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Exhibit 10.1 Execution Copy December 16, 2008
Mr. Pierre Legault
c/o OSI Pharmaceuticals, Inc.
41 Pinelawn Road
Melville, New York 11747 Re:
Employment Agreement Dear Pierre:
This letter is to confirm our
understanding with respect to (i) your future employment by
OSI Pharmaceuticals, Inc. (the "Company"), (ii) your agreement
not to solicit employees or customers of the Company, or any then
existing parent, subsidiary or affiliate of the Company (each, a
"Company Affiliate" and collectively, together with the Company,
the "Company," (iii) your agreement to protect and preserve
information and property which is confidential and proprietary to
the Company and (iv) your agreement with respect to the
ownership of inventions, ideas, copyrights and patents which may be
used in the business of the Company (the terms and conditions
agreed to in this letter are hereinafter referred to as the
"Agreement"). In consideration of the mutual promises and covenants
contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
mutually acknowledged, we have agreed as follows:
1. Employment .
(a) Subject
to the terms and conditions of this Agreement, the Company will
employ you, and you will be employed by the Company and/or any
Company Affiliate designated by the Company, as Executive Vice
President, Chief Financial Officer and Treasurer, of the Company
reporting to the Chief Executive Officer (the "CEO") of the
Company. You will have the responsibilities, duties and authority
customarily performed, undertaken and exercised by a person in a
similar executive capacity. You will also perform such other and/or
different services for the Company as may be assigned to you from
time to time by the CEO. The principal location at which you will
perform such services will be the Company’s headquarters
located at 41 Pinelawn Road, Melville, New York, although you will
be available to perform services at any other Company facility and
to travel as the needs of business may require.
(b)
Devotion to Duties . While you are employed hereunder, you
will, to the best of your ability, perform faithfully and
diligently all duties assigned to you pursuant to this Agreement
and will devote your full business time and energies to the
business and affairs of the Company. While you are employed
hereunder, you will not undertake any other employment from any
person or entity without the prior written consent of the Company.
Notwithstanding the foregoing, nothing contained herein shall limit
your ability to manage your own personal investments on your own
personal time or from serving on no more than two outside boards of
directors or advisory boards of a public company, so long as such
activities do not (i) involve a business or organization which
competes with the Company or any Company Affiliate (except, in the
case of personal investments, you may own up to 1% of the
outstanding capital stock of a corporation if, at the time of your
acquisition such stock is listed on a national securities exchange,
is reported on NASDAQ, or is regularly traded in the
over-the-counter market by a member of a national securities
exchange), (ii) interfere or conflict with the performance of
your duties as an employee of the Company or any Company Affiliate,
or (iii) otherwise result in a breach of any of the provisions
of this Agreement. 2.
Term . Your employment under this Agreement shall commence
on December 29, 2008 (the "Effective Date") and shall continue
until terminated in accordance herewith.
3. Compensation .
(a)
Base Salary . While you are employed hereunder, the Company
will pay you a base salary at the annual rate of $450,000 (the
"Base Salary"). Your Base Salary will be reviewed on an annual
basis (or such other time as determined by the CEO and the
Compensation Committee of the Board of Directors of the Company
(the "Board" and such Committee, the "Compensation Committee"),
provided, however, that the Base Salary shall not be decreased as a
result of any such review. The Base Salary will be payable in equal
installments in accordance with the Company’s payroll
practices as in effect from time to time. The Company will deduct
from each such installment all amounts required to be deducted or
withheld under applicable law or under any employee benefit plan in
which you participate.
(b)
Bonus . In addition to the Base Salary, for each fiscal year
of the Company ending during the Term of the Agreement, beginning
with the 2009 fiscal year, you will be eligible to receive a target
bonus equal to 55% of the Base Salary, determined and payable in
accordance with the Company’s practices applicable to bonuses
paid to its executives. The Company’s bonus system is a
discretionary annual performance-based incentive bonus system,
approved by the Compensation Committee, and is based upon a
combination of personal and corporate performance. Your split
between personal and corporate performance will be 15% personal
performance and 85% corporate performance. Any bonus payable to you
hereunder shall be paid at the time bonuses are otherwise paid to
other executive officers of the Company, but in any event, by
March 15 of the calendar year following the year with respect
to which such annual bonus is earned.
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(c)
Equity Compensation.
(i)
Initial Grant . On the first business day of the month
following your commencement of employment hereunder (i.e.,
January 2, 2009) and pursuant to a written stock option
agreement (the "Stock Option Agreement") between the Company and
you under the OSI Pharmaceuticals, Inc. Amended and Restated Stock
Incentive Plan, as amended (the "Plan"), you will be granted a
non-qualified option (the "Initial Option") to purchase 125,000
shares of the Company’s common stock, par value, $.01 per
share (the "Common Stock"). The exercise price will be the fair
market value of the Common Stock on the date of grant. The Initial
Option will have a term of seven years and will become exercisable
with respect to 1/3 of such shares on each of the third, fourth and
fifth anniversaries of the date of grant. Notwithstanding the
foregoing, the Initial Option shall vest and be fully exercisable
upon a Change in Control (as hereinafter defined) or upon a
termination of your employment by the Company "without cause" (as
defined in Section 4 (e)) or by you for "good reason" (as
defined in Section 4(d)).
(ii)
Restricted Stock Units Grant . On the first business day of
the month following your commencement of employment hereunder
(i.e., January 2, 2009), you will be granted restricted stock
units with respect to 12,500 shares of Common Stock. Twenty-five
percent of the restricted stock units will vest, and shares of
Common Stock will become immediately distributable in respect
thereof, on each anniversary of the date of grant over a period of
four years. Notwithstanding the foregoing, the restricted stock
units shall vest, and shares will become immediately distributable
in respect thereof (it being acknowledged that any sale of other
disposition of such shares is subject to the terms of the OSI
Pharmaceuticals, Inc. Insider Trading Policy), upon a Change in
Control or upon a termination of your employment by the Company
"without cause" or by you for "good reason".
(iii)
Future Grants . On each date that annual stock options
and/or other equity compensation are granted by the Company to its
executive management group, so long as you then remain in the
employ of the Company, the Company will grant to you stock options
or other equity compensation (an "Annual Equity Grant") in respect
of a number of shares of Common Stock to be determined by the
Compensation Committee based upon your grade level and an annual
evaluation of your performance by the CEO and Compensation
Committee. The terms and conditions of the Annual Equity Grant will
be as set forth in the Plan and the agreement or agreements
accompanying such Annual Equity Grant. Notwithstanding the
foregoing, each Annual Equity Grant shall vest and be fully
exercisable upon a Change in Control or upon a termination of your
employment by the Company "without cause" or by you for "good
reason".
(d)
Vacation . You will be entitled to 20 paid vacation days in
each calendar year, and paid holidays plus personal days in
accordance with the Company’s policies for its senior
executives as in effect from time to time.
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(e)
Fringe Benefits . In addition to the equity compensation
provided for herein, you will be entitled to participate in
employee benefit plans which the Company provides or may establish
for the benefit of its senior executives generally (for example,
term life, disability, medical, dental and other insurance,
retirement, pension, profit-sharing and similar plans)
(collectively, the "Fringe Benefits"). Your eligibility to
participate in the Fringe Benefits and receive benefits thereunder
will be subject to the plan documents governing such Fringe
Benefits. Nothing contained herein will require the Company to
establish or maintain any Fringe Benefits.
(f)
Relocation . The Company will assist you in your relocation
to New York in accordance with the following:
(i)
Relocation Service . American International Relocation
Company ("American International") will assist you in your
relocation to New York.
(ii)
Expenses . The Company will reimburse you, either directly
or through American International, for all moving expenses relating
to your relocation to New York and incurred during your employment
hereunder, including, without limitation, expenses relating to
packing and moving household goods, temporary storage of household
goods for a period of six months, closing costs associated with the
purchase of a new home in New York, expenses incurred by you and/or
your family relating to up to 10 house-hunting trips (including
transportation, hotel accommodations and meals) and expenses
incurred by you and/or your family for temporary living
accommodations for up to six months prior to your move into a new
home (including lease or sublease amounts, utilities, hotel or
other accommodations, brokers’ fees). During this six-month
period, if needed and requested by you, the Company will reimburse
you for the costs of a rental car.
(iii)
Down-Payment Assistance . On the Effective Date, the Company
will pay you $134,615 as assistance for a down payment on the
purchase of a home in New York and to defray other miscellaneous
and incidental expenses you may incur while relocating.
(iv)
Pay-Back . If, within 12 months following the Effective
Date, you terminate your employment with the Company without "good
reason", you shall within 60 days of such termination pay back
to the Company 100% of the amounts which had been theretofore paid
to you pursuant to this Section 3(f).
(v)
Reverse Relocation Expenses . We recognize that you are
relocating to New York for the sole purpose of commencing
employment with us. Therefore, if within 12 months following
the Effective Date, your employment is either terminated by the
Company "without cause" or by you for "good reason", the Company
will reimburse you, either directly or through American
International (or such other relocation company used by the Company
at the time of such termination), for all packing and moving
expenses, transfer taxes, broker’s commissions and other
closing costs, fees and expenses incurred in the sale of your New
York residence, and other
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expenses related to your relocation out of New York, provided
that such expenses are incurred within one year following such
termination of your employment.
(vi)
Documentation . Reimbursement of the expenses described in
this Section 3(f)(ii) and (v) shall be made upon
presentation of documentation reasonably satisfactory to the
Company in accordance with the Company’s policies with
respect thereto as in effect from time to time. Receipts shall not
be required for payment covered under Section 3(f)(iii).
(g)
Reimbursement of Expenses . Upon presentation of
documentation of such expenses reasonably satisfactory to the
Company, the Company will reimburse you for all ordinary and
reasonable out-of-pocket business expenses that are reasonably
incurred by you in furtherance of the Company’s business in
accordance with the Company’s policies with respect thereto
as in effect from time to time.
4. Termination . Your
employment hereunder shall end upon the earliest of the following
to occur:
(a) Your
death.
(b) Upon
written notice to you of termination as a result of your Permanent
Disability. "Permanent Disability" means a disability as described
in Treasury Regulation § 1.409A-3(i)(4)(i)(B).
(c) Your
termination by the Company for "cause" as evidenced by, and
effective upon, delivery by the Company to you of a Notice of
Termination (as defined in Section 5 below). "Cause" shall
mean, for purposes of this Agreement, (i) an act of fraud or
embezzlement against the Company or an unauthorized disclosure of
Confidential Information (as defined in Section 8(a)(iv)
hereof) of the Company, in each case which is willful and results
in material damage to the Company, (ii) any criminal violation
of the Securities Act of 1933 or the Securities Exchange Act of
1934, each as amended, (iii) your conviction (or a plea of
nolo contendere) of any felony, (iv) your gross neglect of
your duties or your willful and continuing refusal to perform your
duties, provided you have been given written notice of such neglect
or refusal and within 30 days have failed to cure such neglect
and refusal, or (v) your material willful misconduct with
respect to the business or affairs of the Company.
(d) Your
termination of your employment for "good reason." For purposes of
this Agreement, "good reason" shall mean the occurrence of any of
the events hereinafter set forth unless you have previously
consented in writing (which consent may be given or withheld in
your sole discretion):
(i) a
material reduction in your duties, title, responsibilities,
authority, status, or reporting responsibilities;
(ii) a
reduction in your Base Salary or the target rate of your
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bonus;
(iii) the
Company’s requiring you to be based more than 35 miles from
the Company’s current headquarters in Melville, New York or
to any other location for which the average commute from your
residence exceeds 45 minutes; or
(iv) any
other material breach of this Agreement by the Company. In order to
invoke a termination for "good reason", you must deliver a written
notice to the Company specifying the particular events or
conditions which constitute "good reason" within 30 days of the
occurrence of the event or condition. The Company shall have
30 days to cure the breach. In order to terminate your
employment, if at all, for "good reason", you must terminate
employment within 7 days of the end of the cure period if the
breach has not been cured.
(e) Termination
of your employment by the Company "without cause" by delivery by
the Company to you of a Notice of Termination not less than
30 days prior to the effective date of such termination. Your
termination by the Company shall be considered to be "without
cause" if you are terminated or dismissed by the Company for
reasons other than death, Permanent Disability or for "cause."
(f) Your
termination of your employment "without good reason" by delivery by
you to the Company of a Notice of Termination. Your termination of
your employment shall be considered to be "without good reason"
unless you resign for "good reason" (as defined in
Section 4(d)). 5.
Notice of Termination . Any termination by the Company or by
you shall be communicated by a written "Notice of Termination" to
the other party hereto. A "Notice of Termination" shall mean a
notice which indicates a termination date and the specific
termination provision in this Agreement relied upon and which sets
forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination under the provision so indicated.
6. Payments Upon
Termination .
(a) Upon
termination of your employment for any reason you will become
entitled to (i) any accrued and unpaid Base Salary up to the
date of termination, and (ii) any accrued and unpaid vacation
pay up to the date of termination ((i) and (ii) being
collectively referred to as the "Accrued Compensation"). Such
amounts will be paid in a lump sum within seven days following
termination.
(b) Upon
termination of your employment due to death or Permanent
Disability, in addition to Accrued Compensation, you (or your
estate, as the case may be) will become entitled to an amount equal
to your target bonus for the fiscal year in which your termination
occurs, multiplied by a fraction (i) the numerator of which is
the number
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of days in such fiscal year through the termination date and
(ii) the denominator of which is the number of days in such
fiscal year (a "Pro-rata Bonus"). Such amounts will be paid in a
lump sum within seven days following termination.
(c) Upon
a termination of your employment (i) by the Company "without
cause" or (ii) by you for "good reason" or (iii) as a
result of your resignation for any reason within 60 days of a
Change in Control, in addition to Accrued Compensation, you will
become entitled to (x) a lump sum equal to twice your Base
Salary and twice your target bonus, (y) your Pro-rata Bonus
and any bonus for the prior fiscal year earned but not yet paid at
the time of termination, and (z) Company—funded continued
coverage following termination under any health and dental program
in which you were eligible to participate as of the time of
termination of your employment for the maximum period of time
allowable by law but in no event longer than 24 months
following termination. The amounts described in parts (x) and
(y), above, will be paid in a lump sum within seven days following
termination. For avoidance of doubt, amounts payable hereunder are
intended to satisfy the requirements of the short-term deferral
exemption described in Treasury Regulation § 1.409A-1(b)(4).
(d) You
shall not be required to mitigate the amount of any payment
provided for under this Section 6 by seeking other employment
or otherwise and no payment shall be offset or reduced by the
amount of any compensation or benefits provided to you in any
subsequent employment. The Company’s obligation to make the
payments provided for in this Section 6 and otherwise perform
its obligations hereunder shall not be affected by any
circumstances, including, without limitation, set-off,
counterclaim, recoupment, defense or other claim, right or action
which the Company may have against you or others.
(e)
(i) Subject to Section 6(e)(ii) below, if the Total
Payments (as defined below) would result in the imposition of a
Parachute Excise Tax (as defined below) on you, the Company will
make an additional payment to you in an amount such that, after the
payment of all federal and state income, employment and excise
taxes on both the Total Payments and the additional payment made
pursuant to this Section 6(e)(i), you will be in the same
after-tax position as if no Parachute Excise Tax had been imposed.
Any additional payment made pursuant to this paragraph will be paid
by the Company at the time the applicable Parachute Excise Tax is
required to be withheld by the Company and remitted to the relevant
taxing authorities or, to the extent such excise tax is not
required to be withheld, 5 business days before it is required to
be paid by you to the relevant taxing authorities.
(ii) Notwithstanding
any other provision in this Agreement, no additional payment will
be made to you pursuant to Section 6(e)(i) and the Total
Payments will instead be reduced or limited to the Capped Amount
(as defined below), if the additional payment described above in
Section 6(e)(i) would not cause Total After-Tax Payments (as
defined below) to exceed the economic value of the Capped Amount
(after reduction for all applicable taxes) by more than 10%. If a
reduction to the Total Payments is required pursuant to this
paragraph, such reduction shall be made to the
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payments, rights or other b
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