Sample Business Contracts


Severance Agreement - Incyte Genomics Inc. and Michael D. Lack



July 25, 2002



Michael D. Lack
PO Box 9876
Rancho Santa Fe, CA 92067


Dear Mike:

         This will confirm our agreement regarding your termination of
employment with Incyte Genomics, Inc. (the "Company") on January 1, 2003 (the
"Termination Date").

         For purposes of the Amended and Restated Employment Agreement between
you and the Company dated as of November 26, 2002, as amended by agreement
effective as of July 24, 2002 (the "Employment Agreement"), your termination
will be treated as a termination by the Company during the Employment Period for
Good Reason, as such terms are defined in the Employment Agreement. Accordingly,
the Company's obligations to you will be as set forth in Section 3(b) of the
Employment Agreement, as modified and restated herein, and you shall have no
further rights under the Employment Agreement, and the Company shall have no
further obligation to you, except as expressly provided herein.

         As of June 14, 2002, your position as Executive Vice President and
Chief Operating Officer was terminated. However, thereafter, your employment
will continue until the Termination Date, during which period you will be
required to perform services on a part time basis as requested by the Company.
The Company will continue to pay you at the rate of $30,416.66 per month through
August 31, 2002, and at the rate of $1,000 per month from September 1, 2002
through the Termination Date. You will not continue to accrue vacation or other
paid time off during the period from September 1, 2002 through the Termination
Date.

         Upon the Termination Date, you will be entitled to the following:

(1) Within thirty days of your Termination Date, you will be paid a cash lump
sum equal to the sum of (a) your base salary earned through the Termination
Date, to the extent not

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Michael D. Lack
July 25, 2002
Page 2


already paid, plus (b) $103,333.33 (which represents 8/12 of your target bonus
of $155,000 for the fiscal year ended December 31, 2001, under the Company's
management bonus plan) minus the portion of your target bonus for the current
fiscal year paid to you before the Termination Date, plus (c) the amount of your
accrued vacation or other paid time off as of the Termination Date.

(2) Within thirty days of your Termination Date, you will also be paid a cash
lump sum equal to the sum of your annual base salary ($365,000), plus the amount
of your bonus for the fiscal year ending 12/31/01 under the Company's management
bonus plan ($240,289.68), minus the sum of $4,000.

(3) The Company will reimburse you for the cost of disability insurance coverage
obtained by you, at the levels in effect under the Company's plan at the
Termination Date, for eight months following the Termination Date. In addition,
the Company will reimburse you for the cost of continued coverage for you and
your family under COBRA (including medical, prescription, dental, vision) for
eight months following termination of your coverage on the Termination Date,
provided you elect to continue such coverage in accordance with the applicable
procedures. The Company will also continue your employee life and group life
insurance, as in effect on the Termination Date, for eight months following the
Termination Date. The benefits described in this paragraph (3) shall be
secondary to those provided under any other employer provided plans for which
you may become eligible, and shall fulfill the Company's obligation to provide
continued welfare benefits to you and your family following termination of
employment pursuant to the Employment Agreement.

(4) Subject to paragraph (8) below, on the Termination Date, you will become
fully vested in your stock options granted under the Company's 1991 Stock Plan.
As a result, unless earlier exercised, you will have vested options to acquire
412,000 shares of common stock of the Company, which will remain exercisable
through January 1, 2004. You will continue to be subject to any applicable
trading restrictions under Company policy and Federal and state law.

(5) Subject to paragraph (8) below, on the Termination Date, you will become
vested in 40,000 (i.e. 50%) of your restricted stock units granted under the
Company's 1991 Stock Plan. Payment will be made within thirty days of the
Termination Date, in accordance with and subject to the provisions of your
restricted stock unit award (which may result in deferral pending applicable
trading window periods).

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Michael D. Lack
July 25, 2002
Page 3


(6) The Company will provide you with outplacement services for twelve months
following the Termination Date from a provider to be selected by you. A list of
three national outplacement firms is attached as Schedule A hereto for your
reference, although you are not obligated to select from this list.

(7) Your participation in the Company's 401(k) Plan will terminate upon your
termination of employment on the Termination Date. Your benefits under the
401(k) plans will be determined in accordance with the provisions of that plan,
and you will receive further information on those benefits following the
Termination Date.

(8)  Release.

         You agree and acknowledge that (i) the benefits to be provided to you
upon the Termination Date pursuant to paragraphs (4) and (5) of this Agreement
exceed the benefits to which you would otherwise have been entitled under the
Employment Agreement, (ii) such benefits are expressly conditioned upon your
execution of a release, within 21 days following the Termination Date, in the
following form, and (iii) the Company's obligation to provide such benefits
shall not become effective until 7 days after the date of your execution and
delivery of such release (the "Release Effective Date"):

                   "In consideration of the additional benefits to be provided
         to Michael D. Lack (the "Executive") pursuant to paragraphs (4) and (5)
         of the letter agreement between Executive and Incyte Genomics, Inc.
         (the "Company") dated as of July 25, 2002 (the "Agreement"), the
         sufficiency of which Executive acknowledges, Executive, on behalf of
         himself, his family members and his and their heirs and successors,
         assigns, attorneys and agents, hereby releases and forever discharges
         the Company, as well as its officers, attorneys, directors, employees,
         stockholders and agents, and their successors and assigns, and its
         employee pension benefit or welfare benefit plans and current and
         former trustees and administrators of such plans (collectively "Company
         Releasees") from any and all claims, contracts, liabilities, damages,
         expenses and causes of action, whether in law or in equity, known or
         unknown, which may have existed or which may now exist from the
         beginning of time to the Release Effective Date against one or more of
         the Company Releasees (collectively "Executive Claims"), to the extent
         such Executive Claims relate in any way directly or indirectly, in
         whole or in part to: the termination of Executive's position as
         Executive Vice President and Chief Operating Officer pursuant to the
         Agreement, the fact that Executive is or was an employee, officer,
         stockholder or agent of the Company; any services performed

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Michael D. Lack
July 25, 2002
Page 4


         by Executive for the Company; Executive's employment or non-employment
         by the Company; any alleged harassment or disparagement suffered by
         Executive during his employment at the Company; any status, term or
         condition of such employment; any physical or mental harm or distress
         arising from such termination, employment or non-employment; any claims
         based upon federal, state or local laws prohibiting employment
         discrimination, including but not limited to claims of discrimination
         under the Fair Employment and Housing Act, Title VII of the 1964 Civil
         Rights Act, the Civil Rights Act of 1991, the Americans with
         Disabilities Act of 1990, the Rehabilitation Act of 1973, the Family
         and Medical Leave Act of 1993, or the Employee Retirement Income
         Security Act of 1974; breach of contract or any other legal basis. This
         release also includes release of any claims for age discrimination
         under the Age Discrimination in Employment Act, as amended ("ADEA").
         The ADEA requires that Executive be advised to consult with an attorney
         before Executive waives any claim under the ADEA. In addition, the ADEA
         provides Executive with at least 21 days to decide whether to waive
         claims under the ADEA and seven days after Executive signs this release
         to revoke that waiver.

                  Executive understands that various federal, state and local
         laws prohibit age, sex, national origin, race and other forms of
         employment discrimination and that these laws are enforced through the
         U.S. Equal Employment Opportunity Commission, and similar state and
         local agencies. Executive understands that if he believed that his
         treatment by the Company had violated any of these laws, he could
         consult with these agencies and file a charge with them. Instead,
         Executive has voluntarily decided to accept the Company's offer in the
         Agreement and to waive and release any and all claims he may have under
         such laws.

                  Nothing under in this release shall affect the Company's
         obligations under the Agreement, the Amended and Restated Employment
         Agreement between the parties effective as of November 26, 2001 (as
         modified by and restated in the Agreement), the Confidential
         Information Agreement between the parties, or the stock option and
         restricted stock unit agreements between the parties.

                  Executive expressly waives and relinquishes any and all rights
         that such party may have under Section 1542 of the California Civil
         Code, which reads as follows:

                  A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
                  DOES NOT KNOW OR SUSPECT TO EXIST IN HIS

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Michael D. Lack
July 25, 2002
Page 5


                  FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY
                  HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
                  DEBTOR."

                          _____________________________

         All of your benefits will be subject to applicable withholding taxes.

         In addition, as provided in Section 7(d) of the Employment Agreement,
your termination of employment shall have no effect on the continuing operation
of Section 7 of that agreement.

Please confirm your agreement with the foregoing by signing and dating the
enclosed duplicate copy of this letter and returning it to me.

                                    Sincerely,


                                   /s/ Paul A. Friedman
                                  ---------------------
                                  Paul A. Friedman
                                  (Name)
                                  Chief Executive Officer
                                  (Title)

ACCEPTED AND AGREED:

/s/ Michael D. Lack
------------------------------------
          Michael D. Lack


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