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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
GENZYME CORPORATION
(Exact name of Registrant as Specified in its Charter)
MASSACHUSETTS 06-1047163
(State of Incorporation or Organization) (I.R.S. Employer Identification No.)
ONE KENDALL SQUARE, CAMBRIDGE, MASSACHUSETTS 02139
(Address of Principal Executive Offices) (Zip Code)
If this Form relates to the If this Form relates to the
registration of a class of securities registration of a class of securities
pursuant to Section 12(b) of Exchange pursuant to Section 12(g) of the
Act and is effective upon filing Exchange Act and is effective pursuant
pursuant to General Instruction A.(c), to General Instruction A.(d), please
please check the following box. / / check the following box. /X/
Securities Act registration statement file number
to which this form relates:
--------------------------------------
(If applicable)
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Each Class is to be
to be so Registered Registered
NONE NONE
Securities to be registered pursuant to Section 12(g) of the Act:
GENZYME GENERAL DIVISION COMMON STOCK, $0.01 PAR VALUE
GENZYME MOLECULAR ONCOLOGY DIVISION COMMON STOCK, $0.01 PAR VALUE
GENZYME BIOSURGERY DIVISION COMMON STOCK, $0.01 PAR VALUE
(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
The purpose of this Registration Statement is to register and describe
a new series of the Registrant's common stock, the Genzyme Biosurgery Division
Common Stock , $0.01 par value. Included in this description is a description of
the Registrant's other two series of common stock, the Genzyme General Division
Common Stock , $0.01 par value, and the Genzyme Molecular Oncology Division
Common Stock , $0.01 par value, which have been previously registered pursuant
to section 12(g) of the Exchange Act of 1934, as amended.
OVERVIEW OF GENZYME'S "TRACKING STOCK" CAPITAL STRUCTURE
Throughout the discussion below:
- "Genzyme General Stock" refers to the Genzyme General Division
Common Stock , $0.01 par value, a series of Genzyme's common
stock designed to reflect the value and track the performance
of its Genzyme General Division;
- "Molecular Oncology Stock" refers to the Genzyme Molecular
Oncology Division Common Stock , $0.01 par value, a series of
Genzyme's common stock designed to reflect the value and track
the performance of its Genzyme Molecular Oncology Division;
and
- "Biosurgery Stock" refers to the Genzyme Biosurgery Division
Common Stock , $0.01 par value, a series of Genzyme's common
stock designed to reflect the value and track the performance
of its Genzyme Biosurgery Division.
Genzyme has three series of common stock--Genzyme General Stock, Molecular
Oncology Stock, Biosurgery Stock--which it refers to as "tracking stock."
Tracking stock is common stock of Genzyme that, unlike typical common stock, is
designed to track the financial performance of a specific subset of the
company's business operations and related allocated assets, rather than
operations and assets of the entire company. For instance, operations and assets
dedicated to Genzyme's cancer treatment business are referred to as the Genzyme
Molecular Oncology division. That division is not a company or legal entity;
consequently, the division does not and could not issue stock. Therefore,
Molecular Oncology Stock is not stock of Genzyme Molecular Oncology division,
but rather a series of Genzyme Corporation's common stock containing special
provisions intended to tie the value of that stock primarily to the operations
and assets of Genzyme Corporation that it attributes to its Genzyme Molecular
Oncology division.
The chief mechanism intended to cause a Genzyme tracking stock to "track" the
financial performance of its corresponding division are special provisions in
Genzyme's charter governing dividends and distributions. The provisions
governing dividends provide that Genzyme's board has discretion to decide if and
when to declare dividends subject to certain limitations. Those limitations are
dependent, in part, upon the excess of earnings and paid-in capital or of the
fair value of the net assets allocated to the related division over the
outstanding tracking stock's combined par value and amounts needed to satisfy
preferences and debt obligations allocated to the related division. Within these
and other, general limitations under Genzyme's charter and Massachusetts law,
the amount of any dividend payment will be at the board's discretion. When
deciding whether to declare a dividend, and for how much, the board would
consider, among other things, Genzyme's earnings, financial condition, capital
requirements and level of indebtedness. To date, Genzyme has never paid or
declared a cash dividend on shares of any of its series of common stock, nor
does it anticipate doing so in the foreseeable future. Unless declared,
dividends do not accrue on Genzyme's tracking stock.
The charter provisions governing distributions require that a distribution be
made to holders of Molecular Oncology Stock, Biosurgery Stock if all or
substantially all of the assets allocated to that stock's corresponding division
are sold to a third party. This mandatory distribution can be in the form of a
dividend, a redemption of the division's related tracking stock or an exchange
of that tracking stock for Genzyme General Stock, as chosen by Genzyme's board
in its discretion. The distribution, if by dividend or redemption, must equal in
value the net after-tax proceeds
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received from the sale. If Genzyme's board chooses to make the distribution by
issuing Genzyme General Stock in exchange for the selling division's related
tracking stock, then the exchange must be effected at a 10% premium to the
corresponding tracking stock's average market price following announcement of
the sale.
Genzyme aids investors in evaluating the net worth and earnings performance of
each of its divisions by
- defining in its charter, those programs that will initially
comprise the division; and
- publishing quarterly financial statements that break out the
assets and liabilities and results of operations of each
tracked division for the reported periods.
The financial statements include audited annual and unaudited quarterly
financial statements and separate management's discussion and analysis for each
division and Genzyme Corporation. Genzyme manages and accounts for transactions
between the division and its other divisions and with third parties, and any
resulting re-allocations of assets and liabilities, by applying consistently
across divisions a detailed set of policies established by Genzyme's board.
Genzyme publicly discloses these divisional management and accounting policies;
the policies appear in Exhibit 3 to this Registration Statement. With some
exceptions contained in the policies, Genzyme's board retains the discretion to
revise the policies at any time, subject to its fiduciary duties to
stockholders.
The separate financial statements do not represent any physical segregation of
assets among divisions or separate division accounts. They are an accounting
presentation only, for the purpose of permitting investors to assess the
financial performance of the operations and assets allocated to each division.
While tracking stock is designed to reflect a division's performance, it remains
common stock of the entire company. Therefore, a tracking stockholder is a
common stockholder subject to risks of investing in the businesses, assets and
liabilities of Genzyme as a whole. For instance, the assets allocated to any
division are nonetheless subject to company-wide claims of creditors, product
liability plaintiffs and stockholder litigation. Also, in the event of a Genzyme
liquidation, insolvency or similar event, a holder of tracking stock would have
no direct claim against the assets allocated to the corresponding tracked
division; a holder of tracking stock would only have the rights of a common
stockholder in the combined assets of Genzyme, subject also to the Genzyme
charter's allocation of liquidation units as discussed below under the heading
"Liquidation Rights."
AUTHORIZED CAPITAL STOCK
Genzyme is authorized to issue 390,000,000 shares of common stock, $0.01 par
value per share, of which:
- 200,000,000 shares have been designated Genzyme General Stock;
- 40,000,000 shares have been designated Molecular Oncology Stock;
- 100,000,000 shares have been designated Biosurgery Stock; and
- 50,000,000 shares remain undesignated as to a series.
In addition, Genzyme is authorized to issue 10,000,000 shares of preferred
stock, $0.01 par value per share, of which:
- 2,000,000 shares have been designated Series A Junior Participating
Preferred Stock;
- 1,000,000 shares have been designated Series B Junior Participating
Preferred Stock;
- 400,000 shares have been designated Series C Junior Participating
Preferred Stock; and
- 6,600,000 shares remain undesignated as to a series.
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Each series of junior participating preferred stock is meant to be
associated with one of the series of common stock and would be issued
under Genzyme's stockholder rights plan upon the occurrence of events
described below under the heading "Anti-Takeover Measures."
Throughout this description of Genzyme's capital stock, unless otherwise stated,
the "fair market value" of any series of Genzyme common stock means its average
per share closing price for the 20 consecutive trading days beginning on the
30th trading day before the shares are valued.
DIVIDENDS
Genzyme has never paid cash dividends on its stock. Currently, Genzyme intends
to retain its earnings to finance future growth. Therefore, it does not expect
to pay any cash dividends on its common stock in the near future.
Genzyme can declare and pay dividends on a series of its common stock only in
amounts permitted by its charter, and only if it has funds legally available for
that purpose. Under state law, Genzyme can pay a dividend if it is solvent,
would remain solvent after paying the dividend, and the payment would not
violate its charter. Subject to these limitations, Genzyme's board may, in its
sole discretion, declare and pay dividends exclusively on any series of its
common stock in equal or unequal amounts.
Genzyme's charter sets the amount available for dividends payable on a tracking
stock. The amount available is the excess of either:
- the fair value of the net assets allocated to the tracking stock's
corresponding division; or, if greater,
- the equity amount initially allocated to that division as adjusted to
reflect:
-- the net income or loss attributable to the division as
adjusted for the allocation of tax benefits in accordance with
our management and accounting policies;
-- any dividends or other distributions, including by
reclassification or exchange, declared or paid on shares of
capital stock attributable to the division, excluding those
paid with a stock attributable to a division to holders of
that stock;
-- repurchases or issuances of capital stock attributed to the
division; and
-- any other adjustments made to stockholders' equity of the
division consistent with GAAP;
over the sum of:
- the total par value of all outstanding shares of capital stock
attributed to the division; and
- unless Genzyme's charter permits otherwise, the total amount of
preferential payments that would be due to holders of preferred stock
attributed to the division, if any, upon Genzyme's dissolution less
that preferred stock's aggregate par value and any amount needed by the
division to pay debts allocated to the division as they become due.
If the above-described available dividend amount is less than would
otherwise be available under Massachusetts law, assuming that the
division were a separate corporation, then the greater amount permitted
by law shall be the available dividend amount.
EXCHANGE OF BIOSURGERY STOCK AND MOLECULAR ONCOLOGY STOCK
Genzyme may exchange any series of its tracking stock, other than Genzyme
General Stock, for cash, securities, other property and/or Genzyme General Stock
upon the terms described below.
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OPTIONAL EXCHANGE
Under Genzyme's charter, the board may, at any time, exchange all outstanding
shares of Molecular Oncology Stock and Biosurgery Stock for any combination of
cash and/or Genzyme General Stock having a fair market value equal to 130% of
the fair market value of the series to be exchanged. Fair market value will be
determined as of the day Genzyme first publicly announces the exchange.
Genzyme could exercise the optional exchange at any future time if its board
determines that, considering current facts and circumstances, an equity
structure consisting of several series of common stock is no longer in the best
interests of all of its stockholders. Genzyme could make an exchange, however,
at a time that is disadvantageous to the holders of a particular series of its
common stock. The board's right to exchange at any time all outstanding shares
of Molecular Oncology Stock or Biosurgery Stock for any combination of cash
and/or Genzyme General Stock with a fair market value 30% greater than the fair
market value of the stock being exchanged does not prevent the board from
offering to exchange the shares on other terms. Although the holders of the
shares to be exchanged would have to approve any alternative offer, Genzyme
could make the offer on terms less favorable than those of this optional
exchange provision.
If at any time Genzyme receives an opinion of tax counsel that an "adverse tax
event" has occurred due to a "tax law change," Genzyme may exchange the
Molecular Oncology or Biosurgery Stock for Genzyme General Stock, and not for
cash, at its fair market value. This means that the holders of the exchanged
stock would not receive any premium in the exchange.
The phrase "adverse tax event," with respect to any series of Genzyme's common
stock, means an event making it more likely than not, for U.S. federal income
tax purposes, that:
- Genzyme or its stockholders are, or will be in the future, taxed upon
issuance of shares of that series; or
- shares of that series or of Genzyme General Stock are not, or will not
be in the future, treated solely as Genzyme's common stock.
The phrase "tax law change" means either:
- any enactment of or change in federal, state or other tax laws or
regulations, including any proposed changes announced by a legislative
committee or administrative agency; or
- any official or administrative pronouncement, action or judicial
decision interpreting or applying the tax laws or regulations.
For purposes of tax counsel's opinion, it may be assumed that any
legislative or administrative proposals will be adopted or enacted as
proposed.
A third optional exchange provision provides that at any time at which all of
the assets allocated to a division (excluding Genzyme General) --and only that
division's assets-- are held by a wholly-owned subsidiary (or subsidiaries) of
Genzyme, the board can redeem all outstanding shares of the division's
corresponding tracking stock in exchange for the subsidiary's stock. This type
of transaction is commonly referred to as a "spin off" of a line of business to
existing shareholders. The end result, in the case of Biosurgery Stock, for
example, would be that Genzyme Biosurgery would exist as a separate corporate
entity, owned by stockholders who had formerly held Biosurgery Stock. If at the
time of the spin off, any shares of tracking stock corresponding to the spun off
division were designated for the benefit of Genzyme General, then an appropriate
number of shares of the spun off corporation would be issued to Genzyme and
allocated to Genzyme General.
MANDATORY EXCHANGE
Under Genzyme's charter, following the sale of all or substantially all of the
assets of Genzyme Molecular Oncology or Genzyme Biosurgery, as the case may be,
Genzyme's board would be required to authorize, chosen at
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its sole discretion, one of the following mandatory payments to holders of the
tracking stock corresponding to the sold division:
- PAYMENT METHOD 1. A pro rata dividend payment of cash, securities (other
than Genzyme common stock) or other property to those tracking stockholders
in an amount equal to the after-tax net proceeds of the sale.
- PAYMENT METHOD 2. A redemption of all or a portion of the outstanding
stock corresponding to that division. If all of the assets allocated to the
division were sold, Genzyme would redeem all outstanding stock
corresponding to that division for cash, securities (other than Genzyme
common stock) or other property in an amount equal to the sale's net
proceeds. If substantially all (but not all) of the assets allocated to
that division were sold, Genzyme would redeem a pro rata portion of the
stock corresponding to that division in an amount equal to the sale's net
proceeds.
- PAYMENT METHOD 3. An exchange of each share of stock corresponding to
that division for shares of Genzyme General Stock equal to 110% of the
average closing price of the exchanged stock. The average closing price of
each stock would be calculated during the 10-day trading period beginning
on the fifth trading day AFTER Genzyme's announcement of the sale's
estimated net proceeds.
The board's decision may be made at any time prior to 20 business days after the
date on which Genzyme announces the estimated net proceeds received from the
sale. The redemption or dividend payment under methods 1 and 2 described above
could be in the form of cash, securities or other property, but not Genzyme
common stock, and need not be in the same form as the cash, securities and/or
other property paid by the third party purchasing the assets. An exchange under
method 3, on the other hand, could be completed only with Genzyme General Stock.
To determine the amount of cash, securities or other property distributable to
stockholders after the sale of the associated division's assets, two
calculations would be made. First, the net proceeds of the sale would be
computed. Net proceeds would equal the gross proceeds of the sale, less taxes,
transactional costs, liabilities allocated to another Genzyme division because
of the sale, and amounts payable to any holders of preferred stock that
corresponds to the division. Second, the amount of net proceeds allocable for
distribution to the division's corresponding tracking stockholders would be
calculated. This amount is the product of the net proceeds multiplied by a
fraction. The fraction equals the outstanding shares of the division's
corresponding tracking stock divided by the sum of those outstanding shares plus
the shares corresponding to the division then designated for the benefit of
Genzyme General. (For an explanation of designated shares, see "Molecular
Oncology Designated Shares and Biosurgery Designated Shares" below.)
In establishing the value of the cash, property and/or securities that comprise
the gross proceeds of a sale:
- cash will be valued at face value;
- securities will be valued at the average of their intra-day high and
low trading prices (or if there is no market for the security, at their
fair value determined by Genzyme's board) on the date of the sale; and
- property, other than cash and securities, will be valued at its fair
value on the date of the sale, as determined by Genzyme's board.
Similarly, the value of cash, property and/or securities (other than Genzyme
General Stock distributed under Payment Method 3) distributed to stockholders
will be established in the same manner and as of the date of the sale. Interest
earned up until the record date on any cash net proceeds distributed to
stockholders will be included in that distribution payment.
Genzyme's board must announce the estimated net proceeds of the sale no later
than 20 business days after the sale is completed. Within 20 business days
following that announcement, the board must choose and announce which of the
three payment methods it will use. Within 60 business days after the
announcement of the payment method selected, Genzyme must complete the
distribution to the stockholders.
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Under the terms of the Molecular Oncology Stock and Biosurgery Stock, there are
four types of asset sales that will not trigger a mandatory payment to
stockholders:
- a sale of assets to an entity controlled, as determined by the board,
by Genzyme;
- a sale of assets primarily for equity in a buyer that Genzyme's board
determines is engaged primarily in a business similar or complementary
to that of the division;
- a distribution to a division's corresponding tracking stockholders of
Genzyme's equity interest (which is allocated entirely to that
division) in one or more Genzyme subsidiaries that hold all of the
assets allocated to that division (and only those assets)--namely, a
"spin off" of Genzyme's ownership of the division to that division's
corresponding stockholders; and
- a sale of a assets allocated to a division conditioned on the
affirmative vote of that division's corresponding stockholders voting
together as a single class.
TERMINATION OF CASH EXCHANGE FEATURE
Under Genzyme's charter, if Genzyme receives an opinion of tax counsel at any
time that, because of a tax law change, its right to exchange Molecular Oncology
or Biosurgery Stock for cash would cause an adverse tax event, then Genzyme's
board may by majority vote elect to terminate its right to exchange that
tracking stock for cash. If Genzyme's board elects to terminate this right, then
we will only have the right to exchange that tracking stock for Genzyme General
Stock, and not for cash. In the case of the mandatory exchange feature,
elimination of the cash exchange right will result in the mandatory exchange
provision requiring Genzyme to exchange the tracking stock corresponding to a
division whose associated assets are being sold into shares of Genzyme General
Stock based on both stocks' fair market value as of the date of the sale's
announcement and at no premium.
VOTING RIGHTS
Stockholders of all series of Genzyme's common stock vote together as one class
on all matters on which common stockholders generally are entitled to vote,
including the election of directors. The following chart shows the number of
votes per share to which each series of common stock is entitled on such
matters:
<TABLE>
<CAPTION>
NUMBER OF VOTES PER SHARE
SERIES UNTIL DECEMBER 31, 2000
<S> <C>
Genzyme General Stock................. 1.00
Molecular Oncology Stock.............. 0.08
Biosurgery Stock...................... 0.50
</TABLE>
You can calculate the percentage of a series' total voting power at any time, by
dividing that series' number of votes -- that is, the total number of
outstanding shares of a series multiplied by the vote per share to which that
series is entitled -- by the total number of votes held by all series.
On January 1, 2001 and on January 1st every two years afterward, Genzyme's
charter requires it to adjust the number of votes per share to which Molecular
Oncology Stock and Biosurgery Stock are entitled as follows:
<TABLE>
<CAPTION>
<S><C>
fair market value of a share of Molecular Oncology Stock
Number of votes per = --------------------------------------------------
share of Molecular Oncology Stock fair market value of a share of Genzyme General Stock
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fair market value of a share of Biosurgery Stock
Number of votes per = --------------------------------------------------
share of Biosurgery Stock fair market value of a share of Genzyme General Stock
</TABLE>
If no shares of Genzyme General Stock are outstanding on that date, then of the
series that are outstanding, the one with the highest fair market value per
share becomes the "base" series. That series becomes the denominator in the
formula above and has one vote per share. Each other series then has the number
of votes per share determined under the above formulas, after replacing Genzyme
General Stock in the denominator with the new base series.
Genzyme's charter provides for adjustment of the voting rights of the Molecular
Oncology Stock and Biosurgery Stock to avoid dilution of any series' voting
rights in the event the outstanding shares of any series are subdivided or
combined by stock split, reverse stock split, reclassification or otherwise, or
a stock dividend or distribution is issued to stockholders of that series. If
shares of only one series are outstanding, or if shares of any series are
entitled to vote separately as a class, each share of that series will have one
vote.
The purpose of the periodic adjustments to the relative voting rights of each
series is to ensure that a holder's voting rights more closely reflect the
market value of the holder's investment in Genzyme. These adjustments to voting
rights may influence the investment activities of an investor interested in
acquiring and maintaining a fixed percentage of Genzyme's voting power. The
adjustments will limit the ability of an investor in one series to obtain for
the same consideration more or less voting power per share than investors in
another series. If the relative market values of each series of common stock
change before the first adjustment or in between any adjustments an investor in
one series may acquire relatively more or less voting power for the same
consideration when compared with investors in another series.
While generally all Genzyme common stockholders vote together as a single class,
Genzyme's charter requires that holders of a series affected by any of the
following proposals approve the proposal at a meeting at which both a quorum is
present and the votes in favor of the proposal exceed those against it:
- to allow any proceeds from a disposition of the properties or
assets allocated to a division to be used in the business of
another division without fair compensation;
- to allow any properties or assets allocated to a division to
be used in the business of another division or to declare or
pay any dividend or distribution on any series of common stock
not attributed to that division without fair compensation;
- to issue shares of any series of common stock without
allocating the proceeds of the issuance to the division
represented by that series except, however, for "designated"
shares;
- to change the rights or preferences of any series in a manner
that affects the series adversely; or
- to effect any merger or business combination in which (a)
stockholders of all series together will no longer own,
directly or indirectly, at least fifty percent (50%) of the
voting power of the surviving corporation, and (b)
stockholders of all series will not receive the same form of
consideration, distributed among stockholders in proportion to
the market capitalization of each series of Genzyme's common
stock as of the date of the first public announcement of the
merger or business combination.
If, however, Genzyme receives an opinion of tax counsel at any time that,
because of a tax law change, the special voting rights described above would
cause an adverse tax event, then Genzyme may, by vote of a majority of all of
its common stock outstanding voting as one class--without need of an additional,
separate series vote--eliminate the special voting rights of the Molecular
Oncology and/or Biosurgery Stock.
Under Massachusetts law, any amendment to Genzyme's charter that would adversely
alter or change the powers, preferences or special rights of any series of
common stock must be approved by a majority of the outstanding shares of each
affected series, voting together as a single class.
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The following types of charter amendments are considered to adversely affect a
series of stock under Massachusetts law:
- alteration or abolishment any of any preferential right of stock having
preferences;
- creation, alteration or abolishment of any redemption right of the
stock;
- alteration or abolishment of any preemptive right of the stock;
- creation or alteration (other than abolishment) of any restriction on
transfer of the stock; and
- exclusion or limitation of the stockholder's right to vote on a matter
except a limitation by virtue of voting rights given to new shares
being authorized of a new or existing class of stock.
Massachusetts law does not currently provide for any other separate voting
rights for a series of common stock. Consequently, because most matters brought
to a stockholder vote will require only the approval of a majority of all of
Genzyme's outstanding capital stock entitled to vote and because the holders of
Genzyme General Stock currently have more than the number of votes required to
approve a matter, those stockholders currently are in a position to control the
outcome of most votes.
LIQUIDATION RIGHTS
If Genzyme voluntarily or involuntarily dissolves, liquidates or winds up its
affairs, common stockholders will be entitled to receive any net assets
remaining for distribution after Genzyme has satisfied or made provision for its
debts and obligations and for payment to any stockholders with preferential
rights to receive distributions of its net assets. Genzyme will distribute any
remaining assets to common stockholders on a per share basis in proportion to
each series' respective per share liquidation units. Common stockholders will
have no direct claim against any particular assets of Genzyme or its
subsidiaries. Each series has the following number of liquidation units per
share:
<TABLE>
<CAPTION>
SERIES NUMBER OF LIQUIDATION UNITS
---------------------------
<S> <C>
Genzyme General Stock. 100
Molecular Oncology Stock 25
Biosurgery Stock 50
</TABLE>
Genzyme will adjust the liquidation units of the Biosurgery Stock and Molecular
Oncology Stock only to avoid dilution in the aggregate liquidation rights of any
series in the event the outstanding shares of any series are subdivided or
combined by stock split, reverse stock split, reclassification or otherwise, or
a dividend or distribution is given to stockholders of that series. A merger or
business combination or a sale of all or substantially all of its assets will
not be treated as a liquidation.
Genzyme may not, however, without approval from each series voting as a separate
class, effect a merger or business combination involving Genzyme that results
in:
- stockholders of all series no longer owning, directly or indirectly, at
least 50% of the voting power of the surviving corporation; and
- stockholders of each series not receiving the same form of
consideration distributed among stockholders in proportion to the
market capitalization of each series of common stock as of the date of
the first public announcement of the merger or business combination.
MOLECULAR ONCOLOGY DESIGNATED SHARES AND BIOSURGERY DESIGNATED SHARES
Designated shares are authorized but unissued shares which Genzyme's board may
from time to time issue, sell or otherwise distribute without allocating the
proceeds or other benefits of the issuance, sale or distribution to the
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division tracked by the shares. Until the shares are issued by Genzyme's board,
designated shares are not outstanding shares of stock, and, therefore, may not
receive dividends and cannot be voted by Genzyme.
MOLECULAR ONCOLOGY DESIGNATED SHARES
On September 30, 2000, there were 2,000,198 Molecular Oncology designated
shares, which, if issued, would represent 11.5% of the outstanding shares of
Molecular Oncology Stock. The number of Molecular Oncology designated shares,
from time to time will be:
- adjusted to reflect subdivisions or combinations by stock
split, reverse stock split or otherwise of the Molecular
Oncology Stock and dividends or distributions of shares of
Molecular Oncology Stock to holders of Molecular Oncology
Stock and other reclassifications of Molecular Oncology Stock;
- decreased by
- the number of any designated shares of Molecular Oncology Stock that
Genzyme issues;
- the number of any shares of Molecular Oncology Stock issued
upon the exercise or conversion of securities convertible into
Molecular Oncology Stock that are attributed to Genzyme
General; and
- the number of any shares of Molecular Oncology Stock that
Genzyme issues as a dividend or distribution or by
reclassification, exchange or otherwise to holders of Genzyme
General Stock; and
- increased by
- the number of any outstanding shares of Molecular Oncology
Stock that Genzyme repurchases, the consideration for which
was paid by Genzyme General; and
- the number of shares of Molecular Oncology Stock equal to the
fair value, as determined by Genzyme's board, of assets or
properties allocated to Genzyme General that are reallocated
to Genzyme Molecular Oncology (excluding reallocations that
represent sales at fair value between those divisions) divided
by the fair market value of one share of Molecular Oncology
Stock on the date of that reallocation.
BIOSURGERY DESIGNATED SHARES
The initial number of Biosurgery designated shares will be the aggregate total
of the pre-existing Surgical Products designated shares converted into
Biosurgery designated shares at a ratio of 1-for-0.6060 and of the pre-existing
Tissue Repair designated shares converted at a ratio of 1-for-0.3352 at the
effective time of the Amendment.
Based on the number of Surgical Products designated shares and Tissue Repair
designated shares existing as of September 30, 2000, upon the creation of
Genzyme Biosurgery, there would be 1,995,354 Biosurgery designated shares,
which, if issued, would represent 5.4% of the outstanding shares of Biosurgery
Stock, assuming that there are 34,800,000 shares of Biosurgery Stock outstanding
after the tracking stock exchange and the merger. Following the creation of
Biosurgery stock, that number, from time to time will be:
- adjusted to reflect subdivisions or combinations by stock
split, reverse stock split or otherwise of the Biosurgery
Stock and dividends or distributions of shares of Biosurgery
Stock to holders of Biosurgery Stock and other
reclassifications of Biosurgery Stock;
- decreased by
- the number of any designated shares of Biosurgery Stock that Genzyme
issues;
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- the number of any shares of Biosurgery Stock issued upon the
exercise or conversion of securities convertible into
Biosurgery Stock that are attributed to Genzyme General; and
- the number of any shares of Biosurgery Stock Genzyme issued as
a dividend or distribution or by reclassification, exchange or
otherwise to Genzyme General Stockholders; and
- increased by
- the number of any outstanding shares of Biosurgery Stock that Genzyme
repurchases, the consideration for which was paid by Genzyme General;
- the number of shares of Biosurgery Stock equal to the fair
value, as determined by Genzyme's board, of assets or
properties allocated to Genzyme General that are reallocated
to Genzyme Biosurgery (excluding reallocations that represent
sales at fair value between those divisions) divided by the
fair market value of one share of Biosurgery Stock on the date
of that reallocation; and
- the number of shares of Biosurgery Stock equal to (1) the
aggregate fair market value of any shares of Genzyme General
Stock issued to the limited partners of Genzyme Development
Partners in connection with Genzyme's exercise on behalf of
Genzyme Biosurgery of Genzyme's purchase option to reacquire
all of the limited partnership interests of that partnership
divided by (2) the fair market value of one share of
Biosurgery Stock on the date of the exercise.
Whenever Genzyme issues or sells additional shares of any series of common
stock, Genzyme will identify:
- the number of shares issued and sold for account of a
particular division to which they relate, the proceeds of
which will be allocated to and reflected in the financial
statements of that division; and
- the number of shares issued and sold from the designated
shares of Molecular Oncology Stock and/or Biosurgery Stock.
If Genzyme repurchases outstanding shares of Molecular Oncology Stock or
Biosurgery Stock, Genzyme will identify the number of shares that are
repurchased for consideration that was derived from Genzyme General and the
number of designated shares may increase accordingly.
DETERMINATIONS BY GENZYME'S BOARD
Any determination made by Genzyme's board in good faith under any of the
provisions described above will be final and binding on all stockholders.
"ANTI-TAKEOVER" PROVISIONS
CONTRACTUAL MEASURES
Genzyme's charter and by-laws contain provisions that could discourage potential
takeover attempts and prevent stockholders from changing Genzyme's management.
For example, Genzyme's board is authorized to issue shares of common stock and
preferred stock in series, enlarge the board's size and fill any vacancies on
the board. Also, stockholders face restrictions on calling a special meeting of
stockholders, bringing business before an annual meeting and nominating
candidates for election as directors. Genzyme also has agreements with some of
its officers that contain change of control provisions.
In addition, Genzyme has a stockholder rights plan, the Amended Rights
Agreement. Under the plan, each outstanding share of Genzyme's common stock
carries with it a right, currently unexercisable, that if triggered permits the
holder to purchase large amounts of Genzyme's or any successor entity's
securities at a discount and/or
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trade those purchase rights separately from the common stock. The rights are
triggered when a person acquires, or makes a tender or exchange offer to
acquire, 15% of Genzyme's common stock's voting power. The plan, however,
prohibits the 15%-acquiror, or its affiliates, from exercising its Genzyme
shares' purchase rights. As a result, the acquiror's interest in Genzyme is
substantially diluted.
A summary of the rights is provided below under "5(c) Description of the Amended
Rights Agreement." The rights are described more completely in the Amended
Rights Agreement itself, which is contained in Exhibit 4 to Genzyme's
Registration Statement on Form 8-A filed on December 19, 2000 registering rights
to purchase the Biosurgery Stock, and is incorporated in this document by
reference.
BUSINESS COMBINATION STATUTE
Under the Massachusetts Business Combination statute, if a person acquires 5% or
more of the outstanding voting stock of a Massachusetts corporation without the
approval of its board of directors, that person becomes an interested
stockholder and he or she may not engage in business combination transactions
with the corporation for three years. There are exceptions to this prohibition,
including:
- if the board of directors approves the acquisition of stock or
the transaction before the time that the person became an
interested stockholder;
- if the interested stockholder acquires 90% of the outstanding
voting stock of the company, excluding voting stock owned by
directors who are also officers and some employee stock plans,
in one transaction; or
- if the transaction is approved by the board and by two-thirds
of the outstanding voting stock not owned by the interested
stockholder.
Genzyme is subject to the Massachusetts Business Combination statute unless
it elects, with stockholder approval, not to be. Genzyme has not elected to
be exempt and does not currently intend to do so.
CONTROL SHARE ACQUISITION STATUTE
The Massachusetts Control Share Acquisition statute provides that each and any
time a person offers to acquire, or acquires, shares of stock permitting it to
control at least 20%, 33 1/3% or a majority of the voting power of a
corporation, it cannot vote those acquired shares unless the acquiror obtains
the approval of a majority in interest of the shares held by all stockholders,
excluding shares held by the acquiror, officers of the corporation, and
directors who are also employees of the corporation. The statute does not
require that the acquiror have already purchased the shares before the
stockholder vote.
As permitted under Massachusetts law, Genzyme has elected not to be governed by
the Massachusetts Control Share Acquisition statute. However, the statute
permits Genzyme's board to elect at a future date to be governed by the statute
by amending the company's by-laws accordingly. Any such amendment, however,
would apply only to acquisitions that occur after the effective date of the
amendment.
TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Company is the registrar and transfer agent for
each series of Genzyme's common stock. Its telephone number is (212) 936-5100.
5(b) DESCRIPTION OF GENZYME'S MANAGEMENT AND ACCOUNTING POLICIES
OVERVIEW
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Because each of Genzyme's operating divisions is part of a single company,
Genzyme's board has adopted policies to address issues that may arise among
divisions and to govern the management of and the relationships between each
division. The issues addressed by the policies include:
- the financing of each division;
- competition among the divisions;
- inter-divisional business transactions;
- access to technology and know-how;
- corporate opportunities; and
- the allocation of debt, corporate overhead, interest, taxes
and other charges among the divisions.
Summarized below are the policies as they relate to Genzyme's three divisions.
We recommend that you read the full text of the policies, which is contained in
Exhibit 3 to this Registration Statement. With a few exceptions that are noted,
Genzyme's board may modify or rescind the policies, or adopt additional
policies, in its sole discretion without approval of the stockholders, subject
only to the board's fiduciary duty to Genzyme's stockholders.
PURPOSE OF GENZYME GENERAL, GENZYME MOLECULAR ONCOLOGY AND GENZYME BIOSURGERY
The purpose of Genzyme General is to develop and market therapeutic products and
diagnostic services and products. The purpose of Genzyme Molecular Oncology is
to create a focused, integrated oncology business that will develop and
commercialize novel therapeutic and diagnostic products and services based on
molecular tools and genomic information. The purpose of Genzyme Biosurgery is to
create a business with a comprehensive approach to the field of biosurgery by
developing and commercializing a portfolio of products for the treatment and
prevention of serious tissue injury (excluding products developed on behalf of
Genzyme Development Partners) and a portfolio of devices, biomaterials,
biotherapeutics and other products for the field of biosurgery.
In addition to the programs initially assigned to each of the divisions, Genzyme
expects that the product and service portfolio of each division will expand
through the addition of complementary programs, products and services developed
either internally or externally, including outside of Genzyme. Genzyme will
operate and manage each of the divisions similarly to Genzyme General except as
provided in the policies.
REVENUE ALLOCATION AND RECOGNITION
Genzyme allocates revenues from the sale or licensing of products and services
to the division to which those products or services had been allocated. When
products and services that are normally sold by a division to third parties are
used by other divisions, Genzyme records interdivisional revenue and
interdivisional purchases, which Genzyme describes in detail in its policy
"Other Interdivisional Transactions."
EXPENSE ALLOCATION
Genzyme charges all direct expenses to the division that has incurred the
expenses. Genzyme's policy "Other Interdivisional Transactions" addresses
expenses other than direct expenses.
ASSET ALLOCATION
Genzyme allocates assets that are exclusively dedicated to the production of
goods and services of a particular division to that division. Genzyme addresses
the use of production assets by more than one division in its policy "Other
Interdivisional Transactions."
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TAX ALLOCATIONS
Genzyme allocates income taxes to each division based upon the financial
statement income, taxable income, credits and other amounts properly allocable
to it under generally accepted accounting principles as if it were a separate
taxpayer. As of the end of any fiscal quarter, however, if a division cannot use
any projected annual tax benefit attributable to it to offset or reduce its
current or deferred income tax expense, Genzyme may allocate the tax benefit to
the other divisions in proportion to their taxable income without any
compensating payment or allocation.
ACQUISITIONS OF PROGRAMS, PRODUCTS OR ASSETS
If Genzyme acquires any programs, products or assets from a third party, it will
allocate among its divisions the aggregate cost of the acquisition and the
programs, products or assets acquired. In the case of material acquisitions,
Genzyme will make the allocation in a manner that its board determines to be
fair and reasonable to each division and to holders of the common stock
representing each division, taking into account matters that its board and its
financial advisors, if any, deem relevant. Genzyme's policies provide that the
determinations by its board will be final and binding on all holders of common
stock.
DISPOSITION OF PROGRAMS, PRODUCTS OR ASSETS
If Genzyme disposes of any programs, products or assets that do not consist of
all or substantially all of the assets allocated to a division, it will allocate
all proceeds to the division to which the program, product or asset had been
allocated. If a program, product or asset was allocated to more than one
division, Genzyme will allocate the proceeds among the divisions based on their
interests in the program, product or asset. Genzyme will make the allocation in
a manner that its board determines to be fair and reasonable to each of the
divisions and to holders of the common stock representing each of the divisions,
taking into account matters that its board and its financial advisors, if any,
deem relevant. Genzyme's policies provide that the determinations by its board
will be final and binding on all holders of common stock.
INTERDIVISIONAL ASSET TRANSFERS
Genzyme's board may at any time reallocate any program, product or other asset
from one division to any other division. It will make reallocations at fair
market value, determined by its board, taking into account the following
criteria in the case of a program under development:
- the commercial potential of the program;
- the phase of clinical development of the program;
- the expenses associated with realizing any income from the program and
the likelihood and timing of the realization; and
- other matters that Genzyme's board and its financial advisors,
if any, deem relevant.
One division may pay another division the consideration for a
reallocation in cash or other consideration with a value equal to the
fair market value of the reallocated assets. In the case of a
reallocation of assets from Genzyme General to another division,
Genzyme's board may elect instead to account for the reallocation as an
increase in the designated shares representing the division to which the
assets are reallocated in accordance with the provisions of Genzyme's
charter.
These policies regarding transfers of assets between divisions will not be
changed by Genzyme's board without the approval of the holders of the common
stock representing each of the divisions voting as a separate class. If,
however, the policy change affects one or more, but not all of the divisions,
only holders of shares of the affected division(s) will be entitled to vote on
the matter.
OTHER INTERDIVISIONAL TRANSACTIONS
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Genzyme's divisions may engage in transactions directly with one or more other
divisions or jointly with one or more other divisions and one or more third
parties. These transactions may include agreements by one division to provide
products and services for use by another division, license agreements and joint
ventures or other collaborative arrangements involving more than one division to
develop new products and services jointly and with third parties. The division
providing the products or services does not recognize revenue unless the
division provides those products or services to unrelated third parties as part
of its ordinary conduct of business. The transactions will be subject to the
following conditions:
- Genzyme will charge research and development (including
clinical and regulatory support), distribution, sales,
marketing, and general and administrative services (including
allocated space) performed by one division for another
division to the division for which the services are performed
on a cost basis. It charges all direct expenses to the
division that has incurred the expenses. It will allocate
direct labor and indirect costs in reasonable and consistent
manners based on the use by a division of relevant services.
- Genzyme will charge the manufacturing of goods and services by
one division exclusively for another division to the division
for which it is performed on a cost basis. It will include in
manufacturing costs an interest charge on the gross fixed
assets used in the manufacturing process. It will determine
gross fixed assets for the facility used at the beginning of
each fiscal year. The interest rate will be Genzyme's short
term borrowing rate at the beginning of each fiscal year.
Genzyme will allocate direct labor and indirect costs in
reasonable and consistent manners based on the benefit
received by a division of related goods and services.
- Other than transactions involving research and development,
distribution, sales, marketing, general and administrative
services, which are addressed above, all interdivisional
transactions will be on terms and conditions obtainable in
arm's length transactions with third parties.
- Genzyme's board must approve interdivisional transactions that
are performed on terms and conditions other than as described
above and that are material to one or more of the
participating divisions. In giving its approval, Genzyme's
board must determine that the transaction is fair and
reasonable to each participating division and to holders of
the common stock representing each participating division.
- Divisions may make loans to other divisions. Any loan of $1
million or less will mature within 18 months and interest will
accrue at the best borrowing rate available to Genzyme for a
loan of a similar type and duration. Genzyme's board must
approve any loan in excess of $1 million. In giving its
approval, the board must determine that the material terms of
such loan, including the interest rate and maturity date, are
fair and reasonable to each participating division and to
holders of the common stock representing each such division.
- All material interdivisional transactions will be set forth in
a written agreement signed by an authorized member of the
management team of each division involved in the transaction.
ACCESS TO TECHNOLOGY AND KNOW-HOW
Each division will have unrestricted access to all of Genzyme's technology and
know-how that may be useful in that division's business, subject to any
obligations or limitations that apply to the company.
DISPOSITION OF DESIGNATED SHARES OF MOLECULAR ONCOLOGY STOCK AND BIOSURGERY
STOCK
Genzyme's board may from time to time and in its sole discretion dispose of
designated shares of Molecular Oncology Stock and Biosurgery Stock in the
following manner:
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- issue the designated shares upon the exercise or conversion of
outstanding stock options, warrants or convertible securities
allocated to Genzyme General;
- sell the designated shares for any valid purpose, subject to
the restrictions set forth in Genzyme's policy entitled
"Issuance and Sale of Additional Shares of Common Stock,"
which is set forth on page; and
- distribute the designated shares as a dividend to the holders
of shares of Genzyme General Stock.
MOLECULAR ONCOLOGY DESIGNATED SHARES
Genzyme will distribute substantially all of the designated shares of Molecular
Oncology Stock to holders of record of Genzyme General Stock, if as of November
30 of each year, the number of Molecular Oncology designated shares exceeds 10%
of the number of shares of Molecular Oncology Stock then issued and outstanding.
Genzyme will, however, reserve for issuance a number of shares equal to the sum
of:
- the number of Molecular Oncology designated shares reserved
for issuance with respect to securities convertible into
Genzyme General Stock which include stock options, stock
purchase rights, warrants or other securities convertible into
or exercisable for shares of Genzyme General Stock, then
outstanding as a result of anti-dilution adjustments required
by the terms of these instruments or approved by Genzyme's
board, plus
- the number of Molecular Oncology designated shares reserved by
Genzyme's board as of that date for sale not later than six
months afterwards, with the proceeds to be allocated to
Genzyme General.
BIOSURGERY DESIGNATED SHARES
Genzyme will distribute substantially all of the designated shares of Biosurgery
Stock to holders of record of Genzyme General Stock if, as of September 30 of
each year, the number of Biosurgery designated shares exceeds 10% of the number
of shares of Biosurgery Stock then issued and outstanding. Genzyme will,
however, reserve a number of shares equal to the sum of:
- the number of Biosurgery designated shares reserved for
issuance with respect to securities convertible into Genzyme
General Stock which then outstanding as a result of
anti-dilution adjustments required by the terms of these
instruments or approved by Genzyme's board, plus
- the number of Biosurgery designated shares reserved by
Genzyme's board as of that date for sale not later than six
months afterwards, with the proceeds to be allocated to
Genzyme General.
ISSUANCE AND SALE OF ADDITIONAL SHARES OF COMMON STOCK
When Genzyme issues additional shares of its common stock, it will identify
both:
- the number of shares issued and sold for the account of the
division to which they relate and the corresponding proceeds,
which Genzyme will allocate to and reflect in the financial
statements of that division; and
- the number of shares issued and sold for the account of
Genzyme General, which will reduce the number of designated
shares of that division.
Genzyme will not, however, sell any designated shares of a division, except upon
exercise or conversion of options, warrants or convertible securities issued by
Genzyme General that were adjusted as a result of a dividend of Molecular
Oncology Stock or Biosurgery Stock paid to holders of Genzyme General Stock,
unless either:
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- Genzyme's board determines that the division has sufficient
cash to fund its operations for at least the next 12 months;
or
- Genzyme is then selling shares of a division for that
division's own account in an amount that will produce proceeds
sufficient to fund that division's cash needs for the next 12
months.
OPEN MARKET PURCHASES OF SHARES OF COMMON STOCK
Genzyme may purchase its common stock in the open market in accordance with
applicable securities law requirements. Genzyme will not, however, purchase its
Molecular Oncology Stock or Biosurgery Stock if, as an immediate result, the
number of that series' designated shares will exceed 60% of the sum of the
number of that series' shares outstanding and the number of its designated
shares. Additionally, Genzyme may not, within 90 days of any open market
purchase of shares of any of those series, exercise the right provided under its
charter to exchange shares of that series for cash and/or shares of Genzyme
General Stock.
CLASS VOTING
Where Genzyme has provided that the approval of the holders of a series of its
tracking stock is required to take any action pursuant to these policies or
Genzyme's charter, the requirement may be satisfied if the action is approved by
a majority of the votes cast at a meeting of the holders of that series at which
a quorum is present. This is in addition to any stockholder approval required by
Massachusetts law.
NON-COMPETE
Genzyme's divisions may not materially engage in each other's principal
businesses other than through joint ventures or other collaborative arrangements
involving more than one division to develop new products and services jointly
and with third parties. These permissible transactions are subject to the
conditions set forth on page in Genzyme's policy entitled "Interdivisional Asset
Transfers." The divisions may compete in a business which is not a principal
business of another division. Genzyme's board may determine in its good faith
business judgment whether particular activities of one division constitute a
material engagement in the principal businesses of another division.
CORPORATE OPPORTUNITIES
Genzyme's board will review any matter which involves the allocation of a
material corporate opportunity to any of the divisions, or in part to one
division and in part to another division. The board will make its determination
with regard to the allocation and benefit of an opportunity in accordance with
its good faith business judgment of the best interests of Genzyme and all of its
stockholders as a whole. In making this allocation, the board may consider,
among other factors:
- whether a particular corporate opportunity is principally related to
the business of a particular division;
- whether one division, because of its managerial or operational
expertise, will be better positioned to undertake the corporate
opportunity;
- whether one division, because of its allocated financial resources,
will be better positioned to undertake the corporate opportunity; and
- existing contractual agreements and restrictions.
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ITEM 2. EXHIBITS.
EXHIBIT NO. DESCRIPTION
----------- -----------
1. Restated Articles of Organization of the Registrant. Filed
herewith.
2. By-Laws of the Registrant. Filed as Exhibit 3.2 to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999. (File No. 0-14680), and incorporated
herein by reference.
3. Management and Accounting Policies Governing the Relationship
of Genzyme Divisions. Filed herewith.
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
GENZYME CORPORATION
Date: December 18, 2000 By: /s/ Michael S. Wyzga
--------------------------------------------
Name: Michael S. Wyzga
Title: Senior Vice President,
Finance and Chief Financial Officer
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EXHIBIT LIST
EXHIBIT NO. DESCRIPTION
----------- -----------
1. Restated Articles of Organization of the Registrant. Filed
herewith.
2. By-Laws of the Registrant. Filed as Exhibit 3.2 to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999. (File No. 0-14680), and incorporated
herein by reference.
3. Management and Accounting Policies Governing the Relationship
of Genzyme Divisions. Filed herewith.
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