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CERTIFICATE OF DESIGNATION, NUMBER, VOTING POWERS,
PREFERENCES AND RIGHTS OF SERIES A CONVERTIBLE
PREFERRED STOCK
OF
TRANSKARYOTIC THERAPIES, INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution was duly
adopted by the Board of Directors of Transkaryotic Therapies, Inc., a Delaware
corporation (hereinafter called the "Corporation"), with the preferences and
rights set forth therein relating to dividends, conversion, redemption,
dissolution and distribution of assets of the Corporation having been fixed by
the Board of Directors pursuant to authority granted to it under Article IV of
the Corporation's Certificate of Incorporation and in accordance with the
provisions of Section 151 of the General Corporation Law of the State of
Delaware:
RESOLVED: That, pursuant to authority conferred upon the Board of Directors
by the Certificate of Incorporation of the Corporation, the Board of Directors
hereby authorizes the issuance of 10,000 shares of Series A Convertible
Preferred Stock of the Corporation, and hereby fixes the designations, powers,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, of such shares, in
addition to those set forth in the Certificate of Incorporation of the
Corporation, as follows:
1. DESIGNATION AND AMOUNT. The shares of such series shall be designated
"Series A Convertible Preferred Stock" (the "Series A Preferred Stock"), par
value $0.01 per share, and the number of shares constituting such series shall
be 10,000.
2. DIVIDENDS. The holders of Series A Preferred Stock shall be entitled to
receive, when, as and if dividends are declared on shares of Common Stock by the
Board of Directors of the Corporation (the "Board of Directors"), dividends per
share of Series A Preferred Stock in such an amount as the holders of the Series
A Preferred Stock would have received had such holders converted Series A
Preferred Stock into Common Stock immediately prior to the record date for such
distribution. All dividends declared upon Series A Preferred Stock shall be
declared pro rata per share.
3. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) In the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Corporation, the holders of shares of Series A Preferred
Stock then outstanding shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, after and subject to
the payment in full of all amounts required to be distributed to the holders of
any other Preferred Stock of the Corporation ranking on liquidation prior and in
preference to the Series A Preferred Stock (such Preferred Stock being referred
to hereinafter as "Senior Preferred Stock") upon such liquidation, dissolution
or winding up, but before any payment shall be made to the holders of Common
Stock, an amount in cash equal to Ten Thousand Dollars ($10,000) per share,
subject to appropriate adjustment in the event of any stock dividend, stock
split, stock distribution or combination with respect to the Series A Preferred
Stock (the "Stated Value") plus any dividends thereon declared but unpaid (such
amount being referred to hereinafter as the "Series A Liquidation Value"). If
upon any such liquidation, dissolution or winding up of the Corporation the
remaining assets of the Corporation available for the distribution to its
stockholders after payment in full of amounts required to be paid or distributed
to holders of Senior Preferred Stock shall be insufficient to pay the holders of
shares of Series A Preferred Stock the full amount to which they shall be
entitled, the holders of shares of Series A Preferred Stock, and any class of
stock ranking on liquidation on a parity with the Series A Preferred Stock,
shall share ratably in any distribution of the remaining assets and funds of the
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Corporation in proportion to the respective amounts which would otherwise be
payable in respect to the shares held by them upon such distribution if all
amounts payable on or with respect to said shares were paid in full.
(b) After the payment of all preferential amounts required to be paid to
the holders of Senior Preferred Stock and Series A Preferred Stock and any other
series of Preferred Stock upon the dissolution, liquidation or winding up of the
Corporation, the holders of shares of Common Stock then outstanding shall be
entitled to receive the remaining assets and funds of the Corporation available
for distribution to its stockholders.
(c) The merger or consolidation of the Corporation into or with another
corporation, the merger or consolidation of any other corporation into or with
the Corporation, or the sale, conveyance, mortgage, pledge or lease of all or
substantially all the assets of the Corporation to a person shall not be deemed
to be a liquidation, dissolution or winding up of the Corporation for purposes
of this Section 3.
4. VOTING.
(a) Each issued and outstanding share of Series A Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Common Stock
into which each such share of Series A Preferred Stock is convertible (as
adjusted from time to time pursuant to Section 5 6 hereof), at each meeting of
stockholders of the Corporation (or pursuant to any action by written consent)
with respect to any and all matters presented to the stockholders of the
Corporation for their action or consideration. Except as provided by law, by the
provisions of Sections 4(b) and 4(c) below or by the provisions establishing any
other series of Preferred Stock, holders of Series A Preferred Stock shall vote
together with the holders of Common Stock as a single class.
(b) For so long as at least 9,000 shares of the Series A Preferred Stock
remain outstanding, the holders of Series A Preferred Stock shall have the
exclusive right, voting separately as a class, to elect one director (herein
referred to as the "Series A Director"). A Series A Director shall be elected by
the affirmative vote of the holders of record of a majority of the outstanding
shares of Series A Preferred Stock either at meetings of stockholders at which
directors are elected or a special meeting of holders of Series A Preferred
Stock. A Series A Director so elected shall serve for a term of one year and
until his successor is elected and qualified. Any vacancy in the position of a
Series A Director may be filled only by the holders of the Series A Preferred
Stock. A Series A Director may, during his or her term of office, be removed at
any time, with or without cause, by and only by the affirmative vote, at a
special meeting of holders of Series A Preferred Stock called for such purpose,
or the written consent, of the holders of record of a majority of the
outstanding shares of Series A Preferred Stock. Any vacancy created by such
removal may also be filled at such meeting or by such consent.
(c) In addition to any other rights provided by law, the Corporation shall
not, without first obtaining the affirmative vote or written consent of the
holders of a majority of the outstanding shares of Series A Preferred Stock,
authorize any additional shares of Series A Preferred Stock or amend, alter or
repeal the preferences, special rights or other powers of the Series A Preferred
Stock so as to affect adversely the Series A Preferred Stock. For purposes of
this Section 4(c), the authorization or issuance of any series of Senior
Preferred Stock shall be deemed to affect materially and adversely the Series A
Preferred Stock.
5. OPTIONAL CONVERSION. Each share of Series A Preferred Stock may be
converted at any time, at the option of the holder thereof, into the number of
fully-paid and nonassessable shares of Common Stock obtained by dividing the
Stated Value by the Conversion Price then in effect (the "Conversion Rate"),
provided, however, that on any redemption of any Series A Preferred Stock or any
liquidation of the Corporation, the right of conversion shall terminate at the
close of business on the full business day next preceding the date fixed for
such redemption or for the payment of any amounts distributable on liquidation
to the holders of Series A Preferred Stock.
(a) The initial conversion price, subject to adjustment as provided herein,
is equal to $28.00 (the "Conversion Price"). The initial Conversion Rate for the
Series A Preferred Stock shall be 357.142857 shares of Common Stock for each one
share of Series A Preferred Stock surrendered for conversion. The applicable
Conversion Rate and Conversion Price from time to time in effect is subject to
adjustment as hereinafter provided.
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(b) The Corporation shall not issue fractions of shares of Common Stock
upon conversion of Series A Preferred Stock or scrip in lieu thereof. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 5(b), be issuable upon conversion of any Series A Preferred Stock, the
Corporation shall in lieu thereof pay to the person entitled thereto an amount
in cash equal to the current value of such fraction, calculated to the nearest
one-hundredth (1/100) of a share, to be computed (i) if the Common Stock is
listed on any national securities exchange, on the basis of the last sales price
of the Common Stock on such exchange (or the quoted closing bid price if there
shall have been no sales) on the date of conversion, or (ii) if the Common Stock
shall not be listed, on the basis of the mean between the closing bid and asked
prices for the Common Stock on the date of conversion as reported by NASDAQ, or
its successor, and if there are not such closing bid and asked prices, on the
basis of the fair market value per share as determined by the Board of
Directors.
(c) Whenever the Conversion Rate and Conversion Price shall be adjusted as
provided in Section 6 hereof, the Corporation shall forthwith file at each
office designated for the conversion of Series A Preferred Stock, a statement,
signed by the Chairman of the Board, the President, any Vice President or
Treasurer of the Corporation, showing in reasonable detail the facts requiring
such adjustment and the Conversion Rate that will be effective after such
adjustment. The Corporation shall also cause a notice setting forth any such
adjustments to be sent by mail, first class, postage prepaid, to each record
holder of Series A Preferred Stock at his or its address appearing on the stock
register. If such notice relates to an adjustment resulting from an event
referred to in Section 6(d) hereof, such notice shall be included as part of the
notice required to be mailed and published under the provisions of Section 6(d)
hereof.
(d) In order to exercise the conversion privilege, the holder of any Series
A Preferred Stock to be converted shall surrender his or its certificate or
certificates therefore to the principal office of the transfer agent for the
Series A Preferred Stock (or if no transfer agent be at the time appointed, then
the Corporation at its principal office), and shall give written notice to the
Corporation at such office that the holder elects to convert the Series A
Preferred Stock represented by such certificates, or any number thereof. Such
notice shall also state the name or names (with address) in which the
certificate or certificates for shares of Common Stock which shall be issuable
on such conversion shall be issued, subject to any restrictions on transfer
relating to shares of the Series A Preferred Stock or shares of Common Stock
upon conversion thereof. If so required by the Corporation, certificates
surrendered for conversion shall be endorsed or accompanied by written
instrument or instruments of transfer, in form satisfactory to the Corporation,
duly authorized in writing. The date of receipt by the transfer agent (or by the
Corporation if the Corporation serves as its own transfer agent) of the
certificates and notice shall be the conversion date. As soon as practicable
after receipt of such notice and the surrender of the certificate or
certificates for Series A Preferred Stock as aforesaid, the Corporation shall
cause to be issued and delivered at such office to such holder, or on his or its
written order, a certificate or certificates for the number of full shares of
Common Stock issuable on such conversion in accordance with the provisions
hereof, cash as provided in Section 5(b) hereof in respect of any fraction of a
share of Common Stock otherwise issuable upon such conversion and, if less than
all shares of Series A Preferred Stock represented by the certificate or
certificates so surrendered are being converted, a residual certificate or
certificates representing the shares of Series A Preferred Stock not converted.
(e) The Corporation shall at all times when the Series A Preferred Stock
shall be outstanding reserve and keep available out of its authorized but
unissued stock, for the purposes of effecting the conversion of the Series A
Preferred Stock, such number of its duly authorized shares of Common Stock as
shall from time to time be sufficient to effect the conversion of all
outstanding Series A Preferred Stock. Before taking any action that would cause
an adjustment reducing the Conversion Price below the then par value of the
shares of Common Stock issuable upon conversion of the Series A Preferred Stock,
the Corporation will take any corporate action that may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and legally
issue fully-paid and nonassessable shares of such Common Stock at such adjusted
conversion price.
(f) All shares of Series A Preferred Stock which shall have been
surrendered for conversion as herein provided shall no longer be deemed to be
outstanding and all rights with respect to such shares, including the rights, if
any, to receive notices and to vote, shall forthwith cease and terminate except
only the right of the holder thereof to receive shares of Common Stock in
exchange therefor and payment of any declared and unpaid dividends thereon. Any
shares of Series A Preferred Stock so converted shall be retired and canceled
and shall not be reissued, and the Corporation may from time to time take such
appropriate action as may be necessary to reduce the authorized Series A
Preferred Stock accordingly.
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6. CONVERSION PRICE ADJUSTMENTS.
(a) In case the Corporation shall at any time (i) subdivide the outstanding
Common Stock or (ii) issue a dividend on its outstanding Common Stock payable in
shares of Common Stock, the number of shares of Common Stock issuable upon
conversion of the Series A Preferred Stock shall be proportionately increased by
the same ratio as the subdivision or dividend (with appropriate adjustments to
the Conversion Price in effect immediately prior to such subdivision or
dividend). In case the Corporation shall at any time combine its outstanding
Common Stock, the number of shares issuable upon conversion of the Series A
Preferred Stock immediately prior to such combination shall be proportionately
decreased by the same ratio as the combination (with appropriate adjustments to
the Conversion Price in effect immediately prior to such combination).
(b) In the event the Corporation shall declare a dividend upon the Common
Stock (other than a dividend payable in Common Stock) payable otherwise than out
of earnings or earned surplus, determined in accordance with generally accepted
accounting principles, including the making of appropriate deductions for
minority interests, if any, in subsidiaries (herein referred to as "Liquidating
Dividends"), then, as soon as possible after the conversion of any shares of
Series A Preferred Stock, the Corporation shall pay to the person converting
such shares of Series A Preferred Stock an amount equal to the aggregate value
of all Liquidating Dividends that such person would have received had the person
converted such shares of Series A Preferred Stock immediately prior to the
record date for such Liquidating Dividend. For the purposes of this Section
6(b), a dividend other than in cash shall be considered payable out of earnings
or earned surplus only to the extent that such earnings or earned surplus are
charged an amount equal to the fair value of such dividend as determined in good
faith by the Board of Directors.
(c) If any capital reorganization or reclassification of the capital stock
of the Corporation, or consolidation or merger of the Corporation with another
corporation in which the holders of Common Stock and Series A Preferred Stock
prior to such consolidation or merger hold at least 51% of the combined voting
power of the surviving person in such merger or consolidation immediately
following its effective date, shall be effected in such a way that holders of
Common Stock shall be entitled to receive stock, securities, cash or other
property with respect to or in exchange for Common Stock, then, as a condition
of such reorganization, reclassification, consolidation or merger, lawful and
adequate provision shall be made whereby the holders of the Series A Preferred
Stock shall have the right to acquire and receive upon conversion of the Series
A Preferred Stock such shares of stock, securities, cash or other property
issuable or payable (as part of such reorganization, reclassification,
consolidation or merger) with respect to or in exchange for such number of
outstanding shares of Common Stock as would have been received upon conversion
of the Series A Preferred Stock at the Conversion Price then in effect. Any
other consolidation or merger of the Corporation with another corporation or the
sale of all or substantially all of its assets to another corporation shall be
effected in such a way that the holders of the Series A Preferred Stock shall be
entitled to receive, in exchange for their shares of Series A Preferred Stock,
the stock, securities, cash or other property payable to holders of Common Stock
as if the holders of Series A Preferred Stock had converted the Series A
Preferred Stock in to Common Stock immediately prior to the effective date of
such consolidation, merger or sale. The Corporation will not effect any such
consolidation, merger or sale, unless prior to the consummation thereof the
successor corporation (if other than the Corporation) resulting from such
consolidation or merger or the corporation purchasing such assets shall assume
by written instrument mailed or delivered to the holders of the Series A
Preferred Stock at the last address of each such holder appearing on the books
of the Corporation, the obligation to deliver to each such holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to receive.
(d) In the event that:
(1) the Corporation shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or
other rights, or
(2) there shall be any capital reorganization or reclassification of
the capital stock of the Corporation, including any subdivision or
combination of its outstanding shares of Common Stock, or consolidation or
merger of the Corporation with, or sale of all or substantially all of its
assets to, another corporation, or
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(3) there shall be a voluntary or involuntary dissolution, liquidation
or winding up of the Corporation;
then, in connection with such event, the Corporation shall give to the holders
of the Series A Preferred Stock:
(i) at least twenty (20) days prior written notice of the date on
which the books of the Corporation shall close or a record shall
be taken for such dividend, distribution or subscription rights
or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up; and
(ii) in the case of any such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding
up, at least twenty (20) days prior written notice of the date
when the same shall take place. Such notice in accordance with
the foregoing clause (i) shall also specify, in the case of any
such dividend, distribution or subscription rights, the date on
which the holders of Common Stock shall be entitled thereto, and
such notice in accordance with the foregoing clause (ii) shall
also specify the date on which the holders of Common Stock shall
be entitled to exchange their Common Stock for securities or
other property deliverable upon such reorganization,
reclassification consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Each such written
notice shall be given by first class mail, postage prepaid,
addressed to the holders of the Series A Preferred Stock at the
address of each such holder as shown on the books of the
Corporation.
(e) If at any time or from time to time on or after the date on which
shares of Series A Preferred Stock are initially issued, the Corporation shall
grant, issue or sell any options, convertible securities or rights to purchase
property (the "Purchase Rights") pro rata to the record holders of any class of
Common Stock and such Purchase Rights are not issued to the holders of Series A
Preferred Stock and such grants, issuances or sales do not result in an
adjustment of the Conversion Price under this Section 6, then each holder of
Series A Preferred Stock shall be entitled to acquire (within thirty (30) days
after the later to occur of the initial exercise date of such Purchase Rights or
receipt by such holder of the notice concerning Purchase Rights to which such
holder shall be entitled under Section 6(d)) and upon the terms applicable to
such Purchase Rights either:
(i) the aggregate Purchase Rights which such holder could have
acquired if it had held the number of shares of Common Stock
acquirable upon conversion of the Series A Preferred Stock
immediately before the grant, issuance or sale of such Purchase
Rights; provided that if any Purchase Rights were distributed to
holders of Common Stock without the payment of additional
consideration by such holders, corresponding Purchase Rights
shall be distributed to the holders of the Series A Preferred
Stock as soon as possible and it shall not be necessary for the
holder of the Series A Preferred Stock specifically to request
delivery of such rights; or
(ii) in the event that any such Purchase Rights shall have expired or
shall expire prior to the end of said thirty (30) day period, the
right to acquire the number of shares of Common Stock or the
amount of property which such holder could have acquired upon
such exercise at the time or times at which the Corporation
granted, issued or sold such expired Purchase Rights on the terms
of the Purchase Rights so granted.
7. REDEMPTION.
(a) The Corporation, at its option, may redeem (to the extent that such
redemption shall not violate any applicable provisions of the General
Corporation Law of the State of Delaware) all, but not less than all, of the
shares of Series A Preferred Stock at a price equal to the then Series A
Liquidation Value (subject to adjustment in the event of any stock dividend,
stock split, stock distribution or combination with respect to such shares)
(such price is hereinafter referred to as the "Redemption Price"), at any time
after December 15, 2000 (any such date of redemption is hereafter referred to as
an "Redemption Date"), provided that no shares of Series A
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Preferred Stock may be so called for redemption unless the average of the
closing prices per share of Common Stock for any twenty (20) consecutive trading
days ending within twenty (20) business days of the date on which notice of such
redemption is given to the holders of the Series A Preferred Stock, shall have
been at least $35.00 (subject to appropriate adjustment in the event of any
stock dividend, stock split, stock distribution or combination). For purposes of
the foregoing calculation, "closing price" shall mean for any given date: (i) if
the Common Stock is listed on any national securities exchange or quoted on
Nasdaq, on the basis of the last sales price of the Common Stock on such
exchange or Nasdaq (or the quoted closing bid price if there shall have been no
sales) on such date, or (ii) if no last sales prices are then being quoted for
the Common Stock, on the basis of the mean between the closing bid and asked
prices for the Common Stock on such date as reported by Nasdaq, or its
successor, or (iii) if there are no such closing bid and asked prices, on the
basis of the fair market value per share as determined by the Board of Directors
of the Corporation.
(b) At least thirty (30) days prior to each Redemption Date, written notice
shall be mailed, postage prepaid, to each holder of record of Series A Preferred
Stock to be redeemed, at his or its post office address last shown on the
records of the Corporation, notifying such holder of the number of shares so to
be redeemed, specifying the Redemption Date and the date on which such holder's
conversion rights (pursuant to Section 5 hereof) as to such shares terminate and
calling upon such holder to surrender to the Corporation, in the manner and at
the place designated, his or its certificate or certificates representing the
shares to be redeemed (such notice is hereinafter referred to as the "Redemption
Notice"). On or prior to the Redemption Date, each holder of Series A Preferred
Stock to be redeemed shall surrender his or its certificate or certificates
representing such shares to the Corporation, in the manner and at the place
designated in the Redemption Notice, and thereupon the Redemption Price of such
shares shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be canceled. From and after the Redemption Date, unless there
shall have been a default in payment of the Redemption Price, all rights of the
holders of the Series A Preferred Stock designated for redemption in the
Redemption Notice as holders of Series A Preferred Stock of the Corporation
(except the right to receive the Redemption Price without interest upon
surrender of their certificate or certificates) shall cease with respect to such
shares, and such shares shall not thereafter be transferred on the books of the
Corporation or be deemed to be outstanding for any purpose whatsoever.
(c) Except as provided in paragraph (a) above, the Corporation shall have
no right to redeem the shares of Series A Preferred Stock other than with the
consent of the holders of 66 2/3% of the then outstanding shares of Series A
Preferred Stock. Any shares of Series A Preferred Stock so redeemed shall be
permanently retired, shall no longer be deemed outstanding and shall not under
any circumstances be reissued, and the Corporation may from time to time take
such appropriate corporate action as may be necessary to reduce the authorized
Series A Preferred Stock accordingly. Nothing herein contained shall prevent or
restrict the purchase by the Corporation, from time to time either at public or
private sale, of the whole or any part of the Series A Preferred Stock at such
price or prices as the Corporation may determine, subject to the provisions of
applicable law.
IN WITNESS WHEREOF, Transkaryotic Therapies, Inc. has caused this
Certificate of Designation, Number, Voting Powers, Preferences and Rights of
Series A Convertible Preferred Stock to be duly executed by its ____________
this day of June, 2000.
TRANSKARYOTIC THERAPIES, INC.
By
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[Name:]
[Title:]
(TM)
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