EXHIBIT 10.1
CONSENT AGREEMENT
THIS IS A CONSENT AGREEMENT (this "Consent Agreement"), dated as of
June 9, 2003, by and among the Genaera Corporation (the "Corporation") and all
of the holders of the Series C-1 Convertible Preferred Stock and the Series C-2
Convertible Preferred Stock of the Corporation listed on the signature pages
hereto (collectively, the "Preferred Holders").
Terms
The Preferred Holders hereby consent to the Corporation amending and
restating (i) the Certificate of Designations, Preferences and Rights of Series
C-1 Preferred Stock (the "Series C-1 Certificate") that was filed with the
Secretary of State of Delaware on May 27, 2003, and (ii) the Certificate of
Designations, Preferences and Rights of Series C-2 Preferred Stock (the "Series
C-2 Certificate") that was filed with the Secretary of State of Delaware on May
27, 2003.
The Series C-1 Certificate, as amended and restated (the "Amended
Series C-1 Certificate"), is attached hereto as Exhibit A. The Series C-2
Certificate, as amended and restated (the "Amended Series C-2 Certificate"), is
attached hereto as Exhibit B. The amendments to the Series C-1 Certificate and
the Series C-2 Certificate, respectively, as contained in the Amended Series C-1
Certificate and the Amended Series C-2 Certificate, respectively, are as
follows:
(a) Paragraph "(ii)" of "Section 5(b) - Optional Conversion of
Series C-1 Preferred Stock" of the Resolution of the Board of Directors of the
Corporation contained in the Series C-1 Certificate is amended and restated in
its entirety to read as follows:
(ii) Upon the occurrence of a Series C-1 Stock
Price Trigger (as defined below), each share of Series C-1
Preferred Stock shall be convertible at the election of the
holder of the Series C-1 Preferred Stock in accordance with
Section 5(c)(ii) hereof. A "Series C-1 Stock Price Trigger"
shall occur if, at any time prior to November 23, 2004, the
average closing bid price of the Common Stock (as quoted on
the Nasdaq Small Cap Market, or any other established
exchange, national system or automated quotation system on
which the Common Stock is listed) over a twenty (20)
consecutive Trading Day period is equal to or greater than
$3.00, subject to adjustment as provided in Section 5(f)(i)
hereof.
(b) The first paragraph of "Section 6 - Voting Rights" of the
Resolution of the Board of Directors of the Corporation contained in the Series
C-1 Certificate is amended and restated in its entirety to read as follows
(paragraphs (a), (a)(i), (a)(ii) and (a)(iii) of Section 6 remain unchanged):
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Voting Rights. Except as set forth herein or as otherwise
required by law, at all times prior to the conversion or
redemption of the Series C-1 Preferred Stock, a holder of
Series C-1 Preferred Stock shall be entitled to that number
of votes per share of Series C-1 Preferred Stock equal to
the Conversion Share Amount, subject to adjustment as
provided in Section 5(f)(i) hereof, such votes to be counted
together with all other shares of stock of the Corporation
having general voting power and not counted separately as a
class. The holders of Series C-1 Preferred Stock may vote on
every matter put to a vote of the Corporation's
stockholders, except for any matter reserved solely for the
vote of the holders of any series of Preferred Stock other
than the Series C-1 Preferred Stock.
(c) The first paragraph of "Section 6 - Voting Rights" of the
Resolution of the Board of Directors of the Corporation contained in the Series
C-2 Certificate is amended and restated in its entirety to read as follows
(paragraphs (a), (a)(i), (a)(ii) and (a)(iii) of Section 6 remain unchanged):
Voting Rights. Except as set forth herein or as otherwise
required by law, at all times prior to the conversion or
redemption of the Series C-2 Preferred Stock, a holder of
Series C-2 Preferred Stock shall be entitled to that number
of votes per share of Series C-2 Preferred Stock equal to
the Conversion Share Amount, subject to adjustment as
provided in Section 5(f)(i) hereof, such votes to be counted
together with all other shares of stock of the Corporation
having general voting power and not counted separately as a
class. The holders of Series C-2 Preferred Stock may vote on
every matter put to a vote of the Corporation's
stockholders, except for any matter reserved solely for the
vote of the holders of any series of Preferred Stock other
than the Series C-2 Preferred Stock.
This Consent Agreement shall be governed by and construed and enforced
in accordance with the laws of the Commonwealth of Pennsylvania, without regard
to the conflicts of laws rules thereof.
This Consent Agreement may be executed in two or more counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Consent
Agreement as of the day and year first written above.
GENAERA CORPORATION
By: /s/ Xxx X. Xxxxxx
--------------------------------
Name: Xxx X. Xxxxxx, M.D.
Title: President and Chief Executive
Officer
BIOTECHNOLOGY VALUE FUND LP
BVF Partners LP, General Partner
BVF Inc., its General Partners
By: /s/ Xxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx
Title: President
BIOTECHNOLOGY VALUE FUND II LP
BVF Partners LP, General Partner
BVF Inc., its General Partners
By: /s/ Xxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx
Title: President
INVESTMENTS 10, LLC
BVF Partners LP, General Partner
BVF Inc., its General Partners
By: /s/ Xxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx
Title: President
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BVF INVESTMENTS LLC
BVF Partners LP, General Partner
BVF Inc., its General Partners
By: /s/ Xxxx Xxxxxxx
--------------------------------
Name: Xxxx Xxxxxxx
Title: President
ZIFF ASSET MANAGEMENT, L.P.
PBK Holdings, Inc., its General
Partner
By: /s/ Xxxxxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxxxxx X. Xxxxx
Title: Vice-President
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EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES C-1 PREFERRED STOCK
of
GENAERA CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned, President and Chief Executive Officer of Genaera
Corporation, a Delaware corporation (hereinafter called the "Corporation"),
pursuant to the provisions of Sections 103 and 151 of the Delaware General
Corporation Law (the "DGCL"), does hereby make this Amended and Restated
Certificate of Designations (the "Certificate of Designations") and does hereby
state and certify that pursuant to the authority expressly vested in the Board
of Directors of the Corporation by the Certificate of Incorporation, the Board
of Directors duly adopted the following resolutions:
RESOLVED, that, pursuant to Section A(1) of the Certificate of
Incorporation (which authorizes 9,211,031 shares of convertible preferred stock,
$.001 par value ("Preferred Stock"), of which (i) 80,000 shares have been
designated Series A Convertible Preferred Stock (the "Series A Preferred Stock")
and of which 888 shares of Series A Preferred Stock are currently issued and
outstanding, and (ii) 10,000 shares have been designated Series B Convertible
Preferred Stock (the "Series B Preferred Stock") and of which all shares of
Series B Preferred Stock are currently issued and outstanding), the Board of
Directors hereby fixes the powers, designations, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations and restrictions, of a series of Preferred Stock.
RESOLVED, that this Certificate of Designations amends and restates in its
entirety the Corporation's original certificate of designations, preferences and
rights of the Series C-1 Preferred Stock filed with the Secretary of State of
the State of Delaware on May 27, 2003.
RESOLVED, that each share of such series of Preferred Stock shall rank
equally in all respects and shall be subject to the following provisions:
1. Number and Designation. 2,500 shares of the Preferred Stock of the
Corporation shall be designated as Series C-1 Convertible Preferred Stock, $.001
par value (the "Series C-1 Preferred Stock").
2. Rank. The Series C-1 Preferred Stock shall, with respect to dividend
rights and rights on liquidation, dissolution and winding up, rank prior to the
Corporation's common stock, $.002 par value ("Common Stock") and rank junior to
the Series A Preferred Stock and the Series B Preferred Stock. All equity
securities of the Corporation to which the Series C-1 Preferred Stock ranks
prior (whether with respect to dividends or upon liquidation, dissolution,
winding up or otherwise), including the Common Stock, are collectively referred
to herein as the "Junior Securities." All equity securities of the Corporation
with which the Series C-1 Preferred Stock ranks on a parity are collectively
referred to as "Parity Securities" (it being understood that the Corporation's
Series C-2 Preferred Stock is a Parity Security with respect to the Series C-1
Preferred Stock) and all equity securities of the Corporation to which the
Series C-1 Preferred Stock ranks junior (whether with respect to dividends or
upon liquidation, dissolution or winding up) are collectively referred to herein
as the "Senior Securities." The respective definitions of Junior Securities and
Senior Securities shall also include any rights or options exercisable for or
convertible into any of the Junior Securities and Senior Securities, as the case
may be. The Series C-1 Preferred Stock shall be subject to the creation of
Junior Securities but not subject to the creation of Parity Securities or Senior
Securities except as provided in paragraph 6(a) hereof.
3. Dividends.
(a) In the event that the Corporation declares a dividend with respect
to or makes a distribution on the Common Stock, then the holders of the
Series C-1 Preferred Stock shall be entitled to participate with the
holders of the Common Stock in any such dividends or distributions paid or
set aside for payment, such that the holders of the Series C-1 Preferred
Stock shall receive, with respect to each share of Series C-1 Preferred
Stock held, an amount equal to (i) the dividend or distribution payable
with respect to each share of Common Stock, multiplied by (ii) the number
of shares of Common Stock into which such share of Series C-1 Preferred
Stock is convertible as of the record date for such dividend or
distribution. The provision of this subsection 3(a) shall not apply to any
dividends or distributions that would result in an adjustment of the Common
Stock Conversion Price (as hereinafter defined) pursuant to Section 5(f).
(b) For purposes of this Section 3, unless the context requires
otherwise, "distribution" shall mean the transfer of cash or property
without consideration, whether by way of dividend or otherwise, payable
other than in Common Stock or other securities of the Corporation, or the
purchase or redemption of shares of the Corporation (other than repurchases
of Common Stock held by employees of, or consultants to, the Corporation
upon termination
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of their employment or services pursuant to agreements providing for such
repurchase or other than redemptions in liquidation or dissolution of the
Corporation) for cash or property, including any such transfer, purchase,
or redemption by a subsidiary of the Corporation.
4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, prior and in preference to any distribution of any of the
assets or funds of the Corporation to the holders of Series C-1 Preferred
Stock and any Junior Securities by reason of their ownership of such stock,
the holders of Series A Preferred Stock and Series B Preferred Stock shall
be entitled to receive for each outstanding share of Series A Preferred
Stock and Series B Preferred Stock then held by them an amount equal to
$1,000.00 (the "Series A/B Liquidation Preference") plus accrued and unpaid
cumulative dividends on such share (as adjusted for any recapitalizations,
stock combinations, stock dividends, stock splits and the like). Following
the payment of the Series A/B Liquidation Preference, and prior and in
preference to any distribution of any of the assets or funds of the
Corporation to the holders of Junior Securities by reason of their
ownership of such stock, the holders of Series C-1 Preferred Stock shall be
entitled to receive for each outstanding share of Series C-1 Preferred
Stock then held by them in an amount equal to $1,000.00 (the "Series C-1
Liquidation Preference") plus any declared but unpaid dividends on such
shares (as adjusted for any recapitalizations, stock combinations, stock
dividends, stock splits and the like). If, upon the occurrence of a
liquidation, dissolution or winding up, the assets and funds of the
Corporation legally available for distribution to stockholders by reason of
their ownership of stock of the Corporation shall be insufficient to permit
the payment of the full aforementioned preferential amount on the Series
C-1 Preferred Stock, then the entire assets and funds of the Corporation
legally available for distribution to stockholders by reason of their
ownership of stock of the Corporation shall be distributed among the
holders of Series C-1 Preferred Stock and holders of any other such Parity
Securities ratably in accordance with the respective amounts that would be
payable on such shares of Series C-1 Preferred Stock and such Parity
Securities if the amounts payable thereon were paid in full.
(b) Subject to the prior rights of the holders of any Senior
Securities, after payment shall have been made in full to the holders of
the Series C-1 Preferred Stock, as provided in this Section 4, any other
series or class or classes of Junior Securities shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the
holders of the Series C-1 Preferred Stock shall not be entitled to share
therein.
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5. Conversion.
(a) Automatic Conversion of Series C-1 Preferred Stock.
(i) Upon the occurrence of a Change of Control (as defined
below), each share of Series C-1 Preferred Stock shall be
automatically converted in accordance with Section 5(c)(i) hereof. A
"Change of Control" shall occur upon the occurrence of (i) any sale,
exchange, conveyance or other disposition of capital stock of the
Corporation in a transaction or series of related transactions in
which more than forty percent (40%) of the voting power of the
Corporation is disposed of and the Corporation is a party to such
transaction(s), (ii) upon the sale of all or substantially all of the
assets of the Corporation, or (iii) the consolidation, merger or
similar transaction of the Corporation into or with any other entity
or entities (other than a consolidation, merger or similar transaction
which the Corporation is a party to such transaction(s) and in which
the stockholders of the Corporation immediately prior to such
consolidation, merger or similar transaction will own at least sixty
percent (60%) of the voting power of the combined or surviving entity
by virtue of their ownership of shares of capital stock of the
Corporation).
(b) Optional Conversion of Series C-1 Preferred Stock.
(i) Upon receipt by a holder of Series C-1 Preferred Stock of a
Notice of Redemption (as defined below), each share of Series C-1
Preferred Stock shall be convertible at the election of the holder of
the Series C-1 Preferred Stock in accordance with Section 5(c)(ii)
hereof.
(ii) Upon the occurrence of a Series C-1 Stock Price Trigger (as
defined below), each share of Series C-1 Preferred Stock shall be
convertible at the election of the holder of the Series C-1 Preferred
Stock in accordance with Section 5(c)(ii) hereof. A "Series C-1 Stock
Price Trigger" shall occur if, at any time prior to November 23, 2004,
the average closing bid price of the Common Stock (as quoted on the
Nasdaq Small Cap Market, or any other established exchange, national
system or automated quotation system on which the Common Stock is
listed) over a twenty (20) consecutive Trading Day period is equal to
or greater than $3.00, subject to adjustment as provided in Section
5(f)(i) hereof.
(iii) Each share of Series C-1 Preferred Stock, if not already
converted, shall be convertible at the election of the holder of the
Series C-1 Preferred Stock in accordance with Section 5(c)(ii) hereof
on and after November 23, 2004.
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(iv) Each share of Series C-1 Preferred Stock, if not already
converted, shall be convertible at the election of the Corporation in
accordance with Section 5(c)(iii) hereof on or after May 23, 2006,
subject to adjustment as provided in Section 5(f)(i) hereof.
(c) Determination of Number of Shares of Common Stock to be Issued
Upon Conversion.
(i) Pursuant to Section 5(a)(i) hereof, each share of Series C-1
Preferred Stock shall be converted in accordance with Section 5(d)
hereof at the election of each holder of Series C-1 Preferred Stock,
into either (i) 1,000 fully paid and non-assessable shares of Common
Stock (the "Conversion Share Amount"), subject to adjustment as
provided in Section 5(f)(i) hereof, or (ii) cash in an amount equal to
the price of $1,000.00 per share of Series C-1 Preferred Stock,
together with declared and unpaid dividends thereon to the date fixed
for redemption, without interest (the "Series C-1 Price").
(ii) Pursuant to Section 5(b) hereof, each share of Series C-1
Preferred Stock shall be convertible in accordance with Section 5(d)
hereof at the election of each holder of Series C-1 Preferred Stock,
into the Conversion Share Amount, subject to adjustment as provided in
Section 5(f)(i) hereof.
(iii) Pursuant to Section 5(b)(iv), each share of Series C-1
Preferred Stock, if not already converted, shall be convertible in
accordance with Section 5(k) hereof at the election of the
Corporation, into the Conversion Share Amount, subject to adjustment
as provided in Section 5(f)(i) hereof.
(d) Notice of Conversion by the Holders. In order to convert the
Series C-1 Preferred Stock into Common Stock or cash, as applicable,
pursuant to Section 5(a) or (b) hereof, the holder of the Series C-1
Preferred Stock shall deliver to the Corporation a notice of its election
to make such conversion at least five (5) business days prior to the
intended date of conversion (the "Conversion Date") setting forth (i) the
Conversion Date, (ii) the number of shares of Series C-1 Preferred Stock to
be converted on the Conversion Date, (iii) the number of shares of Common
Stock held by such holder, (iv) the names (and addresses) in which the
certificates for shares of Common Stock issuable upon conversion shall be
issued, and (v) the number of shares to be converted into Common Stock or
cash, as applicable. With respect to any conversion by a holder of Series
C-1 Preferred Stock, such holder shall not sell in the market any shares of
Common Stock held by it during the twenty (20) days preceding the Series
C-1 Conversion Date.
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(e) Partial Conversion. In the event that some but not all of the
Series C-1 Preferred Stock represented by a certificate or certificates
surrendered by a holder are converted, the Corporation shall execute and
deliver to or on the order of the holder, at the expense of the
Corporation, a new certificate representing the number of shares of Series
C-1 Preferred Stock that were not converted.
(f) Adjustments for Stock Splits, Recombinations, etc.
(i) If the Corporation shall at any time or from time to time
effect a subdivision of the outstanding Common Stock, or shall issue a
dividend of Common Stock on its outstanding Common Stock, the number
of shares of Common Stock into which the Series C-1 Preferred Stock is
convertible pursuant to Section 5(c) then in effect immediately before
that subdivision or dividend shall be proportionately increased and
conversely, if the Corporation shall combine the outstanding shares of
Common Stock, the number of shares of Common Stock into which the
Series C-1 Preferred Stock is convertible pursuant to Section 5(c)
then in effect immediately before the combination shall be
proportionately decreased. Any adjustment under this subsection
5(f)(i) shall become effective at the close of business on the date
the subdivision or combination becomes effective or on the date which
the dividend is declared.
(ii) If converted by a holder of Series C-1 Preferred Stock or
the Corporation, the Conversion Date shall be subject to adjustment
from time to time as follows:
(A) In the event the Corporation should at any time or from
time to time after the date hereof fix a record date that is less
than twenty (20) Trading Days (as defined below) prior to a
Conversion Date for the effectuation of a split or subdivision of
the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly, additional
shares of Common Stock (hereinafter, the "Common Stock
Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then such
Conversion Date shall be extended to the date which is twenty
(20) Trading Days after such record date.
(B) In the event the Corporation should at any time or from
time to time after the date hereof fix a record date which is
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less than twenty (20) Trading Days prior to a Conversion Date for
a combination of the outstanding shares of Common Stock, then
such Conversion Date shall be extended to the date which is
twenty (20) Trading Days after such record date.
(iii) Any adjustment under this subsection 5(f) shall become
effective at the close of business on the date the subdivision or
combination becomes effective or on the date which the dividend is
declared.
(iv) In the event that after the date hereof the Corporation
shall declare a dividend payable in securities of other persons,
evidences of indebtedness issued by this Corporation or other persons,
assets (excluding cash dividends), or options or rights not referred
to in paragraphs 5(f)(i) through 5(f)(ii), then, in each such case
each holder of Series C-1 Preferred Stock shall be entitled to a
proportionate share of any such distribution as though such holder
were the holder of the number of shares of Common Stock into which
such holder's shares of Series C-1 Preferred Stock are convertible as
of the record date fixed for the determination of the holders of
Common Stock entitled to receive such distribution.
(v) If at any time or from time to time after the date hereof
there shall be a recapitalization of the Common Stock (other than a
subdivision or combination provided for above in this Section 5 (e)),
provision shall be made so that each holder of Series C-1 Preferred
Stock shall thereafter be entitled to receive upon any conversion of
the Series C-1 Preferred Stock under this Section 5 the number of
shares of stock or other securities or property of the Corporation or
otherwise, to which a holder of Common Stock deliverable upon
conversion of Series C-1 Preferred Stock pursuant to this Section 5
would have been entitled on such recapitalization. In any such case,
appropriate adjustment shall be made in the application of the
provisions of this Section 5 with respect to the rights of the holders
of Series C-1 Preferred Stock after the recapitalization to the end
that the provision of this Section 5 (including the adjustment in the
number of shares of Common Stock issuable on conversion) shall be
applicable after that event as nearly equivalent as may be
practicable.
(g) Mechanics of Conversion. On the Conversion Date, the holder shall
surrender the certificates representing the shares of Series C-1 Preferred
Stock being converted, duly endorsed, to the Corporation at its principal
office or at the office of its transfer agent. As promptly as possible
after the Conversion Date, the Corporation shall issue and deliver to such
holder, such certificates as the holder may request for the number of whole
shares of Common Stock issuable
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upon the conversion of such shares of Series C-1 Preferred Stock. No
fractional shares of Common Stock shall be issued upon conversion of Series
C-1 Preferred Stock. In lieu of any fractional shares to which the holder
would otherwise be entitled, the Corporation shall pay cash equal to such
fraction multiplied by the then effective Common Stock Conversion Price of
the Series C-1 Preferred Stock. Such conversion shall be deemed to have
been effected immediately prior to the close of business on the Conversion
Date, and at such time the rights of the holder of the converted shares of
Series C-1 Preferred Stock shall cease, and the Persons in whose names any
certificates of shares of Common Stock shall be issuable shall be deemed to
have become holders of record of the shares of Common Stock represented
thereby.
(h) Status of Converted Stock. In the event any shares of Series C-1
Preferred Stock shall be converted pursuant to this Section 5, the shares
so converted shall revert to the status of authorized shares of Preferred
Stock undesignated as to series or other terms.
(i) No Impairment. The Corporation will not, by amendment of this
Certificate of Designations or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Corporation, but will at all times in good faith assist in the carrying
out of all the provisions of this Section 5 and in the taking of all such
action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series C-1 Preferred Stock against
impairment.
(j) Notices of Record Date. In the event that the Corporation shall
propose at any time:
(i) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other securities, whether
or not a regular cash dividend and whether or not out of earnings or
earned surplus;
(ii) to offer for subscription pro rata to the holders of Common
Stock any additional shares of stock of any class or series or other
rights;
(iii) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common Stock; or
(iv) to merge or consolidate with or into any other corporation,
or sell, lease or convey all or substantially all of its property or
business, or to liquidate, dissolve or wind up;
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then, in connection with any such event, the Corporation shall send to
the holders of Series C-1 Preferred Stock:
(A) in the case of the matters referred to in (i) and (ii)
above, at least ten (10) days prior written notice of the date on
which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders
of Common Stock shall be entitled thereto); and
(B) in the case of the matters referred to in (iii) and (iv)
above, at least ten (10) days prior written notice of the date
when the same shall take place (and specifying the date on which
the holders of Common Stock shall be entitled to exchange their
Common Stock for securities or other property deliverable upon
the occurrence of such event).
Each such written notice shall be delivered personally or given
by first class mail, postage prepaid, addressed to the holders of
the Series C-1 Preferred Stock at the address for each such
holder as shown on the books and records of the Corporation.
(k) Notice of Conversion by the Corporation. In order to convert the
Series C-1 Preferred Stock into Common Stock or cash, as applicable,
pursuant to Section 5(b)(iv) hereof, Corporation shall mail a notice to
each holder of record of shares of Series C-1 Preferred Stock addressed to
the holder at the address of such holder appearing on the books of the
Corporation or given by the holder to the Corporation for the purpose of
notice, or, if no such address appears or is given, then at the place where
the principal executive office of the Corporation is located, at least five
(5) business days prior to the intended date of conversion (the
"Corporation Conversion Date") setting forth (i) the Conversion Date, (ii)
the number of shares of Series C-1 Preferred Stock to be converted on the
Conversion Date, and (iii) the number of shares of Common Stock held by
such holder. On the Corporation Conversion Date the Series C-1 Preferred
Stock shall automatically convert into the Conversion Share Amount without
any action on the part of the holders of the Series C-1 Preferred Stock.
6. Voting Rights. Except as set forth herein or as otherwise required by
law, at all times prior to the conversion or redemption of the Series C-1
Preferred Stock, a holder of Series C-1 Preferred Stock shall be entitled to
that number of votes per share of Series C-1 Preferred Stock equal to the
Conversion Share Amount, subject to adjustment as provided in Section 5(f)(i)
hereof, such votes to be counted together with all other shares of stock of the
Corporation having general voting power and not counted separately as a class.
The holders of Series C-1 Preferred Stock may vote on every matter put to a vote
of the Corporation's stockholders, except for any matter reserved
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solely for the vote of the holders of any series of Preferred Stock other than
the Series C-1 Preferred Stock.
(a) Approval by Series C-1 Preferred Stock. The Corporation shall not,
without first obtaining the approval of the holders of not less than a
majority of the total number of shares of the Series C-1 Preferred Stock
then outstanding voting on an as-converted to Common Stock basis:
(i) amend or repeal any provision of, or add any provision to,
the Corporation's Certificate of Incorporation or Bylaws if such
action would materially and adversely affect the rights, preferences,
privileges, or restrictions of the Series C-1 Preferred Stock;
(ii) authorize, create or issue shares of any class or series of
stock having any preference or priority superior to or on a parity
with any such preference or priority of the Series C-1 Preferred
Stock; or
(iii) amend this paragraph 6(a).
7. Redemption.
(a) Redemption by the Corporation. As and to the extent permitted by
law, the Corporation may redeem at its option shares of Series C-1
Preferred Stock, at any time in whole or from time to time in part, at the
Series C-1 Price.
(i) Notice of Redemption; Payment; Surrender of Certificates. In
the event of the redemption of shares of Series C-1 Preferred Stock
pursuant to paragraph 7(a), the Corporation shall mail a notice of
redemption ("Notice of Redemption") to each holder of record of shares
of Series C-1 Preferred Stock addressed to the holder at the address
of such holder appearing on the books of the Corporation or given by
the holder to the Corporation for the purpose of notice, or, if no
such address appears or is given, then at the place where the
principal executive office of the Corporation is located, not earlier
than sixty (60) nor later than eight (8) days before such payment is
due, as set forth above. The notice of redemption shall include (i)
the date fixed for redemption (the "Redemption Date"), (ii) the place
at which the stockholders may obtain payment of the Series C-1 Price
upon surrender of their share certificates, (iii) the amount of the
payment due, and (iv) the last date prior to the date of redemption
that the right of conversion may be exercised. If funds are available
on the date fixed for the redemption, then whether or not the share
certificates are surrendered for payment of the Series C-1 Price, the
shares shall no longer be outstanding and the holders thereof shall
cease to be stockholders of the Corporation with respect to the shares
redeemed on and after the date fixed for redemption and shall be
entitled only to receive
10
the Series C-1 Price without interest upon surrender of the share
certificate. If less than all the shares represented by one share
certificate are to be redeemed, the Corporation shall issue a new
share certificate for the shares not redeemed.
8. Waiver of Rights, Preferences or Privileges. Any right, preference or
privilege of the Series C-1 Preferred Stock may be waived and the provisions of
this Certificate of Designation may be amended by the holders of a majority of
the outstanding shares of Series C-1 Preferred Stock and such waiver shall be
binding on all holders of Series C-1 Preferred Stock.
9. General Provisions.
(a) The term "Affiliate" as used herein shall have the meaning given
it in Rule 405 promulgated under the Securities Act of 1933, as amended
from time to time.
(b) The term "Person" as used herein means any corporation, limited
liability company, partnership, trust, organization, association, other
entity or individual.
(c) The term "outstanding", when used with reference to shares of
stock, shall mean issued shares, excluding shares held by the Corporation
or a subsidiary.
(d) The term "Trading Day" shall mean a day on which the Nasdaq Small
Cap Market, or any other established exchange or national system on which
the Common Stock is listed, is open for trading.
(e) The headings of the sections, paragraphs, subparagraphs, clauses
and subclauses of this Certificate of Designations are for convenience of
reference only and shall not define, limit or affect any of the provisions
hereof.
11
IN WITNESS WHEREOF, Genaera Corporation has caused this Certificate of
Designations to be signed and attested by the undersigned this 9th day of June
2003.
GENAERA CORPORATION
By:
--------------------------------
Name: Xxx X. Xxxxxx, M.D.
Title: President and Chief Executive
Officer
12
EXHIBIT B
AMENDED AND RESTATED CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RIGHTS OF SERIES C-2 PREFERRED STOCK
of
GENAERA CORPORATION
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
The undersigned, President and Chief Executive Officer of Genaera
Corporation, a Delaware corporation (hereinafter called the "Corporation"),
pursuant to the provisions of Sections 103 and 151 of the Delaware General
Corporation Law (the "DGCL"), does hereby make this Amended and Restated
Certificate of Designations (the "Certificate of Designations") and does hereby
state and certify that pursuant to the authority expressly vested in the Board
of Directors of the Corporation by the Certificate of Incorporation, the Board
of Directors duly adopted the following resolutions:
RESOLVED, that, pursuant to Section A(1) of the Certificate of
Incorporation (which authorizes 9,211,031 shares of convertible preferred stock,
$.001 par value ("Preferred Stock"), of which (i) 80,000 shares have been
designated Series A Convertible Preferred Stock (the "Series A Preferred Stock")
and of which 888 shares of Series A Preferred Stock are currently issued and
outstanding, and (ii) 10,000 shares have been designated Series B Convertible
Preferred Stock (the "Series B Preferred Stock") and of which all shares of
Series B Preferred Stock are currently issued and outstanding), the Board of
Directors hereby fixes the powers, designations, preferences and relative,
participating, optional and other special rights, and the qualifications,
limitations and restrictions, of a series of Preferred Stock.
RESOLVED, that this Certificate of Designations amends and restates in its
entirety the Corporation's original certificate of designations, preferences and
rights of the Series C-2 Preferred Stock filed with the Secretary of State of
the State of Delaware on May 27, 2003.
RESOLVED, that each share of such series of Preferred Stock shall rank
equally in all respects and shall be subject to the following provisions:
1. Number and Designation. 2,500 shares of the Preferred Stock of the
Corporation shall be designated as Series C-2 Convertible Preferred Stock, $.001
par value (the "Series C-2 Preferred Stock").
2. Rank. The Series C-2 Preferred Stock shall, with respect to dividend
rights and rights on liquidation, dissolution and winding up, rank prior to the
Corporation's common stock, $.002 par value ("Common Stock") and rank junior to
the Series A Preferred Stock and the Series B Preferred Stock. All equity
securities of the Corporation to which the Series C-2 Preferred Stock ranks
prior (whether with respect to dividends or upon liquidation, dissolution,
winding up or otherwise), including the Common Stock, are collectively referred
to herein as the "Junior Securities." All equity securities of the Corporation
with which the Series C-2 Preferred Stock ranks on a parity are collectively
referred to as "Parity Securities" (it being understood that the Corporation's
Series C-1 Preferred Stock is a Parity Security with respect to the Series C-2
Preferred Stock) and all equity securities of the Corporation to which the
Series C-2 Preferred Stock ranks junior (whether with respect to dividends or
upon liquidation, dissolution or winding up) are collectively referred to herein
as the "Senior Securities." The respective definitions of Junior Securities and
Senior Securities shall also include any rights or options exercisable for or
convertible into any of the Junior Securities and Senior Securities, as the case
may be. The Series C-2 Preferred Stock shall be subject to the creation of
Junior Securities but not subject to the creation of Parity Securities or Senior
Securities except as provided in paragraph 6(a) hereof.
3. Dividends.
(a) In the event that the Corporation declares a dividend with respect
to or makes a distribution on the Common Stock, then the holders of the
Series C-2 Preferred Stock shall be entitled to participate with the
holders of the Common Stock in any such dividends or distributions paid or
set aside for payment, such that the holders of the Series C-2 Preferred
Stock shall receive, with respect to each share of Series C-2 Preferred
Stock held, an amount equal to (i) the dividend or distribution payable
with respect to each share of Common Stock, multiplied by (ii) the number
of shares of Common Stock into which such share of Series C-2 Preferred
Stock is convertible as of the record date for such dividend or
distribution. The provision of this subsection 3(a) shall not apply to any
dividends or distributions that would result in an adjustment of the Common
Stock Conversion Price (as hereinafter defined) pursuant to Section 5(f).
(b) For purposes of this Section 3, unless the context requires
otherwise, "distribution" shall mean the transfer of cash or property
without consideration, whether by way of dividend or otherwise, payable
other than in Common Stock or other securities of the Corporation, or the
purchase or redemption of shares of the Corporation (other than repurchases
of Common Stock held by employees of, or consultants to, the Corporation
upon termination
2
of their employment or services pursuant to agreements providing for such
repurchase or other than redemptions in liquidation or dissolution of the
Corporation) for cash or property, including any such transfer, purchase,
or redemption by a subsidiary of the Corporation.
4. Liquidation Preference.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation, prior and in preference to any distribution of any of the
assets or funds of the Corporation to the holders of Series C-2 Preferred
Stock and any Junior Securities by reason of their ownership of such stock,
the holders of Series A Preferred Stock and Series B Preferred Stock shall
be entitled to receive for each outstanding share of Series A Preferred
Stock and Series B Preferred Stock then held by them an amount equal to
$1,000.00 (the "Series A/B Liquidation Preference") plus accrued and unpaid
cumulative dividends on such share (as adjusted for any recapitalizations,
stock combinations, stock dividends, stock splits and the like). Following
the payment of the Series A/B Liquidation Preference, and prior and in
preference to any distribution of any of the assets or funds of the
Corporation to the holders of Junior Securities by reason of their
ownership of such stock, the holders of Series C-2 Preferred Stock shall be
entitled to receive for each outstanding share of Series C-2 Preferred
Stock then held by them in an amount equal to $1,000.00 (the "Series C-2
Liquidation Preference") plus any declared but unpaid dividends on such
shares (as adjusted for any recapitalizations, stock combinations, stock
dividends, stock splits and the like). If, upon the occurrence of a
liquidation, dissolution or winding up, the assets and funds of the
Corporation legally available for distribution to stockholders by reason of
their ownership of stock of the Corporation shall be insufficient to permit
the payment of the full aforementioned preferential amount on the Series
C-2 Preferred Stock, then the entire assets and funds of the Corporation
legally available for distribution to stockholders by reason of their
ownership of stock of the Corporation shall be distributed among the
holders of Series C-2 Preferred Stock and holders of any other such Parity
Securities ratably in accordance with the respective amounts that would be
payable on such shares of Series C-2 Preferred Stock and such Parity
Securities if the amounts payable thereon were paid in full.
(b) Subject to the prior rights of the holders of any Senior
Securities, after payment shall have been made in full to the holders of
the Series C-2 Preferred Stock, as provided in this Section 4, any other
series or class or classes of Junior Securities shall, subject to the
respective terms and provisions (if any) applying thereto, be entitled to
receive any and all assets remaining to be paid or distributed, and the
holders of the Series C-2 Preferred Stock shall not be entitled to share
therein.
3
5. Conversion.
(a) Automatic Conversion of Series C-2 Preferred Stock.
(i) Upon the occurrence of a Change of Control (as defined
below), each share of Series C-2 Preferred Stock shall be
automatically converted in accordance with Section 5(c)(i) hereof. A
"Change of Control" shall occur upon the occurrence of (i) any sale,
exchange, conveyance or other disposition of capital stock of the
Corporation in a transaction or series of related transactions in
which more than forty percent (40%) of the voting power of the
Corporation is disposed of and the Corporation is a party to such
transaction(s), (ii) upon the sale of all or substantially all of the
assets of the Corporation, or (iii) the consolidation, merger or
similar transaction of the Corporation into or with any other entity
or entities (other than a consolidation, merger or similar transaction
which the Corporation is a party to such transaction(s) and in which
the stockholders of the Corporation immediately prior to such
consolidation, merger or similar transaction will own at least sixty
percent (60%) of the voting power of the combined or surviving entity
by virtue of their ownership of shares of capital stock of the
Corporation).
(b) Optional Conversion of Series C-2 Preferred Stock.
(i) Upon receipt by a holder of Series C-2 Preferred Stock of a
Notice of Redemption (as defined below), each share of Series C-2
Preferred Stock shall be convertible at the election of the holder of
the Series C-2 Preferred Stock in accordance with Section 5(c)(ii)
hereof.
(ii) Upon the occurrence of a Series C-2 Stock Price Trigger (as
defined below), each share of Series C-2 Preferred Stock shall be
convertible at the election of the holder of the Series C-2 Preferred
Stock in accordance with Section 5(c)(ii) hereof. A "Series C-2 Stock
Price Trigger" shall occur if, at any time prior to November 23, 2004,
the average closing bid price of the Common Stock (as quoted on the
Nasdaq Small Cap Market, or any other established exchange, national
system or automated quotation system on which the Common Stock is
listed) over a twenty (20) consecutive Trading Day period is equal to
or greater than $4.00, subject to adjustment as provided in Section
5(f)(i) hereof.
(iii) Each share of Series C-2 Preferred Stock, if not already
converted, shall be convertible at the election of the holder of the
Series C-2 Preferred Stock in accordance with Section 5(c)(ii) hereof
on and after November 23, 2004.
4
(iv) Each share of Series C-2 Preferred Stock, if not already
converted, shall be convertible at the election of the Corporation in
accordance with Section 5(c)(iii) hereof on or after May 23, 2006,
subject to adjustment as provided in Section 5(f)(i) hereof.
(c) Determination of Number of Shares of Common Stock to be Issued
Upon Conversion.
(i) Pursuant to Section 5(a)(i) hereof, each share of Series C-2
Preferred Stock shall be converted in accordance with Section 5(d)
hereof at the election of each holder of Series C-2 Preferred Stock,
into either (i) 1,000 fully paid and non-assessable shares of Common
Stock (the "Conversion Share Amount"), subject to adjustment as
provided in Section 5(f)(i) hereof, or (ii) cash in an amount equal to
the price of $1,000.00 per share of Series C-2 Preferred Stock,
together with declared and unpaid dividends thereon to the date fixed
for redemption, without interest (the "Series C-2 Price").
(ii) Pursuant to Section 5(b) hereof, each share of Series C-2
Preferred Stock shall be convertible in accordance with Section 5(d)
hereof at the election of each holder of Series C-2 Preferred Stock,
into the Conversion Share Amount, subject to adjustment as provided in
Section 5(f)(i) hereof.
(iii) Pursuant to Section 5(b)(iv), each share of Series C-2
Preferred Stock, if not already converted, shall be convertible in
accordance with Section 5(k) hereof at the election of the
Corporation, into the Conversion Share Amount, subject to adjustment
as provided in Section 5(f)(i) hereof.
(d) Notice of Conversion by the Holders. In order to convert the
Series C-2 Preferred Stock into Common Stock or cash, as applicable,
pursuant to Section 5(a) or (b) hereof, the holder of the Series C-2
Preferred Stock shall deliver to the Corporation a notice of its election
to make such conversion at least five (5) business days prior to the
intended date of conversion (the "Conversion Date") setting forth (i) the
Conversion Date, (ii) the number of shares of Series C-2 Preferred Stock to
be converted on the Conversion Date, (iii) the number of shares of Common
Stock held by such holder, (iv) the names (and addresses) in which the
certificates for shares of Common Stock issuable upon conversion shall be
issued, and (v) the number of shares to be converted into Common Stock or
cash, as applicable. With respect to any conversion by a holder of Series
C-2 Preferred Stock, such holder shall not sell in the market any shares of
Common Stock held by it during the twenty (20) days preceding the Series
C-2 Conversion Date.
5
(e) Partial Conversion. In the event that some but not all of the
Series C-2 Preferred Stock represented by a certificate or certificates
surrendered by a holder are converted, the Corporation shall execute and
deliver to or on the order of the holder, at the expense of the
Corporation, a new certificate representing the number of shares of Series
C-2 Preferred Stock that were not converted.
(f) Adjustments for Stock Splits, Recombinations, etc.
(i) If the Corporation shall at any time or from time to time
effect a subdivision of the outstanding Common Stock, or shall issue a
dividend of Common Stock on its outstanding Common Stock, the number
of shares of Common Stock into which the Series C-2 Preferred Stock is
convertible pursuant to Section 5(c) then in effect immediately before
that subdivision or dividend shall be proportionately increased and
conversely, if the Corporation shall combine the outstanding shares of
Common Stock, the number of shares of Common Stock into which the
Series C-2 Preferred Stock is convertible pursuant to Section 5(c)
then in effect immediately before the combination shall be
proportionately decreased. Any adjustment under this subsection
5(f)(i) shall become effective at the close of business on the date
the subdivision or combination becomes effective or on the date which
the dividend is declared.
(ii) If converted by a holder of Series C-2 Preferred Stock or
the Corporation, the Conversion Date shall be subject to adjustment
from time to time as follows:
(A) In the event the Corporation should at any time or from
time to time after the date hereof fix a record date that is less
than twenty (20) Trading Days (as defined below) prior to a
Conversion Date for the effectuation of a split or subdivision of
the outstanding shares of Common Stock or the determination of
holders of Common Stock entitled to receive a dividend or other
distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the
holder thereof to receive directly or indirectly, additional
shares of Common Stock (hereinafter, the "Common Stock
Equivalents") without payment of any consideration by such holder
for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock
issuable upon conversion or exercise thereof), then such
Conversion Date shall be extended to the date which is twenty
(20) Trading Days after such record date.
(B) In the event the Corporation should at any time or from
time to time after the date hereof fix a record date which is
6
less than twenty (20) Trading Days prior to a Conversion Date for
a combination of the outstanding shares of Common Stock, then
such Conversion Date shall be extended to the date which is
twenty (20) Trading Days after such record date.
(iii) Any adjustment under this subsection 5(f) shall become
effective at the close of business on the date the subdivision or
combination becomes effective or on the date which the dividend is
declared.
(iv) In the event that after the date hereof the Corporation
shall declare a dividend payable in securities of other persons,
evidences of indebtedness issued by this Corporation or other persons,
assets (excluding cash dividends), or options or rights not referred
to in paragraphs 5(f)(i) through 5(f)(ii), then, in each such case
each holder of Series C-2 Preferred Stock shall be entitled to a
proportionate share of any such distribution as though such holder
were the holder of the number of shares of Common Stock into which
such holder's shares of Series C-2 Preferred Stock are convertible as
of the record date fixed for the determination of the holders of
Common Stock entitled to receive such distribution.
(v) If at any time or from time to time after the date hereof
there shall be a recapitalization of the Common Stock (other than a
subdivision or combination provided for above in this Section 5 (e)),
provision shall be made so that each holder of Series C-2 Preferred
Stock shall thereafter be entitled to receive upon any conversion of
the Series C-2 Preferred Stock under this Section 5 the number of
shares of stock or other securities or property of the Corporation or
otherwise, to which a holder of Common Stock deliverable upon
conversion of Series C-2 Preferred Stock pursuant to this Section 5
would have been entitled on such recapitalization. In any such case,
appropriate adjustment shall be made in the application of the
provisions of this Section 5 with respect to the rights of the holders
of Series C-2 Preferred Stock after the recapitalization to the end
that the provision of this Section 5 (including the adjustment in the
number of shares of Common Stock issuable on conversion) shall be
applicable after that event as nearly equivalent as may be
practicable.
(g) Mechanics of Conversion. On the Conversion Date, the holder shall
surrender the certificates representing the shares of Series C-2 Preferred
Stock being converted, duly endorsed, to the Corporation at its principal
office or at the office of its transfer agent. As promptly as possible
after the Conversion Date, the Corporation shall issue and deliver to such
holder, such certificates as the holder may request for the number of whole
shares of Common Stock issuable
7
upon the conversion of such shares of Series C-2 Preferred Stock. No
fractional shares of Common Stock shall be issued upon conversion of Series
C-2 Preferred Stock. In lieu of any fractional shares to which the holder
would otherwise be entitled, the Corporation shall pay cash equal to such
fraction multiplied by the then effective Common Stock Conversion Price of
the Series C-2 Preferred Stock. Such conversion shall be deemed to have
been effected immediately prior to the close of business on the Conversion
Date, and at such time the rights of the holder of the converted shares of
Series C-2 Preferred Stock shall cease, and the Persons in whose names any
certificates of shares of Common Stock shall be issuable shall be deemed to
have become holders of record of the shares of Common Stock represented
thereby.
(h) Status of Converted Stock. In the event any shares of Series C-2
Preferred Stock shall be converted pursuant to this Section 5, the shares
so converted shall revert to the status of authorized shares of Preferred
Stock undesignated as to series or other terms.
(i) No Impairment. The Corporation will not, by amendment of this
Certificate of Designations or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Corporation, but will at all times in good faith assist in the carrying
out of all the provisions of this Section 5 and in the taking of all such
action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series C-2 Preferred Stock against
impairment.
(j) Notices of Record Date. In the event that the Corporation shall
propose at any time:
(i) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other securities, whether
or not a regular cash dividend and whether or not out of earnings or
earned surplus;
(ii) to offer for subscription pro rata to the holders of Common
Stock any additional shares of stock of any class or series or other
rights;
(iii) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common Stock; or
(iv) to merge or consolidate with or into any other corporation,
or sell, lease or convey all or substantially all of its property or
business, or to liquidate, dissolve or wind up;
8
then, in connection with any such event, the Corporation shall send to the
holders of Series C-2 Preferred Stock:
(A) in the case of the matters referred to in (i) and (ii)
above, at least ten (10) days prior written notice of the date on
which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders
of Common Stock shall be entitled thereto); and
(B) in the case of the matters referred to in (iii) and (iv)
above, at least ten (10) days prior written notice of the date
when the same shall take place (and specifying the date on which
the holders of Common Stock shall be entitled to exchange their
Common Stock for securities or other property deliverable upon
the occurrence of such event).
Each such written notice shall be delivered personally or given
by first class mail, postage prepaid, addressed to the holders of
the Series C-2 Preferred Stock at the address for each such
holder as shown on the books and records of the Corporation.
(k) Notice of Conversion by the Corporation. In order to convert the
Series C-2 Preferred Stock into Common Stock or cash, as applicable,
pursuant to Section 5(b)(iv) hereof, Corporation shall mail a notice to
each holder of record of shares of Series C-2 Preferred Stock addressed to
the holder at the address of such holder appearing on the books of the
Corporation or given by the holder to the Corporation for the purpose of
notice, or, if no such address appears or is given, then at the place where
the principal executive office of the Corporation is located, at least five
(5) business days prior to the intended date of conversion (the
"Corporation Conversion Date") setting forth (i) the Conversion Date, (ii)
the number of shares of Series C-2 Preferred Stock to be converted on the
Conversion Date, and (iii) the number of shares of Common Stock held by
such holder. On the Corporation Conversion Date the Series C-2 Preferred
Stock shall automatically convert into the Conversion Share Amount without
any action on the part of the holders of the Series C-2 Preferred Stock.
6. Voting Rights. Except as set forth herein or as otherwise required by
law, at all times prior to the conversion or redemption of the Series C-2
Preferred Stock, a holder of Series C-2 Preferred Stock shall be entitled to
that number of votes per share of Series C-2 Preferred Stock equal to the
Conversion Share Amount, subject to adjustment as provided in Section 5(f)(i)
hereof, such votes to be counted together with all other shares of stock of the
Corporation having general voting power and not counted separately as a class.
The holders of Series C-2 Preferred Stock may vote on every matter put to a vote
of the Corporation's stockholders, except for any matter reserved
9
solely for the vote of the holders of any series of Preferred Stock other than
the Series C-2 Preferred Stock.
(a) Approval by Series C-2 Preferred Stock. The Corporation shall not,
without first obtaining the approval of the holders of not less than a
majority of the total number of shares of the Series C-2 Preferred Stock
then outstanding voting on an as-converted to Common Stock basis:
(i) amend or repeal any provision of, or add any provision to,
the Corporation's Certificate of Incorporation or Bylaws if such
action would materially and adversely affect the rights, preferences,
privileges, or restrictions of the Series C-2 Preferred Stock;
(ii) authorize, create or issue shares of any class or series of
stock having any preference or priority superior to or on a parity
with any such preference or priority of the Series C-2 Preferred
Stock; or
(iii) amend this paragraph 6(a).
7. Redemption.
(a) Redemption by the Corporation. As and to the extent permitted by
law, the Corporation may redeem at its option shares of Series C-2
Preferred Stock, at any time in whole or from time to time in part, at the
Series C-2 Price.
(i) Notice of Redemption; Payment; Surrender of Certificates. In
the event of the redemption of shares of Series C-2 Preferred Stock
pursuant to paragraph 7(a), the Corporation shall mail a notice of
redemption ("Notice of Redemption") to each holder of record of shares
of Series C-2 Preferred Stock addressed to the holder at the address
of such holder appearing on the books of the Corporation or given by
the holder to the Corporation for the purpose of notice, or, if no
such address appears or is given, then at the place where the
principal executive office of the Corporation is located, not earlier
than sixty (60) nor later than eight (8) days before such payment is
due, as set forth above. The notice of redemption shall include (i)
the date fixed for redemption (the "Redemption Date"), (ii) the place
at which the stockholders may obtain payment of the Series C-2 Price
upon surrender of their share certificates, (iii) the amount of the
payment due, and (iv) the last date prior to the date of redemption
that the right of conversion may be exercised. If funds are available
on the date fixed for the redemption, then whether or not the share
certificates are surrendered for payment of the Series C-2 Price, the
shares shall no longer be outstanding and the holders thereof shall
cease to be stockholders of the Corporation with respect to the shares
redeemed on and after the date fixed for redemption and shall be
entitled only to receive
10
the Series C-2 Price without interest upon surrender of the share
certificate. If less than all the shares represented by one share
certificate are to be redeemed, the Corporation shall issue a new
share certificate for the shares not redeemed.
8. Waiver of Rights, Preferences or Privileges. Any right, preference or
privilege of the Series C-2 Preferred Stock may be waived and the provisions of
this Certificate of Designation may be amended by the holders of a majority of
the outstanding shares of Series C-2 Preferred Stock and such waiver shall be
binding on all holders of Series C-2 Preferred Stock.
9. General Provisions.
(a) The term "Affiliate" as used herein shall have the meaning given
it in Rule 405 promulgated under the Securities Act of 1933, as amended
from time to time.
(b) The term "Person" as used herein means any corporation, limited
liability company, partnership, trust, organization, association, other
entity or individual.
(c) The term "outstanding", when used with reference to shares of
stock, shall mean issued shares, excluding shares held by the Corporation
or a subsidiary.
(d) The term "Trading Day" shall mean a day on which the Nasdaq Small
Cap Market, or any other established exchange or national system on which
the Common Stock is listed, is open for trading.
(e) The headings of the sections, paragraphs, subparagraphs, clauses
and subclauses of this Certificate of Designations are for convenience of
reference only and shall not define, limit or affect any of the provisions
hereof.
11
IN WITNESS WHEREOF, Genaera Corporation has caused this Certificate of
Designations to be signed and attested by the undersigned this 9th day of June
2003.
GENAERA CORPORATION
By:
------------------------------------
Name: Xxx X. Xxxxxx, M.D.
Title: President and Chief Executive
Officer
12
