Document:

EX-10.1

 

Exhibit 10.1

CONSULTING AGREEMENT

     This Consulting Agreement (hereinafter the “Agreement”), is entered into and effective as of
September 1, 2007, between JOHN T. La DUC (hereinafter “Consultant”) and FOSTER WHEELER INC., a
Delaware corporation (collectively with its direct and indirect parents, subsidiaries and
affiliates, the “Company” or “FW”).

     WHEREAS, Consultant retired as an employee of Foster Wheeler Inc effective August 13, 2007;
and

     WHEREAS, FW desires to retain Consultant to provide certain services to FW as specified
herein; and

     WHEREAS, Consultant is able to provide said services and desires to provide the same to FW,
its affiliates, and its representatives on the terms and conditions set forth herein.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and in further consideration of the following mutual promises, covenants and
undertakings, the parties agree as follows:

	 	1.	 	Term. The term of this Agreement shall commence as of September 1,
2007 and shall continue in effect through February 29, 2008. Termination of this
Agreement, except for cause, before February 29, 2008, may occur only by mutual consent
or the death or permanent and total disability of Consultant as a result of bodily
injury, disease or mental disorder. This Agreement may be renewed for such term, and
upon such terms and conditions, as the parties may agree in a further writing.
	 
	 	2.	 	Consulting Services.

2.1. Consultant shall perform non-exclusive consulting services for FW primarily
in the nature of the services provided when consultant was Executive Vice President
& Chief Financial Officer of FW, which employment ended on August 13, 2007. A
listing of subject areas in which FW and Consultant have agreed that Consultant will
provide services to the Company is attached to this Agreement and incorporated
herein by reference.

2.2. Any additional services by Consultant beyond those referenced in Article 2.1
above shall be performed by Consultant only as agreed between Consultant and FW’s
CFO.

2.3. Consultant shall at all times act in accordance with his own best
judgment, experience and expertise as an independent Consultant. Consultant shall
routinely communicate the status and progress of the services being performed by
Consultant to FW’s CFO.

2.4 Consultant may perform consulting services and/or serve on boards of directors
for persons other than FW so long as such other services do not present a conflict
of interest for Consultant. Consultant shall advise FW if he enters into

 

 

any agreements to perform consulting services for any other entity or has agreed to
serve on the board of directors of any other entity. Consultant will arrange his
schedule and other work to ensure that FW work remains the primary priority for
Consultant’s time. Should Consultant request a waiver of any potential conflict
with respect to either other services or time, FW will not unreasonably withhold its
consent to such waiver.

	 	3.	 	Fees and Reimbursements/Invoices.

     3.1. Consultant’s compensation will be as follows:

     3.1.1. A base fee of $14,400 per month (“Base Fee”), exclusive of expenses,
for which Consultant will provide up to 36 hours of services. The Consultant’s mere
travel time (i.e. time when Consultant is traveling, but not also performing other
types of work) will be counted at one-half the number of hours spent so traveling,
and there will be no premium for weekend or holiday work.

     3.1.2. Monthly hours worked in excess of 36, up to a maximum of 104
(“Additional Fee”), exclusive of expenses, will be billed at $400 per hour, subject
to the same terms and conditions for travel, weekend and holiday work as provided in
Article 3.1.1. In the absence of a written agreement signed by Consultant and FW,
Consultant shall neither work, nor be paid for, more than 104 hours per month.

     3.2. Consultant’s compensation and expense reimbursement shall be paid as
follows:

     3.2.1 Beginning in September 2007 and each month thereafter during the term of
the Agreement, Consultant’s Base Fee will be paid automatically in advance by FW by
wire transfer monthly on the first business day between the first and fifth day of
the month.

     3.2.2 Beginning in October 2007 and each month thereafter during the term of
the Agreement, by the fifth day of the month, Consultant will provide an invoice for
the previous month that provides a summary of time and activities as to the Base
Fee, and a reasonably detailed description of services and time, rounded up to the
nearest tenth of the hour, for any Additional Fee earned during the previous month.
Consultant will also submit a reasonably detailed schedule of expenses for
reimbursement including receipts. Bills and receipts may be submitted
electronically.

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     3.2.3 Statements for services and requests for expense reimbursement shall be
submitted to

Foster Wheeler, Inc.

Attn: Franco Baseotto, Executive Vice President and CFO

Perryville Corporate Park

Clinton, NJ 08809-4000

Fax: (908) 730-5300

E-mail : franco_baseotto@fwc.com

     3.2.4 FW will promptly review the statements submitted with respect to the
Additional Fee and requests for expense reimbursement, and will pay all undisputed
Additional Fee and expense reimbursement amounts within 15 days of FW’s receipt of
such statement. Questions regarding any Additional Fee and/or expenses will be
addressed promptly with a view toward reaching an agreement, and payment for any
questioned Additional Fee and/or expense amounts will be paid on the later of 15
days after the statement was received or 10 days after the questions are resolved.
As to the Base Fee, FW may request additional information concerning the content of
the Base Fee description and time but may not withhold payment of the Base Fee.

3.3 If this Agreement is terminated before its expiration date as a result of
Consultant’s death or disability, FW shall pay Consultant or his estate any
Additional Fees that he earned prior to his death or disability, but shall have no
further obligation pursuant to Article 3 of this Agreement. If this Agreement is
terminated before its expiration date for “Cause,” FW shall have no further
obligation pursuant to Article 3 of this Agreement. For the purposes of this
Agreement, “Cause” shall have the same meaning as in the Employment Agreement (as
defined in Article 4 of this Agreement). If FW otherwise terminates this Agreement
before its expiration date, FW shall remain liable for the Base Fees otherwise due
through the expiration date, but shall have no further obligation pursuant to
Article 3 of this Agreement.

	 	4.	 	No Employee Benefits. Consultant and FW agree that Consultant
(including his employees and agents) shall not be entitled to participate in any
employee benefit plans or arrangements or fringe benefit plans or programs or payroll
practice maintained or contributed to by FW or its affiliates for their employees as a
result of providing consulting services or otherwise with relation to this Agreement,
provided, however, it is understood that Consultant may be entitled to certain
benefits related to his April 14, 2004 employment agreement with Foster Wheeler Ltd.,
as amended, (“Employment Agreement”) and his retirement from FW, which entitlement
shall not be affected by this Agreement. Consultant hereby waives any and all claims
to any Company sponsored benefits related to his provision of consulting services or
otherwise with relation to this Agreement even if Consultant (including his employees
and agents) at a later date is determined or adjudged to be a common law or statutory
employee of the Company as a result of performing the consulting services under this
Agreement. Accordingly, there

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	 	 	 	will be no withholdings from the compensation described in Articles 2 and 3 above.

	 	5.	 	Nature of Relationship.

5.1. It is expressly acknowledged and agreed that, in performing any consulting
services pursuant to this Agreement, Consultant shall be an independent contractor
to FW and Consultant shall not be considered as having employee or agent status with
respect to FW or any of its subsidiaries or affiliates for any purpose.
Accordingly, FW shall not supervise, control or direct the manner or means by which
Consultant performs the consulting services, and Consultant shall have no authority
to contractually bind FW without FW’s express written consent.

5.2. Consultant shall be solely responsible for payment of all Federal, state and
local taxes arising out of or imposed on Consultant as a result of Consultant’s
performance of the consulting services or receipt of the compensation described in
Articles 2 and 3 above, including by way of illustration but not limitation,
Federal, state and local income taxes, Social Security taxes or social insurance
obligations and any other taxes or business license fees required to be paid by
Consultant by applicable law. FW shall not carry workers’ compensation insurance or
any health or accident insurance to cover Consultant nor pay any amounts on account
of Consultant for purposes of Social Security or social insurance, unemployment
insurance, or Federal, state or local withholding and employment taxes, and shall
not provide any other contributions or benefits on account of the Consultant which
might be required or customary in connection with an employer-employee relationship.

5.3. Consultant agrees to indemnify and hold harmless FW and its subsidiaries and
affiliates, and their respective directors, officers and employees (“FW Indemnified
Parties”), from and against any taxes, penalties, interest, liabilities, costs or
expenses (including, without limitation, reasonable attorney’s fees and
disbursements) incurred by FW Indemnified Parties arising out of or related to
Consultant’s material breach of his obligations under Article 5.2 hereof.
Consultant agrees to reimburse FW and its subsidiaries and affiliates for any
amounts that the Internal Revenue Service and/or any state or local tax authority
claims should have been withheld by FW from monies paid to Consultant in accordance
with this Agreement or as a result of the reclassification of Consultant as an
employee of FW or its subsidiaries or affiliates or a determination that FW or any
of its subsidiaries or affiliates shall be considered the employer of Consultant for
any purpose.

	 	6.	 	Indemnity. The Company agrees to the provisions of Annex 1 hereto
which provide for indemnification by the Company of Consultant. Such indemnification
is an integral part of this Agreement and the terms thereof are incorporated by
reference as if fully stated herein. The Consultant shall indemnify and hold harmless
FW Indemnified Parties from and against any Losses (as defined in Annex 1 hereto)
directly or indirectly related to Consultant’s breach of this

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	 	 	 	Agreement, or gross negligence, willful misconduct, bad faith or fraud in
conjunction with the Consulting Services to be provided under this Agreement;
provided, however, that the Consultant shall not be required to indemnify a FW
Indemnified Party for such Losses unless and until it is finally judicially
determined by a court of competent jurisdiction that such Losses arose primarily
because of the gross negligence, willful misconduct, bad faith or fraud of
Consultant.

	 	7.	 	Survival

The provisions of Articles 4, 5, 6, and 8-18, and any other provisions necessary to
carry out the intentions of the parties as expressed herein, shall survive the
termination or expiration of this Agreement.

	 	8.	 	Covenants of Consultant.

8.1. Consultant acknowledges that he has acquired and will acquire knowledge of
information relating to the confidential affairs of FW and its subsidiaries and
affiliates, including, but not limited to, financial information, technical
information, intellectual property, business and marketing plans, strategies,
customer information, process material, methodologies, manuals and strategic options
and models (collectively, “Confidential Information”). Consultant agrees that
during and after the time during which he provides Consulting Services (“Term”), he
(i) will hold inviolate, keep secret and will not divulge, transmit, or otherwise
disclose the Confidential Information (except as legally compelled by court order,
and then only to the extent required, after prompt notice to FW of any such order),
directly or indirectly, other than in the proper performance of the Consulting
Services, without the prior written consent of FW, and (ii) not use, directly or
indirectly, any Confidential Information for the benefit of anyone other than FW or
such subsidiary or affiliate; provided, however, that Consultant shall have no
obligation to refrain from disclosing to others or using any such Confidential
Information which is or hereafter shall become available to the public other than
through disclosure by the Consultant.

8.2. All Confidential Information, files, records, or correspondence, memoranda,
notes or other documents (including, without limitation, those in computer-readable
form) or property relating or belonging to FW or its subsidiaries or affiliates,
whether prepared by Consultant or otherwise coming into his possession in the course
of the performance of the Consulting Services, shall be the exclusive property of FW
and shall be delivered to FW or destroyed, as applicable, and not retained by
Consultant (including, without limitation, any copies or excerpts thereof), promptly
upon request by FW.

8.3. During, and for the period specified in the Employment Agreement, Consultant
shall not (i) in any way request, suggest or advise any customer of the Company to
withdraw or cancel any of their business or refuse to continue to do business with
the Company, or (ii) recruit, hire, solicit or induce any current

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employee of the Company to end his or her employment with the Company. For purposes
of this Article 8, “current employee” shall mean any employee of FW on September 1,
2007 or anyone who becomes an employee of FW during the Term of this Agreement.

	 	9.	 	Irreparable Harm. In the event of the breach or threatened breach of
Article 8 of this Agreement by Consultant, Consultant acknowledges that FW would have
no adequate remedy at law and, in the event of such breach, FW would be irreparably
harmed and shall, therefore, be entitled to injunctions, both preliminary and final,
enjoining and restraining such breach or threatened breach. Such remedies shall be in
addition to all other remedies available at law or in equity (including FW’s rights
under this Agreement).
	 
	 	10.	 	Successors and Assigns; Binding Effect. The Consulting Services are of
a unique and specialized nature, to be rendered by Consultant as provided in Article 1
above in reliance upon his unique knowledge and experiences. Consequently, this
Agreement and all rights and obligations hereunder are personal to Consultant, and
Consultant shall not assign his interest in, or delegate his duties under, this
Agreement, and any purported assignment in violation hereof shall not be valid or
binding on FW. The benefits of this Agreement and the indemnification and other
obligations of the Company to Consultant contained in Annex 1 hereto shall inure to the
respective successors and assigns of the parties hereto and thereto and of the
indemnified parties, and the obligations and liabilities assumed in this Agreement and
Annex 1 by the parties hereto and thereto shall be binding upon their respective
successors and assigns. This Agreement shall be binding upon and inure to the benefit
of FW and its successors and assigns.
	 
	 	11.	 	Governing Law and Venue. This Agreement has been negotiated, executed
and delivered at and shall be deemed to have been made in Clinton, New Jersey. This
Agreement shall be governed by and construed in accordance with the laws of the State
of New Jersey, without giving effect to such State’s principles of conflicts of laws.
Regardless of any present or future domicile or principal place of business of the
parties hereto, each such party hereby irrevocably consents and agrees that any and all
claims or disputes between the parties hereto pertaining to this Agreement or to any
matter arising out of or related to this Agreement shall be brought in any State or
Federal court of competent jurisdiction in the State of New Jersey. By execution and
delivery of this Agreement, each party submits and consents in advance to such
jurisdiction in any action or suit commenced in any such court. Each party hereto
hereby waives any objection which it may have based on lack of personal jurisdiction,
improper venue or forum non conveniens and hereby consents to
the granting of such legal or equitable relief as is deemed appropriate by such court.
The Company and the Consultant each consent to the service of process in accordance
with New Jersey Law.
	 
	 	12.	 	Severability. If any clause or provision herein shall be adjudged
invalid or unenforceable by a court of competent jurisdiction or by operation of any

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	 	 	 	applicable law, it shall not affect the validity of any other clause or provision
herein, which shall remain in full force and effect. To the extent any provision is
held invalid or unenforceable for being overly broad, it is the intention of the
parties hereto that the court enforce such provision to the limits of proper scope.

	 	13.	 	Entire Agreement. This Agreement contains the entire agreement between
Consultant and FW regarding his consulting arrangement with the Company, and it shall
supersede any and all other prior agreements, arrangements, or understandings, whether
oral or written, regarding Consultant’s consulting arrangement other than as set forth
in this Agreement, provided, however, that it is understood and agreed that
Consultant’s contractual rights and obligations as a former employee of Foster Wheeler
Inc. and its affiliate Foster Wheeler Ltd. are governed by his Employment Agreement.
If there is any irreconcilable conflict between the Employee Agreement and this
Agreement, the Employee Agreement shall govern.
	 
	 	14.	 	Modification. This Agreement may not be modified, changed, extended or
discharged orally, but only by an agreement that is in writing and executed by the
party against whom enforcement of any change, modification, extension or discharge is
sought. The waiver by either party of any breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach. No waiver
shall be valid hereunder unless it is in writing and executed by the party granting the
waiver.
	 
	 	15.	 	Counterparts. This Agreement may be executed in two counterparts, each
of which shall be deemed an original but all of which together shall constitute one and
the same instrument.
	 
	 	16.	 	Construction. The Company and the Consultant acknowledge that this
Agreement was the result of arm’s-length negotiations between sophisticated parties
each afforded representation by legal counsel. Each and every provision of this
Agreement shall be construed as though both parties participated equally in the
drafting of same, and any rule of construction that a document shall be construed
against the drafting party shall not be applicable to this Agreement.
	 
	 	17.	 	Notices. Any notices required or permitted to be given under this
Agreement shall be sufficient if in writing and either delivered in person or sent by
first class certified or registered mail, postage prepaid,

if to the Company at the Company’s principal place of business to the attention of
the Executive Vice President & Chief Financial Officer, and

if to Consultant, at 1 Laurelwood Drive, Bernardsville, NJ 07924,

or to such other address as either party shall have designated in writing to the
other party hereto.

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	 	18.	 	No Conflict. Consultant represents and warrants to FW that (a)
Consultant is not a party to any agreement, contract or arrangement which prohibits
Consultant’s engagement with FW pursuant to this Agreement and, (b) Consultant has not
and will not, in violation of any contract to which he is a party, bring with
Consultant to his engagement with FW any documents, records or other confidential
information belonging to others.

IN WITNESS WHEREOF, this Consulting Agreement has been executed by Consultant and FW
executed on the dates set forth on the signature page of this Agreement but effective as of
September 1, 2007.

	 	 	 	 	 
	JOHN T. La DUC

 	 	 
	/s/ John T. La Duc
 	 	 
	 	 	 
	 	 	 
	FOSTER WHEELER INC.

 	 	 
	By:  	/s/ Franco Baseotto
 	 	 
	 	Name:  	Franco Baseotto 	 	 
	 	Title:  	Executive Vice President & Chief Financial Officer 	 	 

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List of Subject Areas as to which Foster Wheeler Desires and Consultant Agrees to Provide Services

	 	•	 	U.S. Pension and Savings Plans
	 
	 	•	 	U.K. Pension Plan
	 
	 	•	 	Asbestos Accounting and Disclosure
	 
	 	•	 	SEC filings
	 
	 	•	 	Investor Relations
	 
	 	•	 	Audit Committee Preparations
	 
	 	•	 	External Auditor Matters
	 
	 	•	 	Rating Agency Matters
	 
	 	•	 	Credit Agreements
	 
	 	•	 	M&A Due Diligence

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     ANNEX 1

INDEMNITY

The Company shall indemnify and hold harmless Consultant and its officers, directors, shareholders,
employees, agents and other representatives (each an “Indemnified Person”) from and against any
losses, claims or proceedings, including, without limitation stockholder actions, damages,
judgments, assessments, investigation costs, settlement costs, fines, penalties, arbitration awards
any and other liabilities, costs, fees and expenses, including reasonable attorneys’ fees and
expenses (collectively, “Losses”) (a) directly or indirectly related to or arising out of
(i) oral or written information provided by the Company, the Company’s employees, directors or
other agents, which either the Company or Consultant provides to any person or entity or (ii) any
other action or failure to act by (A) the Company, the Company’s employees, directors or other
agents or (B) the Consultant at the Company’s request or with the Company’s consent, in each case
in connection with, arising out of, based upon, or in any way related to this Agreement, the
retention of and services provided by Consultant under this Agreement, or any transaction
authorized by the Company; or (b) otherwise directly or indirectly in connection with, arising out
of, based upon, or in any way related to the engagement of Consultant under this Agreement or any
transaction or conduct in connection therewith, provided that the Company shall not be required to
indemnify an Indemnified Person for such Losses if and only to the extent that it is finally
judicially determined by a court of competent jurisdiction that such Losses arose primarily because
of the gross negligence, willful misconduct, bad faith or fraud of any Indemnified Person. The
Company also shall indemnify and hold harmless Consultant from and against any Losses directly or
indirectly related to Company’s material breach or non-performance of this Agreement.

The Company shall advance all reasonable legal or other fees, disbursements or expenses incurred or
to be incurred (a) in investigating, preparing or pursuing any action or other proceeding (whether
formal or informal) or threat thereof, in connection with pending or threatened litigation or
arbitration and whether or not such Indemnified Person is a party (each, an “Action”) and
(b) in connection with enforcing Consultant’s rights under this Agreement; provided, however, that
in the event and only to the extent that it is finally judicially determined by a court of
competent jurisdiction that the Losses of an Indemnified Person arose primarily because of the
gross negligence, willful misconduct, bad faith or fraud of such Indemnified Person, such
Indemnified Person will promptly remit to the Company any amounts reimbursed under this paragraph.

Upon receipt by an Indemnified Person of notice of any Action, such Indemnified Person shall notify
the Company in writing of such Action, but the failure to so notify shall not relieve the Company
from any liability hereunder (i) if the Company had actual notice of such action or (ii) unless and
only to the extent that such failure results in the forfeiture by the Company of substantial rights
and defenses. The Company shall, if requested by such Indemnified Person, assume the defense of
any such Action including the employment of counsel reasonable satisfactory to such Indemnified
Person and will not, without the prior written consent of such Indemnified Person, settle,
compromise, consent or otherwise resolve or seek to terminate any pending or threatened Action
(whether or not any Indemnified Party is a party thereto) unless such settlement, compromise,
consent or termination (a) contains an express, unconditional

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release of such Indemnified Person from all liability relating to such Action and (b) does not
include a statement as to, or an admission of fault, culpability or a failure to act by or on
behalf of such Indemnified Person. The Indemnified Person shall be entitled to retain separate
counsel of his choice and participate in the defense of any Action in connection with any of the
matters to which this Agreement relates, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Persona unless (x) the parties to any such Action (including any
impleaded parties) include such Indemnified Person and the Company, and such Indemnified Person
shall have been advised by counsel that there may be one or more legal defenses available to the
Company; provided that the Company shall not in such event be responsible under this Agreement for
the fees and expenses of more than one firm of separate counsel (in addition to local counsel) in
connection with any such Action in the same jurisdiction.

The rights of Consultant hereunder shall be in addition to any other rights that Consultant may
have at common law, by statute or otherwise. Except as otherwise expressly provided for in this
Agreement, if any term, provision, covenant or restriction contained in this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void, unenforceable or against
its regulatory policy, the remainder of the terms, provisions, covenants and restrictions contained
in this Agreement shall all remain in full force and effect and shall in no way be affected,
impaired or invalidated. The reimbursement advancement, indemnity and contribution obligations of
the Company set forth herein shall apply to any modification of this Agreement and shall remain in
full force and effect regardless of any termination of, or the completion of Consultant’s services
under or in connection with, this Agreement.

11EX-10.1

 

Exhibit 10.1

OSI PHARMACEUTICALS, INC.

AMENDED AND RESTATED

STOCK INCENTIVE PLAN

(Including Amendments No. 1, 2, 3 and 4)

1. Purpose

     The purpose of this Amended and Restated Stock Incentive Plan (formerly, the 2001 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, directly or indirectly, 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. 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).

     Pursuant to the Plan, the Company may grant: (i) Incentive Stock Options; (ii) Non-Qualified
Stock Options; (iii) Stock Appreciation Rights; (iv) Restricted Stock; and (v) Stock Bonuses, as
such terms are defined in Section 2.

2. Definitions

     Capitalized terms not otherwise defined in the Plan shall have the following meanings:

               (a) “Award Agreement” shall mean a written agreement, in such form as the Committee shall
determine, that evidences the terms and conditions of a Stock Award granted under the Plan.

               (b) “Fair Market Value” on a specified date means the value of a share of Common Stock,
determined as follows:

                      (i) if the Common Stock is listed on any established stock exchange or a national market
system, including without limitation The Nasdaq Global Select Market, The Nasdaq Global Market, or
The Nasdaq Capital Market of The Nasdaq Stock Market, Inc., its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on
such exchange or system on the day of determination, as reported in The Wall Street Journal or such
other source as the Committee deems reliable;

                      (ii) if the Common Stock is regularly quoted by a recognized securities dealer but selling
prices are not reported, its Fair Market Value shall be the mean between the

 

 

high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or
such other source as the Committee deems reliable; or

                      (iii) in the absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Committee.

               (c) “Code” shall mean the Internal Revenue Code of 1986, as amended.

               (d) “Incentive Stock Option” shall mean an option that is an “incentive stock option” within
the meaning of Section 422 of the Code and that is identified as an Incentive Stock Option in the
Award Agreement by which it is evidenced.

               (e) “Non-Qualified Stock Option” shall mean an option that is not an Incentive Stock Option
within the meaning of Section 422 of the Code.

               (f) “Restricted Stock” shall mean an award of shares of Common Stock that is subject to
certain conditions on vesting and restrictions on transferability as provided in Section 8 of this
Plan.

               (g) “Stock Appreciation Right” shall mean a right to receive payment of the appreciated value
of shares of Common Stock as provided in Section 7 of this Plan.

               (h) “Stock Award” shall mean an Incentive Stock Option, a Non-Qualified Stock Option, a
Restricted Stock award, a Stock Appreciation Right or a Stock Bonus award.

               (i) “Stock Bonus” shall mean a bonus award payable in shares of Common Stock as provided in
Section 9 of this Plan.

3. 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 Committee shall consist solely of “independent”
members of the Board of Directors of the Company, determined in accordance with the requirements of
the stock exchange or national market system on which the Common Stock is listed or quoted. 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 Stock Awards 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 Stock Award, and other terms and conditions of the Stock Award.

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4. Shares of Stock Subject to the Plan

     Except as provided in Section 11, the number of shares that may be issued or transferred
pursuant to Stock Awards granted under the Plan shall not exceed 13,800,000 shares of Common Stock;
provided, however, that any shares issued under an Award granted on or after June 13, 2007 other
than an Option or Stock Appreciation Right shall count against the maximum number of shares
reserved hereunder as two shares for every one share issued in connection with such Award. Shares
reserved hereunder 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 a Stock Award which for any
reason expires, is cancelled or is unexercised may again be subject to a Stock Award under the
Plan. The aggregate Fair Market Value of the shares with respect to which Incentive Stock Options
(determined at the time of grant of the option) 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.

5. Eligibility

     Stock Awards may be granted to directors, officers, employees and consultants of the Company
or a parent or subsidiary of the Company, except that Incentive Stock Options may not be granted to
any such person who is not an employee of the Company or a parent or subsidiary of the Company.

6. Granting of Options

     The Committee may grant options to such persons eligible under the Plan as the Committee may
select from time to time. Such options shall be granted at such times, in such amounts and upon
such other terms and conditions as the Committee shall determine, which shall be evidenced under an
Award Agreement and subject to the following terms and conditions and the terms of the Plan:

               (a) Type of Option. The Award Agreement shall indicate whether and to what extent the option
is intended to be an Incentive Stock Option or a Non-Qualified Stock Option.

               (b) Option Price. The purchase price under each Incentive Stock Option and each Non-Qualified
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.

               (c) 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, if the Committee
consents in its sole discretion, an “in the money” Non-Qualified Stock Option may be exercised

3

 

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.

               (d) 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.

               (e) Non-Assignability of Options. No Incentive Stock Option and, except as may otherwise be
specifically provided by the Committee, no Non-Qualified Stock Option, 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.

               (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 June 15, 2005, 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 June 15, 2005, 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

4

 

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. Nothing in
the Plan or in any Award Agreement shall confer any right to continue in the employ of the Company
or any parent or subsidiary of the Company or interfere 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) 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 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.

               (i) Restrictions 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.

7. Grant of Stock Appreciation Rights

     The Committee may grant Stock Appreciation Rights to such persons eligible under the Plan as
the Committee may select from time to time. Stock Appreciation Rights shall be granted at such
times, in such amounts and under such other terms and conditions as the Committee shall

5

 

determine, which terms and conditions shall be evidenced under an Award Agreement, subject to the terms of the
Plan. Subject to the terms and conditions of the Award Agreement, a Stock Appreciation Right
shall entitle the award recipient to exercise the Stock Appreciation Right, in whole or in part, in
exchange for a payment of shares of Common Stock, cash or a combination thereof, as determined by
the Committee and provided under the Award Agreement, equal in value to the excess of the Fair
Market Value of the shares of Common Stock underlying the Stock Appreciation Right, determined on
the date of exercise, over the base amount set forth in the Award Agreement for shares of Common
Stock underlying the Stock Appreciation Right, which base amount shall not be less than the Fair
Market Value of such Common Stock, determined as of the date the Stock Appreciation Right is
granted.

8. Grant of Restricted Stock

     The Committee may grant Restricted Stock awards to such persons eligible under the Plan as the
Committee may select from time to time. Restricted Stock awards shall be granted at such times, in
such amounts and under such other terms and conditions as the Committee shall determine, which
terms and conditions shall be evidenced under an Award Agreement, subject to the terms of the Plan.
The Award Agreement shall set forth any conditions on vesting and restrictions on transferability
that the Committee may determine is appropriate for the Restricted Stock award, including the
performance of future services or satisfaction of performance goals established by the Committee
subject to the Plan. The books and records of the Company shall reflect the issuance of shares of
Common Stock under a Restricted Stock award and any applicable restrictions and limitations in such
manner as the Committee determines is appropriate subject to the Plan. Unless otherwise provided
in the Award Agreement, a recipient of a Restricted Stock award shall be the record owner of the
shares of Common Stock to which the Restricted Stock relates and shall have all voting and dividend
rights with respect to such shares of Common Stock.

9. Grant of Stock Bonus

     The Committee may grant Stock Bonus awards to such persons eligible under the Plan as the
Committee may select from time to time. Stock Bonus awards shall be granted at such times, in such
amounts and under such other terms and conditions as the Committee shall determine, which terms and
conditions shall be evidenced under an Award Agreement, subject to the terms of the Plan. Upon
satisfaction of any conditions, limitations and restrictions set forth in the Award Agreement, a
Stock Bonus award shall entitle the recipient to receive payment of a bonus described under the
Stock Bonus award in the form of shares of Common Stock of the Company. Prior to the date on which
a Stock Bonus award is required to be paid under an Award Agreement, the Stock Bonus award shall
constitute an unfunded, unsecured promise by the Company to distribute Common Stock in the future.

10. Minimum Vesting Provisions

     No Restricted Stock Award or Stock Bonus Award shall vest more favorably than ratably over a
three year period and no part of a Stock Bonus Award, the payment of which is conditioned

6

 

on the satisfaction of a performance measure, shall vest earlier than one year from the date of grant;
provided, however, that the foregoing restrictions shall not apply to Stock Awards issued in the
aggregate under the Plan with respect to a number of shares equal to ten percent of the number of
shares that may be issued or transferred under the Plan pursuant to Section 4, as such number may
be adjusted under Section 11.

11. Adjustments in the Event of 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 issuable under Stock Awards theretofore granted shall be increased or
decreased proportionately, as the case may be, without change in the aggregate purchase price that
may be applicable thereto. 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.

12. Withholding of Applicable Taxes

     It shall be a condition to the performance of the Company’s obligation to issue or transfer
Common Stock or make a payment of cash pursuant to any Stock Award that the award recipient 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 issuance or
transfer of Common Stock or the payment of cash under such Stock Award, including any applicable
federal, state, or local withholding or employment taxes.

13. General Restrictions

     Each Stock Award 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 of Common Stock issuable or transferable under the Stock Award upon any
securities exchange or under any state or federal law, or the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of, or in connection with,
the granting of the Stock Award or the issue or transfer, of shares of Common Stock thereunder,
shares of Common Stock issuable or transferable under any Stock Award shall not be issued or
transferred, 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

7

 

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 Stock
Awards, require the individual to whom the award is to be granted to enter into an agreement with
the Company stating that as a condition precedent to the receipt of shares of Common Stock issuable
or transferable under the Stock Award, in whole or in part, he shall, if then required by the
Company, represent to the Company in writing that such receipt 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 Stock Awards granted and/or Common Stock held, in the event of the
termination of employment or association, as the case may be, of the award recipient 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 award recipient ,
pursuant to any such agreement, without interest thereon.

14. Termination and Amendment of the Plan and Stock Awards

     The Board of Directors or the Committee shall have the right to amend, suspend, or terminate
the Plan or any Stock Award at any time; provided, however, that no such action shall affect or in
any way impair the rights of a recipient under any Stock Award theretofore granted under the 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: (i) except as provided in Section 11, no amendment or change shall be made in the Plan
that increases the total number of shares which may be issued or transferred under the Plan,
materially increases the benefits to Plan participants or modifies the requirements as to
eligibility for participation in the Plan; and (ii) no amendment or change shall be made to any
Stock Award that waives any restriction or vesting period under the Stock Award except in the case
of a change of control, or the death, disability, layoff, termination without cause, termination
for good reason or retirement of the Stock Award recipient, as such may be determined in the
discretion of the Board of Directors or the Committee.

15. Term of the Plan

     The Plan shall terminate on June 12, 2011, or on such earlier date as the Board of Directors
or the Committee may determine. Any Stock Award outstanding at the termination date shall remain
outstanding until it has either expired or been exercised or cancelled pursuant to its terms.

16. 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.

8

 

17. Rights as a Stockholder

     A recipient of a Stock Award shall have no rights as a stockholder with respect to any shares
issuable or transferable thereunder until the date a stock certificate is issued to him for such
shares unless otherwise provided in the Award Agreement under the Plan. 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.

18. Options Granted to Employees and Directors of any Subsidiary in the UK

     In addition to the provisions above, the provisions of this Section 18 shall apply as herein
set out to options granted to employees and directors of any subsidiary in the United Kingdom. The
provisions of this Section 18 enable the Plan to be used in a tax efficient manner in the United
Kingdom.

            (a) In this Section 18, the following terms have the meanings ascribed to them:

            “Election” means an election in the form envisaged in Paragraph 3B(1) of Schedule 1 to
SSCBA and acceptable to the UK Subsidiary 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) and any other UK Subsidiary of the Company from time to time.

            (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 the Optionholder shall not be entitled to exercise the UK Option until he

9

 

has entered 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 (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 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 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 any liability of the UK Subsidiary
referred to in this paragraph (d).

10

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