EX-10.1



 





Exhibit 10.1




OSI PHARMACEUTICALS, INC.

1999 INCENTIVE AND NON-QUALIFIED

STOCK OPTION PLAN

(Incorporating Amendments No. 1 and 2,

adopted July 19, 2001 and September 19, 2006, respectively)





	1.	 	Purpose






     The purpose of this 1999 Incentive and Non-Qualified Stock Option Plan (the “Plan”) is
to encourage and enable selected management, other employees, directors (whether or not
employees), and consultants of OSI Pharmaceuticals, Inc. (the “Company”) or a parent or
subsidiary of the Company to acquire a proprietary interest in the Company through the
ownership of common stock, par value $.01 per share (the “Common Stock”), of the Company.
Such ownership will provide such employees, directors, and consultants with a more direct
stake in the future welfare of the Company, and encourage them to remain with the Company or
a parent or subsidiary of the Company. It is also expected that the Plan will encourage
qualified persons to seek and accept employment with, or become associated with, the Company
or a parent or subsidiary of the Company. Pursuant to the Plan, the Company may grant (i)
“incentive stock options,” within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”) and (ii) stock options that do not qualify as incentive stock
options (“non-qualified stock options”). No option granted under the Plan shall be treated
as an incentive stock option unless the stock option agreement which evidences the grant
refers to such option as an incentive stock option and such option satisfies the
requirements of Section 422 of the Code.




     As used herein, the term “parent” or “subsidiary” shall mean any present or future
corporation which is or would be a “parent corporation” or “subsidiary corporation” of the
Company as the term is defined in Section 424 of the Code (determined as if the Company were
the employer corporation).




	2.	 	Administration of the Plan






     The Plan shall be administered by a committee (the “Committee”) as appointed from time
to time by the Board of Directors of the Company, which may be the Compensation Committee of
the Board of Directors. Except as otherwise specifically provided herein, no person, other
than members of the Committee, shall have any discretion as to decisions regarding the Plan.
The Company may engage a third party to administer routine matters under the Plan, such as
establishing and maintaining accounts for Plan participants and facilitating transactions by
participants pursuant to the Plan.




     In administering the Plan, the Committee may adopt rules and regulations for carrying
out the Plan. The interpretations and decisions made by the Committee with regard to any
question arising under the Plan shall be final and conclusive on all persons participating
or eligible to participate in the Plan. Subject to the provisions of the Plan, the
Committee shall determine the terms of all options granted pursuant to the Plan, including,
but not limited to, the persons to whom, and the time or times at which, grants shall be



 









 








made, the number of shares to be covered by each option, the duration of options, the
exercisability of options, whether options shall be treated as incentive stock options, and
the option price.




	3.	 	Shares of Stock Subject to the Plan






     Except as provided in paragraphs 6(h), 6(i) and 7 hereof, the number of shares that may
be issued or transferred pursuant to the exercise of options granted under the Plan shall
not exceed 2,000,000 shares of Common Stock. Such shares may be authorized and unissued
shares
or previously issued shares acquired or to be acquired by the Company and held in treasury. Any shares subject to an option which for any reason expires or is terminated
unexercised as to such shares may again be subject to an option right under the Plan. The
aggregate Fair Market Value, as defined in paragraph 6(k) below (determined at the time the
option is granted), of the shares with respect to which incentive stock options are
exercisable for the first time by an optionee during any calendar year (under the Plan and
all plans of the Company and any parent or subsidiary of the Company) shall not exceed
$100,000.




	4.	 	Eligibility






     Incentive stock options may be granted only to management and other employees who are
employed by the Company or a parent or subsidiary of the Company. Incentive stock options
may be granted to a director of the Company or a parent or subsidiary of the Company,
provided that the director is also an officer or employee. Non-qualified stock options may
be granted to directors, officers, employees and consultants of the Company.




	5.	 	Granting of options






     No options pursuant to this Plan may be granted after the close of business on June 22,
2009. The date of the grant of any option shall be the date on which the Committee
authorizes the grant of such option.




	6.	 	Options






     Options shall be evidenced by stock option agreements in such form, consistent with the
Plan, as the Committee shall approve from time to time, which agreements need not be
identical and shall be subject to the following terms and conditions:




     (a) Option Price. The purchase price under each incentive stock option shall
be not less than 100% of the Fair Market Value of the Common Stock at the time the
option is granted and not less than the par value of the Common Stock. In the case
of an incentive stock option granted to an employee owning, actually or
constructively under Section 424(d) of the Code, more than 10% of the total combined
voting power of all classes of stock of the Company or of any parent or subsidiary
of the Company (a “10% Stockholder”) the option price shall not be less than 110% of
the Fair Market Value of the Common Stock at the time



 









 








of the grant. The purchase price under each non-qualified stock option shall
be specified by the Committee, but shall in no case be less than the greater of 50%
of the Fair Market Value of the Common Stock at the time the option is granted and
the par value of such Common Stock.




     (b) Medium and Time of Payment. Stock purchased pursuant to the exercise of an
option shall at the time of purchase be paid for in full in cash, or, upon
conditions established by the Committee, by delivery of shares of Common Stock owned
by the recipient. If payment is made by the delivery of shares, the value of the
shares delivered shall be the Fair Market Value of such shares on the date of
exercise of the option. In addition, unless otherwise provided by the Committee an
“in the money” non-qualified stock option may be exercised on a “cashless” basis in
exchange for the issuance to the optionee (or other person entitled to exercise the
option) of the largest whole number of shares having an aggregate value equal to the
value of such option on the date of exercise. For this purpose, the value of the
shares delivered by the Company and the value of the option being exercised shall be
determined based on the Fair Market Value of the Common Stock on the date of
exercise of the option. Upon receipt of payment and such documentation as the
Company may deem necessary to establish compliance with the Securities Act of 1933,
as amended (the “Securities Act”), the Company shall, without stock transfer tax to
the optionee or other person entitled to exercise the option, deliver to the person
exercising the option a certificate or certificates for such shares. It shall be a
condition to the performance of the Company’s obligation to issue or transfer Common
Stock upon exercise of an option or options that the optionee pay, or make provision
satisfactory to the Company for the payment of, any taxes (other than stock transfer
taxes) the Company or any subsidiary is obligated to collect with respect to the
issue or transfer of Common Stock upon such exercise, including any federal, state,
or local withholding taxes.




     (c) Waiting Period. The waiting period and time for exercising an option shall
be prescribed by the Committee in each particular case; provided, however, that no
option may be exercised after 10 years from the date it is granted. In the case of
an incentive stock option granted to a 10% Stockholder, such option, by its terms,
shall be exercisable only within five years from the date of grant.




     (d) Rights as a Stockholder. A recipient of options shall have no rights as a
stockholder with respect to any shares issuable or transferable upon exercise
thereof until the date a stock certificate is issued to him for such shares. Except
as otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date such stock
certificate is issued.




     (e) Non-Assignability of Options. No incentive stock option and, except as may
otherwise be specifically provided by the Committee, no non-



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qualified stock options, shall be assignable or transferable by the recipient
except by will or by the laws of descent and distribution. During the lifetime of a
recipient, incentive stock options and, except as may otherwise be specifically
provided by the Committee, non-qualified stock options, shall be exercisable only by
such recipient. If the Committee approves provisions in any particular case
allowing for assignment or transfer of a non-qualified stock option, then such
option will nonetheless be subject to a six-month holding period commencing on the
date of grant during which period the recipient will not be permitted to assign or
transfer such option, unless the Committee further specifically provides for the
assignability or transferability of such option during this period. See paragraph 8
hereof for restrictions on sale of shares.




     (f) Effect of Termination of Employment. If a recipient’s employment (or
service as an officer, director or consultant) shall terminate for any reason, other
than death or Retirement (as defined below), the right of the recipient to exercise
any option otherwise exercisable on the date of such termination shall expire unless
such right is exercised within a period of 90 days after the date of such
termination. For Options issued prior to January 1, 2006, the term “Retirement”
shall mean the voluntary termination of employment (or service as an officer,
director or consultant) by a recipient who has attained the age of 55 and who has
completed at least five years of service with the Company. For Options issued on or
after January 1, 2006, unless otherwise determined by the Committee and defined in
the applicable Award Agreement, the term “Retirement” shall mean the voluntary
termination of employment (or service as an officer, director or consultant) by a
recipient who has attained the age of 60 and who has completed at least twenty years
of service with the Company. If a recipient’s employment (or service as an officer,
director or consultant) shall terminate because of death or Retirement, the right of
the recipient to exercise any option otherwise exercisable on the date of such
termination shall be unaffected by such termination and shall continue until the
normal expiration of such option. Notwithstanding the foregoing, the tax treatment
available pursuant to Section 421 of the Code upon the exercise of an incentive
stock option will not be available in connection with the exercise of any incentive
stock option more than three months after the date of termination of such option
recipient’s employment due to Retirement. Option rights shall not be affected by
any change of employment as long as the recipient continues to be employed by either
the Company or a parent or subsidiary of the Company. In no event, however, shall
an option be exercisable after the expiration of its original term as determined by
the Committee pursuant to subparagraph 6(c) above. The Committee may, if it
determines that to do so would be in the Company’s best interests, provide in a
specific case or cases for the exercise of options which would otherwise terminate
upon termination of employment with the Company for any reason, upon such terms and
conditions as the Committee determines to be appropriate. Nothing in the Plan or in
any option agreement shall confer any right to continue in the employ of the Company
or any parent or subsidiary of the Company or interfere



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in any way with the right of the Company or any parent or subsidiary of the
Company to terminate the employment of a recipient at any time.




     (g) Leave of Absence. In the case of a recipient on an approved leave of
absence, the Committee may, if it determines that to do so would be in the best
interests of the Company, provide in a specific case for continuation of options
during such leave of absence, such continuation to be on such terms and conditions
as the Committee determines to be appropriate, except that in no event shall an
option be exercisable after 10 years from the date it is granted.




     (h) Recapitalization. In the event that dividends payable in Common Stock
during any fiscal year of the Company exceed in the aggregate five percent of the
Common Stock issued and outstanding at the beginning of the year, or in the event
there is during any fiscal year of the Company one or more splits, subdivisions, or
combinations of shares of Common Stock resulting in an increase or decrease by more
than five percent of the shares outstanding at the beginning of the year, the number
of shares available under the Plan shall be increased or decreased proportionately,
as the case may be, and the number of shares deliverable upon the exercise
thereafter of any options theretofore granted shall be increased or decreased
proportionately, as the case may be, without change in the aggregate purchase price.
Common Stock dividends, splits, subdivisions, or combinations during any fiscal
year that do not exceed in the aggregate five percent of the Common Stock issued and
outstanding at the beginning of such year shall be ignored for purposes of the Plan.
All adjustments shall be made as of the day such action necessitating such
adjustment becomes effective.




     (i) Sale or Reorganization. In case the Company is merged or consolidated with
another corporation, or in case the property or stock of the Company is acquired by
another corporation, or in case of a separation, reorganization, or liquidation of
the Company, the Board of Directors of the Company, or the board of directors of any
corporation assuming the obligations of the Company hereunder, shall either (i) make
appropriate provisions for the protection of any outstanding options by the
substitution on an equitable basis of appropriate stock of the Company, or
appropriate options to purchase stock of the merged, consolidated, or otherwise
reorganized corporation, provided only that such substitution of options shall, with
respect to incentive stock options, comply with the requirements of Section 424(a)
of the Code, or (ii) give written notice to optionees that their options, which will
become immediately exercisable notwithstanding any waiting period otherwise
prescribed by the Committee, must be exercised within 30 days of the date of such
notice or they will be terminated.




     (j) General Restrictions. Each option granted under the Plan shall be subject
to the requirement that, if at any time the Board of Directors shall determine, in
its discretion, that the listing, registration, or qualification of the shares
issuable or transferable upon exercise thereof upon any securities exchange or under
any state or federal law, or the consent or approval of any governmental



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regulatory body is necessary or desirable as a condition of, or in connection
with, the granting of such option or the issue, transfer, or purchase of shares
thereunder, such option may not be exercised in whole or in part unless such
listing, registration, qualification, consent, or approval shall have been effected
or obtained free of any conditions not acceptable to the Board of Directors.




     The Company shall not be obligated to sell or issue any shares of Common Stock
in any manner in contravention of the Securities Act, the Securities Exchange Act of
1934, as amended (the “Exchange Act”), the rules and regulations of the Securities
and Exchange Commission, any state securities law, the rules and regulations
promulgated thereunder or the rules and regulations of any securities exchange or
over the counter market on which the Common Stock is listed or in which it is
included for quotation. The Board of Directors may, in connection with the granting
of each option, require the individual to whom the option is to be granted to enter
into an agreement with the Company stating that as a condition precedent to each
exercise of the option, in whole or in part, he shall, if then required by the
Company, represent to the Company in writing that such exercise is for investment
only and not with a view to distribution, and also setting forth such other terms
and conditions as the Committee may prescribe. Such agreements may also, in the
discretion of the Committee, contain provisions requiring the forfeiture of any
options granted and/or Common Stock held, in the event of the termination of
employment or association, as the case may be, of the optionee with the Company.
Upon any forfeiture of Common Stock pursuant to an agreement authorized by the
preceding sentence, the Company shall pay consideration for such Common Stock to the
optionee, pursuant to any such agreement, without interest thereon.




     (k) “Fair Market Value.” Fair Market Value for all purposes under the Plan
shall mean the closing price of shares of Common Stock, as reported in The Wall
Street Journal, in the NASDAQ National Market Issues or similar successor
consolidated transactions reports (or a similar consolidated transactions report for
the exchange on which the shares of Common Stock are then trading) for the relevant
date, or if no sales of shares of Common Stock were made on such date, the average
of the high and low sale prices of shares as reported in such composite transaction
report for the preceding day on which sales of shares were made. If the shares are
not listed on a national securities exchange or included for quotation in the NASDAQ
National Market System at the time Fair Market Value is to be determined, then Fair
Market Value shall be determined by the Committee in good faith pursuant to such
method as the Committee deems appropriate and equitable. Under no circumstances
shall the Fair Market Value of a share of Common Stock be less than its par value.




	7.	 	Termination and Amendment of the Plan






     The Board of Directors or the Committee shall have the right to amend, suspend, or
terminate the Plan at any time; provided, however, that no such action shall affect or in
any way impair the rights of a recipient under any option right theretofore granted under the



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Plan; and, provided, further, that unless first duly approved by the stockholders of the
Company entitled to vote thereon at a meeting (which may be the annual meeting) duly called
and held for such purpose, except as provided in subparagraphs 6(h) and 6(i), no amendment
or change shall be made in the Plan increasing the total number of shares which may be
issued or transferred under the Plan, materially increasing the benefits to Plan
participants or modifying the requirements as to eligibility for participation in the Plan.




	8.	 	Restriction on Sale of Shares






     Without the written consent of the Company, no stock acquired by an optionee upon
exercise of an incentive stock option granted hereunder may be disposed of by the optionee
within two years from the date such incentive stock option was granted, nor within one year
after the transfer of such stock to the optionee; provided, however, that a transfer to a
trustee, receiver, or other fiduciary in any insolvency proceeding, as described in Section
422(c)(3) of the Code, shall not be deemed to be such a disposition. The optionee shall
make appropriate arrangements with the Company for any taxes which the Company is obligated
to collect in connection with any such disposition, including any federal, state, or local
withholding taxes.




     No stock acquired by an optionee upon exercise of a non-qualified stock option granted
hereunder may be disposed of by the optionee (or other person eligible to exercise the
option) within six months from the date such non-qualified stock option was granted, unless
otherwise provided by the Committee.




	9.	 	Effective Date of the Plan






     This Plan is effective as of June 23, 1999, provided, however, that the Plan be
approved by the stockholders of the Company at the 2000 Annual Meeting of Stockholders. If
the Plan is not approved by the stockholders, the Plan and options granted hereunder shall
thereupon terminate. In any event, the Plan shall terminate on June 22, 2009, or on such
earlier date as the Board of Directors or the Committee may determine. Any option
outstanding at the termination date shall remain outstanding until it has either expired or
has been exercised.




	10.	 	Compliance with Rule 16b-3






     With respect to persons subject to Section 16 of the Exchange Act, transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its
successors. To the extent any provision of the Plan or action by the Committee (or any
other person on behalf of the Committee or the Company) fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the Committee.




	11.	 	Automatic Grant of Options to Non-Employee Directors






     The purpose of this Section 11 is to continue the program of automatic grants of
options to non-employee directors of the Company established pursuant to Section 11 of the



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Company’s 1993 Incentive and Non-Qualified Stock Option Plan and continued by the Company’s
1997 Incentive and Non-Qualified Stock Option Plan (collectively, the “Prior Plans”). The
following options, to the extent not heretofore granted pursuant to the Prior Plans, shall
be automatically awarded:




     (a) Each director, who is not also an employee of the Company or any of its
affiliates, or the designee of any stockholder of the Company pursuant to a right to
designate one or more directors (an “Eligible Director”) shall automatically be
awarded a grant of 50,000 non-qualified stock options upon his or her initial
election to the Board of Directors. Such options shall vest and be exercisable
solely in accordance with the following schedule:




	 	(i)	 	The options may be exercised with respect to a
maximum of one-half of the option shares during the twelve-month period
beginning after the date of grant.
	 
	 	(ii)	 	The options may be exercised with respect to
all of the option shares upon the Eligible Director’s reelection to the
Board of Directors for a second consecutive term.
	 
	 	(iii)	 	The options will expire and will no longer be
exercisable as of the tenth anniversary of the date of grant, subject
to sooner expiration upon the occurrence of certain events as provided
elsewhere in this Plan.






     (b) In addition to the grant provided in subsection (a), each Eligible Director
shall automatically be awarded a grant of non-qualified stock options upon the
reelection of such Eligible Director to a third or subsequent, successive term, in
the amount and at the times hereinafter set forth. Such automatic grants of
non-qualified stock options commenced on June 21, 1995, pursuant to the Prior Plans,
and have occurred and shall continue to occur annually thereafter on the date of the
annual meeting of stockholders for such year until the termination of the Plan. The
number of options to which each Eligible Director shall be entitled pursuant to this
subsection (b) shall be as follows:




	 	(i)	 	20,000 on the date of the
Eligible Director’s reelection to a third one-year
term;
	 
	 	(ii)	 	20,000 on the date of the
Eligible Director’s reelection to a fourth one-year
term;
	 
	 	(iii)	 	15,000 on the date of the
Eligible Director’s reelection to a fifth one-year
term;
	 
	 	(iv)	 	15,000 on the date of the
Eligible Director’s reelection to a sixth one-year
term;





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	 	(v)	 	10,000 on the date of the
Eligible Director’s reelection to a seventh one-year
term;
	 
	 	(vi)	 	10,000 on the later of the date
of the annual meeting of stockholders in 2000, or the
date of the Eligible Director’s reelection to an eighth
one-year term; and
	 
	 	(vii)	 	10,000 on the later of the
date of the annual meeting of stockholders in 2001, or
the date of the Eligible Director’s reelection to a
ninth one-year term.






Such options shall vest and be exercisable solely in accordance with the following
schedule:




	 	(i)	 	The options shall not be
exercisable during the twelve-month period beginning
after the date of grant.
	 
	 	(ii)	 	The options may be exercised
with respect to one-third of the option shares after
the expiration of twelve months from the date of grant.
	 
	 	(iii)	 	The remaining two-thirds of
the options shall vest and become exercisable ratably
on a monthly basis over the two-year period commencing
one year from the date of grant and ending three years
from the date of grant.
	 
	 	(iv)	 	The options will expire and
will no longer be exercisable as of the tenth
anniversary of the date of grant, subject to sooner
expiration upon the occurrence of certain events as
provided elsewhere in this Plan.






     (c) The option price for all options awarded under this Section 11 shall be
equal to 100% of the Fair Market Value of a share of Common Stock on the date of
grant.




	12.	 	Options granted to employees and directors of any subsidiary in the UK






     In addition to the provisions of paragraphs 1 to 11 (inclusive) above the provisions
of this paragraph 12 shall apply as herein set out to options granted to employees and
directors of any subsidiary in the United Kingdom. The provisions of this paragraph 12
enable the Plan to be used in a tax efficient manner in the United Kingdom.




     (a) In this paragraph 12 the following terms have the meanings ascribed to
them:



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“Election” means an election in the form envisaged in Paragraph 3B(1) of
Schedule 1 to SSCBA to the effect that any Secondary NIC arising on the exercise,
assignment or release of a UK Option shall be the liability of the recipient and not
the liability of the UK Subsidiary




“Independent Transfer Agent” means any person (other than the Company or any
company affiliated with the Company or any individual affiliated with any such
company) who is registered as a broker-dealer with the U.S. Securities and Exchange
Commission and who is thereby able to sell and transfer shares in the Company on
behalf of the Optionholder




“Optionholder” means an employee or director of the UK Subsidiary who is the
holder of a UK Option




“Secondary NIC” means secondary national insurance contributions as defined
in the SSCBA




“SSCBA” means the Social Security Contributions and Benefits Act 1992 of the
United Kingdom




“UK Option” means an option granted to an employee of the UK Subsidiary




“UK Subsidiary” means OSI Pharmaceuticals (UK) Limited (a company
incorporated in England under company number [ 1709877 ])




     (b) To the extent that it is lawful to do so, a UK Option may be granted
subject to a condition that any liability of the UK Subsidiary (as employer or
former employer of the relevant Optionholder) to pay Secondary NIC in respect of the
exercise, assignment or release of that UK Option shall be the liability of the
relevant Optionholder and payable by that Optionholder and that Optionholder shall
be required to enter into an Election to that effect when required to do so by the
UK Subsidiary provided that the Committee may in its discretion at any time or times
release the Optionholder from this liability or reduce his liability thereunder
unless that Election has been entered into between the UK Subsidiary and that
Optionholder and that Election (or the legislation which provides for such an
Election to be effective) does not allow for such an Election to be subsequently
varied.




     (c) If a UK Option is granted subject to the condition referred to in paragraph
12(b) above then the Optionholder shall by completing the Election grant to the UK
Subsidiary (as employer or former employer of the relevant Optionholder) the
irrevocable authority, as agent of the Optionholder and on his
behalf, to appoint an Independent Transfer Agent, to act as agent of the
Optionholder and on his behalf, to sell or procure the sale of sufficient of the
Stock subject to the UK Option and remit the net sale proceeds to the UK Subsidiary
so that the net proceeds payable to the UK Subsidiary are so far as possible equal
to



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but not less than the amount of the Secondary NIC for which the Optionholder is
liable under the terms of the Election and the UK Subsidiary shall account to the
Optionholder for any balance.




          No Stock shall be allotted or transferred to the Optionholder by the Company
until the UK Subsidiary has received an amount in cash equal to the amount of the
Secondary NIC for which the Optionholder is liable under the terms of the Election.




     (d) If a UK Option is exercised and the Optionholder is liable to tax duties or
other amounts on such exercise and the UK Subsidiary (as his employer or former
employer) is liable to make a payment to the appropriate authorities on account of
that liability then the Optionholder shall by having completed the Option Agreement
grant to the UK Subsidiary (as employer or former employer of the relevant
Optionholder) the irrevocable authority, as agent of the Optionholder and on his
behalf, to appoint an Independent Transfer Agent, to act as agent of the
Optionholder and on his behalf, to sell or procure the sale of sufficient of the
Shares subject to the UK Option and remit the net sale proceeds to the UK Subsidiary
so that the net proceeds payable to the UK Subsidiary are so far as possible equal
to but not less than the amount payable to the appropriate authorities and the UK
Subsidiary shall account to the Optionholder for any balance.




          No Shares shall be issued or delivered to the Optionholder by the Company until
the UK Subsidiary has received an amount in cash equal to the amount of the
Secondary NIC for which the Optionholder is liable under the terms of the Election.




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