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OSI PHARMACEUTICALS, INC.
NON-QUALIFIED STOCK OPTION PLAN FOR
FORMER EMPLOYEES OF
CADUS PHARMACEUTICAL CORP.
1. Purpose
OSI Pharmaceuticals, Inc. (the "Company") has acquired certain of
the assets of Cadus Pharmaceutical Corp. ("Cadus"). In connection
therewith, the Company has adopted this Non-Qualified Stock Option Plan
for Former Employees of Cadus Pharmaceutical Corp. (the "Plan") as an
incentive to induce [certain] former employees of Cadus to accept
employment with, or become associated with, the Company or a parent or
subsidiary of the Company, and to encourage them 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 them with a more direct stake in the future welfare of the
Company. No option granted under the Plan shall be considered an
"incentive stock option" as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (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,
and the option price.
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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 415,000 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.
4. Eligibility
Options may be granted only to directors, officer, employees and
consultants who are former employees of Cadus.
5. Granting of options
No options pursuant to this Plan may be granted after ten years from
the date of the closing of the Asset Purchase Agreement by and between the
Company and Cadus. 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 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" 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
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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 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.
(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. Except as may otherwise be
specifically provided by the Committee, no 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, except as may otherwise be specifically provided by the
Committee, options shall be exercisable only by such recipient. If
the Committee approves provisions in any particular case allowing
for assignment or transfer of an 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. 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
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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. 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 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,
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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 stock or options of
the merged, consolidated, or otherwise reorganized corporation, 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 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
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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 to 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 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
No stock acquired by an optionee upon exercise of an 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 option was
granted, unless otherwise provided by the Committee.
9. Effective Date of the Plan
This Plan shall become effective upon the closing of the Asset
Purchase Agreement by and between the Company and Cadus. The Plan shall
terminate after ten years from the date of the closing of the Asset
Purchase Agreement by and between the Company and Cadus, 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.
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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.
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