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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 6)(1)
GENZYME TRANSGENICS CORPORATION
-------------------------------
(Name of Issuer)
COMMON STOCK, $0.01 PAR VALUE
------------------------------
(Title of Class of Securities)
37246E 10 5
--------------
(CUSIP Number)
MICHAEL S. WYZGA PAUL M. KINSELLA
GENZYME CORPORATION PALMER & DODGE LLP
ONE KENDALL SQUARE ONE BEACON STREET
CAMBRIDGE, MA 02139 BOSTON, MA 02108
(617) 252-7500 (617) 573-0100
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
NOVEMBER 12, 1999
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 8 pages)
- ------------------
(1)The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
SCHEDULE 13D
- --------------------------- ----------------------
CUSIP NO. 37246E 10 5 Page 2 of 8 pages
--------------- ----------------------
- ---------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
GENZYME CORPORATION
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
06-1047163
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF THE GROUP (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM
2(d) OR 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
MASSACHUSETTS
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
8,802,710 SHARES
--------------------------------------------------
NUMBER OF SHARES 8 SHARED VOTING POWER
BENEFICIALLY OWNED 0 SHARES
BY EACH REPORTING --------------------------------------------------
PERSON WITH 9 SOLE DISPOSITIVE POWER
8,802,710 SHARES
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
0 SHARES
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,802,710 SHARES
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW(11)
38.1%
- --------------------------------------------------------------------------------
14 TYPE OR REPORT PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS
<PAGE> 3
Page 3 of 8 pages
This Amendment No. 6 amends and supplements the Statement on Schedule 13D
initially filed by Genzyme Corporation, a Massachusetts corporation ("Genzyme"),
with the Securities and Exchange Commission (the "Commission") on July 19, 1993
and the statement on Schedule 13G filed with the Commission on October 6, 1994,
each as thereafter amended by Amendment No. 1 on Schedule 13D filed with the
Commission on February 21, 1995, Amendment No. 2 on Schedule 13D filed with the
Commission on June 21, 1995 and Amendment No. 3 on Schedule 13D filed with the
Commission on August 2, 1995, all as amended and restated by Amendment No. 4 on
Schedule 13D filed with the Commission on August 9, 1996, and as further amended
by Amendment No. 5 on Schedule 13D filed on February 26, 1999 (as so amended and
restated and further amended, the "Schedule 13D").
Except as set forth below, there are no changes in the information set
forth in the Schedule 13D. Capitalized terms used but not otherwise defined
herein shall have the meaning ascribed to them in the Schedule 13D.
The purpose of this Amendment No. 6 is to report the acquisition by Genzyme
of (i) 6,602.53558 shares of Series B Convertible Preferred Stock, $0.01 par
value, of Genzyme Transgenics Corporation which are convertible into shares of
Common Stock of Genzyme Transgenics Corporation and (ii) two warrants to
purchase shares of Common Stock of Genzyme Transgenics Corporation.
ITEM 1. SECURITY AND ISSUER.
Item 1 is amended by replacing such item in its entirety with the following
text:
This statement relates to the Common Stock, $0.01 par value ("Common
Stock"), of Genzyme Transgenics Corporation (the "Issuer"). The principal
executive offices of the Issuer are located at 175 Crossing Boulevard,
Framingham, Massachusetts 01701.
ITEM 2. IDENTITY AND BACKGROUND
Item 2 is amended by replacing in its entirety the information regarding
the directors and executive officers of Genzyme that is set forth in Exhibit 1
to the Schedule 13D and incorporated in such item by reference with the
information set forth in Exhibit 1 to this Amendment No. 6 on Schedule 13D and
incorporated herein by reference.
ITEM 4. PURPOSE OF TRANSACTION.
Item 4 is amended by inserting the following paragraph at the end of such
item:
On November 22, 1999, Genzyme acquired 6,602.53558 shares of Series B
Convertible Preferred Stock, $0.01 par value, of the Issuer (the "Series B
Shares"). Genzyme acquired the Series B Shares pursuant to a Stock Purchase
Agreement dated as of November 12, 1999 between Genzyme and the Issuer (the
"Series B Stock Purchase Agreement"), a copy of which is filed herewith as
Exhibit 7 hereto and incorporated herein by reference. The Series B Shares are
initially convertible at the option of Genzyme into 1,048,021 shares of Common
Stock of the Issuer per Series B Share. The number of shares of Common Stock
which may be issued upon conversion of the Series B Shares is subject to
adjustment under the terms of the Certificate of Designation (which is included
as Exhibit A to the Series B Stock Purchase Agreement.) The Series B Shares are
not entitled to vote except to the extent required under the Massachusetts
<PAGE> 4
Page 4 of 8 pages
business corporation law. The prior consent of the holders of at least 66 2/3%
of the outstanding Series B Shares is required, however, in connection with
significant corporate actions by the Issuer as specified in the Certificate of
Designation, including any merger, consolidation or other business combination
transaction involving the Issuer or sale of all or substantially all of the
assets of the Issuer. The Certificate of Designation sets forth the other
powers, preferences, privileges and other relative, participating, optional and
other special rights of the Series B Shares.
On November 12, 1999, as an inducement for Genzyme to enter into the Series
B Stock Purchase Agreement, the Issuer issued to Genzyme a Warrant to Purchase
Common Stock exercisable for up to 55,833 shares of Common Stock (the "Execution
Warrant"), a copy of which is filed herewith as Exhibit 8 hereto and
incorporated herein by reference. On November 22, 1999, as consideration for
Genzyme purchasing the Series B Shares at the closing under the Series B Stock
Purchase Agreement, the Issuer issued to Genzyme an additional Warrant to
Purchase Common Stock exercisable for up to 29,491 shares of Common Stock (the
"Closing Warrant"), a copy of which is filed herewith as Exhibit 9 hereto and
incorporated herein by reference. The Execution Warrant and the Closing Warrant
are each exercisable by Genzyme at any time from their respective date of
issuance until ten years thereafter. The initial exercise price of the Execution
Warrant and the Closing Warrant is $6.30 per share, subject to adjustment under
the terms thereof.
Pursuant to the Series B Stock Purchase Agreement, the Issuer agreed to
issue to Genzyme on July 1, 2000 an additional Warrant to Purchase Common Stock
(the "Additional Warrant") if there are any Series B Shares which have not been
redeemed by that date. The Additional Warrant will be exercisable for a number
of shares determined by multiplying (i) 55,833 by (ii) the fraction the
numerator of which is the number of Series B Shares outstanding on the date of
issuance of the Additional Warrant and the denominator of which is 12,500. The
additional Warrant will be exercisable during the period of ten years following
the date of issuance at an initial exercise price equal to the lesser of (i)
$6.30 and (ii) the average closing price of the Common Stock of the Issuer for
the five trading day period immediately preceding the date of issuance.
In addition, on December 28, 1998, Genzyme and the Issuer entered into a
Second Amended and Restated Convertible Debt Agreement dated as of December 28,
1998, a copy of which is filed as Exhibit 11 hereto and incorporated herein by
reference. The Second Amended and Restated Convertible Debt Agreement restates
the Convertible Debt Agreement (as previously amended to that date) and further
amends the Convertible Debt Agreement (as so amended, restated and further
amended, the "Amended Convertible Debt Agreement"). The Amended Convertible Debt
Agreement reduces the amount that the Issuer may borrow from Genzyme to
$6,300,000. The Amended Convertible Debt Agreement also provides that
indebtedness thereunder may be converted into Issuer Common Stock (i) at
Genzyme's option at any time or (ii) at the Issuer's option once each fiscal
quarter to the extent necessary, in the reasonable judgment of the Issuer, to
maintain the Issuer's tangible net worth at the minimum amount required for
continued listing of the Issuer's Common stock on the Nasdaq National Market. In
either case the conversion price will equal the average closing price of the
Issuer Common Stock on the Nasdaq National Market for the twenty trading day
period ending two trading days before the date of conversion. As of the date of
the filing of this Amendment No. 6, there was no indebtednesses currently
outstanding under the Convertible Debt Agreement.
<PAGE> 5
Page 5 of 8
Genzyme has acquired the Series B Shares, the Execution Warrant, the
Closing Warrant and the shares of Issuer Common Stock acquired by Genzyme as
described in this Item 4 for its own account and for investment purposes.
Genzyme expects to evaluate on a continuing basis its goals and objectives,
other business opportunities available to it, and general economic and equity
market conditions, as well as the Issuer's business operations and prospects.
Based on these evaluations, from time to time in the future, Genzyme may acquire
additional shares of Issuer capital stock, and Genzyme may dispose of some or
all of the shares of Issuer Common Stock it has acquired in the open market or
in privately negotiated transactions.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is amended by replacing such item in its entirety with the following
text:
(a) Genzyme beneficially owns 8,802,710 shares of the Common Stock of the
Issuer representing 38.1% of the outstanding shares of Common Stock of the
Issuer based on 21,733,608 shares outstanding as of November 22, 1999. The
shares beneficially owned by Genzyme include: (i) an aggregate 326,324 shares
currently issuable upon exercise of the four warrants described in Item 4 and
(ii) an aggregate 1,048,021 shares currently issuable upon conversion of the
Series B Shares.
The following table and footnotes set forth certain information regarding
the beneficial ownership of the Issuer's Common Stock by directors and executive
officers of Genzyme as of November 15, 1999. As of November 15, 1999, no
director or executive officer of Genzyme held more than 1% of the Common Stock
of the Issuer.
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned
----------------------
Beneficial Owner
- ----------------
<S> <C>
Henri A. Termeer.................................................. 32,500(1)
Peter Wirth....................................................... 800(2)
Henry E. Blair.................................................... 21,000(3)
Alan E. Smith..................................................... 20,000(4)
Earl M. Collier, Jr............................................... 1,000
G. Jan van Heek................................................... 1,300(5)
</TABLE>
(1) Includes 23,000 shares subject to stock options currently exercisable or
exercisable within the 60-day period following November 15, 1999.
(2) Represents shares subject to stock options currently exercisable or
exercisable within the 60-day period following November 15, 1999.
(3) Includes 20,000 shares subject to stock options currently exercisable or
exercisable within the 60-day period following November 15, 1999.
(4) Represents 20,000 shares subject to stock options currently
exercisable or exercisable within the 60-day period following November 15, 1999.
(5) Includes 800 shares subject to stock options currently exercisable or
exercisable within the 60-day period following November 15, 1999.
(b) Each stockholder has sole investing and voting power over the shares
of Common Stock of the Issuer beneficially owned by such stockholder as set
forth in Item 5(a).
(c) Other than the pursuant to the transactions described in Item 4,
neither Genzyme nor any director or executive officer of Genzyme has acquired or
disposed of any shares of Common Stock of the Issuer during the past 60 days.
(d) Not applicable.
(e) Not applicable.
<PAGE> 6
Page 6 of 8
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Item 6 is amended by replacing such Item in its entirety with the following
text:
The responses to Items 3 and 4 are incorporated herein by reference.
Genzyme has registration rights with respect to all shares of Common Stock
issued and issuable to Genzyme. These rights are set forth in Section 8 of the
Series A Convertible Preferred Stock Purchase Agreement dated as of May 1, 1993
between Genzyme and the Issuer, a copy of which is included as Exhibit 10 hereto
and incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Item 7 is amended by inserting the following text into such item:
Exhibit 1: Directors and Executive Officers of Genzyme.
Exhibit 7: Stock Purchase Agreement dated November 12, 1999 between
the Issuer and Genzyme. Filed herewith.
Exhibit 8: Warrant to Purchase Common Stock dated November 12, 1999.
Filed herewith.
Exhibit 9: Warrant to Purchase Common Stock dated November 22, 1999.
Filed herewith.
Exhibit 10: Series A Convertible Preferred Stock Purchase Agreement
dated as of May 1, 1993 between Genzyme and the Issuer.
Filed as Exhibit 10.5 to the Issuer's Registration
Statement on Form S-1 (Registration No. 33-62782) and
incorporated herein by reference.
Exhibit 11: Second Amended and Restated Convertible Debt Agreement
dated as of December 28, 1998 between Genzyme and the
Issuer. Filed as Exhibit 10.29 to Issuer's Annual Report
on Form 10-K for the fiscal year ended January 3, 1999
(Commission File No. 0-21794) and incorporated herein by
reference.
<PAGE> 7
Page 7 of 8
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Date: November 23, 1999 GENZYME CORPORATION
By: /s/ Michael S. Wyzga
---------------------------------
Michael S. Wyzga
Senior Vice President, Finance;
Chief Financial Officer; and
Chief Accounting Officer
<PAGE> 8
Page 8 of 8
EXHIBIT INDEX
The Exhibit Index is amended to by replacing the reference to Exhibit 1 in
its entirety with the following text:
Exhibit 1: Directors and Executive Officers of Genzyme.
The Exhibit Index is further amended to insert the following text at the
end of the Exhibit Index:
Exhibit 7: Stock Purchase Agreement dated November 12, 1999 between
the Issuer and Genzyme. Filed herewith.
Exhibit 8: Warrant to Purchase Common Stock dated November 12, 1999.
Filed herewith.
Exhibit 9: Warrant to Purchase Common Stock dated November 22, 1999.
Filed herewith.
Exhibit 10: Series A Convertible Preferred Stock Purchase Agreement
dated as of May 1, 1993 between Genzyme and the Issuer.
Filed as Exhibit 10.5 to the Issuer's Registration
Statement on Form S-1 (Registration No. 33-62782) and
incorporated herein by reference.
Exhibit 11: Second Amended and Restated Convertible Debt Agreement
dated as of December 28, 1998 between Genzyme and the
Issuer. Filed as Exhibit 10.29 to Issuer's Annual Report
on Form 10-K for the fiscal year ended January 3, 1999
(Commission File No. 0-21794) and incorporated herein by
reference.
<PAGE> 1
EXHIBIT 1
Exhibit 1 is amended by replacing such exhibit in its entirety with the
following text:
DIRECTORS OF GENZYME
Set forth below is the name, present principal occupation or employment and
the name, principal business and address of any corporation or other
organization in which such employment is conducted of each director of Genzyme.
Unless otherwise indicated, each director is a citizen of the United States.
Henri A. Termeer
Chairman of the Board, President and Chief Executive Officer
Genzyme Corporation
One Kendall Square
Cambridge, Massachusetts 02139
Constantine E. Anagnostopoulos
Managing General Partner
Gateway Associates (venture capital limited partnership)
800 Maryland Avenue, Suite 1190
St. Louis, MO 63105
Douglas A. Berthiaume
Chairman, President and Chief Executive Officer
Waters Corporation (high technology manufacturer of products used for
analysis and purification)
34 Maple Street
Milford, Massachusetts 01757
Henry E. Blair
President and Chief Executive Officer
Dyax Corp. (bioseparation, pharmaceutical discovery and development
company)
One Kendall Square, Building 600, 5th Floor
Cambridge, Massachusetts 02139
Robert J. Carpenter
Chairman
GelTex Pharmaceuticals, Inc.
303 Bear Hill Road
Waltham, MA 02154
Charles L. Cooney
Professor of Chemical and Biochemical Engineering
Massachusetts Institute of Technology
25 Ames Street
Building 66-Room 352
Cambridge, Massachusetts 02139
<PAGE> 2
EXHIBIT 1
Henry R. Lewis
c/o Genzyme Corporation
One Kendall Square
Cambridge, Massachusetts 02139
EXECUTIVE OFFICERS OF GENZYME
Set forth below is the name and present principal occupation of each of the
executive officers of Genzyme. Unless otherwise indicated, each executive
officer is a citizen of the United States and has as his principal business
address One Kendall Square, Cambridge, Massachusetts 02139.
Henri A. Termeer
Chairman of the Board, President and Chief Executive Officer
Russell J. Campanello
Senior Vice President, Human Resources
Earl M. Collier, Jr.
Executive Vice President, Health Systems and Surgical Products
David D. Fleming
Group Senior Vice President, Diagnostic Products and Genetics
Michael S. Wyzga
Senior Vice President, Chief Financial Officer, Corporate Controller and
Chief Accounting Officer
Richard A. Moscicki
Senior Vice President, Clinical, Medical and Regulatory Affairs; Chief
Medical Officer
Alan E. Smith
Senior Vice President, Research; Chief Scientific Officer
Citizenship: United Kingdom
G. Jan van Heek
Executive Vice President, Therapeutics Division and Tissue Repair
Citizenship: The Netherlands
Peter Wirth
Executive Vice President, Legal, Corporate Development, Molecular Oncology
and Pharmaceuticals; Chief Legal Officer
<PAGE> 1
EXHIBIT 7
STOCK PURCHASE AGREEMENT
BETWEEN
GENZYME TRANSGENICS CORPORATION
AND
GENZYME CORPORATION
Dated as of November 12, 1999
-------------------
PURCHASE OF SERIES B CONVERTIBLE PREFERRED
STOCK OF GENZYME TRANSGENICS CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1
1.1 Definitions ............................................................................................. 1
ARTICLE 2 SALE OF SERIES B CONVERTIBLE PREFERRED STOCK; CLOSING .............................................. 3
2.1 Sale of Series B Convertible Preferred Stock ............................................................ 3
2.2 Use of Proceeds ......................................................................................... 3
2.3 Closing ................................................................................................. 3
2.4 Delivery Upon Signing of this Agreement ................................................................. 3
2.5 Delivery at Closing ..................................................................................... 3
2.6 Delivery on July 1, 2000 ................................................................................ 4
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY ...................................................... 4
3.1 Organization; Standing, etc ............................................................................. 4
3.2 Authorization and Issuance of Series B Preferred Stock and Warrants ..................................... 4
3.3 Authorization and Binding Effect ........................................................................ 5
3.4 Conflict with Laws and Other Instruments ................................................................ 5
3.5 Investment Company Act .................................................................................. 6
3.6 Brokers; Expenses ....................................................................................... 6
3.7 Capitalization .......................................................................................... 6
3.8 SEC Reports ............................................................................................. 6
3.9 Financial Statements .................................................................................... 7
3.10 No Material Adverse Effect .............................................................................. 7
3.11 Anti-Takeover Laws ...................................................................................... 7
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER ........................................................ 7
4.1 Authorization ........................................................................................... 7
4.2 Investment .............................................................................................. 7
4.3 Sophistication; Etc ..................................................................................... 7
4.4 Restricted Securities ................................................................................... 8
4.5 Organization and Authority .............................................................................. 8
4.6 No Conflict ............................................................................................. 8
4.7 Brokers; Expenses ....................................................................................... 8
</TABLE>
-i-
<PAGE> 3
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
<S> <C>
4.8 Knowledge, etc .......................................................................................... 8
ARTICLE 5 CONDITIONS TO PURCHASER'S OBLIGATIONS .............................................................. 9
5.1 Conditions to Closing ................................................................................... 9
5.1.1 Redemption ....................................................................................... 9
5.1.2 Proceedings Satisfactory ......................................................................... 9
5.1.3 Closing Documents ................................................................................ 9
5.1.4 Bring-down of Representations and Warranties ..................................................... 9
5.1.5 Bank Consent and Amendment ....................................................................... 9
5.1.6 No Legal Proceedings ............................................................................ 10
ARTICLE 6 CONDITIONS TO THE COMPANY'S OBLIGATIONS ........................................................... 10
6.1 Conditions to Closing .................................................................................. 10
6.1.1 Payment of Purchase Price ....................................................................... 10
6.1.2 Closing Documents ............................................................................... 10
6.1.3 No Legal Proceedings ............................................................................ 10
ARTICLE 7 COVENANTS BY THE COMPANY .......................................................................... 10
7.1 No Impairment .......................................................................................... 10
7.2 Reservation of Common Stock and Other Securities ....................................................... 10
ARTICLE 8 REGISTRATION RIGHTS ............................................................................... 11
8.1 Registration Rights .................................................................................... 11
ARTICLE 9 TERMINATION AND SURVIVAL .......................................................................... 11
9.1 Termination for Failure to Close ....................................................................... 11
9.2 Survival of Representation and Warranties .............................................................. 11
9.3 Termination of Purchase Obligation ..................................................................... 11
10.1 Expenses ............................................................................................... 12
10.2 Entire Agreement; Successors and Assigns ............................................................... 12
10.3 Governing Law .......................................................................................... 12
10.4 Consent to Jurisdiction ................................................................................ 12
10.5 Counterparts ........................................................................................... 12
10.6 Notices ................................................................................................ 12
10.7 Amendments and Waivers ................................................................................. 14
</TABLE>
-ii-
<PAGE> 4
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
<S> <C>
10.8 Severability .......................................................................................... 14
10.9 Attorneys' Fees ....................................................................................... 14
10.10 Public Disclosure ..................................................................................... 14
10.11 No Third Party Beneficiaries .......................................................................... 14
</TABLE>
-iii-
<PAGE> 5
EXHIBITS
Exhibit A Charter Amendments
Exhibit B Execution Warrant
Exhibit C Closing Warrant
Exhibit D Additional Warrant
iv
<PAGE> 6
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into
as of November 12, 1999 between Genzyme Transgenics Corporation, a Massachusetts
corporation (the "COMPANY") and Genzyme Corporation, a Massachusetts corporation
("PURCHASER").
WITNESSETH:
WHEREAS, Purchaser desires to contribute up to $12.5 million in capital to
the Company in exchange for the issuance to Purchaser of up to 12,500 shares of
Series B Convertible Preferred Stock and certain warrants to purchase additional
shares of Common Stock (as hereinafter defined) and the Company desires to sell
to Purchaser such shares of Series B Convertible Preferred Stock (as hereinafter
defined) and issue such warrants on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
1.1 DEFINITIONS. For purposes of this Agreement:
"ACT" means the Securities Act of 1933, as amended.
"ADDITIONAL WARRANT" means a warrant to purchase up to 55,833 shares
of Common Stock substantially in the form attached hereto as EXHIBIT D.
"AFFILIATE" with respect to any Person means a Person that directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, the first Person. "Control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
"ARTICLES OF ORGANIZATION" means the Articles of Organization of the
Company including the Charter Amendments.
"BUSINESS DAY" means any day other than a Saturday, Sunday, national
or state holiday or other day on which commercial banks in New York are
authorized or required by law to close.
<PAGE> 7
"CHARTER AMENDMENTS" means the proposed amendments to the Articles of
Organization of the Company attached hereto a Exhibit A.
"CLOSING" means the closing of the purchase and sale of the Series B
Convertible Preferred Stock.
"CLOSING DATE" means such date upon which all of the conditions to
closing set forth in Article V of this Agreement have been fulfilled or waived.
"CLOSING WARRANT" means a warrant to purchase up to 55,833 shares of
Common Stock substantially in the form attached hereto in Exhibit C.
"CODE" means the Internal Revenue Code of 1986, as the same may be
amended from time to time.
"COMMON STOCK" means the Common Stock, par value $0.01 per share, of
the Company.
"EXECUTION DATE" means such date upon which this Stock Purchase
Agreement is executed.
"EXECUTION WARRANT" means a warrant to purchase 55,833 shares of
Common Stock substantially in the form attached hereto as Exhibit B.
"MATERIAL ADVERSE EFFECT" shall mean any event or occurrence which is
reasonably likely to materially adversely affect (i) the business, properties,
results of operations or financial condition of the Company or (ii) the ability
of the Company to perform its obligations under this Agreement.
"NOTICE OF REDEMPTION" shall mean that certain Notice of Redemption to
the Holders of Genzyme Transgenics Corporation Series A Convertible Preferred
Stock issued by the Company on November 12, 1999.
"PERSON" means any natural person, firm, partnership, association,
corporation, company, business, governmental agency or authority or other
entity.
"REPRESENTATIVE" means any officer, director, partner, stockholder,
principal, attorney, agent, employee or other representative of any Person.
"SERIES A CONVERTIBLE PREFERRED STOCK" means the Series A Convertible
Preferred Stock, par value $.01 per share, of the Company.
"SERIES B CONVERTIBLE PREFERRED STOCK" means the Series B Convertible
Preferred Stock, par value $.01 per share, of the Company.
2
<PAGE> 8
"WARRANTS" shall mean the Additional Warrant, the Closing Warrant and
the Execution Warrant, collectively.
ARTICLE 2
SALE OF SERIES B CONVERTIBLE PREFERRED STOCK; CLOSING
2.1 SALE OF SERIES B CONVERTIBLE PREFERRED STOCK. Upon the terms and
subject to the conditions contained in this Agreement and in reliance on the
representations and warranties of Purchaser set forth herein, on the Closing
Date the Company hereby agrees to issue and to sell to Purchaser, and Purchaser
agrees to purchase from the Company up to 12,500 shares of Series B Convertible
Preferred Stock at a purchase price of $1,000.00 per share. The Series B
Convertible Preferred Stock will have the rights, powers, preferences and other
features set forth in the Articles of Organization.
2.2 USE OF PROCEEDS. The Company shall use the proceeds of any sale of
shares of the Series B Convertible Preferred Stock (i) to fund the redemption of
the outstanding shares of Series A Convertible Preferred Stock in accordance
with the terms and conditions (including, without limitation, the applicable
redemption price) set forth in the Notice of Redemption and (ii) for such other
purposes as Purchaser consents to in writing.
2.3 CLOSING. The Closing will be held at the offices of Goodwin, Procter &
Hoar LLP, Exchange Place, Boston, Massachusetts 02109, at 10:00 a.m. on the
Closing Date.
2.4 DELIVERY UPON SIGNING OF THIS AGREEMENT. Concurrently with the
execution and delivery of this Agreement, the Company shall execute and deliver
to Purchaser the Execution Warrant.
2.5 DELIVERY AT CLOSING. To effect the purchase and sale of Series B
Convertible Preferred Stock pursuant to this Agreement and the delivery of the
consideration for such purchase and sale, the parties to this Agreement will, on
the Closing Date, deliver the following:
2.5.1 The Company will deliver to Purchaser:
(i) one or more stock certificates representing the appropriate
number of shares of Series B Convertible Preferred Stock, registered in the
names Purchaser shall specify;
(ii) the Closing Warrant;
(iii) a certificate (dated the Closing Date and in form and
substance reasonably satisfactory to Purchaser) executed on behalf of the
Company (a) certifying as to the fulfillment of the conditions set forth in
Article 5 hereof applicable to such Closing and (b) certifying as to the amounts
payable to fund the redemption of the outstanding shares of Series A Convertible
Preferred Stock in accordance with the Notice of Redemption;
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<PAGE> 9
(iv) a certificate of the Secretary of the Company, certifying
as to the adoption by the Board of Directors of the Company, dated the Closing
Date and in form and substance reasonably satisfactory to Purchaser;
(v) a cross-receipt for the purchase price paid for the shares
purchased at the Closing;
(vi) a certificate of good standing with respect to the Company
issued by the Secretary of the Commonwealth of Massachusetts dated as of a date
not more than five (5) Business Days prior to the Closing Date; and
(vii) an opinion of Goodwin, Procter & Hoar LLP, counsel to the
Company addressed to the Purchaser, dated the Closing Date, and in form and
substance reasonably satisfactory to Purchaser.
2.5.2 Purchaser will deliver to the Company:
(i) payment of the aggregate purchase price for the Series B
Convertible Preferred Stock to be purchased by Purchaser at the Closing by wire
transfer of immediately available funds to an account designated by the Company;
and
(ii) a cross-receipt for the stock certificate(s) for the shares
purchased at the Closing.
2.6 DELIVERY ON JULY 1, 2000. In connection with the transactions
contemplated hereby, in the event that the Company has not redeemed all of the
issued and outstanding shares of Series B Convertible Preferred Stock on or
prior to July 1, 2000, (the "Additional Warrant Date") the Company will deliver
the Additional Warrant to the Purchaser as of the date which is one Business Day
after the Additional Warrant Date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants as of the date hereof to Purchaser as
follows:
3.1 ORGANIZATION; STANDING, ETC. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as presently conducted.
3.2 AUTHORIZATION AND ISSUANCE OF SERIES B PREFERRED STOCK AND WARRANTS.
The issuance of the shares of Series B Convertible Preferred Stock under this
Agreement has been duly authorized and, upon delivery of certificates thereof
and against payment in accordance with the terms hereof, such shares of Series B
Convertible Preferred Stock will be validly issued,
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<PAGE> 10
fully paid and non-assessable, free and clear of all pledges, liens and
encumbrances and, assuming the accuracy of Purchaser's representations in
Sections 4.2, 4.3 and 4.8 hereof, the issuance of shares of Series B Convertible
Preferred Stock contemplated by this Agreement will be exempt from the
registration requirements under the Act.
The Company has taken all necessary corporate action to authorize the
issuance, sale, and delivery of the Warrants in accordance with this Agreement
and to reserve for issuance and delivery (i) the shares of Common Stock issuable
upon the exercise of the Warrants and (ii) the shares of Common Stock issuable
upon conversion of the Series B Convertible Preferred Stock. Assuming the
accuracy of Purchaser's representations in Sections 4.2, 4.3 and 4.8 hereof, the
issuance of the Warrants contemplated by this Agreement will be exempt from the
registration requirements under the Act. The shares of Common Stock issuable
upon exercise of the Warrants have been duly and validly authorized and reserved
for issuance and, upon issuance in accordance with the terms of such Warrants,
including the payment of the exercise price, shall be duly and validly issued,
fully paid and non-assessable and, assuming the accuracy of Purchaser's
representations in Sections 4.2, 4.3 and 4.8 hereof, the issuance of such shares
of Common Stock will be exempt from the registration requirements under the Act.
The Common Stock issuable upon conversion of the Series B Convertible Preferred
Stock have been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Articles of Organization, shall be duly and
validly issued, fully paid, and nonassessable and, assuming the accuracy of
Purchaser's representations in Sections 4.2, 4.3 and 4.8 hereof, the issuance of
shares of Common Stock upon conversion of the Series B Convertible Preferred
Stock will be exempt from the registration requirements under the Act.
3.3 AUTHORIZATION AND BINDING EFFECT. The Company has all requisite
corporate power and authority to execute and deliver, and to perform its
obligations under, this Agreement and the Execution Warrant. The execution and
delivery of this Agreement and the Execution Warrant by the Company and the
performance by the Company of its obligations hereunder have been duly
authorized by all necessary corporate action on behalf of the Company, and this
Agreement and the Execution Warrant constitute a legal, valid and binding
agreements of the Company, each enforceable against the Company in accordance
with its respective terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity, regardless whether enforcement is sought in a
proceeding at law or in equity.
3.4 CONFLICT WITH LAWS AND OTHER INSTRUMENTS. The execution and delivery
of this Agreement and the Execution Warrant, the consummation of the
transactions contemplated hereby and thereby and the performance by the Company
of its obligations hereunder and thereunder will not conflict with or result in
the violation of or default under any provision of the Company's Articles of
Organization or By-laws, any agreement or instrument to which either the Company
is a party or by which it or any of its properties is bound, or any license,
permit, franchise, judgment, order, writ, decree, statute, rule or regulation
applicable to the Company or its business or properties. No consent, approval,
authorization or order of any court or
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governmental agency is required in connection with the consummation of the
transactions contemplated by this Agreement.
3.5 INVESTMENT COMPANY ACT. The Company is not required to register as an
"investment company" under the Investment Company Act of 1940, as amended.
3.6 BROKERS; EXPENSES. The Company represents and warrants that it has not
utilized the services of any broker or finder in connection with the
transactions contemplated hereby and no person is entitled to a fee or
commission in connection therewith.
3.7 CAPITALIZATION.
3.7.1 The authorized capital of the Company consists of 45,000,000
shares of capital stock, consisting of 40,000,000 shares of Common Stock, of
which there are 20,830,430 shares issued and outstanding as of November 5, 1999,
3,050,298 shares reserved for issuance (net of exercises) upon the exercise of
certain options issued pursuant to the Company's 1993 Incentive Plan and, 97,728
shares reserved for issuance (net of exercises) pursuant to the Company's 1993
Employee Stock Purchase Plan, 200,000 shares reserved for issuance pursuant to
the 1993 Director Stock Option Plan, and 911,000 shares reserved for issuance
upon the exercise of certain outstanding warrants to purchase Common Stock and
(2) 5,000,000 shares of preferred stock, per value $.01 per share ("Preferred
Stock"), 20,000 of which have been designated as Series A Convertible Preferred
Stock, 11,000 of which were issued and outstanding on November 1, 1999 and
12,500 of which have been designated as Series B Convertible Preferred Stock,
none of which were issued and outstanding prior to the Closing; and all shares
of Common Stock and Preferred Stock have the rights, privileges, restrictions
and conditions specified in the Articles of Organization.
3.7.2 All of the issued and outstanding shares of Common Stock and
Series A Preferred Stock have been duly authorized for issuance and upon the
consummation of the transactions contemplated hereby are validly issued, fully
paid and non-assessable.
3.8 SEC REPORTS. The Company has timely filed with the U.S. Securities and
Exchange Commission (the "SEC") under the Exchange Act all documents required to
be filed under Sections 13, 14 or 15(d) of the Exchange Act since December 31,
1997. Prior to the Closing Date, the Company shall have previously delivered to
Purchaser (a) each Annual Report on Form 10-K of the Company filed with the SEC
since December 31, 1998 (the Annual Report on Form 10-K most recently filed
prior to a given Closing Date is referred to herein as the "Company 10-K"
relating to the Closing Date), (b) all proxy statements relating to the
Company's meetings of stockholders held since December 31, 1998 and (c) all
other documents filed by the Company with the SEC since December 31, 1998, in
each case as filed with the SEC (collectively, the "Company SEC Reports"). As of
their respective dates, such documents complied in all material respects with
applicable SEC requirements and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
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<PAGE> 12
3.9 FINANCIAL STATEMENTS. The financial statements (the "Financial
Statements") contained in the Company 10-K and each of the Company's Quarterly
Reports on Form 10-Q for each quarter ended after the end of the most recent
fiscal year covered by the Company 10-K (the "Company 10-Qs") have been prepared
from, and are in accordance with, the books and records of the Company and
fairly present in all material respects the financial condition, results of
operations and cash flows of the Company as of and for the periods presented
therein, all in accordance with generally accepted accounting principles applied
on a consistent basis, except as otherwise indicated therein and subject, in the
case of the unaudited Financial Statements included in the Company 10-Qs, to
normal year-end and audit adjustments, which in the aggregate are not material,
and the absence of footnote disclosures.
3.10 NO MATERIAL ADVERSE EFFECT. Since June 30, 1999, except as disclosed
in the Company SEC Reports or as set forth on Schedule 3.10 attached hereto,
there has occurred no event which has had or could reasonably be expected to
have a Material Adverse Effect.
3.11 ANTI-TAKEOVER LAWS. The Company has taken all action necessary such
that no "fair price," "control share acquisition," "business combination,"
"anti-takeover" or similar statute (including, without limitation Chapters 110D
or 110F of the General Laws of the Commonwealth of Massachusetts) will apply to
(i) the execution or delivery of this Agreement, (ii) the purchase of the shares
at the Closing, (iii) the exercise by Purchaser of the Warrants or (iii) the
consummation of the transactions contemplated hereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
4.1 AUTHORIZATION. All requisite action on the part of Purchaser necessary
for authorization, execution, delivery and performance of all obligations under
this have been taken, and this Agreement has been duly executed and delivered by
Purchaser and constitutes a legally binding and valid obligation of Purchaser,
enforceable against Purchaser in accordance with its terms.
4.2 INVESTMENT. Purchaser is acquiring the Series B Convertible Preferred
Stock for Purchaser's own account and not with a view to or for sale in
connection with any distribution thereof in violation of applicable law, rule or
regulation. Purchaser understands that it must bear the economic risk of the
investment for an indefinite period of time because the Series B Convertible
Preferred Stock has not been registered under the Act or qualified under the
securities laws of any other jurisdiction. Purchaser has not been organized for
the purpose of acquiring the Series B Convertible Preferred Stock.
4.3 SOPHISTICATION; ETC. Purchaser is an "accredited investor" within the
meaning of Rule 501(a) promulgated pursuant to the Act, and has such knowledge
and experience in financial or business matters that it is capable of evaluating
the merits and risks of this investment in the Series B Convertible Preferred
Stock.
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<PAGE> 13
4.4 RESTRICTED SECURITIES.
4.4.1 Purchaser understands that the Series B Convertible Preferred
Stock is characterized as "restricted securities" under the Act and that, under
the Act and applicable regulations, such securities may not be resold, pledged
or otherwise transferred without registration under the Act or pursuant to an
exemption from registration.
4.4.2 Purchaser understands that (i) the registrar or transfer agent
for the Series B Convertible Preferred Stock will not be required to accept for
registration or transfer any Securities except upon presentation of evidence
satisfactory to the Company that the restrictions on transfer under the Act have
been complied with and (ii) any Series B Convertible Preferred Stock in the form
of definitive physical certificates will bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW
AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR (ii) UPON FIRST FURNISHING TO THE COMPANY AN OPINION
OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE
REGISTRATION REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW.
4.5 ORGANIZATION AND AUTHORITY. Purchaser: (i) is a corporation duly
organized, validly existing and in good standing in the Commonwealth of
Massachusetts; and (ii) has the corporate power and authority to own and hold
the Series B Convertible Preferred Stock.
4.6 NO CONFLICT. The execution, delivery and performance of this Agreement
will not result in any violation of, be in conflict with, or constitute a breach
of, a default under, or an event that with or without the passage of time or the
giving of notice (or both) would become a default under, any term or provision
of: (a) the partnership agreement, charter or organizational agreement, as
applicable, pursuant to which Purchaser was organized or is operating; (b) any
contract, encumbrance, consent, or authorization to which Purchaser is a party
or any contract, agreement, obligation, lease, note, loan, evidence of
indebtedness or similar document or instrument to which Purchaser is a party; or
(c) any law, statute, rule, regulation, ordinance, code, order, judgment, writ,
injunction, decree or award.
4.7 BROKERS; EXPENSES. The Purchaser represents and warrants that it has
not utilized the services of any broker or finder in connection with the
transactions contemplated hereby and no person is entitled to any fee or
commission in connection therewith.
4.8 KNOWLEDGE, ETC. The Purchaser acknowledges that it has received and
reviewed the Company's Annual Report and Form 10-K for the Company's fiscal year
ended December 31, 1998, and its Quarterly Reports on Form 10-Q for the three
and six month periods ended March 31, 1999 and June 30, 1999, respectively.
Purchaser represents that its knowledge and experience in financial and business
matters are such that Investor is capable of evaluating the merits and risks of
its investment in the Series B Convertible Preferred Stock, and has made its own
independent valuation with respect to the value of the Series B Convertible
Preferred Stock.
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<PAGE> 14
Purchaser is not relying on any representations, warranties, or statements,
express or implied, of the Company or any of its respective Affiliates,
directors, officers, employees, agents or representatives, except those
expressly set forth in Article III of this Agreement. Purchaser and Purchaser's
representatives, including Purchaser's financial, tax, legal and other advisers,
have carefully reviewed all documents furnished to them in connection with
Purchaser's investment in the Series B Convertible Preferred Stock, and
Purchaser understands and has taken cognizance of all the risk factors related
to such investment. Purchaser and Purchaser's representatives have been given
the opportunity to examine all documents and to ask questions of, and to receive
answers from, the Company and its representatives concerning the terms and
conditions of the acquisition of the Series B Convertible Preferred Stock
hereunder and the assets, business and prospects of the Company and to obtain
any additional information which Purchaser or Purchaser's representatives deem
necessary to verify the accuracy of the information that has been provided to
Purchaser in order for Purchaser to evaluate the merits and risk of its
investment in the Series B Convertible Preferred Stock.
ARTICLE 5
CONDITIONS TO PURCHASER'S OBLIGATIONS
5.1 CONDITIONS TO CLOSING. The obligations of Purchaser under Section 2 of
this Agreement are subject to the fulfillment at or before the Closing of each
of the following conditions, any of which may be waived in writing by the
Purchaser.
5.1.1 REDEMPTION. The Company shall have taken all steps necessary to
consummate the transactions contemplated by the Notice of Redemption upon the
terms and conditions described therein.
5.1.2 PROCEEDINGS SATISFACTORY. All corporate and legal proceedings
taken by the Company in connection with the transactions contemplated by this
Agreement and all documents and papers relating to such transactions will be
reasonably satisfactory to Purchaser.
5.1.3 CLOSING DOCUMENTS. Purchaser and its counsel will have received
from the Company the documents required to be delivered to Purchaser pursuant to
Section 2.5.1 hereof.
5.1.4 BRING-DOWN OF REPRESENTATIONS AND WARRANTIES. (i) All
representations and warranties of the Company shall be true and correct in all
material respects at and as of the Closing Date, except to the extent expressly
made as of an earlier date; and (ii) the Company shall have performed and
complied in all material respects with all obligations and covenants required by
this Agreement to be performed or complied with by the Company on or prior to
the Closing Date.
5.1.5 BANK CONSENT AND AMENDMENT. The Company shall have obtained from
its lender, Fleet National Bank, (i) a waiver to Section 6.6 of the Company's
Credit Agreement dated as of December 28, 1998 (the "Credit Agreement")
permitting the redemption by the
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<PAGE> 15
Company of its Series A Convertible Preferred Stock by payment to the holders of
such Series A Convertible Preferred Stock of the redemption price for such stock
plus all dividends accrued thereon in an aggregate amount not in excess of
$12,650,000 and (ii) a binding commitment to amend Section 6.6 of the Credit
Agreement to permit the redemption of the Company's Series B Convertible
Preferred Stock by payment to the holders of such Series B Convertible Preferred
Stock of the redemption price for such stock plus all dividends accrued thereon
in an aggregate amount not in excess of $15,000,000.
5.1.6 NO LEGAL PROCEEDINGS. No injunction, non-applicable court order
or other action having the force of a court order shall be in effect which
enjoins, prohibits or otherwise precludes the consummation of the transactions
contemplated hereby.
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATIONS
6.1 CONDITIONS TO CLOSING. The obligations of the Company under Section 2
of this Agreement are subject to the fulfillment at or before the Closing of
each of the following conditions, any of which may be waived in writing by the
Company:
6.1.1 PAYMENT OF PURCHASE PRICE. Purchaser will have delivered the
aggregate purchase price for the Series B Convertible Preferred Stock being
purchased at the Closing.
6.1.2 CLOSING DOCUMENTS. The Company will have received from Purchaser
the documents required to be delivered to the Company pursuant to Section 2.5.2
hereof.
6.1.3 NO LEGAL PROCEEDINGS. No injunction, non-applicable court order
or other action having the force of a court order shall be in effect which
enjoins, prohibits or otherwise precludes the consummation of the transactions
contemplated hereby.
ARTICLE 7
COVENANTS BY THE COMPANY
7.1 NO IMPAIRMENT. The Company will not, by amendment of its Articles of
Organization or By-Laws 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 Company, but will at all
times in good faith assist in the carrying out of all of the provisions of this
Agreement.
7.2 RESERVATION OF COMMON STOCK AND OTHER SECURITIES. The Company shall
take all actions necessary or appropriate to ensure that at all times there
shall be a sufficient number of authorized and unissued shares of Common Stock
reserved and available for issuance to the
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Purchaser upon the conversion of the Series B Convertible Preferred Stock and
the exercise or conversion of the Warrants. If the Common Stock is reclassified
into a different class or series of capital stock of the Company, then the
Company shall take any and all actions necessary or appropriate to ensure that
there shall be a sufficient number of authorized and unissued shares of such
capital stock reserved and available for issuance to the Purchaser upon the
conversion of the Series B Convertible Preferred Stock and the exercise or
conversion of the Warrants.
ARTICLE 8
REGISTRATION RIGHTS
8.1 REGISTRATION RIGHTS. Purchaser and its successors and assigns shall be
entitled, with respect to the shares of Common Stock issued or issuable (i) upon
conversion of the shares of Series B Convertible Preferred Stock purchased
hereunder or (ii) issuable upon the exercise or conversion of the Warrants, to
the same registration rights as are applicable to the shares of Common Stock
already held by Purchaser, which registration rights are set forth in Section 8
of the Series A Convertible Preferred Stock Purchase Agreement dated May 1, 1993
between the Company and Purchaser.
ARTICLE 9
TERMINATION AND SURVIVAL
9.1 TERMINATION FOR FAILURE TO CLOSE. If, for any reason, the Closing
shall not have occurred on or before the date which is ten (10) Business Days
after the Execution Date, then this agreement shall automatically terminate
without any action by either party effective at 5:00 pm Boston time on such
date; provided, however, that Purchaser shall have the right to retain the
Execution Warrant in such event.
9.2 SURVIVAL OF REPRESENTATION AND WARRANTIES. The parties hereto hereby
agree that the representations and warranties contained in this Agreement or in
any certificate, document or instrument delivered in connection herewith, shall
survive the execution and delivery of this Agreement, and the Closing hereunder,
regardless of any investigation made by the parties hereto. The parties hereto
agree that the agreements and covenants of each of the parties contained in this
Agreement shall survive the execution and delivery of this Agreement, and the
Closing hereunder.
9.3 TERMINATION OF PURCHASE OBLIGATION. If, for any reason, Purchaser does
not purchase the full amount of 12,500 shares of Series Convertible Preferred
Stock which may be purchased by Purchaser at the Closing, then, notwithstanding
anything to the contrary herein, Purchaser shall have no further obligation
thereafter to purchase any shares of Series B Convertible Preferred Stock not
purchased at the Closing.
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ARTICLE 10
MISCELLANEOUS
10.1 EXPENSES. Except to the extent expressly provided for in this
Agreement and the Warrants each party shall bear its own costs and expenses in
connection with this Agreement and the consummation of the transactions
contemplated hereby and thereby. Notwithstanding the foregoing, the Company will
pay all reasonable expenses incurred by the Company and Purchaser in connection
with documenting the transactions contemplated by this Agreement and the other
documents contemplated by this transaction, including but not limited to the
reasonable fees of Palmer & Dodge LLP.
10.2 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement and the
Closing Documents constitute the entire agreement among the parties hereto
relative to the subject matter hereof. Any previous agreement between such
parties related to such subject matter is superseded by this Agreement. Subject
to the exceptions specifically set forth in this Agreement, the terms and
conditions of this Agreement will inure to the benefit of and be binding upon
the respective executors, administrators, heirs, successors and assigns of the
parties.
10.3 GOVERNING LAW. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the internal laws of the
Commonwealth of Massachusetts, without giving effect to any choice or conflict
of laws rules thereof.
10.4 CONSENT TO JURISDICTION. Each of the parties agrees that all actions,
suits or proceedings arising out of or based upon this Agreement or the subject
matter hereof shall be brought and maintained exclusively in the federal and
state courts of the Commonwealth of Massachusetts, provided that Purchaser or
the Company may bring any such action, suit or proceeding against any other
party in any jurisdiction in which such holder is subject to personal
jurisdiction. Each of the parties hereto by execution hereof hereby (i)
irrevocably submits to the jurisdiction of the federal and state courts in the
Commonwealth of Massachusetts for the purpose of any action, suit or proceeding
arising out of or based upon this Agreement or the subject matter hereof, (ii)
consents to the service of process, and (iii) waives any other requirement
(whether imposed by statute, rules of court or otherwise) with respect to
personal jurisdiction or service of process. The provisions of this Section 10.4
shall not restrict the ability of any party to enforce in any court any judgment
obtained in a federal or state court of the Commonwealth of Massachusetts.
10.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
10.6 NOTICES. Prior to the Closing, and thereafter with respect to matters
pertaining to this Agreement only, all notices and other communications provided
for or permitted hereunder will be made by hand-delivery, United States mail
(registered or certified, return receipt requested), telex, facsimile, overnight
air courier guaranteeing next day delivery:
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<PAGE> 18
(i) if to Purchaser to:
Genzyme Corporation
One Kendall Square
Cambridge, MA 02139
Attention: Evan Lebson, Treasurer
Telephone: (508) 270-2334
Facsimile: (508) 872-0827
with a copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02109
Attention: Paul M. Kinsella, Esq.
Telephone: (617) 573-0100
Facsimile: (617) 227-4420
(ii) if to the Company to:
Genzyme Transgenics Corporation
175 Crossing Boulevard
P.O. Box 9322
Framingham, MA 01701
Attention: John B. Green, Chief Financial Officer
Telephone: (508) 270-2579
Facsimile: (508) 270-2303
with copies to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attention: Stuart M. Cable, P.C.
Telephone: (617) 570-1322
Facsimile: (617) 523-1231
All such notices and communications will be deemed to have been duly given:
at the time delivered by hand, if personally delivered; five business days after
being deposited in the United States mail, postage prepaid, if mailed
(registered or certified, return receipt requested); when answered back, if
telexed; when receipt is acknowledged, if faxed and the next business day after
timely delivery to the courier, if sent by overnight air courier guaranteeing
next day delivery, in any case, to the parties at the addresses or facsimile
numbers specified above, as any party may change its address and number by
written notice to the other parties from time to time.
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10.7 AMENDMENTS AND WAIVERS. This Agreement may be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may be given, provided that any such amendments, modifications or supplements
are in writing and signed by: (i) Purchaser and (ii) the Company.
10.8 SEVERABILITY. In the event that any provision hereof would, under
applicable law, be invalid or unenforceable in any respect, such provision shall
be construed by modifying or limiting it so as to be valid and enforceable to
the maximum extent compatible with, and possible under applicable law. If such
construction or deletion substantially affects or alters the commercial basis of
this Agreement, the parties shall negotiate in good faith to amend and modify
the terms and provisions of this Agreement to give effect to the original intent
of the parties.
10.9 ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Agreement or any Initial Closing Document, or where any
provision hereof or thereof is validly asserted as a defense, the successful
party will be entitled to recover reasonable attorneys' fees in addition to any
other available remedy.
10.10 PUBLIC DISCLOSURE. The Company covenants that it will not disclose
Purchaser's identity as a investor in the Company in any public announcement,
governmental filing or otherwise without Purchaser's prior written consent,
unless such disclosure is required by law or compelled by order of a court of
competent jurisdiction, in which case prior to making such disclosure the
Company will give written notice to Purchaser in good faith an opportunity to
suggest modifications in the form and substance of such proposed disclosure.
10.11 NO THIRD PARTY BENEFICIARIES. This Agreement is intended solely for
the benefit of the parties hereto. Neither this Agreement nor any of the
transactions contemplated hereby shall be deemed to create or enlarge any rights
in any party not a party hereto.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 20
IN WITNESS WHEREOF, the Company and Purchaser have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized, as of the day and year first above written.
GENZYME TRANSGENICS CORPORATION,
a Massachusetts corporation
By: /s/ John B. Green
--------------------------------
Name: John B. Green
Title: Vice President and
Chief Financial Officer
GENZYME CORPORATION, a
Massachusetts corporation
By: /s/ Michael S. Wyzga
-------------------------------
Name: Michael S. Wyzga
Title: Senior Vice President
and Chief Financial
Officer
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<PAGE> 21
SCHEDULE 3.10
1. Events or transactions related to the Notice of Redemption.
2. Events or transactions related to this Stock Purchase Agreement.
<PAGE> 22
EXHIBIT A
VOTE OF DIRECTORS
ESTABLISHING A SERIES OF
CONVERTIBLE PREFERRED STOCK
OF
GENZYME TRANSGENICS CORPORATION
Pursuant to Section 26 of Chapter 156B of the General Laws of the Commonwealth
of Massachusetts:
VOTED, that pursuant to authority conferred upon the Board of Directors by
the Articles of Organization, as amended as of the date hereof of GENZYME
TRANSGENICS CORPORATION ("GTC"), the Board of Directors hereby establishes and
designates a series of Convertible Preferred Stock of GTC, and hereby fixes and
determines the relative rights and preferences of the shares of such series, in
addition to those set forth in the Articles of Organization, as follows (this
document is referred to herein as the "Certificate of Designation"):
1. DESIGNATION
The initial series of Convertible Preferred Stock shall be known as "Series
B Convertible Preferred Stock." The number of authorized shares constituting
such series shall be twelve thousand, five hundred (12,500).
2. RIGHTS
(a) RIGHT TO CONVERT. Each holder (a "Holder") of shares of Series B
Convertible Preferred Stock shall have the right, exercisable at any time, and
from time to time from and after the date of execution of that certain Stock
Purchase Agreement (the "Purchase Agreement"), dated November 12, 1999 (the
"Pricing Date"), by and between GTC and Genzyme Corporation, a Massachusetts
corporation ("Genzyme"), by written notice given to GTC, to convert all or a
portion of the shares of Series B Convertible Preferred Stock into a number of
shares of the common stock of GTC, par value $.01 per share (the "Common
Stock"), determined by dividing the aggregate Liquidation Value (as defined
below) of the shares of Series B Convertible Preferred Stock being converted by
the Conversion Price (as defined below) then in effect; provided, that a
majority of holders of Series B Convertible Preferred Stock may, pursuant to
Section 3(b) hereof upon the occurrence of certain events, also elect to have
all or any portion of the shares of Series B Convertible Preferred Stock
redeemed by GTC in consideration of the payment of the Redemption Amount
calculated in accordance with Section 3(a) below. As used herein, "Conversion
Price" means the Pricing Date Fair Market Value (as defined below), as such
amount may be adjusted from time to time after the Pricing Date in accordance
with Sections 2(h) and 2(i) below. "Pricing Date Fair Market Value" shall mean
$6.30 which is the average of the closing price per share reported on the Nasdaq
National
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Market for Common Stock for the five (5) consecutive trading days immediately
preceding the Pricing Date.
(b) MECHANICS OF CONVERSION AND RELATED MATTERS.
(i) MECHANICS. To convert shares of Series B Convertible Preferred
Stock, a Holder shall: (i) fax to GTC, confirming receipt (or otherwise
deliver personally, by overnight courier of national reputation or by
registered or certified mail, return receipt requested), a copy of the
fully executed Notice of Conversion in the form agreed upon by GTC and
Genzyme and (ii) surrender or cause to be surrendered to GTC (or satisfy
the provisions of Section 6(c), if applicable) the certificates
representing the shares of Series B Convertible Preferred Stock being
converted (the "Preferred Stock Certificates") accompanied by duly executed
stock powers and the original executed version of the Notice of Conversion
as soon as practicable thereafter. The date the Holder faxes or otherwise
delivers to the GTC a Notice of Conversion described in clause (i) in
accordance herewith or such later date specified in the Notice of
Conversion shall be the "Conversion Date."
(ii) TIMING. No later than the third Business Day (as defined below)
following the Conversion Date (the "Delivery Date"), provided that the GTC
has received prior to such date the Preferred Stock Certificates (or the
Holder has satisfied the provisions of Section 6(c), if applicable), GTC
shall issue and deliver to the Holder (or to the Holder's designee) that
number of shares of Common Stock issuable upon conversion of the number of
shares of Series B Convertible Preferred Stock being converted. The person
or persons entitled to receive shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or
holders of such shares at the close of business on the Conversion Date,
unless the Notice of Conversion is revoked as provided in Section 2(b)(iii)
below. The Delivery Date shall be extended until the Business Day following
the date of surrender to GTC of Preferred Stock Certificates to be
converted or satisfaction of the provisions of Section 6(c), if applicable.
For the purposes hereof, "Business Day" shall mean and include any day
other than a Saturday, a Sunday or a day on which banks in New York City,
New York are permitted or required by law to be closed.
(iii) CONTINUING RIGHTS. In addition to any other remedies which may
be available to the Holder, in the event GTC fails for any reason to effect
delivery to the Holder of certificates representing the shares of Common
Stock receivable upon conversion of the shares of Series B Convertible
Preferred Stock by the Business Day following the Delivery Date, the Holder
shall, unless the Holder otherwise elects to retain its status as a holder
of Common Stock by so notifying GTC, retain the rights of a Holder with
respect to such unconverted shares of Series B Convertible Preferred Stock,
and GTC shall immediately return the subject Preferred Stock Certificates
and other conversion documents, if any, delivered by Holder, to the Holder,
or, if shares of Series B Convertible Preferred Stock have not been
surrendered, adjust its records to reflect that such shares of Series B
Convertible Preferred Stock have not been converted.
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(iv) STAMP, DOCUMENTARY AND OTHER SIMILAR TAXES. GTC shall pay all
stamp, documentary, issuance and other similar taxes which may be imposed
with respect to the issuance and delivery of the shares of Common Stock
pursuant to conversion of the shares of Series B Convertible Preferred
Stock; provided that GTC will not be obligated to pay stamp, transfer or
other taxes, resulting from the issuance of Common Stock to any person
other than the registered holder of the Series B Convertible Preferred
Stock.
(v) NO FRACTIONAL SHARES. No fractional shares of Common Stock are to
be issued upon the conversion of shares of Series B Convertible Preferred
Stock, but GTC shall make a cash payment equal to such fraction multiplied
by the per share face value in respect of any fractional share of Common
Stock which would otherwise be issuable; provided that in the event that
sufficient funds are not legally available for the payment of such cash
adjustment any fractional shares of Common Stock shall be rounded up to the
next whole number.
(vi) ELECTRONIC TRANSMISSION. In lieu of delivering physical
certificates representing the shares of Common Stock issuable upon
conversion, and provided GTC's transfer agent is participating in the
Depository Trust Company ("DTC") Fast Automated Securities Transfer
program, upon request of a Holder who shall have previously instructed such
Holder's prime broker to confirm such request to GTC's transfer agent and
upon the Holder's compliance with Section 2(b)(i) above, GTC shall use its
commercially reasonable efforts to cause its transfer agent to
electronically transmit the Common Stock issuable upon conversion to the
Holder by crediting the account of Holder's prime broker with DTC through
its Deposit Withdrawal Agent Commission ("DWAC") system. GTC shall within
three (3) Business Days issue a new certificate representing the shares of
Series B Convertible Preferred Stock not converted pursuant to any Notice
of Conversion.
(c) DIVIDENDS. Dividends shall accrue on each share of Series B
Convertible Preferred Stock on a daily basis (calculated based on a 360-day
year) at a rate of (i) eleven percent (11%) per annum from the Pricing Date
until and including June 30, 2000 and (ii) twelve percent (12%) per annum from
July 1, 2000 and thereafter, on the sum of the Liquidation Value (as defined
below) of such shares of Series B Convertible Preferred Stock plus all
accumulated and unpaid dividends thereupon from and including the Pricing Date
to and including the date on which the Liquidation Value of such share (and all
accumulated or accrued and unpaid dividends thereon) is paid in full or the date
on which such share is converted into shares of Common Stock. For purposes of
the foregoing, to the extent not paid on each June 30 and December 31 (beginning
December 31, 1999) of each year on which shares of Series B Convertible
Preferred Stock are outstanding, dividends that have accrued on each share of
Series B Convertible Preferred Stock during the six-month period (or other
period with respect to December 31, 1999) ending upon such date shall be
accumulated dividends and shall remain accumulated dividends with respect to
such share of Series B Convertible Preferred Stock until paid. Cash dividends
paid upon any share of Series B Convertible Preferred Stock pursuant to this
Section 2(b) will be applied first to the payment of unpaid dividends that are
accrued but not accumulated with respect to such share until all such accrued
dividends have been paid in full, and second to the
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payment of unpaid dividends that have accumulated with respect to such share.
Dividends on the Series B Convertible Preferred Stock shall be paid in full
before any dividend shall be declared or paid on the Common Stock or any other
equity security of GTC.
(d) UNPAID DIVIDENDS PAYABLE IN COMMON STOCK. Upon conversion of the
Series B Convertible Preferred Stock, GTC shall deliver to the holder of the
shares of Series B Convertible Preferred Stock being converted all accumulated
or accrued but unpaid dividends thereon through the date of conversion, provided
that GTC, in its sole discretion, may elect to pay all or any portion of the
accumulated or accrued and unpaid dividends (the "Converted Dividends") payable
in respect of each share of Series B Convertible Preferred Stock by the delivery
of shares of Common Stock having an aggregate fair market value equal to the
amount of the Converted Dividends payable with respect to such share. For the
purposes of this Section 2(d), fair market value as of any date shall mean the
average of the closing prices per share on the Nasdaq National Market for the
five (5) trading days prior to the date of conversion.
(e) ADJUSTMENTS. In the event GTC shall make or issue, or fix a record
date for the determination of holders of Common Stock entitled to receive, a
dividend or other distribution payable in securities of GTC other than shares of
Common Stock, then and in each such event lawful and adequate provision shall be
made so that the holders of Series B Convertible Preferred Stock shall receive
upon conversion thereof in addition to the number of shares of Common Stock
receivable thereupon, the number of securities of GTC which they would have
received had their Series B Convertible Preferred Stock been converted into
Common Stock on the date of such event and had they thereafter, during the
period from the date of such event to and including the date of conversion,
retained such securities receivable by them as aforesaid during such period,
giving application to all adjustments called for during such period under this
Section 2(e) as applied to such distributed securities.
If the Common Stock issuable upon the conversion of the Series B
Convertible Preferred Stock shall be changed into the same or different number
of shares of any class or classes of stock, whether by reclassification or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation or sale of assets
provided for elsewhere herein), then and in each such event the holder of each
share of Series B Convertible Preferred Stock shall have the right thereafter to
convert such share into the kind and amount of shares of stock and other
securities and property receivable upon such reclassification or other change,
by holders of the number of shares of Common Stock into which such shares of
Series B Convertible Preferred Stock might have been converted immediately prior
to such reclassification or change, all subject to further adjustment as
provided herein.
(f) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. GTC shall at all times
reserve and keep available out of its authorized but unissued shares of Common
Stock solely for the purpose of effecting the conversion of the shares of Series
B Convertible Preferred Stock such number of its shares of Common Stock as shall
from time to time be sufficient to effect the conversion of all outstanding
shares of Series B Convertible Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Series B Convertible Preferred
Stock, GTC will
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take such corporate action as may be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
(g) LIQUIDATION PREFERENCE. In the event of any liquidation, dissolution
or winding up of GTC, the holder or holders of the Series B Convertible
Preferred Stock shall be entitled to receive per share, prior and in preference
to any distribution of any of the assets or surplus funds of GTC to the holders
of the Common Stock and any other class or series of capital stock that is
junior to the Series B Convertible Preferred Stock, an amount in cash equal to
(i) one thousand dollars ($1,000.00) (the "Liquidation Value"), plus (ii) any
dividends which have accumulated or accrued with respect thereto but have
remained unpaid at such time.
(h) ADJUSTMENTS
(i) MERGERS AND OTHER REORGANIZATIONS. If at any time or from time to
time there shall be a capital reorganization of the Common Stock (other
than a subdivision, combination, reclassification or exchange of shares
provided for elsewhere herein) or a merger or consolidation of GTC with or
into another corporation or other entity or the sale of all or
substantially all of GTC's properties and assets to any other person, then,
as a part of and as a condition to the effectiveness of such
reorganization, merger, consolidation or sale, lawful and adequate
provision shall be made so that the holders of the Series B Convertible
Preferred Stock shall thereafter be entitled to receive upon conversion of
the Series B Convertible Preferred Stock the number of shares of stock or
other securities or property of GTC or of the successor corporation or
other entity resulting from such merger or consolidation or sale, to which
a holder of Common Stock deliverable upon conversion would have been
entitled on such capital reorganization, merger, consolidation, or sale. In
any such case, appropriate provisions shall be made with respect to the
rights of the holders of the Series B Convertible Preferred Stock after the
reorganization, merger, consolidation or sale to the end that the
provisions of this Section 2 (including without limitation provisions for
adjustment) shall thereafter be applicable, as nearly as may be, with
respect to any shares of stock, securities or assets to be deliverable
thereafter upon the conversion of the Series B Convertible Preferred Stock.
(ii) STOCK SPLITS, DIVIDENDS, ETC. If GTC at any time after the
Pricing Date subdivides (by any stock split, stock dividend,
recapitalization or otherwise) its outstanding shares of Common Stock into
a greater number of shares, the Conversion Price in effect immediately
prior to such subdivision shall be proportionately reduced. If GTC at any
time after the Pricing Date combines (by reverse stock split or otherwise)
its outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
(i) CONVERSION PRICE ADJUSTMENT FOR MATERIAL EVENT. In the event that a
Material Event (as hereinafter defined) occurs after June 30, 1999 and prior to
the Closing (as defined in the Purchase Agreement) and such Material Event has
not been disclosed by a public announcement made by GTC or in a current or
periodic report filed by GTC with the Securities and Exchange Commission (the
"SEC") under the Securities Exchange Act of 1934, as amended
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(hereinafter, a "Company SEC Report"), in each such case not fewer than three
trading days prior to the Closing then, notwithstanding the provisions of
paragraph 2(a) above, the Conversion Price shall be subject to adjustment as
provided in this paragraph 2(i) (a "Price Adjustment Event"). For purposes of
this paragraph 2, "Material Event" shall mean any event or occurrence which is
reasonably likely to materially and adversely affect (1) the business,
properties, results of operations or financial condition of GTC or (2) the
ability of GTC to perform its obligations under this Agreement; provided,
however that none of (x) the execution and delivery of the Purchase Agreement
(including without limitation, any adverse affect, whether direct or indirect,
of such transaction on the price per share at which the Common Stock is traded
on the Nasdaq National Market), (y) the redemption or conversion into shares of
Common Stock of all or any portion of the issued and outstanding shares of GTC's
Series A Convertible Preferred Stock as contemplated by that certain Notice of
Redemption to the Holders of Genzyme Transgenics Corporation Series A
Convertible Preferred Stock issued by GTC on November 12, 1999 (including
without limitation, any adverse affect, whether direct or indirect, of such
transaction on the price per share at which the Common Stock is traded on the
Nasdaq National Market) or (z) any other fact, circumstance, event or occurrence
otherwise disclosed to Genzyme prior to the Pricing Date shall be deemed to
constitute a Material Event. For purposes of this Agreement, the "Price
Determination Period" shall mean the period of five (5) trading days during
which the closing prices of the Common Stock are averaged to calculate the
Pricing Date Fair Market Value. In the event that a Price Adjustment Event shall
have occurred, then: (i) unless the Material Event has already been announced or
disclosed, GTC shall promptly publicly announce or file a Company SEC Report
disclosing such Material Event; and (ii) the Price Determination Period with
respect to the calculation of the Pricing Date Fair Market Value and the
Conversion Price shall be delayed and shall commence on the third trading day
following the date of the public announcement or disclosure of such Material
Event. GTC shall promptly notify each Holder in writing of the occurrence of any
Price Adjustment Event and shall furnish each Holder with a certificate of the
chief financial officer of GTC setting forth the adjusted conversion price and
describing the method used to calculate such adjustment.
(j) VOTING. The holders of Series B Convertible Preferred Stock shall not
be entitled to vote or consent with respect to any matter brought before the
stockholders of GTC for such vote or consent except to the extent otherwise
required under the business corporation law of the Commonwealth of
Massachusetts. Notwithstanding the foregoing, so long as any shares of Series B
Convertible Preferred Stock are outstanding, GTC shall not, without first
obtaining the approval of the holders of not less than sixty-six percent (66%)
of the outstanding shares of Series B Convertible Preferred Stock: (a) alter or
change the rights preferences or privileges of the Series B Convertible
Preferred Stock; (b) alter or change the rights preferences or privileges of any
capital stock of GTC so as to affect adversely the rights, preferences or
privileges of the Series B Convertible Preferred Stock; (c) create or issue any
class or series of capital stock which specifically, by its terms, ranks senior
to or on parity with the Series B Convertible Preferred Stock in terms of
dividends, liquidation preference, redemption or other rights and privileges; or
(d) effect any merger, consolidation or other business combination of GTC with
or into any other person or any sale of all or substantially all of the assets
of GTC.
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3. REDEMPTION
(a) OPTIONAL REDEMPTION. At the election of GTC, in its sole discretion,
the Series B Convertible Preferred Stock may be redeemed, in whole or in part,
at any time upon five (5) Business Days' written notice (such five Business Day
period, the "Notice Period") delivered by GTC to each Holder. In connection with
any such redemption, GTC shall pay to each Holder an amount per share ( the
"Redemption Amount") to be redeemed equal to (i) the Liquidation Value as of
such date plus (ii) any dividends which have accumulated or accrued with respect
to such share as of the redemption date but remain unpaid at such time, such
amount to be payable in cash.
(b) MANDATORY REDEMPTION. Upon the written election (the "Redemption
Election") of a majority in interest of the Holders delivered to GTC not more
than thirty (30) days after the occurrence of any Triggering Event (as defined
below), GTC shall redeem (at the sole discretion of the Holders) the outstanding
Series B Convertible Preferred Stock as follows: (i) if the aggregate amount of
gross proceeds from such Equity Sales exceeds $20,000,000 but is less than
$25,000,000 as of the date of the Redemption Election (the "Redemption Election
Date"), then GTC shall redeem up to $5,000,000 of outstanding Series B
Convertible Preferred Stock for an amount equal to the Redemption Amount then in
effect, (ii) if the aggregate amount of gross proceeds from such Equity Sales
exceeds or equals $25,000,000 but is less than $30,000,000 as of the Redemption
Election Date, then GTC shall redeem up to $7,000,000 of outstanding Series B
Convertible Preferred Stock for an amount equal to the Redemption Amount then in
effect, (iii) if the aggregate amount of gross proceeds from such Equity Sales
exceeds or equals $30,000,000 but is less than $35,000,000 as of the Redemption
Election Date, then GTC shall redeem up to $9,000,000 of outstanding Series B
Convertible Preferred Stock for an amount equal to the Redemption Amount then in
effect; and (iv) if the aggregate amount of gross proceeds from such Equity
Sales exceeds or equals $35,000,000 as of the Redemption Election Date, then GTC
shall redeem all of outstanding Series B Convertible Preferred Stock, or such
portion thereof as the Holder may elect, for an amount equal to the Redemption
Amount then in effect. For the purposes hereof, the term "Equity Sale" shall
mean and include the sale or series of sales of equity securities by GTC for
cash to any person which sale or sales occurs after November 12, 1999 other than
any such issuance or sale (i) to Genzyme or any entity controlled by Genzyme or
(ii) pursuant to an employee benefit plan approved by the stockholders of GTC.
"Triggering Event" shall mean and include the consummation of any of the
transactions described in clauses (i) through (iv) above; provided, however,
that no Triggering Event shall be deemed to have occurred as a result of Equity
Sales which when aggregated with all other Equity Sales occurring after the date
hereof yield gross proceeds to GTC in an amount equal to or less than
$20,000,000. GTC shall promptly notify each Holder in writing of the occurrence
of any Triggering Event.
For all purposes under this Section 3(b), all Equity Sales, Triggering
Events and the amount of Series B Convertible Preferred Stock which the Holder
may elect to have redeemed, shall be determined on a cumulative basis. For
example, assuming that (i) GTC has raised $20,000,001 pursuant to an Equity
Sale, (ii) in connection therewith, the Holder has elected to require GTC to
redeem $3 million of the up to $5 million of Series B Convertible
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Preferred Stock which would then be eligible for redemption hereunder as a
result of such Equity Sales and (iii) GTC subsequently consummates an Equity
Sale yielding additional gross proceeds to GTC of $5 million, GTC would be
deemed to have consummated Equity Sales of $25,000,001; and the Holder would be
entitled to have GTC redeem an aggregate amount of $7 million of Series B
Convertible Preferred Stock. Accordingly, in connection with the subsequent $5
million Equity Sale, the Holder would be entitled to elect that GTC redeem up to
$4 million of Series B Convertible Preferred Stock ($7 million total less the $3
million previously redeemed).
(c) CLOSING OF REDEMPTION. The closing of any redemption of shares of
Series B Convertible Preferred Stock contemplated by Section 3(a) above shall
occur on the first Business Day following the Notice Period. The closing of any
redemption contemplated by Section 3(b) above shall occur on the date which is
five (5) Business Days after the date on which the Company shall have received
the Redemption Election. At the closing of any such redemption, each Holder
shall surrender the Preferred Stock Certificate(s) representing the shares of
Series B Convertible Preferred Stock to be redeemed (or satisfy the provisions
of Section 6(c) below) accompanied by duly executed stock powers.
(d) SPECIAL CIRCUMSTANCES. In connection with any proposed redemption of
Series B Convertible Preferred Stock contemplated hereby, in the event that the
aggregate Redemption Amount payable to the Holder(s) of Series B Convertible
Preferred Stock exceeds the maximum amount (the "Redemption Maximum") which GTC
is authorized to pay in connection with such transaction pursuant to that
certain Credit Agreement, dated as of December 28, 1998, by and between GTC and
Fleet National Bank, as the same may be amended, amended and restated, modified
or refinanced from time to time, the Holder may elect in a writing delivered to
GTC to convert the Excess Shares into that number of shares of Common Stock
equal to the quotient of (x) the aggregate Redemption Amount otherwise payable
in respect of the Excess Shares divided by (y) the average of the closing price
per share reported on the Nasdaq National Market for Common Stock for the five
(5) consecutive trading days immediately preceding the date which is two
Business Days prior to the closing date for such redemption. For the purposes
hereof, "Excess Shares" shall mean that number of shares of Series B Convertible
Preferred Stock equal to (i) the aggregate number of shares of Series B
Convertible Preferred Stock issued and outstanding as of the date of redemption
less (ii) the greatest number of shares of Series B Convertible Preferred Stock
which would be redeemed upon the payment to the Holder(s) of an aggregate amount
equal to the Redemption Maximum.
4. NO IMPAIRMENT
GTC will not, by amendment of its Articles of Organization or By-Laws 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 GTC, but will at all times in good faith assist in the
carrying out of all of the provisions of this Certificate of Designation.
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5. RANK All shares of the Series B Convertible Preferred Stock shall rank
(i) prior to the Common Stock; (ii) prior to any class or series of capital
stock of GTC hereafter created (unless, with the consent of the requisite
Holders of the outstanding shares of Series B Convertible Preferred Stock, such
class or series of capital stock specifically, by its terms, ranks senior to or
pari passu with the Series B Convertible Preferred Stock) (collectively, with
the Common Stock, "Junior Securities"); (iii) pari passu with any class or
series of capital stock of GTC hereafter created (with the consent of the
requisite Holders of the outstanding shares of Series B Convertible Preferred
Stock) specifically ranking, by its terms, on parity with the Series B
Convertible Preferred Stock (the "Pari Passu Securities"); and (iv) junior to
any class or series of capital stock of GTC hereafter created (with the consent
of the requisite Holders of the outstanding shares of Series B Convertible
Preferred Stock) specifically ranking, by its terms, senior to the Preferred
Stock (the "Senior Securities"), in each case as to distribution of assets upon
liquidation, dissolution or winding up of GTC, whether voluntary or involuntary.
6. MISCELLANEOUS
(a) REDEMPTION DEFAULTS. In the event that GTC fails to pay any Holder the
Redemption Amount with respect to any share of Series B Convertible Preferred
Stock, as provided herein, in accordance with the terms of Section 3 above, then
such Holder (i) shall be entitled to interest on the Redemption Amount at a per
annum rate equal to the lower of (x) the sum of the dividend rate then in effect
for the Series B Convertible Preferred Stock plus three percent (3%) and (y) the
highest interest rate permitted by applicable law from the date of the
Redemption Election until the date of redemption hereunder. In the event the
Company is not able to redeem all of the shares of Series B Convertible
Preferred Stock subject to Redemption Election, the Company shall redeem shares
of Series B Convertible Preferred Stock from each Holder, pro rata, based on the
ratio of the total number of shares of Series B Convertible Preferred Stock of
such Holder included in the Redemption Election to the total number of shares of
Convertible Preferred Stock in the Redemption Election. In the case of a
redemption contemplated by Section 3 above, if the Company fails (a "Redemption
Failure") to pay the Redemption Amount for each share for any reason on the date
contemplated by Section 3(c) above and the Holder has complied with the delivery
requirements set forth in Section 3(c), then (assuming there are sufficient
authorized shares of Common Stock) in addition to all other available remedies,
each Holder of Series B Convertible Preferred Stock shall have the right at any
time, so long as the Redemption Failure continues, to convert, upon written
notice, in lieu of the Redemption Amount, each outstanding share of Series B
Convertible Preferred Stock held by such Holder, into the number of shares of
Common Stock of the Company equal to the Redemption Amount, divided by the
Conversion Price then in effect.
(b) CAPITAL IMPAIRMENT. In the event that any section of the Massachusetts
Corporation Law ("MCL"), would be violated by the redemption of any shares of
Series B Convertible Preferred Stock that are otherwise subject to redemption
pursuant to Section 3 above, the Company: (i) will redeem the greatest number of
shares of Series B Convertible Preferred Stock possible without violation of the
MCL; (ii) GTC thereafter shall use its best efforts to take all necessary steps
permitted pursuant to this Certificate of Designation and the agreements entered
into in connection with the issuance of Series B Convertible Preferred Stock
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pursuant hereto in order to remedy its capital structure in order to allow
further redemptions without violation of the MCL; and (iii) from time to time
thereafter as promptly as possible GTC shall redeem shares of Series B
Convertible Preferred Stock at the request of the Holders to the greatest extent
possible without causing a violation of the MCL.
(c) LOST OR STOLEN CERTIFICATES. Upon receipt by GTC of (i) evidence of
the loss, theft, destruction or mutilation of any Series B Preferred Stock
Certificate and (ii)(x) in the case of the loss, theft or destruction of any
such Series B Preferred Stock Certificate, the execution and delivery by the
holder of such shares of Series B Preferred Stock of an affidavit of loss and
indemnification agreement in form and substance satisfactory to GTC and on such
other terms and conditions as the Board of Directors of GTC may prescribe or (y)
in the case of mutilation, upon surrender and cancellation of the Series B
Preferred Stock Certificate, GTC shall execute and deliver one or more new
Series B Preferred Stock Certificate of like tenor and date. GTC shall not be
obligated to reissue any such lost, stolen, destroyed or mutilated Series B
Preferred Stock Certificate if the holder thereof contemporaneously requests to
convert such shares of Series B Preferred Stock.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, GTC has caused this Certificate of Designation to be
duly executed this ___ day of November, 1999.
GENZYME TRANSGENICS CORPORATION
By:__________________________________
Name:
Title:
By:__________________________________
Name:
Title
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EXHIBIT B
Filed herewith as Exhibit 8
<PAGE> 34
EXHIBIT C
Filed herewith as Exhibit 9
<PAGE> 35
EXHIBIT D
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW
AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR (ii) UPON FIRST FURNISHING TO THE COMPANY AN OPINION
OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE
REGISTRATION REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW.
GENZYME TRANSGENICS CORPORATION
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, GENZYME CORPORATION ("GENZYME") is
entitled to subscribe for and purchase up to 55,833 shares (as initially
established by Section 1(b) and subject to adjustment from time to time pursuant
to the provisions of Section 5 hereof) of fully paid and nonassessable Common
Stock of GENZYME TRANSGENICS CORPORATION, a Massachusetts corporation (the
"COMPANY"), at the Warrant Price (as defined in Section 2 hereof), subject to
the provisions and upon the terms and conditions hereinafter set forth. The
shares of Common Stock issuable upon exercise or conversion of this Warrant are
referred to herein as "WARRANT SHARES."
As used herein, the term "COMMON STOCK" shall mean the Company's presently
authorized Common Stock, $0.01 par value per share, and any stock into or for
which such Common Stock may hereafter be converted or exchanged.
This Warrant to purchase Common Stock (this "WARRANT") is issued in
consideration for that certain Stock Purchase Agreement dated as of November __,
1999, (the "STOCK PURCHASE AGREEMENT") between Genzyme and the Company.
1. TERM OF WARRANT.
(a) TERM. Subject to the vesting schedule set forth in the following
paragraph, the purchase or conversion right represented by this Warrant may be
exercised, in whole or in part, at any time during the period beginning on the
date hereof (the "ISSUE DATE") and ending on July __, 2010 (the "EXPIRATION
DATE").
(b) NUMBER OF WARRANT SHARES. The number of Warrant Shares issued to
Genzyme on the Issue Date shall be equal to (i) 55,833 multiplied by (ii) a
fraction, the numerator of which is equal to the number of shares of Series B
Convertible Preferred Stock (as
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defined in the Stock Purchase Agreement) issued to, outstanding and held by
Genzyme on the Issue Date and the denominator of which is 12,500.
(c) EXERCISABILITY. This Warrant shall be exercisable at any time
following the Issue Date.
2. WARRANT PRICE. The initial exercise price of this Warrant shall be the
lower of (i) $6.30 and (ii) the average of the closing price per share reported
on the Nasdaq National Market for Common Stock for the five (5) consecutive
trading days immediately preceding the Issue Date, subject to adjustment from
time to time pursuant to the provisions of Section 5 hereof (the "Warrant
Price").
3. METHOD OF EXERCISE OR CONVERSION; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) EXERCISE. Subject to Section 1 hereof, the purchase right
represented by this Warrant may be exercised by the holder hereof, in whole or
in part, by the surrender of this Warrant (with the notice of exercise form
attached hereto as EXHIBIT 1 duly executed) at the principal office of the
Company and by the payment to the Company, by check or wire transfer, of an
amount equal to the then applicable Warrant Price per share multiplied by the
number of shares then being purchased. The Company agrees that the shares so
purchased shall be deemed to be issued to the holder hereof as the record owner
of such shares as of the close of business on the date on which this Warrant
shall have been surrendered and payment made for such shares as aforesaid. In
the event of any exercise of this Warrant, certificates for the shares of stock
so purchased shall be delivered to the holder hereof within 15 days thereafter
and, unless this Warrant has been fully exercised or expired, a new warrant
representing the portion of the shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the holder
hereof within such 15-day period.
(b) CONVERSION. Pursuant to the following formula and subject to
Section 1 hereof, the holder has a right to convert its purchase rights under
this Warrant (the "CONVERSION RIGHT"), in whole or in part, into a number of
shares of Common Stock of the Company by surrendering this Warrant (with the
notice of exercise form attached hereto as EXHIBIT 1 duly executed) at the
principal office of the Company, specifying the number of shares of Common Stock
of the Company subject to this Warrant which the holder desires to convert.
X = Y (A - B)
---------
A
where X = the number of shares of Common Stock to be issued to the
holder;
Y = the number of shares of Common Stock subject to this Warrant
for which the Conversion Right is being exercised;
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A = the fair market value of one share of Common Stock; and
B = the Warrant Price
As used herein, the fair market value of a share of Common Stock shall
mean, with respect to each share of Common Stock, the closing price per share of
the Company's Common Stock on the principal national securities exchange on
which the Common Stock is then listed or admitted to trading or, if not then
listed or admitted to trading on any such exchange, on The Nasdaq National
Market, or if not then listed or traded on any such exchange or market, the bid
price per share on the Nasdaq Small-Cap Market or, in the sole discretion of the
Board of Directors of the Company, any other over-the-counter market, including
the OTC Bulletin Board, which reports bid and asked or last sale prices and
volume of sales, averaged over the five (5) consecutive trading days prior to
the business day on which notice of exercise duly executed and this Warrant are
duly delivered to the Company. If at any time such quotations are not available,
the current fair market value of a share of Common Stock shall be the highest
price per share which the Company could obtain from a willing buyer (not a
current employee or director) for shares of Common Stock sold by the Company,
from authorized but unissued shares, as determined in good faith by the Board of
Directors of the Company. The Company agrees that the shares so converted shall
be deemed to be issued to the holder hereof as the record owner of such shares
as of the close of business on the date on which this Warrant shall have been
surrendered as aforesaid. In the event of any conversion of this Warrant,
certificates for the shares of stock so converted shall be delivered to the
holder hereof within 15 days thereafter and, unless this Warrant has been fully
converted or expired, a new Warrant representing the portion of the shares, if
any, with respect to which this Warrant shall not then have been converted shall
also be issued to the holder hereof within such 15-day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES. All Common Stock which may be
issued upon the exercise or conversion of this Warrant will, upon issuance, be
fully paid and nonassessable, and free from all taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issuance upon exercise or
conversion of the purchase rights evidenced by this Warrant, a sufficient number
of shares of its Common Stock to provide for the complete exercise of the rights
represented by this Warrant.
5. ADJUSTMENTS.
(a) STOCK DIVIDENDS AND STOCK SPLITS. If, at any time after the date
hereof and before the Expiration Date, (i) the Company shall fix a record date
for the issuance of any stock dividend payable in shares of Common Stock or (ii)
the number of shares of Common Stock outstanding shall have been increased by a
subdivision or split-up of shares of Common Stock, then, on the record date
fixed for the determination of holders of Common Stock entitled to receive such
dividend or immediately after the effective date of such subdivision or
split-up, as the case may be, the number of shares of Common Stock to be
delivered upon exercise of this
D-3
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Warrant will be appropriately increased so that the holder thereafter will be
entitled to receive the number of shares of Common Stock that the holder would
have owned immediately following such action had this Warrant been fully
exercised immediately prior thereto, and the Warrant Price will be appropriately
adjusted.
(b) COMBINATION OF STOCK. If, at any time after the date hereof and
before the Expiration Date, the number of shares of Common Stock outstanding
shall have been decreased by a reverse stock split or other combination of the
outstanding shares of Common Stock, then, immediately after the effective date
of such combination, the number of shares of Common Stock to be delivered upon
exercise of this Warrant will be appropriately decreased so that the holder
thereafter will be entitled to receive the number of shares of Common Stock that
the holder would have owned immediately following such action had such Warrant
been fully exercised immediately prior thereto, and the Warrant Price will be
appropriately adjusted.
(c) REORGANIZATION, ETC. If any capital reorganization of the
Company, or any reclassification of the Common Stock, or any consolidation of
the Company with or merger of the Company with or into any other person or any
sale, lease or other transfer of all or substantially all of the assets of the
Company to any other person (including any individual, partnership, joint
venture, corporation, trust or group thereof) shall be effected in such a way
that, following consummation of such transaction, the holders of Common Stock
shall be entitled to receive stock, securities or assets with respect to or in
exchange for Common Stock, then, upon exercise or conversion of this Warrant in
accordance with Section 3 hereof, the holder shall have the right to receive the
kind and amount of stock, securities or assets receivable upon such
reorganization, reclassification, consolidation, merger or sale, lease or other
transfer by a holder of the number of shares of Common Stock that the holder
would have been entitled to receive upon exercise or conversion of this Warrant
pursuant to Section 3 hereof had such Warrant been exercised or converted
immediately before such reorganization, reclassification, consolidation, merger
or sale, lease or other transfer, subject to adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
5.
(d) RIGHTS OFFERING. If the Company, at any time after the date
hereof and before the Expiration Date, shall issue or sell or fix a record date
for the issuance of rights, options, warrants or convertible or exchangeable
securities to all holders of Common Stock entitling them to subscribe for or
purchase Common Stock (or securities convertible into Common Stock) at a price
per share (or having a conversion price per share) that, together with the value
of any consideration paid for any such rights, options, warrants or convertible
or exchangeable securities (as determined in good faith by the Board of
Directors of the Company) is less than the fair market value of a share of
Common Stock as of the date of such issuance or sale or on such record date:
then, immediately after the date of such issuance or sale or on such record
date, the holder shall have the right to receive, upon the same terms as the
holders of Common Stock, the kind and amount of rights, options, warrants or
convertible or exchangeable securities receivable in such offering by a holder
of the number of shares of Common Stock that the holder would have been entitled
to receive upon exercise or conversion of this Warrant pursuant to Section 1
hereof had such Warrant been exercised or converted immediately before such
issuance or the record date for such instance.
D-4
<PAGE> 39
(e) SPECIAL DIVIDEND. If (other than in dissolution or liquidation)
securities of the Company (other than shares of Common Stock or securities
issued pursuant to a shareholder rights or similar plan) or assets (other than
cash dividends) are issued by way of a dividend on outstanding shares of Common
Stock, then the Warrant Price shall be adjusted so that it shall equal the price
determined by multiplying the Warrant Price in effect immediately prior to the
close of business on the record date for the determination of the stockholders
entitled to receive such dividend by a fraction, the numerator of which shall be
the last sale price of the Common Stock on such record date less the then fair
market value as determined by the Board of Directors of the Company, whose
determination shall be conclusive, of the portion of the securities or assets
distributed applicable to one share of Common Stock, and the denominator of
which shall be such last sale price. Such adjustment shall become effective
immediately prior to the opening of business on the day following such record
date.
(f) LIMITATIONS. Anything in this Section 5 to the contrary
notwithstanding, no adjustment in the Warrant Price in accordance with the
provisions of 5(a), 5(b), 5(c), 5(d) or 5(e), hereof need be made if such
adjustment would amount to a change in such Warrant Price of less than $0.01;
provided, however, that the amount by which any adjustment is not made by reason
of the provisions of this Section 5(f) shall be carried forward and taken into
account at the time of any subsequent adjustment in the Warrant Price.
(g) READJUSTMENTS. If an adjustment is made under Sections 5(a),
5(b), 5(c), 5(d) or 5(e), and the event to which the adjustment relates does not
occur or is rescinded, then any adjustments in the Warrant Price or the number
of Warrant Shares that were made in accordance with such sections shall be
adjusted back to the Warrant Price and the number of Warrant Shares that were in
effect immediately prior to the date of or record date for such event.
(h) NOTICE OF ADJUSTMENT UNDER THIS WARRANT. Upon any adjustment of
the Warrant Price or the number of Warrant Shares, then, and in each such case,
the Company shall give written notice thereof, in the form of an officer's
certificate, to the holder hereof which notice shall state the Warrant Price
resulting from such adjustment and the increase or decrease, if any, in the
number of Warrant Shares at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based. However, failure to give such notice, or any
defect therein, shall not affect the legality or validity of the subject
adjustments.
(i) CERTIFICATE OF INDEPENDENT PUBLIC ACCOUNTANTS. The Company may
retain a firm of independent public accountants of recognized national standing
(who may be any such firm regularly employed by the Company) to make any
computation required under this Section 5, and a certificate signed by such firm
shall be conclusive evidence of the correctness of the computation made under
this Section 5.
6. FRACTIONAL SHARES. No fractional shares of Common Stock will be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the fair market
value of a share of Common Stock as of the date of exercise.
D-5
<PAGE> 40
7. COMPLIANCE WITH THE ACT; REGISTRATION RIGHTS.
(a) COMPLIANCE WITH THE ACT. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the shares of Common Stock to be
issued upon exercise hereof are being acquired for investment for such holder's
own account and not with a view toward distribution hereof or thereof, and that
it will not offer, sell or otherwise dispose of this Warrant or any shares of
Common Stock to be issued upon exercise hereof unless this Warrant has been
registered under the Act and applicable state securities laws or (i) such
registration is not required and (ii) an opinion of counsel satisfactory to the
Company is furnished to the Company to that effect.
(b) REGISTRATION RIGHTS. The holder shall be entitled, with respect
to the shares of Common Stock issuable upon the exercise or conversion hereof,
to the same registration rights as are applicable to the shares of Common Stock
already held by Genzyme, which registration rights are set forth in Section 8 of
the Series A Convertible Preferred Stock Purchase Agreement dated May 1, 1993
between the Company and Genzyme.
8. TRANSFER AND EXCHANGE OF WARRANT.
(a) TRANSFER. This Warrant may be transferred or succeeded to by any
person; provided, however, that the Company is given written notice by such
transferee at the time of such transfer, stating the name and address of the
transferee and identifying the securities with respect to which the rights
hereunder are being assigned.
(b) EXCHANGE. Subject to compliance with the terms hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, at the
office of the Company by the holder hereof, in person or by duly authorized
attorney, upon surrender of this Warrant properly endorsed. Each taker and
holder of this Warrant, by taking or holding the same, consents and agrees that
this Warrant, when endorsed in blank, shall be deemed negotiable; provided that
the last holder of this Warrant as registered on the books of the Company may be
treated by the Company and all persons dealing with this Warrant as the absolute
owner hereof for any purposes and as the person entitled to exercise the rights
represented by this Warrant or to transfer hereof on the books of the Company,
any notice to the contrary notwithstanding, unless and until such holder seeks
to transfer registered ownership of this Warrant on the books of the Company and
such transfer is effected.
9. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. No holder of this Warrant, as such,
shall be entitled to vote or receive dividends or be deemed the holder of Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value,
D-6
<PAGE> 41
consolidation, merger, conveyance or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until this
Warrant shall have been exercised or converted and the shares purchasable upon
the exercise or conversion hereof shall have become deliverable, as provided
herein.
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity
agreement, or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and cancellation of this Warrant, the
Company, at its expense, will execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
(c) NOTICE. Any notice given to either party under this Warrant shall
be in writing, and any notice hereunder shall be deemed to have been given upon
the earlier of (i) delivery thereof by hand delivery, by courier, or by standard
form of telecommunication, and (ii) three (3) business days after the mailing
thereof if sent registered mail with postage prepaid, addressed to the Company
at its principal executive offices and to the holder at its address set forth in
the Company's books and records or at such other address as the holder may have
provided to the Company in writing.
(d) NO IMPAIRMENT. The Company will not, by amendment of its Restated
Articles of Organization of 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 Company, but will at all
times in good faith assist in the carrying out of all the provisions in the
Warrant.
(e) GOVERNING LAW. This Warrant shall be governed by and construed
under the laws of the Commonwealth of Massachusetts.
(Signature page follows)
D-7
<PAGE> 42
IN WITNESS WHEREOF, this Warrant is executed as of this ____ day of July,
2000.
GENZYME TRANSGENICS CORPORATION
By:_____________________________________
Name: John B. Green
Title: Vice President and Chief
Financial Officer
D-8
<PAGE> 43
EXHIBIT 1
NOTICE OF EXERCISE
TO: GENZYME TRANSGENICS CORPORATION
1. Check Box that Applies:
[ ] The undersigned hereby elects to purchase ______ shares of Common
Stock of GENZYME TRANSGENICS CORPORATION pursuant to the terms of the attached
Warrant, and tenders herewith cash payment of the purchase price of such shares
in full.
[ ] The undersigned hereby elects to convert ______ shares subject to the
attached Warrant into shares of Common Stock of GENZYME TRANSGENICS CORPORATION
pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
__________________________________
(Name)
__________________________________
__________________________________
(Address)
__________________________________
Signature
D-9
<PAGE> 1
EXHIBIT 8
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW
AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR (ii) UPON FIRST FURNISHING TO THE COMPANY AN OPINION
OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE
REGISTRATION REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW.
GENZYME TRANSGENICS CORPORATION
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, GENZYME CORPORATION ("GENZYME") is
entitled to subscribe for and purchase 55,833 shares (subject to adjustment from
time to time pursuant to the provisions of Section 5 hereof) of fully paid and
nonassessable Common Stock of GENZYME TRANSGENICS CORPORATION, a Massachusetts
corporation (the "COMPANY"), at the Warrant Price (as defined in Section 2
hereof), subject to the provisions and upon the terms and conditions hereinafter
set forth. The shares of Common Stock issuable upon exercise or conversion of
this Warrant are referred to herein as "WARRANT SHARES".
As used herein, the term "COMMON STOCK" shall mean the Company's presently
authorized Common Stock, $0.01 par value per share, and any stock into or for
which such Common Stock may hereafter be converted or exchanged.
This Warrant to purchase Common Stock (this "WARRANT") is issued in
consideration for that certain Stock Purchase Agreement dated as of November 12,
1999, (the "STOCK PURCHASE AGREEMENT") between Genzyme and the Company.
1. TERM OF WARRANT.
(a) TERM. Subject to the vesting schedule set forth in the following
paragraph, the purchase or conversion right represented by this Warrant may be
exercised, in whole or in part, at any time during the period beginning on the
date hereof (the "ISSUE DATE") and ending on November 12, 2009 (the "EXPIRATION
DATE").
(b) EXERCISABILITY. This Warrant shall be exercisable at any time
following the Issue Date.
2. WARRANT PRICE. The initial exercise price of this Warrant is $6.30,
subject to adjustment from time to time pursuant to the provisions of Section 5
hereof (the "WARRANT PRICE").
<PAGE> 2
3. METHOD OF EXERCISE OR CONVERSION; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) EXERCISE. Subject to Section 1 hereof, the purchase right
represented by this Warrant may be exercised by the holder hereof, in whole or
in part, by the surrender of this Warrant (with the notice of exercise form
attached hereto as EXHIBIT 1 duly executed) at the principal office of the
Company and by the payment to the Company, by check or wire transfer, of an
amount equal to the then applicable Warrant Price per share multiplied by the
number of shares then being purchased. The Company agrees that the shares so
purchased shall be deemed to be issued to the holder hereof as the record owner
of such shares as of the close of business on the date on which this Warrant
shall have been surrendered and payment made for such shares as aforesaid. In
the event of any exercise of this Warrant, certificates for the shares of stock
so purchased shall be delivered to the holder hereof within 15 days thereafter
and, unless this Warrant has been fully exercised or expired, a new warrant
representing the portion of the shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the holder
hereof within such 15-day period.
(b) CONVERSION. Pursuant to the following formula and subject to
Section 1 hereof, the holder has a right to convert its purchase rights under
this Warrant (the "CONVERSION RIGHT"), in whole or in part, into a number of
shares of Common Stock of the Company by surrendering this Warrant (with the
notice of exercise form attached hereto as EXHIBIT 1 duly executed) at the
principal office of the Company, specifying the number of shares of Common Stock
of the Company subject to this Warrant which the holder desires to convert.
X = Y (A - B)
---------
A
where X = the number of shares of Common Stock to be issued to the
holder;
Y = the number of shares of Common Stock subject to this Warrant
for which the Conversion Right is being exercised;
A = the fair market value of one share of Common Stock; and
B = the Warrant Price
As used herein, the fair market value of a share of Common Stock shall
mean, with respect to each share of Common Stock, the closing price per share of
the Company's Common Stock on the principal national securities exchange on
which the Common Stock is then listed or admitted to trading or, if not then
listed or admitted to trading on any such exchange, on The Nasdaq National
Market, or if not then listed or traded on any such exchange or market, the bid
price per share on the Nasdaq Small-Cap Market or, in the sole discretion of the
Board of Directors of the Company, any other over-the-counter market, including
the OTC Bulletin
2
<PAGE> 3
Board, which reports bid and asked or last sale prices and volume of sales,
averaged over the five consecutive trading days prior to the business day on
which notice of exercise duly executed and this Warrant are duly delivered to
the Company. If at any time such quotations are not available, the current fair
market value of a share of Common Stock shall be the highest price per share
which the Company could obtain from a willing buyer (not a current employee or
director) for shares of Common Stock sold by the Company, from authorized but
unissued shares, as determined in good faith by the Board of Directors of the
Company. The Company agrees that the shares so converted shall be deemed to be
issued to the holder hereof as the record owner of such shares as of the close
of business on the date on which this Warrant shall have been surrendered as
aforesaid. In the event of any conversion of this Warrant, certificates for the
shares of stock so converted shall be delivered to the holder hereof within 15
days thereafter and, unless this Warrant has been fully converted or expired, a
new Warrant representing the portion of the shares, if any, with respect to
which this Warrant shall not then have been converted shall also be issued to
the holder hereof within such 15-day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES. All Common Stock which may be
issued upon the exercise or conversion of this Warrant will, upon issuance, be
fully paid and nonassessable, and free from all taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issuance upon exercise or
conversion of the purchase rights evidenced by this Warrant, a sufficient number
of shares of its Common Stock to provide for the complete exercise of the rights
represented by this Warrant.
5. ADJUSTMENTS.
(a) STOCK DIVIDENDS AND STOCK SPLITS. If, at any time after the date
hereof and before the Expiration Date, (i) the Company shall fix a record date
for the issuance of any stock dividend payable in shares of Common Stock or (ii)
the number of shares of Common Stock outstanding shall have been increased by a
subdivision or split-up of shares of Common Stock, then, on the record date
fixed for the determination of holders of Common Stock entitled to receive such
dividend or immediately after the effective date of such subdivision or
split-up, as the case may be, the number of shares of Common Stock to be
delivered upon exercise of this Warrant will be appropriately increased so that
the holder thereafter will be entitled to receive the number of shares of Common
Stock that the holder would have owned immediately following such action had
this Warrant been fully exercised immediately prior thereto, and the Warrant
Price will be appropriately adjusted.
(b) COMBINATION OF STOCK. If, at any time after the date hereof and
before the Expiration Date, the number of shares of Common Stock outstanding
shall have been decreased by a reverse stock split or other combination of the
outstanding shares of Common Stock, then, immediately after the effective date
of such combination, the number of shares of Common Stock to be delivered upon
exercise of this Warrant will be appropriately decreased so that the holder
thereafter will be entitled to receive the number of shares of Common Stock that
the
3
<PAGE> 4
holder would have owned immediately following such action had such Warrant been
fully exercised immediately prior thereto, and the Warrant Price will be
appropriately adjusted.
(c) REORGANIZATION, ETC. If any capital reorganization of the
Company, or any reclassification of the Common Stock, or any consolidation of
the Company with or merger of the Company with or into any other person or any
sale, lease or other transfer of all or substantially all of the assets of the
Company to any other person (including any individual, partnership, joint
venture, corporation, trust or group thereof) shall be effected in such a way
that, following consummation of such transaction, the holders of Common Stock
shall be entitled to receive stock, securities or assets with respect to or in
exchange for Common Stock, then, upon exercise or conversion of this Warrant in
accordance with Section 3 hereof, the holder shall have the right to receive the
kind and amount of stock, securities or assets receivable upon such
reorganization, reclassification, consolidation, merger or sale, lease or other
transfer by a holder of the number of shares of Common Stock that the holder
would have been entitled to receive upon exercise or conversion of this Warrant
pursuant to Section 3 hereof had such Warrant been exercised or converted
immediately before such reorganization, reclassification, consolidation, merger
or sale, lease or other transfer, subject to adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
5.
(d) RIGHTS OFFERING. If the Company, at any time after the date
hereof and before the Expiration Date, shall issue or sell or fix a record date
for the issuance of rights, options, warrants or convertible or exchangeable
securities to all holders of Common Stock entitling them to subscribe for or
purchase Common Stock (or securities convertible into Common Stock) at a price
per share (or having a conversion price per share) that, together with the value
of any consideration paid for any such rights, options, warrants or convertible
or exchangeable securities (as determined in good faith by the Board of
Directors of the Company) is less than the fair market value of a share of
Common Stock as of the date of such issuance or sale or on such record date:
then, immediately after the date of such issuance or sale or on such record
date, the holder shall have the right to receive, upon the same terms as the
holders of Common Stock, the kind and amount of rights, options, warrants or
convertible or exchangeable securities receivable in such offering by a holder
of the number of shares of Common Stock that the holder would have been entitled
to receive upon exercise or conversion of this Warrant pursuant to Section 1
hereof had such Warrant been exercised or converted immediately before such
issuance or the record date for such instance.
(e) SPECIAL DIVIDEND. If (other than in dissolution or liquidation)
securities of the Company (other than shares of Common Stock or securities
issued pursuant to a shareholder rights or similar plan) or assets (other than
cash dividends) are issued by way of a dividend on outstanding shares of Common
Stock, then the Warrant Price shall be adjusted so that it shall equal the price
determined by multiplying the Warrant Price in effect immediately prior to the
close of business on the record date for the determination of the stockholders
entitled to receive such dividend by a fraction, the numerator of which shall be
the last sale price of the Common Stock on such record date less the then fair
market value as determined by the Board of Directors of the Company, whose
determination shall be conclusive, of the portion of the securities or assets
distributed applicable to one share of Common Stock, and the denominator of
which shall
4
<PAGE> 5
be such last sale price. Such adjustment shall become effective immediately
prior to the opening of business on the day following such record date.
(f) LIMITATIONS. Anything in this Section 5 to the contrary
notwithstanding, no adjustment in the Warrant Price in accordance with the
provisions of 5(a), 5(b), 5(c), 5(d) or 5(e), hereof need be made if such
adjustment would amount to a change in such Warrant Price of less than $0.01;
provided, however, that the amount by which any adjustment is not made by reason
of the provisions of this Section 5(f) shall be carried forward and taken into
account at the time of any subsequent adjustment in the Warrant Price.
(g) READJUSTMENTS. If an adjustment is made under Sections 5(a),
5(b), 5(c), 5(d) or 5(e), and the event to which the adjustment relates does not
occur or is rescinded, then any adjustments in the Warrant Price or the number
of Warrant Shares that were made in accordance with such sections shall be
adjusted back to the Warrant Price and the number of Warrant Shares that were in
effect immediately prior to the date of or record date for such event.
(h) NOTICE OF ADJUSTMENT UNDER THIS WARRANT. Upon any adjustment of
the Warrant Price or the number of Warrant Shares, then, and in each such case,
the Company shall give written notice thereof, in the form of an officer's
certificate, to the holder hereof which notice shall state the Warrant Price
resulting from such adjustment and the increase or decrease, if any, in the
number of Warrant Shares at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based. However, failure to give such notice, or any
defect therein, shall not affect the legality or validity of the subject
adjustments.
(i) CERTIFICATE OF INDEPENDENT PUBLIC ACCOUNTANTS. The Company may
retain a firm of independent public accountants of recognized national standing
(who may be any such firm regularly employed by the Company) to make any
computation required under this Section 5, and a certificate signed by such firm
shall be conclusive evidence of the correctness of the computation made under
this Section 5.
6. FRACTIONAL SHARES. No fractional shares of Common Stock will be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the fair market
value of a share of Common Stock as of the date of exercise.
7. COMPLIANCE WITH THE ACT; REGISTRATION RIGHTS.
(a) COMPLIANCE WITH THE ACT. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the shares of Common Stock to be
issued upon exercise hereof are being acquired for investment for such holder's
own account and not with a view toward distribution hereof or thereof, and that
it will not offer, sell or otherwise dispose of this Warrant or any shares of
Common Stock to be issued upon exercise hereof unless this Warrant has been
registered under the Act and applicable state securities laws or (i) such
registration is not required and (ii) an opinion of counsel satisfactory to the
Company is furnished to the Company to that effect.
5
<PAGE> 6
(b) REGISTRATION RIGHTS. The holder shall be entitled, with respect
to the shares of Common Stock issuable upon the exercise or conversion hereof,
to the same registration rights as are applicable to the shares of Common Stock
already held by Genzyme, which registration rights are set forth in Section 8 of
the Series A Convertible Preferred Stock Purchase Agreement dated May 1, 1993
between the Company and Genzyme.
8. TRANSFER AND EXCHANGE OF WARRANT.
(a) TRANSFER. This Warrant may be transferred or succeeded to by any
person; provided, however, that the Company is given written notice by such
transferee at the time of such transfer, stating the name and address of the
transferee and identifying the securities with respect to which the rights
hereunder are being assigned.
(b) EXCHANGE. Subject to compliance with the terms hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, at the
office of the Company by the holder hereof, in person or by duly authorized
attorney, upon surrender of this Warrant properly endorsed. Each taker and
holder of this Warrant, by taking or holding the same, consents and agrees that
this Warrant, when endorsed in blank, shall be deemed negotiable; provided that
the last holder of this Warrant as registered on the books of the Company may be
treated by the Company and all persons dealing with this Warrant as the absolute
owner hereof for any purposes and as the person entitled to exercise the rights
represented by this Warrant or to transfer hereof on the books of the Company,
any notice to the contrary notwithstanding, unless and until such holder seeks
to transfer registered ownership of this Warrant on the books of the Company and
such transfer is effected.
9. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. No holder of this Warrant, as such,
shall be entitled to vote or receive dividends or be deemed the holder of Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been exercised or
converted and the shares purchasable upon the exercise or conversion hereof
shall have become deliverable, as provided herein.
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity
agreement, or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and cancellation of this
6
<PAGE> 7
Warrant, the Company, at its expense, will execute and deliver, in lieu of this
Warrant, a new warrant of like tenor.
(c) NOTICE. Any notice given to either party under this Warrant shall
be in writing, and any notice hereunder shall be deemed to have been given upon
the earlier of (i) delivery thereof by hand delivery, by courier, or by standard
form of telecommunication, and (ii) three (3) business days after the mailing
thereof if sent registered mail with postage prepaid, addressed to the Company
at its principal executive offices and to the holder at its address set forth in
the Company's books and records or at such other address as the holder may have
provided to the Company in writing.
(d) NO IMPAIRMENT. The Company will not, by amendment of its Restated
Articles of Organization of 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 Company, but will at all
times in good faith assist in the carrying out of all the provisions in the
Warrant.
(e) GOVERNING LAW. This Warrant shall be governed by and construed
under the laws of the Commonwealth of Massachusetts.
(Signature page follows)
7
<PAGE> 8
IN WITNESS WHEREOF, this Warrant is executed as of this 12th day of
November, 1999.
GENZYME TRANSGENICS CORPORATION
By: /s/ John B. Green
------------------------------------------
Name: John B. Green
Title: Vice President and Chief Financial
Officer
8
<PAGE> 9
EXHIBIT 1
NOTICE OF EXERCISE
TO: GENZYME TRANSGENICS CORPORATION
1. Check Box that Applies:
[ ] The undersigned hereby elects to purchase ______ shares of Common
Stock of GENZYME TRANSGENICS CORPORATION pursuant to the terms of the attached
Warrant, and tenders herewith cash payment of the purchase price of such shares
in full.
[ ] The undersigned hereby elects to convert ______ shares subject to the
attached Warrant into shares of Common Stock of GENZYME TRANSGENICS CORPORATION
pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
_______________________________________
(Name)
_______________________________________
_______________________________________
(Address)
_______________________________________
Signature
9
<PAGE> 1
EXHIBIT 9
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW
AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR (ii) UPON FIRST FURNISHING TO THE COMPANY AN OPINION
OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER IS NOT IN VIOLATION OF THE
REGISTRATION REQUIREMENTS OF THE ACT OR ANY STATE SECURITIES LAW.
GENZYME TRANSGENICS CORPORATION
WARRANT TO PURCHASE COMMON STOCK
This certifies that, for value received, GENZYME CORPORATION ("GENZYME") is
entitled to subscribe for and purchase up to 55,833 shares (as initially
established by Section 1(b) and subject to adjustment from time to time pursuant
to the provisions of Section 5 hereof) of fully paid and nonassessable Common
Stock of GENZYME TRANSGENICS CORPORATION, a Massachusetts corporation (the
"COMPANY"), at the Warrant Price (as defined in Section 2 hereof), subject to
the provisions and upon the terms and conditions hereinafter set forth. The
shares of Common Stock issuable upon exercise or conversion of this Warrant are
referred to herein as "WARRANT SHARES."
As used herein, the term "COMMON STOCK" shall mean the Company's presently
authorized Common Stock, $0.01 par value per share, and any stock into or for
which such Common Stock may hereafter be converted or exchanged.
This Warrant to purchase Common Stock (this "WARRANT") is issued in
consideration for that certain Stock Purchase Agreement dated as of November 12,
1999, (the "STOCK PURCHASE AGREEMENT") between Genzyme and the Company.
1. TERM OF WARRANT.
(a) TERM. Subject to the vesting schedule set forth in the following
paragraph, the purchase or conversion right represented by this Warrant may be
exercised, in whole or in part, at any time during the period beginning on the
date hereof (the "ISSUE DATE") and ending on November 22, 2009 (the "EXPIRATION
DATE").
(b) NUMBER OF WARRANT SHARES. The number of Warrant Shares issued to
Genzyme on the Issue Date shall be equal to (i) 55,833 multiplied by (ii) a
fraction, the
<PAGE> 2
numerator of which is equal to the number of shares of Series B Convertible
Preferred Stock (as defined in the Stock Purchase Agreement) issued to,
outstanding and held by Genzyme on the Issue Date and the denominator of which
is 12,500.
(c) EXERCISABILITY. This Warrant shall be exercisable at any time
following the Issue Date.
2. WARRANT PRICE. The initial exercise price of this Warrant is $6.30,
subject to adjustment from time to time pursuant to the provisions of Section 5
hereof (the "WARRANT PRICE").
3. METHOD OF EXERCISE OR CONVERSION; PAYMENT; ISSUANCE OF NEW WARRANT.
(a) EXERCISE. Subject to Section 1 hereof, the purchase right
represented by this Warrant may be exercised by the holder hereof, in whole or
in part, by the surrender of this Warrant (with the notice of exercise form
attached hereto as EXHIBIT 1 duly executed) at the principal office of the
Company and by the payment to the Company, by check or wire transfer, of an
amount equal to the then applicable Warrant Price per share multiplied by the
number of shares then being purchased. The Company agrees that the shares so
purchased shall be deemed to be issued to the holder hereof as the record owner
of such shares as of the close of business on the date on which this Warrant
shall have been surrendered and payment made for such shares as aforesaid. In
the event of any exercise of this Warrant, certificates for the shares of stock
so purchased shall be delivered to the holder hereof within 15 days thereafter
and, unless this Warrant has been fully exercised or expired, a new warrant
representing the portion of the shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued to the holder
hereof within such 15-day period.
(b) CONVERSION. Pursuant to the following formula and subject to
Section 1 hereof, the holder has a right to convert its purchase rights under
this Warrant (the "CONVERSION RIGHT"), in whole or in part, into a number of
shares of Common Stock of the Company by surrendering this Warrant (with the
notice of exercise form attached hereto as EXHIBIT 1 duly executed) at the
principal office of the Company, specifying the number of shares of Common Stock
of the Company subject to this Warrant which the holder desires to convert.
X = Y (A - B)
---------
A
where X = the number of shares of Common Stock to be issued to the
holder;
Y = the number of shares of Common Stock subject to this Warrant
for which the Conversion Right is being exercised;
A = the fair market value of one share of Common Stock; and
B = the Warrant Price
2
<PAGE> 3
As used herein, the fair market value of a share of Common Stock shall
mean, with respect to each share of Common Stock, the closing price per share of
the Company's Common Stock on the principal national securities exchange on
which the Common Stock is then listed or admitted to trading or, if not then
listed or admitted to trading on any such exchange, on The Nasdaq National
Market, or if not then listed or traded on any such exchange or market, the bid
price per share on the Nasdaq Small-Cap Market or, in the sole discretion of the
Board of Directors of the Company, any other over-the-counter market, including
the OTC Bulletin Board, which reports bid and asked or last sale prices and
volume of sales, averaged over the five (5) consecutive trading days prior to
the business day on which notice of exercise duly executed and this Warrant are
duly delivered to the Company. If at any time such quotations are not available,
the current fair market value of a share of Common Stock shall be the highest
price per share which the Company could obtain from a willing buyer (not a
current employee or director) for shares of Common Stock sold by the Company,
from authorized but unissued shares, as determined in good faith by the Board of
Directors of the Company. The Company agrees that the shares so converted shall
be deemed to be issued to the holder hereof as the record owner of such shares
as of the close of business on the date on which this Warrant shall have been
surrendered as aforesaid. In the event of any conversion of this Warrant,
certificates for the shares of stock so converted shall be delivered to the
holder hereof within 15 days thereafter and, unless this Warrant has been fully
converted or expired, a new Warrant representing the portion of the shares, if
any, with respect to which this Warrant shall not then have been converted shall
also be issued to the holder hereof within such 15-day period.
4. STOCK FULLY PAID; RESERVATION OF SHARES. All Common Stock which may be
issued upon the exercise or conversion of this Warrant will, upon issuance, be
fully paid and nonassessable, and free from all taxes, liens and charges with
respect to the issue thereof. During the period within which the rights
represented by this Warrant may be exercised, the Company will at all times have
authorized, and reserved for the purpose of the issuance upon exercise or
conversion of the purchase rights evidenced by this Warrant, a sufficient number
of shares of its Common Stock to provide for the complete exercise of the rights
represented by this Warrant.
5. ADJUSTMENTS.
(a) STOCK DIVIDENDS AND STOCK SPLITS. If, at any time after the date
hereof and before the Expiration Date, (i) the Company shall fix a record date
for the issuance of any stock dividend payable in shares of Common Stock or (ii)
the number of shares of Common Stock outstanding shall have been increased by a
subdivision or split-up of shares of Common Stock, then, on the record date
fixed for the determination of holders of Common Stock entitled to receive such
dividend or immediately after the effective date of such subdivision or
split-up, as the case may be, the number of shares of Common Stock to be
delivered upon exercise of this Warrant will be appropriately increased so that
the holder thereafter will be entitled to receive the number of shares of Common
Stock that the holder would have owned immediately following such action had
this Warrant been fully exercised immediately prior thereto, and the Warrant
Price will be appropriately adjusted.
3
<PAGE> 4
(b) COMBINATION OF STOCK. If, at any time after the date hereof and
before the Expiration Date, the number of shares of Common Stock outstanding
shall have been decreased by a reverse stock split or other combination of the
outstanding shares of Common Stock, then, immediately after the effective date
of such combination, the number of shares of Common Stock to be delivered upon
exercise of this Warrant will be appropriately decreased so that the holder
thereafter will be entitled to receive the number of shares of Common Stock that
the holder would have owned immediately following such action had such Warrant
been fully exercised immediately prior thereto, and the Warrant Price will be
appropriately adjusted.
(c) REORGANIZATION, ETC. If any capital reorganization of the
Company, or any reclassification of the Common Stock, or any consolidation of
the Company with or merger of the Company with or into any other person or any
sale, lease or other transfer of all or substantially all of the assets of the
Company to any other person (including any individual, partnership, joint
venture, corporation, trust or group thereof) shall be effected in such a way
that, following consummation of such transaction, the holders of Common Stock
shall be entitled to receive stock, securities or assets with respect to or in
exchange for Common Stock, then, upon exercise or conversion of this Warrant in
accordance with Section 3 hereof, the holder shall have the right to receive the
kind and amount of stock, securities or assets receivable upon such
reorganization, reclassification, consolidation, merger or sale, lease or other
transfer by a holder of the number of shares of Common Stock that the holder
would have been entitled to receive upon exercise or conversion of this Warrant
pursuant to Section 3 hereof had such Warrant been exercised or converted
immediately before such reorganization, reclassification, consolidation, merger
or sale, lease or other transfer, subject to adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
5.
(d) RIGHTS OFFERING. If the Company, at any time after the date
hereof and before the Expiration Date, shall issue or sell or fix a record date
for the issuance of rights, options, warrants or convertible or exchangeable
securities to all holders of Common Stock entitling them to subscribe for or
purchase Common Stock (or securities convertible into Common Stock) at a price
per share (or having a conversion price per share) that, together with the value
of any consideration paid for any such rights, options, warrants or convertible
or exchangeable securities (as determined in good faith by the Board of
Directors of the Company) is less than the fair market value of a share of
Common Stock as of the date of such issuance or sale or on such record date:
then, immediately after the date of such issuance or sale or on such record
date, the holder shall have the right to receive, upon the same terms as the
holders of Common Stock, the kind and amount of rights, options, warrants or
convertible or exchangeable securities receivable in such offering by a holder
of the number of shares of Common Stock that the holder would have been entitled
to receive upon exercise or conversion of this Warrant pursuant to Section 1
hereof had such Warrant been exercised or converted immediately before such
issuance or the record date for such instance.
(e) SPECIAL DIVIDEND. If (other than in dissolution or liquidation)
securities of the Company (other than shares of Common Stock or securities
issued pursuant to a shareholder rights or similar plan) or assets (other than
cash dividends) are issued by way of a dividend on outstanding shares of Common
Stock, then the Warrant Price shall be adjusted so that it shall
4
<PAGE> 5
equal the price determined by multiplying the Warrant Price in effect
immediately prior to the close of business on the record date for the
determination of the stockholders entitled to receive such dividend by a
fraction, the numerator of which shall be the last sale price of the Common
Stock on such record date less the then fair market value as determined by the
Board of Directors of the Company, whose determination shall be conclusive, of
the portion of the securities or assets distributed applicable to one share of
Common Stock, and the denominator of which shall be such last sale price. Such
adjustment shall become effective immediately prior to the opening of business
on the day following such record date.
(f) LIMITATIONS. Anything in this Section 5 to the contrary
notwithstanding, no adjustment in the Warrant Price in accordance with the
provisions of 5(a), 5(b), 5(c), 5(d) or 5(e), hereof need be made if such
adjustment would amount to a change in such Warrant Price of less than $0.01;
provided, however, that the amount by which any adjustment is not made by reason
of the provisions of this Section 5(f) shall be carried forward and taken into
account at the time of any subsequent adjustment in the Warrant Price.
(g) READJUSTMENTS. If an adjustment is made under Sections 5(a),
5(b), 5(c), 5(d) or 5(e), and the event to which the adjustment relates does not
occur or is rescinded, then any adjustments in the Warrant Price or the number
of Warrant Shares that were made in accordance with such sections shall be
adjusted back to the Warrant Price and the number of Warrant Shares that were in
effect immediately prior to the date of or record date for such event.
(h) NOTICE OF ADJUSTMENT UNDER THIS WARRANT. Upon any adjustment of
the Warrant Price or the number of Warrant Shares, then, and in each such case,
the Company shall give written notice thereof, in the form of an officer's
certificate, to the holder hereof which notice shall state the Warrant Price
resulting from such adjustment and the increase or decrease, if any, in the
number of Warrant Shares at such price upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation and the facts upon
which such calculation is based. However, failure to give such notice, or any
defect therein, shall not affect the legality or validity of the subject
adjustments.
(i) CERTIFICATE OF INDEPENDENT PUBLIC ACCOUNTANTS. The Company may
retain a firm of independent public accountants of recognized national standing
(who may be any such firm regularly employed by the Company) to make any
computation required under this Section 5, and a certificate signed by such firm
shall be conclusive evidence of the correctness of the computation made under
this Section 5.
6. FRACTIONAL SHARES. No fractional shares of Common Stock will be issued
in connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the fair market
value of a share of Common Stock as of the date of exercise.
7. COMPLIANCE WITH THE ACT; REGISTRATION RIGHTS.
(a) COMPLIANCE WITH THE ACT. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the shares of Common Stock to be
issued upon exercise
5
<PAGE> 6
hereof are being acquired for investment for such holder's own account and not
with a view toward distribution hereof or thereof, and that it will not offer,
sell or otherwise dispose of this Warrant or any shares of Common Stock to be
issued upon exercise hereof unless this Warrant has been registered under the
Act and applicable state securities laws or (i) such registration is not
required and (ii) an opinion of counsel satisfactory to the Company is furnished
to the Company to that effect.
(b) REGISTRATION RIGHTS. The holder shall be entitled, with respect
to the shares of Common Stock issuable upon the exercise or conversion hereof,
to the same registration rights as are applicable to the shares of Common Stock
already held by Genzyme, which registration rights are set forth in Section 8 of
the Series A Convertible Preferred Stock Purchase Agreement dated May 1, 1993
between the Company and Genzyme.
8. TRANSFER AND EXCHANGE OF WARRANT.
(a) TRANSFER. This Warrant may be transferred or succeeded to by any
person; provided, however, that the Company is given written notice by such
transferee at the time of such transfer, stating the name and address of the
transferee and identifying the securities with respect to which the rights
hereunder are being assigned.
(b) EXCHANGE. Subject to compliance with the terms hereof, this Warrant
and all rights hereunder are transferable, in whole or in part, at the office of
the Company by the holder hereof, in person or by duly authorized attorney, upon
surrender of this Warrant properly endorsed. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that this Warrant,
when endorsed in blank, shall be deemed negotiable; provided that the last
holder of this Warrant as registered on the books of the Company may be treated
by the Company and all persons dealing with this Warrant as the absolute owner
hereof for any purposes and as the person entitled to exercise the rights
represented by this Warrant or to transfer hereof on the books of the Company,
any notice to the contrary notwithstanding, unless and until such holder seeks
to transfer registered ownership of this Warrant on the books of the Company and
such transfer is effected.
9. MISCELLANEOUS.
(a) NO RIGHTS AS SHAREHOLDER. No holder of this Warrant, as such,
shall be entitled to vote or receive dividends or be deemed the holder of Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value or change of stock to no par value, consolidation, merger, conveyance or
otherwise) or to receive notice of meetings, or to receive dividends or
subscription rights or otherwise until this Warrant shall have been exercised or
6
<PAGE> 7
converted and the shares purchasable upon the exercise or conversion hereof
shall have become deliverable, as provided herein.
(b) REPLACEMENT. On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity
agreement, or bond reasonably satisfactory in form and amount to the Company or,
in the case of mutilation, on surrender and cancellation of this Warrant, the
Company, at its expense, will execute and deliver, in lieu of this Warrant, a
new warrant of like tenor.
(c) NOTICE. Any notice given to either party under this Warrant shall
be in writing, and any notice hereunder shall be deemed to have been given upon
the earlier of (i) delivery thereof by hand delivery, by courier, or by standard
form of telecommunication, and (ii) three (3) business days after the mailing
thereof if sent registered mail with postage prepaid, addressed to the Company
at its principal executive offices and to the holder at its address set forth in
the Company's books and records or at such other address as the holder may have
provided to the Company in writing.
(d) NO IMPAIRMENT. The Company will not, by amendment of its Restated
Articles of Organization of 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 Company, but will at all
times in good faith assist in the carrying out of all the provisions in the
Warrant.
(e) GOVERNING LAW. This Warrant shall be governed by and construed
under the laws of the Commonwealth of Massachusetts.
(Signature page follows)
7
<PAGE> 8
IN WITNESS WHEREOF, this Warrant is executed as of this 22nd day of
November, 1999.
GENZYME TRANSGENICS CORPORATION
By: /s/ John B. Green
----------------------------------------
Name: John B. Green
Title: Vice President and Chief
Financial Officer
8
<PAGE> 9
EXHIBIT 1
NOTICE OF EXERCISE
TO: GENZYME TRANSGENICS CORPORATION
1. Check Box that Applies:
[ ] The undersigned hereby elects to purchase ______ shares of Common
Stock of GENZYME TRANSGENICS CORPORATION pursuant to the terms of the attached
Warrant, and tenders herewith cash payment of the purchase price of such shares
in full.
[ ] The undersigned hereby elects to convert ______ shares subject to the
attached Warrant into shares of Common Stock of GENZYME TRANSGENICS CORPORATION
pursuant to the terms of the attached Warrant.
2. Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
__________________________________
(Name)
__________________________________
__________________________________
(Address)
__________________________________
Signature
9
