<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
MARCH 2, 2000
GENZYME CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
MASSACHUSETTS 0-14680 06-1047163
<S> <C> <C>
(State or other jurisdiction of (Commission file number) (IRS employer identification
incorporation or organization) number)
</TABLE>
ONE KENDALL SQUARE, CAMBRIDGE, MASSACHUSETTS 02139
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(617) 252-7500
<PAGE>
ITEM 5. OTHER EVENTS.
On March 2, 2000, the Board of Directors of Genzyme Corporation
("Genzyme") authorized, subject to the approval of Genzyme's stockholders, an
amendment to Genzyme's Articles of Organization (its "charter") that would
modify the terms of its Genzyme Molecular Oncology Division Common Stock, $0.01
par value per share (the "GZMO Stock"), Genzyme Surgical Products Division
Common Stock, $0.01 par value per share (the "GZSP Stock") and Genzyme Tissue
Repair Common Stock, $0.01 par value per share (the "GZTR Stock"). The general
purpose of the amendment is to update the terms of Genzyme's tracking stock so
that they include the types of rights and other terms contained in the more
recently introduced tracking stocks of other companies. The principal issues
addressed by the amendment are
- modifying the provisions that govern mandatory distributions to
division stockholders upon a sale of all or substantially all of a
division's assets, such that stockholders will receive a distribution
more accurately reflecting the value assigned to those assets by a
third party purchaser;
- permitting Genzyme to modify the terms of its tracking stock or to
unwind its tracking stock structure without incurring the substantial
costs and dilutive effects of exchanging its tracking stock at 30%, or
some other, premium to its fair market value if, on the advice of tax
counsel, the Board of Directors deems it desirable to take such action
to avoid adverse tax consequences to Genzyme or its stockholders due
to a change in tax laws affecting tracking stock; and
- describing in more detail the information that must be contained in
notices sent to stockholders regarding any exchange of or distribution
on their common stock.
The amendment proposal will be described in the proxy statement to be
sent to Genzyme stockholders in connection with its 2000 Annual Meeting of
Stockholders. Article IV of Genzyme's Articles of Organization as proposed to be
amended and restated is filed herewith as Exhibit 99.1 and is incorporated
herein by reference. The proposed amendment may be modified or abandoned by
Genzyme prior to stockholder approval. The proposed amendment will become
effective if approved by Genzyme's stockholders and filed with, and declared
effective by, the Secretary of the Commonwealth of Massachusetts.
In addition, Genzyme currently intends to convene a special meeting of
Genzyme stockholders some time following the Annual Meeting. At the special
meeting, Genzyme will ask its stockholders to consider and adopt a further
amendment to Genzyme's charter. Specifically, it will ask stockholders to
approve a charter amendment contemplating the creation of a new series of common
stock (the "GZBX Stock") which will track a new division that Genzyme
anticipates calling Genzyme Biosurgery. Genzyme Biosurgery will combine the
assets and liabilities of Genzyme Surgical Products and Genzyme Tissue Repair
with those of Biomatrix, Inc., with whom Genzyme has signed a merger agreement
on March 6, 2000 (the "Merger Agreement"). Genzyme will also ask holders of the
GZSP Stock and GZTR Stock to approve the transfer of the assets and liabilities
of Genzyme Surgical Products and Genzyme Tissue Repair into Genzyme Biosurgery
and the conversion of their shares of GZSP Stock and GZTR Stock into shares of
GZBX Stock (the "Recapitalization"). The GZBX Stock is expected to have the same
terms, rights and preferences as those of the GZMO Stock, GZSP Stock and GZTR
Stock as proposed to be amended by the amendment described in this Form 8-K. For
a fuller description of the Merger Agreement and Recapitalization, see Genzyme's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
March 15, 2000.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) EXHIBITS:
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<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
99.1 Article IV of the Articles of Organization of Genzyme Corporation as proposed to be
amended and restated. Filed herewith.
</TABLE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENZYME CORPORATION
Dated: March 22, 2000 By: /s/ Peter Wirth
------------------------------------
Peter Wirth
Executive Vice President and Chief
Legal Officer
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
99.1 Article IV of the Articles of Organization of Genzyme Corporation as proposed to be amended
and restated. Filed herewith.
</TABLE>
<PAGE>
EXHIBIT 99.1
The following is the text of Article IV of the Articles of Organization of
Genzyme Corporation as proposed to be amended and restated.
ARTICLE IV
DESCRIPTION OF CAPITAL STOCK
A. AUTHORIZED CAPITAL STOCK
The total number of shares of all classes of capital stock which the
Corporation shall be authorized to issue is four hundred million (400,000,000)
shares, consisting of three hundred ninety million (390,000,000) shares of
Common Stock, $.01 par value per share (the "Common Stock") and ten million
(10,000,000) shares of Preferred Stock, $.01 par value per share (the "Preferred
Stock").
B. UNDESIGNATED COMMON STOCK
Shares of Common Stock not at the time designated as shares of a
particular series pursuant to this Section IV.B. or any other provision of these
Articles of Organization may be issued from time to time in one or more
additional series. The Board of Directors may determine, in whole or in part,
the preferences, voting powers, qualifications and special or relative rights or
privileges of any such series before the issuance of any shares of that series,
provided that in no event shall the holder of a share of any series of Common
Stock be entitled to more than one vote per share at the time that shares of
such series are first issued. The Board of Directors shall determine the number
of shares constituting each series of Common Stock and each series shall have a
distinguishing designation.
C. GENZYME GENERAL DIVISION COMMON STOCK
1. AUTHORIZED AMOUNTS. Two hundred million (200,000,000) shares of
Common Stock are designated as a series of Common Stock with the following
designation: Genzyme General Division Common Stock (the "GGD Stock"). To the
extent legally permitted, such number of shares may be increased or decreased
by vote of the Board of Directors, provided that no decrease shall reduce the
number of shares of GGD Stock to a number less than the number of shares of
such series then outstanding plus the number of shares of such series
reserved for issuance upon the exercise of outstanding options, rights or
warrants or upon the conversion of any outstanding securities issued by the
Corporation convertible into such series of Common Stock. A description of
the GGD Stock and a statement of its preferences, voting powers,
qualifications and special or relative rights or privileges is as follows:
2. DIVIDENDS AND DISTRIBUTIONS. Subject to the express terms of any
outstanding series of Preferred Stock, dividends may be declared and paid
upon the GGD Stock, in such amounts and at such times as the Board of
Directors may determine, only out of the lesser of (a) funds of the
Corporation legally available therefor and (b) the Available GGD Dividend
Amount.
Continuation Sheet - 1
<PAGE>
3. VOTING RIGHTS. The holders of GGD Stock, voting together with the
holders of shares of all other series of Common Stock as a single class of
stock, shall have the exclusive right to vote for the election of directors
and on all other matters requiring action by the stockholders or submitted to
the stockholders for action, except as may be determined by the Board of
Directors in establishing any series of Common or Preferred Stock or as may
otherwise be required by law. Each share of the GGD Stock shall entitle the
holder thereof to one vote.
4. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
rights of the holders of GGD Stock shall be as follows:
(a) After the Corporation has satisfied or made provision for
its debts and obligations and for the payment to the holders of shares of any
class or series of capital stock having preferential rights to receive
distributions of the net assets of the Corporation (including any accumulated
and unpaid dividends), the holders of GGD Stock shall be entitled to receive
the net assets of the Corporation remaining for distribution, on a per share
basis in proportion to the respective liquidation units per share of all
series of Common Stock. Each share of GGD Stock shall have one hundred (100)
liquidation units.
(b) For the purposes of Section IV.C.4(a), any merger or
business combination involving the Corporation or any sale of all or
substantially all of the assets of the Corporation shall not be treated as a
liquidation.
5. SPECIAL VOTING RIGHTS. The Corporation shall not, without
approval by the holders of the GGD Stock at a meeting at which a quorum is
present and the votes cast in favor of the proposal exceed those cast against:
(a) allow any proceeds from the Disposition of the properties
or assets allocated to Genzyme General Division to be used in the business of
any other Division without fair compensation being allocated to Genzyme
General Division as determined by the Board of Directors;
(b) allow any properties or assets allocated to Genzyme General
Division to be used in the business of any other Division or for the
declaration or payment of any dividend or distribution on any series of
Common Stock other than the GGD Stock without fair compensation being
allocated to Genzyme General Division as determined by the Board of Directors;
(c) issue, sell or otherwise distribute shares of GGD Stock
without allocating the proceeds or other benefits of such issuance, sale or
distribution to Genzyme General Division;
(d) change the rights or preferences of the GGD Stock so as to
affect the GGD Stock adversely; or
(e) effect any merger or business combination involving the
Corporation as a result of which (a) the holders of all series of Common
Stock of the Corporation shall no longer own, directly or indirectly, at
least fifty percent (50%) of the voting power of the surviving corporation
and (b) the holders of all series of Common Stock of the Corporation do not
receive
Continuation Sheet - 2
<PAGE>
the same form of consideration, distributed among such holders in proportion
to the Market Capitalization of each series of Common Stock as of the date of
the first public announcement of such merger or business combination.
6. DEFINITIONS. As used in this Section IV.C., the following terms
shall have the following meanings (with terms defined in the singular having
comparable meaning when used in the plural and vice versa), unless another
definition is provided or the context otherwise requires:
(a) "Available GGD Dividend Amount," on any date, shall mean
the greater of:
(1) the excess of
(A) the greater of (x) the fair value on such
date of the net assets of Genzyme General Division and (y) an amount equal to
$335,378,000 (stockholders' equity allocated to Genzyme General Division at
June 30, 1994), such dollar amount to be increased or decreased, as
appropriate, to reflect, after June 30, 1994, (A) the Earnings Attributable
to Genzyme General Division, (B) any dividends or other distributions
(including by reclassification or exchange) declared or paid with respect to,
or repurchases or issuances of, any shares of GGD Stock or any other class of
capital stock attributed to Genzyme General Division, but excluding dividends
or other distributions paid in shares of GGD Stock to the holders thereof or
in shares of any other class of capital stock attributed to Genzyme General
Division to the holders thereof, and (C) any other adjustments to the
stockholders' equity of Genzyme General Division made in accordance with
generally accepted accounting principles, over
(B) the sum of (x) the aggregate par value of
all outstanding shares of GGD Stock and any other class of capital stock
attributed to Genzyme General Division and (y) unless these Articles of
Organization permit otherwise, the aggregate amount that would be needed to
satisfy any preferential rights to which holders of all outstanding Preferred
Stock attributed to Genzyme General Division are entitled upon dissolution of
the Corporation in excess of the aggregate par value of such Preferred Stock,
provided that such excess shall be reduced by any amount necessary to enable
Genzyme General Division to pay its debts as they become due, and
(2) the amount legally available for the payment of
dividends determined in accordance with Massachusetts law applied as if
Genzyme General Division were a separate corporation.
(b) "Earnings Attributable" to Genzyme General Division for any
period, shall mean the net income or loss of Genzyme General Division for
such period (or for the fiscal periods of the Corporation commencing prior to
the GTR Effective Date and after June 30, 1994, pro forma net income or loss
of Genzyme General Division as if the GTR Effective Date were June 30, 1994)
determined in accordance with generally accepted accounting principles, with
all income and expenses of the Corporation being allocated between Divisions
in a reasonable and consistent manner in accordance with policies adopted by
the Board of Directors; provided, however, that as of the end of any fiscal
quarter of the Corporation, any projected annual tax benefit attributable to
any Division that cannot be utilized by such Division to offset or reduce its
Continuation Sheet - 3
<PAGE>
allocated tax liability may be allocated to any other Division without any
compensating payment or allocation.
(c) "Genzyme General Division" shall mean, at any time, the
Corporation's interest in (i) all of the businesses, products, or development
or research programs in which the Corporation or any of its subsidiaries (or
any of their predecessors or successors) is or has been engaged, directly or
indirectly, other than those allocated to any division of the Corporation
represented by a series of Common Stock (any "Division") other than the GGD
Stock; and (ii) all assets and liabilities of the Corporation to the extent
allocated to any such businesses, products, or development or research
programs in accordance with generally accepted accounting principles
consistently applied for all of the Corporation's business units. From and
after the date on which all of the outstanding shares of any series of Common
Stock are exchanged for shares of GGD Stock, other securities, cash, other
property or a combination thereof, all of the businesses, products,
development or research programs, assets and liabilities of the Division
represented by such series of Common Stock shall be included in Genzyme
General Division. Genzyme General Division shall be represented by the GGD
Stock.
D. GENZYME MOLECULAR ONCOLOGY COMMON STOCK
1. AUTHORIZED AMOUNTS AND DESIGNATIONS. Forty million (40,000,000)
shares of Common Stock are designated as a series of Common Stock with the
following designation: Genzyme Molecular Oncology Division Common Stock (the
"GMO Stock"). To the extent legally permitted, such number of shares may be
increased or decreased by vote of the Board of Directors, provided that no
decrease shall reduce the number of shares of GMO Stock to a number less than
the number of shares of such series then outstanding plus the number of
shares of such series reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding
securities issued by the Corporation convertible into such series of Common
Stock.
2. DIVIDENDS AND DISTRIBUTIONS. Subject to the express terms of
any outstanding series of Preferred Stock, dividends may be declared and paid
upon the GMO Stock, in such amounts and at such times as the Board of
Directors may determine, only out of the lesser of (a) funds of the
Corporation legally available therefor and (b) the Available GMO Dividend
Amount.
3. VOTING RIGHTS. The holders of GMO Stock, voting together with
the holders of shares of all other series of Common Stock as a single class
of stock, shall have the exclusive right to vote for the election of
directors and on all other matters requiring action by the stockholders or
submitted to the stockholders for action, except as may be determined by the
Board of Directors in establishing any series of Common or Preferred Stock or
as may otherwise be required by law. Each share of GMO Stock shall entitle
the holder thereof to .08 vote through December 31, 2000. On January 1, 2001
and on each January 1 every two years thereafter, the number of votes to
which the holder of each share of GMO Stock shall be entitled shall be
adjusted and fixed for two-year periods to equal the quotient (expressed as a
decimal and rounded to the nearest two decimal places) obtained by dividing
(i) the Fair Market Value of one share of GMO Stock by (ii) Fair Market Value
of one share of GGD Stock as of such date. If no shares of GGD Stock are
outstanding on such date, then all other series of voting Common Stock
outstanding on such date shall have a number of votes such that each share of
the series of
Continuation Sheet - 4
<PAGE>
outstanding Common Stock that has the highest Fair Market Value per share on
such date (the "Base Series") shall have one vote and each share of each
other series of outstanding Common Stock shall have the number of votes
determined according to the immediately preceding sentence, treating, for
such purpose, the Base Series as the GGD Stock in such sentence. If shares of
GMO Stock are entitled to vote separately as a class, each share of GMO Stock
shall have one vote.
4. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
rights of the holders of GMO Stock shall be as follows:
(a) After the Corporation has satisfied or made provision for
its debts and obligations and for the payment to the holders of shares of any
class or series of capital stock having preferential rights to receive
distributions of the net assets of the Corporation (including any accumulated
and unpaid dividends), the holders of GMO Stock shall be entitled to receive
the net assets of the Corporation remaining for distribution, on a per share
basis in proportion to the respective liquidation units per share of all
series of Common Stock. Each share of GMO Stock shall, subject to Section
IV.G.4., have 25 liquidation units.
(b) For the purposes of Section IV.D.4(a) any merger or
business combination involving the Corporation or any sale of all or
substantially all of the assets of the Corporation shall not be treated as a
liquidation.
5. SPECIAL VOTING RIGHTS. The Corporation shall not, without
approval by the holders of the GMO Stock at a meeting at which a quorum is
present and the votes cast in favor of the proposal exceed those cast against:
(a) allow any proceeds from the Disposition of the properties
or assets allocated to Genzyme Molecular Oncology Division to be used in the
business of any other Division without fair compensation being allocated to
Genzyme Molecular Oncology Division as determined by the Board of Directors;
(b) allow any properties or assets allocated to Genzyme
Molecular Oncology Division to be used in the business of any other Division
or for the declaration or payment of any dividend or distribution on any
series of Common Stock other than the GMO Stock without fair compensation
being allocated to Genzyme Molecular Oncology Division as determined by the
Board of Directors;
(c) issue, sell or otherwise distribute shares of GMO Stock
without allocating the proceeds or other benefits of such issuance, sale or
distribution to Genzyme Molecular Oncology Division; provided, however, that
the Corporation may without such approval issue GMO Designated Shares;
(d) change the rights or preferences of the GMO Stock so as to
affect the GMO Stock adversely; or
(e) effect any merger or business combination involving the
Corporation as a result of which (i) the holders of all series of Common
Stock of the Corporation shall no longer
Continuation Sheet - 5
<PAGE>
own, directly or indirectly, at least fifty percent (50%) of the voting power
of the surviving corporation and (ii) the holders of all series of Common
Stock of the Corporation do not receive the same form of consideration,
distributed among such holders in proportion to the Market Capitalization of
each series of Common Stock as of the date of the first public announcement
of such merger or business combination.
Notwithstanding the foregoing, if the Corporation receives an
opinion of Qualified Tax Counsel that, by reason of any Tax Law Change, the
special voting rights of the GMO Stock set forth in this subsection 5 would
cause a Tax Event absent the termination of such rights, then the Corporation
may, by vote of a majority of the stock outstanding and entitled to vote
thereon, voting together as a single class, authorize an amendment to these
Articles of Organization to effect the termination of such rights in order to
avoid the occurrence of such Tax Event. Any such amendment shall not be
deemed to change the rights or preferences of the GMO Stock so as to affect
the GMO Stock adversely as contemplated by either Section IV.D.5(d) or
Section 77 of the Massachusetts Business Corporation Law.
6. EXCHANGE OR REDEMPTION OF GMO STOCK. Shares of GMO Stock are
subject to exchange or redemption upon the terms and conditions set forth
below:
(a) OPTIONAL EXCHANGE OF GMO STOCK.
(1) The Board of Directors may at any time, including
without limitation in the event of the reallocation, in one transaction or a
series of related transactions, by the Corporation and/or its subsidiaries of
all or substantially all of the properties and assets allocated to Genzyme
Molecular Oncology Division to any other Division of Genzyme (a "GMO
Reallocation"), declare that each of the outstanding shares of GMO Stock
shall be exchanged, on an Exchange Date, as determined by the Board of
Directors, for (a) a number of fully paid and nonassessable shares of GGD
Stock (calculated to the nearest five decimal places) equal to (1) 130% of
the Fair Market Value of one share of the GMO Stock (the "GMO Optional
Exchange Amount") as of the date of the first public announcement by the
Corporation (the "GMO Optional Exchange Announcement Date") of such exchange
divided by (2) the Fair Market Value of one share of GGD Stock as of such GMO
Optional Exchange Announcement Date or (b) cash equal to the GMO Optional
Exchange Amount, or (c) any combination of GGD Stock and cash equal to the
GMO Optional Exchange Amount as determined by the Board of Directors.
(2) If the Corporation receives an opinion of Qualified
Tax Counsel that a Tax Event has occurred by reason of any Tax Law Change,
then the Board of Directors may at any time declare that each of the
outstanding shares of GMO Stock shall be exchanged, on an Exchange Date, as
determined by the Board of Directors, for a number of fully paid and
nonassessable shares of GGD Stock (calculated to the nearest five decimal
places) equal to (1) the Fair Market Value of one share of the GMO Stock as
of the date of the first public announcement by the Corporation of such
exchange divided by (2) the Fair Market Value of one share of GGD Stock as of
such date.
(3) At any time at which all of the assets and
liabilities attributed to Genzyme Molecular Oncology Division (and no other
assets or liabilities of the Corporation or any subsidiary thereof) are held
directly or indirectly by one or more wholly-owned subsidiaries
Continuation Sheet - 6
<PAGE>
of the Corporation (each, a "GMO Subsidiary"), the Board of Directors may,
provided that there are funds of the Corporation legally available therefor,
exchange on an Exchange Date, as determined by the Board of Directors, all of
the outstanding shares of GMO Stock for that number of the shares of common
stock of each GMO Subsidiary equal to the number of such GMO Subsidiary
shares outstanding immediately prior to such exchange multiplied by the GMO
Allocation Ratio, such shares of common stock of each GMO Subsidiary to be
delivered to the holders of shares of GMO Stock on the Exchange Date either
directly or indirectly through the delivery of shares of another GMO
Subsidiary that owns directly or indirectly all such shares, and to be
divided among the holders of GMO Stock on a pro rata basis in accordance with
the number of shares of GMO Stock held by each such holder, each of which
shares of common stock of such GMO Subsidiary shall be, upon such delivery,
fully paid and nonassessable; PROVIDED, HOWEVER, that upon any such exchange,
any existing GMO Designated Shares shall be cancelled in exchange for the
allocation to Genzyme General of the direct or indirect interest of the
Corporation in any remaining outstanding shares of each such GMO Subsidiary
that are not transferred to the holders of GMO Stock in such exchange.
(b) MANDATORY EXCHANGE OR REDEMPTION OF OR PAYMENT OF DIVIDEND
ON GMO STOCK.
(1) GMO MANDATORY PAYMENT. In the event of the
Disposition, in one transaction or a series of related transactions, by the
Corporation and/or its subsidiaries of all or substantially all of the
properties and assets allocated to Genzyme Molecular Oncology Division to any
person, entity or group (other than a Disposition of a type set forth in
subsection (2) of this subsection (b)), on or prior to the 60th Business Day,
or such earlier date required under this Section IV.D.6, following the date
of the GMO Mandatory Payment Announcement (as defined in Section
IV.D.6(d)(2)), the Corporation shall select one of the following
alternatives, as determined by the Board of Directors in its discretion:
(A) provided that there are funds of the
Corporation legally available therefor, pay to the holders of the shares of
GMO Stock a dividend on a pro rata basis in accordance with the number of
shares of GMO Stock held by each such holder in cash, securities (other than
shares of a series of Common Stock) and/or other property having a Fair
Market Value as of the date of the Disposition in the aggregate equal to the
Fair Market Value as of the date of the Disposition of the GMO Net Proceeds
of such Disposition; or
(B) provided that there are funds of the
Corporation legally available therefor,
(i) if such Disposition involves all
(not merely substantially all) of the properties and assets attributed to
Genzyme Molecular Oncology Division, redeem or exchange as of a Redemption
Date determined by the Board of Directors, all outstanding shares of GMO
Stock in exchange for, on a pro rata basis, cash, securities (other than
shares of a series of Common Stock) and/or other property having a Fair
Market Value as of the date of the Disposition in the aggregate equal to the
Fair Market Value as of the date of the Disposition of the GMO Net Proceeds
of such Disposition; or
Continuation Sheet - 7
<PAGE>
(ii) if such Disposition involves
substantially all (but not all) of the properties and assets attributed to
Genzyme Molecular Oncology Division, redeem or exchange as of a Redemption
Date as determined by the Board of Directors such number of whole shares of
GMO Stock (which may be all, but not more than all, of such shares
outstanding) as have in the aggregate an average Closing Price during the
period of ten (10) consecutive Business Days beginning on the first Business
Day immediately following the date of the Estimated GMO Net Proceeds
Announcement (as defined in Section IV.D.6(d)(2)) closest to the Fair Market
Value as of the date of the Disposition of the GMO Net Proceeds of such
Disposition in consideration for, on a pro rata basis, cash securities (other
than shares of a series of Common Stock) and/or other property having a Fair
Market Value as of the date of the Disposition in the aggregate equal to such
Fair Market Value of the GMO Net Proceeds; or
(C) declare that each outstanding share of GMO
Stock shall be exchanged as of an Exchange Date as determined by the Board of
Directors into a number of fully paid and nonassessable shares of GGD Stock
equal to 110% of the ratio (calculated to the nearest five decimal places) of
the average Closing Price of one share of GMO Stock over the period of ten
(10) consecutive Business Days beginning on the first Business Day
immediately following the date of the Estimated GMO Net Proceeds Announcement
(as defined in Section IV.D.6(d)(2)) to the average Closing Price of one
share of GGD Stock over the same ten Business Day period.
Any redemption or exchange of or dividend payment on GMO Stock made pursuant
to this Section IV.D.6(b)(1) or Section IV.D.6(c)(3) is hereinafter referred
to as a "GMO Mandatory Payment." Notwithstanding the foregoing provisions of
this Section IV.D.6.(b), the Corporation shall redeem GMO Stock as provided
by Section IV.D.(b)(1)(B) only if the amount to be paid pursuant to such
redemption is less than or equal to the Available GMO Dividend Amount as of
the Redemption Date.
(2) EXCEPTIONS TO MANDATORY PAYMENT. Notwithstanding the
foregoing Section IV.D.6(b)(1) or Section IV.D.6(c)(3), a GMO Mandatory
Payment shall not be required by the occurrence of a Disposition:
(A) by the Corporation of all or substantially
all of the Corporation's properties and assets in one transaction or a series
of related transactions, including such Disposition in connection with the
dissolution, liquidation or winding up of the Corporation and the
distribution of assets to stockholders as referred to in Section IV.D.4;
(B) of the properties and assets attributed to
Genzyme Molecular Oncology Division as contemplated by Section IV.D.6(a)(3)
or otherwise to all holders of GMO Stock divided among such holders on a pro
rata basis in accordance with the number of shares GMO Stock outstanding;
(C) to any person or entity controlled (as
determined by the Board of Directors) by the Corporation;
(D) in connection with a Related Business
Transaction in respect of Genzyme Molecular Oncology Division; or
Continuation Sheet - 8
<PAGE>
(E) that is conditioned upon the affirmative
vote of the holders of GMO Stock, voting as a separate class.
(c) TERMINATION OF CASH EXCHANGE RIGHT. If the Corporation
receives an opinion of Qualified Tax Counsel that, by reason of any Tax Law
Change, the right or obligation of the Corporation to exchange GMO Stock for
cash, securities or other property pursuant to Section IV.D.6(a)(1) or (3) or
IV.D.6(b) (each, a "GMO Cash Exchange Right") would cause a Tax Event if not
terminated, then the Board of Directors may at any time, by a vote of a
majority of the directors then in office, elect to terminate any or all such
GMO Cash Exchange Rights, with the result that the Corporation shall
thereafter have, depending on which GMO Cash Exchange Right(s) is (are) so
terminated:
(1) under Section IV.D.6(a)(1) only the right to cause
the exchange of GMO Stock for GGD Stock and not for cash, securities or other
property other than capital stock of the Corporation,
(2) no right to effect an exchange under Section
IV.D.6(a)(3), and/or
(3) no right or obligation to effect a GMO Mandatory
Payment under Section IV.D.6(b), provided that if the Board shall no longer
have the right or obligation to effect a GMO Mandatory Payment under Section
IV.D.6(b), then if a GMO Mandatory Payment thereunder shall otherwise be or
have been required, the Corporation instead shall have the obligation to
effect on or prior to the first Business Day after the 90th day following the
consummation of such Disposition, a GMO Mandatory Payment pursuant to which
it shall exchange each outstanding share of GMO Stock for a number of fully
paid and nonassessable shares of GGD Stock (calculated to the nearest five
decimal places) equal to (i) the Fair Market Value of one share of the GMO
Stock as of the date of the first public announcement of such Disposition by
the Corporation by press release divided by (ii) the Fair Market Value of one
share of GGD Stock as of such date.
Notwithstanding the foregoing, the Board of Directors may not
terminate any GMO Cash Exchange Right during the period commencing on the
date of a Disposition requiring a GMO Mandatory Payment until the date upon
which the related Mandatory Payment is effected by the Corporation.
(d) EXCHANGE AND REDEMPTION PROCEDURES.
(1) If the Corporation determines to exchange shares of
GMO Stock pursuant to Section IV.D.6(a), the Corporation shall cause notice
to be sent not less than 30 nor more than 60 days prior to the Exchange Date
in the form and manner set forth in Section IV.G.1, and the procedures
governing such exchange shall be those set forth in Section IV.G.1.
(2) Not later than the 20th Business Day following the
consummation of a Disposition described in Section IV.D.6(b)(1) with respect
to Genzyme Molecular Oncology Division, the Corporation shall announce
publicly by press release (1) the estimated GMO Net Proceeds, (2) the number
of outstanding shares of GMO Stock and (3) the number of shares of GMO Stock
into or for which Convertible Securities are then convertible, exchangeable
or exercisable and the conversion, exchange or exercise price thereof (the
"Estimated GMO Net
Continuation Sheet - 9
<PAGE>
Proceeds Announcement"). Not earlier than the day immediately following the
10th Business Day, nor later than the 15th Business Day, following the date
of the Estimated GMO Net Proceeds Announcement, the Corporation shall
announce publicly by press release which of the actions specified in Section
IV.D.6(b)(1) that it has irrevocably determined to make in respect of such
Disposition (the "GMO Mandatory Payment Announcement").
(3) If the Corporation determines to pay a dividend
pursuant to Section IV.D.6(b)(1)(A), the Corporation shall, not later than
the 15th Business Day following the date of the Estimated GMO Net Proceeds
Announcement, cause notice to be sent to the holders of shares of GMO Stock
and to each holder of Convertible Securities that are convertible into or
exchangeable or exercisable for shares of GMO Stock (unless alternate
provision for such notice to the holders of such Convertible Securities is
made pursuant to the terms of such Convertible Securities), setting forth (1)
the record date for determining holders entitled to receive such dividend,
which shall be not earlier than the 10th Business Day and not later than the
20th Business Day following the date of such notice, (2) the anticipated
payment date of such dividend (which shall not be more than 60 Business Days
following the date of the GMO Mandatory Payment Announcement), (3) the type
and amount of property to be paid as such dividend in respect of the
outstanding shares of GMO Stock, (4) the GMO Net Proceeds, (5) the number of
outstanding shares of GMO Stock and the number of shares of GMO Stock into or
for which outstanding Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise price
thereof and (6) in the case of notice to be given to holders of Convertible
Securities, a statement to the effect that a holder of such Convertible
Securities shall be entitled to receive such dividend only if such holder
properly converts, exchanges or exercises such Convertible Securities (unless
the terms of a Convertible Security provide otherwise) on or prior to the
record date referred to in clause (1) of this sentence. Except as provided in
the preceding sentence, such notice shall conform with the provisions
governing notice at Section IV.G.1 and the provisions governing the payment
of such dividend shall be those set for in such Section IV.G.1 to the extent
such provisions are applicable to the payment of a dividend.
(4) If the Corporation determines to redeem shares of
GMO Stock pursuant to Section IV.D.6(b)(1)(B)(i), the Corporation shall, not
later than the 15th Business Day following the date of the Estimated GMO Net
Proceeds Announcement, cause notice to be sent in the form and manner set
forth in Section IV.G.1, and the procedures governing such redemption shall
be those set forth in Section IV.G.1; PROVIDED, HOWEVER, the Redemption Date
shall not be more than 60 Business Days following the date of the GMO
Mandatory Payment Announcement. Such notice shall also state the GMO Net
Proceeds.
(5) If the Corporation determines to redeem shares of GMO
Stock pursuant to Section IV.D.6(b)(1)(B)(ii), the Corporation shall, not
later than the 15th Business Day following the date of the GMO Estimated Net
Proceeds Announcement, cause notice to be sent in the form and manner set
forth in Section IV.G.1, and the procedures governing such redemption shall
be those set forth in Section IV.G.1; PROVIDED, HOWEVER, the Redemption Date
shall not be more than 60 Business Days following the date of the Estimated
GMO Net Proceeds Announcement. The notice delivered hereunder shall also
state (a) the GMO Net Proceeds and (b) a date (the "selection date") not
earlier than the 10th Business Day and not later than the 20th Business Day
following the date of such notice on which shares of GMO Stock shall be
selected
Continuation Sheet - 10
<PAGE>
for redemption and that the Corporation will not be required to register a
transfer of any shares of GMO Stock for a period of ten (10) Business Days
next preceding the Selection Date.
(6) If the Corporation determines to exchange GMO Stock
for GGD Stock pursuant to Section IV.D.6(b)(1)(C), the Corporation shall
cause notice to be sent in the form and manner set forth in Section IV.G.1,
and the procedures governing such exchange shall be those set forth in
Section IV.G.1; PROVIDED, HOWEVER, the Exchange Date shall not be more than
60 Business Days following the date of the GMO Mandatory Payment
Announcement. Such notice shall also state the GMO Net Proceeds.
(7) If the Corporation determines to exchange GMO Stock
for GGD Stock pursuant to Section IV.D.6(c)(3), the Corporation shall cause
notice to be sent not less than 30 nor more than 60 days in the form and
manner set forth in Section IV.G.1, and the procedures governing such
exchange shall be those set forth in Section IV.G.1.
(e) SPECIAL MANDATORY PAYMENT PROVISIONS. For purposes of this
Section IV.D.6:
(1) "substantially all of the properties and assets
allocated to Genzyme Molecular Oncology Division" shall mean a portion of the
properties and assets allocated to Genzyme Molecular Oncology Division (A)
that represents at least 80% of the then-current fair value (as determined by
the Board of Directors) of, or (B) to which is attributable at least 80% of
the aggregate revenues for the immediately preceding twelve fiscal quarterly
periods of the Corporation derived from, the properties and assets allocated
to Genzyme Molecular Oncology Division;
(2) in the case of a Disposition of properties and
assets in a series of related transactions, such Disposition shall not be
deemed to have been consummated until the consummation of the last of such
transactions; and
(3) in the event that at the time of any Disposition
there are outstanding any Convertible Securities convertible into or
exercisable for shares of GMO Stock that would give the holders rights to
receive any dividend related to the Disposition upon exercise, conversion or
otherwise, or would adjust as a result of such dividend to give the holder
equivalent economic rights, then the shares of GMO Stock underlying such
Convertible Securities will be taken into account for purposes of computing
the GMO Allocation Ratio and determining the terms of any dividend payment on
such shares;
(4) in the event that as a result of or in connection
with a dividend payment pursuant to Section IV.D.6(b)(1)(A) there ceases to
be any properties or assets attributed to Genzyme Molecular Oncology
Division, then each outstanding share of GMO Stock shall immediately
following such dividend payment be cancelled and all rights of a holder of a
share of GMO Stock shall cease except for the right to such dividend payment;
and
(5) there shall be added to any cash portion of a GMO
Mandatory Payment paid to holders of GMO Stock, which cash comprised a
portion of the GMO Net Proceeds, any interest earned by Genzyme Molecular
Oncology Division or the Corporation on such cash from the date of the
Disposition up to the record date of such GMO Mandatory Payment.
Continuation Sheet - 11
<PAGE>
7. DEFINITIONS. As used in this Section IV.D., the following terms
shall have the following meanings (with terms defined in the singular having
comparable meaning when used in the plural and vice versa), unless another
definition is provided or the context otherwise requires. Capitalized terms
used but not defined in this Section IV.D.7 shall have the meanings given
them in Section IV.G.7.
(a) "Available GMO Dividend Amount," on any date, shall mean
the greater of:
(1) the excess of
(A) the greater of (x) the fair value on such
date of the net assets of Genzyme Molecular Oncology Division and (y) an
amount equal to $20,500,000 (stockholders' equity allocated to Genzyme
Molecular Oncology Division at September 30, 1996), such dollar amount to be
increased or decreased, as appropriate, to reflect, after September 30, 1996,
(A) the Earnings Attributable to Genzyme Molecular Oncology Division, (B) any
dividends or other distributions (including by reclassification or exchange)
declared or paid with respect to, or repurchases or issuances of, any shares
of GMO Stock or any other class of capital stock attributed to Genzyme
Molecular Oncology Division, but excluding dividends or other distributions
paid in shares of GMO Stock to the holders thereof or in shares of any other
class of capital stock attributed to Genzyme Molecular Oncology Division to
the holders thereof, and (C) any other adjustments to the stockholders'
equity of Genzyme Molecular Oncology Division made in accordance with
generally accepted accounting principles, over
(B) the sum of (x) the aggregate par value of
all outstanding shares of GMO Stock and any other class of capital stock
attributed to Genzyme Molecular Oncology Division and (y) unless these
Articles of Organization permit otherwise, the aggregate amount that would be
needed to satisfy any preferential rights to which holders of all outstanding
Preferred Stock attributed to Genzyme Molecular Oncology Division are
entitled upon dissolution of the Corporation in excess of the aggregate par
value of such Preferred Stock, provided that such excess shall be reduced by
any amount necessary to enable Genzyme Molecular Oncology Division to pay its
debts as they become due, and
(2) the amount legally available for the payment of
dividends determined in accordance with Massachusetts law applied as if
Genzyme Molecular Oncology Division were a separate corporation.
(b) "Earnings Attributable" to Genzyme Molecular Oncology
Division for any period, shall mean the net income or loss of Genzyme
Molecular Oncology Division for such period (or for the fiscal periods of the
Corporation commencing prior to the GMO Effective Date and after September
30, 1996, pro forma net income or loss of Genzyme Molecular Oncology Division
as if the GMO Effective Date were September 30, 1996) determined in
accordance with generally accepted accounting principles, with all income and
expenses of the Corporation being allocated between Divisions in a reasonable
and consistent manner in accordance with policies adopted by the Board of
Directors; provided, however, that as of the end of any fiscal quarter of the
Corporation, any projected annual tax benefit attributable to any Division
that cannot be utilized by such Division to offset or reduce its allocated
tax liability may be allocated to any other Division without any compensating
payment or allocation.
Continuation Sheet - 12
<PAGE>
(c) "GMO Allocation Ratio," as of any date, shall mean the
fraction computed by dividing the GMO Shares Outstanding by the sum of the
GMO Shares Outstanding plus the GMO Designated Shares.
(d) "GMO Designated Shares" as of any date shall mean a number
of shares of GMO Stock that, as of the GMO Effective Date, shall be
6,000,000, which number shall be subject to adjustment as provided in the
next sentence. The number of GMO Designated Shares shall from time to time be
(1) adjusted as appropriate to reflect subdivisions (by
stock split or otherwise) and combinations (by reverse stock split or
otherwise) of the GMO Stock and dividends or distributions of shares of GMO
Stock to holders of GMO Stock and other reclassifications of GMO Stock,
(2) decreased by (A) the number of any shares of GMO
Stock issued by the Corporation, the proceeds of which are allocated to
Genzyme General Division, (B) the number of any shares of GMO Stock issued
upon the exercise or conversion of Convertible Securities attributed to
Genzyme General Division, and (C) the number of any shares of GMO Stock
issued by the Corporation as a dividend or distribution or by
reclassification, exchange or otherwise to holders of GGD Stock, and
(3) increased by (A) the number of any outstanding
shares of GMO Stock repurchased by the Corporation, the consideration for
which was allocated to Genzyme General Division, (B) the number equal to the
fair value (as determined by the Board of Directors) of assets or properties
allocated to Genzyme General Division that are reallocated to Genzyme
Molecular Oncology Division (other than GMO Reallocations that represent
sales at fair value between such Divisions) divided by the Fair Market Value
of one share of GMO Stock as of the date of such GMO Reallocation, (C) the
number equal to the number of shares into which the Board of Directors elects
to convert the promissory note dated February 10, 1997 issued by
PharmaGenics, Inc. to the Corporation pursuant to the terms of such
promissory note and (D) with respect to the $25 million equity line from
Genzyme General Division to Genzyme Molecular Oncology Division approved by
the Corporation's Board of Directors on January 30, 1997 (the "Equity Line"),
if
(A) the closing of the first public offering by
the Corporation of GMO Stock has occurred prior to the third anniversary of
the GMO Effective Date, then, upon such closing, a number equal to the
aggregate of the quotients obtained by dividing (i) the amount of each
advance made under the Equity Line by (ii) the dollar amount determined for
each such advance by the following formula: 7.00 +
[(IPOGMO - 7.00) x (ADATE/IPODATE)]; where IPOGMO = the offering price of the
GMO Stock in the first such public offering, ADATE = the number of days from
the GMO Effective Date to the time of such advance, and IPODATE = the number
of days from the GMO Effective Date to the time of the first such public
offering; and, thereafter, upon each advance made under the Equity Line, a
number equal to the quotient obtained by dividing (i) the amount of each such
advance by (ii) the Fair Market Value of the GMO Stock on the date of such
advance; or
Continuation Sheet - 13
<PAGE>
(B) the closing of the first public offering by
the Corporation of GMO Stock has not occurred prior to the third anniversary
of the GMO Effective Date, then, upon the election of the Corporation's Board
of Directors, a number equal to the quotient obtained by dividing (i) the
aggregate amount of all advances made under the Equity Line by (ii) the Fair
Market Value of the GMO Stock on the date of such third anniversary;
provided, that the Corporation shall take no action which would have the
effect of reducing the GMO Designated Shares to a number which is less than
zero. Within 45 days after the end of each fiscal quarter of the Corporation,
the Corporation shall prepare and file a statement of such change with the
transfer agent for the GMO Stock and with the Clerk of the Corporation.
(e) "GMO Effective Date" shall mean June 18, 1997.
(f) "GMO Net Proceeds" shall mean, as of any date, with
respect to a Disposition of any of the properties and assets of Genzyme
Molecular Oncology Division, a fraction of the proceeds from such disposition
determined by multiplying the GMO Allocation Ratio by the gross proceeds of
such Disposition after any adjustment to such gross proceeds resulting from
payment of, or reasonable provision for, (a) any taxes payable by the
Corporation in respect of either such Disposition or any mandatory exchange,
redemption or dividend payment resulting from such Disposition (or that would
have been payable but for the utilization of tax benefits attributable to any
division or group of the Corporation other than Genzyme Molecular Oncology
Division (a "Non-GMO Division")), (b) any transaction costs borne by Non-GMO
Division in connection with such Disposition, including, without limitation,
any legal, investment banking and accounting fees and expenses borne by a
Non-GMO Division in connection with such Disposition, (c) any liabilities and
other obligations (contingent or otherwise) of Genzyme Molecular Oncology
Division borne by a Non-GMO Division in connection with such Disposition,
including, without limitation, any indemnity or guarantee obligations
incurred by a Non-GMO Division in connection with the Disposition or any
liabilities assumed by a Non-GMO Division for future purchase price
adjustments, and (d) any preferential amounts, accumulated and unpaid
dividends and other obligations in respect of any Preferred Stock attributed
to Genzyme Molecular Oncology Division.
(g) "GMO Shares Outstanding" as of any date shall mean the
number of shares of GMO Stock then issued and outstanding.
(h) "Genzyme Molecular Oncology Division" shall mean, at any
time, the Corporation's interest in (i) the following businesses, products,
or development or research programs: (A) the use of the Serial Analysis of
Gene Expression ("SAGE") technology licensed from Johns Hopkins University
School of Medicine for third parties; (B) the clinical program developing
adenovirus vectors containing the tumor antigens MART 1 or gp100 for
treatment of melanoma: (C) the "suicide" gene therapy research program
developing adenovirus and lipid vectors containing genes to enhance
chemotherapy for oncology indications; (D) the research program developing
adenovirus and lipid vectors containing tumor suppressor genes for oncology
indications; (E) the research program developing adenovirus and lipid
containing genes to regulate the immune system for oncology indications,
including heat shock proteins; (F) the research program developing
antibody-targeted gene therapy for treatment of tumors; (G) the research
program developing small molecule compounds to inhibit angiogenesis and
stimulate apoptosis; (H) the research program developing small molecule
compounds to regulate tumor
Continuation Sheet - 14
<PAGE>
suppressor gene function; and (I) the research program developing diagnostic
applications for tumor suppressor genes and other cancer-related genes
licensed from Hoffmann-La Roche Inc. or identified by Johns Hopkins
University using SAGE technology or other genomic technology; (ii) all assets
and liabilities of the Corporation to the extent allocated to any such
businesses, products, or development or research programs in accordance with
generally accepted accounting principles consistently applied for all of the
Corporation's business units; (iii) to the extent not described above, all
assets and liabilities of PharmaGenics, Inc. as of the GMO Effective Date;
and (iv) such businesses, products, or development or research programs
developed in, or acquired by the Corporation for, Genzyme Molecular Oncology
Division after the GMO Effective Date, in each case as determined by the
Board of Directors; provided, however, that, from and after any Disposition
or transfer to Genzyme General Division of any business, product, development
program, research project, assets or properties, Genzyme Molecular Oncology
Division shall no longer include the business, product, development program,
research project, assets or properties so disposed of or transferred. Genzyme
Molecular Oncology Division shall be represented by the GMO Stock.
E. GENZYME SURGICAL PRODUCTS DIVISION COMMON STOCK
1. AUTHORIZED AMOUNTS AND DESIGNATIONS. Sixty million (60,000,000)
shares of Common Stock are designated as a series of Common Stock with the
following designation: Genzyme Surgical Products Division Common Stock (the
"GSP Stock"). To the extent legally permitted, such number of shares may be
increased or decreased by vote of the Board of Directors, PROVIDED that no
decrease shall reduce the number of shares of GSP Stock to a number less than
the number of shares of such series then outstanding plus the number of
shares of such series reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding
securities issued by the Corporation convertible into GSP Stock.
2. DIVIDENDS AND DISTRIBUTIONS. Subject to the express terms of any
outstanding series of Preferred Stock, dividends may be declared and paid
upon the GSP Stock, in such amounts and at such times as the Board of
Directors may determine, only out of the lesser of (a) funds of the
Corporation legally available therefor and (b) the Available GSP Dividend
Amount.
3. VOTING RIGHTS. The holders of GSP Stock, voting together with
the holders of shares of all other series of Common Stock as a single class
of stock, shall have the exclusive right to vote for the election of
directors and on all other matters requiring action by the stockholders or
submitted to the stockholders for action, except as may be determined by the
Board of Directors in establishing any series of Common or Preferred Stock or
as may otherwise be required by law. Each share of GSP Stock shall entitle
the holder thereof to .61 vote through December 31, 2000. On January 1, 2001
and on each January 1 every two years thereafter, the number of votes to
which the holder of each share of GSP Stock shall be entitled shall be
adjusted and fixed for two-year periods to equal the quotient (expressed as a
decimal and rounded to the nearest two decimal places) obtained by dividing
(i) the Fair Market Value of one share of GSP Stock by (ii) the Fair Market
Value of one share of GGD Stock as of such date. If no shares of GGD Stock
are outstanding on such date, then all other series of voting Common Stock
outstanding on such date shall have a number of votes such that each share of
the series of outstanding Common Stock that has the highest Fair Market Value
per share on such date (the "Base Series") shall
Continuation Sheet - 15
<PAGE>
have one vote and each share of each other series of outstanding Common Stock
shall have the number of votes determined according to the immediately
preceding sentence, treating, for such purpose, the Base Series as the GGD
Stock in such sentence. If shares of GSP Stock are entitled to vote
separately as a class, each share of GSP Stock shall have one vote.
4. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
rights of the holders of GSP Stock shall be as follows:
(a) After the Corporation has satisfied or made provision for
its debts and obligations and for the payment to the holders of shares of any
class or series of capital stock having preferential rights to receive
distributions of the net assets of the Corporation (including any accumulated
and unpaid dividends), the holders of GSP Stock shall be entitled to receive
the net assets of the Corporation remaining for distribution, on a per share
basis in proportion to the respective liquidation units per share of all
series of Common Stock. Each share of GSP Stock shall, subject to this
Section IV.E.4(a), have 61 liquidation units.
(b) For the purposes of Section IV.E.4(a). any merger or
business combination involving the Corporation or any sale of all or
substantially all of the assets of the Corporation shall not be treated as a
liquidation.
5. SPECIAL VOTING RIGHTS. The Corporation shall not, without
approval by the holders of the GSP Stock at a meeting at which a quorum is
present and the votes cast in favor of the proposal exceed those cast against:
(a) allow any proceeds from the Disposition of the properties
or assets allocated to Genzyme Surgical Products Division to be used in the
business of any other Division without fair compensation being allocated to
Genzyme Surgical Products Division as determined by the Board of Directors;
(b) allow any properties or assets allocated to Genzyme
Surgical Products Division to be used in the business of any other Division
or for the declaration or payment of any dividend or distribution on any
series of Common Stock other than the GSP Stock without fair compensation
being allocated to Genzyme Surgical Products Division as determined by the
Board of Directors;
(c) issue, sell or otherwise distribute shares of GSP Stock
without allocating the proceeds or other benefits of such issuance, sale or
distribution to Genzyme Surgical Products Division; PROVIDED, HOWEVER, that
the Corporation may without such approval issue GSP Designated Shares;
(d) change the rights or preferences of the GSP Stock so as to
affect the GSP Stock adversely; or
(e) effect any merger or business combination involving the
Corporation as a result of which (i) the holders of all series of Common
Stock of the Corporation shall no longer own, directly or indirectly, at
least fifty percent (50%) of the voting power of the surviving corporation
and (ii) the holders of all series of Common Stock of the Corporation do not
receive
Continuation Sheet - 16
<PAGE>
the same form of consideration, distributed among such holders in proportion
to the Market Capitalization of each series of Common Stock as of the date of
the first public announcement of such merger or business combination.
Notwithstanding the foregoing, if the Corporation receives an
opinion of Qualified Tax Counsel that, by reason of any Tax Law Change, the
special voting rights of the GSP Stock set forth in this subsection 5 would
cause a Tax Event absent the termination of such rights, then the Corporation
may, by vote of a majority of the stock outstanding and entitled to vote
thereon, voting together as a single class, authorize an amendment to these
Articles of Organization to effect the termination of such rights in order to
avoid the occurrence of such Tax Event. Any such amendment shall not be
deemed to change the rights or preferences of the GSP Stock so as to affect
the GSP Stock adversely as contemplated by either Section IV.E.5(d) or
Section 77 of the Massachusetts Business Corporation Law.
6. EXCHANGE OR REDEMPTION OF GSP STOCK. Shares of GSP Stock are
subject to exchange or redemption upon the terms and conditions set forth
below:
(a) OPTIONAL EXCHANGE OF GSP STOCK.
(1) The Board of Directors may at any time, including
without limitation in the event of the reallocation, in one transaction or a
series of related transactions, by the Corporation and/or its subsidiaries of
all or substantially all of the properties and assets allocated to Genzyme
Surgical Products Division to any other Division of Genzyme (a "GSP
Reallocation"), declare that each of the outstanding shares of GSP Stock
shall be exchanged, on an Exchange Date, as determined by the Board of
Directors, for (a) a number of fully paid and nonassessable shares of GGD
Stock (calculated to the nearest five decimal places) equal to (1) 130% of
the Fair Market Value of one share of the GSP Stock (the "GSP Optional
Exchange Amount") as of the date of the first public announcement by the
Corporation (the "GSP Optional Exchange Announcement Date") of such exchange
divided by (2) the Fair Market Value of one share of GGD Stock as of such GSP
Optional Exchange Announcement Date or (b) cash equal to the GSP Optional
Exchange Amount, or (c) any combination of GGD Stock and cash equal to the
GSP Optional Exchange Amount as determined by the Board of Directors.
(2) If the Corporation receives an opinion of Qualified
Tax Counsel that a Tax Event has occurred by reason of any Tax Law Change,
then the Board of Directors may at any time declare that each of the
outstanding shares of GSP Stock shall be exchanged, on an Exchange Date, as
determined by the Board of Directors, for a number of fully paid and
nonassessable shares of GGD Stock (calculated to the nearest five decimal
places) equal to (1) the Fair Market Value of one share of the GSP Stock as
of the date of the first public announcement by the Corporation of such
exchange divided by (2) the Fair Market Value of one share of GGD Stock as of
such date.
(3) At any time at which all of the assets and
liabilities attributed to Genzyme Surgical Products Division (and no other
assets or liabilities of the Corporation or any subsidiary thereof) are held
directly or indirectly by one or more wholly-owned subsidiaries of the
Corporation (each, a "GSP Subsidiary"), the Board of Directors may, provided
that there are funds of the Corporation legally available therefor, exchange
on an Exchange Date, as
Continuation Sheet - 17
<PAGE>
determined by the Board of Directors, all of the outstanding shares of GSP
Stock for that number of the shares of common stock of each GSP Subsidiary
equal to the number of such GSP Subsidiary shares outstanding immediately
prior to such exchange multiplied by the GSP Allocation Ratio, such shares of
common stock of each GSP Subsidiary to be delivered to the holders of shares
of GSP Stock on the Exchange Date either directly or indirectly through the
delivery of shares of another GSP Subsidiary that owns directly or indirectly
all such shares, and to be divided among the holders of GSP Stock on a pro
rata basis in accordance with the number of shares of GSP Stock held by each
such holder, each of which shares of common stock of such GSP Subsidiary
shall be, upon such delivery, fully paid and nonassessable; PROVIDED,
HOWEVER, that upon any such exchange, any existing GSP Designated Shares
shall be cancelled in exchange for the allocation to Genzyme General of the
direct or indirect interest of the Corporation in any remaining outstanding
shares of each such GSP Subsidiary that are not transferred to the holders of
GSP Stock in such exchange.
(b) MANDATORY EXCHANGE OR REDEMPTION OF OR PAYMENT OF DIVIDEND
ON GSP STOCK.
(1) GSP MANDATORY PAYMENT. In the event of the
Disposition, in one transaction or a series of related transactions, by the
Corporation and/or its subsidiaries of all or substantially all of the
properties and assets allocated to Genzyme Surgical Products Division to any
person, entity or group (other than a Disposition of a type set forth in
subsection (2) of this subsection (b)), on or prior to the 60th Business Day,
or such earlier date required under this Section IV.E.6, following the date
of the GSP Mandatory Payment Announcement (as defined in Section
IV.E.6(d)(2)), the Corporation shall select one of the following
alternatives, as determined by the Board of Directors in its discretion:
(A) provided that there are funds of the
Corporation legally available therefor, pay to the holders of the shares of
GSP Stock a dividend on a pro rata basis in accordance with the number of
shares of GSP Stock held by each such holder in cash, securities (other than
shares of a series of Common Stock) and/or other property having a Fair
Market Value as of the date of the Disposition in the aggregate equal to the
Fair Market Value as of the date of the Disposition of the GSP Net Proceeds
of such Disposition; or
(B) provided that there are funds of the
Corporation legally available therefor,
(i) if such Disposition involves all
(not merely substantially all) of the properties and assets attributed to
Genzyme Surgical Products Division, redeem or exchange as of a Redemption
Date determined by the Board of Directors, all outstanding shares of GSP
Stock in exchange for, on a pro rata basis, cash securities (other than
shares of a series of Common Stock) and/or other property having a Fair
Market Value as of the date of the Disposition in the aggregate equal to the
Fair Market Value as of the date of the Disposition of the GSP Net Proceeds
of such Disposition; or
(ii) if such Disposition involves
substantially all (but not all) of the properties and assets attributed to
Genzyme Surgical Products Division, redeem or exchange as of a Redemption
Date as determined by the Board of Directors such number of
Continuation Sheet - 18
<PAGE>
whole shares of GSP Stock (which may be all, but not more than all, of such
shares outstanding) as have in the aggregate an average Closing Price during
the period of ten (10) consecutive Business Days beginning on the first
Business Day immediately following the date of the Estimated GSP Net Proceeds
Announcement (as defined in Section IV.E.6(d)(2)) closest to the Fair Market
Value as of the date of the Disposition of the GSP Net Proceeds of such
Disposition in consideration for, on a pro rata basis, cash, securities
(other than shares of a series of Common Stock) and/or other property having
a Fair Market Value as of the date of the Disposition in the aggregate equal
to such Fair Market Value of the GSP Net Proceeds; or
(C) declare that each outstanding share of GSP
Stock shall be exchanged as of an Exchange Date as determined by the Board of
Directors into a number of fully paid and nonassessable shares of GGD Stock
equal to 110% of the ratio (calculated to the nearest five decimal places) of
the average Closing Price of one share of GSP Stock over the period of ten
(10) consecutive Business Days beginning on the first Business Day
immediately following the date of the Estimated GSP Net Proceeds Announcement
(as defined in Section IV.E.6(d)(2)) to the average Closing Price of one
share of GGD Stock over the same ten Business Day period.
Any redemption or exchange of or dividend payment on GSP Stock made pursuant to
this Section IV.E.6(b)(1) or Section IV.E.6(c)(3) is hereinafter referred to as
a "GSP Mandatory Payment." Notwithstanding the foregoing provisions of this
Section IV.E.6(b), the Corporation shall redeem GSP Stock as provided by Section
IV.E.(6)(b)(1) only if the amount to be paid pursuant to such redemption is less
than or equal to the Available GSP Dividend Amount as of the Redemption Date.
(2) EXCEPTIONS TO MANDATORY PAYMENT. Notwithstanding the
foregoing Section IV.E.6(b)(1) or Section IV.E.6(c)(3), a GSP Mandatory
Payment shall not be required by the occurrence of a Disposition:
(A) by the Corporation of all or substantially
all of the Corporation's properties and assets in one transaction or a series
of related transactions, including such Disposition in connection with the
dissolution, liquidation or winding up of the Corporation and the
distribution of assets to stockholders as referred to in Section IV.E.4;
(B) of the properties and assets attributed to
Genzyme Surgical Products Division as contemplated by Section IV.E.6(a)(3) or
otherwise to all holders of GSP Stock divided among such holders on a pro
rata basis in accordance with the number of shares GSP Stock outstanding;
(C) to any person or entity controlled (as
determined by the Board of Directors) by the Corporation;
(D) in connection with a Related Business
Transaction in respect of Genzyme Surgical Products Division; or
(E) that is conditioned upon the affirmative
vote of the holders of GSP Stock, voting as a separate class.
Continuation Sheet - 19
<PAGE>
(c) TERMINATION OF CASH EXCHANGE RIGHT. If the Corporation
receives an opinion of Qualified Tax Counsel that, by reason of any Tax Law
Change, the right or obligation of the Corporation to exchange GSP Stock for
cash, securities or other property pursuant to Section IV.E.6(a)(1) or (3) or
IV.E.6(b) (each, a "GSP Cash Exchange Right") would cause a Tax Event if not
terminated, then the Board of Directors may at any time, by a vote of a
majority of the directors then in office, elect to terminate any or all such
GSP Cash Exchange Rights, with the result that the Corporation shall
thereafter have, depending on which GSP Cash Exchange Right(s) is (are) so
terminated:
(1) under Section IV.E.6(a)(1) only the right to cause
the exchange of GSP Stock for GGD Stock and not for cash, securities or other
property other than capital stock of the Corporation,
(2) no right to effect an exchange under Section
IV.E.6(a)(3), and/or
(3) no right or obligation to effect a GSP Mandatory
Payment under Section IV.E.6(b), provided that if the Board shall no longer
have the right or obligation to effect a GSP Mandatory Payment under Section
IV.E.6(b), then if a GSP Mandatory Payment thereunder shall otherwise be or
have been required, the Corporation instead shall have the obligation to
effect on or prior to the first Business Day after the 90th day following the
consummation of such Disposition, a GSP Mandatory Payment pursuant to which
it shall exchange each outstanding share of GSP Stock for a number of fully
paid and nonassessable shares of GGD Stock (calculated to the nearest five
decimal places) equal to (i) the Fair Market Value of one share of the GSP
Stock as of the date of the first public announcement of such Disposition by
the Corporation by press release divided by (ii) the Fair Market Value of one
share of GGD Stock as of such date.
Notwithstanding the foregoing, the Board of Directors may not
terminate any GSP Cash Exchange Right during the period commencing on the
date of a Disposition requiring a GSP Mandatory Payment until the date upon
which the related Mandatory Payment is effected by the Corporation.
(d) EXCHANGE AND REDEMPTION PROCEDURES.
(1) If the Corporation determines to exchange shares of
GSP Stock pursuant to Section IV.E.6(a), the Corporation shall cause notice
to be sent not less than 30 nor more than 60 days prior to the Exchange Date
in the form and manner set forth in Section IV.G.1, and the procedures
governing such exchange shall be those set forth in Section IV.G.1.
(2) Not later than the 20th Business Day following the
consummation of a Disposition described in Section IV.E.6(b)(1) with respect
to Genzyme Surgical Products Division, the Corporation shall announce
publicly by press release (1) the estimated GSP Net Proceeds, (2) the number
of outstanding shares of GSP Stock and (3) the number of shares of GSP Stock
into or for which Convertible Securities are then convertible, exchangeable
or exercisable and the conversion, exchange or exercise price thereof (the
"Estimated GSP Net Proceeds Announcement"). Not earlier than the day
immediately following the 10th Business Day, nor later than the 15th Business
Day, following the date of the Estimated GSP Net Proceeds
Continuation Sheet - 20
<PAGE>
Announcement, the Corporation shall announce publicly by press release which
of the actions specified in Section IV.E.6(b)(1) that it has irrevocably
determined to make in respect of such Disposition (the "GSP Mandatory Payment
Announcement").
(3) If the Corporation determines to pay a dividend
pursuant to Section IV.E.6(b)(1)(A), the Corporation shall, not later than
the 15th Business Day following the date of the Estimated GSP Net Proceeds
Announcement, cause notice to be sent to the holders of shares of GSP Stock
and to each holder of Convertible Securities that are convertible into or
exchangeable or exercisable for shares of GSP Stock (unless alternate
provision for such notice to the holders of such Convertible Securities is
made pursuant to the terms of such Convertible Securities), setting forth (1)
the record date for determining holders entitled to receive such dividend,
which shall be not earlier than the 10th Business Day and not later than the
20th Business Day following the date of such notice, (2) the anticipated
payment date of such dividend (which shall not be more than 60 Business Days
following the date of the GSP Mandatory Payment Announcement), (3) the type
and amount of property to be paid as such dividend in respect of the
outstanding shares of GSP Stock, (4) the GSP Net Proceeds, (5) the number of
outstanding shares of GSP Stock and the number of shares of GSP Stock into or
for which outstanding Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise price
thereof and (6) in the case of notice to be given to holders of Convertible
Securities, a statement to the effect that a holder of such Convertible
Securities shall be entitled to receive such dividend only if such holder
properly converts, exchanges or exercises such Convertible Securities (unless
the terms of a Convertible Security provide otherwise) on or prior to the
record date referred to in clause (1) of this sentence. Except as provided in
the preceding sentence, such notice shall conform with the provisions
governing notice at Section IV.G.1 and the provisions governing the payment
of such dividend shall be those set for in such Section IV.G.1 to the extent
such provisions are applicable to the payment of a dividend.
(4) If the Corporation determines to redeem shares of
GSP Stock pursuant to Section IV.E.6(b)(1)(B)(i), the Corporation shall, not
later than the 15th Business Day following the date of the Estimated GSP Net
Proceeds Announcement, cause notice to be sent in the form and manner set
forth in Section IV.G.1, and the procedures governing such redemption shall
be those set forth in Section IV.G.1; PROVIDED, HOWEVER, the Redemption Date
shall not be more than 60 Business Days following the date of the GSP
Mandatory Payment Announcement. Such notice shall also state the GSP Net
Proceeds.
(5) If the Corporation determines to redeem shares of
GSP Stock pursuant to Section IV.E.6(b)(1)(B)(ii), the Corporation shall, not
later than the 15th Business Day following the date of the GSP Estimated Net
Proceeds Announcement, cause notice to be sent in the form and manner set
forth in Section IV.G.1, and the procedures governing such redemption shall
be those set forth in Section IV.G.1; PROVIDED, HOWEVER, the Redemption Date
shall not be more than 60 Business Days following the date of the Estimated
GSP Net Proceeds Announcement. The notice delivered hereunder shall also
state (a) the GSP Net Proceeds and (b) a date (the "selection date") not
earlier than the 10th Business Day and not later than the 20th Business Day
following the date of such notice on which shares of GSP Stock shall be
selected for redemption and that the Corporation will not be required to
register a transfer of any shares of GSP Stock for a period of ten (10)
Business Days next preceding the Selection Date.
Continuation Sheet - 21
<PAGE>
(6) If the Corporation determines to exchange GSP Stock
for GGD Stock pursuant to Section IV.E.6(b)(1)(C), the Corporation shall
cause notice to be sent in the form and manner set forth in Section IV.G.1,
and the procedures governing such exchange shall be those set forth in
Section IV.G.1; PROVIDED, HOWEVER, the Exchange Date shall not be more than
60 Business Days following the date of the GSP Mandatory Payment
Announcement. Such notice shall also state the GSP Net Proceeds.
(7) If the Corporation determines to exchange GSP Stock
for GGD Stock pursuant to Section IV.E.6(c)(3), the Corporation shall cause
notice to be sent not less than 30 nor more than 60 days in the form and
manner set forth in Section IV.G.1, and the procedures governing such
exchange shall be those set forth in Section IV.G.1.
(e) SPECIAL MANDATORY PAYMENT PROVISIONS. For purposes of this
Section IV.E.6:
(1) "substantially all of the properties and assets
allocated to Genzyme Surgical Products Division" shall mean a portion of the
properties and assets allocated to Genzyme Surgical Products Division (A)
that represents at least 80% of the then-current fair value (as determined by
the Board of Directors) of, or (B) to which is attributable at least 80% of
the aggregate revenues for the immediately preceding twelve fiscal quarterly
periods of the Corporation derived from, the properties and assets allocated
to Genzyme Surgical Products Division;
(2) in the case of a Disposition of properties and
assets in a series of related transactions, such Disposition shall not be
deemed to have been consummated until the consummation of the last of such
transactions; and
(3) in the event that at the time of any Disposition
there are outstanding any Convertible Securities convertible into or
exercisable for shares of GSP Stock that would give the holders rights to
receive any dividend related to the Disposition upon exercise, conversion or
otherwise, or would adjust as a result of such dividend to give the holder
equivalent economic rights, then the shares of GSP Stock underlying such
Convertible Securities will be taken into account for purposes of computing
the GSP Allocation Ratio and determining the terms of any dividend payment on
such shares;
(4) in the event that as a result of or in connection
with a dividend payment pursuant to Section IV.E.6(b)(1)(A) there ceases to
be any properties or assets attributed to Genzyme Surgical Products Division,
then each outstanding share of GSP Stock shall immediately following such
dividend payment be cancelled and all rights of a holder of a share of GSP
Stock shall cease except for the right to such dividend payment; and
(5) there shall be added to any cash portion of a GSP
Mandatory Payment paid to holders of GSP Stock, which cash comprised a
portion of the GSP Net Proceeds, any interest earned by Genzyme Surgical
Products Division or the Corporation on such cash from the date of the
Disposition up to the record date of such GSP Mandatory Payment.
7. DEFINITIONS. As used in this Section IV.E., the following terms
shall have the following meanings (with terms defined in the singular having
comparable meaning when used in the plural and vice versa), unless another
definition is provided or the context otherwise
Continuation Sheet - 22
<PAGE>
requires. Capitalized terms used but not defined in this Section IV.D.7 shall
have the meanings given them in Section IV.G.7.
(a) "Available GSP Dividend Amount," on any date, shall mean
the greater of:
(1) the excess of
(A) the greater of (x) the fair value on such
date of the net assets of Genzyme Surgical Products Division and (y) an
amount equal to $228,466,000 (division equity allocated to Genzyme Surgical
Products Division at March 31, 1999), such dollar amount to be increased or
decreased, as appropriate, to reflect, after March 31, 1999, (A) the Earnings
Attributable to Genzyme Surgical Products Division, (B) any dividends or
other distributions (including by reclassification or exchange) declared or
paid with respect to, or repurchases or issuances of, any shares of GSP Stock
or any other class of capital stock attributed to Genzyme Surgical Products
Division, but excluding dividends or other distributions paid in shares of
GSP Stock to the holders thereof or in shares of any other class of capital
stock attributed to Genzyme Surgical Products Division to the holders
thereof, and (C) any other adjustments to the stockholders' equity of Genzyme
Surgical Products Division made in accordance with generally accepted
accounting principles, over
(B) the sum of (x) the aggregate par value of
all outstanding shares of GSP Stock and any other class of capital stock
attributed to Genzyme Surgical Products Division and (y) unless these
Articles of Organization permit otherwise, the aggregate amount that would be
needed to satisfy any preferential rights to which holders of all outstanding
Preferred Stock attributed to Genzyme Surgical Products Division are entitled
upon dissolution of the Corporation in excess of the aggregate par value of
such Preferred Stock, PROVIDED that such excess shall be reduced by any
amount necessary to enable Genzyme Surgical Products Division to pay its
debts as they become due, and
(2) the amount legally available for the payment of
dividends determined in accordance with Massachusetts law applied as if
Genzyme Surgical Products Division were a separate corporation.
(b) "Earnings Attributable" to Genzyme Surgical Products
Division for any period shall mean the net income or loss of Genzyme Surgical
Products Division for such period (or for the fiscal periods of the
Corporation commencing prior to the GSP Effective Date and after March 31,
1999, pro forma net income or loss of Genzyme Surgical Products Division as
if the GSP Effective Date were March 31, 1999) determined in accordance with
generally accepted accounting principles, with all income and expenses of the
Corporation being allocated between Divisions in a reasonable and consistent
manner in accordance with policies adopted by the Board of Directors;
PROVIDED, HOWEVER, that as of the end of any fiscal quarter of the
Corporation, any projected annual tax benefit attributable to any Division
that cannot be utilized by such Division to offset or reduce its allocated
tax liability may be allocated to any other Division without any compensating
payment or allocation.
Continuation Sheet - 23
<PAGE>
(c) "GSP Allocation Ratio," as of any date, shall mean the
fraction computed by dividing the GSP Shares Outstanding by the sum of the
GSP Shares Outstanding plus the GSP Designated Shares.
(d) "GSP Designated Shares" as of any date shall mean a number
of shares of GSP Stock that, as of the GSP Effective Date, shall be
16,000,000, which number shall be subject to adjustment as provided in the
next sentence. The number of Genzyme Surgical Products Designated Shares
shall from time to time be
(1) adjusted as appropriate to reflect subdivisions (by
stock split or otherwise) and combinations (by reverse stock split or
otherwise) of the GSP Stock and dividends or distributions of shares of GSP
Stock to holders of GSP Stock and other reclassifications of GSP Stock,
(2) decreased by (A) the number of any shares of GSP
Stock issued by the Corporation, the proceeds of which are allocated to
Genzyme General Division, (B) the number of any shares of GSP Stock issued
upon the exercise or conversion of Convertible Securities attributed to
Genzyme General Division, and (C) the number of any shares of GSP Stock
issued by the Corporation as a dividend or distribution or by
reclassification, exchange or otherwise to holders of GGD Stock, and
(3) increased by (A) the number of any outstanding
shares of GSP Stock repurchased by the Corporation, the consideration for
which was allocated to Genzyme General Division, (B) the number equal to the
fair value (as determined by the Board of Directors) of assets or properties
allocated to Genzyme General Division that are reallocated to Genzyme
Surgical Products Division (other than GSP Reallocations that represent sales
at fair value between such Divisions) divided by the Fair Market Value of one
share of GSP Stock as of the date of such GSP Reallocation and (C) the number
equal to (i) the aggregate Fair Market Value of any shares of GGD Stock
issued to the limited partners of Genzyme Development Partners L.P. ("GDP")
in connection with the Corporation's exercise on behalf of Genzyme Surgical
Products Division of its purchase option to reacquire all of the limited
partnership interests of GDP divided by (ii) the Fair Market Value of one
share of GSP Stock as of the date of such exercise,
PROVIDED, that the Corporation shall take no action which would have the
effect of reducing the GSP Designated Shares to a number which is less than
zero. Within 45 days after the end of each fiscal quarter of the Corporation,
the Corporation shall prepare and file a statement of such change with the
transfer agent for the GSP Stock and with the Clerk of the Corporation.
(e) "GSP Effective Date" shall mean June 10, 1999.
(f) "GSP Net Proceeds" shall mean, as of any date, with
respect to a Disposition of any of the properties and assets of Genzyme
Surgical Products Division, a fraction of the proceeds from such disposition
determined by multiplying the GSP Allocation Ratio by the gross proceeds of
such Disposition after any adjustment to such gross proceeds resulting from
payment of, or reasonable provision for, (a) any taxes payable by the
Corporation in respect of either such Disposition or any mandatory exchange,
redemption or dividend payment resulting from such
Continuation Sheet - 24
<PAGE>
Disposition (or that would have been payable but for the utilization of tax
benefits attributable to any division or group of the Corporation other than
Genzyme Surgical Products Division (a "Non-GSP Division")), (b) any
transaction costs borne by a Non-GSP Division in connection with such
Disposition, including, without limitation, any legal, investment banking and
accounting fees and expenses borne by a Non-GSP Division in connection with
such Disposition, (c) any liabilities and other obligations (contingent or
otherwise) of Genzyme Surgical Products Division borne by a Non-GSP Division
in connection with such Disposition, including, without limitation, any
indemnity or guarantee obligations incurred by a Non-GSP Division in
connection with the Disposition or any liabilities assumed by a Non-GSP
Division for future purchase price adjustments, and (d) any preferential
amounts, accumulated and unpaid dividends and other obligations in respect of
any Preferred Stock attributed to Genzyme Surgical Products Division.
(g) "GSP Shares Outstanding" as of any date shall mean the
number of shares of GSP Stock then issued and outstanding.
(h) "Genzyme Surgical Products Division" shall mean, at any
time, the Corporation's interest in (i) surgical device, closure, instrument,
biomaterial and biotherapeutic businesses, products, or development or
research programs which exist as of the GSP Effective Date and are directed
toward the cardiovascular, general and plastic surgery markets (other than
such businesses, products, or development or research programs that were
allocated to another division immediately prior to the GSP Effective Date);
(ii) all assets and liabilities of the Corporation to the extent allocated to
any such businesses, products, or development or research programs in
accordance with generally accepted accounting principles consistently applied
for all of the Corporation's business units; and (iii) such businesses,
products, or development or research programs developed in, or acquired by
the Corporation for, Genzyme Surgical Products Division after the GSP
Effective Date, in each case as determined by the Board of Directors;
PROVIDED, HOWEVER, that, from and after any Disposition or transfer to
another Division of any business, product, development program, research
project, assets or properties, Genzyme Surgical Products Division shall no
longer include the business, product, development program, research project,
assets or properties so disposed of or transferred. Genzyme Surgical Products
Division shall be represented by the GSP Stock.
F. GENZYME TISSUE REPAIR DIVISION COMMON STOCK
1. AUTHORIZED AMOUNTS AND DESIGNATIONS. Forty million (40,000,000)
shares of Common Stock are designated as a series of Common Stock with the
following designation: Genzyme Tissue Repair Division Common Stock (the "GTR
Stock"). To the extent legally permitted, such number of shares may be
increased or decreased by vote of the Board of Directors, provided that no
decrease shall reduce the number of shares of GTR Stock to a number less than
the number of shares of such series then outstanding plus the number of
shares of such series reserved for issuance upon the exercise of outstanding
options, rights or warrants or upon the conversion of any outstanding
securities issued by the Corporation convertible into such series of Common
Stock. A description of the GTR Stock and a statement of its preferences,
voting powers, qualifications and special or relative rights or privileges is
as follows:
Continuation Sheet - 25
<PAGE>
2. DIVIDENDS AND DISTRIBUTIONS. Subject to the express terms of any
outstanding series of Preferred Stock, dividends may be declared and paid
upon the GTR Stock, in such amounts and at such times as the Board of
Directors may determine, only out of the lesser of (a) funds of the
Corporation legally available therefor and (b) the Available GTR Dividend
Amount.
3. VOTING RIGHTS. The holders of GTR Stock, voting together with
the holders of shares of all other series of Common Stock as a single class
of stock, shall have the exclusive right to vote for the election of
directors and on all other matters requiring action by the stockholders or
submitted to the stockholders for action, except as may be determined by the
Board of Directors in establishing any series of Common or Preferred Stock or
as may otherwise be required by law. Each share of GTR Stock shall entitle
the holder thereof to .06 vote through December 31, 2000. On January 1, 2001
and on each January 1 every two years thereafter, the number of votes to
which the holder of each share of GTR Stock shall be entitled shall be
adjusted and fixed for two-year periods to equal the quotient (expressed as a
decimal and rounded to the nearest two decimal places) obtained by dividing
(i) the Fair Market Value of one share of GTR Stock by (ii) Fair Market Value
of one share of GGD Stock as of such date. If no shares of GGD Stock are
outstanding on such date, then all other series of voting Common Stock
outstanding on such date shall have a number of votes such that each share of
the series of outstanding Common Stock that has the highest Fair Market Value
per share on such date (the "Base Series") shall have one vote and each share
of each other series of outstanding Common Stock shall have the number of
votes determined according to the immediately preceding sentence, treating,
for such purpose, the Base Series as the GGD Stock in such sentence. If
shares of GTR Stock are entitled to vote separately as a class, each share of
GTR Stock shall have one vote.
4. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
rights of the holders of GTR Stock shall be as follows:
(a) After the Corporation has satisfied or made provision for
its debts and obligations and for the payment to the holders of shares of any
class or series of capital stock having preferential rights to receive
distributions of the net assets of the Corporation (including any accumulated
and unpaid dividends), the holders of GTR Stock shall be entitled to receive
the net assets of the Corporation remaining for distribution, on a per share
basis in proportion to the respective liquidation units per share of all
series of Common Stock. Each share of GTR Stock shall, subject to Section
G.4. below, have 58 liquidation units.
(b) For the purposes of Section IV.D.3(a)., any merger or
business combination involving the Corporation or any sale of all or
substantially all of the assets of the Corporation shall not be treated as a
liquidation.
5. SPECIAL VOTING RIGHTS. The Corporation shall not, without
approval by the holders of the GTR Stock at a meeting at which a quorum is
present and the votes cast in favor of the proposal exceed those cast against:
(a) allow any proceeds from the Disposition of the properties
or assets allocated to Genzyme Tissue Repair Division to be used in the
business of any other Division without fair
Continuation Sheet - 26
<PAGE>
compensation being allocated to Genzyme Tissue Repair Division as determined
by the Board of Directors;
(b) allow any properties or assets allocated to Genzyme Tissue
Repair Division to be used in the business of any other Division or for the
declaration or payment of any dividend or distribution on any series of
Common Stock other than the GTR Stock without fair compensation being
allocated to Genzyme Tissue Repair Division as determined by the Board of
Directors;
(c) issue, sell or otherwise distribute shares of GTR Stock
without allocating the proceeds or other benefits of such issuance, sale or
distribution to Genzyme Tissue Repair Division; provided, however, that the
Corporation may without such approval issue GTR Designated Shares;
(d) change the rights or preferences of the GTR Stock so as to
affect the GTR Stock adversely; or
(e) effect any merger or business combination involving the
Corporation as a result of which (i) the holders of all series of Common
Stock of the Corporation shall no longer own, directly or indirectly, at
least fifty percent (50%) of the voting power of the surviving corporation
and (ii) the holders of all series of Common Stock of the Corporation do not
receive the same form of consideration, distributed among such holders in
proportion to the Market Capitalization of each series of Common Stock as of
the date of the first public announcement of such merger or business
combination.
Notwithstanding the foregoing, if the Corporation receives an opinion
of Qualified Tax Counsel that, by reason of any Tax Law Change, the special
voting rights of the GTR Stock set forth in this subsection 5 would cause a Tax
Event absent the termination of such rights, then the Corporation may, by vote
of a majority of the stock outstanding and entitled to vote thereon, voting
together as a single class, authorize an amendment to these Articles of
Organization to effect the termination of such rights in order to avoid the
occurrence of such Tax Event. Any such amendment shall not be deemed to change
the rights or preferences of the GTR Stock so as to affect the GSP Stock
adversely as contemplated by either Section IV.F.5(d) or Section 77 of the
Massachusetts Business Corporation Law.
6. EXCHANGE OR REDEMPTION OF GTR STOCK. Shares of GTR Stock are
subject to exchange or redemption upon the terms and conditions set forth
below:
(a) OPTIONAL EXCHANGE OF GTR STOCK.
(1) The Board of Directors may at any time, including
without limitation in the event of the reallocation, in one transaction or a
series of related transactions, by the Corporation and/or its subsidiaries of
all or substantially all of the properties and assets allocated to Genzyme
Tissue Repair Division to any other Division of Genzyme (a "GTR
Reallocation"), declare that each of the outstanding shares of GTR Stock
shall be exchanged, on an Exchange Date, as determined by the Board of
Directors, for (a) a number of fully paid and nonassessable shares of GGD
Stock (calculated to the nearest five decimal places) equal to (1) 130% of
the Fair Market Value of one share of the GTR Stock (the "GTR Optional
Exchange Amount") as of the date of the first public announcement by the
Corporation (the "GTR Optional Exchange
Continuation Sheet - 27
<PAGE>
Announcement Date") of such exchange divided by (2) the Fair Market Value of
one share of GGD Stock as of such GTR Optional Exchange Announcement Date or
(b) cash equal to the GTR Optional Exchange Amount, or (c) any combination of
GGD Stock and cash equal to the GTR Optional Exchange Amount as determined by
the Board of Directors.
(2) If the Corporation receives an opinion of Qualified
Tax Counsel that a Tax Event has occurred by reason of any Tax Law Change,
then the Board of Directors may at any time declare that each of the
outstanding shares of GTR Stock shall be exchanged, on an Exchange Date, as
determined by the Board of Directors, for a number of fully paid and
nonassessable shares of GGD Stock (calculated to the nearest five decimal
places) equal to (1) the Fair Market Value of one share of the GTR Stock as
of the date of the first public announcement by the Corporation of such
exchange divided by (2) the Fair Market Value of one share of GGD Stock as of
such date.
(3) At any time at which all of the assets and
liabilities attributed to Genzyme Tissue Repair Division (and no other assets
or liabilities of the Corporation or any subsidiary thereof) are held
directly or indirectly by one or more wholly-owned subsidiaries of the
Corporation (each, a "GTR Subsidiary"), the Board of Directors may, provided
that there are funds of the Corporation legally available therefor, exchange
on an Exchange Date, as determined by the Board of Directors, all of the
outstanding shares of GTR Stock for that number of the shares of common stock
of each GTR Subsidiary equal to the number of such GTR Subsidiary shares
outstanding immediately prior to such exchange multiplied by the GTR
Allocation Ratio, such shares of common stock of each GTR Subsidiary to be
delivered to the holders of shares of GTR Stock on the Exchange Date either
directly or indirectly through the delivery of shares of another GTR
Subsidiary that owns directly or indirectly all such shares, and to be
divided among the holders of GTR Stock on a pro rata basis in accordance with
the number of shares of GTR Stock held by each such holder, each of which
shares of common stock of such GTR Subsidiary shall be, upon such delivery,
fully paid and nonassessable; PROVIDED, HOWEVER, that upon any such exchange,
any existing GTR Designated Shares shall be cancelled in exchange for the
allocation to Genzyme General of the direct or indirect interest of the
Corporation in any remaining outstanding shares of each such GTR Subsidiary
that are not transferred to the holders of GTR Stock in such exchange.
(b) MANDATORY EXCHANGE OR REDEMPTION OF OR PAYMENT OF DIVIDEND
ON GTR STOCK.
(1) GTR MANDATORY PAYMENT. In the event of the
Disposition, in one transaction or a series of related transactions, by the
Corporation and/or its subsidiaries of all or substantially all of the
properties and assets allocated to Genzyme Tissue Repair Division to any
person, entity or group (other than a Disposition of a type set forth in
subsection (2) of this subsection (b)), on or prior to the 60th Business Day,
or such earlier date required under this Section IV.F.6, following the date
of the GTR Mandatory Payment Announcement (as defined in Section
IV.F.6(d)(2)), the Corporation shall select one of the following
alternatives, as determined by the Board of Directors in its discretion:
(A) provided that there are funds of the
Corporation legally available therefor, pay to the holders of the shares of
GTR Stock a dividend on a pro rata basis in
Continuation Sheet - 28
<PAGE>
accordance with the number of shares of GTR Stock held by each such holder in
cash, in securities (other than shares of a series of Common Stock) and/or
other property having a Fair Market Value as of the date of the Disposition
in the aggregate equal to the Fair Market Value as of the date of the
Disposition of the GTR Net Proceeds of such Disposition; or
(B) provided that there are funds of the
Corporation legally available therefor,
(i) if such Disposition involves all
(not merely substantially all) of the properties and assets attributed to
Genzyme Tissue Repair Division, redeem or exchange as of a Redemption Date
determined by the Board of Directors, all outstanding shares of GTR Stock in
exchange for, on a pro rata basis, cash, securities (other than shares of a
series of Common Stock) and/or other property having a Fair Market Value as
of the date of the Disposition in the aggregate equal to the Fair Market
Value as of the date of the Disposition of the GTR Net Proceeds of such
Disposition; or
(ii) if such Disposition involves
substantially all (but not all) of the properties and assets attributed to
Genzyme Tissue Repair Division, redeem or exchange as of a Redemption Date as
determined by the Board of Directors such number of whole shares of GTR Stock
(which may be all, but not more than all, of such shares outstanding) as have
in the aggregate an average Closing Price during the period of ten (10)
consecutive Business Days beginning on the first Business Day immediately
following the date of the Estimated GTR Net Proceeds Announcement (as defined
in Section IV.F.6(d)(2)) closest to the Fair Market Value as of the date of
the Disposition of the GTR Net Proceeds of such Disposition in consideration
for, on a pro rata basis, cash, securities (other than shares of a series of
Common Stock), or other property having a Fair Market Value as of the date of
the Disposition in the aggregate equal to such Fair Market Value of the GTR
Net Proceeds; or
(C) declare that each outstanding share of GTR
Stock shall be exchanged as of an Exchange Date as determined by the Board of
Directors into a number of fully paid and nonassessable shares of GGD Stock
equal to 110% of the ratio (calculated to the nearest five decimal places) of
the average Closing Price of one share of GTR Stock over the period of ten
(10) consecutive Business Days beginning on the first Business Day
immediately following the date of the Estimated GTR Net Proceeds Announcement
(as defined in Section IV.F.6(d)(2)) to the average Closing Price of one
share of GGD Stock over the same ten Business Day period.
Any redemption or exchange of or dividend payment on GTR Stock made pursuant
to this Section IV.F.6(b)(1) or Section IV.F.6(c)(3) is hereinafter referred
to as a "GTR Mandatory Payment." Notwithstanding the foregoing provisions of
this Section IV.F.6(b), the Corporation shall redeem GTR Stock as provided by
Section IV.F6(b)(1)(b) only if the amount to be paid pursuant to such
redemption is less than or equal to the Available GTR Dividend Amount as of
the Redemption Date.
(2) EXCEPTIONS TO MANDATORY PAYMENT. Notwithstanding the
foregoing Section IV.F.6(b)(1) or Section IV.F.6(c)(3), a GTR Mandatory
Payment shall not be required by the occurrence of a Disposition:
Continuation Sheet - 29
<PAGE>
(A) by the Corporation of all or substantially
all of the Corporation's properties and assets in one transaction or a series
of related transactions, including such Disposition in connection with the
dissolution, liquidation or winding up of the Corporation and the
distribution of assets to stockholders as referred to in Section IV.F.4;
(B) of the properties and assets attributed to
Genzyme Tissue Repair Division as contemplated by Section IV.F.6(a)(3) or
otherwise to all holders of GTR Stock divided among such holders on a pro
rata basis in accordance with the number of shares GTR Stock outstanding;
(C) to any person or entity controlled (as
determined by the Board of Directors) by the Corporation;
(D) in connection with a Related Business
Transaction in respect of Genzyme Tissue Repair Division; or
(E) that is conditioned upon the affirmative
vote of the holders of GTR Stock, voting as a separate class.
(c) TERMINATION OF CASH EXCHANGE RIGHT. If the Corporation
receives an opinion of Qualified Tax Counsel that, by reason of any Tax Law
Change, the right or obligation of the Corporation to exchange GTR Stock for
cash, securities or other property pursuant to Section IV.F.6(a)(1) or (3) or
IV.E.6(b) (each, a "GTR Cash Exchange Right") would cause a Tax Event if not
terminated, then the Board of Directors may at any time, by a vote of a
majority of the directors then in office, elect to terminate any or all such
GTR Cash Exchange Rights, with the result that the Corporation shall
thereafter have, depending on which GTR Cash Exchange Right(s) is (are) so
terminated:
(1) under Section IV.F.6(a)(1) only the right to cause
the exchange of GTR Stock for GGD Stock and not for cash, securities or other
property other than capital stock of the Corporation,
(2) no right to effect an exchange under Section
IV.F.6(a)(3), and/or
(3) no right or obligation to effect a GTR Mandatory
Payment under Section IV.F.6(b), provided that if the Board shall no longer
have the right or obligation to effect a GTR Mandatory Payment under Section
IV.F.6(b), then if a GTR Mandatory Payment thereunder shall otherwise be or
have been required, the Corporation instead shall have the obligation to
effect on or prior to the first Business Day after the 90th day following the
consummation of such Disposition, a GTR Mandatory Payment pursuant to which
it shall exchange each outstanding share of GTR Stock for a number of fully
paid and nonassessable shares of GGD Stock (calculated to the nearest five
decimal places) equal to (i) the Fair Market Value of one share of the GTR
Stock as of the date of the first public announcement of such Disposition by
the Corporation by press release divided by (ii) the Fair Market Value of one
share of GGD Stock as of such date.
Notwithstanding the foregoing, the Board of Directors may not terminate
any GTR Cash Exchange Right during the period commencing on the date of a
Disposition requiring a GTR
Continuation Sheet - 30
<PAGE>
Mandatory Payment until the date upon which the related Mandatory Payment is
effected by the Corporation.
(d) EXCHANGE AND REDEMPTION PROCEDURES.
(1) If the Corporation determines to exchange shares of
GTR Stock pursuant to Section IV.F.6(a), the Corporation shall cause notice
to be sent not less than 30 nor more than 60 days prior to the Exchange Date
in the form and manner set forth in Section IV.G.1, and the procedures
governing such exchange shall be those set forth in Section IV.G.1.
(2) Not later than the 20th Business Day following the
consummation of a Disposition described in Section IV.F.6(b)(1) with respect
to Genzyme Tissue Repair Division, the Corporation shall announce publicly by
press release (1) the estimated GTR Net Proceeds, (2) the number of
outstanding shares of GTR Stock and (3) the number of shares of GTR Stock
into or for which Convertible Securities are then convertible, exchangeable
or exercisable and the conversion, exchange or exercise price thereof (the
"Estimated GTR Net Proceeds Announcement"). Not earlier than the day
immediately following the 10th Business Day, nor later than the 15th Business
Day, following the date of the Estimated GTR Net Proceeds Announcement, the
Corporation shall announce publicly by press release which of the actions
specified in Section IV.F.6(b)(1) that it has irrevocably determined to make
in respect of such Disposition (the "GTR Mandatory Payment Announcement").
(3) If the Corporation determines to pay a dividend
pursuant to Section IV.F.6(b)(1)(A), the Corporation shall, not later than
the 15th Business Day following the date of the Estimated GTR Net Proceeds
Announcement, cause notice to be sent to the holders of shares of GTR Stock
and to each holder of Convertible Securities that are convertible into or
exchangeable or exercisable for shares of GTR Stock (unless alternate
provision for such notice to the holders of such Convertible Securities is
made pursuant to the terms of such Convertible Securities), setting forth (1)
the record date for determining holders entitled to receive such dividend,
which shall be not earlier than the 10th Business Day and not later than the
20th Business Day following the date of such notice, (2) the anticipated
payment date of such dividend (which shall not be more than 60 Business Days
following the date of the GTR Mandatory Payment Announcement), (3) the type
and amount of property to be paid as such dividend in respect of the
outstanding shares of GTR Stock, (4) the GTR Net Proceeds, (5) the number of
outstanding shares of GTR Stock and the number of shares of GTR Stock into or
for which outstanding Convertible Securities are then convertible,
exchangeable or exercisable and the conversion, exchange or exercise price
thereof and (6) in the case of notice to be given to holders of Convertible
Securities, a statement to the effect that a holder of such Convertible
Securities shall be entitled to receive such dividend only if such holder
properly converts, exchanges or exercises such Convertible Securities (unless
the terms of a Convertible Security provide otherwise) on or prior to the
record date referred to in clause (1) of this sentence. Except as provided in
the preceding sentence, such notice shall conform with the provisions
governing notice at Section IV.G.1 and the provisions governing the payment
of such dividend shall be those set for in such Section IV.G.1 to the extent
such provisions are applicable to the payment of a dividend.
Continuation Sheet - 31
<PAGE>
(4) If the Corporation determines to redeem shares of
GTR Stock pursuant to Section IV.F.6(b)(1)(B)(i), the Corporation shall, not
later than the 15th Business Day following the date of the Estimated GTR Net
Proceeds Announcement, cause notice to be sent in the form and manner set
forth in Section IV.G.1, and the procedures governing such redemption shall
be those set forth in Section IV.G.1; PROVIDED, HOWEVER, the Redemption Date
shall not be more than 60 Business Days following the date of the GTR
Mandatory Payment Announcement. Such notice shall also state the GTR Net
Proceeds.
(5) If the Corporation determines to redeem shares of
GTR Stock pursuant to Section IV.F.6(b)(1)(B)(ii), the Corporation shall, not
later than the 15th Business Day following the date of the GTR Estimated Net
Proceeds Announcement, cause notice to be sent in the form and manner set
forth in Section IV.G.1, and the procedures governing such redemption shall
be those set forth in Section IV.G.1; PROVIDED, HOWEVER, the Redemption Date
shall not be more than 60 Business Days following the date of the Estimated
GTR Net Proceeds Announcement. The notice delivered hereunder shall also
state (a) the GTR Net Proceeds and (b) a date (the "selection date") not
earlier than the 10th Business Day and not later than the 20th Business Day
following the date of such notice on which shares of GTR Stock shall be
selected for redemption and that the Corporation will not be required to
register a transfer of any shares of GTR Stock for a period of ten (10)
Business Days next preceding the Selection Date.
(6) If the Corporation determines to exchange GTR Stock
for GGD Stock pursuant to Section IV.F.6(b)(1)(C), the Corporation shall
cause notice to be sent in the form and manner set forth in Section IV.G.1,
and the procedures governing such exchange shall be those set forth in
Section IV.G.1; PROVIDED, HOWEVER, the Exchange Date shall not be more than
60 Business Days following the date of the GTR Mandatory Payment
Announcement. Such notice shall also state the GTR Net Proceeds.
(7) If the Corporation determines to exchange GTR Stock
for GGD Stock pursuant to Section IV.F.6(c)(3), the Corporation shall cause
notice to be sent not less than 30 nor more than 60 days in the form and
manner set forth in Section IV.G.1, and the procedures governing such
exchange shall be those set forth in Section IV.G.1.
(e) SPECIAL MANDATORY PAYMENT PROVISIONS. For purposes of this
Section IV.F.6:
(1) "substantially all of the properties and assets
allocated to Genzyme Tissue Repair Division" shall mean a portion of the
properties and assets allocated to Genzyme Tissue Repair Division (A) that
represents at least 80% of the then-current fair value (as determined by the
Board of Directors) of, or (B) to which is attributable at least 80% of the
aggregate revenues for the immediately preceding twelve fiscal quarterly
periods of the Corporation derived from, the properties and assets allocated
to Genzyme Tissue Repair Division;
(2) in the case of a Disposition of properties and
assets in a series of related transactions, such Disposition shall not be
deemed to have been consummated until the consummation of the last of such
transactions; and
Continuation Sheet - 32
<PAGE>
(3) in the event that at the time of any Disposition
there are outstanding any Convertible Securities convertible into or
exercisable for shares of GTR Stock that would give the holders rights to
receive any dividend related to the Disposition upon exercise, conversion or
otherwise, or would adjust as a result of such dividend to give the holder
equivalent economic rights, then the shares of GTR Stock underlying such
Convertible Securities will be taken into account for purposes of computing
the GTR Allocation Ratio and determining the terms of any dividend payment on
such shares;
(4) in the event that as a result of or in connection
with a dividend payment pursuant to Section IV.F.6(b)(1)(A) there ceases to
be any properties or assets attributed to Genzyme Tissue Repair Division,
then each outstanding share of GTR Stock shall immediately following such
dividend payment be cancelled and all rights of a holder of a share of GTR
Stock shall cease except for the right to such dividend payment; and
(5) there shall be added to any cash portion of a GTR
Mandatory Payment paid to holders of GTR Stock, which cash comprised a
portion of the GTR Net Proceeds, any interest earned by Genzyme Tissue Repair
Division or the Corporation on such cash from the date of the Disposition up
to the record date of such GTR Mandatory Payment.
7. DEFINITIONS. As used in this Section IV.F., the following terms
shall have the following meanings (with terms defined in the singular having
comparable meaning when used in the plural and vice versa), unless another
definition is provided or the context otherwise requires. Capitalized terms
used but not defined in this Section IV.F.7 shall have the meanings given
them in Section IV.G.7.
(a) "Available GTR Dividend Amount," on any date, shall mean
the greater of:
(1) the excess of
(A) the greater of (x) the fair value on such
date of the net assets of Genzyme Tissue Repair Division and (y) an amount
equal to $28,712,000 (stockholders' equity allocated to Genzyme Tissue Repair
Division at June 30, 1994), such dollar amount to be increased or decreased,
as appropriate, to reflect, after June 30, 1994, (A) the Earnings
Attributable to Genzyme Tissue Repair Division, (B) any dividends or other
distributions (including by reclassification or exchange) declared or paid
with respect to, or repurchases or issuances of, any shares of GTR Stock or
any other class of capital stock attributed to Genzyme Tissue Repair
Division, but excluding dividends or other distributions paid in shares of
GTR Stock to the holders thereof or in shares of any other class of capital
stock attributed to Genzyme Tissue Repair Division to the holders thereof,
and (C) any other adjustments to the stockholders' equity of Genzyme Tissue
Repair Division made in accordance with generally accepted accounting
principles, over
(B) the sum of (x) the aggregate par value of
all outstanding shares of GTR Stock and any other class of capital stock
attributed to Genzyme Tissue Repair Division and (y) unless these Articles of
Organization permit otherwise, the aggregate amount that would be needed to
satisfy any preferential rights to which holders of all outstanding Preferred
Stock attributed to Genzyme Tissue Repair Division are entitled upon
dissolution of the Corporation in
Continuation Sheet - 33
<PAGE>
excess of the aggregate par value of such Preferred Stock, provided that such
excess shall be reduced by any amount necessary to enable Genzyme Tissue
Repair Division to pay its debts as they become due, and
(2) the amount legally available for the payment of
dividends determined in accordance with Massachusetts law applied as if
Genzyme Tissue Repair Division were a separate corporation.
(b) "Earnings Attributable" to Genzyme Tissue Repair Division
for any period, shall mean the net income or loss of Genzyme Tissue Repair
Division for such period (or for the fiscal periods of the Corporation
commencing prior to the GTR Effective Date and after June 30, 1994, pro forma
net income or loss of Genzyme Tissue Repair Division as if the GTR Effective
Date were June 30, 1994) determined in accordance with generally accepted
accounting principles, with all income and expenses of the Corporation being
allocated between Divisions in a reasonable and consistent manner in
accordance with policies adopted by the Board of Directors; provided,
however, that as of the end of any fiscal quarter of the Corporation, any
projected annual tax benefit attributable to any Division that cannot be
utilized by such Division to offset or reduce its allocated tax liability may
be allocated to any other Division without any compensating payment or
allocation.
(c) "GTR Allocation Ratio," as of any date, shall mean the
fraction computed by dividing the GTR Shares Outstanding by the sum of the
GTR Shares Outstanding plus the GTR Designated Shares.
(d) "GTR Effective Date" shall mean December 16, 1994.
(e) "GTR Net Proceeds" shall mean, as of any date, with
respect to a Disposition of any of the properties and assets of Genzyme
Tissue Repair Division, a fraction of the proceeds from such disposition
determined by multiplying the GTR Allocation Ratio by the gross proceeds of
such Disposition after any adjustment to such gross proceeds resulting from
payment of, or reasonable provision for, (a) any taxes payable by the
Corporation in respect of either such Disposition or any mandatory exchange,
redemption or dividend payment resulting from such Disposition (or that would
have been payable but for the utilization of tax benefits attributable to any
division or group of the Corporation other than Genzyme Tissue Repair
Division (a "Non-GTR Division")), (b) any transaction costs borne by a
Non-GTR Division in connection with such Disposition, including, without
limitation, any legal, investment banking and accounting fees and expenses
borne by a Non-GTR Division in connection with such Disposition, (c) any
liabilities and other obligations (contingent or otherwise) of Genzyme Tissue
Repair Division borne by a Non-GTR Division in connection with such
Disposition, including, without limitation, any indemnity or guarantee
obligations incurred by a Non-GTR Division in connection with the Disposition
or any liabilities assumed by a Non-GTR Division for future purchase price
adjustments, and (d) any preferential amounts, accumulated and unpaid
dividends and other obligations in respect of any Preferred Stock attributed
to Genzyme Tissue Repair Division.
(f) "GTR Shares Outstanding" as of any date shall mean the
number of shares of GTR Stock then issued and outstanding.
Continuation Sheet - 34
<PAGE>
(g) "Genzyme Tissue Repair Division" shall mean, at any time,
the Corporation's interest in (i) the following businesses, products, or
development or research programs: (A) Vianain(R) for debridement of necrotic
or damaged tissue; (B) TGF-B2 for all indications licensed from Celtrix
Pharmaceuticals, Inc. on the GTR Effective Date; (C) Epicel(TM) cultured
epithelial cell autografts for tissue replacement or repair, including but
not limited to skin, ocular or oral tissue; (D) Acticel(TM) cultured
epithelial cell allografts for tissue replacement or repair, including but
not limited to skin, ocular or oral tissue; (E) Chondrograft cultured
chondrocyte auto- and allografts; (F) tissue-type plasminogen activator
("tPA") for all tissue repair indications licensed by the Corporation from
Genentech, Inc. on the GTR Effective Date; (G) the leukocyte-derived growth
factor ("LDGF") research program; (H) the dermal replacement research
program; (I) the cultured fibroblast dermal replacement research program and
(J) the research program on cultured keratinocyte or fibroblast cell extracts
or derivatives, each as being conducted by the Corporation on the GTR
Effective Date; (ii) all assets and liabilities of the Corporation to the
extent allocated to any such businesses, products, or development or research
programs in accordance with generally accepted accounting principles
consistently applied for all of the Corporation's business units; and (iii)
such businesses, products, or development or research programs developed in,
or acquired by the Corporation for, Genzyme Tissue Repair Division after the
GTR Effective Date, in each case as determined by the Board of Directors;
provided, however, that, from and after any Disposition or transfer to
Genzyme General Division of any business, product, development or research
program, assets or properties, Genzyme Tissue Repair Division shall no longer
include the business, product, development program, research project, assets
or properties so disposed of or transferred. Genzyme Tissue Repair Division
shall be represented by the GTR Stock.
(h) "GTR Designated Shares" as of any date shall mean a number
of shares of GTR Stock that shall initially be 5,000,000, which number shall
be subject to adjustment as provided in the next sentence. The number of GTR
Designated Shares shall from time to time be
(1) adjusted as appropriate to reflect subdivisions (by
stock split or otherwise) and combinations (by reverse stock split or
otherwise) of the GTR Stock and dividends or distributions of shares of GTR
Stock to holders of GTR Stock and other reclassifications of GTR Stock,
(2) decreased by (A) the number of any shares of GTR
Stock issued by the Corporation, the proceeds of which are allocated to
Genzyme General Division, (B) the number of any shares of GTR Stock issued
upon the exercise or conversion of Convertible Securities attributed to
Genzyme General Division, and (C) the number of any shares of GTR Stock
issued by the Corporation as a dividend or distribution or by
reclassification, exchange or otherwise to holders of GGD Stock, and
(3) increased by (A) the number of any outstanding
shares of GTR Stock repurchased by the Corporation, the consideration for
which was allocated to Genzyme General Division, (B) one for each $10.00
reallocated from Genzyme General Division to Genzyme Tissue Repair Division
from time to time in satisfaction of the funding commitment or the purchase
option of Genzyme General Division set forth in sections 4.17 and 4.18 of the
Agreement and Plan of Reorganization among the Corporation, Phoenix
Acquisition Corporation and BioSurface Technology, Inc. dated as of July 25,
1994, up to a maximum of $30,000,000,
Continuation Sheet - 35
<PAGE>
and (C) the number equal to the fair value (as determined by the Board of
Directors) of assets or properties allocated to Genzyme General Division that
are reallocated to Genzyme Tissue Repair Division (other than GTR
Reallocations that represent sales at fair value between such Divisions or
GTR Reallocations described in the foregoing clause (B)) divided by the Fair
Market Value of one share of GTR Stock as of the date of such GTR
Reallocation;
PROVIDED, that the Corporation shall take no action which would have the effect
of reducing the GTR Designated Shares to a number which is less than zero.
Within 45 days after the end of each fiscal quarter of the Corporation, the
Corporation shall prepare and file a statement of such change with the transfer
agent for the GTR Stock and with the Clerk of the Corporation.
G. GENERAL PROVISIONS REGARDING THE COMMON STOCK
1. GENERAL EXCHANGE AND REDEMPTION PROVISIONS. In the event of any
exchange or mandatory redemption or dividend pursuant to the provisions of
these Articles of Organization, the following provisions shall apply:
(a) Any notice delivered hereunder shall be sent by the
Corporation to each record holder of shares of the Common Stock to be
exchanged or redeemed or upon which will be made a dividend payment (the
"Exchange Stock") and to the holders of Convertible Securities that are
convertible into or exchangeable or exercisable for shares of such Exchange
Stock (unless alternate provision for such notice is made pursuant to the
terms of such Convertible Securities). Unless otherwise required by any other
provision of these Articles of Organization, such notice shall be sent not
less nor more than 60 days prior to the Exchange Date.
(b) With respect to an exchange or redemption, such notice
shall state, to the extent and in the manner applicable, (1) the number of
shares of Exchange Stock outstanding on the record date for such exchange or
redemption and the number of such shares to be redeemed or exchanged, (2) the
aggregate amount and form of consideration, including shares of Common Stock,
other securities, cash or other property, that will be paid on the Exchange
Date or Redemption Date upon the exchange or redemption of the shares of
Exchange Stock, (3) the amount and form of such consideration to be received
by such holder with respect to each share of the Exchange Stock held by such
holder, including details as to the calculation thereof, (4) the Exchange
Date or Redemption Date, (5) the place or places where certificates for
shares of Exchange Stock, properly endorsed or assigned for transfer are to
be surrendered for delivery of such consideration (unless the Corporation
shall waive such requirement), (6), if applicable, a statement to the effect
that, subject to Section IV.G.1(e) dividends on shares of Exchange Stock
shall cease to be paid as of such Exchange Date or Redemption Date, (7) the
number of shares of Exchange Stock into or for which outstanding Convertible
Securities are convertible, exchangeable or exercisable as of the record date
for such exchange or redemption and the conversion, exchange or exercise
price thereof and (8) in the case of notice to holders of Convertible
Securities, a statement to the effect that a holder of Convertible Securities
shall be entitled to receive its pro rata portion of the consideration, as
applicable, upon redemption or exchange only if such holder properly
converts, exchanges or exercises such Convertible Securities (unless the
terms of a Convertible Security provide otherwise) on or prior to the
Exchange Date or Redemption Date and a statement as to what, if anything,
such holder will be
Continuation Sheet - 36
<PAGE>
entitled to receive pursuant to the terms of such
Convertible Securities if such holder thereafter converts, exchanges or
exercises such Convertible Securities.
(c) Any notice delivered under this Section IV.G.1 shall be
sent by first-class mail, postage prepaid at such holder's address as the
same appears on the stock transfer books of the Corporation. Neither the
failure to mail such notice to any particular holder of shares of Exchange
Stock nor any defect therein shall affect the sufficiency thereof with
respect to any other holder of shares of Exchange Stock or the validity of
any such exchange, redemption or dividend payment.
(d) The Corporation shall not be required to issue or deliver
fractional shares of any series of Common Stock, capital stock, securities or
other property to any holder of shares of Exchange Stock upon any such
exchange, redemption or dividend payment. If more than one share of Exchange
Stock shall be held by the same holder of record, the Corporation shall
aggregate the number of shares of any security that shall be issuable or any
other property that shall be distributable to such holder upon any such
exchange, redemption or dividend payment. If fractional shares of any
security would be required to be issued or distributed to the holder of
Exchange Stock, the Corporation shall, if such fractional shares are not
issued or distributed to such holder, either arrange for the disposition of
such fraction by or on behalf of such holder or pay the Fair Market Value
(without interest) of such fractional shares.
(e) No adjustments in respect of dividends shall be made upon
the exchange or redemption of any shares of Exchange Stock; provided,
however, that if the Exchange Date shall be subsequent to the record date for
determining holders of Exchange Stock entitled to the payment of a dividend
or other distribution thereon or with respect thereto, the holders of shares
of Exchange Stock at the close of business on such record date shall be
entitled to receive the dividend or other distribution payable on or with
respect to such shares on the date set for payment of such dividend or other
distribution, notwithstanding the exchange or redemption of such shares.
(f) With respect to an exchange or redemption, before any
holder of shares of Exchange Stock shall be entitled to receive the
consideration to be received by such holder with respect to the exchange or
redemption of such shares of Exchange Stock, such holder shall surrender at
such place as the Corporation shall specify certificates for such shares of
Exchange Stock, properly endorsed or assigned for transfer (unless the
Corporation shall waive such requirement). The Corporation will as soon as
practicable after such surrender of certificates representing such shares of
Exchange Stock deliver to the person for whose account such shares of
Exchange Stock were so surrendered, or to the nominee or nominees of such
person, the consideration to which such person shall be entitled as
aforesaid, together with any fractional share payment contemplated by Section
IV.G.1(d).
(g) With respect to an exchange or redemption, from and after
the Exchange Date, all rights of a holder of shares of Exchange Stock shall
cease except for the right, upon surrender of the certificates representing
such shares of Exchange Stock, to receive the consideration for which such
shares were exchanged are redeemed, together with any fractional share
payment contemplated by Section IV.G.1(d), and rights to dividends as
provided in Section IV.G.1(e). No holder of a certificate that immediately
prior to the Exchange Date represented shares of
Continuation Sheet - 37
<PAGE>
Exchange Stock shall be entitled to receive any dividend or interest payment
or other distribution with respect to the shares of any security or
instrument for which the Exchange Stock was exchanged or redeemed until
surrender of such holder's certificate for a certificate or certificates or
instrument or instruments representing such security (unless the Corporation
shall waive such requirement). Subject to applicable escheat and similar
laws, upon such surrender, there shall be paid to the holder the amount of
any dividend or interest payments or other distributions (without interest)
which theretofore became payable with respect to a record date after the
Exchange Date, but that were not paid by reason of the foregoing, with
respect to the number of shares of the kind of securities represented by the
certificate or certificates issued upon such surrender. From and after the
Exchange Date, the Corporation shall, however, be entitled to treat the
certificates for Exchange Stock that have not yet been surrendered for
exchange or redemption as evidencing the ownership of the number of shares of
the kind of securities for which the shares of Exchange Stock represented by
such certificates shall have been exchanged or redeemed, notwithstanding the
failure to surrender such certificates.
(h) The Corporation will pay any and all documentary, stamp or
similar issue or transfer taxes that may be payable in respect of the issue
or delivery of any securities in exchange for or upon redemption of or
dividend payment on shares of Exchange Stock pursuant hereto. The Corporation
shall not, however, be required to pay any tax that may be payable in respect
of any transfer involved in the issue and delivery of any such securities
issued in exchange or upon redemption or as a dividend in a name other than
that in which the shares of Exchange Stock so exchanged or redeemed or paid
as a dividend upon were registered and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the
Corporation the amount of any such tax, or has established to the
satisfaction of the Corporation that such tax has been paid or that no such
tax is due.
(i) After the Exchange Date, any share of Exchange Stock
issued upon conversion or exercise of any Convertible Security shall,
immediately upon issuance pursuant to such conversion or exercise and without
any notice or any other action on the part of the Corporation or its Board of
Directors or the holder of such share of Exchange Stock, be exchanged for the
amount of cash, securities and/or other property thereof (together with any
payments in lieu of fractional shares or dividends, if any) that a holder of
such Convertible Security would have been entitled to receive pursuant to the
terms of such Convertible Security had such terms provided that the
conversion privilege in effect immediately prior to any exchange by the
Corporation of any shares of Exchange Stock would be adjusted so that the
holder of any such Convertible Security thereafter surrendered for conversion
would be entitled to receive the amount of cash, securities and/or other
property he or she would have owned immediately following such action had
such Convertible Security been converted immediately prior to such exchange.
The foregoing provisions shall not apply to the extent that equivalent
adjustments are otherwise made pursuant to the provisions of such Convertible
Security.
2. VOTING OF CONTROLLED SHARES. Shares of any series of Common
Stock held by a corporation or other entity controlled by the Corporation
(other than an employee benefit plan) shall be voted on any proposal
requiring a vote of the holders of such series in the same proportion as
votes are cast for or against such proposal by all other holders of such
series.
Continuation Sheet - 38
<PAGE>
3. DISCRIMINATION BETWEEN CLASSES OF COMMON STOCK. Subject to the
provisions of each series of Common Stock regarding the payment of dividends
on such series of Common Stock, the Board of Directors may, in its sole
discretion, declare and pay dividends exclusively on any series of Common
Stock, or all series, in equal or unequal amounts, notwithstanding the
amounts available for the payment of dividends on any series, the respective
voting and liquidation rights of each series, the amounts of prior dividends
declared on each series or any other factor.
4. ADJUSTMENTS RELATIVE TO VOTING RIGHTS AND LIQUIDATION. If at any
time the Corporation shall in any manner subdivide (by stock split,
reclassification or otherwise) or combine (by reverse stock split,
reclassification or otherwise) the outstanding shares of any series of Common
Stock, or pay a dividend or make a distribution in shares of any series of
Common Stock to holders of such series, the per share voting rights and the
liquidation units of each series of Common Stock other than the GGD Stock
shall be appropriately adjusted so as to avoid dilution in the aggregate
voting and liquidation rights of any series. The issuance by the Corporation
of shares of any series of Common Stock (whether by a dividend or otherwise)
to the holders of any other series of Common Stock shall not require
adjustment pursuant to this paragraph.
5. RANK. All series of Common Stock shall rank junior with respect
to the payment of dividends and the distribution of assets to all series of
the Corporation's Preferred Stock that specifically provide that they shall
rank prior to the Common Stock. Nothing herein shall preclude the Board from
creating any series of Preferred Stock ranking on a parity with or prior to
the Common Stock as to the payment of dividends or the distribution of assets.
6. FRACTIONAL SHARES. Any series of Common Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of such series of Common Stock.
7. DEFINITIONS. As used in these Articles of Organization, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meaning when used in the plural and vice versa),
unless another definition is provided or the context otherwise requires:
(a) "Business Day" shall mean each weekday other than any day
on which any relevant series of common stock is not traded on any national
securities exchange or the Nasdaq National Market or in the over-the-counter
market.
(b) The "Closing Price," with respect to any security, as of
any given day, shall be (x) if such security is listed or admitted to trading
on a national securities exchange, the closing price on the New York Stock
Exchange Composite Tape (or any successor composite tape reporting
transactions on national securities exchanges) or, if such composite tape
shall not be in use or shall not report transactions in such shares, the last
reported sales price regular way on the principal national securities
exchange on which such shares are listed or admitted to trading (which shall
be the national securities exchange on which the greatest number of shares of
such series of stock has been traded during such consecutive trading days),
or,
Continuation Sheet - 39
<PAGE>
if there is no such sale on any such day, the mean of the bid and asked
prices on such day, or (y) if such shares are not listed or admitted to
trading on any such exchange, the closing price, if reported, or, if the
closing price is not reported, the mean of the closing bid and asked prices
as reported by the Nasdaq National Market or a similar source selected from
time to time by the Corporation for the purpose.
(c) "Convertible Securities" shall mean any securities
(including employee stock options) of the Corporation that are convertible
into or evidence the right to purchase any shares of any series of Common
Stock.
(d) "Disposition" shall mean the sale, transfer, assignment or
other disposition (whether by merger, consolidation, sale or contribution of
assets or stock or otherwise) of any properties or assets, other than by
pledge, hypothecation or grant of any security interest in such properties or
assets.
(e) "Exchange Date" shall mean, in respect of any exchange of
any share of a series of Common Stock effected pursuant to these Articles of
Organization, the date upon which such exchange becomes effective.
(f) "Fair Market Value" shall mean
(1) as to shares of any series of stock of the
Corporation as of any date, the average of the daily Closing Prices for the
20 consecutive Business Days commencing on the 30th Business Day prior to
such date, except that in the event such Closing Prices are unavailable, Fair
Market Value shall be determined by the Board of Directors;
(2) in the case of securities other than securities of
the Corporation, if such security of a class that has previously been
publicly traded for a period of at least three months, the Market Value
thereof or, in the case of a security that has not been publicly traded for
at least such period, the fair value per share of stock or per other unit of
such security, on a fully distributed basis, as determined by an independent
investment banking firm experienced in the valuation of securities selected
in good faith by the Board of Directors;
(3) in the case of property other than securities, the
"Fair Market Value" as determined in good faith by the Board of Directors
based upon such appraisals or valuation reports of such independent experts
as the Board of Directors shall in good faith determine to be appropriate in
accordance with good business practice.
Any determination of Fair Market Value made under clauses 2 or
3 above shall be described in a statement filed with the records of the
actions of the Board of Directors.
(g) "Market Capitalization" of any series of Common stock on
any date shall mean the product of (i) the Fair Market Value of one share of
such series of Common Stock on such date and (ii) the number of shares of
such series of Common Stock outstanding on such date.
(h) "Market Value" as of any day of any security shall mean
the average of the high and low reported sales prices regular way of a share
of such class or series on such day (if
Continuation Sheet - 40
<PAGE>
such day is a Business Day, and, if such day is not a Business Day, on the
Business Day immediately preceding such day); or, in case no such reported
sale takes place on such Business Day, the average of the reported closing
bid and asked prices regular way of a share of such class or series on such
Business Day, in either case, on the New York Stock Exchange; or, if the
shares of such class or series are not quoted on the New York Stock Exchange
on such Business Day, on the Nasdaq National Market; or, if the shares of
such class or series are not quoted on the Nasdaq National Market on such
Business Day, the average of the closing bid and asked prices of a share of
such class or series in the over-the-counter market on such Business Day as
furnished by any New York Stock Exchange member firm selected from time to
time by the corporation; or, if such closing bid and asked prices are not
made available by any such New York Stock Exchange member firm on such
Business Day (including, without limitation, because such securities are not
publicly held), the market value as determined by an independent investment
banking firm experienced in the valuation of securities selected in good
faith by the Board of Directors. Any determination of Fair Market Value made
under the final clause of the preceding sentence shall be described in a
statement filed with the records of the actions of the Board of Directors.
(i) "Qualified Tax Counsel" shall mean tax counsel who may be
regular outside counsel to the Corporation but shall not be an officer or
employee of the Corporation or any of its affiliates.
(j) "Redemption Date" shall mean, in respect of any redemption
of any share of a series of Common Stock effected pursuant to these Articles
of Organization, the date upon which such redemption becomes effective.
(k) "Related Business Transaction" shall mean, with respect to
the Disposition of all or substantially all the properties and assets
attributed to a particular series of Common Stock, such Disposition in a
transaction or series of related transactions that result in the Corporation
receiving in consideration of such properties and assets primarily equity
securities (including, without limitation, capital stock, debt securities
convertible into or exchangeable for equity securities or interests in a
general or limited partnership or limited liability company, without regard
to the voting power or other management or governance rights associated
therewith) of any entity which (i) acquires such properties or assets or
succeeds (by merger, formation of a joint venture or otherwise) to the
business conducted with such properties or assets or controls such acquiror
or successor and (ii) is engaged primarily or proposes to engage primarily in
one or more businesses similar or complementary to the businesses conducted
by the division or group of the Corporation to which were attributed such
properties and assets prior to such Disposition, as determined by the Board
of Directors.
(l) "Tax Event" shall mean, with respect to any series of
Common Stock that it has become (or will become, as the context may require)
more likely than not that for United States Federal income tax purposes (i)
the Corporation or the holders of its stock are, or at any time in the future
will be, subject to tax or other adverse tax consequences upon the issuance
or receipt of shares of such series of Common Stock or by reason of the
existence of such series of Common Stock or (ii) either such series of Common
Stock or the GGD Stock is not, or at any time in the future will not be,
treated solely as stock of the Corporation.
Continuation Sheet - 41
<PAGE>
(m) "Tax Law Change" shall mean (i) any enactment of,
amendment to, or change in the laws of the United States or any political
subdivision thereof (including any announced proposed change by an applicable
legislative committee or the chair in such laws), (ii) any promulgation of,
amendment to, or change in the regulations under the laws of the United
States or any political subdivision or taxing authority thereof or therein
(including any announced proposed change in or promulgation of regulations by
an administrative agency) or (iii) any official or administrative
pronouncement or action or judicial decision interpreting or applying such
laws or regulations. For purposes of rendering an opinion as to a Tax Law
Change, tax counsel shall assume that any legislative or administrative
proposals will be adopted or enacted as proposed.
8. DETERMINATIONS BY THE BOARD OF DIRECTORS. Any determinations
with respect to any Division or the rights of holders of any series of Common
Stock made by the Board of Directors of the Corporation in good faith
pursuant to or in furtherance of any provision of these Articles of
Organization relating to the Common Stock shall be final and binding on all
stockholders of the Corporation.
H. DESCRIPTION OF THE PREFERRED STOCK
[**The terms of Genzyme Corporation's existing Junior Participating Preferred
Stock, as proposed to be amended and restated, are not included here. The only
modifications that will be proposed to stockholders at Genzyme's 2000 Annual
Meeting of Stockholders will be to update any section cross references in the
text of the existing terms of the preferred stock in order to reflect the
proposed restatement of the Articles of Organization.**]
Continuation Sheet - 42
