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EXHIBIT 2
Exhibit A
OSI PHARMACEUTICALS, INC.
Terms of
Series SRP Preferred Stock
The issuance of a series of preferred stock, par value $.01 per share (the
"Preferred Stock"), designated "Series SRP Junior Participating Preferred Stock"
(hereinafter referred to as the "Series SRP Preferred Stock"), initially
consisting of 60,000 shares, was authorized by action of the Board of Directors
of the Corporation on June 23, 1999, and, to the extent that the designations,
relative rights, preferreds, limitations and restrictions of the Series SRP
Preferred Stock are not stated and expressed in the Certificate of
Incorporation, the Board of Directors fixed and stated such designations,
relative rights, preferences, limitations and restrictions thereof as follows
(all terms used herein which are defined in the Certificate of Incorporation
shall be deemed to have the meanings provided therein):
Section 1. Designation and Amount. The shares of such series shall
be designated as "Series SRP Junior Participating Preferred Stock" and the
number of shares constituting such series shall be 60,000.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series SRP Preferred Stock with respect to dividends, the holders of
shares of Series SRP Preferred Stock shall be entitled to receive, when and as
declared by the Board of Directors out of funds legally available for the
purpose, quarterly dividends payable in cash on March 15, June 15, September 15
and December 15 in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series SRP Preferred Stock, in an amount per share (rounded to the nearest cent)
equal to the greater of (a) $.025 or (b) 1,000 times the aggregate per share
(rounded to nearest cent) amount of all cash dividends and 1,000 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of common stock (the
"Common Stock") or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date, or, with respect to the
first Quarterly Dividend Payment Date, since the first issuance of any share or
fraction of a share of Series SRP Preferred Stock.
(B) The Corporation shall declare a dividend or distribution on
the Series SRP Preferred Stock as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been
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declared on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend
of $.025 per share on the Series SRP Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on each
outstanding share of Series SRP Preferred Stock from the first Quarterly
Dividend Payment Date following the date of issue of such share unless such date
of issue is a date after the record date for the determination of holders of
shares of Series SRP Preferred Stock entitled to receive a quarterly dividend on
such Quarterly Dividend Payment Date, in which event such dividends shall begin
to accrue and be cumulative on such shares from the second Quarterly Dividend
Payment Date following the date of issue of such share. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Series SRP
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series SRP Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series SRP
Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series SRP Preferred Stock shall entitle the holder thereof
to 1,000 votes on all matters submitted to a vote of the stockholders of the
Corporation.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series SRP Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) If at any time dividends on any Series SRP Preferred
Stock shall be in arrears in an amount equal to six (6) quarterly dividends
thereon, the occurrence of such contingency shall mark the beginning of a period
(a "Default Period") which shall extend until such time when all accrued and
unpaid dividends for all previous quarterly dividend periods and for the current
quarterly dividend period on all shares of Series SRP Preferred Stock then
outstanding shall have been declared and paid or set apart for payment. During
each Default Period, all holders of Preferred Stock (including holders of the
Series SRP Preferred Stock) on which dividends are in arrears in an amount equal
to six (6) quarterly dividends thereon, voting as a class, irrespective of
series, shall have the right to elect two (2) directors.
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(ii) During any Default Period, such voting rights of the
holders of Series SRP Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any
annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that neither such voting rights nor the right of the
holders of any other series of Preferred Stock, if any, to increase the
authorized number of directors shall be exercised unless the holders of ten
percent (10%) in number of shares of Preferred Stock outstanding shall be
present in person or by proxy. The absence of a quorum of the holders of Common
Stock shall not affect the exercise by the holders of Preferred Stock of such
voting right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing Default Period, they
shall have the right, voting as a class, to elect directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
directors or, if such right is exercised at an annual meeting, to elect two (2)
directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall have the
right to make such increase in the number of directors as shall be necessary to
permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect directors in any
Default Period and during the continuance of such period, the number of
directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series SRP Preferred Stock.
(iii) During an existing Default Period, unless the
holders of Preferred Stock shall have previously exercised their right to elect
directors, the Board of Directors may order, or any stockholder or stockholders
owning in the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding, irrespective of series, may request, the
calling of a special meeting of the holders of Preferred Stock, which meeting
shall thereupon be called by the President, a Vice President or the Secretary of
the Corporation. Notice of such meeting and of any annual meeting at which
holders of Preferred Stock are entitled to vote pursuant to this paragraph
(C)(iii) shall be given to each holder of record of Preferred Stock by mailing a
copy of such notice to such holder at such holder's last address as the same
appears on the books of the Corporation. Such meeting shall be called for a time
not earlier than 20 days and not later than 60 days after such order or request
or in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any stockholder or
stockholders owning in the aggregate not less than ten percent (10%) of the
total number of shares of Preferred Stock outstanding. Notwithstanding the
provisions of this paragraph (C)(iii), no such special meeting shall be called
during the period within 60 days immediately preceding the date fixed for the
next annual meeting of the stockholders.
(iv) In any Default Period, the holders of Common Stock,
and other classes of stock of the Corporation if applicable, shall continue to
be entitled to elect the whole number of directors until the holders of
Preferred Stock shall have exercised their right to elect two (2) directors
voting as a class, after the exercise of which right (x) the
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directors so elected by the holders of Preferred Stock shall continue in office
until their successors shall have been elected by such holders or until the
expiration of the Default Period and (y) any vacancy in the Board of Directors
may (except as provided in paragraph (C)(ii) of this Section 3) be filled by
vote of a majority of the remaining directors theretofore elected by the holders
of the class of stock which elected the Director whose office shall have become
vacant. References in this paragraph (C) to directors elected by the holders of
a particular class of stock shall include directors elected by such directors to
fill vacancies as provided in clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a Default Period,
(x) the right of the holders of Preferred Stock as a class to elect directors
shall cease, (y) the term of any directors elected by the holders of Preferred
Stock as a class shall terminate and (z) the number of directors shall be such
number as may be provided for in or fixed pursuant to the Certificate of
Incorporation or by-laws irrespective of any increase made pursuant to the
provisions of paragraph (C)(ii) of this Section 3 (such number being subject,
however, to change thereafter in any manner provided by law or in the
Certificate Incorporation or By-laws). Any vacancies in the Board of Directors
affected by the provisions of clauses (y) and (z) in the preceding sentence may
be filled by a majority of the remaining directors.
(D) Except as set forth herein, holders of Series SRP Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of Common
Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series SRP Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series SRP Preferred Stock
outstanding shall have been paid in full, the Corporation shall not
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series SRP Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series SRP Preferred
Stock, except dividends paid ratably on the Series SRP Preferred Stock and all
such parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then entitled;
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(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series SRP Preferred
Stock, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series SRP Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Series SRP Preferred Stock or any shares of stock ranking on a parity
with the Series SRP Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferreds of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (A) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series SRP Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up.
(A) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation, no distribution shall be made to the holders
of shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) of the Series SRP Preferred Stock unless, prior
thereto, the holders of shares of Series SRP Preferred Stock shall have received
$.01 per share plus an amount equal to accrued and unpaid dividends and
distribution thereon, whether or not declared, to the date of such payment (the
"Series SRP Liquidation Preferred"). Following the payment of the full amount of
the Series SRP Liquidation Preferred, no additional distributions shall be made
to the holders of shares of Series SRP Preferred Stock unless, prior thereto,
the holders of shares of Common Stock shall have received an amount per share
(the "Common Adjustment") equal to the quotient obtained by dividing (i) the
Series SRP Liquidation Preferred by (ii) 1,000 (such number in clause (ii), the
"Adjustment Number"). Following the payment of the full amount of the Series SRP
Liquidation Preferred and
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the Common Adjustment in respect of all outstanding shares of Series SRP
Preferred Stock and Common Stock, respectively, holders of Series SRP Preferred
Stock and holders of shares of Common Stock shall receive their ratable and
proportionate share of the remaining assets to be distributed in the ratio of
the Adjustment Number to 1 with respect to such Preferred Stock and Common
Stock, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series SRP Liquidation Preferred and
the liquidation preferreds of all other series of Preferred Stock, if any, which
rank on a parity with Series SRP Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferreds.
Section 7. Consolidation, Merger, etc. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash or other property, then in any such case the shares of
Series SRP Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share equal to 1,000 times the aggregate amount of
stock, securities, cash and other property (payable in kind) into which or for
which each share of Common Stock is changed or exchanged.
Section 8. No Redemption. The shares of Series SRP Preferred Stock
shall not be redeemable.
Section 9. Ranking. The Series SRP Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.
Section 10. Amendment. The Certificate of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferreds or special rights of the Series SRP
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding shares of Series SRP
Preferred Stock, voting separately as a class.
Section 11. Fractional Shares. Series SRP Preferred Stock may be
issued in fractions of a share which shall entitle the holder, in proportion to
such holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series SRP Preferred Stock.
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