Document:

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.

11EX-10.2

 

Exhibit 10.2

ESCROW AGREEMENT

     This Escrow Agreement (the “Agreement”) dated as of September 8, 2006, among Omega Protein
Corporation, a Nevada corporation (“Purchaser”), with an address of 2101 CityWest Boulevard,
Building 3, Suite 500, Houston, Texas 77042, Zapata Corporation, a Nevada corporation (the
“Seller”), with an address of 100 Meridian Centre, Suite 350, Rochester, New York 14618 and
Manufacturers and Traders Trust Company (the “Escrow Agent”). Capitalized terms used but not
defined herein have the meanings assigned to them in the Purchase Agreement;

     WHEREAS, the Purchaser and the Seller have entered into a Stock Purchase Agreement (the
“Purchase Agreement”), on even date herewith, pursuant to which the Purchaser has agreed to
repurchase from the Seller and the Seller has agreed to sell to the Purchaser 9,268,292 shares (the
“Shares”) of common stock, par value $0.01 per share of Purchaser on the terms and conditions
therein; and

     WHEREAS, in accordance with the provisions of Section 3.1 of the Purchase Agreement, (a) the
Purchaser has agreed to deliver to the Escrow Agent the Purchase Price payable under the Purchase
Agreement, and (b) the Seller has agreed to deliver to the Escrow Agent the certificates
representing the Shares and stock powers duly endorsed to the Purchaser, in each case to be held by
the Escrow Agent in accordance with the terms and provisions of this Agreement;

     NOW THEREFORE, the parties hereto agree as follows:

Section 1. Escrow Agent. The Purchaser and the Seller hereby appoint and designate
Manufacturers and Traders Trust Company, as Escrow Agent for the purposes set forth in this
Agreement. (All references to the Escrow Agent, as that term is used in this Agreement, shall
refer to the Escrow Agent solely in its capacity as an escrow agent under the terms of this
Agreement, and not to it in any other capacity whatsoever whether as individual, agent, attorney,
fiduciary, trustee or otherwise.) The Escrow Agent hereby accepts such appointment, and agrees to
hold, invest, disburse and release all assets and property deposited with it hereunder (the
“Escrowed Property”) in accordance with the terms hereof.

Section 2. Deposits.

     (a) Purchase Price. Subject to the terms of the Purchase Agreement, within forty-five
(45) days following the date hereof (or such later date as the Purchaser and the Seller parties may
agree in writing), the Purchaser shall deposit with the Escrow Agent by wire transfer of
immediately available funds an amount of U.S. $47,500,000 to an escrow account designated by the
Escrow Agent (the “Escrowed Purchase Price”).

     (b) Shares and Distributions. Subject to the terms of the Purchase Agreement, within
forty-five (45) days following the date hereof (or such later date as the Purchaser and the Seller
may agree in writing), the Seller shall deliver to the Escrow Agent that certain share certificate
of Omega Protein Corporation number OM0000230, registered in the name of the Seller dated September
6, 2006 (the “Certificate”) which represents the Shares, together with the relating stock powers
duly endorsed in blank (the “Escrowed Shares”). If delivery of the Escrowed Shares shall be made
other than by hand, the Seller shall ensure that the Certificate and the relating stock powers are
delivered to Escrow Agent under separate cover. If during the term of this Escrow Agreement, a
dividend or other distribution shall be made or issued upon or on account of any of the Escrowed
Shares (an “Escrowed Distribution”), the Seller shall, immediately following receipt thereof,
deliver such Escrowed Distribution to the Escrow Agent to be retained by the Escrow Agent with the
Escrowed Shares and eventually distributed therewith in accordance with the terms hereof. As long
as the Escrowed Shares are held in escrow in accordance with this Agreement, the Seller shall have
the right to vote all Escrowed Shares and other rights as a stockholder with respect thereto.

     (c) Investment of Purchase Price. The Escrow Agent shall invest and reinvest all
funds received under this Agreement as directed in a written instruction (an “Investment Direction
Letter”) signed jointly by the Purchaser and Seller in one of the following (the “Permitted
Investments”):

          (i) MTB U.S. Government Money Market Fund, a AAA rated money market deposit

46

 

account of Manufacturers and Traders Trust Company;

          (ii) United States Treasury Bills with a maturity of 30 days, or

          (iii) as otherwise directed jointly in writing by the Purchaser and the Seller provided such
investment can be accommodated by the Escrow Agent.

          In the absence of an Investment Direction Letter, the Escrow Agent shall invest and reinvest
all funds in (i) above. In addition, any residual cash which cannot be invested in (ii) or (iii)
above and any cash awaiting investment in (ii) or (iii) above shall be invested in (i) above. All
interest or other income received in respect of the Escrowed Purchase Price or the Escrowed
Distributions shall be added thereto and reinvested by Escrow Agent in accordance herewith until
the Escrowed Property is distributed in accordance with Section 4 hereof.

Section 3. Distribution of Interest and Other Income, Allocation of Taxes.

     (a) At the time of the distribution in accordance with the terms of this Agreement, the Escrow
Agent shall pay (i) to the Purchaser, in accordance with Section 4 hereof, all Accrued Interest
since the date of its deposit with the Escrow Agent, and (ii) to the party receiving Escrowed
Distributions, in accordance with Section 4 hereof, all interest or other income received in
respect thereof since the date of its deposit with the Escrow Agent.

     (b) All income accrued with respect to any interest or other income accrued in respect of the
Escrowed Purchase Price shall be allocated by the Escrow Agent to the Purchaser, in accordance with
Section 4 hereof.

     (c) All income accrued with respect to any interest or other income accrued in respect of the
Escrowed Distributions shall be allocated by the Escrow Agent to the party receiving such Escrowed
Distributions, in accordance with Section 4 hereof.

     (d) In the event there shall exist, at the end of any calendar year, any undistributed income
accrued in respect of any Escrowed Property, Purchaser and Seller shall provide the Escrow Agent
with joint instructions as to how such income should be attributed for 1099 reporting purposes.

Section 4. Distribution of Escrow.

     (a) General. The Escrow Agent shall hold the Escrowed Property and shall not deliver
any amounts thereof to any party other than (i) in accordance with Sections 4(b) and 4(c), (ii)
pursuant to an Award (as defined below), or (iii) by depositing the Escrowed Property with a court
of competent jurisdiction as provided in Section 5(f) below or successor escrow agent in accordance
with Section 8 below. Immediately following the disbursement of the Escrowed Property in
accordance with the terms and conditions of this Escrow Agreement, the Escrow Agent shall be
released from all of its obligations hereunder.

     (b) Closing Conditions Satisfied. Immediately following the satisfaction or waiver of
the closing conditions by the party entitled to assert any such conditions in Article 8 of the
Purchase Agreement and no later than two business days prior to the Closing Date, the Purchaser and
the Seller shall deliver to the Escrow Agent a written notice (the “Closing Notice”) signed by the
Purchaser and the Seller certifying that the closing conditions under Article 8 of the Purchase
Agreement have been satisfied or waived and providing the date which the parties agreed to be the
Closing Date. On the Closing Date, the Escrow Agent shall deliver: (i) the Escrowed Purchase Price
to the Seller by wire transfer of immediately available funds in accordance with written wire
transfer instructions provided by the Seller, and (ii) the certificates representing the Shares,
the stock powers duly endorsed to the Purchaser, the Escrowed Distributions together with interest
and earnings thereon and all Accrued Interest on the Escrowed Purchase Price to the Purchaser at
the address set forth in Section 9(b) and by wire transfer of immediately available funds in
accordance with written wire transfer instructions provided by the Purchaser, as applicable.

     (c) Termination of Purchase Agreement. If the Escrow Agent receives a written notice
(“Termination Notice”) from either the Purchaser or the Seller (a copy of which shall be
simultaneously given to the other party) that it has terminated the Purchase Agreement pursuant to
and in accordance with Article 10 thereof, and does not within ten (10) calendar days
thereafter receive a written notice from the other party objecting to the

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release of the Escrowed Property (“Termination Objection Notice”), a copy of which shall be
simultaneously given to the other party), the Escrow Agent shall deliver on the eleventh
calendar day following the Escrow Agent’s receipt of such Termination Notice, (i) the Escrowed
Purchased Price together with the interest and other earnings thereon to the Purchaser by wire
transfer of immediately available funds in accordance with written wire transfer instructions
provided by the Purchaser and (ii) the Escrowed Shares to the Seller at the address set forth in
Section 9(b) and the Escrowed Distributions together with interest and earnings thereon to the
Seller by wire transfer of immediately available funds in accordance with written wire transfer
instructions provided by the Seller. If within 10 days following its receipt of a Termination
Notice, the Escrow Agent receives a Termination Objection Notice, the Escrow Agent shall continue
to hold the Escrowed Property until Escrow Agent receives a Settlement Memorandum or an Award is
granted, in each case in accordance with Section 4(e).

     (d) Reliance by Escrow Agent. Subject to Escrow Agent’s normal procedures, including
the confirmation procedures contained in Section 9(a), Escrow Agent shall be entitled to rely
conclusively on: (i) any Closing Notice or Termination Notice received by it in accordance with
Section 4(b) or 4(c); and (ii) any Termination Objection Notice received by it.

     (e) Resolution of Dispute.

          (i) In case there is delivered to the Escrow Agent a Termination Objection Notice, the
Purchaser and the Seller shall endeavor to agree upon the rights of the respective parties with
respect to the Escrowed Property. If the parties should so agree, a memorandum (a “Settlement
Memorandum”) setting forth such agreement and containing instructions to the Escrow Agent shall be
prepared, signed by both parties and furnished to the Escrow Agent. The Escrow Agent shall be
entitled to rely conclusively on any such Settlement Memorandum. If the Parties are unable to so
agree, then, upon a Final Determination (as defined below), the prevailing party shall submit such
Final Determination to the Escrow Agent, together with an opinion of counsel for the presenting
party reasonably satisfactory to the Escrow Agent to the effect that such decision is a Final
Determination, and the Escrow Agent shall disburse the Escrowed Property as instructed in such
Final Determination. The Escrow Agent shall act on such Final Determination (and opinion of
counsel) without further question. In addition, notwithstanding any of the provisions herein to
the contrary, the Escrow Agent shall disburse the Escrowed Property from time to time as the
Purchaser and the Seller shall jointly notify the Escrow Agent in writing, promptly after receipt
by the Escrow Agent of a joint written notice from the Purchaser and the Seller. A Final
Determination” shall mean a final non-appealable judgment of a court of competent jurisdiction and
shall be accompanied by an opinion of counsel for the presenting party reasonably satisfactory to
the Escrow Agent to the effect that such judgment is a Final Determination.

          (ii) If a dispute over the Escrow Agent’s duties with respect to the disposition of the
Escrowed Property has not been finally resolved in accordance with procedure of Section 4(e)(i),
any such dispute shall be settled by filing a demand for arbitration with the American Arbitration
Association (“AAA”). Such dispute shall then be settled by one (1) arbitrator having reasonable
experience in corporate finance transactions of the type provided for in this Agreement to be
chosen by the AAA. The arbitration will be conducted on an expedited basis in accordance with the
Commercial Rules of the AAA in effect on the date a demand for arbitration is filed with the AAA.
The Arbitrator shall, within 10 business days of his designation, deliver a report to the Seller,
the Purchaser and the Escrow Agent containing the Arbitrator’s conclusions regarding the final
disbursement of the Escrowed Property (the “Award”), which Award shall contain detailed
instructions to Escrow Agent as to the disbursement of such Escrowed Property. The Award shall be
final, conclusive and binding on the parties. Judgment on the Award rendered by the arbitrator may
be entered in any court having jurisdiction thereof. The place of arbitration shall be in Buffalo,
New York.

Section 5. Rights, Obligations and Indemnification of Escrow Agent. 

     (a) The Escrow Agent shall neither be responsible for or under, nor chargeable with knowledge
of, the terms and conditions of any other agreement, instrument or document executed between/among
the parties hereto. This Agreement sets forth all of the obligations of the Escrow Agent, and no
additional obligations shall be implied from the terms of this Agreement or any other agreement,
instrument or document.

     (b) The Escrow Agent may act in reliance upon any instructions, notice, certification, demand,
consent, authorization, receipt, power of attorney or other writing delivered to it by any other
party without being required to determine the authenticity or validity thereof or the correctness
of any fact stated therein, the propriety or

48

 

validity of the service thereof, or the jurisdiction of the court issuing any judgment or
order. The Escrow Agent may act in reliance upon any signature believed by it to be genuine, and
may assume that such person has been properly authorized to do so.

     (c) Each of the parties, jointly and severally, agrees to reimburse the Escrow Agent on demand
for, and to indemnify and hold the Escrow Agent harmless against and with respect to, any and all
loss, liability, damage or expense (including, but without limitation, attorneys’ fees, costs and
disbursements) that the Escrow Agent may suffer or incur in connection with this Agreement and its
performance hereunder or in connection herewith, except to the extent such loss, liability, damage
or expense arises from its willful misconduct or gross negligence as adjudicated by a court of
competent jurisdiction.

     (d) The Escrow Agent may consult with legal counsel of its selection in the event of any
dispute or question as to the meaning or construction of any of the provisions hereof or its duties
hereunder, and it shall incur no liability and shall be fully protected in acting in accordance
with the opinion and instructions of such counsel. Purchaser agrees to reimburse the Escrow Agent
on demand for such legal fees, disbursements and expenses.

     (e) The Escrow Agent shall be under no duty to give the Escrowed Property by it hereunder any
greater degree of care than it gives its own similar property.

     (f) In the event of any disagreement between/among any of the parties to this Agreement, or
between/among them or either or any of them and any other person, resulting in adverse claims or
demands being made in connection with the subject matter of the Escrowed Property, or in the event
that the Escrow Agent, in good faith, be in doubt as to what action it should take hereunder, the
Escrow Agent may, at its option, refuse to comply with any claims or demands on it, or refuse to
take any other action hereunder, so long as such disagreement continues or such doubt exists, and
in any such event, the Escrow Agent shall not become liable in any way or to any person for its
failure or refusal to act, and the Escrow Agent shall be entitled to continue so to refrain from
acting until (i) the rights of all parties shall have been fully and finally adjudicated by a court
of competent jurisdiction, or (ii) all differences shall have been adjusted and all doubt resolved
by agreement among all of the interested persons, and the Escrow Agent shall have been notified
thereof in writing signed by all such persons. The Escrow Agent shall have the option, after 30
calendar days’ notice to the other parties of its intention to do so, to file an action in
interpleader requiring the parties to answer and litigate any claims and rights among themselves.
The rights of the Escrow Agent under this paragraph are cumulative of all other rights which it may
have by law or otherwise.

Section 6. Tax Reporting. The Escrow Agent shall make payments of income earned on
the Escrowed Property as provided herein. Each such payee shall provide to the Escrow Agent an
appropriate W-9 form for tax identification number certification or a W-8 form for non-resident
alien certification. The Escrow Agent shall be responsible only for income reporting to the
Internal Revenue Service with respect to income earned on the escrowed property.

Section 7. Fees, Expenses and Charges. The Purchaser shall be solely liable for
the fees, expenses and charges of the Escrow Agent in accordance Schedule A attached hereto,
including reasonable fees, out-of-pocket expenses and charges of counsel engaged by it in
connection with the execution of this Agreement and its services under this Agreement, which fees,
out-of-pocket expenses and charges shall be payable on demand.

Section 8. Resignation of Escrow Agent, Successor. The Escrow Agent may, in its
sole discretion, resign and terminate its position hereunder at any time following 30 calendar
days’ written notice to the parties to the Agreement. Any such resignation shall terminate all
obligations and duties of the Escrow Agent hereunder. On the effective date of such resignation,
the Escrow Agent shall deliver this Agreement together with any and all related instruments or
documents to any successor Escrow Agent agreeable to the parties, subject to this Agreement. If a
successor Escrow Agent has not been appointed prior to the expiration of 30 calendar days following
the date of the notice of such resignation, the then acting Escrow Agent may petition any court of
competent jurisdiction for the appointment of a successor Escrow Agent, or other appropriate
relief. Any such resulting appointment shall be binding upon all of the parties to this Agreement.

Section 9. Miscellaneous.

     (a) Escrow Agent’s Right to Confirm Instructions. In the event funds transfer
instructions are given

49

 

(other than in writing at the time of execution of this Agreement), whether in writing, by
telecopier or otherwise, the Escrow Agent is authorized to seek confirmation of such instructions
by telephone call back to the person or persons designated in incumbency certificates for each
party delivered by the parties concurrently herewith, and the Escrow Agent may rely upon the
confirmations of anyone purporting to be the person or persons so designated. To assure accuracy of
the instructions it receives, the Escrow Agent may record such call backs. If the Escrow Agent is
unable to verify the instructions, or is not satisfied with the verification it receives, it will
not execute the instruction until all issues have been resolved. The persons and telephone numbers
for call backs may be changed only in writing actually received and acknowledged by the Escrow
Agent. The parties agree to notify the Escrow Agent of any errors, delays or other problems within
30 calendar days after receiving notification that a transaction has been executed. If it is
determined that the transaction was delayed or erroneously executed as a result of the Escrow
Agent’s error, the Escrow Agent’s sole obligation is to pay or refund such amounts as may be
required by applicable law. In no event shall the Escrow Agent be responsible for any incidental or
consequential damages or expenses in connection with the instruction. Any claim for interest
payable will be at the Escrow Agent’s published savings account rate in effect in New York, New
York.

     (b) Notices. All notices, requests, claims, demands and other communications
hereunder shall be communicated in writing, mailed by first class mail, by facsimile or delivered
by hand at the address (or such other address for a party as such party may specify by written
notice given pursuant hereto) set forth below:

	 	 	 	 	 
	 

	 	Escrow Agent:
	 	Manufacturers and Traders Trust Company

One M&T Plaza

Buffalo, NY 14203

Fax: 716-842-5839

Attention:

	 

	 	Purchaser:
	 	Omega Protein Corporation

2101 City West Blvd., Bldg. 3, Suite 500

Houston, Texas 77042

Attn: John D. Held

Facsimile: (713) 940-6122

	 

	 	 	 	With a copy to:

	 

	 	 	 	Porter & Hedges, L.L.P.

1000 Main Street, 36th Floor

Houston, Texas 77002

Attn: Robert G. Reedy

Facsimile: (713) 226-0274

	 

	 	The Seller :
	 	Zapata Corporation

100 Meridian Centre

Suite 350

Rochester, New York 14618

Facsimile: (585) 242-8677

Attention: Avram A. Glazer, President and Chief

Executive Officer

	 

	 	 	 	With a copy (which shall not constitute notice) to:

	 

	 	 	 	Woods Oviatt Gilman LLP

700 Crossroads Building

2 State Street

Rochester, New York 14614

Telephone: 585.987.2800

Facsimile: 585.987.2901

Attention: Gordon E. Forth, Esq.

50

 

The Escrow Agent shall provide monthly account statements and transaction advices to all parties
identified in this Section 9(b) unless instructed otherwise in writing by the party in question.

Notwithstanding any of the foregoing, any computation of a time period which is to begin after
receipt of a notice by the Escrow Agent shall run from the date of receipt by it.

     (c) No Waivers; Remedies. No failure or delay by the any party in exercising any
right, power or privilege under this Agreement shall operate as a waiver of the right, power or
privilege. A single or partial exercise of any right, power or privilege shall not preclude any
other or further exercise of the right, power or privilege or the exercise of any other right,
power or privilege. The rights and remedies provided in this Agreement shall be cumulative and not
exclusive of any rights or remedies provided by law.

     (d) Amendments, Etc. No amendment, modification, termination, or waiver of any
provision of this Agreement and no consent to any departure by a party from any provision of this
Agreement, shall be effective unless it shall be in writing and signed and delivered by the other
parties, and then it shall be effective only in the specific instance and for the specific purpose
for which it is given.

     (e) Successors and Assigns; No Third Party Beneficiaries, Etc. All provisions hereof
shall inure to the benefit of and be binding upon, the parties hereto and their successors and
assigns. No other parties shall have any rights under or be entitled to enforce this Agreement.

     (f) Governing Law. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York without reference to conflicts of law principles.
Any litigation between the parties involving the Escrow Agent’s duties under this Agreement shall
be adjudicated in a court located in either Erie County, New York. The parties hereby irrevocably
consent to the jurisdiction and venue of such courts, including with respect to any interpleader
proceeding or proceeding for the appointment of a successor escrow agent the Escrow Agent may
commence pursuant to this Agreement.

     (g) Counterparts and Facsimile Signatures. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if all signatures were
on the same instrument. This Agreement may be executed by facsimile signature transmitted to any
other party by electronic transmission. The parties shall be bound by a facsimile signature once
transmitted to another party. The latter transmission of an originally executed copy of any such
document shall not invalidate any signature previously given by electronic transmission.

     (h) Severability of Provisions. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
the prohibition or unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other jurisdiction.

     (i) Entire Agreement. This Agreement contains the entire agreement between the
Purchaser, the Seller and the Escrow Agent as to the subject matter hereof. Other than the
Purchase Agreement and the Acquisition Documents, there are no other agreements, arrangements or
undertakings, oral or written, between the parties hereto relating to the subject matter hereof or
to the Purchase Agreement.

     (j) Force Majeure. The Escrow Agent shall not incur any liability for not performing
any act or fulfilling any obligation hereunder by reason of any occurrence beyond its control
(including, but not limited to, any provision of any present or future law or regulation or any act
of any governmental authority, any act of God or war or terrorism, or the unavailability of the
Federal Reserve Bank wire services or any electronic communication facility).

51

 

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date
first written above.

	 	 	 	 	 	 
	 	 	OMEGA PROTEIN CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Joseph L. von Rosenberg III
	 

	 	 	 	 
	 

	 	Name:
	 	Joseph L. von Rosenberg III
	 

	 	Title:
	 	President
	 
	 	 	 	 
	 	 	ZAPATA CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Avram A. Glazer
	 

	 	 	 	 
	 

	 	Name:
	 	Avram A. Glazer
	 

	 	Title:
	 	President and Chief Executive Officer
	 
	 	 	 	 
	 	 	MANUFACTURES & TRADERS TRUST COMPANY
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Joan Stapley
	 

	 	 	 	 
	 

	 	Name:
	 	Joan Stapley
	 

	 	Title:
	 	Assistant Vice President

52

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