Item 5.03 Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal Year
On September 21,
2020, Enzon Pharmaceuticals, Inc. (the “Company”) filed a Certificate of Designation of Series C Non-Convertible
Redeemable Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of
Delaware designating 40,000 shares of its authorized and unissued preferred stock as Series C Non-Convertible Redeemable
Preferred Stock, par value $0.01 per share (the “Series C Preferred Stock”). The Certificate of Designation
establishes the powers, preferences, rights, qualifications, limitations and restrictions of the Series C Preferred Stock.
The shares of Series C Preferred Stock are issuable in the Company’s Rights Offering (as defined below).
Ranking
The Series C Preferred
Stock ranks senior to all junior securities of the Company with respect to payment of dividends and distributions of assets upon
the Company’s liquidation, dissolution or winding up, whether voluntary or involuntary.
Dividends
On an annual basis, the
Company’s Board of Directors may, at its sole discretion, cause a dividend with respect to the Series C Preferred Stock to
be paid in cash to the holders in an amount equal to 3% of the liquidation preference as in effect at such time (initially $1,000
per share). If the dividend is not so paid in cash, the liquidation preference will be adjusted and increased annually by an amount
equal to 5% of the liquidation preference per share as in effect at such time, that is not paid in cash to the holders on such
date. The initial dividend payments for the period of time between the initial issuance date and the first dividend payment date,
if applicable, shall be prorated. Due to the Company’s ability to pay dividends on the Series C Preferred Stock in kind by
increasing the liquidation preference of the shares of Series C Preferred Stock, the payment of accrued dividends in cash may be
deferred until the redemption by the Company or the holders, as applicable, of the Series C Preferred Stock, or until the Company’s
dissolution, liquidation or winding up. No plan, arrangement or agreement is currently in place that would prevent the Company
from paying a dividend with respect to the Series C Preferred Stock in cash.
All accrued and accumulated
dividends on the shares of Series C Preferred Stock will be paid prior to, and in preference to, any dividend on any securities
ranking junior to the Series C Preferred Stock and will be fully declared and paid before any dividends are declared and paid,
or any other distributions or redemptions are made, on any junior securities, provided that (a) the Company will be permitted to
declare or pay any dividend or distribution payable on the shares of the Company’s common stock in shares of common stock
and (b) in the event that, as of the applicable measurement date, there are shares of the Company’s Series A-1 Junior Participating
Preferred Stock issued and outstanding, the Company will be permitted to declare or pay any dividend or distribution on the Series
A-1 Junior Participating Preferred Stock pursuant to the Certificate of Designation for the Series A-1 Junior Participating Preferred
Stock. As the Company’s common stock ranks junior to the Series C Preferred Stock, unless full dividends have been paid,
redeemed in an amount in excess of the initial liquidation value of $1,000 or set aside for payment on all outstanding Series C
Preferred Stock for all dividends or increases in the liquidation value in excess of the initial liquidation amount of $1,000,
no cash dividends may be declared or paid on the Company’s common stock otherwise.
No Conversion
Holders will not have
the right to convert Series C Preferred Stock into, or exchange Series C Preferred Stock for, any other securities or property
of the Company.
Voting Rights
Except as otherwise provided
by law, the holders of Series C Preferred Stock have no special voting rights and their consent will not be required for taking
any corporate action. However, the Company must obtain the prior written consent of the holders of Series C Preferred Stock in
order to amend the Certificate of Designation, including, under certain circumstances, in connection with a merger, consolidation
or other transaction between the Company and another entity.
Redemption
The Series C Preferred
Stock is not subject to any mandatory redemption, sinking fund, retirement fund, purchase fund or other similar provisions. On
and after November 1, 2022, the Company has the option to redeem the shares of Series C Preferred Stock in whole or in part at
any time for an amount equal to the liquidation preference per share as in effect at such time. There is no prohibition on the
repurchase or redemption of shares while there is any arrearage in the payment of dividends. The Series C Preferred Stock is also
redeemable at the option of the holders if the Company undergoes a “change of control” (as defined in the Certificate
of Designation).
Liquidation Rights
The Series C Preferred
Stock has a preference upon dissolution, liquidation or winding up of the Company in respect of assets available for distribution
to holders of the Company’s junior securities. The liquidation preference of the Series C Preferred Stock is initially $1,000
per share. On an annual basis, the Board of Directors may, in its sole discretion, cause a dividend with respect to the Series
C Preferred Stock to be paid in cash to the holders in an amount equal to 3% of the liquidation preference as in effect at such
time. If the dividend is not so paid in cash, the liquidation preference will be adjusted and increased annually by an amount equal
to 5% of the liquidation preference per share as in effect at such time, that is not paid in cash to the holders on such date.
The annual accretion will continue until the shares are redeemed, or until the Company liquidates, dissolves or winds-up its affairs.
Amendment and Waiver
No provision of the Certificate
of Designation may be amended, modified or waived without the affirmative vote of the holders of two-thirds (2/3) of the outstanding
shares of Series C Preferred Stock, voting separately as a class, and any such written amendment, modification or waiver will be
binding upon the Company and each holder of Series C Preferred Stock, provided that the prior written consent of each holder of
outstanding shares of Series C Preferred Stock will be required in order to change or waive (i) the definition of “Liquidation
Preference Adjustment” in the Certificate of Designation, (ii) the rate at which or the manner in which dividends on the
Series C Preferred Stock accrue or accumulate or the times at which such dividends become payable, or (iii) the provision governing
the amendment, modification or waiver of any provision of the Certificate of Designation.
The Company is prohibited
from amending, modifying or waiving the terms or relative priorities of the Series C Preferred Stock through a merger, consolidation
or other transaction with another entity unless the Company has obtained the prior written consent of the holders of Series C Preferred
Stock.
No Market
The Series C Preferred
Stock will not be listed for trading or quoted on any securities exchange or recognized trading system.
The foregoing description
of the Series C Preferred Stock and Certificate of Designation is qualified in its entirety by reference to the full text of the
Certificate of Designation, which is filed as Exhibit 3.1 hereto and is incorporated herein
by reference.