EX-10.69 8 b38163hiex10-69.txt OFFER TO EXCHANGE SERIES B 1 EXHIBIT NO. 10.69 OFFER TO EXCHANGE SERIES B PREFERRED STOCK OF HYBRIDON, INC. ("HYBRIDON") FOR ANY AND ALL OUTSTANDING PRINCIPAL AMOUNT OF 8% NOTES DUE 2002 OF HYBRIDON DATED MARCH 5, 2001 THIS OFFER TO EXCHANGE WILL EXPIRE AT 12:00 MIDNIGHT, BOSTON TIME, ON MARCH 16, 2001, UNLESS THE OFFER IS EXTENDED. Hybridon, Inc., a Delaware corporation ("Hybridon"), invites the holders of its 8% Notes due 2002 (the "Notes") to tender their Notes in exchange (the "Exchange") for 1 share of Series B Preferred Stock, par value $.01 per share, of Hybridon ("Series B Preferred Stock"), for each $100 in principal amount of the Notes tendered, upon the terms of this Offer to Exchange. This Offer to Exchange constitutes the "Offer." Hybridon will pay all accrued but unpaid interest on the Notes due through the date of the Exchange by issuing additional Notes in an aggregate principal amount equal to the amount of accrued but unpaid interest. Notes which will be paid in respect of accrued interest will be deemed tendered for exchange by a Noteholder participating in the Offer to Exchange, unless said Noteholder indicates otherwise in Box One below. The Offer is open to all holders of Notes. The shares of Hybridon's Common Stock (the "Common Stock") into which the Notes are convertible have been registered by Hybridon in its Registration Statement on Form S-1 (No. 333-69649) (the "Registration Statement"), which became effective under the Securities Act of 1933, as amended, on February 8, 2001. Upon an amendment to the Registration Statement, the shares of Common Stock into which shares of the Series B Preferred Stock are convertible will be registered. As part of the Exchange, the registration rights granted to the holders of the Notes in Section 12 of the Subscription Agreement between Hybridon and the holders of the Notes, dated as of December 13, 1999 (the "Subscription Agreement"), shall survive, and shall be applied in full force and effect to the shares of Common Stock issuable upon conversion of the Series B Preferred Stock. The definition of "Registrable Securities" in Section 12.1(f) of the Subscription Agreement, as it will apply to the shares of Common Stock issuable upon conversion of the Series B Preferred Stock, will substitute "shares of Series B Preferred Stock" for "Notes." DELIVERY OF THE OFFER TO EXCHANGE TO AN ADDRESS OTHER THAN THAT OF THE DEPOSITARY AS SET FORTH HEREIN WILL NOT CONSTITUTE A VALID DELIVERY. PLEASE READ THIS ENTIRE OFFER TO EXCHANGE CAREFULLY. QUESTIONS AND REQUESTS FOR ASSISTANCE SHOULD BE DIRECTED TO 2 THE DEPOSITARY AT THE ADDRESS AND TELEPHONE NUMBER SET FORTH HEREIN. REQUESTS FOR ADDITIONAL COPIES OF THE OFFER TO EXCHANGE SHOULD BE DIRECTED TO THE DEPOSITARY AT THE ADDRESS AND PHONE NUMBER LISTED HEREIN. ANY TENDER OF NOTES WHICH INVOLVES DENOMINATIONS OF LESS THAN $100 IN PRINCIPAL AMOUNT THEREOF WILL BE EXCHANGED BY PAYMENT IN CASH OF AN AMOUNT EQUAL TO SAID DENOMINATION. Any holder of Notes (a "Noteholder") desiring to tender all or any portion of the principal amount of such Notes should (i) sign this Offer to Exchange or a facsimile thereof, and (ii) mail or deliver the signed Offer to Exchange to the Depositary specified herein, along with either (A) the original Notes to the Depositary, or, (B) for any Noteholder whose original Notes have been mutilated, lost, stolen or destroyed, an affidavit of lost note, in substantially the same form as Exhibit A attached hereto (the "Affidavit of Lost Note"), in lieu of such Notes so mutilated, lost, stolen or destroyed, by the Expiration Date. THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. INFORMATION REGARDING HYBRIDON Current information regarding Hybridon can be obtained by reference to its prospectus (the "Prospectus") contained within the Registration Statement. Please note that the Prospectus contains financial information about Hybridon not later than September 30, 2000. Audited financial statements for the year ended December 31, 2000 are not yet available. A copy of the prospectus can be obtained from Robert Andersen, Chief Financial Officer of Hybridon, or by accessing EDGAR. SUMMARY This general summary is provided solely for the convenience of the Noteholders and is qualified in its entirety by reference to the full text and more specific details contained in this Offer to Exchange, and any amendments hereto. 3 Hybridon.................... Hybridon, Inc., a Delaware corporation. The Notes................... 8% Notes due 2002 of Hybridon. Amount of Notes Sought...... All of the outstanding Notes. Consideration............... The consideration being offered per $100 in principal amount of the Notes tendered consists of 1 share of Series B Preferred Stock of Hybridon. Conditions of Offer......... The Offer is not conditioned upon any minimum of the principal amount of the Notes being tendered. Expiration Date............. March 16, 2001, at 12:00 Midnight, Boston time, unless extended. How to Tender Notes......... See "Procedure for Tendering Notes." For further information, call the Depositary. Purpose of Offer............ The Offer is part of the restructuring of Hybridon's capital structure to reduce Hybridon's debt service obligations. Exchange Date............... As soon as practicable after the Expiration Date, which is expected to be no later than four business days after the Expiration Date. Further Information......... Additional copies of this Offer to Exchange may be obtained by contacting the Depositary at the address and telephone number shown herein. Effect of Exchange on Rights Although shares of the Series B Preferred of Shareholders are prior in liquidation to shares of Common Stock and Hybridon's Series A Preferred Stock, those Noteholders who exchange their Notes will be surrendering the security interest in Hybridon's assets securing the payment of their Notes. Under Hybridon's First Amended and Restated Subordination and Intercreditor Agreement dated June 29, 2000 (the "Intercreditor Agreement"), to the extent that Noteholders accept this Offer to Exchange, the benefit of said security interest will inure largely to the lenders of a $6,000,000 loan which was otherwise junior.
4 TERMS OF THE OFFER Upon the terms described herein, Hybridon will exchange all Notes that are validly tendered on or prior to the Expiration Date (as defined below) at the rate of 1 share of Series B Preferred Stock for each $100 in principal amount of the Notes tendered. Any tender of Notes which involves denominations of less than $100 in principal amount thereof will be exchanged by payment in cash of an amount equal to said denomination. Hybridon will pay all accrued but unpaid interest on the Notes due through the date of the Exchange by issuing additional Notes in an aggregate principal amount equal to the amount of accrued but unpaid interest. Notes which will be paid in respect of accrued interest will be deemed tendered for exchange by a Noteholder participating in the Offer to Exchange, unless said Noteholder indicates otherwise in Box One below. CONSIDERATION BEING OFFERED SERIES B PREFERRED STOCK For a summary of the terms of the Series B Preferred Stock, and a comparison of those terms with the terms of Hybridon's presently outstanding shares of Series A Preferred Stock, see the summary attached hereto as Exhibit B. For a full statement of the rights, preferences and privileges of the Series B Preferred Stock, see Hybridon's Certificate of Designation for the Series B Preferred Stock (the "Certificate") attached hereto as Exhibit C, which Hybridon will file with the Delaware Secretary of State for purposes of amending its Certificate of Incorporation and authorizing the issuance of the Series B Preferred Stock. PROCEDURE FOR TENDERING NOTES To validly tender the Notes pursuant to the Offer, the tendering Noteholder must (i) sign this Offer to Exchange or a facsimile thereof, and (ii) mail or deliver the signed Offer to Exchange to the Depositary (at its address set forth herein), along with either (A) the original Notes to the Depositary, or (B) for any Noteholder whose certificates for the Notes have been mutilated, lost, stolen or destroyed, an Affidavit of Lost Note, in lieu of such Notes so mutilated, lost, stolen or destroyed, on or prior to the Expiration Date. 5 All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Notes will be determined by Hybridon, in its sole discretion, and its determination shall be final and binding. Hybridon reserves the absolute right to reject any or all tenders of Notes that (i) it determines are not in proper form, or (ii) the acceptance for payments of or payment for which may, in the opinion of Hybridon's counsel, be unlawful. Hybridon also reserves the absolute right to waive any defect or irregularity in any tender of Notes. None of Hybridon, the Depositary or any other person will be under any duty to give notice of any defect or irregularity in tenders, nor shall any of them incur any liability for failure to give any such notice. ACCEPTANCE FOR EXCHANGE OF NOTES Upon the terms of the Offer and as promptly as practicable after the Expiration Date (which is expected to be within four (4) business days after the Expiration Date), Hybridon will accept for exchange and exchange the Notes validly tendered. Thereafter, exchange for all Notes validly tendered on or prior to the Expiration Date and accepted for exchange pursuant to the Offer will be made by the Depositary as promptly as practicable. In all cases, exchange pursuant to the Offer will be made only after timely receipt by the Depositary of the original Notes or an Affidavit of Lost Note, and a properly completed and duly executed Offer to Exchange, or facsimile thereof. Notes not accepted for exchange by Hybridon, or a replacement Note for the portion of the Notes not tendered by the Noteholder or not accepted for exchange by Hybridon, will be returned as promptly as practicable, without expense to the tendering Noteholder. EXTENSION Prior to the Expiration Date, Hybridon may extend the period of time during which the Offer is open or otherwise amend or modify the Offer and may terminate the Offer for any reason. There can be no assurance, however, that Hybridon will extend the Offer. During any such extension, all Notes previously tendered will remain subject to the Offer. REPRESENTATIONS AND WARRANTIES OF HYBRIDON In connection with this Offer and the Exchange, Hybridon represents and warrants as follows: ORGANIZATION Hybridon is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority 6 to own and lease its property and to carry on its business as presently conducted. Hybridon is duly qualified to do business as a corporation in all jurisdictions in which the failure to be so qualified would have an adverse affect on the financial or any other business condition of Hybridon. AUTHORIZATION OF SERIES B PREFERRED STOCK The issuance of shares of Series B Preferred Stock in accordance with the Offer has been, or will be on or prior to the Exchange Date, duly authorized by all necessary corporate action on the part of Hybridon, and all such shares of Series B Preferred Stock have been duly reserved for issuance. AUTHORIZATION OF OFFER The execution, delivery and performance by Hybridon of this Offer and of the transactions contemplated hereby have been duly authorized by all requisite action on the part of Hybridon. This Offer has been duly executed and delivered by the Company and constitutes a valid and binding obligation of Hybridon, enforceable in accordance with its respective terms. CONSENTS AND APPROVALS No authorization, consent, approval or other order of, or declaration to or filing with, any governmental agency or body (other than filings required to be made under applicable federal and state securities laws) is required for the valid authorization, execution, delivery and performance by Hybridon of this Offer or the issuance of the shares of Series B Preferred Stock. SECURITIES LAWS Based on the representations of the holders of the Notes set forth below, the offer and issuance of the shares of Series B Preferred Stock will not be in violation of the Securities Act of 1933, as amended (The "Securities Act"). REPRESENTATIONS AND WARRANTIES OF THE HOLDERS OF THE NOTES In connection with this Offer and the Exchange, as to himself, herself or itself, the holders of the Notes represent and warrant as follows: 7 INVESTMENT INTENT Each Note holder recognizes that the Exchange involves a high degree of risk including, but not limited to, the following: (i) Hybridon remains a development stage business with limited operating history and requires substantial funds in addition to any proceeds derived from the Exchange; (ii) an investment in Hybridon is highly speculative, and only investors who can afford the loss of their entire investment should consider investing in Hybridon, or the shares of Series B Preferred Stock, or shares of Series B Preferred Stock-Underlying Common Stock, (iii) such Note holder may not be able to liquidate his investment; (iv) transferability of the Series B Preferred Stock is extremely limited; and (v) in the event of a disposition of the Series B Preferred Stock and the Series B Preferred Stock-Underlying Common Stock, such Note holder could sustain the loss of his entire investment. LACK OF LIQUIDITY Each Note holder confirms that he or it is able (i) to bear the economic risk of this investment, (ii) to hold the Series B Preferred Stock and any shares of Series B Preferred Stock-Underlying Common Stock for an indefinite period of time, and (iii) presently to afford a complete loss of his or its investment; and represents that he or it has sufficient liquid assets so that the illiquidity associated with this investment will not cause any undue financial difficulties or affect such Note holder's ability to provide for his or its current needs and possible financial contingencies, and that his or its commitment to all speculative investments is reasonable in relation to his or its net worth and annual income. Furthermore, each Note holder acknowledges that the Series B Preferred Stock contains certain restrictions, as more particularly set forth in the Certificate of Designation for the Series B Preferred Stock attached hereto as Exhibit C. KNOWLEDGE AND EXPERIENCE Each Note holder hereby acknowledges and represents that such Note holder has prior investment experience, including investment in securities that are non-listed, unregistered and are not traded on the Nasdaq National or SmallCap Market, nor on the National Association of Securities Dealers, Inc.'s (the "NASD") automated quotation system, or such Note holder has employed at its own expense the services of an investment advisor, attorney and/or accountant to request documents from Hybridon and to read all of the documents furnished or made available by Hybridon to such Note holder and to evaluate the investment, tax and legal merits and the consequences and risks of such a transaction on such Note holder's behalf, that such Note holder or such professional advisor has such knowledge and experience in financial and business matters and that such Note holder or such professional 8 advisor is capable of evaluating the merits and risks of the prospective investment and, if applicable, satisfies the conditions set out in Rule 501(h) under the Securities Act. NOTE HOLDER CAPACITY Each Note holder hereby represents that such Note holder either by reason of such Note holder's business or financial experience, or the business or financial experience of such Note holder's professional advisors (who are unaffiliated with, and who are not compensated by, Hybridon or any affiliate or selling agent of Hybridon, directly or indirectly), has the capacity to protect such Note holder's own interests in connection with the transaction contemplated hereby. REGISTRATION Each Note holder hereby acknowledges that the Offer has not been reviewed by the Securities and Exchange Commission or any state regulatory authority. No Note holder shall sell or otherwise transfer the Series B Preferred Stock or any Series B Preferred Stock-Underlying Common Stock unless such securities are registered under the Securities Act or unless an exemption from such registration is available. LEGEND Each Note holder consents to the placement of the legend set forth below on any certificate or other document evidencing the shares of the Series B Preferred Stock: THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO THEIR DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED. POWER AND AUTHORITY Each Note holder represents that such Note holder has full power and authority (corporate, statutory and otherwise) to execute and deliver this Offer and to exchange their Notes for shares of Series B Preferred Stock and any shares of Series B Preferred Stock-Underlying Common Stock. This Agreement constitutes the legal, 9 valid and binding obligation of each Note holder, enforceable against such Note holder in accordance with its terms. ACCREDITED INVESTOR Each Note holder represents that it is an "accredited investor" as such term is defined in Rule 501 of Regulation D. DEPOSITARY The Depositary for this Offer to Exchange is: Holland & Knight LLP Attn: Sean B. Leonard, Esq. 10 St. James Avenue Boston, MA 02116 Telephone: (617) 523-2700 Facsimile: (617) 523-6850 10 SIGNATURE(S) MUST BE PROVIDED IN BOX TWO BELOW [_] CHECK HERE IF TENDERED NOTES ARE ENCLOSED HEREWITH. [_] CHECK HERE IF A CERTIFICATE OF LOST NOTE IS ENCLOSED HEREWITH. -------------------------------------------------------------------------------- BOX ONE -------------------------------------------------------------------------------- LIST BELOW THE NOTES TO WHICH THIS OFFER TO EXCHANGE RELATE. IF THE SPACE PROVIDED BELOW IS INADEQUATE, THE NOTE NUMBERS AND PRINCIPAL AMOUNTS SHOULD BE LISTED ON A SEPARATE SIGNED SCHEDULE AFFIXED HERETO. NOTEHOLDERS WHO WISH TO TENDER THEIR NOTES MUST COMPLETE THE TABLE BELOW AND COMPLETE AND SIGN IN BOX TWO. HYBRIDON WILL PAY ALL ACCRUED BUT UNPAID INTEREST ON THE NOTES DUE BY ISSUING ADDITIONAL NOTES IN AN AGGREGATE PRINCIPAL AMOUNT EQUAL TO THE AMOUNT OF ACCRUED BUT UNPAID INTEREST. NOTES WHICH WILL BE PAID IN RESPECT OF ACCRUED INTEREST SHALL BE DEEMED TENDERED FOR EXCHANGE, UNLESS SPECIFIED TO THE CONTRARY BY CHECKING THE BOX BELOW. CHECK THE BOX BELOW IF YOU DO NOT WANT NOTES WHICH WILL BE PAID IN RESPECT OF ACCRUED INTEREST DEEMED TENDERED FOR EXCHANGE. [_] CHECK HERE IF YOU DO NOT WANT NOTES WHICH WILL BE PAID IN RESPECT OF ACCRUED INTEREST DEEMED TENDERED FOR EXCHANGE. -------------------------------------------------------------------------------- DESCRIPTION OF NOTES --------------------------------------------------------------------------------
1 2 3 4 NAME(S) AND NOTE NUMBER(S) AGGREGATE PRINCIPAL ADDRESS(ES) OF (ATTACH LIST IF PRINCIPAL AMOUNT REGISTERED HOLDER(S) NECESSARY)* AMOUNT(S) TENDERED** -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- --------------------------------------------------------------------------------
* NEED NOT BE COMPLETED BY NOTEHOLDERS TENDERING BY AFFIDAVIT OF LOST NOTE IF NOTE NUMBER NOT AVAILABLE. ** UNLESS OTHERWISE INDICATED, THE NOTEHOLDER WILL BE DEEMED TO HAVE TENDERED THE ENTIRE PRINCIPAL AMOUNT OF NOTES REPRESENTED BY TENDERED NOTES 11 -------------------------------------------------------------------------------- BOX TWO -------------------------------------------------------------------------------- ACCEPTANCE OF OFFER TO EXCHANGE PLEASE SIGN HERE TO BE COMPLETED BY ALL HOLDERS TENDERING NOTES (WHETHER OR NOT NOTES ARE BEING PHYSICALLY TENDERED OR BEING TENDERED BY AFFIDAVIT OF LOST NOTE) I have read this Offer to Exchange, and hereby accept such Offer to Exchange, and further agree to be bound by the foregoing. ---------------------------------------------------------------- Signature(s) of Registered Noteholder(s) or Authorized Signatory ---------------------------------------------------------------- Type or Print Name Dated: , 2001 ---------- -------- Area Code and Telephone No(s): ------------------------------------------------ Must be signed by the registered Noteholder(s) exactly as the name(s) appear(s) on the certificate and by person(s) authorized to become registered Noteholder(s) as evidenced by endorsements and documents. 12 EXHIBIT A AFFIDAVIT OF LOST NOTE 13 AFFIDAVIT OF LOST NOTE The undersigned (the "Noteholder"), a Noteholder of Hybridon, Inc. (the "Company"), does hereby certify: 1. The Noteholder is the beneficial owner of that certain 8% Note due 2002 Number ___ of the Company (the "Note") dated December 13, 1999, and registered in the name of the Noteholder, in the principal amount of $___________, and is entitled to the full and exclusive possession of the Note; 2. The Noteholder has made an extensive search to locate the Note but it appears to have been mutilated, lost, stolen or destroyed so that it cannot be found or produced for exchange for shares of the Company's Series B Preferred Stock; 3. Neither the Note nor the rights of the Noteholder, therein, have in whole or in part been assigned, transferred, pledged or otherwise hypothecated by the Noteholder; 4. The Note was not endorsed; 5. The Noteholder hereby requests and this Affidavit of Lost Note is made for the purpose of inducing the Company and its transfer agent (i) to refuse to recognize any person other than the Noteholder as the owner of the Note, (ii) to refuse to make any payment, transfer, registration, delivery or exchange in connection with the Note to any other person other than the Noteholder, and (iii) to refuse to take any other action pursuant to the request or demand of any person other than the Noteholder with respect to the Note; 6. In consideration for the Company's acceptance of this Affidavit of Lost Note, the Noteholder agrees to indemnify and hold the Company harmless against any person, firm or entity now or hereafter acting as the Company's transfer agent, or any successors and assigns of such person, firm, entity in such capacity, from and against any and all claims, demands, liabilities, losses, damages and expenses, including attorney's fees and costs of suits, incurred in connection with or arising out of their compliance with this Affidavit of Lost Note, as set forth therein; 7. If the original Note comes into the possession of the Noteholder, it will promptly be delivered to the Company for cancellation. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 14 Dated this day of , 2001. ------ ----------- X ------------------------------------------- [Signature of Noteholder] Name: --------------------------------------- Address: ------------------------------------ ------------------------------------ ------------------------------------ Note Number: ------------------------------------------ Principal Amount of Note: ----------------------------- 15 EXHIBIT B SUMMARY OF SERIES B PREFERRED STOCK 16 SERIES B CONVERTIBLE PREFERRED STOCK ISSUED IN CONNECTION WITH THE EXCHANGE OF 8% NOTES DUE 2002 Set forth below is a summary of the principal terms of a Series B Convertible Preferred Stock (the "Preferred B") of Hybridon, Inc. (the "Company"), to be offered in exchange for the 8% Notes of the Company due 2002. The terms of the Company's Series A Convertible Preferred Stock (the "Preferred A") are set forth for comparison. Differences between the Preferred A and Preferred B are highlighted in the Preferred B column. This general summary is provided solely for the convenience of the Noteholders and is qualified in its entirety by reference to the full text and more specific details contained in the Certificate of Designation for the Preferred B.
Rights, Preferences, Privileges Preferred A Preferred B ------------------------------- ----------- ----------- (1) Dividend Provisions - dividends on semi-annual - dividends on semi-annual basis at rate of 6.5% of basis at rate of 8% of Dividend Base Amount Dividend Base Amount ($100 plus accrued but ($100 plus accrued but unpaid dividends) unpaid dividends) - payable in cash, or at - payable in cash, or at Company's option, PIK Company's option, PIK - in preference to - in preference to dividends paid on Common dividends paid on Common AND PREFERRED A - Preferred A valued at - Preferred B valued at $100.00/share for $100.00/share for calculating PIK calculating PIK - payable if declared by - payable if declared by Board Board - NO DIVIDEND OR DISTRIBUTION PAID TO COMMON OR PREFERRED A UNLESS PAID TO PREFERRED B FIRST
17 (2) Liquidation Preference - upon (i) liquidation, - upon (i) liquidation, dissolution, or winding dissolution, or winding up, (ii) sale of all or up, (ii) sale of all or substantially all assets, substantially all assets, or (iii) any merger or (iii) any merger transaction, entitled to transaction, entitled to receive Dividend Base receive Dividend Base Amount prior to any Amount prior to any distribution to Common distribution to Common OR PREFERRED A (3) Conversion - "Conversion Price" is - "Conversion Price" is $4.25, subject to $.50, subject to adjustment in Section 4 adjustment in Section 4 - "Conversion Rate" - "Conversion Rate" determined by dividing determined by dividing then-existing Conversion then-existing Conversion Price into Dividend Base Price into Dividend Base Amount Amount (4) Antidilution Conversion Price subject to Conversion Price subject to proportional adjustment if proportional adjustment if Company: Company: - pays dividend or makes - pays dividend or makes distribution on any class distribution on any class of capital stock in of capital stock in shares of Common; shares of Common; - subdivides outstanding - subdivides outstanding Common into greater Common into greater number of shares; number of shares;
18 - combines outstanding - combines outstanding Common into smaller Common into smaller number of shares; number of shares; - issues shares of a series - issues shares of a series or class of capital stock or class of capital stock to any holder of Common, to any holder of Common, Preferred A or Preferred Preferred A or Preferred B or rights to acquire B or rights to acquire shares of a series or shares of a series or class of capital stock at class of capital stock at price per share less than price per share less than market price; market price; - pays or distributes to - pays or distributes to the holders of a series the holders of a series or class of capital stock or class of capital stock assets, properties, or assets, properties, or rights to acquire rights to acquire Company's capital stock Company's capital stock at price per share less at price per share less than market price; than market price; - or makes distribution - or makes distribution consisting solely of cash consisting solely of cash to holders of any class to holders of any class of capital stock where, of capital stock where, during specified 12 month during specified 12 month period, cash distribution period, cash distribution exceeds 10% of product of exceeds 10% of product of market price of Common market price of Common multiplied by total multiplied by total outstanding shares of outstanding shares of Common Common
19 (5) Mandatory Conversion - converted into shares of - CONVERTED INTO SHARES OF Common using Conversion COMMON IF ALL OF Price of $4.00 if closing PREFERRED A IS CONVERTED, bid price of Common USING A CONVERSION PRICE equals or exceeds 250% of OF $.50 Conversion Price for at least 20 trading days in any period of 30 consecutive trading days (6) Redemption - at Company's option, - at Company's option, redeemable for cash equal redeemable for cash equal to the Dividend Base to the Dividend Base Amount if closing bid Amount if closing bid price of Common equals or price of Common equals or exceeds 250% of exceeds 250% of Conversion Price of Conversion Price of Preferred A for at least Preferred A for at least 20 trading days in any 20 trading days in any period of 30 consecutive period of 30 consecutive trading days trading days (7) Voting Rights Company needs 50% vote of all Company needs 50% vote of all outstanding Preferred A to: outstanding PREFERRED B to: - amend, alter or repeal - amend, alter or repeal any provision of any provision of Certificate of Certificate of Incorporation or Bylaws Incorporation or Bylaws adversely affecting adversely affecting relative rights, relative rights, preferences, preferences, qualifications, qualifications, limitations or limitations or
20 restrictions of Preferred restrictions of PREFERRED A (issuance of securities B; ranking prior to, or pari passu with Preferred A - ISSUE SECURITIES RANKING upon Liquidation Event or PRIOR TO, OR PARI PASSU with respect to payment WITH PREFERRED B UPON of dividends does not LIQUIDATION EVENT OR WITH adversely affect such); RESPECT TO PAYMENT OF or DIVIDENDS; OR - authorize or issue, or - authorize or issue, or increase authorized amount increase authorized of, Preferred A, other than amount of, PREFERRED B, Preferred A issuable as other than PREFERRED B dividends on Preferred A or ISSUABLE AS DIVIDENDS ON in exchange for 9% Notes PREFERRED B OR IN EXCHANGE FOR 8% NOTES
21 EXHIBIT C CERTIFICATE OF DESIGNATION FOR SERIES B PREFERRED STOCK OF HYBRIDON