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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
June 23, 1999
Date of Report (Date of earliest event reported)
OSI PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-15190 13-3159796
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
106 CHARLES LINDBERGH BOULEVARD
UNIONDALE, NY 11553
(Address of principal executive offices)
(516) 222-0023
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On June 23, 1999, the Board of Directors of OSI Pharmaceuticals, Inc., a
Delaware corporation (the "Company") approved a new shareholders rights plan
(the "Preferred Stock Plan"), authorized the redemption of the rights (the
"Existing Rights") issued pursuant to the Company's existing shareholders rights
plan (the "Existing Rights Plan") subject to certain conditions, and authorized
the termination of the Existing Rights Plan following the redemption of the
Existing Rights.
The Preferred Stock Plan is a more traditional form of shareholders rights
plan than the Existing Rights Plan, in that it utilizes preferred stock as the
security which the rightsholder would acquire upon initial exercise of the
rights issued pursuant to it. Because the Existing Rights Plan was adopted
before the Company was authorized to issue preferred stock, the Existing Rights
Plan provided that a "Unit," comprised of a fractional share of common stock and
a corporate note, would be the security which the rightsholder would acquire
upon initial exercise of the rights issued pursuant to the Existing Rights Plan.
On March 24, 1999, the Company's stockholders approved the amendment of the
Company's Certificate of Incorporation to authorize the issuance of up to
5,000,000 shares of preferred stock as the Board of Directors may from time to
time determine. As discussed in the Company's 1999 proxy statement, if the
stockholders authorized the issuance of preferred stock, the Board of Directors
contemplated utilizing a portion of the shares so authorized in connection with
the Existing Rights Plan to make it a more traditional plan. The adoption of the
Preferred Stock Plan, the redemption of the Existing Rights and the termination
of the Existing Rights Plan are intended to accomplish such objective.
These actions are also designed to ensure that the Company and its
stockholders will continue to have the protections offered by a shareholders
rights plan without interruption. Rights (the "New Rights") will be issued under
the Preferred Stock Plan before the Existing Rights are redeemed and the
Existing Rights Plan is terminated. If, prior to the issuance of the New Rights,
any person, entity or group of persons or entities ("Person") were to commence
or announce the commencement of a tender or exchange offer which would result in
such Person becoming an Acquiring Person (as defined in both the Existing Plan
and the Preferred Stock Plan), or if any Person were to become an Acquiring
Person (each a "Triggering Event"), the Existing Rights, with their "Flip-In"
and "Flip-Over" Rights (as described below) would still be outstanding.
Additionally, the Preferred Stock Plan provides that holders of the New Rights
would be entitled to "Flip-In" and "Flip-Over" Rights even if the New Rights are
issued after a Triggering Event, and the New Rights may not be redeemed if a
Triggering Event occurs prior to their issuance.
DESCRIPTION OF THE PREFERRED STOCK PLAN
In connection with the adoption of the Preferred Rights Plan, the Company
declared a dividend distribution of one New Rights for each outstanding share of
common stock of the Company (the "Common Stock") payable to stockholders of
record at the close of business on July 23, 1999. Each New Right entitles the
registered holder to purchase from the Company one
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one-thousandth of a share of a newly-created series of preferred stock, par
value $0.01 per share (the "Preferred Stock"), at a price of $50.00 (the
"Purchase Price"), subject to adjustment. The description and terms of the New
Rights are set forth in the form of Preferred Stock Plan (the "Preferred Stock
Plan") dated as of June 23, 1999 between the Company and The Bank of New York,
as Rights Agent (the "Rights Agent").
The New Rights are not exercisable until the "Distribution Date," which is
the earlier of (i) the date which is 10 days (or such later date as the Board of
Directors may determine) after the commencement of, or first public announcement
of an intention to make, a tender or exchange offer by any Person the
consummation of which would result in Person becoming an Acquiring Person
(defined below) or (ii) the date of the first public announcement that a Person
has acquired, or obtained the right to acquire, otherwise than pursuant to a
Permitted Offer (described below), beneficial ownership of 17.5% or more of the
outstanding shares of Common Stock. A Person whose acquisition of shares of
Common Stock causes a Distribution Date to occur pursuant to the foregoing
clause (ii) is an "Acquiring Person."
Until the Distribution Date (i) the New Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates issued after July 23,
1999 will contain a notation referring to the New Rights associated with such
shares of Common Stock, incorporating the Preferred Stock Plan by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the New Rights associated with
the Common Stock represented by such certificates. As soon as practicable after
the Distribution Date, Right Certificates will be mailed to holders of record of
the Common Stock as of the close of business on the Distribution Date and,
thereafter, the separate Right Certificates alone will represent the New Rights.
The New Rights will expire at the close of business on May 31, 2009,
unless earlier redeemed by the Company as described below.
In the event that any Person becomes an Acquiring Person (otherwise than
pursuant to a Permitted Offer), the New Rights will be modified automatically so
that each holder of a New Right will thereafter have, in lieu of the right to
purchase shares of Preferred Stock, the right (the "Flip-In Right") to receive
upon exercise of the New Right the number of shares of Common Stock which,
immediately before such Acquiring Person became an Acquiring Person, had a
market value equal to twice the amount of the exercise price of the New Right.
Notwithstanding the foregoing, after such Person shall have become an Acquiring
Person, all New Rights that are, or under certain circumstances specified in the
Preferred Stock Plan were, beneficially owned by any Acquiring Person or any
affiliate or associate thereof will be null and void. A "Permitted Offer" is a
tender or exchange offer which is for all outstanding shares of Common Stock at
a price and on terms which the Board of Directors determines to be adequate and
in the best interests of the Company, its stockholders and other relevant
constituencies, other than such Acquiring Person, its affiliates and associates.
In the event that, at any time after a Person has become an Acquiring
Person, (i) the Company is acquired in a merger or other business combination in
which the holders of all of the
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outstanding shares of Common Stock immediately prior to the consummation of the
transaction are not the holders of all of the surviving corporation's voting
power or (ii) more than 50% of the Company's assets or earning power is sold or
transferred, in either case with or to an Acquiring Person or any affiliate or
associate thereof or any other Person in which such Acquiring Person, affiliate
or associate has an interest or any Person acting on behalf of or in concert
with such Acquiring Person (or, if in such transaction all holders of shares of
Common Stock are not treated alike, any other Person), then each holder of a New
Right (except New Rights which previously have become null and void as set forth
above) shall thereafter have the right (the "Flip-Over Right") to receive, upon
exercise of the New Right, shares of common stock of the acquiring company
having a value equal to twice the amount of the exercise price of the New Right.
Each such holder of a New Right will continue to have a Flip-Over Right whether
or not such holder exercises or surrenders the Flip-In Right, and such holder
will have a successive Flip-Over Right on each occurrence of a transaction
specified in the first sentence of this paragraph.
At any time before a Person becomes an Acquiring Person, the Company may
redeem the New Rights in whole, but not in part, at a price of $.001 per New
Right (the "Redemption Price"). Immediately upon the action of the Board of
Directors ordering redemption of the New Rights, the right to exercise the New
Rights will terminate and the only right of the holders of New Rights will be to
receive the Redemption Price. Notice of redemption will be given by mail to each
holder of New Rights at such holder's last address on the registry books for the
New Rights, or, at the Company's option, by issuing a press release and mailing
payment of the redemption price to the registered holders of the New Rights.
The Purchase Price payable, and the number of shares of Preferred Stock or
other securities or property issuable, upon exercise of the New Rights are
subject to adjustments from time to time to prevent dilution in the event of
certain changes in the Preferred Stock or Common Stock or distributions of such
stock or other events which would otherwise diminish the benefits intended to be
afforded by the New Rights. With certain exceptions, no adjustment in the
Purchase Price will be required until cumulative adjustments amount to at least
1% of the Purchase Price.
No fractional New Rights or shares of Preferred Stock or Common Stock will
be issued (other than fractions of a share of Preferred Stock which are one
one-thousandth of a share or an integral multiple of one one-thousandth of a
share) and, in lieu thereof, a payment in cash will be made based on the market
price of the New Rights, Preferred Stock or Common Stock, as the case may be, on
the last trading date prior to the date of exercise of the New Rights involved.
The dividends, liquidation and voting rights, and the non-redemption
feature of the Preferred Stock are designed so that the value of the one
one-thousandth of a share of Preferred Stock purchasable upon exercise of each
New Right will approximate the value of one share of Common Stock. The Preferred
Stock will be non-redeemable and will rank junior to all other series of the
Company's Preferred Stock. Each whole share of Preferred Stock will be entitled
to receive a quarterly preferential dividend of the greater of (a) $.025 per
share or (b) 1,000 times the dividend declared on the Common Stock. In the event
of liquidation, the holders of the
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Preferred Stock will be entitled to receive a preferential liquidation payment
of $.01 per share and will also be entitled to receive, in the aggregate, a
liquidation payment equal to 1,000 times the liquidation payment made per share
of Common Stock. Each share of Preferred Stock will have 1,000 votes, voting
together with the Common Stock. In the event of any merger, consolidation or
other transaction in which shares of Common Stock are exchanged for or converted
into other stock or securities, cash or other property, each share of Preferred
Stock will be entitled to receive 1,000 times the amount received per share of
Common Stock.
Prior to the Distribution Date the Board of Directors may amend any of the
provisions of the Preferred Stock Plan other than to decrease the Redemption
Price, increase the Exercise Price or decrease the number of one one-thousandths
of a share of Preferred Stock purchasable upon exercise of a New Right. After
the Distribution Date, the provisions of the Preferred Stock Plan may be amended
by the Board of Directors to cure any ambiguity, defect or inconsistency, to
make changes which do not adversely affect the interests of the holders of New
Rights (other than holders whose New Rights have become null and void as set
forth above) or to shorten or lengthen any time period under the Preferred Stock
Plan; provided that no such amendment may be adopted to adjust the time period
governing redemption at a time when the New Rights are not redeemable.
Until a New Right is exercised, the holder thereof, as such, will have no
right as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the New Rights will
not be taxable to stockholders of the Company, stockholders may, depending upon
the circumstances, recognize taxable income should the New Rights become
exercisable or upon the occurrence of certain events thereafter.
The summary description of the New Rights set forth herein does not
purport to be complete and is qualified in its entirety by reference to the
Preferred Stock Plan, which is filed as Exhibit 4 hereto.
REDEMPTION OF EXISTING RIGHTS AND TERMINATION OF EXISTING RIGHTS PLAN
The Board of Directors authorized the redemption of the Existing Rights at
the close of business on July 23, 1999 (the "Redemption Time") from all holders
of record of such Existing Rights at the Redemption Time for the price of $0.001
per Existing Right, subject to certain conditions including that, at the
Redemption Time, (i) the Preferred Stock Plan has been executed and delivered
and New Rights have been issued pursuant thereto and are outstanding, and (ii)
no tender or exchange offer has commenced or been announced, the consummation of
which would result in any Person becoming an Acquiring Person, nor has any
Person become an Acquiring Person. Upon the redemption of the Existing Rights,
the Existing Rights Plan will be terminated.
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ITEM 7. EXHIBITS
<TABLE>
<CAPTION>
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EXHIBIT NO. DESCRIPTION
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<S> <C>
4 Form of Preferred Stock Plan, dated as of June 23, 1999, between
OSI Pharmaceuticals, Inc. and The Bank of New York, as Rights
Agent, including Terms of Series SRP Junior Participating
Preferred Stock (Exhibit A thereto) Summary of Rights to Purchase
Preferred Stock (Exhibit B thereto), and Form of Right Certificate
(Exhibit C thereto).
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99 Press release, dated June 25, 1999
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</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: June 28, 1999 OSI PHARMACEUTICALS, INC.
By: /s/ Robert L. Van Nostrand
-------------------------------
Name: Robert L. Van Nostrand
Title: Vice President and Chief
Financial Officer, Secretary
and Treasurer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
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EXHIBIT NO. DESCRIPTION
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<S> <C>
4 Form of Preferred Stock Plan, dated as of June 23, 1999, between
OSI Pharmaceuticals, Inc. and The Bank of New York, as Rights
Agent, including Terms of Series SRP Junior Participating
Preferred Stock (Exhibit A thereto), Summary of Rights to Purchase
Preferred Stock (Exhibit B thereto), and Form of Right Certificate
(Exhibit C thereto).
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99 Press release, dated June 25, 1999.
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</TABLE>
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EXHIBIT 4
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OSI PHARMACEUTICALS, INC.
and
THE BANK OF NEW YORK
as Rights Agent
RIGHTS AGREEMENT
Dated as of June 23, 1999
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TABLE OF CONTENTS
<TABLE>
<S> <C>
Section 1. Definitions....................................................... 1
Section 2. Appointment of Rights Agent....................................... 5
Section 3. Issue of Rights and Right Certificates............................ 5
Section 4. Form of Right Certificates........................................ 6
Section 5. Signature and Countersignature of Right Certificates; Registration
of Ownership and Transfers................................................... 7
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates........ 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..... 8
Section 8. Cancellation of Right Certificates............................... 11
Section 9. Reservation and Availability of Preferred Stock; Compliance with
Registration or Other Requirements of Securities Laws; Transfer Taxes...... 11
Section 10. Preferred Stock Record Date..................................... 12
Section 11. Modification of Rights and Adjustment of Purchase Price, Number
of Shares, Number of Rights and Securities Purchasable...................... 13
Section 12. Certificate of Adjusted Purchase Price or Number of Shares...... 18
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power....................................................................... 19
Section 14. Fractional Rights and Fractional Shares......................... 21
Section 15. Rights of Action................................................ 22
Section 16. Agreement of Right Holders...................................... 23
Section 17. Right Certificate Holder Not Deemed a Stockholder............... 23
Section 18. Concerning the Rights Agent..................................... 24
Section 19. Merger or Consolidation or Change of Name of Rights Agent....... 24
Section 20. Duties of Rights Agent.......................................... 25
Section 21. Change of Rights Agent.......................................... 27
Section 22. Issuance of New Right Certificates.............................. 28
Section 23. Redemption of Rights............................................ 29
Section 24. Notice of Certain Events........................................ 29
Section 25. Notices......................................................... 30
Section 26. Supplements and Amendments...................................... 31
Section 27. Successors...................................................... 32
Section 28. Determinations and Actions by the Company or the Board of
Directors................................................................... 32
Section 29. Benefits of this Agreement...................................... 32
Section 30. Severability.................................................... 32
Section 31. Governing Law................................................... 33
Section 32. Counterparts.................................................... 33
Section 33. Descriptive Headings............................................ 33
</TABLE>
Exhibit A - Terms of Preferred Stock
Exhibit B - Summary of Rights to Purchase Preferred Stock
Exhibit C - Form of Right Certificate
i
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RIGHTS AGREEMENT
AGREEMENT dated as of June 23, 1999, between OSI PHARMACEUTICALS, INC., a
Delaware corporation (the "Company"), and THE BANK OF NEW YORK, a New York
banking corporation, as rights agent (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend, distributable to the holders of common stock of the Company of record
at the Record Date (hereinafter defined), of rights to purchase shares of
Preferred Stock of the Company and has also authorized the issuance of one such
right to the holder of each share of common stock of the Company which shall
become outstanding after the Record Date and before the earliest of the
Distribution Date, the Redemption Date and the Final Expiration Date (such terms
are hereinafter defined). This Agreement provides for the issuance and the terms
of such rights and other matters relating thereto.
NOW THEREFORE, in consideration of the mutual agreements herein set forth,
the parties hereby agree as follows:
Section 1. Definitions.
The following terms used in this Agreement have the meanings indicated
therefor:
(a) "Acquiring Person," except as provided in the next sentence, means any
Person who or which, together with all Affiliates and Associates of such Person,
shall at any time be the Beneficial Owner of 17.5% or more of the shares of
Common Stock then outstanding. Notwithstanding the foregoing, (A) the term
"Acquiring Person" shall not include (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or any such Subsidiary,
(iv) any Person organized, appointed or established by the Company or any such
Subsidiary for or pursuant to any such plan or (v) any Person who or which,
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 17.5% or more of the shares of Common Stock then outstanding
as a result of the acquisition of shares of Common Stock directly from the
Company or pursuant to a Permitted Offer and (B) no Person shall become an
"Acquiring Person" either (x) as the result of an acquisition of Common Stock by
the Company which, by reducing the number of shares outstanding, increases the
proportionate number of shares Beneficially Owned by such Person to 17.5% or
more of the shares of Common Stock of the Company then outstanding; provided,
that if (i) a Person who would become an Acquiring Person but for the provisions
of this clause (x) as a result of the acquisition of shares of Common Stock by
the Company and (ii) after such acquisition of shares by the Company such Person
becomes the Beneficial Owner of any additional share of Common Stock of the
Company, then such Person shall be deemed an "Acquiring Person" or (y) if (i)
within eight (8) days after such Person would otherwise have become an Acquiring
Person (but for the operation of this clause (y)) such Person notifies the Board
of Directors of the Company that such Person did so inadvertently and (ii)
within two (2) days after such notification such
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Person is the Beneficial Owner of less than 17.5% of the shares of Common Stock
then outstanding.
(b) "Affiliate" and "Associate" have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act, as in effect on the Record Date.
(c) "Beneficial Owner" of securities means the following: A Person shall
be deemed the "Beneficial Owner" of and shall be deemed to "Beneficially Own"
any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly;
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (whether or not in writing), or upon the exercise
of conversion rights, exchange rights, rights (other than these Rights),
warrants or options, or otherwise (provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to Beneficially Own, securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange) or (B) the right, alone or with any other
Person, to vote or to direct the voting pursuant to any agreement, arrangement
or understanding (provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to Beneficially Own, any security if such agreement,
arrangement or understanding granting the right to vote such security (1) arises
solely from a revocable proxy or consent given to such Person in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the proxy rules and regulations under the Exchange Act and (2) is not then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(iii) which are Beneficially Owned (within the definition thereof
set forth in clause (i) or (ii)), directly or indirectly, by any other Person
with which such first-mentioned Person or any of such first-mentioned Person's
Affiliates or Associates has any agreement, arrangement or understanding for the
acquiring, holding, disposing or voting (except to the extent provided by the
provisos of the foregoing clauses (ii)(A) and (ii)(B)) any securities of the
Company.
(d) "Board of Directors" or "Board" means the board of directors of the
Company.
(e) "Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(f) "Close of Business" on any day means 5:00 P.M., New York City time, on
such day; provided, however, that if such day is not a Business Day it shall
mean 5:00 P.M., New York City time, on the next succeeding Business Day.
2
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(g) "Common Stock" when used with reference to the Company means shares of
common stock, par value $0.01, of the Company. "Common Stock" when used with
reference to any Person other than the Company means the capital stock (or other
form of equity interest) with the greatest voting power of such Person or, if
such Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person, the terms of which shares or
units do not limit (as a fixed amount and not merely in proportional terms) the
amount of dividends or income payable or distributable on such shares or units
or the amount of assets distributable on such shares or units upon any voluntary
or involuntary liquidation, dissolution or winding up of such Person and do not
provide that such shares or units are subject to redemption at the option of
such Person, or any shares of capital stock or units of equity interests into
which the foregoing shall be reclassified or changed; provided, however, that if
at any time there shall be more than one such class or series of capital stock
of or equity interests in such Person, "Common Stock" of such person shall
include all such classes and series substantially in the proportion of the total
number of shares or other units of each such class or series outstanding at such
time.
(h) "Company" means OSI Pharmaceuticals, Inc., a Delaware corporation.
(i) "Co-Rights Agent" means, at any time when there shall be more than one
Person duly acting as Rights Agent, each such Person other than the Rights
Agent.
(j) "Distribution Date" has the meaning assigned thereto in Section 3(b).
(k) "Equivalent Preference Shares" has the meaning assigned thereto in
Section 11(b).
(l) "Exchange Act" means the Securities Exchange Act of 1934 as amended.
(m) "Final Expiration Date" means May 31, 2009.
(n) "Interested Stockholder" means any Acquiring Person or any Affiliate
or Associate of an Acquiring Person or any other Person in which any such
Acquiring Person, Affiliate or Associate has an interest, or any other Person
acting directly or indirectly on behalf of or in concert with any such Acquiring
Person, Affiliate or Associate.
(o) "Permitted Offer" means a tender or exchange offer which is for all
outstanding shares of Common Stock at a price and on terms determined prior to
the purchase of any shares under such tender or exchange offer by the Board of
Directors to be adequate, taking into account all factors that the directors
deem relevant, including without limitation amounts that the directors believe
could reasonably be realized if the Company or its assets were sold on an
orderly basis designed to realize maximum value, and otherwise in the best
interests of the Company and its stockholders (other than the Person or an
Affiliate or Associate thereof on whose behalf the tender or exchange offer is
made), taking into account all factors that the directors may deem relevant
thereto.
3
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(p) "Person" means an individual, corporation, partnership, association,
trust, unincorporated organization or other entity, including, without
limitation, any "group," as that term is used in Rule 13d-5(b) under the
Exchange Act, or a government or governmental agency.
(q) "Preferred Stock" means shares of Series SRP Junior Participating
Preferred Stock, par value $0.01 per share, of the Company, the terms of which
are set forth on Exhibit A hereto.
(r) "Principal Party" has the meaning assigned thereto in Section 13(b).
(s) "Purchase Price" has the meaning assigned thereto in Section 7(b).
(t) "Record Date" means the Close of Business on July 23, 1999.
(u) "Redemption Date" has the meaning assigned thereto in Section 7(a).
(v) "Redemption Price" has the meaning assigned thereto in Section 23.
(w) "Right" means a right issued pursuant to this Agreement to purchase
one one-thousandth of a share of Preferred Stock at the Purchase Price and on
the other terms, subject to the conditions, set forth in this Agreement.
(x) "Right Certificates" means certificates evidencing Rights as provided
for in Section 3.
(y) "Rights Agent" at any time means the Person then duly acting as rights
agent hereunder. The initial such Rights Agent is The Bank of New York.
(z) "Section 11(a)(ii) Event" has the meaning assigned thereto in Section
11(a)(ii).
(aa) "Section 13 Event" has the meaning assigned thereto in Section
13(a).
(bb) "Securities Act" means the Securities Act of 1933, as amended.
(cc) "Shares Acquisition Date" means the date of the first public
announcement (including, without limitation a report filed pursuant to Section
13(d) under the Exchange Act) by the Company or any Person who is then an
Acquiring Person that a Person has become an Acquiring Person; provided that if
such Person is determined not to have become an Acquiring Person by reason of
action taken pursuant to Section 1(a)(B)(y), then no Shares Acquisition Date
shall be deemed to have occurred.
(dd) "Subsidiary" of any Person means any corporation or other entity of
which a majority of the voting power of the voting equity securities or equity
interests is owned, directly or indirectly, by such Person.
(ee) "Trading Day" has the meaning assigned thereto in Section 11(d).
4
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(ff) "Voting Securities" of any Person means the securities (or other
equity interest) of such Person, the holders of which are entitled to vote
generally in the election of directors (or similar supervisory authorities).
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of Rights in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment. The Company may
from time to time appoint such Co-Rights Agents as it may deem necessary or
desirable. In the event the Company appoints one or more Co-Rights Agents, the
respective duties of the Rights Agent and any Co-Rights Agents shall be as the
Company shall determine upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such Co-Rights Agent.
Section 3. Issue of Rights and Right Certificates.
(a) The Company will issue (i) as of the Record Date, to each then holder
of record of shares of Common Stock, Rights at the rate of one Right per share
of such Common Stock and (ii) as of the date of issuance of any shares of Common
Stock hereafter issued by the Company after the Record Date and before the
earliest of the Distribution Date, the Redemption Date and the Final Expiration
Date, to the first holder thereof, one Right per share of such Common Stock.
(b) The "Distribution Date" means the earlier of (i) the Close of Business
on the tenth day (or such later day as may be determined by action of the Board
of Directors of the Company) after the date of the commencement of, or first
public announcement of the intention of any Person to commence, a tender or
exchange offer the consummation of which would result in any Person becoming an
Acquiring Person and (ii) the Shares Acquisition Date; provided that, if the
date referred to in (i) or (ii) occurs after the date of this Agreement and
prior to the Record Date, then the Distribution Date shall be the Business Day
next succeeding the Record Date and the Rights shall forthwith be exercisable.
(c) From the Record Date until the Distribution Date (i) the Rights will
be evidenced by the related certificates for shares of Common Stock registered
in the names of the holders thereof (which certificates shall be deemed to be
Right Certificates for such Rights) and not by separate Right Certificates,
whether or not such Common Stock certificates contain the legend provided for in
paragraph (e) of this Section, and (ii) the Rights (including the right to
receive Right Certificates) will be transferable only in connection with the
transfer of Common Stock and the surrender for transfer of any certificate for
Common Stock. The Company shall give the Rights Agent prompt written notice of
the Distribution Date. As soon as practicable after the Distribution Date and
receipt of written notice of the Distribution Date from the Company, the Rights
Agent will, at the Company's expense, send, by first-class postage-prepaid mail,
to each record holder of Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate, in the form provided for in Section 4, evidencing
one Right for each share of Common Stock so held subject
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to adjustment as provided herein. As of and after the Distribution Date, the
Rights will be evidenced solely by the Right Certificates.
(d) As soon as practicable after the Record Date, the Company will send a
copy of a Summary of Rights to Purchase Preferred Stock, in substantially the
form of Exhibit B hereto (the "Summary of Rights"), by first-class
postage-prepaid mail, to each record holder of Common Stock as of the Close of
Business on the Record Date, at the address of such holder shown on the records
of the Company.
(e) Certificates for Common Stock issued after the Record Date but prior
to the earliest of the Distribution Date, the Redemption Date or the Final
Expiration Date shall have impressed on, printed on, written on or otherwise
affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between OSI
PHARMACEUTICALS, INC. (the "Company") and THE BANK OF NEW YORK, as
Rights Agent, dated as of June 23, 1999 (the "Rights Agreement"),
the terms of which are hereby incorporated herein by reference and a
copy of which is on file at the principal executive office of the
Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates
and will no longer be evidenced by this certificate. The Company
will mail to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without charge,
promptly after receipt of a written request therefor. Under certain
circumstances, Rights beneficially owned by Acquiring Persons or
Associates or Affiliates thereof (as defined in the Rights
Agreement) and any subsequent holder of such Rights may become null
and void.
Section 4. Form of Right Certificates.
(a) The Right Certificates (and the forms of election to purchase
Preferred Stock and of assignment to be printed on the reverse thereof) shall be
substantially in the form of Exhibit C hereto and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed or to conform to usage. The Right Certificates shall be in a
machine printable format and in a form reasonably satisfactory to the Rights
Agent. Subject to the provisions of Section 22, Right Certificates issued in
respect of shares of Common Stock which were issued and outstanding as of the
Record Date shall be dated as of the Record Date, and all Right Certificates
issued in respect of other shares of Common Stock shall be dated as of the
respective dates of issuance of such Common Stock, and in either case shall
state the number of shares of Preferred Stock and the Purchase Price thereof per
one
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<PAGE> 9
one-thousandth of a share of Preferred Stock, but such number of such shares of
Preferred Stock and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Right Certificate issued pursuant to Section 3 or Section 22 that
represents Rights which are null and void pursuant to Section 7(e) and any Right
Certificate issued pursuant to Section 6 or Section 11 upon transfer, exchange,
replacement or adjustment of any other Right Certificate referred to in this
sentence, shall contain (to the extent feasible) the following legend:
The Rights represented by this Right Certificate were issued to a
Person who was or became an Acquiring Person or an Affiliate or an
Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement). Accordingly, this Right Certificate and the
Rights represented thereby are null and void.
The Company shall instruct the Rights Agent in writing of the Rights which
should be so legended and shall supply the Rights Agent with such legended Right
Certificates.
Section 5. Signature and Countersignature of Right Certificates;
Registration of Ownership and Transfers.
(a) The Right Certificates shall be executed on behalf of the Company by
its chairman, its president or a vice president, either manually or by facsimile
signature, and have affixed thereto the Company's seal or a facsimile thereof
which shall be attested by the secretary or an assistant secretary or the
treasurer or an assistant treasurer of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless so countersigned.
In case any officer of the Company who shall have signed any of the Right
Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery thereof by the
Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent, and issued and delivered by the Company with the same force and
effect as though the person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
(b) After the Distribution Date, the Rights Agent will keep or cause to be
kept, at the office of the Rights Agent designated for such purposes, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date and certificate number of each of the Right
Certificates.
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Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14, at any time
after the Close of Business on the Distribution Date until the Close of Business
on the earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate may be transferred, split up, combined or exchanged for another
Right Certificate or Right Certificates, entitling the registered holder to
purchase a like number of shares of Preferred Stock (or Common Stock, other
securities, cash or other assets, as the case may be) as the Right Certificate
or Right Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Right
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Right Certificate or Right Certificates to be
transferred, split up, combined or exchanged, with the form of assignment set
forth on the reverse side of the Right Certificate, and the certificate
following the form of assignment, appropriately executed, at the office of the
Rights Agent designated for such purpose.
(b) Neither the Rights Agent nor the Company shall be obligated to take
any action whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the
certificate following the form of assignment on the reverse side of such Right
Certificate and shall have provided such additional evidence of the identity of
the Beneficial Owner (or former Beneficial Owner) of such Right Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall countersign and deliver to the Person entitled
thereto a Right Certificate or Right Certificates, as the case may be, as so
requested. The Company may require payment by the holders of Rights of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split-up, combination or exchange of Right
Certificates.
(c) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Right Certificate, if mutilated, the Company will make and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered owner in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights.
(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein) in whole or in part at
any time after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the office of the Rights Agent designated for such
purpose, together with payment of the Purchase Price for each one one-thousandth
of a share of Preferred Stock (or Common Stock, other securities, cash or other
assets, as the case may be) as to which the Rights are exercised, and an amount
equal to any
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<PAGE> 11
applicable transfer tax as provided in Section 7(c), at or prior to the earlier
of (i) the Close of Business on the Final Expiration Date or (ii) the time at
which the Rights are redeemed as provided in Section 23 (the "Redemption Date").
(b) The purchase price (the "Purchase Price") for each one one-thousandth
of a share of Preferred Stock pursuant to the exercise of a Right shall
initially be $50, subject to adjustment from time to time as provided in the
next sentence and in Sections 11 and 13, payable in lawful money of the United
States of America in accordance with Section 7(c). Anything in this Agreement to
the contrary notwithstanding, in the event that at any time after the Record
Date and prior to the Distribution Date, the Company shall (i) declare or pay
any dividend on the Common Stock payable in shares of its Common Stock or (ii)
effect a subdivision, combination or consolidation of its shares of Common Stock
(by reclassification or otherwise than by payment of dividends in shares of its
Common Stock) into a greater or lesser number of shares of Common Stock, then in
any such case, each share of Common Stock of the Company outstanding following
such subdivision, combination or consolidation shall continue to have a Right
associated therewith and the Purchase Price after any such event shall be
proportionately adjusted to equal the result obtained by multiplying the
Purchase Price immediately prior to such event by a fraction the numerator of
which shall be the total number of shares of such Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of such Common Stock outstanding immediately
following the occurrence of such event. The adjustment provided for in the
preceding sentence shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the shares (other securities or other assets, as the case
may be) to be purchased and an amount equal to any applicable transfer tax
required to be paid by the holder of such Right Certificate in accordance with
Section 9 in cash, by certified check or bank draft payable to the order of the
Company, or as otherwise provided herein, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred Stock
certificates for the number of shares of Preferred Stock to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests, or (B) requisition from the depositary agent depositary receipts
representing such number of one one-thousandths of a share of Preferred Stock as
are to be purchased (in which case certificates for the shares of Preferred
Stock represented by such receipts shall be deposited by such transfer agent of
the Preferred Stock with the depositary agent) and the Company hereby directs
the depositary agent to comply with such request, (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional interests in shares in accordance with Section 14, (iii) after
receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Right
Certificates registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver the cash
referred to in clause (ii), to or upon the order of the registered holder of
such Right Certificate. The payment of the Purchase Price may be made (x) in
cash or by certified check or bank draft payable to the order of the Company or
(y) by delivery of a certificate or certificates (with appropriate stock powers
executed in blank attached thereto) evidencing the number of shares of
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<PAGE> 12
Common Stock equal to the then Purchase Price divided by the closing price (as
determined pursuant to Section 11(d) hereof) per share of Common Stock on the
Trading Day immediately preceding the date of such exercise). In the event that
the Company is obligated to issue other securities (including Common Stock) of
the Company or distribute other property pursuant to Section 11(a) hereof, the
Company will make all arrangements necessary so that such other securities are
available for distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent and delivered to the registered holder of such Right Certificate or
to such holder's duly authorized assigns, subject to the provisions of Section
14.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights Beneficially
Owned by (i) an Acquiring Person or an Affiliate or Associate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or an Affiliate or Associate
thereof) who becomes such transferee after the Acquiring Person becomes an
Acquiring Person or (iii) a transferee of an Acquiring Person (or an Affiliate
or Associate thereof) who becomes such transferee prior to or concurrently with
the Acquiring Person becoming an Acquiring Person and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has a continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Company determines is part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights to exercise any such
Right, whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to insure that the provisions of this Section
7(e) and Section 4(b) are complied with, but shall have no liability to any
holder of Right Certificates or other Person as a result of its failure to make
any determination hereunder with respect to an Acquiring Person or its
Affiliates, Associates or transferees. The Rights Agent will endeavor to comply
with the provisions hereof to the extent it has received instructions from the
Company concerning such matters. The provisions of this Section 7(e) shall be
operative whether or not the legend provided for in Section 4(b) is set forth on
the Right Certificate for any Rights referred to in this Section.
(f) Notwithstanding anything in this Agreement to the contrary, neither
the Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported transfer or
exercise unless such registered holder shall have (i) completed and signed the
certificate following the form of assignment or election to purchase set forth
on the reverse side of the Right Certificate surrendered for such assignment or
exercise and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) of such Right Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.
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Section 8. Cancellation of Right Certificates.
All Right Certificates surrendered for the purpose of exercise, transfer,
split up, combination or exchange shall, if surrendered to the Company or to any
of its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Right Certificates shall be issued in lieu thereof except as expressly permitted
by the provisions of this Rights Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all cancelled Right Certificates to the Company.
Section 9. Reservation and Availability of Preferred Stock; Compliance
with Registration or Other Requirements of Securities Laws; Transfer Taxes.
(a) The Company covenants and agrees that at all times prior to the
occurrence of a Section 11(a)(ii) Event it will cause to be reserved and kept
available out of its authorized and unissued shares of Preferred Stock or any
shares of Preferred Stock held in its treasury the number of shares of Preferred
Stock that will be sufficient to permit the exercise in full of all outstanding
Rights and, after the occurrence of a Section 11(a)(ii) Event, shall, to the
extent reasonably practicable, so reserve and keep available a sufficient number
of shares of Common Stock or such other securities as may be required to permit
the exercise in full of all outstanding Rights.
(b) So long as the shares of Preferred Stock (and, after the occurrence of
a Section 11(a)(ii) Event, the shares of Common Stock or other securities)
issuable upon the exercise of Rights are listed on any national securities
exchange, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such issuance to
be listed on such exchange upon official notice of issuance upon such exercise.
(c) The Company shall use its best efforts to (i) file, as soon as is
practicable after the Shares Acquisition Date, a registration statement under
the Securities Act, with respect to the securities purchasable upon exercise of
the Rights on an appropriate form, (ii) cause such registration statement to
become effective as soon as practicable after such filing and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities and (B) the Final
Expiration Date. The Company will also take such action as may be appropriate
under, or to ensure compliance with, the securities or "blue sky" laws of the
various states in connection with the exercisability of the Rights. The Company
may temporarily suspend, for a period of time (not to exceed ninety (90) days)
after the Shares Acquisition Date, the exercisability of the Rights in order to
prepare and file such registration statement and permit it to become effective.
Upon any such suspension, the Company shall issue a public announcement, in each
case with simultaneous written notice to the Rights Agent, stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding any
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provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction unless the requisite qualification in such jurisdiction
shall have been obtained. The Rights Agent may assume that any Right exercised
is permitted to be exercised under applicable law and shall have no liability
for acting in reliance upon such assumption.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Preferred Stock (or shares of
Common Stock or other securities) delivered upon exercise of Rights shall, at
the time of delivery of the certificates for such shares of Preferred Stock (or
other securities), subject to payment of the Purchase Price, be duly and validly
authorized and issued and, if such securities are represented by shares, fully
paid and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of the Right Certificates or of
any shares of Preferred Stock (or shares of Common Stock or other securities)
upon the exercise of Rights. The Company shall not, however, be required (i) to
pay any transfer tax that may be payable in respect of any transfer or delivery
of Right Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for the shares of Preferred Stock (or shares
of Common Stock or other securities) in a name other than that of, the
registered holder of the Right Certificate evidencing Rights surrendered for
exercise or (ii) to issue or deliver any certificates or depositary receipts for
shares of Preferred Stock (or shares of Common Stock or other securities) upon
the exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
Section 10. Preferred Stock Record Date.
Each Person in whose name any certificate for shares of Preferred Stock
(or shares of Common Stock or other securities) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of
the shares of Preferred Stock (or shares of Common Stock or other securities)
represented thereby on, and such certificate shall be dated, the date upon which
the Right Certificate evidencing such Rights was duly surrendered and payment of
the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which
transfer books of the Company for the shares of Preferred Stock (or shares of
Common Stock or other securities) are closed, such Person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which such transfer books are open.
Prior to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate, as such, shall not be entitled to any rights of a holder of shares
of Preferred Stock (or Common Stock or other securities) for which the Rights
shall be exercisable, including, without limitation, the right to vote, to
receive dividends or other distributions or to exercise any preemptive rights,
and shall not be entitled to receive any notice of any proceedings of the
Company, except as provided herein.
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Section 11. Modification of Rights and Adjustment of Purchase Price,
Number of Shares, Number of Rights and Securities Purchasable.
The Purchase Price, the number of shares of Preferred Stock covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Stock payable in Preferred
Stock, (B) subdivide the outstanding shares of Preferred Stock, (C) combine the
outstanding shares of Preferred Stock into a smaller number of shares of
Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this Section 11(a),
the Purchase Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books of the Company were
open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification. If an event occurs which would require an adjustment under
both Section 11(a)(i) and Section 11(a)(ii), the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii).
(ii) In the event any Person, alone or together with its Affiliates and
Associates, shall become an Acquiring Person (a "Section 11(a)(ii) Event"), then
proper provision shall be made so that each holder of a Right at any time
thereafter outstanding (except as provided in Section 7(e)) shall, for a period
of 60 days after the later of the occurrence of any such event or the effective
date of an appropriate registration statement under the Securities Act pursuant
to Section 9, have a right to receive, upon exercise of such Right at a price
equal to the then current Purchase Price, in accordance with the terms of this
Agreement and in lieu of shares of Preferred Stock, such number of shares of
Common Stock as shall equal the result obtained by multiplying (x) the then
current Purchase Price by the then number of one one-thousandths of a share of
Preferred Stock for which the Right was exercisable immediately prior to the
occurrence of such Section 11(a)(ii) Event, and dividing that product by (y) 50%
of the then current per share market price of the shares of Common Stock
(determined pursuant to Section 11(d)); provided, however, that if the
transaction that would otherwise give rise to the foregoing adjustment is also
subject to the provisions of Section 13, then only the provisions of Section 13
shall apply and no adjustment shall be made pursuant to this Section 11(a)(ii);
(iii) In the event that there shall not be sufficient treasury shares or
authorized but unissued shares of Common Stock to permit the exercise in full of
the Rights in accordance with the foregoing subparagraph (ii), the Company shall
take all such action as may be necessary to authorize additional shares of
Common Stock for issuance upon exercise of the Rights or shall substitute for
the Common Stock otherwise purchasable, upon payment of the Purchase Price, a
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<PAGE> 16
combination of some or all of the following that has an aggregate value equal to
the aggregate current per share market price of the shares of Common Stock
(determined pursuant to Section 11(d)) purchasable upon exercise in full of the
Rights (where such aggregate value has been determined by the Board of Directors
of the Company after considering the advice of a nationally recognized
investment banking firm selected by the Board of Directors): (i) fractions of a
share of Common Stock, (ii) other equity securities of the Company, (iii) debt
securities of the Company or (iv) other assets.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Preferred Stock (or shares having the same rights,
privileges and preferences as the Preferred Stock ("Equivalent Preference
Shares")) or securities convertible into Preferred Stock or Equivalent
Preference Shares at a price per share of Preferred Stock or Equivalent
Preference Shares (or having a conversion price per share, if a security
convertible into Preferred Stock or Equivalent Preference Shares) less than the
current per share market price of the Preferred Stock (as determined pursuant to
Section 11(d)) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock outstanding on such record date
plus the number of shares of Preferred Stock which the aggregate offering price
of the total number of shares of Preferred Stock and Equivalent Preference
Shares so to be offered (and the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such current market
price and the denominator of which shall be the number of shares of Preferred
Stock outstanding on such record date plus the number of additional shares of
Preferred Stock and Equivalent Preference Shares to be offered for subscription
or purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Shares of Preferred Stock owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation. Such adjustment shall be made successively whenever such a
record date is fixed; and in the event that such rights or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed.
(c) In case the Company shall fix a record date for the making of a
distribution to all holders of shares of Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing corporation) of evidences of indebtedness, cash or
assets (other than a regular quarterly cash dividend or a dividend payable in
shares of Preferred Stock) or subscription rights, options or warrants
(excluding those referred to in Section 11(b)), the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the current per share market price of the shares of
Preferred Stock (determined pursuant to Section 11(d)) on such record date less
the fair market value (as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent) of the portion of the cash, assets or
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evidences of indebtedness so to be distributed or of such subscription rights or
warrants applicable to one share of Preferred Stock and the denominator of which
shall be such current per share market price of the shares of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price that would then be in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of the Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days immediately prior to such date; provided, however, that
in the event that the current per share market price of the Common Stock is
determined during a period after the announcement by the issuer of such Common
Stock of (1) a dividend or distribution on such Common Stock payable in such
Common Stock or securities convertible into such Common Stock or (2) any
subdivision, combination or reclassification of such Common Stock and prior to
the expiration of 30 Trading Days after the ex-dividend date for such dividend
or distribution or the record date for such subdivision, combination or
reclassification, then, and in each such case, such daily closing prices shall
be appropriately adjusted to reflect the effect of such dividend, distribution,
subdivision, combination or reclassification. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the shares of Common Stock are not listed or admitted to
trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the shares of Common Stock
are listed or admitted to trading or, if the shares of Common Stock are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or such other
system then in use, or, if on any such date the shares of Common Stock are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Common Stock
selected by the Board of Directors of the Company. If on any such date the
shares of Common Stock are not so listed or traded, or no market maker is making
a market in the Common Stock, "current per share market price" shall mean the
fair value per share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed with
the Rights Agent. The term "Trading Day" means a day on which the principal
national securities exchange on which the shares of Common Stock are listed or
admitted to trading is open for the transaction of business or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, a Business Day.
(ii) For the purpose of any computation hereunder, the "current per share
market price" of the Preferred Stock shall be determined in the same manner as
set forth above for Common Stock in clause (i) of this Section 11(d).
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<PAGE> 18
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one one hundred-thousandth
of a share of Preferred Stock or one-ten thousandth of a share of Common Stock
or other security. Notwithstanding the first sentence of this Section 11(e), any
adjustment required by this Section 11 shall be made no later than the earlier
of (i) three years from the date of the transaction that requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a), the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock of the Company other than
Preferred Stock, thereafter the number of such other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the shares of Preferred Stock contained in Sections 11(a) through
11(c), inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Preferred Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one-thousandths of a
share of Preferred Stock purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and 11(c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Purchase Price, that number of one
one-thousandths of a share of Preferred Stock (calculated to the nearest one
one-hundred thousandth of a share of Preferred Stock) obtained by (i)
multiplying (x) the number of one one-thousandths of a share covered by a Right
immediately prior to such adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in lieu of any adjustment in the
number of shares of Preferred Stock purchasable upon the exercise of a Right.
Each of the Rights outstanding after such adjustment of the number of Rights
shall be exercisable for the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
one-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be
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made. This record date may be the date on which the Purchase Price is adjusted
or any day thereafter, but, if the Right Certificates have been issued, shall be
at least 10 days later than the date of the public announcement. If Right
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Right Certificates on such
record date Right Certificates evidencing, subject to Section 14, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Right Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Right Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Right Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of shares of Preferred Stock issuable upon the exercise of the Rights,
the Right Certificates theretofore and thereafter issued may continue to express
the Purchase Price and the number of shares of Preferred Stock purchasable
thereunder as such terms were expressed in the initial Right Certificates issued
hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-thousandth of the then par value, if any, of the
Preferred Stock issuable upon exercise of the Rights, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuing to the holder of any Right exercised after such record date of the
shares of Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the shares of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon such
exercise on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any (i) consolidation or subdivision of the shares of Preferred
Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less
than the current market price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) dividends on shares of
Preferred Stock payable in shares of Preferred Stock or (v) issuance of rights,
options or warrants
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<PAGE> 20
referred to in Section 11(b), hereafter made by the Company to holders of its
Preferred Stock shall not be taxable to such shareholders.
(n) The Company covenants and agrees that, after the Distribution Date, it
shall not, except as permitted by Section 23 or Section 26 hereof, take (or
permit any Subsidiary to take) any action if at the time such action is taken it
is reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(o) The Company covenants and agrees that, after the Distribution Date, it
shall not (i) consolidate with any Person (other than a Subsidiary of the
Company in a transaction which does not violate Section 11(n)), (ii) merge with
or into any other Person (other than a Subsidiary of the Company in a
transaction which does not violate Section 11(n)) or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction or a series of
related transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any Person or Persons (other than one or more of the Company and its
Subsidiaries in one or more transactions each of which does not violate Section
11(n)), if (x) at the time of or immediately after such consolidation, merger,
sale or transfer there are any charter or by-law provisions or any rights,
warrants or other instruments or securities outstanding or agreements in effect
or other actions taken which would materially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes, or would constitute, the Principal
Party for purposes of Section 13(a) shall have received a distribution of Rights
previously owned by such Person or any of its Affiliates or Associates. The
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 11 (o).
(p) The exercise of Rights in accordance with Section 11(a)(ii) shall only
result in the loss of the rights under Section 11(a)(ii) to the extent so
exercised and shall not otherwise affect the other rights represented by such
Rights under this Rights Agreement, including without limitation the rights
provided for in Section 13.
Section 12. Certificate of Adjusted Purchase Price or Number of
Shares.
Whenever an adjustment is made as provided in Section 11, the Company
shall (a) promptly prepare a certificate setting forth such adjustment and a
brief statement of the facts accounting for such adjustment, (b) promptly file
with the Rights Agent and with each transfer agent for the Common Stock or the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate (or, if prior to the Distribution Date, to
each holder of a certificate representing shares of Common Stock) in accordance
with Section 25. The Rights Agent shall be fully protected in relying on such
certificate and on any adjustment therein contained and shall not be deemed to
have knowledge of any adjustment unless and until it shall have received such
certificate.
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<PAGE> 21
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, on or after the Shares Acquisition Date, any of the
following (each a "Section 13 Event") shall occur, directly or indirectly, (x)
the Company shall consolidate with, or merge with and into, any Interested
Stockholder or, if in such consolidation or merger all holders of shares of
Common Stock are not treated alike, any other Person, (y) the Company shall
consolidate or merge with any Interested Stockholder or, if in such
consolidation or merger all holders of shares of Common Stock are not treated
alike, any other Person, and the Company shall be the continuing or surviving
corporation of such consolidation or merger (other than, in the case of any
transaction described in clause (x) or (y), a merger or consolidation which
would result in all of the Voting Securities outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into securities of the surviving entity) all of the Voting Securities
of the Company or such other surviving entity outstanding immediately after such
consolidation or merger and the holders of such securities not having changed as
a result of such merger or consolidation) or (z) the Company shall sell or
otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise
transfer), in one transaction or a series of related transactions, assets or
earning power aggregating more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any Interested Stockholder or
Stockholders or, if in such transaction all holders of shares of Common Stock
are not treated alike, any other Person (other than the Company or any
Subsidiary of the Company in one or more transactions each of which does not
violate Section 11(n)), then, and in each such case (except as provided in
Section 13(e)), proper provision shall be made so that (i) each holder of a
Right at any time thereafter outstanding (except as provided in Section 7(e))
shall thereafter have the right to receive, upon the exercise of such Right at a
price equal to the then current Purchase Price, in accordance with the terms of
this Agreement and in lieu of shares of Preferred Stock, such number of freely
tradable shares of Common Stock of the Principal Party, not subject to any
liens, encumbrances, rights of first refusal or other adverse claims, as shall
equal the result obtained by (A) multiplying the then current Purchase Price by
the number of one one-thousandths of a share of Preferred Stock for which a
Right is then exercisable (without taking into account any adjustment previously
made pursuant to Section 11(a)(ii)) and dividing that product by (B) 50% of the
then current per share market price of the shares of Common Stock of such
Principal Party (determined pursuant to Section 11(d)) on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall thereafter be deemed to refer to such Principal Party,
it being specifically intended that the provisions of Section 11 shall apply
only to such Principal Party following the first occurrence of a Section 13
Event; and (iv) such Principal Party shall take such steps (including without
limitation the reservation of a sufficient number of shares of its Common Stock)
in connection with the consummation of any such transaction as may be necessary
to assure that the provisions hereof shall thereafter be applicable, as nearly
as reasonably may be, in relation to the shares of Common Stock thereafter
deliverable upon the exercise of the Rights.
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<PAGE> 22
(b) "Principal Party" means:
(i) in the case of any transaction described in clause (x) or (y) of
Section 13(a), the Person that is the issuer of any securities into which shares
of Common Stock of the Company are converted in such merger or consolidation,
and if no securities are so issued, the Person that is the other party to such
merger or consolidation (including, if applicable, the Company if it is the
surviving corporation); and
(ii) in the case of any transaction described in clause (z) of
Section 13(a), the Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such transaction or
transactions;
provided, however, that in any of the foregoing cases, (A) if the shares of
Common Stock of such Person are not at such time and have not been continuously
over the preceding 12 months registered under Section 12 of the Exchange Act,
and such Person is a direct or indirect Subsidiary of another Person the shares
of Common Stock of which are and have been so registered, "Principal Party"
shall refer to such other Person; (B) if such Person is a Subsidiary, directly
or indirectly, of more than one Person, the shares of Common Stock of two or
more of which are and have been so registered, "Principal Party" shall refer to
whichever of such Persons is the issuer of the shares of Common Stock having the
greatest aggregate market value; and (C) in case such Person is owned, directly
or indirectly, by a joint venture formed by two or more Persons that are not
owned, directly or indirectly, by the same Person, the rules set forth in
clauses (A) and (B) above shall apply to each of the chains of ownership having
an interest in such joint venture as if such party to the joint venture were a
Subsidiary of both or all of such joint venturers and the Principal Parties in
each such chain shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Company shall not consummate any such consolidation, merger, sale
or transfer unless the Principal Party shall have a sufficient number of its
authorized shares of Common Stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in Sections 13(a) and 13(b) and further
providing that, as soon as practicable after the date of any consolidation,
merger, sale or transfer mentioned in Section 13(a), the Principal Party at its
own expense shall:
(i) prepare and file a registration statement under the Securities
Act with respect to the Rights and the securities purchasable upon exercise of
the Rights on an appropriate form, and will use its best efforts to cause such
registration statement to (A) become effective as soon as practicable after such
filing and (B) remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Final Expiration Date;
(ii) use its best efforts to qualify or register the Rights and the
securities purchasable upon exercise of the Rights under the blue sky laws of
such jurisdictions as may be necessary or appropriate; and
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<PAGE> 23
(iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.
(d) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. The rights under this
Section 13 shall be in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) and shall survive any exercise thereof.
(e) Notwithstanding anything in this Agreement to the contrary, this
Section 13 shall not be applicable to a transaction described in clause (x) or
(y) of Section 13(a) if (i) such transaction is consummated with a Person or
Persons who acquired shares of Common Stock pursuant to a Permitted Offer (or a
wholly owned Subsidiary of any such Person or Persons), (ii) the price per share
of Common Stock offered in such transaction is not less than the price per share
of Common Stock paid to all holders of shares of Common Stock whose shares were
purchased pursuant to such Permitted Offer and (iii) the form of consideration
offered in such transaction is the same as the form of consideration paid
pursuant to such Permitted Offer. Upon consummation of any such transaction
contemplated by this Section 13(e), all Rights then outstanding shall expire.
(f) In no event shall the Rights Agent have any liability in respect to
any such Principal Party transactions. The Rights Agent may rely and be fully
protected in relying upon a certificate of the Company stating that the
provisions of this Section 13 have been fulfilled. Notwithstanding anything in
this Agreement to the contrary, the prior written consent of the Rights Agent
must be obtained in connection with any supplemental agreement which alters the
rights or duties of the Rights Agent.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by NASDAQ or such other
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<PAGE> 24
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions that are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Right or to
issue certificates which evidence fractions of shares of Preferred Stock (other
than fractions that are integral multiples of one one-thousandth of a share of
Preferred Stock). Fractions of shares of Preferred Stock in integral multiples
of one one-thousandth of a share of Preferred Stock may, at the election of the
Company, be evidenced by depositary receipts pursuant to an appropriate
agreement between the Company and a depositary selected by it, provided that
such agreement shall provide that the holders of such depositary receipts shall
have all the rights, privileges and preferences to which they are entitled as
Beneficial Owners of the shares of Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-thousandth of a share of Preferred Stock, the
Company may pay to the registered holders of Right Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one share of Preferred Stock. For
purposes of this Section 14(b) the current market value of a share of Preferred
Stock shall be the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(d)(ii) and the second sentence of Section 11(d)(i)) for
the Trading Day immediately prior to the date of such exercise.
(c) After the occurrence of a Section 11(a)(ii) Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Right Certificates which are exercised as herein
provided an amount in cash equal to the same fraction of the current market
value of a share of Common Stock. For purposes of this Section 14(c) the current
market value of a share of Common Stock shall be the closing price of a share of
Common Stock (as determined pursuant to the second sentence of Section 11(d)(i))
for the Trading Day immediately prior to the date of such exercise.
(d) The holder of a Right by the acceptance of such Right expressly waives
such holder's right to receive any fractional Rights or any fractional shares
(except as provided above) upon exercise of a Right.
Section 15. Rights of Action.
All rights of action in respect of this Agreement, excepting the rights of
action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of Common Stock); and any registered
holder of any Right Certificate (or, prior to the Distribution Date, of any
share of Common Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of any other
holder of shares of Common Stock),
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<PAGE> 25
may, in such holder's own behalf and for such holder's own benefit, enforce, and
may institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights evidenced by such Right Certificate in the manner provided in such Right
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this Agreement.
Section 16. Agreement of Right Holders.
Every holder of a Right, by accepting the same, consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) Prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of the shares of Common Stock;
(b) After the Distribution Date, the Right Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office of
the Rights Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and certificates
fully completed and duly executed;
(c) Subject to Section 6 and Section 7(e), the Company and the Rights
Agent may deem and treat the Person in whose name the Right Certificate (or,
prior to the Distribution Date, the associated Common Stock certificate) is
registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Common Stock certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, that the Company shall use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 17. Right Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the shares of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented
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<PAGE> 26
thereby, nor shall anything contained herein or in any Right Certificate be
construed to confer upon the holder of any Right Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders (except as provided
in Section 24), or to receive dividends or subscription rights, or otherwise,
until the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent such compensation as
shall be agreed to in writing between the Company and the Rights Agent for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration and execution of this Agreement and the exercise
and performance of its duties hereunder. The Company also agrees to fully
indemnify the Rights Agent for, and to hold it harmless against, any and all
loss, liability, claim damage or expense, incurred without gross negligence or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending itself against any
claim of liability arising therefrom, directly or indirectly. The provisions of
this Section 18(a) shall survive the expiration of the Rights and the
termination of this Agreement.
(b) The Rights Agent shall be fully protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Right Certificate
or certificate for shares of Preferred Stock or Common Stock or other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, instruction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed and executed by the proper Person or Persons, or otherwise upon
the advice of its counsel as set forth in Section 20(a).
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to all or
principally all of the corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so
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<PAGE> 27
countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name, and in all such cases such Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
The Rights Agent undertakes the duties and obligations expressly imposed
by this Agreement, and no implied duties or obligations shall be read into this
Agreement against the Rights Agent, upon the following terms and conditions, by
all of which the Company and the holders of Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel of its selection (who
may be legal counsel for the Company), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity or existence of any Acquiring
Person and the determination of "current per share market price") be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate signed by any one of the chairman, the president, any vice
president, the secretary, an assistant secretary, the treasurer or an assistant
treasurer of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
to be taken in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
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(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Right Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section 7(e)) or any adjustment provided for in
Sections 7, 11 or 13 or the ascertaining of the existence of facts that would
require any such change or adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after the Rights Agent's actual receipt
of a certificate described in Section 12); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any shares of Preferred Stock or Common Stock to be issued
pursuant to this Agreement or any Right Certificate or as to whether any shares
of Preferred Stock or Common Stock will, when issued, be validly authorized and
issued, fully paid and nonassessable, nor shall the Rights Agent be responsible
for the legality of the terms hereof in its capacity as an administrative agent.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the chairman, the president, any vice president, the secretary or the
treasurer of the Company, and to apply to such officers for advice or
instructions in connection with its duties, and it shall not be liable for any
action taken or suffered to be taken by it in good faith in accordance with
instructions of any such officer or for any delay in acting while waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company may, at the option of the Rights Agent, set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this
Agreement and the date on or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any action
taken by, or omission of, the Rights Agent in accordance with a proposal
included in such application on or after the date specified in such application
(which date shall not be less than three Business Days after the date any
officer of the Company actually receives such application, unless any such
officer shall have consented in writing to any earlier date) unless prior to
taking any such action (or the effective date in the case of an omission), the
Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other Person.
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<PAGE> 29
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Right Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause (1) or (2)
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
(l) In addition to the foregoing, the Rights Agent shall be protected and
shall incur no liability for, or in respect of, any action taken or omitted by
it in connection with its administration of this Agreement if such acts or
omissions are (i) in reliance upon the proper execution of the certification
concerning beneficial ownership appended to the form of assignment and the form
of election to purchase attached thereto unless the Rights Agent shall have
actual knowledge that, as executed, such certification is untrue, or (ii) the
refusal to honor any otherwise permissible assignment or election by reason of
the non-execution.
(m) The Company agrees to give the Rights Agent written notice of any
event or ownership which would prohibit the exercise or transfer of the Right
Certificates, such notice to be given promptly after the Company acquires actual
knowledge of such event or ownership.
Section 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Stock and
Preferred Stock by registered or certified mail, and to the holders of the Right
Certificates by first-class mail, such notice to be at the expense of the
Company. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Common Stock and
Preferred Stock by registered or certified mail, and to the holders of the
Rights Certificates by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate,
then the Rights Agent or any registered holder of
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<PAGE> 30
any Right Certificate may, at the expense of the Company, apply to any court of
competent jurisdiction for the appointment of a new Rights Agent; provided that
such holder of a Right Certificate shall, prior to making such application, have
submitted such holder's Right Certificate to the Company for inspection. Any
successor Rights Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the State of New York (or of any other state of the United States
so long as such corporation is authorized to do business in the State of New
York), in good standing, that is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or
examination by federal or state authority and that has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million, provided that the Company's transfer agent for its shares of Common
Stock shall be an acceptable successor Rights Agent without regard to the
foregoing capital and surplus requirement. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Not later than the effective date of any such appointment the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and Preferred Stock, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Right Certificates.
Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change in the Purchase Price and the number or kind or
class of shares or other securities or property purchasable under the Right
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Common Stock
after the Distribution Date and prior to the redemption or expiration of the
Rights, the Company (a) shall, with respect to shares of Common Stock so issued
or sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereafter issued by the Company and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Right
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Right Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or to the Person to whom such Right Certificate
would be issued and (ii) no such Right Certificate shall be issued if, and to
the extent that, appropriate adjustments shall otherwise have been made in lieu
of the issuance thereof.
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<PAGE> 31
Section 23. Redemption of Rights.
(a) The Board of Directors of the Company may, at its option, at any time
prior to 5:00 P.M., New York City time, on the earlier of (x) the date on which
a Section 11(a)(ii) Event shall have occurred (even if prior to the Record Date)
and (y) the Final Expiration Date, redeem all but not less than all of the then
outstanding Rights at a redemption price of $.001 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"); provided, however, that in the event
payment of the Redemption Price to a holder of Rights would result in the
payment of an amount not equal to $.01 or an integral multiple of $.01, the
amount to be paid shall be rounded upward to the next $.01.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights, and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. Within 10 days after the action of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and holders of the then outstanding Rights by mailing such
notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for the Common Stock. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than (i) as specifically set
forth in this Section 23 or (ii) in connection with the purchase of shares of
Common Stock prior to the Distribution Date.
(c) The Company may, at its option discharge all of its obligations with
respect to the Rights by (i) issuing a press release announcing the redemption
of the Rights pursuant to this Section 23 and (ii) mailing payment of the
Redemption Price to the registered holders of the Rights at their respective
last addresses as they appear on the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the Transfer Agent of
the Common Stock, and upon such action all outstanding Rights and Rights
Certificates shall be null and void without any further action by the Company.
Section 24. Notice of Certain Events.
(a) In case the Company shall propose (a) to pay any dividend payable in
stock of any class to the holders of shares of Preferred Stock or to make any
other distribution to the holders of shares of Preferred Stock (other than a
regular quarterly cash dividend) or (b) to offer to the holders of shares of
Preferred Stock rights or warrants to subscribe for or to purchase any
additional shares of Preferred Stock or of stock of any class or any other
securities, rights or options or (c) to effect any reclassification of the
Preferred Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock) or (d) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction that does not violate Section 11(n)) or to effect any sale or
other transfer (or to
29
<PAGE> 32
permit one or more of its Subsidiaries to effect any sale or other transfer), in
one or more transactions, of 50% or more of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person (other than
the Company or any of its Subsidiaries in one or more transactions, each of
which does not violate Section 11(n) or in a transaction that may be effected
without notice to or approval of or consent by the holders of at least a
majority of the outstanding shares of Common Stock), or (e) to effect the
liquidation, dissolution or winding up of the Company, then, in each such case,
the Company shall give to each holder of a Right Certificate and to the Rights
Agent in accordance with Section 25 a notice of such proposed action which shall
specify the record date for the purposes of such stock dividend, or distribution
of rights or warrants, or the date on which such reclassification,
consolidation, merger, sale, transfer, liquidation, dissolution, or winding up
is to take place and the date of participation therein by the holders of the
Common Stock or Preferred Stock, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (a) or (b)
above at least 20 days prior to the record date for determining holders of the
Preferred Stock for purposes of such action, and in the case of any such other
action, at least 20 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the shares of Common
Stock or Preferred Stock, whichever shall be the earlier.
(b) In case any Section 11(a)(ii) Event shall occur, then (i) the Company
shall as soon as practicable thereafter give to each holder of a Right
Certificate and to the Rights Agent, in accordance with Section 25, a notice of
the occurrence of such event, which shall specify the event and the consequences
of the event to the holders of Rights under Section 11(a)(ii) and (ii) all
references in Section 24(a) to shares of Preferred Stock shall be deemed
thereafter to refer also to shares of Common Stock and, if appropriate, other
securities of the Company.
(c) The failure to give notice required by this Section 24 or any defect
therein shall not affect the legality or validity of the action taken by the
Company or the vote on any such action by the holders of capital stock of the
Company.
Section 25. Notices.
(a) Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Right Certificate to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
OSI Pharmaceuticals, Inc.
106 Charles Lindbergh Boulevard
Uniondale, New York 11553
Attention: Secretary
(b) Subject to the provisions of Section 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right Certificate to or on the Rights Agent shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing with the Company) as follows:
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<PAGE> 33
The Bank of New York
101 Barclay Street
New York, NY 10286
Attn: Stock Transfer Administration
(c) Notices or demands authorized by this Agreement to be given or made by
the Company or the Rights Agent to the holder of any Right Certificate (or, if
prior to the Distribution Date, to the holders of certificates representing
shares of Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 26. Supplements and Amendments.
Subject to the penultimate sentence of this Section 26, prior to the
Distribution Date the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement (including
supplements or amendments that may be deemed to affect adversely the interests
of the holders of Rights) without the approval of any holders of shares of
Common Stock or Rights. Subject to the penultimate sentence of this Section 26,
from and after the Distribution Date the Company and the Rights Agent shall, if
the Company so directs, supplement or amend this Agreement without the approval
of any holders of Rights in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions hereof, (iii) to shorten or lengthen any time period
hereunder or (iv) to change or supplement the provisions hereunder in any manner
which the Company may deem desirable, including, without limitation, the
addition of other events requiring adjustment to the Rights under Section
11(a)(ii) or Section 13 or procedures relating to the redemption of the Rights,
which change, amendment or supplement shall not adversely affect the interests
of the holders of Rights (other than Rights which are null and void pursuant to
Section 7(e)); provided, that from and after the Distribution Date, this
Agreement may not be supplemented or amended to lengthen, pursuant to clause
(iii) of this sentence, (A) a time period relating to when the Rights may be
redeemed at such time as the Rights are not then redeemable or (B) any other
time period unless such lengthening is for the purpose of protecting, enhancing
or clarifying the rights of, or the benefits to, the holders of Rights. Upon the
delivery of a certificate of an officer of the Company which states that a
proposed supplement or amendment is in compliance with the terms of this Section
26, the Rights Agent shall execute such supplement or amendment. Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section, the Rights Agent shall execute such supplement or amendment.
Notwithstanding any other provision hereof, the Rights Agent's consent must be
obtained regarding any amendment or supplement pursuant to this Section 26 which
alters the Rights Agent's rights or duties. Notwithstanding anything contained
in this Agreement to the contrary, without the approval or consent of the
holders of the affected Rights then outstanding (other than Rights which are
null and void pursuant to Section 7(e)) no supplement or amendment shall be made
which decreases the Redemption Price, increases the Purchase Price or decreases
the number of one one-thousandths of a share of Preferred Stock for which a
Right is exercisable. Prior to the
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<PAGE> 34
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of shares of Common Stock.
Section 27. Successors.
All the covenants and provisions of this Agreement by or for the benefit
of the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 28. Determinations and Actions by the Company or the Board of
Directors.
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding Common
Stock of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act. The Board of Directors of the Company shall
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend this Agreement or
as to whether an Acquiring Person exists or as to whether any Section 11(a)(ii)
Event has occurred). All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other Persons and (y) not subject any
Person who was a director of the Company at the time thereof to any liability to
the holders of the Rights.
Section 29. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give any Person other than
the Company, the Rights Agent and the registered holders of Right Certificates
(and, prior to the Distribution Date, the registered holders of shares of Common
Stock) any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the registered holders of shares of Common Stock).
Section 30. Severability.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant
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<PAGE> 35
or restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in good faith
that severing the invalid language of this Agreement would adversely affect the
purpose or effect of this Agreement, the right of redemption set forth in
Section 23, if it shall then have expired, shall be reinstated and shall not
expire until the Close of Business on the tenth day following the date of such
determination by the Board of Directors.
Section 31. Governing Law.
This Agreement and each Right Certificate issued hereunder shall be deemed
to be a contract made under the laws of Delaware and for all purposes shall be
governed by and construed in accordance with the laws of such State applicable
to contracts to be made and performed entirely within such State, provided,
however, that the rights and obligations of the Rights Agent shall be governed
by and construed in accordance with the laws of the State of New York.
Section 32. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.
Section 33. Descriptive Headings.
Descriptive headings of Sections of this Agreement are inserted for
convenience of reference only, form no part of this Agreement and shall not be
considered for purposes of interpreting or construing any of the provisions
hereof.
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<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
OSI PHARMACEUTICALS, INC.
By: /s/
-------------------------------------------
THE BANK OF NEW YORK, as Rights Agent
By: /s/
-------------------------------------------
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<PAGE> 37
Exhibit A
OSI PHARMACEUTICALS, INC.
Terms of
Series SRP Junior Participating Preferred Stock
RESOLVED, that pursuant to the authority vested in the Board of Directors of
this Corporation by the Certificate of Incorporation, the Board of Directors
does hereby provide for the issuance of a series of preferred stock, par value
$.01 per share (the "Preferred Stock"), to be designated "Series SRP Junior
Participating Preferred Stock" (hereinafter referred to as the "Series SRP
Preferred Stock"), initially consisting of 60,000 shares, and to the extent that
the designations, relative rights, preferreds, limitations and restrictions of
the Series SRP Preferred Stock are not stated and expressed in the Certificate
of Incorporation, does hereby fix and herein state and express such
designations, relative rights, preferreds, limitations and restrictions thereof
as follows (all terms used herein which are defined in the Certificate of
Incorporation shall be deemed to have the meanings provided therein):
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series SRP Junior Participating Preferred Stock" and the number
of shares constituting such series shall be 60,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares of
Series SRP Preferred Stock with respect to dividends, the holders of shares of
Series SRP Preferred Stock shall be entitled to receive, when and as declared by
the Board of Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on March 15, June 15, September 15 and December 15 in
each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance of a share or fraction of a share of Series SRP Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $.025 or (b) 1,000 times the aggregate per share (rounded to nearest
cent) amount of all cash dividends and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions, other
than a dividend payable in shares of common stock (the "Common Stock") or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series SRP Preferred Stock.
(B) The Corporation shall declare a dividend or distribution on the Series
SRP Preferred Stock as provided in paragraph (A) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock); provided that, in the event no dividend or
distribution shall have been declared on the Common Stock during the period
between any Quarterly Dividend Payment Date and the next subsequent
<PAGE> 38
Quarterly Dividend Payment Date, a dividend of $.025 per share on the Series SRP
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on each outstanding
share of Series SRP Preferred Stock from the first Quarterly Dividend Payment
Date following the date of issue of such share unless such date of issue is a
date after the record date for the determination of holders of shares of Series
SRP Preferred Stock entitled to receive a quarterly dividend on such Quarterly
Dividend Payment Date, in which event such dividends shall begin to accrue and
be cumulative on such shares from the second Quarterly Dividend Payment Date
following the date of issue of such share. Accrued but unpaid dividends shall
not bear interest. Dividends paid on the shares of Series SRP Preferred Stock in
an amount less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Series SRP Preferred
Stock entitled to receive payment of a dividend or distribution declared
thereon, which record date shall be no more than 30 days prior to the date fixed
for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series SRP
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series SRP Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the Corporation.
(B) Except as otherwise provided herein or by law, the holders of shares
of Series SRP Preferred Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of stockholders of
the Corporation.
(C) (i) If at any time dividends on any Series SRP Preferred Stock shall
be in arrears in an amount equal to six (6) quarterly dividends thereon, the
occurrence of such contingency shall mark the beginning of a period (a "Default
Period") which shall extend until such time when all accrued and unpaid
dividends for all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series SRP Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each Default Period, all holders of Preferred Stock (including holders of the
Series SRP Preferred Stock) on which dividends are in arrears in an amount equal
to six (6) quarterly dividends thereon, voting as a class, irrespective of
series, shall have the right to elect two (2) directors.
(ii) During any Default Period, such voting rights of the holders of
Series SRP Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) or at any annual
meeting of stockholders, and thereafter at annual meetings of stockholders,
provided that neither such voting rights nor the right of the holders of any
other series of Preferred Stock, if any, to increase the authorized number of
directors shall be exercised unless the holders of ten percent (10%) in number
of shares of Preferred Stock outstanding shall be present in person or by proxy.
The absence of a quorum of the holders of Common Stock shall not affect the
exercise by the holders of Preferred Stock of such voting
-2-
<PAGE> 39
right. At any meeting at which the holders of Preferred Stock shall exercise
such voting right initially during an existing Default Period, they shall have
the right, voting as a class, to elect directors to fill such vacancies, if any,
in the Board of Directors as may then exist up to two (2) directors or, if such
right is exercised at an annual meeting, to elect two (2) directors. If the
number which may be so elected at any special meeting does not amount to the
required number, the holders of the Preferred Stock shall have the right to make
such increase in the number of directors as shall be necessary to permit the
election by them of the required number. After the holders of the Preferred
Stock shall have exercised their right to elect directors in any Default Period
and during the continuance of such period, the number of directors shall not be
increased or decreased except by vote of the holders of Preferred Stock as
herein provided or pursuant to the rights of any equity securities ranking
senior to or pari passu with the Series SRP Preferred Stock.
(iii) During an existing Default Period, unless the holders of
Preferred Stock shall have previously exercised their right to elect directors,
the Board of Directors may order, or any stockholder or stockholders owning in
the aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request, the calling of
a special meeting of the holders of Preferred Stock, which meeting shall
thereupon be called by the President, a Vice President or the Secretary of the
Corporation. Notice of such meeting and of any annual meeting at which holders
of Preferred Stock are entitled to vote pursuant to this paragraph (C)(iii)
shall be given to each holder of record of Preferred Stock by mailing a copy of
such notice to such holder at such holder's last address as the same appears on
the books of the Corporation. Such meeting shall be called for a time not
earlier than 20 days and not later than 60 days after such order or request or
in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding. Notwithstanding the
provisions of this paragraph (C)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the date fixed for the
next annual meeting of the stockholders.
(iv) In any Default Period, the holders of Common Stock, and other
classes of stock of the Corporation if applicable, shall continue to be entitled
to elect the whole number of directors until the holders of Preferred Stock
shall have exercised their right to elect two (2) directors voting as a class,
after the exercise of which right (x) the directors so elected by the holders of
Preferred Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the Default Period and (y)
any vacancy in the Board of Directors may (except as provided in paragraph
(C)(ii) of this Section 3) be filled by vote of a majority of the remaining
directors theretofore elected by the holders of the class of stock which elected
the Director whose office shall have become vacant. References in this paragraph
(C) to directors elected by the holders of a particular class of stock shall
include directors elected by such directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a Default Period, (x) the
right of the holders of Preferred Stock as a class to elect directors shall
cease, (y) the term of any directors elected by the holders of Preferred Stock
as a class shall terminate and (z) the number of directors shall be such number
as may be provided for in or fixed pursuant to the Certificate of
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<PAGE> 40
Incorporation or by-laws irrespective of any increase made pursuant to the
provisions of paragraph (C)(ii) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in the
Certificate Incorporation or By-laws). Any vacancies in the Board of Directors
affected by the provisions of clauses (y) and (z) in the preceding sentence may
be filled by a majority of the remaining directors.
(D) Except as set forth herein, holders of Series SRP Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series SRP Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series SRP Preferred Stock
outstanding shall have been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series SRP Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series SRP Preferred Stock,
except dividends paid ratably on the Series SRP Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to the
total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration
shares of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series SRP Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such parity stock in exchange for shares of any stock of
the Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series SRP Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series SRP Preferred Stock or any shares of stock ranking on a parity with the
Series SRP Preferred Stock, except in accordance with a purchase offer made in
writing or by publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferreds of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
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<PAGE> 41
Section 5. Reacquired Shares. Any shares of Series SRP Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Corporation, no distribution shall be made to the holders of shares of
stock ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) of the Series SRP Preferred Stock unless, prior thereto, the holders
of shares of Series SRP Preferred Stock shall have received $.01 per share plus
an amount equal to accrued and unpaid dividends and distribution thereon,
whether or not declared, to the date of such payment (the "Series SRP
Liquidation Preferred"). Following the payment of the full amount of the Series
SRP Liquidation Preferred, no additional distributions shall be made to the
holders of shares of Series SRP Preferred Stock unless, prior thereto, the
holders of shares of Common Stock shall have received an amount per share (the
"Common Adjustment") equal to the quotient obtained by dividing (i) the Series
SRP Liquidation Preferred by (ii) 1,000 (such number in clause (ii), the
"Adjustment Number"). Following the payment of the full amount of the Series SRP
Liquidation Preferred and the Common Adjustment in respect of all outstanding
shares of Series SRP Preferred Stock and Common Stock, respectively, holders of
Series SRP Preferred Stock and holders of shares of Common Stock shall receive
their ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to such Preferred Stock
and Common Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series SRP Liquidation Preferred and the
liquidation preferreds of all other series of Preferred Stock, if any, which
rank on a parity with Series SRP Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferreds.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash or other property, then in any such case the shares of Series
SRP Preferred Stock shall at the same time be similarly exchanged or changed in
an amount per share equal to 1,000 times the aggregate amount of stock,
securities, cash and other property (payable in kind) into which or for which
each share of Common Stock is changed or exchanged.
Section 8. No Redemption. The shares of Series SRP Preferred Stock
shall not be redeemable.
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<PAGE> 42
Section 9. Ranking. The Series SRP Preferred Stock shall rank junior to
all other series of the Corporation's Preferred Stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise.
Section 10. Amendment. The Certificate of Incorporation of the Corporation
shall not be further amended in any manner which would materially alter or
change the powers, preferreds or special rights of the Series SRP Preferred
Stock so as to affect them adversely without the affirmative vote of the holders
of a majority or more of the outstanding shares of Series SRP Preferred Stock,
voting separately as a class.
Section 11. Fractional Shares. Series SRP Preferred Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series SRP Preferred Stock.
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<PAGE> 43
Exhibit B
OSI PHARMACEUTICALS, INC.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On June 23, 1999, the Board of Directors of OSI Pharmaceuticals, Inc., a
Delaware corporation (the "Company"), declared a dividend distribution of one
right (a "Right") for each outstanding share of common stock of the Company (the
"Common Stock") payable to stockholders of record at the close of business on
July 23, 1999. Each Right entitles the registered holder to purchase from the
Company one one-thousandth of a share of a newly-created series of preferred
stock, par value $0.01 per share (the "Preferred Stock"), at a price of $50 (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in the form of Rights Agreement (the "Rights Agreement")
dated as of June 23, 1999 between the Company and The Bank of New York, as
Rights Agent (the "Rights Agent").
The Rights are not exercisable until the "Distribution Date," which is the
earlier of (i) the date which is 10 days (or such later date as the Board of
Directors may determine) after the commencement of, or first public announcement
of an intention to make, a tender or exchange offer by any person the
consummation of which would result in a person or group becoming an Acquiring
Person (defined below) or (ii) the date of the first public announcement that a
person or group of affiliated or associated persons has acquired, or obtained
the right to acquire, otherwise than pursuant to a Permitted Offer (described
below), beneficial ownership of 17.5% or more of the outstanding shares of
Common Stock. A person or group whose acquisition of shares of Common Stock
causes a Distribution Date to occur pursuant to the foregoing clause (ii) is an
"Acquiring Person."
Until the Distribution Date (i) the Rights will be evidenced by the Common
Stock certificates and will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after July 23, 1999 will
contain a notation referring to the Rights associated with such shares of Common
Stock, incorporating the Rights Agreement by reference and (iii) the surrender
for transfer of any certificates for Common Stock outstanding will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificates. As soon as practicable after the Distribution
Date, Right Certificates will be mailed to holders of record of the Common Stock
as of the close of business on the Distribution Date and, thereafter, the
separate Right Certificates alone will represent the Rights.
The Rights will expire at the close of business on May 31, 2009, unless
earlier redeemed by the Company as described below.
In the event that any person becomes an Acquiring Person (otherwise than
pursuant to a Permitted Offer), the Rights will be modified automatically so
that each holder of a Right will thereafter have, in lieu of the right to
purchase shares of Preferred stock, the right (the "Flip-In
<PAGE> 44
Right") to receive upon exercise of the Right the number of shares of Common
Stock which, immediately before such Acquiring Person became an Acquiring
Person, had a market value equal to twice the amount of the exercise price of
the Right. Notwithstanding the foregoing, after such person shall have become an
Acquiring Person, all Rights that are, or under certain circumstances specified
in the Rights Agreement were, beneficially owned by any Acquiring Person or any
affiliate or associate thereof will be null and void. A "Permitted Offer" is a
tender or exchange offer which is for all outstanding shares of Common Stock at
a price and on terms which the Board of Directors determines to be adequate and
in the best interests of the Company, its stockholders and other relevant
constituencies, other than such Acquiring Person, its affiliates and associates.
In the event that, at any time after a person or group has become an
Acquiring Person, (i) the Company is acquired in a merger or other business
combination in which the holders of all of the outstanding shares of Common
Stock immediately prior to the consummation of the transaction are not the
holders of all of the surviving corporation's voting power or (ii) more than 50%
of the Company's assets or earning power is sold or transferred, in either case
with or to an Acquiring Person or any affiliate or associate thereof or any
other person in which such Acquiring Person, affiliate or associate has an
interest or any person acting on behalf of or in concert with such Acquiring
Person (or, if in such transaction all holders of shares of Common Stock are not
treated alike, any other person), then each holder of a Right (except Rights
which previously have become null and void as set forth above) shall thereafter
have the right (the "Flip-Over Right") to receive, upon exercise of the Right,
shares of common stock of the acquiring company having a value equal to twice
the amount of the exercise price of the Right. Each such holder of a Right will
continue to have a Flip-Over Right whether or not such holder exercises or
surrenders the Flip-In Right, and such holder will have a successive Flip-Over
Right on each occurrence of a transaction specified in the first sentence of
this paragraph.
At any time before a person or group becomes an Acquiring Person, the
Company may redeem the Rights in whole, but not in part, at a price of $.001 per
Right (the "Redemption Price"). Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price. Notice of redemption will be given by mail to each holder
of Rights at such holder's last address on the registry books for the Rights,
or, at the Company's option, by issuing a press release and mailing payment of
the redemption price to the registered holders of the Rights.
The Purchase Price payable, and the number of shares of Preferred stock or
other securities or property issuable, upon exercise of the Rights are subject
to adjustments from time to time to prevent dilution in the event of certain
changes in the Preferred stock or Common Stock or distributions of such stock or
other events which would otherwise diminish the benefits intended to be afforded
by the Rights. With certain exceptions, no adjustment in the Purchase Price will
be required until cumulative adjustments amount to at least 1% of the Purchase
Price.
No fractional Rights or shares of Preferred stock or Common Stock will be
issued (other than fractions of a share of Preferred stock which are one
one-thousandth of a share or an integral
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<PAGE> 45
multiple of one one-thousandth of a share) and, in lieu thereof, a payment in
cash will be made based on the market price of the Rights, Preferred stock or
Common Stock, as the case may be, on the last trading date prior to the date of
exercise of the Rights involved.
The dividends, liquidation and voting rights, and the non-redemption
feature of the Preferred stock are designed so that the value of the one
one-thousandth of a share of Preferred stock purchasable upon exercise of each
Right will approximate the value of one share of Common Stock. The Preferred
stock will be non-redeemable and will rank junior to all other series of the
Company's Preferred stock. Each whole share of Preferred stock will be entitled
to receive a quarterly preferential dividend of the greater of (a) $.025 per
share or (b) 1,000 times the dividend declared on the Common Stock. In the event
of liquidation, the holders of the Preferred stock will be entitled to receive a
preferential liquidation payment of $.01 per share and will also be entitled to
receive, in the aggregate, a liquidation payment equal to 1,000 times the
liquidation payment made per share of Common Stock. Each share of Preferred
stock will have 1,000 votes, voting together with the Common Stock. In the event
of any merger, consolidation or other transaction in which shares of Common
Stock are exchanged for or converted into other stock or securities, cash or
other property, each share of Preferred stock will be entitled to receive 1,000
times the amount received per share of Common Stock.
Prior to the Distribution Date the Board of Directors may amend any of the
provisions of the Rights Agreement other than to decrease the Redemption Price,
increase the Exercise Price or decrease the number of one one-thousandths of a
share of Preferred stock purchasable upon exercise of a Right. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board of Directors to cure any ambiguity, defect or inconsistency, to make
changes which do not adversely affect the interests of the holders of Rights
(other than holders whose Rights have become null and void as set forth above)
or to shorten or lengthen any time period under the Rights Agreement; provided
that no such amendment may be adopted to adjust the time period governing
redemption at a time when the Rights are not redeemable.
Until a Right is exercised, the holder thereof, as such, will have no
right as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders of the Company, stockholders may, depending upon the
circumstances, recognize taxable income should the Rights become exercisable or
upon the occurrence of certain events thereafter.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to the Company's Current Report on Form 8-K
dated ___________, 1999. A copy of the Rights Agreement is available to
registered holders of the Rights free of charge from the Rights Agent. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
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<PAGE> 46
Exhibit C
[Form of Right Certificate]
Certificate No. SRP___ ____________ Rights
NOT EXERCISABLE AFTER MAY 31, 2009, OR EARLIER IF NOTICE OF REDEMPTION IS
GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.
* THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE WERE ISSUED TO A PERSON
WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR AN ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED THEREBY ARE
NULL AND VOID.
Right Certificate
OSI PHARMACEUTICALS, INC.
This certifies that ________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of June 23, 1999 (the "Rights Agreement") between
OSI Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and The Bank
of New York (the "Rights Agent") to purchase from the Company at any time after
the Distribution Date (as such term is defined in the Rights Agreement) and
prior to 5:00 p.m. (New York time) on May 31, 2009 at the office of the Rights
Agent designated for such purpose, or at the office of its successor as Rights
Agent, one one-thousandth of a fully paid and nonassessable share of Series SRP
Junior Participating Preferred Stock, par value $0.01 per share, of the Company
(the "Preferred Stock") at a purchase price of $50 per one one-thousandth of a
share of Preferred Stock (the "Purchase Price"), upon presentation and surrender
of this Right Certificate with the Form of Election to Purchase duly executed.
The number of Rights evidenced by this Right Certificate (and the number of
shares of Preferred Stock which may be purchased upon exercise thereof) set
forth above, and the Purchase Price set forth above, are such numbers and
Purchase Price as of June 23, 1999, based on the shares of
- --------
* This legend shall be inserted only if applicable.
<PAGE> 47
Preferred Stock as constituted at such date. As provided in the Rights
Agreement, the Purchase Price and the number of shares of Preferred Stock which
may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.
This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
incorporated herein by reference and made a part hereof. Reference is made to
the Rights Agreement for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Company, the Rights
Agent and the holders of the Right Certificates.
Copies of the Rights Agreement are on file at the principal executive
office of the Company and the above-mentioned office of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Right Certificate or Right Certificates of like tenor and
date evidencing Rights entitling the holder to purchase a like aggregate number
of shares of Preferred Stock as the Rights evidenced by the Right Certificate or
Right Certificates surrendered shall have entitled such holder to purchase. If
this Right Certificate shall be exercised in part, the holder shall be entitled
to receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may, but are not required to, be redeemed by the Company at a
redemption price of $.001 per Right.
No fractional share of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractional shares which are
integral multiples of one one-thousandth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote in the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Right
Certificate shall have been exercised as provided in the Rights Agreement.
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<PAGE> 48
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been manually countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of ____________________, ____.
OSI PHARMACEUTICALS, INC.
By: ___________________________
Attest:
By: ___________________________
[CORPORATE SEAL]
Countersigned:
THE BANK OF NEW YORK,
as Rights Agent
By: ___________________________
Authorized Officer
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<PAGE> 49
[Form of Reverse Side of Right Certificate]
FORM OF ASSIGNMENT
To be executed by the registered holder if such
holder desires to transfer the Right Certificate
FOR VALUE RECEIVED ______________________________ hereby sells, assigns
and transfers unto ____________________________________________________________
_______________________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ________________________________
attorney, to transfer the within Right Certificate on the books of the
within-named Company, with full power of substitution.
Dated: __________________, ____
___________________________________
Signature
Signature Guaranteed: __________________________
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.
________________________________________________________________
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) This Right Certificate [ ] is [ ] is not being sold, assigned
and transferred by or on behalf of, or pursuant to any agreement, arrangement or
understanding with, a Person who is or was an Acquiring Person or an Affiliate
or Associate of any such Person (as such terms are defined in the Rights
Agreement); and
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<PAGE> 50
(2) After due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this Right
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
Dated: ________________, ____ _____________________________
Signature
Signature Guaranteed: ________________________________
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.
___________________________________________________________________
NOTICE
The signatures to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
____________________________________________________________________
WARNING
In the event the Certificate set forth above is not completed, the Company
will deem the Beneficial Owner of the Rights evidenced by this Right Certificate
to be an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement), and the Company will affix a legend to that effect on any
Right Certificates issued in exchange for this Right Certificate.
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<PAGE> 51
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to
exercise the Right Certificate)
To: OSI PHARMACEUTICALS, INC.
The undersigned hereby irrevocably elects to exercise ____________________
Rights represented by this Right Certificate to purchase _____________ shares of
Preferred Stock issuable upon the exercise of such Rights and requests that
certificates for such shares of Preferred Stock be issued in the name of:
Please insert social security
or other identifying number _______________________________________
______________________________________________________________________________
(Please print name and address)
______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number _______________________________________
_____________________________________________________________________________
(Please print name and address)
_____________________________________________________________________________
Dated: _________________, ____
___________________________________
Signature
Signature Guaranteed: ____________________________
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.
______________________________________________________________
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<PAGE> 52
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) Rights evidenced by this Rights Certificate [ ] are [ ] are not being
exercised by or on behalf of, or pursuant to any agreement, arrangement or
understanding with, a Person who is or was an Acquiring Person or an Affiliate
or Associate of any such Person (as such terms are defined pursuant to the
Rights Agreement); and
(2) After due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any Person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate of any such Person.
Dated: _______________, ____ _____________________________________
Signature
Signature Guaranteed: ________________________
Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.
___________________________________________________________________
NOTICE
The signatures in the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
___________________________________________________________________
WARNING
In the event the Certificate set forth above is not completed, the Company
will deem the Beneficial Owner of the Rights evidenced by this Right Certificate
to be an Acquiring Person or an Affiliate or Associate thereof (as defined in
the Rights Agreement) and the Company will affix a legend to that effect on any
Right Certificates issued in exchange for this Right Certificate.
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<PAGE> 1
EXHIBIT 99
OSI PHARMACEUTICALS, INC. ADOPTS
A NEW SHAREHOLDERS RIGHTS PLAN, REDEEMS
RIGHTS UNDER THE OLD SHAREHOLDERS RIGHTS PLAN,
AND TERMINATES THE OLD SHAREHOLDERS RIGHTS PLAN
UNIONDALE, NEW YORK -- JUNE 25, 1999 -- OSI Pharmaceuticals, Inc.
(Nasdaq:OSIP) announced today that it has approved a new shareholders rights
plan (the "Preferred Stock Plan"), authorized the redemption of the rights (the
"Existing Rights") issued pursuant to the Company's existing shareholders rights
plan (the "Existing Rights Plan") subject to certain conditions, and authorized
the termination of the Existing Rights Plan following the redemption of the
Existing Rights.
The Preferred Stock Plan is a more traditional form of shareholders rights
plan than the Existing Rights Plan, in that it utilizes preferred stock as the
security which the rightsholder would acquire upon initial exercise of the
rights issued pursuant to it. Because the Existing Rights Plan was adopted
before the Company was authorized to issue preferred stock, the Existing Rights
Plan provided that a "Unit," comprised of a fractional share of common stock and
a corporate note, would be the security which the rightsholder would acquire
upon initial exercise of the rights issued pursuant to the Existing Rights Plan.
On March 24, 1999, the Company's stockholders approved the amendment of the
Company's Certificate of Incorporation to authorize the issuance of up to
5,000,000 shares of preferred stock as the Board of Directors may from time to
time determine. As discussed in the Company's 1999 proxy statement, if the
stockholders authorized the issuance of preferred stock, the Board of Directors
contemplated utilizing a portion of the shares so authorized in connection with
the Existing Rights Plan to make it a more traditional plan. The approval of the
Preferred Stock Plan, the redemption of the Existing Rights and the termination
of the Existing Rights Plan are intended to accomplish such objective.
These actions are also designed to ensure that the Company and its
stockholders will continue to have the protections offered by a shareholders
rights plan without interruption. Rights (the "New Rights") will be issued under
the Preferred Stock Plan before the Existing Rights are redeemed and the
Existing Rights Plan is terminated. If, prior to the issuance of the New Rights,
any person, entity or group of persons or entities ("Person") were to commence
or announce the commencement of a tender or exchange offer which would result in
such Person becoming an Acquiring Person (as defined in both the Existing Plan
and the Preferred Stock Plan), or if any Person were to become an Acquiring
Person (each a "Triggering Event"), the Existing Rights, with their "flip-in"
and "flip-over" rights would still be outstanding. Additionally, the Preferred
Stock Plan provides that holders of the New Rights would be entitled to
"flip-in" and "flip-over" rights even if the New Rights are issued after a
Triggering Event, and the New Rights may not be redeemed if a Triggering Event
occurs prior to their issuance.
<PAGE> 2
The Preferred Stock Plan was not approved in response to any specific
proposal or inquiry to acquire control of OSI, and the Company's directors are
not aware of any such contemplated takeover activity.
OSI will distribute New Rights to all stockholders of record on July 23,
1999. As with the Existing Rights, the New Rights are exercisable only if: (1) a
Person acquires 17.5% or more of the Company's common stock other than through
an offer for all shares of the common stock at a price and on terms determined
by the Board of Directors to be fair to all stockholders, or (2) a Person
commences a tender or exchange offer for 17.5% or more of the Company's common
stock.
If a Person should acquire 17.5% or more of the Company's common stock,
the New Rights will be modified automatically to entitle the rightsholders
(other than the acquiring Person) to purchase shares of OSI common stock at a
50% discount for the then market value ("flip-in" rights). In addition, if OSI
is acquired in a merger or other transaction after a Person has acquired 17.5%
or more of the Company's common stock, the rightsholders (other than such
Person) will be entitled to purchase shares of common stock of the surviving
company at the same discount from market value ("flip-over" rights).
Initially, the New Rights will be represented by existing OSI stock
certificates. Should the New Rights become exercisable, the Company will issue
separate right certificates to all holders.
OSI can redeem the New Rights at any time before (but not after) a Person
has acquired 17.5% or more of the Company's common stock as described above. If
not redeemed prior to May 1, 2009, the rights will expire on that date.
The Existing Rights will be redeemed at the close of business on July 23,
1999 (the "Redemption Time") from all holders of record of such Existing Rights
at the Redemption Time, provided no Triggering Event has occurred prior to such
time and subject to certain other conditions. Pursuant to the terms of the
Existing Plan, the Redemption Price is $0.001 per Existing Right. Upon the
redemption of the Existing Rights, the Existing Rights Plan will be terminated.
A Form 8-K describing the Preferred Stock Plan, redemption of the Existing
Rights and termination of the Existing Rights Plan will be filed with the
Securities and Exchange Commission. The Form 8-K will include a copy of the
Rights Agreement containing the full terms of the Preferred Stock Plan as an
exhibit. A detailed summary of the terms of the Preferred Stock Plan will be
mailed to each stockholder of record on July 23, 1999.
OSI Pharmaceuticals is a leading drug discovery company with a substantial
pipeline of product opportunities for commercialization with the pharmaceutical
industry. OSI's research programs are focused in the areas of cancer
therapeutics and diagnostics, cosmeceuticals, and anti-infectives. OSI utilizes
a comprehensive drug discovery and development capability to facilitate the
rapid and cost-effective discovery and development of novel, small molecule
<PAGE> 3
compounds in more than 40 research and development programs. OSI is involved in
long-term research alliances with Pfizer, Novartis, Hoechst Marion Roussel,
Sankyo, and Bayer.
This news release contains forward-looking statements. These statements
are subject to known and unknown risks and uncertainties that may cause actual
future experience and results to differ materially from the statements made.
Factors that might cause such a difference include, among others, uncertainties
related to the completion of clinical trials, the FDA review process and other
governmental regulation, a pharmaceutical collaborator's ability to successfully
develop and commercialize drug candidates, competition from other pharmaceutical
companies, product pricing and third party reimbursement, and other factors
described in OSI Pharmaceuticals' filings with the Securities and Exchange
Commission.
For additional information on OSI Pharmaceuticals,
please visit OSI's website at:
http://www.osip.com
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