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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
January 6, 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 jurisdiction of (Commission (I.R.S. Employer
incorporation) File Number) Identification No.)
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 January 6, 1999, the Board of Directors of OSI Pharmaceuticals,
Inc., a Delaware corporation (the "Company") adopted a Shareholders Rights Plan
and certain amendments to the By-Laws of the Company.
The By-Law amendments (1) provide exclusive authority to the Board of
Directors to call a special meeting of stockholders of the Company (see Article
I, Section 1.2 of the Amended and Restated By-Laws), and (2) create advance
notice requirements and procedures for the submission by stockholders of
nominations for the Board of Directors and stockholder proposals (see Article I,
Section 1.8 of the Amended and Restated By-Laws). The full text of the Amended
and Restated By-Laws is attached hereto as Exhibit 99.1 and incorporated herein
by reference.
In connection with the adoption of the Shareholders Rights Plan, the
Company declared a dividend distribution of one right (a "Right") for each
outstanding share of common stock, par value $.01 per share (the "Common Stock")
of the Company payable to stockholders of record at the close of business on
February 15, 1999 (the "Record Date"). One Right will also be issued to the
holder of each share of Common Stock that becomes outstanding after the Record
Date and before the earliest of (i) the Distribution Date, as defined below,
(ii) the redemption of the Rights, and (iii) the expiration of the Rights.
Except as set forth below, and subject to adjustment as provided in the Rights
Agreement (as defined below), each Right entitles the registered holder to
purchase from the Company one Unit, consisting of one one-tenth share of Common
Stock and one Subordinated Debenture in the principal amount equal to
nine-tenths of the current per share market price of the Common Stock on the
date of exercise, for an exercise price of $50.00 per Right (the "Purchase
Price"). Under certain circumstances, as set forth in the form of Rights
Agreement, the Company may substitute other securities or property for the Unit
otherwise obtainable upon exercise of a Right, provided the value of such
securities is equal to the then current market price of one share of Common
Stock. The description and terms of the Rights are set forth in the Rights
Agreement (the "Rights Agreement") dated as of January 6, 1999 between the
Company and The Bank of New York, as Rights Agent (the "Rights Agent"). The
Subordinated Debentures will be issuable under, and subject to the terms and
conditions of, an Indenture (the "Indenture") between the Company and The Bank
of New York, as Trustee.
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 or entity
(each a "Person"), other than the Company and certain related entities, if, upon
the consummation of such offer a Person or group of affiliated or associated
Persons would become 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 (defined 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)
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is an "Acquiring Person."
Until the Distribution Date (or earlier redemption or expiration of the
Rights) (i) the Rights will be evidenced by the Common Stock certificates and
not by separate certificates and will be transferred with and only with such
Common Stock certificates (except in connection with the redemption of the
Rights), (ii) new Common Stock certificates issued after the Record Date 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, separate 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 January 5, 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 a Unit, the right (the "Flip-In 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, and any holder of such Rights will have no right to exercise such
Rights. 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, leased, exchanged, mortgaged,
pledged or otherwise transferred or disposed of (in one transaction or a series
of related transactions), in any such 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
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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"), subject to adjustment. 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 and kind of securities or
property issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution in the event of certain changes in the 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, shares of Common Stock or Subordinated Debentures
will be issued (other than fractions of a share of Common Stock which are one
one-tenth of a share or an integral multiple of one one-tenth of a share) and,
in lieu thereof, a payment in cash will be made based on the market price of the
Rights, Common Stock or Subordinated Debentures, as the case may be, on the last
trading date prior to the date of exercise of the Rights involved or the Company
may issue scrip, warrants or depositary receipts. Subordinated Debentures will
be issued in denominations not less than $10 or integral multiples thereof and
the Company may pay cash in lieu of issuing Subordinated Debentures in
denominations other than $10 or integral multiples thereof in an amount equal to
the difference between the principal amount of the Subordinated Debentures
otherwise issuable and the integral multiple of $10 which is nearest to, but not
in excess of, such amount.
The terms of the Subordinated Debentures are designed, and the interest
rate will be set, so that the value of the one Unit issuable upon exercise of
each Right will approximate the value of one share of Common Stock and the
Subordinated Debentures will trade when issued at par. The payment of principal
and interest on account of the Subordinated Debentures will be subordinate to
the repayment in full of all senior indebtedness (including interest thereon) of
the Company.
Prior to the Distribution Date, the Board of Directors may, without the
approval of any holder of Rights, supplement or amend any provision of the
Rights Agreement other than to decrease the Redemption Price, increase the
Exercise Price, or decrease the number of Units, fractional shares of Common
Stock or the calculation of the principal amount or interest rate of the
Subordinated Debentures constituting such Units, or decrease the amount of other
securities, cash or property for which a Right is exercisable. After the
Distribution Date, the provisions of
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the Rights Agreement may be amended by the Board of Directors only 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
rights as a stockholder or Subordinated Debentureholder of the Company,
including, without limitation, the right to vote or to receive dividends, other
distributions, or payments of principal or interest. 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.
The summary description of the Rights set forth herein does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, which is filed as Exhibit 4 hereto.
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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 Rights Agreement, dated as of January 11, 1999, between OSI Pharmaceuticals, Inc. and The
Bank of New York, as Rights Agent, including Summary of Rights to Purchase Common Stock and
Subordinated Debenture (Exhibit A thereto) and Form of Right Certificate (Exhibit B thereto).
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99.1 Amended and Restated By-Laws of OSI Pharmaceuticals, Inc.
99.2 Press release, dated January 8, 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: January 8, 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>
- ----------------------- ---------------------------------------------------------------------------------------------------
EXHIBIT NO. DESCRIPTION
- ----------------------- ---------------------------------------------------------------------------------------------------
<S> <C>
4 Form of Rights Agreement, dated as of January 6, 1999, between OSI Pharmaceuticals, Inc. and The
Bank of New York including Summary of Rights to Purchase Common Stock and Subordinated Debenture
(Exhibit A thereto) and Form of Right Certificate (Exhibit B thereto).
- ----------------------- ---------------------------------------------------------------------------------------------------
99.1 Amended and Restated By-Laws of OSI Pharmaceuticals, Inc.
99.2 Press release, dated January 8, 1999.
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</TABLE>
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EXHIBIT 4
OSI PHARMACEUTICALS, INC.
and
THE BANK OF NEW YORK
as Rights Agent
RIGHTS AGREEMENT
Dated as of January 6, 1999
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TABLE OF CONTENTS
<TABLE>
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Section 1. Definitions........................................................................................... 1
Section 2. Appointment of Rights Agent........................................................................... 5
Section 3. Issue of Rights and Right Certificates................................................................ 6
Section 4. Form of Right Certificates............................................................................ 7
Section 5. Signature and Countersignature of Right Certificates; Registration of Ownership and
Transfers........................................................................................... 8
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......................................... 9
Section 8. Cancellation of Right Certificates.................................................................... 11
Section 9. Reservation and Availability of Common Stock; Compliance with Registration or Other
Requirements of Securities Laws; Transfer Taxes.................................................... 12
Section 10. Record Date.......................................................................................... 13
Section 11. Modification of Rights and Adjustment of Purchase Price, Number of Units, Number of
Rights and Securities Purchasable................................................................... 13
Section 12. Certificate of Adjusted Purchase Price or Number of Units............................................ 19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power................................. 19
Section 14. Fractional Rights and Fractional Shares.............................................................. 22
Section 15. Rights of Action..................................................................................... 23
Section 16. Agreement of Right Holders........................................................................... 24
Section 17. Right Certificate Holder Not Deemed a Stockholder.................................................... 24
Section 18. Concerning the Rights Agent.......................................................................... 25
Section 19. Merger or Consolidation or Change of Name of Rights Agent............................................ 25
Section 20. Duties of Rights Agent............................................................................... 26
Section 21. Change of Rights Agent............................................................................... 28
Section 22. Issuance of New Right Certificates................................................................... 29
Section 23. Redemption of Rights................................................................................. 30
Section 24. Notice of Certain Events............................................................................. 30
Section 25. Notices.............................................................................................. 31
Section 26. Supplements and Amendments........................................................................... 32
Section 27. Successors........................................................................................... 33
Section 28. Determinations and Actions by the Company or the Board of Directors.................................. 33
Section 29. Benefits of this Agreement........................................................................... 33
Section 30. Severability......................................................................................... 34
Section 31. Governing Law........................................................................................ 34
Section 32. Counterparts......................................................................................... 34
Section 33. Descriptive Headings................................................................................. 34
</TABLE>
Exhibit A - Summary of Rights to Purchase Common Stock and Subordinated
Debentures
Exhibit B - Form of Right Certificate
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RIGHTS AGREEMENT
RIGHTS AGREEMENT dated as of January 6, 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 the Common Stock (as hereinafter
defined) of the Company of record at the Record Date (hereinafter defined), of
rights to purchase units (each a "Unit"), each consisting of one-tenth share of
Common Stock of the Company and one subordinated debenture (each a "Subordinated
Debenture") in the principal amount equal to nine-tenths of the current per
share market price of the Common Stock of the Company on the date of exercise,
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 a Person who would become an Acquiring Person but for the provisions of
this clause (x), becomes the Beneficial Owner of any additional share or shares
of Common Stock of the Company after such acquisition of shares by the Company,
then such Person shall be deemed an "Acquiring Person", or (y) if (i)
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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 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 proviso of the foregoing clause (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.
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(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.
(g) "Common Stock" when used with reference to the Company means shares
of common stock, par value $.01 per share, 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) of such Person 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 Shares" means any class or series of capital stock of
the Company, other than the Common Stock, which is entitled to participate on a
proportional basis with the Common Stock in dividends and other distributions,
including distributions upon the liquidation, dissolution or winding up of the
Company. In calculating the number of any class or series of Equivalent Shares
for purposes of Section 11, the number of shares, or fractions of a share, of
such class or series of capital stock that is entitled to the same dividend or
distribution as a whole share of Common Stock shall be deemed to be one share.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Final Expiration Date" means January 5, 2009.
(n) "Indenture" means the Indenture, dated as of January 6, 1999,
between the Company and The Bank of New York, as trustee, as originally executed
or as it may from time to time be supplemented or amended by one or more
indentures supplemental thereto and shall include the terms of the particular
series of securities issued thereunder, including the Subordinated Debentures.
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(o) "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.
(p) "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.
(q) "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.
(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 February 15, 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 Unit 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.
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(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 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) "Subordinated Debenture" means a subordinated debenture issuable
under the Indenture and pursuant to this Agreement. Each Subordinated Debenture
shall be substantially in the form set forth in an exhibit to the Indenture and
shall be issuable in the principal amount equal to nine-tenths (9/10) of the
Current Market Price of the Common Stock calculated on the date of exercise of
the Right with respect to which such Subordinated Debenture is being issued.
Each Subordinated Debenture shall bear interest from and after its date of
issuance at a rate set at or prior to the initial issuance of the first
Subordinated Debenture to be issued by the Board of Directors of the Company,
in its sole discretion, who may rely on the advice of an independent investment
banking firm. The rate of interest will be designated to have such Subordinated
Debenture trade immediately following such initial issuance at par.
Subordinated Debentures will be issued only in registered form, without
coupons, in denominations of $10 and integral multiples thereof. The
Subordinated Debentures shall be subject to all the terms and conditions of the
Indenture, which is incorporated herein by reference.
(ee) "Subsidiary" of any Person means any corporation or other entity
of which a majority of the Voting Securities (as hereinafter defined) is owned,
directly or indirectly, by such Person.
(ff) "Trading Day" has the meaning assigned thereto in Section 11(d).
(gg) "Unit" has the meaning set forth in the preamble to this
Agreement.
(hh) "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 and provide 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.
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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.
(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 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 Common Stock and Subordinated
Debentures, in substantially the form of Exhibit A 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., a Delaware corporation (the
"Company") and THE BANK OF NEW YORK, as Rights Agent, dated as
of January 6, 1999 (the "Rights Agreement"), the terms of
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<PAGE> 9
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
Common Stock and Subordinated Debentures and of assignment to be printed on the
reverse thereof) shall be substantially in the form of Exhibit B 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 Units and the Purchase Price thereof, but such number
of Units 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 is, 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.
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<PAGE> 10
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.
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 Units (or 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 and certificate 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 contained in 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
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<PAGE> 11
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 Unit (or
other securities, cash or other assets, as the case may be) as to which the
Rights are exercised, 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 Unit pursuant to
the exercise of a Right shall initially be $50.00, 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.
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<PAGE> 12
(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 each Unit (other securities, cash 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, or by certified check or bank
draft payable to the order of the Company, the Rights Agent shall thereupon
promptly (i) (A) requisition from any transfer agent of the Common Stock
certificates for the number of shares of Common 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-tenths of a share of Common Stock as are to
be purchased (in which case certificates for the shares of Common Stock
represented by such receipts shall be deposited by such transfer agent of the
Common Stock with the depositary agent) and the Company hereby directs the
depositary agent to comply with such request; (ii) requisition from any trustee
or securities registrar under the Indenture, Subordinated Debentures for the
total principal amount of Subordinated Debentures which constitute part of the
Units to be purchased and the Company hereby irrevocably authorizes the trustee
or securities registrar under the Indenture to comply with all such requests;
(iii) after receipt of such certificates, depositary receipts or Subordinated
Debentures, 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, 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, and promptly after receipt
thereof deliver such cash 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 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 shares of 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 hereof.
(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 direct or indirect 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 direct or indirect
transferee of an
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<PAGE> 13
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 direct or
indirect 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 direct or indirect
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 use all reasonable
efforts 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.
(g) Notwithstanding any statement to the contrary contained in this
Agreement or in any Right Certificate, if the Distribution Date or the Stock
Acquisition Date shall occur prior to the Record Date, the provisions of this
Agreement, including without limitation Sections 3 and 11(a)(ii), shall be
applicable to the Rights upon their issuance to the same extent such provisions
would have been applicable if the Record Date were the date of this Agreement.
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
canceled form, or, if surrendered to the Rights Agent, shall be canceled 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 canceled Right Certificates to the Company.
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<PAGE> 14
Section 9. Reservation and Availability of Common 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 Common Stock or any
shares of Common Stock held in its treasury the number of shares of Common 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 Common Stock or Subordinated Debentures
(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 such
shares of Common Stock and all such Subordinated Debentures (and such other
securities) 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 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 unless the Company
shall have provided written notice to the Rights Agent that the Rights are not
exercisable in any jurisdiction.
(d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Common Stock and Subordinated
Debentures (or other
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<PAGE> 15
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares and of such Subordinated Debentures (or of such
other securities) subject to payment of the Purchase Price, be duly and validly
authorized and issued and fully paid and nonassessable shares, and, in the case
of the Subordinated Debentures, valid, binding and enforceable.
(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, of any
shares of Common Stock or that Subordinated Debentures (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 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 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. Record Date.
Each Person in whose name any certificate for shares of Common Stock
and any Subordinated Debenture (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 Common Stock and such Subordinated Debenture (or other
securities) represented thereby on, and such certificate and such Subordinated
Debenture 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 are
closed, such Person shall be deemed to have become the record holder of such
shares and such Subordinated Debentures (or other securities) 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 Common Stock or of Subordinated Debentures (or other
securities) for which the Rights shall be exercisable, including, without
limitation, the right to vote or to receive dividends, other distributions or
payments of principal or interest and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.
Section 11. Modification of Rights and Adjustment of Purchase Price,
Number of Units, Number of Rights and Securities Purchasable.
The Purchase Price, the number of Units covered by, and kind of
securities, cash and other property obtainable upon exercise of each Right and
the number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
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<PAGE> 16
(a) (i) In the event the Company shall at any time after the
Distribution Date of this Agreement (A) declare a dividend on the Common Stock
payable in Common Stock, (B) subdivide the outstanding shares of Common Stock,
(C) combine the outstanding shares of Common Stock into a smaller number of
shares of Common Stock or (D) issue any shares of its capital stock in a
reclassification of the Common 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 securities 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 securities
which, if such Right had been exercised immediately prior to such date and at a
time when the Common 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 (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 the Unit otherwise receivable upon exercise of such Right prior to a
Section 11(a)(ii) Event, 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-tenths of a share of Common 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
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 Board of Directors of
the Company after considering the advice of a
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<PAGE> 17
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 Common Stock entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Common Stock, Equivalent Shares or securities convertible into
Common Stock or Equivalent Shares at a price per share of Common Stock or
Equivalent Shares (or having a conversion price per share, if a security
convertible into Common Stock or Equivalent Shares) less than the current per
share market price of the Common 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 Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate offering price of the total number
of shares of Common Stock and Equivalent 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 Common Stock outstanding on such record
date plus the number of additional shares of Common Stock and Equivalent 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 Common 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 Common 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 Common Stock) or subscription rights 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 Common 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 evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one share
of Common Stock and the denominator of which shall be such current per share
market price of the shares of Common 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
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<PAGE> 18
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) 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.
(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-hundredth of Unit 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
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<PAGE> 19
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 Common
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 Common 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 Common 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 Units purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided in this Agreement.
(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 Units
(calculated to the nearest one one-hundredth of a Unit) obtained by (i)
multiplying (x) the number of Units 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 Units purchasable upon the exercise of a Right. Each of the Rights
outstanding after such adjustment of the number of Rights shall be exercisable
for one Unit. 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
ten-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 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
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<PAGE> 20
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 to be so 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) Right Certificates issued subsequent to any adjustment or change in
the Purchase Price or number of Units issuable upon the exercise of the Rights
may continue to express the Purchase Price per Unit and the number of Units
purchasable thereunder as such terms were expressed in the initial Right
Certificates issued hereunder, irrespective of any such adjustment or change,
and shall be deemed to be exercisable at the Purchase Price determined in
accordance with the provisions of this Rights Agreement.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below one one-tenth of the then par value, if any, of the
Common 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 Common 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 Common Stock and Subordinated Debentures and other capital stock
or securities of the Company, if any, issuable upon such exercise over and above
the shares of Common Stock and Subordinated Debentures 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 Common Stock,
(ii) issuance wholly for cash of any shares of Common Stock at less than the
current market price, (iii) issuance wholly for cash of shares of Common Stock
or securities which by their terms are convertible into or exchangeable for
shares of Common Stock, (iv) dividends on shares of Common Stock payable in
shares of Common Stock or (v) issuance of rights, options or warrants referred
to in Section 11(b), hereafter made by the Company to holders of its Common
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, Section 26 or Section 30
hereof, take (or permit any Subsidiary to take) any action if at the time such
action is taken it is reasonably foreseeable that
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<PAGE> 21
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 Units.
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 and each
trustee under the Indenture 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.
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
19
<PAGE> 22
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, lease,
exchange, mortgage, pledge or otherwise transfer (or one or more of its
Subsidiaries shall sell, lease, exchange, mortgage, pledge 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 (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
the Unit otherwise receivable upon exercise of such Right prior to a Section 13
Event, 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 Units 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.
(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,
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<PAGE> 23
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
(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.
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<PAGE> 24
(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 of
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
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
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<PAGE> 25
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
Common Stock (other than fractions that are integral multiples of one one-tenth
of a share of Common Stock) upon exercise of the Right or to issue certificates
which evidence fractions of shares of Common Stock (other than fractions that
are integral multiples of one one-tenth of a share of Common Stock). Fractions
of shares of Common Stock in integral multiples of one one-tenth of a share of
Common 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
Common Stock represented by such depositary receipts. In lieu of fractional
shares of Common Stock that are not integral multiples of one one-tenth of a
share of Common 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
Common Stock. For purposes of this Section 14(b) 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 Section 11(d) for the Trading Day immediately prior to
the date of such exercise.
(c) Notwithstanding anything to the contrary contained herein, the
Company shall not be required to issue Subordinated Debentures in denominations
other than $10 or integral multiples thereof and the Company may pay cash in
lieu of issuing Subordinated Debentures in denominations other than $10 or
integral multiples thereof in an amount equal to the difference between the
principal amount of the Subordinated Debentures otherwise issuable and the
integral multiple of $10 which is nearest to, but not in excess of, such amount.
(d) The holder of a Right by the acceptance of such Right expressly
waives such holder's right to receive any fractional Rights, any fractional
shares or any fractional Subordinated Debentures (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), 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
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<PAGE> 26
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 distributions or be deemed for any purpose the holder of
the shares of Common Stock, Subordinated Debentures or any other securities or
property of the Company which may at any time be issuable on the exercise of the
Rights represented 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 a holder of a
Subordinated Debenture, including, without limitation any right (i) to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, (ii) to give or withhold consent to
24
<PAGE> 27
any corporate action, (iii) to receive notice of meetings or other actions
affecting stockholders or holders of Subordinated Debentures (except as provided
in Section 24), (iv) to receive dividends, distributions or subscription rights,
or payments of principal and interest, or (v) to institute, as a holder of
Common Stock or other securities issuable on exercise of the Rights represented
by any Right Certificate, any derivative action on behalf of the Company 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 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 countersigned; and in case at that time any of the Right
Certificates shall not have been
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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 Common Stock to be issued pursuant to this
Agreement or any Right Certificate or as to whether any shares of 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> 30
(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 unless the Rights Agent shall have actual knowledge
that, as executed, such certification is untrue, or (ii) to refuse to honor any
otherwise permissible assignment or election by reason of the non-execution of
such certification.
(m) The Company agrees to give the Rights Agent prompt written notice
of any event or ownership which would prohibit the exercise or transfer of the
Right Certificates.
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 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 by registered or
certified mail, and to the holders of the Right 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 any Right Certificate may, at the expense of the
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<PAGE> 31
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 the transfer agent of the Common 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> 32
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 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 the 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 Right
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 Common Stock or to make any
other distribution to the holders of shares of Common Stock (other than a
regular quarterly cash dividend) or (b) to offer to the holders of shares of
Common Stock rights or warrants to subscribe for or to purchase any additional
shares of Common Stock or of stock of any class or any other securities, rights
or options or (c) to effect any reclassification of the Common Stock (other than
a reclassification involving only the subdivision of outstanding shares of
Common Stock) or (d) to effect any consolidation or merger into or with any
other Person (other than a Subsidiary of the Company in
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<PAGE> 33
a transaction that does not violate Section 11(n)) or to effect any sale or
other transfer (or to 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, 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 Common 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, 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 Common Stock shall be deemed thereafter
to refer also to shares of other securities of the Company, if appropriate.
(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 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
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<PAGE> 34
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:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: 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 invalid, void,
unenforceable or otherwise defective or inconsistent with any other provision
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. 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 Units, fractional shares of Common Stock or the calculation of the
principal amount or interest rate of the Subordinated Debentures constituting
such Units, other securities, cash or property for which a Right is exercisable.
Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the
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<PAGE> 35
interests of the holders of shares of Common Stock. 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 27 which
alters the Rights Agent's rights or increases the Rights Agent's duties.
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).
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Section 30. Severability.
(a) 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 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.
(b) If legal counsel to the Company delivers to the Company a written
opinion to the effect that, as a result of changes in federal law or Delaware
law, any term, provision, covenant or restriction of this Agreement may be
invalid, void, or unenforceable, then, notwithstanding any other provision of
this Agreement, the Company and the Rights Agent may amend this Agreement to
modify, revise or delete such term, provision, covenant or restriction to the
extent necessary to comply with such law as so changed.
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> 37
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:
-------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Rights Agent
By:
-------------------------------------
Name:
Title:
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<PAGE> 38
Exhibit A
OSI PHARMACEUTICALS, INC.
SUMMARY OF RIGHTS TO PURCHASE
COMMON STOCK AND SUBORDINATED DEBENTURES
On January 6, 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, par value
$.01 per share (the "Common Stock") of the Company payable to stockholders of
record at the close of business on February 15, 1999 (the "Record Date"). One
Right will also be issued to the holder of each share of Common Stock that
becomes outstanding after the Record Date and before the earliest of (i) the
Distribution Date, as defined below, (ii) the redemption of the Rights, and
(iii) the expiration of the Rights. Except as set forth below, and subject to
adjustment as provided in the Rights Agreement (as defined below), each Right
entitles the registered holder to purchase from the Company one Unit, consisting
of one one-tenth share of Common Stock and one Subordinated Debenture in the
principal amount equal to nine-tenths of the current per share market price of
the Common Stock on the date of exercise, for an exercise price of $50.00
per Right (the "Purchase Price"). Under certain circumstances, as set forth in
the Rights Agreement, the Company may substitute other securities or property
for the Unit otherwise obtainable upon exercise of a Right, provided the value
of such securities is equal to the then current market price of one share of
Common Stock. The description and terms of the Rights are set forth in the
Rights Agreement (the "Rights Agreement") dated as of January 6, 1999 between
the Company and The Bank of New York, as Rights Agent (the "Rights Agent"). The
Subordinated Debentures are issuable under, and subject to the terms and
conditions of, an Indenture (the "Indenture") between the Company and The Bank
of New York, as Trustee.
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 or entity
(each a "Person"), other than the Company and certain related entities, if, upon
the consummation of such offer a Person or group of affiliated or associated
Persons would become 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 (defined 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 (or earlier redemption or expiration of the
Rights) (i) the Rights will be evidenced by the Common Stock certificates and
not by separate certificates and will be transferred with and only with such
Common Stock certificates (except in connection with the redemption of the
Rights), (ii) new Common Stock certificates issued after the Record Date 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
<PAGE> 39
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, separate 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 January 5, 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 a Unit, the right (the "Flip-In 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, and any holder of such Rights will have no right to exercise such
Rights. 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, leased, exchanged, mortgaged,
pledged or otherwise transferred or disposed of (in one transaction or a series
of related transactions), in any such 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"), subject to adjustment. 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
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<PAGE> 40
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 and kind of securities
or property issuable, upon exercise of the Rights are subject to adjustment from
time to time to prevent dilution in the event of certain changes in the 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, shares of Common Stock or Subordinated Debentures
will be issued (other than fractions of a share of Common Stock which are one
one-tenth of a share or an integral multiple of one one-tenth of a share) and,
in lieu thereof, a payment in cash will be made based on the market price of the
Rights, Common Stock or Subordinated Debentures, as the case may be, on the last
trading date prior to the date of exercise of the Rights involved or the Company
may issue scrip, warrants or depositary receipts. Subordinated Debentures will
be issued in denominations not less than $10 or integral multiples thereof and
the Company may pay cash in lieu of issuing Subordinated Debentures in
denominations other than $10 or integral multiples thereof in an amount equal to
the difference between the principal amount of the Subordinated Debentures
otherwise issuable and the integral multiple of $10 which is nearest to, but not
in excess of, such amount.
The terms of the Subordinated Debentures are designed, and the interest
rate will be set, so that the value of the one Unit issuable upon exercise of
each Right will approximate the value of one share of Common Stock and the
Subordinated Debentures will trade when issued at par. The payment of principal
and interest on account of the Subordinated Debentures will be subordinate to
the repayment in full of all senior indebtedness (including interest thereon) of
the Company.
Prior to the Distribution Date, the Board of Directors may, without the
approval of any holder of Rights, supplement or amend any provision of the
Rights Agreement other than to decrease the Redemption Price, increase the
Exercise Price, decrease the number of Units, fractional shares of Common Stock
or the calculation of the principal amount or interest rate of the Subordinated
Debentures constituting such Units, or decrease the amount of other securities,
cash or property for which a Right is exercisable. After the Distribution Date,
the provisions of the Rights Agreement may be amended by the Board of Directors
only 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.
-3-
<PAGE> 41
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder or Subordinated Debentureholder of the Company,
including, without limitation, the right to vote or to receive dividends, other
distributions, or payments of principal or interest. 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 and the Indenture have been filed with
the Securities and Exchange Commission as Exhibits to the Company's Current
Report on Form 8-K dated ______________, 1999. A copy of the Rights Agreement
and Indenture are 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 and the Indenture, which are incorporated herein by reference.
-4-
<PAGE> 42
Exhibit B
[Form of Right Certificate]
Certificate No. R-___ ____________ Rights
NOT EXERCISABLE AFTER JANUARY 5, 2009, OR EARLIER IF NOTICE OF
REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION AT THE OPTION
OF THE COMPANY AT $50.00 PER RIGHT ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT.
* THE RIGHTS REPRESENTED BY THIS RIGHT CERTIFICATE WERE ISSUED TO A
PERSON WHO IS, 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 January 6,1999 (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 January 5, 2009 at the office of the
Rights Agent designated for such purpose, or at the office of its successor as
Rights Agent, one Unit, consisting of one-tenth of a fully paid and
nonassessable share of the common stock, par value $.01 per share, of the
Company (the "Common Stock") and one Note in the principal amount equal to
nine-tenths of the current Market Price (as defined in the Rights Agreement) of
a share of Common Stock at a purchase price of $50.00 per Unit (subject to
adjustment) (the "Purchase Price"), upon presentation and surrender of this
Right Certificate with the Form of Election to Purchase duly executed. The notes
forming part of the Units are issuable under, and subject to the terms and
conditions of, an Indenture dated as of January 6,1999 (the "Indenture") between
the Company and The Bank of New York, as Trustee. The number of Rights
___________________
* This legend shall be inserted only if applicable.
<PAGE> 43
evidenced by this Right Certificate (and the amount of securities constituting a
Unit 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
January 6, 1999, based on the Common Stock as constituted at such date. As
provided in the Rights Agreement, the Purchase Price and the number of Units
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. Capitalized terms used in this
Right Certificate have the same meanings as such terms are defined in the Rights
Agreement.
Copies of the Rights Agreement and Indenture 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 Units 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, subject to adjustment.
No fractional share of Common 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-tenth of a share of Common Stock, which may, at
the election of the Company, be evidenced by depositary receipts), but in lieu
thereof the Company may elect to issue scrip or warrants in registered form
(either represented by a certificate or uncertificated) or in bearer form
(represented by a certificate) which shall entitle the holder to receive a full
share upon the surrender of such scrip or warrants aggregating a full share or
make a cash payment, as provided in the Rights Agreement. Notes will be issued
in denominations not less than $10 or integral multiples thereof and the Company
may pay cash in lieu of issuing Notes in denominations other than $10 or
integral multiples thereof in an amount equal to the difference between the
principal amount of the notes otherwise issuable and the integral multiple of
$10 which is nearest to, but not in excess of, such amount.
No holder of this Right Certificate, as such, shall be entitled to vote
or to receive dividends or shall be deemed for any purpose the holder of shares
of Common Stock, notes or
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<PAGE> 44
any other securities, cash or property 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, including, without limitation, 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 to institute, as a holder of Common Stock or other securities
issuable on the exercise of the Rights represented by this Certificate, any
derivative action, or otherwise, until, and to the extent, the Rights evidenced
by this Right Certificate shall have been exercised as provided in the Rights
Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been 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:________________________________
[CORPORATE SEAL]
Attest:
By:_________________________________
Countersigned:
THE BANK OF NEW YORK,
as Rights Agent
By: _______________________________
Authorized Officer
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<PAGE> 45
[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> 46
(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> 47
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 the Units issuable upon the exercise of such Rights (or such other
securities of the Company or of any other Person which may be issuable upon the
exercise of such Rights) and requests that certificates for the shares of Common
Stock and the note constituting such Units 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.
-6-
<PAGE> 48
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 99.1
OSI PHARMACEUTICALS, INC.
A Delaware Corporation
AMENDED AND RESTATED BY-LAWS
ARTICLE I
STOCKHOLDERS
Section 1.1 Annual Meeting
An annual meeting of stockholders for the purpose of electing directors
and of transacting such other business as may come before it shall be held each
year at such date, time, and place, either within or without the State of
Delaware, as may be specified by the Board of Directors.
Section 1.2 Special Meetings
Special meetings of stockholders for any purpose or purposes unless
otherwise provided by law or by the Certificate of Incorporation, may be called
at any time by the vote of a majority of the Board of Directors, at such time
and place either within or without the State of Delaware as may be stated in the
notice. Stockholders of the Corporation shall not be entitled to call special
meetings of stockholders.
Section 1.3 Notice of Meetings
Written notice of stockholders meetings, stating the place, date, and
hour thereof, and, in the case of a special meeting, the purpose or purposes for
which the meeting is called, shall be given by the Chairman of the Board, if
any, the President, any Vice President, the Secretary, or an Assistant
Secretary, to each stockholder entitled to vote thereat at least ten days but
not more than sixty days before the date of the meeting, unless a different
period is prescribed by law.
Section 1.4 Quorum
Except as otherwise provided by law or in the Certificate of
Incorporation or these By-Laws, at any meeting of stockholders, the holders of a
majority of the outstanding shares of each class of stock entitled to vote at
the meeting shall be present or represented by proxy in order to constitute a
quorum for the transaction of any business. In the absence of a quorum, a
majority in interest of the stockholders present or the chairman of the meeting
may adjourn the meeting from time to time in the manner provided in Section 1.5
of these By-Laws until a quorum shall attend.
Section 1.5 Adjournment
Any meeting of stockholders, annual or special, may adjourn from time
to time to reconvene at the same or some other place, and notice need not be
given of any such adjourned meeting if the time and place thereof are announced
at the
<PAGE> 2
meeting at which the adjournment is taken. At the adjourned meeting, the
Corporation may transact any business which might have been transacted at the
original meeting. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
Section 1.6 Organization
The Chairman of the Board, if any, or in his absence the President, or
in their absence any Vice President, shall call to order meetings of
stockholders and shall act as chairman of such meetings. The Board of Directors
or, if the Board fails to act, the stockholders may appoint any stockholder,
director, or officer of the Corporation to act as chairman of any meeting in the
absence of the Chairman of the Board, the President, and all Vice Presidents.
The Secretary of the Corporation shall act as secretary of all meetings
of stockholders, but, in the absence of the Secretary, the chairman of the
meeting may appoint any other person to act as secretary of the meeting.
Section 1.7 Voting
Except as otherwise provided by law or in the Certificate of
Incorporation or these By-Laws and except for the election of directors, at any
meeting duly called and held at which a quorum is present, a majority of the
votes cast at such meeting upon a given question by the holders of outstanding
shares of stock of all classes of stock of the Corporation entitled to vote
thereon who are present in person or by proxy shall decide such question. At any
meeting duly called and held for the election of directors at which a quorum is
present, directors shall be elected by a plurality of the votes cast by the
holders (acting as such) of shares of stock of the Corporation entitled to elect
such directors.
Section 1.8 Nominations for Election of Directors and Submission of
Proposals
(a) Nominations for the election of directors at any annual meeting may
be made by the Board of Directors or by any stockholder entitled to vote for the
election of directors. Nominations by a stockholder shall be made by notice in
writing, delivered or mailed, and received by the Secretary of the Corporation
in accordance with paragraph (c). Each notice of nomination submitted by a
stockholder shall set forth (i) the name, age, business address and, if known,
residence address of each nominee proposed in such notice, (ii) the principal
occupation or employment of each such nominee, and (iii) the number of shares of
stock of the Corporation which are beneficially owned by each such nominee.
(b) Any proposal which a stockholder proposes to make at an annual
meeting of stockholders of the Corporation shall be made by notice in writing,
containing the text of the proposal and a statement that such stockholder
intends to make such proposal at the annual meeting, and which shall be
delivered or mailed, and received by the Secretary of the Corporation in
accordance with paragraph (c).
(c) Any notice pursuant to paragraph (a) or (b) shall be made at least
45 days prior to the date on
<PAGE> 3
which the Corporation first mailed its proxy materials for the prior year's
annual meeting of stockholders, or, if the Corporation did not have an annual
meeting of stockholders in the prior year, 90 days prior to the date of the
annual meeting.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Number and Term of Office
The business, property, and affairs of the Corporation shall be managed
by or under the direction of a Board of seven directors provided, however, that
the Board, by resolution adopted by vote of a majority of the then authorized
number of directors, may increase or decrease the number of directors. The
directors shall be elected at the annual meeting of stockholders, and each shall
serve (subject to the provisions of Article IV) until the next succeeding annual
meeting of the stockholders and until his respective successor has been elected
and qualified.
Section 2.2 Chairman of the Board
The directors may elect one of their members to be Chairman of the
Board of Directors. The Chairman shall be subject to the control of and may be
removed by the Board of Directors. He shall perform such duties as may from time
to time be assigned to him by the Board.
Section 2.3 Meetings
The annual meeting of the Board of Directors, for the election of
officers and the transaction of such other business as may come before the
meeting, shall be held without notice at the same place as, and immediately
following, the annual meeting of the stockholders.
Regular meetings of the Board of Directors may be held without notice
at such time and place as shall from time to time be determined by the Board.
Special meetings of the Board of Directors shall be held at such time
and place as shall be designated in the notice of the meeting whenever called by
the Chairman of the Board, if any, the President, or by a majority of the
directors then in office.
Section 2.4 Notice of Special Meetings
The secretary, or in his absence any other officer of the Corporation,
shall give each director notice of the time and place of holding of special
meetings of the Board of Directors by mail at least three days before the
meeting, or by telegram, cable, radiogram, or personal service at least one day
before the meeting. Unless otherwise stated in the notice thereof, any and all
business may be transacted at any meeting without specification of such business
in the notice.
<PAGE> 4
Section 2.5 Quorum and Organization of Meetings
A majority of the total number of members of the Board of
Directors as constituted from time to time shall constitute a quorum for the
transaction of business, but, if at any meeting of the Board of Directors
(whether or not adjourned from a previous meeting) there shall be less than a
quorum present, a majority of those present may adjourn the meeting to another
time and place, and the meeting may be held as adjourned without further notice
or waiver. Except as otherwise provided by law or in the Certificate of
Incorporation or these By-Laws, a majority of the entire Board of Directors may
decide any question brought before such meetings. Meetings shall be presided
over by the Chairman of the Board, if any, or in his absence by the President,
or in the absence of both such other person as the directors may select. The
Secretary of the Corporation shall act as secretary of the meeting, but in his
absence the chairman of the meeting may appoint any person to act as secretary
of the meeting.
Section 2.6 Committees
The Board of Directors may, by resolution passed by a majority of the
whole Board, designate one or more committees, each committee to consist of one
or more of the directors of the Corporation. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
Board of Directors, shall have and may exercise all powers and authority of the
Board of Directors in the management of the business, property, and affairs of
the Corporation, and may authorize the seal of the Corporation to be affixed to
all papers which may require it; but no such committee shall have power or
authority in reference to amending the Certificate of Incorporation of the
Corporation, adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease, or exchange of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or a revocation of dissolution, or amending these
By-Laws; and, unless the resolution expressly so provided, no such committee
shall have power or authority to declare a dividend or to authorize the issuance
of stock. Each committee which may be established by the Board of Directors or
these By-Laws may fix its own rules and procedures. Notice of meetings of
committees, other than of regular meetings provided for by the rules, shall be
given to committee members. All action taken by the committees shall be recorded
in minutes of the meetings.
Section 2.7 Action Without Meeting
Nothing contained in these By-Laws shall be deemed to restrict the
power of the directors or members of any
<PAGE> 5
committee to take any action, required or permitted to be taken by them, without
meeting.
Section 2.8 Telephone Meetings
Nothing contained in these By-Laws shall be deemed to restrict the
power of members of the Board of Directors, or any committee designated by the
Board, to participate in a meeting of the Board, or committee, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other.
ARTICLE III
OFFICERS
Section 3.1 Executive Officers
The executive officers of the Corporation shall be a President, a
Scientific Director, one or more Vice Presidents, a Treasurer, and a Secretary,
each of whom shall be elected by the Board of Directors. The Board of Directors
may elect or appoint such other officers (including a Chairman of the Board,
Chief Financial Officer, a Controller and one or more Assistant Treasurers and
Assistant Secretaries) as it may deem necessary or desirable. Each officer shall
hold office for such term as may be prescribed by the Board of Directors from
time to time. Any person may hold at one time two or more offices.
Section 3.2 Powers and Duties
The Chairman of the Board, if any, or, in his absence, the President,
shall preside at all meetings of the stockholders and of the Board of Directors.
The President shall be the chief executive officer of the Corporation. In the
absence of the President, a Vice President appointed by the President or, if the
President fails to make such appointment, by the Board, shall perform all the
duties of the President. The officers and agents of the Corporation shall each
have such powers and authority and shall perform such duties in the management
of the business, property, and affairs of the Corporation as generally pertain
to their respective offices, as well as such powers and authorities and such
duties as from time to time may be prescribed by the Board of Directors.
ARTICLE IV
RESIGNATIONS, REMOVALS AND VACANCIES
Section 4.1 Resignations
Any director or officer of the Corporation, or any member of any
committee, may resign at any time by giving written notice to the Board of
Directors, the President, or the Secretary of the Corporation. Any such
resignation shall take effect at the time specified therein or, if the time be
not specified therein, then upon receipt thereof. The acceptance of such
resignation shall not be necessary to make it effective.
<PAGE> 6
Section 4.2 Removals
The Board of Directors, by a vote of not less than a majority of the
entire Board, at any meeting thereof, or by written consent, at any time, may,
to the extent permitted by law, remove with or without cause from office or
terminate the employment of any officer or member of any committee and may, with
or without cause, disband any committee.
Any director or the entire Board of Directors may be removed, with or
without cause, by the holders of a majority of the shares entitled at the time
to vote at an election of directors.
Section 4.3 Vacancies
Any vacancy in the office of any director or officer through death,
resignation, removal, disqualification, or other cause, and any additional
directorship resulting from increase in the number of directors, may be filled
at any time by a majority of the directors then in office (even though less than
a quorum remains) or, in the case of any vacancy in the office of any director,
by the stockholders, and, subject to the provisions of this Article IV, the
person so chosen shall hold office until his successor shall have been elected
and qualified; or, if the person so chosen is a director elected to fill a
vacancy, he shall (subject to the provisions of this Article IV) hold office for
the unexpired term of his predecessor.
ARTICLE V
CAPITAL STOCK
Section 5.1 Stock Certificates
The certificates for share of the capital stock of the Corporation
shall be in such form as shall be prescribed by law and approved, from time to
time, by the Board of Directors.
Section 5.2 Transfer of Shares
Shares of the capital stock of the Corporation may be transferred on
the books of the Corporation only by the holder of such shares or by his duly
authorized attorney, upon the surrender to the Corporation or its transfer agent
of the certificate representing such stock properly endorsed.
Section 5.3 Fixing Record Date
In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion, or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which, unless
otherwise provided by law, shall not be more than sixty nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action.
<PAGE> 7
Section 5.4 Lost Certificates
The Board of Directors or any transfer agent of the Corporation may
direct a new share certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation, alleged to
have been lost, stolen, or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his legal representative, to give the Corporation bond in such
sum as the Board of Directors shall direct to indemnify the Corporation against
any claim that may be made against the Corporation with respect to the
certificate alleged to have been lost, stolen, or destroyed or the issuance of
such new certificates, and such requirement may be general or confined to
specific instances.
Section 5.5 Regulations
The Board of Directors shall have power and authority to make all such
rules and regulations as it may deem expedient concerning the issue, transfer,
registration, cancellation, and replacement of certificates representing stock
of the Corporation.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Corporate Seal
The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization, and the words "Corporate Seal" and
"Delaware", and shall be in such form as may be approved from time to time by
the Board of Directors.
Section 6.2 Fiscal Year
The fiscal year of the Corporation shall be determined by resolution of
the Board of Directors.
Section 6.3 Notices and Waivers Thereof
Whenever any notice is required by law, the Certificate of
Incorporation, or these By-Laws to by given to any stockholder, director, or
officer, such notice, except as otherwise provided by law, may be given
personally, or by mail, or in the case of directors or officers, by telegram,
cable, or radiogram, addressed to such address as appears on the books or the
Corporation. Any notice given by telegram, cable, or radiogram shall be deemed
to have been given when it shall have been delivered for transmission and any
notice given by mail shall be deemed to have been given when it shall have been
deposited in the United States mail with postage thereon prepaid.
Whenever any notice is required to be given by law, the Certificate of
Incorporation, or these By-Laws, a
<PAGE> 8
written waiver thereof, signed by the person entitled to such notice, whether
before or after the meeting or the time stated therein, shall be deemed
equivalent in all respects to such notice to the full extent permitted by law.
Section 6.4 Stock of Other Corporations Other Interests
Unless otherwise ordered by the Board of Directors, the President, the
Secretary, and such attorneys or agents of the Corporation as may be from time
to time authorized by the Board of Directors or the President, shall have full
power and authority on behalf of this Corporation to attend and to act and vote
in person or by proxy at any meeting of the holders of securities of any
corporation or other entity in which this Corporation may own or hold shares or
other securities, and at such meetings shall possess and may exercise all the
rights and powers incident to the ownership of such shares or other securities
which this Corporation, as the owner or holder thereof, might have possessed and
exercised if present. The President, the Secretary or such attorneys or agents,
may also execute and deliver on behalf of the Corporation powers of attorney,
proxies, consents, waivers and other instruments relating to the shares or
securities owned or held by this Corporation.
ARTICLE VII
AMENDMENTS
The holders of shares entitled at the time to vote for the election of
directors shall have power to adopt, amend, or repeal the By-Laws of the
Corporation by vote of not less than a majority of such shares, and except as
otherwise provided by law, the Board of Directors shall have power equal in all
respects to that of the stockholders to adopt, amend, or repeal the By-Laws by
vote of not less than a majority of the entire Board. However, any By-Law
adopted by the board may be amended or repealed by vote of the holders of a
majority of the shares entitled at the time to vote for the election or
directors.
<PAGE> 1
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
CONTACT: Matthew D. Haines
Director, Corporate Communications
(516) 222-0023
[email protected]
OSI PHARMACEUTICALS, INC. ADOPTS
SHAREHOLDERS RIGHTS PLAN AND BY-LAW AMENDMENTS
UNIONDALE, NEW YORK -- JANUARY 8, 1999 -- OSI Pharmaceuticals, Inc.
(Nasdaq:OSIP) announced today that it has adopted a Shareholders Rights Plan and
several By-Law amendments. The rights plan and By-Law amendments provide
protection for the Company's stockholders against coercive or unfair takeover
tactics. "We felt it to be in the best interest of our shareholders to institute
these measures at this time," stated Colin Goddard, President and Chief
Executive Officer of OSI. "We believe the Company is very undervalued at a time
when the progress in our discovery programs, most notably our clinical and late
stage pre-clinical product developments with Pfizer, point to an exciting future
for OSI."
The plan is designed to encourage anyone seeking to acquire OSI to negotiate an
equitable price and terms fair to all stockholders with the Company's Board of
Directors. It is similar to plans in place at more than 2,500 public companies.
Recent studies have shown that shareholders rights plans such as this one
generally benefit targeted companies by enabling the board of directors to
negotiate more favorable terms for its shareholders. The plan was not adopted
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.
In conjunction with adopting the plan, OSI declared a dividend distribution of
one Common Stock and Subordinate Debenture Purchase Right on each outstanding
share of its common stock. Each right entitles the holder to purchase a unit
comprised of one one-tenth of a share of common stock and a subordinated
debenture in the principal amount equal to nine-tenths of a share of common
stock at the time of exercise. The rights, however, are exercisable only if: (1)
a person or group 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 or group commences a tender or exchange offer for 17.5% or more of the
Company's common stock.
If a person, group, or entity should acquire such a 17.5% interest, the rights
will be modified automatically to entitle the rightholders (other than the
acquiring person, group, or entity) to purchase shares of OSI common stock at a
50% discount for the then market value. In addition, if OSI is acquired in a
merger or other transaction after such person or group has acquired such a 17.5%
common stock interest, the rightholders (other than such person, group, or
entity) will be entitled to purchase shares of common stock of the surviving
company at the same discount from market value.
<PAGE> 2
- MORE -
SHAREHOLDERS RIGHTS PLAN AND BY-LAW AMENDMENTS
PAGE 2
Initially, the rights will be represented by existing OSI stock certificates.
Should the rights become exercisable, the Company will issue separate right
certificates to all holders.
OSI can redeem the rights at any time before (but not after) a person, group,
or entity has acquired 17.5% or more of the Company's common stock as described
above. If not redeemed prior to January 5, 2009, the rights will expire on that
date.
The By-Law amendments adopted today include amendments which (1) require the
vote of a majority of the Board of Directors to call a special meeting of
stockholders and (2) establish notification procedures for stockholder
nominations for the election of directors and stockholder proposals.
A Form 8-K describing the Shareholders Rights Plan and the By-Law amendments
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
Shareholders Rights Plan as an exhibit. A detailed summary of the terms of the
Shareholders Rights Plan will be mailed to each stockholder of record on
February 15, 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
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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