Document:

EX-10.2

 

EXHIBIT 10.2

Compensatory Arrangements of Executive Officers

Amended as of September 20, 2005

     The Compensation Committee (the “Committee”) of the Board of Directors of OSI Pharmaceuticals,
Inc. (“OSI” or the “Company”) approved the 2005 annual base salaries and 2004 cash bonuses for
OSI’s executive officers including the Company’s named executive officers (as that term is defined
in Item 402 of Regulation S-K) as set forth in OSI’s proxy statement dated February 2, 2005. The
following table sets forth the annual base salary levels of such officers for 2005 as compared to
2004 as well as the 2004 cash bonuses for each such officer:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	2004 Base	 	2005 Base	 	 
	Name and Position	 	Salary	 	Salary	 	2004 Bonus
	Colin Goddard, Ph.D.

Chief Executive Officer
	 	$	550,000	 	 	$	600,000	 	 	$	400,000	 
	Gabriel Leung

Executive Vice President and

President, (OSI) Oncology
	 	$	361,000	 	 	$	400,000	 	 	$	145,000	 
	Anker Lundemose, M.D., Ph.D., D.Sc.(1)

Executive Vice President and

President, (OSI) Prosidion
	 	£	150,000	 	 	£	175,000	 	 	£	60,000	 
	Robert Simon(2)

Executive Vice President,

Pharmaceutical Development and

Technical Operations
	 	$	280,000	 	 	$	335,000	 	 	$	100,000	 
	Michael G. Atieh

Executive Vice President and Chief

Financial Officer
	 	 	n/a	 	 	$	410,000	 	 	 	n/a	 
	Neil Gibson, Ph.D.

Chief Scientific Officer
	 	$	252,000	 	 	$	280,000	 	 	$	90,000	 
	Barbara A. Wood

Vice President, General Counsel and

Secretary
	 	$	277,000	 	 	$	287,000	 	 	$	90,000	 

 

			
	(1)	 	During fiscal 2004, Dr. Lundemose received an additional bonus of £94,000 related to the
identification and successful acquisition by Prosidion Limited, OSI’s wholly-owned subsidiary,
of certain assets from Probiodrug AG as per his Employment Agreement.
	 
	(2)	 	During 2004, Mr. Simon agreed to relocate from Boulder, Colorado to the Company’s
headquarters in Melville, New York. In connection with his relocation, the Company agreed to
a relocation package and the forgiveness of a $100,000 loan assumed by the Company as part of
its 2001 acquisition of Gilead Sciences Inc.’s oncology business. The total amount of
relocation costs reimbursed in 2004 were $251,423 including the forgiveness of the loan. The
Company anticipates additional payments of relocation costs in fiscal 2005.

 

 

Bonuses

     The Committee’s policy of awarding annual bonuses is designed to specifically relate executive
pay to Company and individual performance. All Company employees, including the executive officers,
are assigned a grade level, and each grade level is assigned a bonus target, a percentage of which
is tied to Company performance and a percentage of which is tied to individual performance. With
respect to executive officers, the percentage tied to the Company performance is weighted more
heavily than the individual performance. For example, in the case of a bonus for an executive
officer with a grade level of 11, 25% of the bonus is based on individual performance and 75% of
the bonus is based upon Company performance. With regard to each of the two components (Company
performance and individual performance), an employee can earn a range around the target level
(100%). The range for the Company performance component is 0% to 150% and the percentage is
recommended by the CEO each year and approved by the Committee. The range for the individual
performance component is also 0% to 150% and is based upon individual performance. Individual
performance is measured in accordance with the Company’s employee performance management
procedures, and the percentage is recommended by the CEO for the executive officers and approved by
the Committee. For purposes of compensation decisions for 2004, the Committee measured the
Company’s performance and that of each executive officer in fiscal year 2004 against goals
established by the executive officers and ratified by the Committee under the Company’s Annual
Business Plan prior to the start of the fiscal year. For 2004, the Committee awarded the
respective executive officers’ discretionary bonuses in accordance with the foregoing process. For
2004, the Company performance component was set at 150%.

     The bonus targets for the executive officers are either set in accordance with their
employment agreements or are based upon their respective grade levels, the latter of which are
currently under review for 2005.

Stock Option Grants

     Executive officers are eligible for awards of stock options or shares of stock pursuant to the
Company’s Amended and Restated Stock Incentive Plan. Such awards are made at the discretion of the
Committee.

     Annual stock option grants for executive officers are a key element of the executive officer’s
total compensation. As for all Company employees, the stock option grants made annually to the
executive officers are made in accordance with the Company’s formula-based policy for granting
options. According to the formula, each grade level is assigned a grant multiple. The number of
options granted to an executive officer is determined by multiplying the executive officer’s salary
by the grant multiple and then dividing the product by a stock price which is determined by the CEO
and ratified by the Committee and is typically a 3-6 month trailing average. In 2004, the CEO
recommended stock option grants for the executive officers based upon the foregoing criteria, and
the Committee reviewed and approved the grants.

 

 

Perquisites

     The only perquisite granted to executive officers which is not available to other employees
relates to the use of automobiles and is in the form of either the payment of a car lease or, in
lieu thereof, a monthly cash payment. Currently, Mr. Atieh is the only executive officer who does
not receive the perquisites.EX-10.3

 

EXHIBIT 10.3

CHANGE OF CONTROL AGREEMENT

This Agreement dated September 20, 2005 between OSI Pharmaceuticals, Inc. and Neil Gibson:

In the event OSI is sold or merged with another company resulting in a change of control (“Change
of Control”), the following shall apply:

	 	1.	 	All of your outstanding unvested options shall vest and be fully exercisable; and
	 
	 	2.	 	If your employment with the controlling company is terminated (including if you
voluntarily terminate your employment for “Good Reason”*) at any time within six (6) months
following a CHANGE OF CONTROL transaction, unless such termination is for “cause”, death,
disability or you voluntarily leave without “Good Reason”, you will be entitled to receive
the benefits described below:

           (i) a lump sum severance payment equal to your annual salary for a period of twelve (12)
months;

           (ii) your pro-rated bonus;

           (iii) all unpaid, accrued vacation through the date of termination; and

           (iv) continued coverage for you and your dependants for 12 months following termination under
health and dental program in which you were eligible to participate as of the time of termination
of your employment.

 

	*	 	Good Reason for termination of employment includes (i) a decrease in your total compensation
package, (ii) the assignment of duties or responsibilities which are not commensurate with your
position immediately prior to the sale or Change of Control, or (iii) you are required to relocate
to an office or facility more than forty (40) miles from your present location or forty (40) miles
from your home.

OSI Pharmaceuticals, Inc.

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	By:

	 	/s/ Coling Goddard
	 	 	 	/s/ Neil Gibson	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Colin Goddard

CEO
	 	 	 	Neil GibsonEX-10.4

 

EXHIBIT 10.4

November 15, 2001

Amended September 20, 2005

Mr. Robert L. Simon

Dear Robert:

     This letter is to confirm our understanding with respect to your employment with OSI
Pharmaceuticals, Inc., its subsidiaries or affiliates (the “Company”).

          1. Employment. The Company will initially employ you, and you agree to be employed by
the Company as Vice President, Global Regulatory Affairs reporting to Nicole Onetto. The principal
location at which you shall perform such services shall be the Company’s facility located in
Boulder, Colorado. Your employment hereunder shall commence on or about January 1, 2002 (the
“Commencement Date”) and shall continue on an “at-will" basis, meaning that either you
or the Company may terminate your employment at any time and for any reason.

          2. Compensation.

               (a) Base Salary; Incentive Bonus. The Company shall pay you as your compensation for
your services and agreements hereunder a base salary payable at the biweekly rate of $9,890, which
annualized is $257,145 per year (the “Base Salary”), less any amounts required to be withheld under
applicable law. Beginning with calendar year 2002, you will also be eligible to participate in the
Company’s annual performance-based incentive bonus plan as approved by the Board solely in its
discretion. You expressly acknowledge that you will not be eligible to receive any bonus from the
Company in respect of calendar year 2001, which bonus, if any, shall be paid to you by Gilead
Sciences, Inc.

               (b) Signing Bonus. You shall receive a $100,000 bonus (the “Signing Bonus”), payable
in one lump sum payment, less any amounts required to be withheld under applicable law, upon the
commencement of your employment with the Company. If you voluntarily terminate your employment or
the Company terminates your employment for cause within one year of the Commencement Date, you
shall be required to reimburse the Company for such Signing Bonus; provided that, the amount you
shall be required to repay the Company shall be reduced 1/12th for each full month of
service you have completed as of the termination date. This bonus is designated to pay off your
Gilead loan.

               (c) Equity Compensation. Subject to approval by the Board, you shall receive stock
options to purchase 25,000 shares of the Company’s common stock, at an exercise price to be
determined based on the date of board approval, subject to, and in accordance with, the provisions
of the Company’s 1999 Incentive and Non-Qualified Stock Option Plan.

               (d) Benefits. You shall be entitled to participate in such employee benefit plans as
are generally made available for employees of the Company in positions at a level comparable to
you.

 

 

          3. Severance Compensation.

               (a) In the event that your employment hereunder is terminated by the Company without “cause”,
and in exchange for your execution of a general release of all claims against the Company:

                    (i) The Company will continue to pay you your Base Salary for a period of twelve (12) months
commencing on the effective date of such termination.

               (b) In the event that the Company is sold or merged with another Company resulting in a change
of control (a “Change of Control”), and if, at any time within six (6) months following a Change of
Control transaction, your employment is terminated by the controlling company or if you voluntarily
terminate your employment for a “Good Reason” (as defined below) unless such termination is for
“cause”, death, disability or you voluntarily leave without “Good Reason”, you will be entitled to
receive from the controlling company in lieu of any further salary and bonus payments to you for
periods subsequent to the date of termination, (i) the salary described in subparagraph (a) above,
(ii) your pro-rated bonus, (iii) all unpaid, accrued vacation time through the date of
termination, and (iv) continued coverage for you and your dependents for 12 months following
termination under any health and dental program in which you were eligible to participate as of the
time of termination of your employment . In addition, upon a Change of Control, all outstanding
unvested options held by you shall vest and be fully exercisable.

               (c) For purposes of this Section 3(b), “Good Reason” means (i) decrease in your total
compensation package, (ii) the assignment of duties or responsibilities which are not commensurate
with your position immediately prior to the sale or Change of Control, or (iii) you are required to
relocate to an office or facility more than forty (40) miles from your present location or forty
(40) miles from your home.

          4. Prohibited Competition. NOTE: Colorado statutes limit non-competes to situations
involving (i) protection of trade secrets or (ii) “executive and management personnel,” or
“professional staff to executive and management personnel.”

               (a) Covenants Not to Compete. During the period in which you perform services for or
at the request of the Company (the “Term”) and for a period of two (2) years following the
expiration or termination of the Term, whether such termination is voluntary or involuntary, you
shall not, without the prior written consent of the Company:

                    (i) For yourself or on behalf of any other person or entity, directly or indirectly, either as
principal, agent, stockholder, employee, consultant, representative or in any other capacity, own,
manage, operate or control, or be concerned, connected or employed by, or otherwise associate in
any manner with, engage in or have a financial interest in any business which creates or develops
products which are directly competitive with the products of the Company in any geographic location
in which the Company is then operating (the “restricted Territory”), except that nothing contained
herein shall preclude you from purchasing or owning securities of any such business if such
securities are publicly traded, and provided that your holdings do not exceed three (3%) percent of
the issued and outstanding

 

 

securities of any class of securities of such business; or

                    (ii) Either individually or on behalf of or through any third party, solicit, diver or
appropriate or attempt to solicit, divert or appropriate, for the purpose of competing with the
Company or any present or future parent, subsidiary or other affiliate of the Company which is
engaged in a similar business as the Company, any customers or patrons of the Company, or any
prospective customers or patrons with respect to which the Company has developed or made a sales
presentation (or similar offering of services), located within the Restricted Territory; or

                    (iii) Either individually or on behalf of or through any third party, directly or indirectly,
solicit, entice or persuade or attempt to solicit, entice or persuade any other employees of or
consultants to the company or any present or future parent, subsidiary or affiliate of the Company
to leave the services or the Company or any such parent, subsidiary or affiliate for any reason.

               (b) Reasonableness of Restrictions. You further recognize and acknowledge that (i) the
types of employment which are prohibited by this Section 4 are narrow and reasonable in relation to
the skills which represent your principal salable asset both to the Company and to your other
prospective employers, and (ii) the specific but broad geographical scope of the provisions of this
Section 4 is reasonable, legitimate and fair to you in light of the Company’s need to market its
services and sell its products in a large geographic area in order to have a sufficient customer
base to make the Company’s business profitable and in light of the limited restrictions on the type
of employment prohibited herein compared to the types of employment for which you are qualified to
earn your livelihood.

               (c) Survival of Acknowledgements and Agreements. Your acknowledgements and agreements
set forth in this shall survive the expiration or termination of this Agreement and the termination
of your employment with the Company for any reason.

          5. Protected Information. You shall at all times, both during and after any
termination of this Agreement by either you or the Company, maintain in confidence and shall not,
without the prior written consent of the Company, use, except in the course of performance of your
duties for the Company, disclose or give to others any Confidential and Proprietary Information.
For purposes of this Agreement, “Confidential and Proprietary Information” means confidential and
proprietary information of the Company which was disclosed to or developed by you during the course
of performing services for, or receiving training from, the Company, and is not available to the
public, including but not limited to information and facts concerning business plans, customers,
future customers, suppliers, licensors, licensees, partners, investors, affiliates or others,
training methods and materials, financial information, sales prospects, client lists, inventions,
or any other scientific, technical, trade or business secret of the Company or any third party
provided to you or the Company under a condition of confidentiality, provided that Confidential and
Proprietary Information shall not include information that is (1) in the public domain other than
through any fault or act by you, (2) known to you prior to its disclosure to you in the course of
your employment by the Company, or (3) lawfully disclosed to you by a source other than the Company
which source has the legal right to disclose such information.

 

 

          6. Ownership of Ideas, Copyrights and Patents. You agree that 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 which may be used in the business of the Company, whether patentable,
copyrightable or not, which you may conceive, reduce to practice or develop during your employment
with the Company (collectively, “the Inventions”), alone or in conjunction with another, or others
and whether at the request or upon the suggestion of the Company, or otherwise, shall be the sole
and exclusive property of the Company, and that you shall not publish any of the Inventions without
the prior written consent of the Company. You hereby assign to the Company all of your right, title
and interest in and to all of the foregoing. You further represent and agree that to the best of
your knowledge and belief none of the Inventions will violate or infringe upon any right, patent,
copyright, trademark or right of privacy, or any 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. You agree that you will fully cooperate with the Company, its attorneys and
agents in the preparation and filing of all papers and other documents as may be required to
perfect the Company’s rights in and to any of such Inventions.

          7. Disclosure to Future Employers. You agree that you will provide, and that the
Company may similarly provide in its discretion, a copy of the covenants contained in Sections 4, 5
and 6 of this Agreement to any business or enterprise which you may directly, or indirectly, own,
manage, operate, finance, join, control or in which you participate in the ownership, management,
operation, financing or control, or with which you may be connected as an officer, director,
employee, partner, principal, agent, representative, consultant or otherwise.

          8. Records. Upon termination of your relationship with the Company, you shall deliver
to the Company any property of the Company which may be in your possession including products,
materials, memoranda, notes, records, reports, or other documents or photocopies of the same.

          9. No Conflicting Agreements. You hereby represent and warrant that you have no
commitments or obligations inconsistent with this Agreement and you hereby agree to indemnify and
hold the Company harmless against loss, damage, liability or expense arising from any claim based
upon circumstances alleged to be inconsistent with such representation and warranty.

          10. Other. Based upon financial evaluation of the value in your unvested Gilead
options, OSI will be granting you 25,000 options of OSI common stock.

 

 

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/ Coling Goddard
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Colin Goddard
	 

	 	 	 	Title:	 	CEO
	 
	 	 	 	 	 	 
	          /s/ Robert L. Simon
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Print Name       Robert L. Simon

	 	 	 	 	 	Date

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