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EXHIBIT 3
Exhibit B
OSI PHARMACEUTICALS, INC.
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED STOCK
On September 27, 2000, the Board of Directors of OSI Pharmaceuticals,
Inc., a Delaware corporation (the "Company"), declared a dividend distribution
of one right (a "Right") for each outstanding share of common stock of the
Company (the "Common Stock") payable to stockholders of record at the close of
business on September 27, 2000. Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of a newly-created
series of preferred stock, par value $0.01 per share (the "Preferred Stock"), at
a price of $500 (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in the form of the Rights Agreement (the
"Rights Agreement") dated as of September 27, 2000 between the Company and The
Bank of New York, as Rights Agent (the "Rights Agent").
The Rights are not exercisable until the "Distribution Date," which is
the earlier of (i) the date which is 10 days (or such later date as the Board of
Directors may determine) after the commencement of, or first public announcement
of an intention to make, a tender or exchange offer by any person the
consummation of which would result in a person or group becoming an Acquiring
Person (defined below) or (ii) the date of the first public announcement that a
person or group of affiliated or associated persons has acquired, or obtained
the right to acquire, otherwise than pursuant to a Permitted Offer (described
below), beneficial ownership of 17.5% or more of the outstanding shares of
Common Stock. A person or group whose acquisition of shares of Common Stock
causes a Distribution Date to occur pursuant to the foregoing clause (ii) is an
"Acquiring Person."
Until the Distribution Date (i) the Rights will be evidenced by the
Common Stock certificates and will be transferred with and only with such Common
Stock certificates, (ii) new Common Stock certificates issued after September
27, 2000 will contain a notation referring to the Rights associated with such
shares of Common Stock, incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificates. As soon as practicable after the
Distribution Date, Right Certificates will be mailed to holders of record of the
Common Stock as of the close of business on the Distribution Date and,
thereafter, the separate Right Certificates alone will represent the Rights.
The Rights will expire at the close of business on August 31, 2010,
unless earlier redeemed by the Company as described below.
In the event that any person becomes an Acquiring Person (otherwise than
pursuant to a Permitted Offer), the Rights will be modified automatically so
that each holder of a Right will thereafter have, in lieu of the right to
purchase shares of Preferred Stock, the right (the "Flip-In Right") to receive
upon exercise of the Right the number of shares of Common Stock which,
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immediately before such Acquiring Person became an Acquiring Person, had a
market value equal to twice the amount of the exercise price of the Right.
Notwithstanding the foregoing, after such person shall have become an Acquiring
Person, all Rights that are, or under certain circumstances specified in the
Rights Agreement were, beneficially owned by any Acquiring Person or any
affiliate or associate thereof will be null and void. A "Permitted Offer" is a
tender or exchange offer which is for all outstanding shares of Common Stock at
a price and on terms which the Board of Directors determines to be adequate and
in the best interests of the Company, its stockholders and other relevant
constituencies, other than such Acquiring Person, its affiliates and associates.
In the event that, at any time after a person or group has become an
Acquiring Person, (i) the Company is acquired in a merger or other business
combination in which the holders of all of the outstanding shares of Common
Stock immediately prior to the consummation of the transaction are not the
holders of all of the surviving corporation's voting power or (ii) more than 50%
of the Company's assets or earning power is sold or transferred, in either case
with or to an Acquiring Person or any affiliate or associate thereof or any
other person in which such Acquiring Person, affiliate or associate has an
interest or any person acting on behalf of or in concert with such Acquiring
Person (or, if in such transaction all holders of shares of Common Stock are not
treated alike, any other person), then each holder of a Right (except Rights
which previously have become null and void as set forth above) shall thereafter
have the right (the "Flip-Over Right") to receive, upon exercise of the Right,
shares of common stock of the acquiring company having a value equal to twice
the amount of the exercise price of the Right. Each such holder of a Right will
continue to have a Flip-Over Right whether or not such holder exercises or
surrenders the Flip-In Right, and such holder will have a successive Flip-Over
Right on each occurrence of a transaction specified in the first sentence of
this paragraph.
At any time before a person or group becomes an Acquiring Person, the
Company may redeem the Rights in whole, but not in part, at a price of $.001 per
Right (the "Redemption Price"). Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the right to exercise the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price. Notice of redemption will be given by mail to each holder
of Rights at such holder's last address on the registry books for the Rights,
or, at the Company's option, by issuing a press release and mailing payment of
the redemption price to the registered holders of the Rights.
The Purchase Price payable, and the number of shares of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustments from time to time to prevent dilution in the event of
certain changes in the Preferred Stock or Common Stock or distributions of such
stock or other events which would otherwise diminish the benefits intended to be
afforded by the Rights. With certain exceptions, no adjustment in the Purchase
Price will be required until cumulative adjustments amount to at least 1% of the
Purchase Price.
No fractional Rights or shares of Preferred Stock or Common Stock will be
issued (other than fractions of a share of Preferred Stock which are one
one-thousandth of a share or an integral multiple of one one-thousandth of a
share) and, in lieu thereof, a payment in cash will be
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made based on the market price of the Rights, Preferred Stock or Common Stock,
as the case may be, on the last trading date prior to the date of exercise of
the Rights involved.
The dividends, liquidation and voting rights, and the non-redemption
feature of the Preferred Stock are designed so that the value of the one
one-thousandth of a share of Preferred Stock purchasable upon exercise of each
Right will approximate the value of one share of Common Stock. The Preferred
Stock will be non-redeemable and will rank junior to all other series of the
Company's Preferred Stock. Each whole share of Preferred Stock will be entitled
to receive a quarterly preferential dividend of the greater of (a) $.025 per
share or (b) 1,000 times the dividend declared on the Common Stock. In the event
of liquidation, the holders of the Preferred Stock will be entitled to receive a
preferential liquidation payment of $.01 per share and will also be entitled to
receive, in the aggregate, a liquidation payment equal to 1,000 times the
liquidation payment made per share of Common Stock. Each share of Preferred
Stock will have 1,000 votes, voting together with the Common Stock. In the event
of any merger, consolidation or other transaction in which shares of Common
Stock are exchanged for or converted into other stock or securities, cash or
other property, each share of Preferred Stock will be entitled to receive 1,000
times the amount received per share of Common Stock.
Prior to the Distribution Date the Board of Directors may amend any of
the provisions of the Rights Agreement other than to decrease the Redemption
Price, increase the Exercise Price or decrease the number of one one-thousandths
of a share of Preferred Stock purchasable upon exercise of a Right. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board of Directors to cure any ambiguity, defect or inconsistency, to make
changes which do not adversely affect the interests of the holders of Rights
(other than holders whose Rights have become null and void as set forth above)
or to shorten or lengthen any time period under the Rights Agreement; provided
that no such amendment may be adopted to adjust the time period governing
redemption at a time when the Rights are not redeemable.
Until a Right is exercised, the holder thereof, as such, will have no
right as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to stockholders of the Company, stockholders may, depending upon the
circumstances, recognize taxable income should the Rights become exercisable or
upon the occurrence of certain events thereafter.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to the Company's Registration Statement on
Form 8-A dated September 27, 2000. A copy of the Rights Agreement is available
to registered holders of the Rights free of charge from the Rights Agent. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.
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