Exhibit 10.1
(OSI LOGO) [y12158y1215800.gif]
August 21, 2005
David R. Guyer, M.D.
Dear David:
     This letter is to confirm our understanding with respect to your continued
employment with (OSI) Eyetech, Inc., formerly known as Eyetech Pharmaceuticals,
Inc. (the “Company”), following the consummation of the merger described in the
Agreement and Plan of Merger (“Merger Agreement”) among OSI Pharmaceuticals,
Inc. (the “Parent”), Merger Sub and Eyetech Pharmaceuticals, Inc., and your
future employment with Parent. If the Merger Agreement is terminated in
accordance with its terms, this Agreement shall immediately terminate. You
acknowledge and understand that upon the consummation of the merger, the Company
will be a wholly-owned subsidiary of Parent.
     1. Employment. The Company will continue to employ you, and you agree to
continue to be employed by the Company, in your current position as Chief
Executive Officer. In addition, you agree to serve as an Executive Vice
President of Parent. At a mutually agreeable time, you and Parent will discuss a
transition to an arrangement whereby you become a consultant to Parent and a
member of the Board of Directors of Parent (the “Board”) rather than an employee
as described herein.
     2. Compensation.
     (a) Base Salary. The Company will continue to pay you as your compensation
for your services and agreements hereunder a base salary payable at the
bi-weekly rate of $20,192.31, which annualized is $525,000 per year (the “Base
Salary”), less any amounts required to be withheld under applicable law.
     (b) Incentive Bonus.
          (i) If the effective date of the merger contemplated by the Merger
Agreement (the “Effective Date”) occurs on or prior to November 30, 2005, you
will be eligible to receive a pro-rated bonus for calendar year 2005 (prorated
on a monthly basis) based upon the Company’s current bonus program which will be
paid at the end of December 2005 or early January 2006.
          (ii) If the Effective Date occurs after December 1, 2005, you will be
eligible to receive the full portion of your bonus based upon the Company’s
current bonus program for calendar year 2005, which will be paid at a reasonable
time after the Effective Date; provided that the Company has not already paid
you such bonus for calendar year 2005.

 

--------------------------------------------------------------------------------

 

          (iii) Beginning in calendar year 2006, you will be eligible to
participate in the Parent’s annual performance-based incentive bonus plan as
approved by the Board solely in its discretion. If you received a pro-rated
bonus for calendar year 2005, any bonus for calendar year 2006 will also include
a pro-rated amount, based upon the amount of the 2006 bonus, for that period of
time in 2005 for which a bonus was not paid.
     (c) Equity Compensation. On the first day of the first month after the
Effective Date, you shall be granted stock options to purchase 100,000 shares of
the Parent’s common stock, at an exercise price equal to the closing price per
share of the Parent’s common stock on the date of grant as reported on NASDAQ®,
and in accordance with the provisions of the Parent’s Amended and Restated Stock
Incentive Plan. One quarter of the options shall be exercisable on the first
anniversary of the grant and the remaining three-quarters of the options shall
become exercisable ratably on a monthly basis for the succeeding 36 months after
such first anniversary.
     (d) Benefits. You shall be entitled to participate in employee benefit
plans which the Parent provides or may establish for the benefit of its
employees and the employees of its subsidiaries (including the Company after the
Effective Date) in positions at a level comparable to you. In addition, as set
forth in the Merger Agreement, you may continue to participate in certain
Company benefit plans until the end of the plan year, and then transfer to the
applicable Parent plans.
     (e) Retention Bonus. If you remain employed by the Company on the date that
is fifteen (15) months after the Effective Date, you shall receive a retention
bonus of $125,000 at that time.
     3. Termination of Existing Employment Agreement. You acknowledge and agree
that immediately after the Effective Date, your Employment Agreement with the
Company dated April 12, 2000, as amended August 25, 2003 (the “Employment
Agreement”), shall terminate and be of no further force or effect and you shall
no longer be entitled to any payments or benefits thereunder, other than as
expressly provided in this Section 3 or in Section 4 below.
     BY ACCEPTING THE OFFER OF EMPLOYMENT EVIDENCED HEREBY, YOU SPECIFICALLY
ACKNOWLEDGE AND AGREE THAT YOU WILL NOT MAKE ANY CLAIM FOR SEVERANCE BASED ON
YOUR TERMINATING YOUR EMPLOYMENT WITH THE COMPANY FOR GOOD REASON (AS SUCH TERM
IS DEFINED IN THE EMPLOYMENT AGREEMENT), PROVIDED THAT YOU RETAIN THE RIGHT TO
MAKE A CLAIM UNDER CLAUSE (iii) OF SUCH DEFINITION, AT ANY TIME PRIOR TO THE
EFFECTIVE DATE OR DURING THE PERIOD TWELVE (12) MONTHS AFTER THE EFFECTIVE DATE.
     4. Severance Compensation.
     (a) For purposes of this Agreement, “Cause” shall be defined as, (i) an
intentional action or intentional failure to act by you which was performed in
bad faith and to the material detriment of the Company; (ii) you intentionally
refuse or intentionally fail to act in accordance with any lawful and proper
direction or order of the Board of Directors of the Company or the Parent; (iii)
you willfully and habitually neglect the duties of your employment; or (iv) you
are

2

--------------------------------------------------------------------------------

 

convicted of a felony crime involving moral turpitude; provided, however, that
in the event that any of the foregoing events under clauses (i), (ii), (iii) or
(iv) above is capable of being cured, the Company shall provide written notice
to you describing the nature of such event and you shall thereafter have ten
(10) business days to cure such event.
     (b) In the event that your employment hereunder is terminated by the
Company without “Cause” during the period beginning on the Effective Date and
ending twelve (12) months after the Effective Date, in exchange for your
execution of a general release of all claims against the Company and the Parent
as set forth below, the Company will provide the following, subject to
Section 5(d):
          (i) within fifteen (15) days of such termination, one lump sum payment
equivalent to twenty-four (24) months of your then Base Salary, less applicable
state and federal withholdings; and
          (ii) for a period of eighteen (18) months (or until comparable
benefits coverage becomes available to you, if sooner), the Company shall
reimburse you (or pay you directly at the Company’s option) the costs associated
with the continuation of you and your dependents’ medical and dental benefits
under COBRA as in effect immediately prior to the termination of your
employment.
     (c) Release. You agree to execute a general release of all claims against
the Company and the Parent and their employees, officers, directors and agents
in a form reasonably acceptable to the Company and Parent.
     (d) “Key Employee” Status. Section 409(A) of the Internal Revenue Code of
1986, as amended (the “Code”) provides for significant tax penalties for
employees who are deemed to be “key employees” under Section 416(i) of the Code.
Such a finding could result in significant additional taxes being owed by you if
you receive payments within six (6) months of the termination of your employment
with the Company. In order to avoid this potential issue, if you are deemed to
be a key employee, the Company will make the payments due under Section 5(b) as
follows:
          (i) on the first day of the seventh (7th) month following the date
your employment with the Company is terminated, you will receive twenty-four
(24) months of your Base Salary, less applicable state and federal withholdings
(instead of receiving such payment within fifteen (15) days) and the Company
will reimburse you for amounts that you paid for COBRA coverage during the
preceding six (6) months; and
          (ii) thereafter, the Company will either directly pay the COBRA
premiums or reimburse you for your monthly premiums on the first day of each
month for the next twelve (12) months.
     (e) Golden Parachute Taxes. Notwithstanding anything contained in this
letter agreement to the contrary, to the extent that payments and benefits
provided to you under this letter agreement and benefits provided to you, or for
your benefit, under any other Company plan or agreement (such payments or
benefits are collectively referred to as the “Payments”) would be subject to the
excise tax (the “Excise Tax”) imposed under Section 4999 of the Internal Revenue

3

--------------------------------------------------------------------------------

 

Code of 1986, as amended (the “Code”), the Payments shall be reduced (but not
below zero) to the extent necessary so that no Payment to be made or benefit to
be provided to you shall be subject to the Excise Tax, but only if, by reason of
such reduction, the net after-tax benefit you receive shall exceed the net
after-tax benefit you receive if no such reduction was made. For purposes of
this Section 4(e), “net after-tax benefit” shall mean (a) the Payments which you
receive or then entitled to receive from the Company that would constitute
“parachute payments” within the meaning of Section 280G of the Code, less
(b) the amount of all federal, state and local income taxes payable with respect
to the foregoing calculated at the maximum marginal income tax rate for each
year in which the foregoing shall be paid to you (based on the rate in effect
for such year as set forth in the Code as in effect at the time of the first
payment of the foregoing), less (c) the amount of excise taxes imposed with
respect to the payments and benefits described in (a) above by Section 4999 of
the Code. The foregoing determination will be made by a nationally recognized
accounting firm (the “Accounting Firm”) selected by the Company (which may be,
but will not be required to be, the Company’s independent auditors). The Company
will direct the Accounting Firm to submit its determination and detailed
supporting calculations to both you and the Company within fifteen (15) days
after the date of termination of your employment. If the Accounting Firm
determines that such reduction is required by this Section 4(e), you, in your
sole and absolute discretion, may determine which Payments shall be reduced to
the extent necessary so that no portion thereof shall be subject to the excise
tax imposed by Section 4999 of the Code, and the Company shall pay such reduced
amount to you. The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by this
Section 4 (e) will be borne by the Company.
     5. Employment Covenants. You agree to execute and abide by the terms of the
Employment Covenants Agreement attached hereto and made a part hereof.
     6. Representations/Warranties. You hereby represent and warrant to the
Company and the Parent that you have no commitments or obligations inconsistent
with this letter agreement.
     7. Governing Law. This letter agreement and the rights and obligations of
the parties hereunder will be construed in accordance with and governed by the
laws of the State of New York, without giving effect to the conflict of law
principles thereof.
     If the foregoing accurately sets forth our agreement, please so indicate by
signing and returning to us the enclosed copy of this letter.

            Very truly yours,

OSI PHARMACEUTICALS, INC.
      By:   /s/ Barbara A. Wood         Barbara A. Wood, Esq.        Vice
President and General Counsel   

4

--------------------------------------------------------------------------------

 

         

Accepted and Approved:

       
/s/ David R. Guyer
  August 21, 2005  
 
       
David R. Guyer, M.D.
  Date  

5

--------------------------------------------------------------------------------

 

(OSI LOGO) [y12158y1215800.gif]
Employment Covenants
Dear Employee:
     This letter is to confirm our understanding with respect to (i) your
agreement to protect and preserve information and property which is confidential
and proprietary to OSI Pharmaceuticals, Inc. (“OSIP”), or any present or future
parent, subsidiary or affiliate of OSIP (collectively, “OSI”), (ii) your
agreement with respect to the ownership of inventions, ideas, copyrights and
patents which may be used in the business of OSI and (iii) your agreement not to
solicit employees or customers of OSI (the terms and conditions agreed to in
this letter are hereinafter referred to as the “Agreement”). In consideration of
the mutual promises and covenants contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
mutually acknowledged, we have agreed as follows:
     1. Protected Information.
     (a) Treatment of Confidential Information. You will at all times, both
during the period while you are employed by OSI and after the termination of
your employment with OSI for any reason or for no reason, maintain in confidence
and will not, without the prior written consent of OSI, use, disclose or give to
others, directly or indirectly, any Confidential Information, except as required
in the course of performance of your duties for OSI or by court order. In the
event you are questioned by anyone not employed by OSI (including government
agency personnel) or by an employee of or consultant to OSI not authorized to
receive Confidential Information, in regard to any Confidential Information, or
concerning any fact or circumstance relating thereto, you will promptly notify
OSI. Upon the termination of your employment with OSI for any reason or for no
reason, or if OSI otherwise requests, you will return to OSI all tangible
Confidential Information and copies thereof (regardless how such Confidential
Information or copies are maintained). All Confidential Information shall be the
sole property of OSI and its assigns. You hereby assign to OSI any right you may
have or acquire in such Confidential Information. The terms of this Section 1
are in addition to, and not in lieu of, any statutory or other contractual or
legal obligation that you may have relating to the protection of Confidential
Information.
     (b) Definition of Confidential Information. For purposes of this Agreement,
“Confidential Information” means confidential and proprietary

1

--------------------------------------------------------------------------------

 

information of OSI, whether in written, oral, electronic or other form,
including, without limitation, systems, processes, formulae, data, functional
specifications, computer software, programs and displays, know-how,
improvements, discoveries, inventions, developments, designs, techniques,
marketing plans, strategies, forecasts, new and proposed products and
technologies, unpublished financial statements and financial information,
business plans, budgets, projections, licenses, prices, costs, training methods
and materials, sales prospects, and customer, supplier, manufacturer,
collaborator, partner and client lists and any and all intellectual properties,
including any scientific, technical or trade secrets of OSI or of any third
party provided to you or OSI under a condition of confidentiality, provided that
Confidential Information will not include information that is in the public
domain other than through any fault or act by you.
     2. Ownership of Ideas, Copyrights and Patents.
     (a) Property of OSI.
     (i) All ideas, discoveries, creations, manuscripts and properties,
innovations, improvements, know-how, inventions, designs, developments,
apparatus, techniques, methods, biological processes, cell lines, laboratory
notebooks and formulae (collectively, the “Inventions”) which may be used in the
current or planned business of OSI or which in any way relates to such business,
whether patentable, copyrightable or not, which you may conceive, reduce to
practice or develop while you are employed by OSI (and, if based on or related
to any Confidential Information, within two (2) years after termination of such
employment for any reason or for no reason), alone or in conjunction with
another or others, whether during or out of regular business hours, whether or
not on OSI’s premises or with the use of its equipment, and whether at the
request or upon the suggestion of OSI or otherwise, will be the sole and
exclusive property of OSI, and that you will not publish any of the Inventions
without the prior written consent of OSI. You agree that you will promptly
disclose to OSI all of the foregoing and you hereby assign to OSI all of your
right, title and interest in and to all of the foregoing.
     (ii) Without limiting the terms of Section 2(a)(i), you also acknowledge
that all original works of authorship which are made by you (solely or jointly
with others) within the scope of your employment or which relate to the business
of OSI, including, without limitation, marketing and/or business plans, and
which are protectable by copyright are “works made for hire” pursuant to the
United States Copyright Act (17 U.S.C. Section 101) and will be the sole and
exclusive property of OSI. You agree that you will promptly disclose to OSI all
of the foregoing and you hereby assign to OSI all of your right, title and
interest in and to all of the foregoing.

2

--------------------------------------------------------------------------------

 

     (iii) You represent that, to the best of your knowledge and belief, none of
the Inventions and works made for hire set forth in Sections 2(a)(i) and (ii),
will violate or infringe upon any right, patent, copyright, trademark or right
of privacy, or constitute libel or slander against or violate any other rights
of any person, firm or corporation, and that you will use your best efforts to
prevent any such violation.
     (b) Cooperation. At any time during your employment with OSI or after the
termination of your employment with OSI for any reason or for no reason, you
will cooperate fully with OSI and its attorneys and agents in the preparation
and filing of all papers and other documents as may be required to perfect OSI’s
rights in and to any of such Inventions, including, without limitation, joining
in any proceeding to obtain letters patent, copyrights, trademarks or other
legal rights with respect to any such Inventions in the United States and in any
and all other countries, provided that OSI will bear the expense of such
proceedings, and that any patent or other legal right so issued to you
personally will be assigned by you to OSI without charge by you.
     (c) Licensing and Use of Inventions. With respect to any Inventions, and
work of any similar nature (from any source), whenever created, which you have
not prepared or originated in the performance of your employment, but which you
provide to OSI or incorporate in any OSI product or system, you hereby grant to
OSI a royalty-free, fully paid-up, non-exclusive, perpetual and irrevocable
license throughout the world to use, modify, create derivative works from,
disclose, publish, translate, reproduce, deliver, perform, dispose of, and to
authorize others so to do, all such Inventions. You will not include in any
Inventions you deliver to OSI or use on its behalf, without the prior written
approval of OSI, any material which is or will be patented, copyrighted or
trademarked by you or others unless you provide OSI with the written permission
of the holder of any patent, copyright or trademark owner for OSI to use such
material in a manner consistent with then-current OSI policy.
     (d) Other Inventions. Listed on Exhibit A to this Agreement are any and all
Inventions in which you claim or intend to claim any right, title and interest
(collectively, “Other Inventions”), including, without limitation, patent,
copyright and trademark interests, which to the best of your knowledge will be
or may be delivered to OSI in the course of your employment, or incorporated
into any OSI product or system. You acknowledge that your obligation to disclose
Other Inventions is ongoing while you are employed hereunder.
     3. Prohibited Activities.
     (a) Certain Acknowledgements and Agreements.
     (i) We have discussed, and you recognize and acknowledge the competitive
and proprietary aspects of the business of OSI.

3

--------------------------------------------------------------------------------

 

     (ii) You acknowledge that your employment by OSI creates a relationship of
confidence and trust between OSI and you with respect to certain information
relating to the business and affairs of OSI or applicable to the business of any
client, customer, consultant, partner, external collaborator or service provider
of OSI, which may be made known to you by OSI or by any client, customer,
consultant, partner, external collaborator or service provider of OSI, or
learned by you during the period of your affiliation with OSI.
     (iii) You further acknowledge that, while you are employed with OSI, OSI
will furnish, disclose or make available to you Confidential Information (as
defined in Section 1(b) above related to the business of OSI (whether or not the
information has commercial value to OSI’s business). You also acknowledge that
such Confidential Information has been developed and will be developed by OSI
through the expenditure by OSI of substantial time, effort and money and that
all such Confidential Information could be used by you to compete with OSI. You
also acknowledge that if you become employed or affiliated with any competitor
of OSI, it is possible that you would disclose Confidential Information to such
competitor and would use Confidential Information, knowingly or unknowingly, on
behalf of such competitor.
     (b) Covenants. While you are employed by OSI and for a period of one
(1) year following the termination of your employment with OSI for any reason or
for no reason, you will not, without the prior written consent of OSI:
     (i) Engage, directly or indirectly, for your benefit or the benefit of
others, in any activity or employment in the performance of which any
Confidential Information obtained during the course of your employment would, by
necessity, need to be disclosed by you in order to engage in any such activity
or employment. This covenant shall not be construed to limit in any way your
obligation not to use or disclose Confidential Information as set forth in
Section 1 above.
     (ii) Either individually or on behalf of or through any third party,
directly or indirectly, solicit, divert or appropriate or attempt to solicit,
divert or appropriate, any customers of OSI or any prospective customers with
respect to which OSI has developed or made a sales presentation (or similar
offering of services) for the purpose of directly competing with OSI with
respect to OSI’s “principal marketed products” (i.e., those products which are
in the first or second detail position); or
     (iii) Either individually or on behalf of or through any third party,
directly or indirectly, (A) solicit, entice or persuade or attempt to solicit,
entice or persuade any employees of or consultants to OSI to leave the service
of OSI for any reason, or (B) employ, cause to be employed, or

4

--------------------------------------------------------------------------------

 

solicit the employment of, any employees of or consultants to OSI while any such
person is providing services to OSI; or
     (iv) Either individually or on behalf of or through any third party,
directly or indirectly, interfere with, or attempt to interfere with, the
relations between OSI and any manufacturer or supplier to or customer of OSI.
     (c) Reasonableness of Restrictions. You understand that the provisions set
forth in Section 3(b) are not meant to prevent you from earning a living or
fostering your career. They are intended, however, to prevent competitors of OSI
from gaining an unfair advantage from your knowledge of Confidential
Information. You understand that, by making any other employer aware of the
provisions set forth in this Section 3, that employer can take such action as to
avoid your breach of this Section 3.
4. Records. Upon termination of your employment with OSI for any reason or for
no reason and at any other time requested by OSI, you will deliver to OSI any
property of OSI which may be in your possession, including products, materials,
memoranda, notes, records, reports, or other documents or photocopies of the
same.
     5. Termination of Agreement and Survival of Obligations.
     (a) Termination. This Agreement shall terminate upon the termination of
your employment with OSI for any reason or for no reason.
     (b) Survival. Your acknowledgements, agreements and obligations set forth
in Sections 1 through 6 of this Agreement will survive the termination of this
Agreement and the termination of your employment with OSI for any reason or for
no reason.
     6. Miscellaneous.
     (a) Injunctive Relief. You hereby expressly acknowledge that any breach or
threatened breach of any of the terms and/or conditions set forth in Sections 1
through 4 of this Agreement will result in substantial, continuing and
irreparable injury to OSI. Therefore, in addition to any other remedy that may
be available to OSI, OSI will be entitled to injunctive or other equitable
relief by a court of appropriate jurisdiction in the event of any breach or
threatened breach of the terms of Sections 1 through 4 of this Agreement. The
period during which the covenants contained in Section 3 will apply will be
extended by any periods during which you are found by a court to have been in
violation of such covenants.
     (b) Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof.

5

--------------------------------------------------------------------------------

 

     (c) Governing Law. This Agreement and the rights and obligations of the
parties hereunder will be construed in accordance with and governed by the law
of the State of New York, without giving effect to the conflict of law
principles thereof.
     (d) Assignment. OSI may assign its rights and obligations hereunder,
including, without limitation, those with respect to Sections 1 through 6 of
this Agreement to any person or entity that succeeds to all or substantially all
of OSI’s business or that aspect of OSI’s business in which you are principally
involved. You may not assign your rights and obligations under this Agreement
without the prior written consent of OSI and any such attempted assignment by
you without the prior written consent of OSI will be void.
     (e) Benefit. All statements, representations, warranties, covenants and
agreements in this Agreement will be binding on the parties hereto and will
inure to the benefit of the respective successors and permitted assigns of each
party hereto.
     (f) Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by the
parties hereto.
     (g) Severability. The parties intend this Agreement to be enforced as
written. However, (a) if any portion or provision of this Agreement is to any
extent declared illegal or unenforceable by a duly authorized court having
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, will not be affected thereby, and each
portion and provision of this Agreement will be valid and enforceable to the
fullest extent permitted by law and (b) if any provision, or part thereof, is
held to be unenforceable because of the duration of such provision or the
geographic area covered thereby, the court making such determination will have
the power to reduce the duration and/or geographic area of such provision,
and/or to delete specific words and phrases (“blue-pencilling”), and in its
reduced or blue-pencilled form such provision will then be enforceable and will
be enforced.

6

--------------------------------------------------------------------------------

 

     If the foregoing accurately sets forth our agreement, please so indicate by
signing and returning to us the enclosed copy of this Agreement.

            Very truly yours,

OSI Pharmaceuticals, Inc.
      By:   /s/ Barbara A. Wood         Barbara A. Wood, Esq.        Vice
President and General Counsel     

       
Accepted and Approved:
       
 
       
/s/ David R. Guyer
  August 21, 2005  
 
       
David R. Guyer, M.D.
  Date  

7

--------------------------------------------------------------------------------

 

EXHIBIT A
OTHER INVENTIONS