CERTIFICATE OF POWERS, DESIGNATIONS,
PREFERENCES AND RIGHTS OF THE SERIES
OF THE PREFERRED STOCK OF
HEMISPHERx BIOPHARMA, INC.
To Be Designated
Series E Preferred Stock
Hemispherx Biopharma, Inc., a Delaware corporation (the "Company"), in
accordance Section 103 of the General Corporation Law of the State of Delaware
("DGCL"), by its President, does hereby certify that on January 31, 1997, the
Board of Directors of the Company by unanimous written consent pursuant to
Section 141(f) of the DGCL, duly adopted the following resolutions providing for
the issuance of a series of Preferred Stock to be designated the Series E
Convertible Preferred Stock, par value $.01, and to consist of 5,000 shares:
RESOLVED, that the Company is authorized to issue a series of
Preferred Stock to be designated the Series E Convertible Preferred
Stock, $.01 par value ("Series E Preferred"), to consist of 5,000
shares; and it is further
RESOLVED, that the rights, privileges and limitations of each share of
Series E Preferred shall be as follows:
1. Issuance. The Series of Preferred designated as the Series E Preferred
shall consist of 5,000 shares.
2. Dividends. The holders of shares of Series E Preferred stock shall
receive dividends, when and if declared by the board of directors, out of funds
legally available for the payment of dividends, at the rate of $60 per share in
cash (or at the option of the Company in freely tradable shares of the Company's
Common Stock, $.01 par value ("Common Stock") based on market value at the time
the dividend is declared), payable in preference to all other common
shareholders and on a parity basis with respect to any other series of preferred
shares. Such dividends shall be cumulative, and no dividend shall be paid on the
shares of any other class ranking junior to the Series E Preferred unless the
current annual dividend, and all arrears of dividends if any, on the shares of
Series E Preferred shall have been paid, or provision shall have been made for
the payment thereof. The holders of shares of Series E Preferred shall at no
time have any other right to further dividends of any kind.
3. Voting Rights Except as required by law, shares of Series E Preferred
shall not be entitled to vote on any matter upon which the vote, or the consent
in lieu of voting, of the shareholders is required including, without
limitation, the election of directors.
4. Rank. All Series E Preferred shall rank (i) senior to the Common Stock,
now or hereafter issued, as to payment of dividends and distribution of assets
upon liquidation, dissolution, or winding up of the Company, whether voluntary
or involuntary, and (ii) on a parity with any additional series of preferred
stock of any class which the Board of Directors or the stockholders may from
time to time authorize, both as to payment of dividends and as to distributions
of assets upon liquidation, dissolution, or winding up of the Company, whether
voluntary or involuntary.
5. Liquidation. In the event of the dissolution, liquidation, or winding up
of the Company, or a sale of all its assets, whether voluntary or involuntary,
or in the event of its insolvency, there shall be paid to the holders of the
shares of Series E Preferred the sum of $1,000 per share, plus accrued and
unpaid dividends, before any sums shall be paid or any assets distributed among
the holders of the Company's Common Stock. If the assets of the Company shall be
insufficient to permit the payment in full to the holders of the shares of
Series E Preferred and other series of preferred stock of the amount thus
distributable, then the entire assets of the Company shall be distributed
ratably among the holders of Series E Preferred and the holders of other series
of preferred stock. After the foregoing payments to the holders of shares of
Series E Preferred and holders of other series of preferred stock, the remaining
assets and funds of the Company shall be distributed among and paid to the
holders of the Common Stock, share and share alike, in proportion to their
shareholdings. The foregoing provisions of this paragraph shall not, however, be
deemed to require the distribution of assets among the holders of the Series E
Preferred and the holders of the Common Stock in the event of a consolidation,
merger, lease, or sale, which does not in fact result in the liquidation or
winding up of the enterprise.
6. Conversion of Series E Preferred for Common Stock. The holders of Series
E Preferred, subject to the conditions set forth below, upon surrender of the
certificates therefor, shall have the right to convert the Series E Preferred
into fully paid and non-assessable shares of Common Stock determined by dividing
(x) the sum of (i) $1,000 and (ii) accrued but unpaid dividends by (y) $2.00
(the "Exchange Rate");
Shares of Series E Preferred shall be exchanged only upon such conditions
and at such times as follows:
(A) As promptly as practicable after the conversion, and in any event
within 15 calendar days thereafter, the Company, at its expense (including
the payment by it of any applicable issue taxes) will issue and deliver to
the holder of record, or as such holder (upon payment by such holder of any
applicable transfer taxes) may direct, a certificate or certificates for
the number of shares of Common Stock issuable upon such conversion,
including fractional shares.
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(B) In the event that sufficient authorized and unissued shares of
Common Stock are not available in order to convert specific Series E
Preferred into shares of Common Stock, such conversion shall take place
upon obtaining shareholder approval of an amendment to the Company's
Certificate of Incorporation authorizing additional Common Stock.
(C) If, prior to the exercise of the conversion, the Company shall
issue any shares of its Common Stock as a stock dividend or subdivide the
number of outstanding shares of Common Stock into a greater number of
shares, then, in either case, the Exchange Rate per share of the Common
Stock shall be proportionately reduced, and, conversely, in the event that
the Company shall contract the number of outstanding shares of Common Stock
by combining such shares into a smaller number of shares, then, in such
case, the Exchange Rate per share of the Common Stock shall be
proportionately increased and the number of shares of Common Stock at that
time into which a share of Series E Preferred may be converted shall be
proportionately decreased. If the Company shall at any time prior to the
exercise of the exchange declare a dividend payable in cash on its Common
Stock and at substantially the same time offer its holders of Common Stock
a right to purchase Common Stock from the proceeds of such dividend or for
an amount substantially equal to such dividend, then, in such cases, all
Common Stock so issued shall be deemed to have been issued as a stock
dividend. Any dividend paid or distributed upon the Common Stock in stock
of any other class of securities convertible into shares of Common Stock
shall be treated as a dividend paid in Common Stock to the extent that
shares of Common Stock are issuable upon the exchange thereof. Issuance of
shares of a subsidiary of the Company as a dividend to the Company's
shareholders shall have no effect on the Exchange Rate.
7. Redemption. The Company shall have the right, exercisable on not less
than 5 days written notice to the holders of record of Series E Preferred, to
redeem any or all of the Series E Preferred Shares, at any time 12 months after
the effective date of a registration statement registering the shares of Common
Stock underlying the Series E Preferred under the Securities Act of 1933, as
amended (the "Registration Statement"), at a price per share of Series E
Preferred equal to the sum of (i) $1,250 and (ii) accrued and unpaid dividends.
8. Mandatory Conversion. So long as the Registration Statement shall be
effective, on the date which is 730 days after the date of delivery and issuance
of the Certificate representing the Series E Preferred Shares to the holders,
all of the shares of Series E Preferred then outstanding shall be converted into
shares of Common Stock in accordance with the provisions of Section 5.
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9. Future Offerings. During the period that the Series E Preferred is
outstanding, the Company shall not proceed with any Regulation S offerings or
similarly structured Regulation D offerings which have a conversion price with a
floating discount to the market price of the Common Stock.
IN WITNESS WHEREOF, we, the undersigned, have executed and subscribed this
certificate on March 4, 1997.
/s/ William A. Carter
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William A. Carter, President
ATTEST:
/s/ Josephine Dolhancryk
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Josephine Dolhancryk, Asst. Secretary
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