts as may be specified in your Agreement.

II. BENEFITS

The benefits to which you may become entitled are set forth in your Agreement.

III. OTHER IMPORTANT INFORMATION

Plan Administration. As the Plan Administrator, ICOS has full and sole discretionary authority to administer and interpret the Plan, including discretionary authority to determine eligibility for participation in and for benefits under the Plan, to determine the amount of benefits (if any) payable per participant, and to any terms of this document. All determinations by the Plan Administrator will be final and conclusive upon all persons and be given the maximum possible deference allowed by law. The Plan Administrator is the “named fiduciary” of the Plan for purposes of ERISA and will be subject to the fiduciary standards of ERISA when acting in such capacity. ICOS may delegate in writing to any other person all or a portion of its authority or responsibility with respect to the Plan.

Source of Benefits. The Plan is unfunded, and all severance benefits will be paid from the general assets of ICOS or its successor. No contributions are required under the Plan.

Claims Procedure. If you believe you are incorrectly denied a benefit or are entitled to a greater benefit than the benefit you received under the Plan you may submit a signed, written application to the Vice President of Human Resources. You will be notified in writing of the approval or denial of this claim within ninety (90) days of the date that Vice President of Human Resources, receives the claim, unless special circumstances require an extension of time for processing the claim. In the event an extension is necessary, you will be provided written notice prior to the end of the initial ninety (90) day period indicating the special circumstances requiring the extension and the date by which Vice President of Human Resources, expects to notify you of approval or denial of the claim. In no event will an extension extend beyond ninety (90) days after the end of the initial ninety (90) day period. If your claim is denied, the written notification will state specific reasons for the denial, make specific reference to the Plan provision(s) on which the denial is based, and provide a description of any material or information necessary for you to perfect the claim and why such material or information is necessary. The written notification will also provide a description of the Plan’s review procedures and the applicable time limits, including a statement of your right to bring a civil suit under section 502(a) of ERISA following denial of your claim on review.

You will have sixty (60) days from receipt of the written notification of the denial of your claim to file a signed, written request for a full and fair review of the denial by a review panel which will be a named fiduciary of the Plan for purposes of such review. This request should include the reasons you are requesting a review and may include facts supporting your request and any other relevant comments, documents, records and other information relating to your claim. Upon request and free of charge, you will be provided with reasonable access to, and copies of, all documents, records and other information relevant to your claim, including any document, record or other information that was relied upon in, or submitted, considered or generated in the course of, denying your claim. A final, written determination of your eligibility for benefits shall be made within sixty (60) days of receipt of your request for review, unless special circumstances require an extension of time for processing the claim, in which case you will be provided written notice of the reasons for the delay within the initial sixty (60) day period and the date by which you should expect notification of approval or denial of your claim. This review will take into account all comments, documents, records and other information submitted by you relating to your claim, whether or not submitted or considered in the initial review of your claim. In no event will an extension extend beyond sixty (60) days after the end of the initial sixty (60) day period. If an extension is required because you fail to submit information that is necessary to decide your claim, the period for making the benefit determination on review will be tolled from the date the notice of extension is sent to you until the date on which you respond to the request for additional information. If your claim is denied on review, the written notification will state specific reasons for the denial, make specific reference to the Plan provision(s) on which the denial is based and state that you are entitled to receive upon request, and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to your claim, including any document, record or other information that was relied upon in, or submitted, considered or generated in the course of, denying your claim. The written notification will also include a statement of your right to bring an action under section 502(a) of ERISA.

If your claim is initially denied or is denied upon review, you are entitled to receive upon request, and free of charge, reasonable access to, and copies of, any document, record or other information that demonstrates that (1) your claim was denied in accordance with the terms of the Plan, and (2) the provisions of the Plan have been consistently applied to similarly situated Plan participants, if any. In pursuing any of your rights set forth in this section, your authorized representative may act on your behalf.

If you do not receive notice within the time periods described above, whether on initial determination or review, you may initiate a lawsuit under Section 502(a) of ERISA.

Prior Plans Superseded. With the exception of individual employment agreements that are in effect as of the Plan Effective Date, the Plan supersedes any and all prior separation, change in control, severance and salary continuation arrangements, programs and plans that may previously have been offered by ICOS to employees eligible to participate in this Plan.

Plan Amendment or Termination. ICOS reserves the right to terminate or amend the Plan at any time, in whole or in part, and in any manner, and for any reason. Any termination or amendment of the Plan will be effective only after two years advance written notice to Covered Employees if such amendment or termination would result in a reduction of benefits that Covered Employees would have otherwise been able to receive under the pre-amended Plan.

At-Will Employment. No provision of the Plan is intended to provide you with any right to continue as an employee with ICOS, or in any other capacity, for any specific period of time, or otherwise affect the right of ICOS to terminate the employment or service of any individual at any time for any reason, with or without cause.

Section 409A of the Internal Revenue Code. This Plan is intended to provide severance benefits under ERISA. The Plan is not intended to constitute a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Internal Revenue Code. Notwithstanding the foregoing, in the event this Plan or any benefit paid under this Plan to a Covered Employee is deemed to be subject to Section 409A of the Internal Revenue Code, each Covered Employee consents to ICOS adoption of such conforming amendments as the Legal Department of ICOS deems advisable or necessary, in its sole discretion, to comply with Section 409A of the Internal Revenue Code (including without limitation delaying the timing of payments), without reducing the amounts of any benefits due to Covered Employee hereunder (excluding for this purpose any decrease in the present value of the benefits).

Indemnification. ICOS agrees to indemnify its officers and employees and the members of the Board of Directors of ICOS Corporation from all liabilities from their acts or omissions in connection with the administration, amendment or termination of the Plan, to the maximum extent permitted by applicable law.

Severability. If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced as if such provision had not been included.

Headings. Headings in this Plan document are for purposes of reference only and will not limit or otherwise affect the meaning hereof.

IV. STATEMENT OF ERISA RIGHTS

As a participant in the Plan you are entitled to certain rights and protections under ERISA. ERISA provides that all plan participants shall be entitled to:

Receive Information About Your Plan and Benefits

Examine, without charge, at the plan administrator’s office and at other specified locations, such as work sites, all documents governing the plan.

Obtain, upon written request to the plan administrator, copies of documents governing the operation of the plan. The administrator may make a reasonable charge for the copies.

Prudent Actions by Plan Fiduciaries

In addition to creating rights for plan participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your plan, called “fiduciaries” of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.

Enforce Your Rights

If your claim for a welfare benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of plan documents and do not receive it within 30 days, you may file suit in a Federal court. In such a case, the court may require the plan administrator to provide the materials and pay you up to $110.00 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court. If you are discriminated against for asserting your rights, you may seek assistance form the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

Assistance With Your Questions

If you have any questions about your plan, you should contact the plan administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the plan administrator, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

ADDITIONAL PLAN INFORMATION


Name of Plan:		ICOS Corporation Change in Control Severance Plan

ICOS Sponsoring Plan:		ICOS Corporation 22021 - 20th Avenue S.E. Bothell, WA 98021

Employer Identification Number:		91-1463450

Plan Number:		507

Plan Year:		Calendar Year

Plan Administrator:		ICOS Corporation c/o General Counsel 22021 - 20th Avenue S.E. Bothell, WA 98021 Telephone No. 425-485-1900

Agent for Service of Legal Process:		Plan Administrator, at the above address

Type of Plan:		Employee Welfare Benefit Plan providing for severance benefits

Plan Costs:		The cost of the Plan is paid by ICOS Corporation

Type of Administration:		Self-administration by the Plan Administrator

EX-99.2 3 dex992.htm CHANGE IN CONTROL SEVERANCE AGREEMENT -- CHIEF EXECUTIVE OFFICER Change in Control Severance Agreement -- Chief Executive Officer

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;

(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

(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.

(i)

A conviction of an Employee for a felony crime or the failure of an Employee to contest prosecution for a felony crime;

(ii)

An Employee’s misconduct, fraud or dishonesty that causes material harm or damage to the Company; or

(iii)

Any unauthorized use or disclosure of confidential information or trade secrets by an Employee.

(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):

(i)

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

that is similar to the position held immediately prior to the Change in Control shall constitute a material and substantial diminution in job responsibilities.

(ii)

Has incurred one or more reductions in his or her “total compensation” which is defined as follows:

(A) any reduction in base salary or

(B) any reduction in the target annual bonus percentage of base salary; or

(iii)

Has been notified that his or her principal place of work will be relocated by a distance of 35 miles or more; or

(iv)

a material breach by the Company or by its successor entity of its obligations to Employee under the Plan or this Agreement.

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:

(i)

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

(ii)

The Company terminates the Employee’s employment for any reason other than Just Cause, death or Total Disability.

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

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 Section 2 (whether by seeking new employment or in any other manner) and (ii) no payment shall be reduced by earnings that the Employee may receive from any other source.

(d) Conditions. All payments and benefits provided under this Section 2 are conditioned on the Employee’s continuing compliance with the Plan, this Agreement and the Employee’s execution (and effectiveness) of a release of claims and covenant not to sue substantially in the form provided in Exhibit A upon termination of employment. There is no entitlement to any payments or benefits unless and until such release of claims and covenant not to sue is effective.

3. Tax Effect of Payments.

affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of the Plan and this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties, are collectively referred to as the “Excise Tax”), then the Company will make an additional payment to Executive (the “Gross-Up Payment”) in an amount sufficient to cover (1) any Excise Taxes, (2) all taxes on the Gross-Up Payment, and (3) all interest and/or penalties imposed with respect to such taxes. If the Employee receives a Severance Payment under Section 2(a) and/or receives group health continuation coverage under Section 2(b), then Item 9 (“Gross-Up Payment for Golden Parachute Taxes”) of the Employment Agreement shall not be applicable.

(b) Determination by Auditors. All mathematical determinations and all determinations of whether any of the Total Payments are “parachute payments” (within the meaning of section 280G of the Code) that are required to be made under this Section 3, shall be made by the independent auditors retained by the Company most recently prior to the Change in Control (the “Auditors”), who shall provide their determination (the “Determination”), together with detailed supporting calculations, both to the Company and to the Employee within seven (7) business days of the Employee’s termination date, if applicable, or such earlier time as is requested by the Company or by the Employee. If applicable, the Auditors shall furnish the Employee with a written statement that such Auditors have concluded that no Excise Tax is payable (including the reasons therefor) and that the Employee has substantial authority not to report any Excise Tax on the Employee’s federal income tax return. Any Determination by the Auditors shall be binding upon the Company and the Employee, absent manifest error. The Company shall pay the fees and costs of the Auditors. If the Auditors do not agree to perform the tasks contemplated by this Section 3, then the Company shall promptly select another qualified accounting firm to perform such tasks.

4. Successors.

(a) Company’s Successors. Any successor (whether direct or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets, shall be obligated to perform this Agreement in the same manner and to the same extent as the Company would be required to perform it in the absence of a succession.

(b) Employee’s Successors. This Agreement and all rights of the Employee hereunder shall inure to the benefit of, and be enforceable by, the Employee’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

5. Miscellaneous Provisions.

(a) Notice. Notices and all other communications contemplated by this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of the Employee, mailed notices shall be addressed to him or her at the home address which he or she most recently communicated to the Company in writing. In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its Secretary.

(b) Waiver. No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and by an authorized officer of the Company (other than the Employee). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

(c) Whole Agreement. Except as expressly provided herein, this Agreement and the Plan contain all the legally binding understandings and agreements between the Employee and the Company pertaining to the subject matter thereof and supersedes all such agreements, whether oral or in writing, previously entered into between the parties. In the event of any conflict in terms between this Agreement (or the Plan) and the Employment Agreement, the terms of this Agreement (or the Plan) shall prevail and govern.

(d) Withholding Taxes. All payments made under this Agreement shall be subject to reduction to reflect taxes required to be withheld by law.

(e) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Washington without regard to the conflicts of laws principles thereof.

(f) Severability. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

(g) No Assignment. The rights of Employee to payments or benefits under this Agreement shall not be made subject to option or assignment, either by voluntary or involuntary assignment or by operation of law, including (without limitation) bankruptcy, garnishment, attachment or other creditor’s process, and any action in violation of this Subsection (h) shall be void.

(h) Nondisparagement. As of the Effective Date and thereafter, the Employee agrees that he/she will not disparage the Company or its directors, officers, employees, affiliates, subsidiaries, predecessors, successors or assigns in any written or oral communications to any third party. The Employee further agrees that he/she will not direct anyone to make any disparaging oral or written remarks to any third parties.

(i) Nonsolicit. During the Employee’s employment with Company and for 24 months after Employee’s termination of employment, the Employee shall not, directly or indirectly, either as an individual or as an employee, agent, consultant, advisor, independent contractor, general partner, officer, director, stockholder, investor, lender, or in any other capacity whatsoever, of any person, firm, corporation or partnership: (i) induce or attempt to induce any person who at the time of such inducement is an employee of Company to perform work or service for any other person or entity other than Company or (ii) participate or engage in the design, development, manufacture, production, marketing, sale or servicing of any product, or the provision of any service, that directly or indirectly relates to Company business.

(j) Nondisclosure. Notwithstanding any requirement that the Company may have to publicly disclose the terms of the Plan or this Agreement pursuant to applicable law or regulations, the Employee agrees to use reasonable efforts to maintain in confidence the existence of the Plan and this Agreement, the contents and terms of the Plan or this Agreement, and the consideration for this Agreement (hereinafter collectively referred to as “Agreement Information”). The Employee also agrees to take every reasonable precaution to prevent disclosure of any Agreement Information to third parties, except for disclosures required by law or absolutely necessary with respect to Employee’s family members or personal advisors who shall also agree to maintain confidentiality of the Agreement Information.

(k) Section 409A. The Plan and this Agreement are intended to provide severance benefits under ERISA. The Plan is not intended to constitute a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Internal Revenue Code. Notwithstanding the foregoing, in the event the Plan or this Agreement or any benefit paid under this Agreement to Employee is deemed to be subject to Section 409A of the Internal Revenue Code, the Employee consents to the Company’s adoption of such conforming amendments as the Legal Department of the Company deems advisable or necessary, in its sole discretion, to comply with Section 409A of the Internal Revenue Code (including without limit delaying the timing of payments), without reducing the amounts of any benefits due to Employee hereunder (excluding for this purpose any decrease in the present value of the benefits).

6. Term of Agreement. This Agreement shall continue in effect until the Company shall have given Employee two years advance written notice of an amendment or cancellation that would reduce the benefits that Employee would otherwise receive under the pre-amended Agreement. In addition, such pre-amended version of this Agreement shall continue in effect for a period of two years after a Change in Control, if such Change in Control shall have occurred prior to the effectiveness of an amendment or cancellation. Except as provided in the next paragraph, this Agreement shall terminate if Employee’s employment is terminated prior to a Change in Control. Termination of the Plan or this Agreement shall not absolve the Company of its duty to continue satisfying its obligations under Section 2 if such obligations arose on or before the effective date of the Plan and Agreement’s termination.

This Agreement shall remain effective if, in connection with an impending Change in Control that is actually consummated, the Company terminates the Employee’s employment for any reason other than Just Cause, death or Total Disability or the Employee resigns his/her employment because of an event that would constitute Good Reason. The Company’s Board of Directors shall determine in good faith whether such a termination or resignation is occurring in connection with an impending Change in Control. However, such a termination or resignation shall in any event be deemed to be in connection with an impending Change in Control if such termination or resignation (i) is required by the merger agreement or other instrument relating to such Change in Control or (ii) is made at the express request of the other party (or parties) to the transaction constituting such Change in Control.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

EMPLOYEE:

Paul N. Clark

ICOS CORPORATION:

By:

As Its:

EXHIBIT A

Form of Release of Claims and Covenant Not To Sue

In consideration of the payments and other benefits that ICOS Corporation, a Delaware corporation (the “Company”), is providing to Paul N. Clark (“Employee”) under the Change in Control Severance Agreement entered into by and between Employee and the Company, dated July 19, 2005, the Employee, on his/her own behalf and on behalf of Employee’s representatives, agents, heirs and assigns, waives, releases, discharges and promises never to assert any and all claims, demands, actions, costs, rights, liabilities, damages or obligations of every kind and nature, whether known or unknown, suspected or unsuspected that Employee ever had, now have or might have as of the date of Employee’s termination of employment with the Company against the Company or its predecessors, parent, affiliates, subsidiaries, stockholders, owners, directors, officers, employees, agents, attorneys, insurers, successors, or assigns (including all such persons or entities that have a current and/or former relationship with the Company) for any claims arising from or related to Employee’s employment with the Company, its parent or any of its affiliates and subsidiaries and the termination of that employment.

These released claims also specifically include, but are not limited to, any claims arising under any federal, state and local statutory or common law, such as (as amended and as applicable) Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans With Disabilities Act, the Employee Retirement Income Security Act, the Family Medical Leave Act, the Equal Pay Act, the Fair Labor Standards Act, the Industrial Welfare Commission’s Orders, and any other federal, state or local constitution, law, regulation or ordinance governing the terms and conditions of employment or the termination of employment, and the law of contract and tort and any claim for attorneys’ fees.

Furthermore, the Employee acknowledges that this waiver and release is knowing and voluntary and that the consideration given for this waiver and release is in addition to anything of value to which Employee was already entitled. Employee acknowledges that there may exist facts or claims in addition to or different from those which are now known or believed by Employee to exist. Nonetheless, this Agreement extends to all claims of every nature and kind whatsoever, whether known or unknown, suspected or unsuspected, past or present. With respect to the claims released in the preceding sentences, the Employee will not initiate or maintain any legal or administrative action or proceeding of any kind against the Company or its predecessors, parent, affiliates, subsidiaries, stockholders, owners, directors, officers, employees, agents, successors, or assigns (including all such persons or entities that have a current or former relationship with the Company), for the purpose of obtaining any personal relief, nor assist or participate in any such proceedings, including any proceedings brought by any third parties (except as otherwise required or permitted by law). The Employee further acknowledges that he/she has been advised by this writing that:

•

he/she should consult with an attorney prior to executing this release;

•

he/she has at least twenty-one (21) days within which to consider this release;

•

he/she has up to seven (7) days following the execution of this release by the parties to revoke the release; and

•

this release shall not be effective until such seven (7) day revocation period has expired.

Employee agrees that the release set forth above shall be and remain in effect in all respects as a complete general release as to the matters released.

EMPLOYEE

Paul N. Clark

Date:

EX-99.3 4 dex993.htm CHANGE IN CONTROL SEVERANCE AGREEMENT -- OTHER EXECUTIVE OFFICERS Change in Control Severance Agreement -- Other Executive Officers

Exhibit 99.3

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 (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:

(ii) The sale, transfer or other disposition of all or substantially all of the Company’s assets;

(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

(v) A complete liquidation or dissolution of the Company.

(b) Just Cause. “Just Cause” means any one or more of the following:

(i)

A conviction of an Employee for a felony crime or the failure of an Employee to contest prosecution for a felony crime;

(ii)

An Employee’s misconduct, fraud or dishonesty that causes material harm or damage to the Company; or

(iii)

Any unauthorized use or disclosure of confidential information or trade secrets by an Employee.

(c) 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.

(d) 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):

(i)

(ii)

Has incurred one or more reductions in his or her “total compensation” which is defined as follows:

(A)

any reduction in base salary or

(B)

any reduction in the target annual bonus percentage of base salary; or

(iii)

Has been notified that his or her principal place of work will be relocated by a distance of 35 miles or more; or

(iv)

a material breach by the Company or by its successor entity of its obligations to Employee under the Plan or this Agreement.

2. Severance.

(i)

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(d); or

(ii)

The Company terminates the Employee’s employment for any reason other than Just Cause, death or Total Disability.

For all purposes under this Agreement, the amount of the Severance Payment shall be equal to two 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.

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 24 months.

(c) Mitigation. This Agreement is intended to represent Employee’s sole entitlement to cash severance payments and health coverage benefits in connection with the termination of his/her employment. To the extent Employee receives cash severance and/or health coverage benefits under 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 Section 2 (whether by seeking new employment or in any other manner) and (ii) no payment shall be reduced by earnings that the Employee may receive from any other source.

3. Tax Effect of Payments.

(a) Excise Taxes. In the event that it is determined that any payment or distribution of any type to or for the benefit of the Employee made by the Company, by any of its affiliates, by any person who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company’s assets (within the meaning of section 280G of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “Code”)) or by any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of the Plan and this Agreement or otherwise (the “Total Payments”), would be subject to the excise tax imposed by section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties, are collectively referred to as the “Excise Tax”), then such payments or distributions shall be payable either in (x) full or (y) as to such lesser amount which would result in no portion of such payments or distributions being subject to the Excise Tax and the Employee shall receive the greater, on an after-tax basis, of (x) or (y) above.

reasons therefor) and that the Employee has substantial authority not to report any Excise Tax on the Employee’s federal income tax return. Any Determination by the Auditors shall be binding upon the Company and the Employee, absent manifest error. The Company shall pay the fees and costs of the Auditors. If the Auditors do not agree to perform the tasks contemplated by this Section 3, then the Company shall promptly select another qualified accounting firm to perform such tasks.

4. Successors.

5. Miscellaneous Provisions.

(c) Whole Agreement. This Agreement and the Plan contain all the legally binding understandings and agreements between the Employee and the Company pertaining to the subject matter thereof and supersedes all such agreements, whether oral or in writing, previously entered into between the parties.

(d) Withholding Taxes. All payments made under this Agreement shall be subject to reduction to reflect taxes required to be withheld by law.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.


EMPLOYEE:



ICOS CORPORATION:


By:		Paul N. Clark
As Its:		Chairman, President and CEO

EXHIBIT A

Form of Release of Claims and Covenant Not To Sue

In consideration of the payments and other benefits that ICOS Corporation, a Delaware corporation (the “Company”), is providing to (“Employee”) under the Change in Control Severance Agreement entered into by and between Employee and the Company, dated July 19, 2005, the Employee, on his/her own behalf and on behalf of Employee’s representatives, agents, heirs and assigns, waives, releases, discharges and promises never to assert any and all claims, demands, actions, costs, rights, liabilities, damages or obligations of every kind and nature, whether known or unknown, suspected or unsuspected that Employee ever had, now have or might have as of the date of Employee’s termination of employment with the Company against the Company or its predecessors, parent, affiliates, subsidiaries, stockholders, owners, directors, officers, employees, agents, attorneys, insurers, successors, or assigns (including all such persons or entities that have a current and/or former relationship with the Company) for any claims arising from or related to Employee’s employment with the Company, its parent or any of its affiliates and subsidiaries and the termination of that employment.

•

he/she should consult with an attorney prior to executing this release;

•

he/she has at least twenty-one (21) days within which to consider this release;

•

he/she has up to seven (7) days following the execution of this release by the parties to revoke the release; and

•

this release shall not be effective until such seven (7) day revocation period has expired.

Employee agrees that the release set forth above shall be and remain in effect in all respects as a complete general release as to the matters released.

EMPLOYEE

Date:

EX-99.4 5 dex994.htm FORM OF RESTRICTED STOCK GRANT AGREEMENT -- EXECUTIVE OFFICERS Form of Restricted Stock Grant Agreement -- Executive Officers

Exhibit 99.4

ICOS CORPORATION

1999 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK GRANT AGREEMENT

ICOS Corporation, a Delaware corporation (the “Company”), hereby awards shares of Common Stock to the Participant named below. The terms and conditions of the Award are set forth in this cover sheet, in the attached Restricted Stock Grant Agreement and in the ICOS Corporation 1999 Long-Term Incentive Plan (the “Plan”).

Date of Award:

Name of Participant:

Participant’s Social Security Number:

Number of Shares of Common Stock Awarded:

Amount Paid by Participant for the Shares of Common Stock Awarded:

Aggregate Fair Market Value of Common Stock on Date of Award:

By signing this cover sheet, you agree to all of the terms and conditions described in the attached Restricted Stock Grant Agreement and in the Plan. You are also acknowledging receipt of this Agreement and copies of the Plan and the Plan’s Prospectus.



Participant:
		(Signature)

Company:
		(Signature)
Title:

Attachment

ICOS CORPORATION

1999 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK GRANT AGREEMENT


The Plan and Other Agreements		The text of the Plan is incorporated in this Agreement by this reference. You and the Company agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Agreement. Unless otherwise defined in this Agreement, certain capitalized terms used in this Agreement are defined in the Plan. This Agreement, the attached Exhibits and the Plan constitute the entire understanding between you and the Company regarding this Award of Common Stock. Any prior agreements, commitments or negotiations are superseded.

Award of Common Stock		ICOS Corporation awards you the number of shares of Common Stock shown on the cover sheet of this Agreement. The Award is subject to the terms and conditions of this Agreement and the Plan. This Award is not intended to constitute a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, and will be interpreted accordingly.

Vesting		As long as you render continuous Service to the Company (or its Parent, Subsidiary or Affiliate), you will become vested as to 100% of the total number of shares of Common Stock awarded, as shown above on the cover sheet, on the [fourth][fifth] anniversary of the Date of Award. In addition, the total number of shares of Common Stock awarded shall become fully vested if, within twenty-four months after a Change in Control, your Service is terminated (i) without Cause by the Company or (ii) by you for Good Reason. Except as provided in the preceding sentence, in the event that your Service ceases prior to the [fourth][fifth] anniversary of the Date of Award, you will forfeit to the Company all of the unvested Common Stock subject to this Award. The Company will make a pro-rated cash payment to you that reimburses you, without interest or appreciation, for the amount, if any, that you previously paid to the Company (as shown on the cover sheet of this Agreement) with respect to purchasing such unvested shares of Common Stock.

Escrow		The certificates for the Common Stock shall be deposited in escrow with the Secretary of the Company to be held in accordance with the provisions of this paragraph. Each deposited certificate shall be accompanied by a duly executed Assignment Separate from Certificate in the form attached hereto as Exhibit A. The deposited certificates, shall remain in escrow until such time as the certificates are to be released or otherwise surrendered for


		cancellation as discussed below. Upon delivery of the certificates to the Company, you shall be issued an instrument of deposit acknowledging the number of shares of Common Stock delivered in escrow to the Secretary of the Company. All regular cash dividends on the unvested Common Stock shall be paid directly to you and shall not be held in escrow. If any dividend or distribution on the unvested Common Stock is paid in shares of Common Stock, such dividend or distribution shares will have the same conditions as your unvested shares of Common Stock. In addition, any securities that you may receive in connection with the exercise of rights under the Company’s Rights Agreement, dated August 9, 2002, with Mellon Investor Services LLC as Rights Agent (or any such successor agreement) will also have the same conditions as your unvested shares of Common Stock. The unvested Common Stock held in escrow hereunder shall be subject to the following terms and conditions relating to their release from escrow or their surrender to the Company: • When your interest in the Common Stock vests as described above, the certificate(s) for such vested Common Stock shall be released from escrow and delivered to you within thirty (30) days following the vesting date of such shares. • Upon termination of your Service, any unvested Common Stock shall be surrendered to the Company.

Code Section 83(b) Election		Under Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), the Fair Market Value of the Common Stock on the date any forfeiture restrictions applicable to such Common Stock lapse will be reportable as ordinary income at that time. For this purpose, “forfeiture restrictions” include surrender to the Company of unvested Common Stock as described above. You may elect to be taxed at the time the Common Stock is acquired to the extent that the Fair Market Value of the Common Stock exceeds the amount of consideration paid by you (if any) for such Common Stock at that time rather than when such Common Stock ceases to be subject to such forfeiture restrictions, by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days after the Date of Award. The form for making this election is attached as Exhibit B hereto. Failure to make this filing within the thirty (30) day period will result in the recognition of ordinary income by you (in the event the Fair Market Value of the Common Stock increases after the date of purchase) as the forfeiture restrictions lapse. YOU ACKNOWLEDGE THAT IT IS YOUR SOLE RESPONSIBILITY, AND NOT THE COMPANY’S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF YOU REQUEST THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON YOUR BEHALF. YOU ARE RELYING


		SOLELY ON YOUR OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER OR NOT TO FILE A CODE SECTION 83(b) ELECTION.

Leaves of Absence		For purposes of this Agreement, while you are a common-law employee, your Service does not terminate when you go on a bona fide leave of absence that was approved by the Company (or its Parent, Subsidiary or Affiliate) in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. Your Service terminates in any event when the approved leave ends, unless you immediately return to active work. The Company determines which leaves count for this purpose, and when your Service terminates for all purposes under the Plan.

Voting and Other Rights		Subject to the terms of this Agreement, you shall have all the rights and privileges of a stockholder of the Company while the Common Stock is held in escrow, including the right to vote and to receive dividends (if any).

Restrictions on Issuance		The Company will not issue any Common Stock or Shares if the issuance of such Common Stock or Shares at that time would violate any law or regulation.

Withholding Taxes		The release of the Common Stock from escrow will not be allowed unless you make acceptable arrangements to pay any withholding or other taxes that may be due.

Restrictions on Resale		By signing this Agreement, you agree not to sell any Common Stock prior to its vesting or sell any Shares acquired under this Award at a time when applicable laws, regulations or Company or underwriter trading policies prohibit sale. If the sale of Shares acquired under this Award is not registered under the Securities Act, but an exemption is available which requires an investment or other representation and warranty, you shall represent and agree that the Shares being acquired are being acquired for investment, and not with a view to the sale or distribution thereof, and shall make such other representations and warranties as are deemed necessary or appropriate by the Company and its counsel.

No Retention Rights		This Agreement is not an employment agreement and does not give you the right to be retained by the Company (or its Parent, Subsidiaries or Affiliates). The Company (or its Parent, Subsidiaries or Affiliates) reserves the right to terminate your Service at any time and for any reason.

Adjustments		In the event of a stock split, a stock dividend or a similar change in the Company stock, the number of Shares covered by this Award may be adjusted (and rounded down to the nearest whole number) pursuant to the Plan.


Legends		All certificates representing the Common Stock issued under this Award may, where applicable, have endorsed thereon the following legend and any other legend the Company determines appropriate: “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE.”

Applicable Law		This Agreement will be interpreted and enforced under the laws of the State of Washington.

By signing the cover sheet of this Agreement, you agree to all of the terms and conditions described above and in the Plan.

EXHIBIT A

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED and pursuant to that certain Restricted Stock Grant Agreement dated as of , the undersigned hereby sells, assigns and transfers unto ICOS Corporation (the “Corporation”) shares of the Common Stock of ICOS Corporation, a Delaware corporation, standing in the undersigned’s name on the books of said Corporation represented by certificate No. , herewith, and does hereby irrevocably constitute and appoint the Secretary of the Corporation attorney-in-fact to transfer the said stock on the books of the said Corporation with full power of substitution in the premises.


Dated:

		[NAME]

A-1

EXHIBIT B

ELECTION UNDER SECTION 83(b) OF

THE INTERNAL REVENUE CODE

The undersigned hereby makes an election pursuant to Section 83(b) of the Internal Revenue Code with respect to the property described below and supplies the following information in accordance with the regulations promulgated thereunder:

1.	The name, address and social security number of the undersigned:









Social Security No. :

2.	Description of property with respect to which the election is being made:

shares of common stock of ICOS Corporation (the “Company”).

3.	The date on which the property was transferred is , [YEAR].

4.	The taxable year to which this election relates is calendar year [YEAR].

5.	Nature of restrictions to which the property is subject:

The shares of stock are subject to the provisions of a Restricted Stock Grant Agreement (the “Agreement”) between the undersigned and the Company. The shares of stock are subject to forfeiture under the terms of the Agreement.

6.	The fair market value of the property at the time of transfer (determined without regard to any lapse restriction) was $ per share, [for a total of $ .]

7.	The amount paid by taxpayer for the property was $ .

8.	A copy of this statement has been furnished to the Company.

Dated: , [YEAR].



		[Taxpayer’s Name]

B-1

-----END PRIVACY-ENHANCED MESSAGE-----