<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
GENZYME CORPORATION
-----------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
----------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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</TABLE>
<PAGE>
<TABLE>
<S> <C>
GENZYME CORPORATION
One Kendall Square
Cambridge, MA 02139
[LOGO] (617) 252-7500
</TABLE>
DEAR STOCKHOLDERS:
We invite you to attend our Annual Meeting of Stockholders to be held on
Thursday, May 25, 2000 at State Street Bank, 225 Franklin Street, Boston,
Massachusetts.
The enclosed proxy statement explains the agenda for the meeting and voting
information and procedures. It also includes information about our board of
directors and senior management. Please read this booklet carefully. Also
included with this proxy is a copy of our 1999 Annual Report and your proxy
card.
As we have done in the past, at the annual meeting we will review important
developments in our operations since our last stockholder meeting.
Whether or not you plan to attend, your vote is very important to us.
Information about voting procedures can be found in the proxy statement. Please
return a signed proxy card or give us instructions by telephone or over the
Internet so that you can be sure your shares will be properly voted.
Sincerely,
[SIGNATURE]
Henri A. Termeer
Chairman and
Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF GENZYME CORPORATION
<TABLE>
<S> <C>
DATE: Thursday, May 25, 2000
TIME: 2:00 - 4:00 p.m.
PLACE: State Street Bank
Enterprise Room, 5(th) floor
225 Franklin Street
Boston, Massachusetts
</TABLE>
PURPOSE:
- Re-elect one director.
- Amend our 1990 Equity Incentive Plan to increase the number of shares
of GZSP Stock available for grant by 175,000 shares.
- Amend and restate our charter to modify the terms of the GZMO, GZSP and
GZTR Stock.
- Act on any other matter that may be properly brought before the
meeting.
Under Massachusetts law, a holder of GZMO, GZSP and GZTR Stock is entitled to
assert dissenters' rights of appraisal if the charter amendment, as it relates
to his or her her series of tracking stock, is adopted and made effective. If
the amendment proposal is approved by our stockholders and effected by us, then
any holder of GZMO, GZSP or GZTR Stock, if the terms of that series is affected
by the amendment and:
- who, prior to the taking of the vote approving the amendment, files
with us written objection to the amendment proposal stating that he or
she intends to demand payment for his or her shares if the amendment is
effected, and
- whose shares are not voted in favor of the amendment proposal
has or may have the right to demand in writing from us, within 20 days after
receiving written notice from us that the amendment has become effective,
payment for his or her shares and appraisal of their value. Genzyme and
dissenting stockholders will have the rights and duties, and must follow the
procedures, regarding appraisal demands contained in Section 86 through 98 of
Chapter 156B of the General Laws of Massachusetts.
Only stockholders of record at the close of business on March 31, 2000 will be
entitled to vote at the meeting.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE "IN FAVOR OF" THE THREE PROPOSALS.
WE INTEND TO HOLD A SPECIAL MEETING OF STOCKHOLDERS IN JUNE. AT THAT MEETING,
YOU WILL BE ASKED TO CONSIDER AND VOTE ON A PROPOSAL TO AMEND AND RESTATE OUR
CHARTER TO:
- CREATE A NEW SERIES OF COMMON STOCK DESIGNATED AS GENZYME BIOSURGERY
DIVISION COMMON STOCK;
- CANCEL GZSP STOCK AND GZTR STOCK;
- EXCHANGE GZSP STOCK AND GZTR STOCK FOR GENZYME BIOSURGERY DIVISION
COMMON STOCK; AND
- TRANSFER THE ASSETS OF GENZYME SURGICAL PRODUCTS AND GENZYME TISSUE
REPAIR TO GENZYME BIOSURGERY.
THIS TRANSACTION IS A CONDITION TO A PROPOSED MERGER OF BIOMATRIX, INC. INTO A
SUBSIDIARY OF GENZYME FOR CASH AND GENZYME BIOSURGERY COMMON STOCK, AND THE
ALLOCATION OF THE BIOMATRIX ASSETS TO GENZYME BIOSURGERY. WE EXPECT TO MAIL A
PROXY STATEMENT DETAILING THESE TRANSACTIONS TO YOU IN MAY.
PROXY MATERIAL MAILING DATE:
April 18, 2000
By order of the Board of Directors
PETER WIRTH, CLERK
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
General Information About Voting............................ 2
Stock Ownership............................................. 4
ELECTION OF DIRECTORS....................................... 6
Directors Continuing in Office.............................. 7
Director Compensation....................................... 8
Executive Compensation...................................... 8
Compensation Committee Report on Executive Compensation..... 8
Summary Compensation Table.................................. 12
Option Grants in Last Fiscal Year........................... 13
Aggregated Option Exercises in Last Fiscal Year and Fiscal
Year-End Option Values.................................... 15
Executive Employment Agreements............................. 16
Executive Severance Agreements.............................. 16
Stock Performance Graphs.................................... 17
PROPOSAL TO AMEND OUR 1990 EQUITY INCENTIVE PLAN............ 20
PROPOSAL TO AMEND AND RESTATE OUR CORPORATE CHARTER......... 22
Certain Transactions........................................ 29
Section 16(a) Beneficial Ownership Reporting Compliance..... 30
Independent Accountants..................................... 30
Stockholder Proposals....................................... 30
Where You Can Find More Information......................... 30
APPENDICES
Appendix A--Proposed Amended and Restated Articles of
Organization.............................................. A-1
Appendix B--Massachusetts Appraisal Law..................... B-1
</TABLE>
<PAGE>
GENERAL INFORMATION ABOUT VOTING
Our board of directors is soliciting proxies for the 2000 Annual Meeting of
Stockholders. This proxy statement explains the agenda, voting information and
procedures. Please read it carefully.
In this proxy statement, references to "we," "us," "our," "the company" or
"Genzyme" mean Genzyme Corporation.
WHO CAN VOTE. Only stockholders of record of each series of Genzyme common
stock at the close of business on March 31, 2000 can vote at the meeting. We
currently have four series of common stock, and each is publicly traded on The
Nasdaq Stock Market-Registered Trademark-. We refer to them in this document by
their ticker symbols:
<TABLE>
<S> <C> <C>
- - Genzyme General Division common stock is GENZ Stock
- - Genzyme Molecular Oncology Division common stock is GZMO Stock
- - Genzyme Surgical Products Division common stock is GZSP Stock
- - Genzyme Tissue Repair Division common stock is GZTR Stock
</TABLE>
QUORUM. In order to hold and complete the business of the annual meeting, we
must have a majority in interest of the outstanding shares of
- all four series of common stock, together as a single class, and
- each of GZMO, GZSP and GZTR Stock, as a separate class
represented at the meeting.
SHARES OUTSTANDING AND VOTING POWER.
<TABLE>
<CAPTION>
SHARES OUTSTANDING NUMBER OF TOTAL
MARCH 31, 2000 VOTES PER SHARE VOTING SHARES
------------------ --------------- -------------
<S> <C> <C> <C>
GENZ Stock........................................ 84,773,869 1.00 84,773,869
GZMO Stock........................................ 13,624,432 0.08 1,089,955
GZSP Stock........................................ 14,900,615 0.61 9,089,375
GZTR Stock........................................ 28,655,353 0.06 1,719,321
----------
Total........................................... 96,672,520
</TABLE>
The number of votes for each series of common stock (other than GZSP Stock,
which did not exist at that time) was set on January 1, 1999 and is reset every
two years in accordance with our charter. The number of votes is based on an
average closing stock price for each series of stock over a defined period of
time.
HOW TO VOTE YOUR SHARES. There are four ways you can vote your shares:
- by mail;
- by telephone;
- on the Internet; or
- in person, at the annual meeting.
To vote by mail, simply complete the enclosed proxy card, sign and date it, and
return it in the enclosed self-addressed envelope. Instructions for voting by
telephone or on the Internet can be found on your proxy card. If you hold your
shares through a bank, broker or other nominee, they will give you separate
instructions for voting your shares.
By signing a proxy, you are authorizing us to vote your shares at the meeting in
the manner you direct. If you return a signed proxy without specific voting
instructions, your shares will be voted in favor of the proposals recommended by
the board of directors. If any matters come before the meeting which are not
described in this proxy statement, the proxies will use their own judgment to
determine how to vote your shares.
2
<PAGE>
If your shares are held in a nominee name, you must request a legal proxy from
your nominee as proof of ownership in order to vote at the meeting.
HOW YOU MAY REVOKE YOUR PROXY INSTRUCTIONS. You may revoke or amend your proxy
before it is voted by writing to us directly, submitting a new proxy with a
later date, or by attending the meeting and voting in person.
WHAT IF YOU GET MORE THAN ONE PROXY CARD? This means that you have more than
one account at the transfer agent and/or with a nominee. It may also mean that
you hold stock in more than one series of our common stock. Your proxy card
lists the number of shares you are voting. Please sign and return all proxy
cards to be sure that all of your shares are voted.
We recommend you consolidate your holdings under the same name, address and tax
identification number as much as possible. This will eliminate some duplication
of mailings and costs. Please contact your nominee to consolidate accounts, or
our transfer agent, American Stock Transfer and Trust Co., Inc. at
(800) 937-5449.
HOW THE SHARES ARE COUNTED. Approval of all of the proposals, except the
charter amendment, requires the favorable vote of the majority of votes cast at
the meeting. Abstentions and broker non-votes are counted for determining a
quorum but are not counted for voting purposes. Broker non-votes occur when a
broker returns a proxy but does not have the authority to vote on a particular
proposal without a specific instruction from the owner of the shares.
Approval of the proposal to amend and restate our charter requires:
- the affirmative vote of a majority of all shares of GENZ, GZMO, GZSP and
GZTR Stock outstanding and entitled to vote, voting together as one class,
with:
-- GENZ stockholders having one vote per share;
-- GZMO stockholders having 0.08 vote per share;
-- GZSP stockholders having 0.61 vote per share; and
-- GZTR stockholders having 0.06 vote per share; and
- for those parts of the amendment specific to the GZMO Stock, GZSP Stock or
GZTR Stock, adoption will require the favorable vote of a majority of all
shares outstanding and entitled to vote of that series, each voting as a
separate class. If the holders of the GZMO Stock, GZSP Stock or GZTR
Stock, with that series voting separately, do not approve the charter
amendment, then the terms of that series will not be amended.
Abstentions and broker non-votes will be treated as votes against the charter
amendment.
WHAT IF YOU EXERCISE DISSENTERS' RIGHTS? As described more fully at page 27,
holders of GZMO, GZSP and GZTR Stock who object to the proposed charter
amendment can demand payment for and appraisal of their shares. Our board of
directors has determined that if the holders of more than 5% of the shares of
any one of those series exercises their appraisal rights, then the amendment
will not be adopted with respect to the specific terms of that series' stock.
Our board of directors, however, has reserved its right to waive that condition
in part or entirely at any time.
COSTS OF SOLICITATION. We are paying Corporate Investor Communications, a proxy
solicitation firm, $15,000 plus expenses to help us with the solicitation. Our
employees may solicit proxies personally, electronically, by telephone or by
mail. We also reimburse, on request, the fees and expenses of brokers and other
nominees for sending you the proxy material and sending in your vote.
RESULTS OF THE VOTING. We will announce the results of the voting at the annual
meeting. We will also publish the results in our quarterly report on Form 10-Q
that we will file with the Securities and Exchange Commission in August.
ANNUAL MEETING TO BE BROADCAST ON OUR WEB SITE. The annual meeting will be
broadcast live over the Internet at our corporate web site at
HTTP://WWW.GENZYME.COM in the "Investor Information--Events" section. To listen
to the meeting you need a computer equipped with speakers and a sound card.
3
<PAGE>
STOCK OWNERSHIP
This table shows how many shares are held by anyone that owns more than 5%
of any series of our common stock. The information in this table is as of
February 29, 2000 and is based on the most recent SEC filings by these entities
as to their ownership of our stock. Unless noted, each stockholder has sole
voting and investment power for the shares listed in the table.
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY OWNED
-----------------------------------
(* INDICATES LESS THAN 1%)
--------------------------
GENZ GZMO GZSP GZTR
STOCK % STOCK % STOCK % STOCK %
---------- -------- -------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Baupost Group, Inc. (1)............... 0 * 0 * 1,458,583 9.8 0 *
44 Brattle Street
Cambridge, MA 02139
CitiGroup Inc. (2).................... 2,829,435 3.3 148,379 1.1 1,180,850 7.9 0 *
153 East 53(rd) Street
New York, NY 10043
FMR Corp. (3)......................... 7,796,291 9.2 0 * 172 * 0 *
82 Devonshire Street
Boston, MA 02109
Iridian Asset Management, LLC (4)..... 4,599,600 5.4 0 * 557,551 3.8 0 *
276 Post Road West
Westport, CT 06880
State of Wisconsin Investment Board 6,100 * 0 * 0 * 3,062,148 10.7
(5).................................
P.O. Box 7842
Madison, WI 53707
Wellington Management Co., L.L.P. 11,681,859 13.8 906,799 6.7 2,076,822 14.0 492,502 1.7
(6).................................
75 State Street
Boston, MA 02109
</TABLE>
- ------------------------
(1) Baupost Group, Inc. is an investment management company. No single client
of Baupost owns more than 5% of the shares listed.
(2) Citigroup Inc. is a holding company and investment manager and advisor for
Citicorp Bank, and is reporting the shares listed for certain of its
subsidiaries. Citigroup has sole power to vote 2,350,763 of the shares of GENZ
Stock and 138,482 of the shares of GZMO Stock listed, and shares voting and
dispositive power for all of the shares listed, including with:
- SSB Citi Fund Management LLC, an investment advisor that shares voting and
dispositive power for 1,020,071 of the shares of GZSP Stock listed; and
- Salomon Brothers Holdings, Inc., a holding company that shares voting and
dispositive power for 1,165,703 of the shares of GZSP Stock listed.
No single client of Citigroup or its subsidiaries owns more than 5% of the
shares listed.
(3) FMR Corp. is a holding company and is reporting the shares listed for
several subsidiaries, who act as investment advisors. FMR has sole power to vote
380,154 shares of the GENZ Stock and 111 shares of the GZSP Stock listed. No
single client of FMR or its subsidiaries owns more than 5% of the shares listed.
(4) Iridian is a registered investment advisor and is reporting the shares
listed as part of a group that includes:
- LC Capital Management LLC;
- CL Investors, Inc.;
- COLE Partners LLC;
- Iridian Partners Fund, L.P.;
- Iridian Private Business Value Equity Fund, L.P.; and
- David L. Cohen and Harold J. Levy.
4
<PAGE>
Iridian, LC Capital and CL Investors share voting and dispositive power for
4,274,400 of the shares of GENZ Stock listed. COLE shares voting and dispositive
power for 40,600 of the shares of GENZ Stock listed. Iridian Partners shares
voting and dispositive power for 7,300 of the shares of GENZ Stock listed.
Iridian Private Business shares voting and dispositive power for 40,600 of the
shares of GENZ Stock listed. Messrs. Cohen and Levy, who are the controlling
stockholders of CL Investors, each share voting and dispositive power for
4,599,600 of the shares of GENZ Stock listed, including 325,200 shares of the
GENZ Stock owned by First Eagle Fund of America. Iridian has sole power to vote
407,372 of the shares of GZSP Stock listed. No single client of Iridian owns
more than 5% of the shares listed.
(5) The State of Wisconsin Investment Board is a government agency that manages
public pension funds.
(6) Wellington Management Co., L.L.P. is a registered investment advisor. Its
clients can receive or direct the receipt of dividends and proceeds from sales
of shares disposed of by Wellington Management. No single client owns more than
5% of the shares listed. Wellington Management has shared power to dispose or to
direct the disposition of 11,663,459 shares of GENZ Stock, 906,799 shares of
GZMO Stock and 2,076,822 shares of GZSP Stock, and has shared power to vote or
to direct the vote with respect to 6,957,639 shares of GENZ Stock, 734,849
shares of GZMO Stock, 1,876,122 shares of GZSP Stock and 298,685 shares of GZTR
Stock.
------------------------
This table shows how much of each series of our common stock is held by the
executive officers listed in the compensation table on page 12, our directors,
and all of our current executive officers and directors together. It also
includes information about the ownership of Genzyme Transgenics Corporation, a
30% owned subsidiary of Genzyme, whose stock is referred to by its ticker
symbol, GZTC. Unless otherwise noted, each director and officer has sole voting
and investment power for the shares listed. The information in this table is as
of February 29, 2000.
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY OWNED (1)
-----------------------------
(* INDICATES LESS THAN 1%)
-----------------------
GENZ GZMO GZSP
STOCK % STOCK % STOCK %
--------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Henri A. Termeer (2)............... 738,430 * 71,467 * 229,559 1.5
Earl M. Collier, Jr. (3)........... 79,262 * 6,689 * 50,563 *
Alan E. Smith...................... 151,932 * 17,644 * 3,936 *
G. Jan van Heek (4)................ 120,756 * 6,399 * 4,124 *
Peter Wirth........................ 149,333 * 20,618 * 52,230 *
Constantine E. Anagnostopoulos..... 42,000 * 2,916 * 1,074 *
Douglas A. Berthiaume (5).......... 44,100 * 7,340 * 3,311 *
Henry E. Blair..................... 50,600 * 19,339 * 4,475 *
Robert J. Carpenter (6)............ 29,095 * 3,764 * 1,756 *
Charles L. Cooney (7).............. 15,350 * 4,478 * 2,841 *
Henry R. Lewis..................... 34,600 * 2,980 * 465 *
All current officers and directors
as a group (15 people) (8)....... 1,704,022 2.0 189,328 1.4 373,064 2.5
<CAPTION>
NUMBER OF SHARES BENEFICIALLY OWNED (1)
-------
(* INDICATES LESS THAN 1%)
GZTR GZTC
STOCK % STOCK %
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Henri A. Termeer (2)........... 973,367 3.4 32,500 *
Earl M. Collier, Jr. (3)....... 23,507 * 1,000 *
Alan E. Smith.................. 45,384 * 20,000 *
G. Jan van Heek (4)............ 50,201 * 1,700 *
Peter Wirth.................... 40,447 * 1,200 *
Constantine E. Anagnostopoulos. 15,168 * 0 *
Douglas A. Berthiaume (5)...... 82,115 * 0 *
Henry E. Blair................. 21,911 * 21,000 *
Robert J. Carpenter (6)........ 31,213 * 0 *
Charles L. Cooney (7).......... 24,829 * 0 *
Henry R. Lewis................. 12,057 * 0 *
All current officers and direct
as a group (15 people) (8)... 1,409,565 4.9 77,400 *
</TABLE>
- ------------------------
(1) The shares listed include the following stock options exercisable
within 60 days of February 29, 2000:
<TABLE>
<CAPTION>
GENZ GZMO GZSP GZTR GZTC
STOCK OPTIONS STOCK OPTIONS STOCK OPTIONS STOCK OPTIONS STOCK OPTIONS
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Henri A. Termeer............................ 518,240 52,080 31,500 174,939 23,000
Earl M. Collier, Jr......................... 78,454 6,684 31,500 21,135 --
Alan E. Smith............................... 128,818 17,618 3,900 38,810 20,000
G. Jan van Heek............................. 117,795 6,350 1,920 39,072 1,200
Peter Wirth................................. 147,119 20,442 1,920 37,463 1,200
Constantine E. Anagnostopoulos.............. 31,000 2,700 -- 14,028 --
Douglas A. Berthiaume....................... 25,600 6,638 -- 17,827 --
Henry E. Blair.............................. 25,600 6,638 -- 17,827 20,000
Robert J. Carpenter......................... 18,400 2,700 -- 13,208 --
Charles L. Cooney........................... 6,000 2,700 -- 13,488 --
Henry R. Lewis.............................. 32,000 2,700 -- 11,024 --
All current officers and directors as a
group (15 people)......................... 1,362,430 151,904 78,710 469,600 65,400
</TABLE>
5
<PAGE>
The shares listed in this footnote for Mr. van Heek and for all current
officers and directors as a group include 31,209 shares of GENZ Stock and
2,043 shares of GZTR Stock subject to stock options held by Mr. van Heek's
wife. Mr. van Heek disclaims beneficial ownership of shares held by his
wife.
(2) The stock beneficially owned by Mr. Termeer includes:
<TABLE>
<CAPTION>
GENZ STOCK GZMO STOCK GZSP STOCK GZTR STOCK
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
- shares held by his wife............. 1,123 120 201 6,900
- shares held in a trust.............. 500 -- -- 8,649
</TABLE>
The shares held in trust are for the benefit of Mr. Termeer's son.
Mr. Termeer disclaims beneficial ownership of all shares held by his wife
and the trust.
(3) Mr. Collier's wife owns 9,000 shares of GZSP Stock. Mr. Collier
disclaims beneficial ownership of all shares held by his wife.
(4) Mr. van Heek's wife owns 1,089 shares of GENZ Stock, 42 shares of GZMO
Stock, 168 shares of GZSP Stock and 637 shares of GZTR Stock. Mr. van Heek
disclaims beneficial ownership of all shares held by his wife.
(5) Mr. Berthiaume's wife owns 2,000 shares of GENZ Stock, 216 shares of
GZMO Stock, 358 shares of GZSP Stock and 1,560 shares of GZTR Stock.
Mr. Berthiaume disclaims beneficial ownership of all shares held by his
wife.
(6) Mr. Carpenter's wife owns 348 shares of GENZ Stock, 41 shares of GZMO
Stock, 62 shares of GZSP Stock, and 44 shares of GZTR Stock. Mr. Carpenter
disclaims beneficial ownership of all shares held by his wife.
(7) The stock beneficially owned by Dr. Cooney includes:
<TABLE>
<CAPTION>
GENZ STOCK GZMO STOCK GZSP STOCK GZTR STOCK
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
- held jointly with his wife.......... 8,910 1,732 2,763 11,329
- held by his wife.................... 120 12 21 3
- held by his son..................... 320 34 57 9
</TABLE>
Dr. Cooney disclaims beneficial ownership of all shares held individually by
his wife and by his son.
(8) In addition to the shares listed in footnotes 1 through 7 above, the
shares listed include the following:
<TABLE>
<CAPTION>
GENZ STOCK GZMO STOCK GZSP STOCK GZTR STOCK
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
- shares held jointly with the spouse
of an officer....................... -- 71 -- --
- shares held by the son of an
officer................................. 2,757 297 493 242
</TABLE>
ELECTION OF DIRECTORS
We currently have seven directors. Our board has decided to change the
number of directors to six. Our charter divides the board of directors into
three classes, with each class being as equal in size as possible. Each class of
directors is elected for a three-year term. Mr. Lewis, whose current term as a
director expires at the annual meeting, has decided to retire from the board. We
are actively looking for a new board member to replace Mr. Lewis.
Mr. Termeer has been nominated for re-election to a term of office expiring
in 2003. Mr. Termeer has agreed to serve as a director if he is elected. If for
some reason Mr. Termeer is unable to serve, the board will propose a substitute
nominee and the proxies will vote to approve the election of the substitute
nominee. The following biography gives you information about Mr. Termeer
followed by biographies of the directors who are continuing in office.
HENRI A. TERMEER, director since 1983
Mr. Termeer, 54, has served as President of Genzyme since October 1983,
Chief Executive Officer since December 1985 and Chairman of the Board since
May 1988. For ten years prior to joining Genzyme,
6
<PAGE>
Mr. Termeer worked for Baxter Travenol Laboratories, Inc., a manufacturer of
human health care products. Mr. Termeer is also a director of ABIOMED, Inc.,
AutoImmune Inc., Diacrin, Inc., GelTex Pharmaceuticals, Inc. and Genzyme
Transgenics, and a trustee of Hambrecht & Quist Healthcare Investors and of
Hambrecht & Quist Life Sciences Investors.
DIRECTORS CONTINUING IN OFFICE
The following directors were elected at our 1998 annual meeting for terms
ending in 2001:
DOUGLAS A. BERTHIAUME, director since 1988
Mr. Berthiaume, 51, is Chairman, President and Chief Executive Officer of
Waters Corporation, a high technology manufacturer of products used for analysis
and purification. From November 1990 to August 1994, he was President of the
Waters Division of Millipore Corporation.
HENRY E. BLAIR, director since 1981
Mr. Blair, 56, is the Chairman and Chief Executive Officer of Dyax Corp., a
privately held bioseparation, pharmaceutical discovery and development company,
and a consultant to several companies, including Genzyme. Prior to
January 1990, Mr. Blair was Senior Vice President, Scientific Affairs of
Genzyme. Before joining Genzyme in 1981, he was Associate Director of the New
England Enzyme Center at Tufts University School of Medicine. Mr. Blair is also
a director of Genzyme Transgenics and Celtrix Pharmaceuticals, Inc.
The following directors were elected at our 1999 annual meeting for terms
ending in 2002:
CONSTANTINE E. ANAGNOSTOPOULOS, director since 1986
Dr. Anagnostopoulos, 77, is Managing General Partner of Gateway Associates,
which is the general partner of Gateway Venture Partners III, L.P., a venture
capital partnership. He is a retired corporate executive of Monsanto Company.
ROBERT J. CARPENTER, director since 1994
Mr. Carpenter, 55, is Chairman of GelTex Pharmaceuticals, Inc., a publicly
held pharmaceutical development company which he co-founded in November 1991 and
where he served as President and Chief Executive Officer until May 1993. He was
President and Chief Executive Officer of VacTex, Inc., a privately held
biotechnology company which he co-founded, from November 1995 until its
acquisition by Aquila Biopharmaceuticals, Inc. in April 1998. Mr. Carpenter was
Chairman of the Board, President and Chief Executive Officer of Integrated
Genetics, Inc., a biotechnology company that merged with us in 1989. Following
the merger and until 1991, Mr. Carpenter was Executive Vice President of
Genzyme, and Chief Executive Officer and Chairman of the Board of IG
Laboratories, Inc. He is also a director of Aquila Biopharmaceuticals.
CHARLES L. COONEY, director since 1983
Dr. Cooney, 55, is a Professor of Chemical and Biochemical Engineering and
Co-Director of the Program on the Pharmaceutical Industry at Massachusetts
Institute of Technology. Dr. Cooney joined the MIT faculty as an Assistant
Professor in 1970 and became a Professor in 1982. Dr. Cooney is a director of
CUNO, Inc., a high technology manufacturer of filtration products for
separation, clarification and purification of liquids and gases. He is also a
principal of BioInformation Associates, Inc., a consulting company.
------------------------
The board of directors held nine meetings during 1999, and each director
attended at least 75% of all meetings of the board and all committees of the
board on which he served, except for Dr. Anagnostopoulos, who attended 67% of
the audit committee meetings and Mr. Lewis, who attended 67% of all board
meetings and 67% of the audit committee meetings. The board has audit and
compensation committees, but does not have a nominating committee.
The audit committee held three meetings in 1999. Current members are
Messrs. Lewis (chairman), Berthiaume, Carpenter and Dr. Anagnostopoulos. The
purpose of the committee is to ensure that the financial information provided to
our stockholders and others is reliable and that the systems of control
7
<PAGE>
that we have established effectively safeguard our assets. The committee reviews
the general scope and results of our annual audit, the fee charged by our
independent accountants and issues relating to internal control systems.
The compensation committee held six meetings in 1999. Current members are
Drs. Cooney (chairman) and Anagnostopoulos, and Messrs. Berthiaume and Lewis.
The committee determines the compensation to be paid to all executive officers,
including the chief executive officer, and administers our equity incentive
plans.
DIRECTOR COMPENSATION
Employee directors do not receive any additional compensation for their
service on the board of directors. Non-employee directors receive a quarterly
retainer of $6,250. Under our director deferred compensation plan, each director
can choose to defer his retainer fee:
- in exchange for cash or a combination of cash and stock;
- into stock accounts allocated to GENZ Stock, GZMO Stock, GZSP Stock and/or
GZTR Stock; and
- until his service as a director ends or until a specified date.
As of March 31, 2000, one of the six eligible directors was participating in
the deferred compensation plan.
Directors also receive stock option grants for each year (or partial year)
served on the board. Grants are made when a director is elected or re-elected to
the board. The terms of these grants include:
- 4,000 shares each of GENZ, GZMO, GZSP and GZTR Stock for each year of a
director's term of office;
- an exercise price equal to the closing price of each series of stock on
the date of grant;
- 4,000 shares become exercisable on the date of each annual meeting
following the date of grant; and
- each grant has a term of ten years.
Mr. Blair has provided consulting services to us since 1990. Mr. Blair's
agreement requires a minimum of 25 days of consulting services during the year.
He receives an annual fee of $50,000. We paid Mr. Blair $36,058 in 1999 under
this agreement.
Dr. Cooney has provided consulting services to us since 1983. Dr. Cooney's
agreement covers 15 days of consulting services during the year for an annual
fee of $30,000. For each day he works in excess of 15 days he will be paid
$2,000 per day or $250 per hour. We paid Dr. Cooney $30,000 in 1999.
Mr. Carpenter entered into a consulting contract with us in 1998.
Mr. Carpenter is paid $2,000 per day, and for partial days at a rate of $250 per
hour. Mr. Carpenter received no payment for services in 1999.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Our executive compensation program is designed to attract, reward and
motivate executive officers who contribute to our long-term success. We also
seek to align executive compensation with the achievement of business objectives
and individual and corporate performance.
There are three elements to our executive compensation program:
- base salary;
- annual incentive bonuses; and
- stock option grants.
For 1999, we sought to achieve a total compensation package for each officer
that is between the 40(th) and 60(th) percentile (and at approximately the
55(th) percentile for Mr. Termeer) of a blended market rate of
8
<PAGE>
total compensation paid to officers in comparable positions at other companies
in the pharmaceutical and biotechnology industries. The blended market rate is
weighted 40% toward large biotechnology companies and 60% toward pharmaceutical
companies (50/50 in the case of Mr. Termeer). We believe this is an appropriate
measure of cash compensation because we are regarded in the employment market as
a growing small pharmaceutical company.
BASE SALARY. For 1999, Mr. Termeer recommended merit increases and base
salary amounts for each officer other than himself based on his assessment of
each officer's individual performance. We approved his recommendations after
reviewing an analysis of compensation data gathered from two surveys prepared by
independent compensation consultants. These surveys focused on cash compensation
compiled for the biotechnology and pharmaceutical industries. Genzyme was one of
the companies included in each survey. These surveys were used to establish the
blended market rates used in our total compensation package.
We did not seek to set each officer's salary at the same percentile within
the established range. We evaluated Mr. Termeer's recommendation regarding each
officer's base salary in light of the range established for that officer's
position, taking into account the officer's tenure and our subjective assessment
of individual performance. For 1999, base salaries ranged from the first to the
fourth quartile of the ranges developed from the blended survey data.
INCENTIVE BONUSES. A significant portion of the direct pay of officers
consists of annual incentive bonuses. The bonus targets are closely tied to
performance measures, at both the corporate level and at individual areas of
responsibility. We established a bonus target for each officer prior to the
beginning of 1999 using the same survey data considered in setting base
salaries. Mr. Termeer recommended the bonus targets for all officers other than
himself and we evaluated and approved the targets.
The bonus targets included both an individual performance component and a
corporate performance component for all officers. The individual performance
component was payable at the discretion of Mr. Termeer based on his evaluation
of each officer's performance for the year. The corporate performance component
was payable at our discretion based on the extent to which Genzyme achieved the
operating income goals approved by the board of directors in connection with
setting the 1999 annual budget. For each 2% reduction in meeting these goals, we
would decrease the corporate bonus by 5%. If Genzyme did not achieve at least
86% of the established operating income goals for 1999, then we would not pay
any corporate bonus.
The 1999 combined bonus targets represented from 52% to 80% of base salary.
The amount payable based on corporate performance represented 30% to 51% of the
total bonus payable. For 1999, Genzyme achieved 96% of the total operating
income goals established in the 1999 budget. As a result, we awarded each
officer 90% of his or her targeted corporate bonus.
STOCK OPTIONS. We have established guidelines to limit the total number of
options that may be granted in a fiscal year to a stated percentage of shares
outstanding. Annual option awards for GENZ Stock, GZMO Stock and GZTR Stock were
made in May 1999 to all qualified employees of the company, excluding the
executive officers. In January 1999, we granted stock options to officers under
a new premium long-term equity incentive plan. This program uses premium-priced
stock options to meet our objectives of retaining executives and providing them
with a long-term incentive to achieve superior increases in shareholder value.
The number of options granted to each officer was based on survey data with
respect to comparable positions in other biotechnology and pharmaceutical
companies. The following range of option grants were made to officers under the
premium option program:
<TABLE>
<CAPTION>
PREMIUM TO MARKET PRICE
RANGE OF SHARES GRANTED ON DATE OF GRANT
----------------------- -----------------------
<S> <C> <C>
GENZ Stock............................ 27,400-116,090 20%
GZMO Stock............................ 8,694-36,835 100%
GZTR Stock............................ 8,694-36,835 100%
</TABLE>
After the formation of Genzyme Surgical Products in June 1999, in
August 1999 we made stock option awards for GZSP Stock to officers, at the same
time that GZSP Stock option awards were made to
9
<PAGE>
employees of Genzyme Surgical Products and other qualified employees, most of
whom did not receive stock option grants at the time of the annual option grant
in May 1999. We granted options to officers in a range of 4,750 to 157,500
shares of GZSP Stock. We determined the size of each officer's award based on an
overall dilution target for all option grants for GZSP Stock plus each officer's
level of involvement in Genzyme Surgical Products' business. Mr. Collier's grant
was based on an ownership target of 1%.
In May 1999, we accelerated the exercisability of GENZ Stock options granted
to each of the officers in 1995 under a long-term incentive program, so that the
options became exercisable immediately. As an incentive to tie performance to
increasing shareholder value, the program provided for this acceleration at our
discretion if certain target stock prices were achieved over a 90-day period
from April 1, 1998 through March 31, 1999.
MR. TERMEER'S COMPENSATION. In fixing Mr. Termeer's base salary for 1999,
we considered chief executive officer compensation data contained in the same
surveys of biotechnology and pharmaceutical companies used in setting the base
salaries for the other officers. We fixed Mr. Termeer's 1999 base salary at the
55(th) percentile of the range established by the survey data based on the same
factors considered in setting the base salaries for the other officers. In
addition, we considered several corporate performance measures from 1998:
- consolidated revenues increased 17% to $709.3 million;
- consolidated net income increased 59% to $62.6 million;
- sales of Cerezyme-Registered Trademark- enzyme and
Ceredase-Registered Trademark- enzyme reached a record $411.1 million, a
24% increase;
- we received FDA marketing approval for Renagel-Registered Trademark-
capsules in November;
- we received FDA marketing approval for Thyrogen-Registered Trademark-
hormone in December;
- sales of Carticel-Registered Trademark- chondrocytes increased 66%
worldwide and 82% in the U.S.; and
- in November, GZMO Stock began trading on Nasdaq following a distribution
of GZMO Stock to GENZ stockholders.
We believe that a significant portion of Mr. Termeer's cash compensation
should be tied to performance. Therefore, we set Mr. Termeer's 1999 combined
bonus target at 100% of his base salary. Approximately 40% of Mr. Termeer's
bonus target was payable based on individual performance and 60% was payable
based on corporate performance. Mr. Termeer received 90% of his targeted
corporate bonus. We awarded Mr. Termeer 100% of his targeted individual
performance bonus based on several achievements during the year, including:
- creation of Genzyme Surgical Products, and distribution of GZSP Stock to
GENZ stockholders in June 1999;
- completion of a phase III clinical trial to evaluate the use of
Fabrazyme-TM- enzyme replacement therapy to treat patients with Fabry
disease;
- European approval for Sepra Film-Registered Trademark- bioresorbable
membrane for use in cardiac surgery;
- a collaboration with researchers at Beth Israel Deaconess Medical Center
in Boston to develop a treatment for cystic fibrosis based on a
formulation designed to correct the lipid imbalance in cystic fibrosis
patients to alleviate symptoms of the disease;
- a collaboration with researchers at Mt. Sinai Medical Center to develop a
therapy for Niemann-Pick disease;
- completion of a phase III clinical trial of ATIII for the control of blood
clotting;
- establishment of a pre-clinical research program for pemphigus vulgaris, a
fatal autoimmune disorder, through the acquisition of Peptimmune, Inc.;
- a collaboration with Skye PharmaTech, Inc. for a point-of-care stroke
diagnostic product;
- an agreement to market Focal, Inc.'s surgical sealants in North America;
and
10
<PAGE>
- a collaboration with Genovo, Inc. to develop gene therapy treatments for
lysosomal storage diseases.
In January 1999, we granted Mr. Termeer options to purchase 232,901 shares
of GENZ Stock, 73,899 shares of GZMO Stock and 73,899 shares of GZTR Stock under
the long-term premium option program based on the same analysis used for
granting premium options to the other officers. In May 1999 we accelerated the
exercisability of options to purchase 56,820 shares of GENZ Stock that were
granted to Mr. Termeer in 1995 under the same long-term program considered for
the other officers. In August 1999, we granted Mr. Termeer options to purchase
157,500 shares of GZSP Stock based on an ownership target of 1%.
TAX LAW LIMITS ON EXECUTIVE COMPENSATION. Section 162(m) of the Internal
Revenue Code limits the tax deduction available to Genzyme for compensation paid
to the chief executive officer and the other four most highly paid officers in
excess of $1,000,000 in any fiscal year. Certain performance based compensation
that has been approved by stockholders is not subject to the limit. Our
stockholders have approved an amendment to the 1990 Equity Plan designed to
maximize the deductibility of certain awards under that plan. We reserve the
authority to award compensation that is not fully deductible under the statute
if such an award is consistent with our compensation policies and is in the best
interests of the company and its stockholders.
By the Compensation Committee,
CHARLES L. COONEY, CHAIRMAN
CONSTANTINE E. ANAGNOSTOPOULOS
DOUGLAS A. BERTHIAUME
HENRY R. LEWIS
11
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL SECURITIES UNDERLYING OPTIONS(#)
COMPENSATION ----------------------------------------------------
NAME AND -------------------- GENZ GZMO GZSP GZTR GZTC
PRINCIPAL POSITION YEAR SALARY($) BONUS($) STOCK STOCK STOCK STOCK STOCK
- ---------------------------------- -------- --------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Henri A. Termeer.................. 1999 850,000 786,250 232,901 73,899 157,500 73,899 --
Chief Executive 1998 803,223 698,670 72,800 31,200 -- 31,200 9,000
Officer 1997 688,697 526,397 78,000 66,000 -- 52,000 3,000
Earl M. Collier, Jr............... 1999 365,000 201,000 92,115 29,228 157,500 29,228 --
Executive Vice 1998 356,539 170,000 21,835 5,459 -- 5,459 --
President 1997 296,635 100,000 84,987 7,500 -- 39,918 --
Alan E. Smith..................... 1999 330,000 172,500 83,282 26,425 19,500 26,425 --
Senior Vice 1998 317,000 175,000 40,269 6,544 -- 6,544 --
President, 1997 285,500 127,050 13,169 25,000 -- 6,585 6,000
Research; Chief
Scientific Officer
G. Jan van Heek................... 1999 350,000 220,000 88,330 28,027 9,600 28,027 --
Executive Vice 1998 330,154 225,000 16,189 4,625 -- 9,251 2,000
President 1997 287,860 153,915 13,169 7,500 -- 6,585 --
Peter Wirth....................... 1999 460,000 221,000 116,090 36,835 9,600 36,835 --
Executive Vice 1998 445,462 225,000 23,804 13,602 -- 6,801 2,000
President; Chief 1997 401,564 169,400 27,205 25,000 -- 13,602 --
Legal Officer
<CAPTION>
ALL OTHER
COMPENSATION
-----------------
NAME AND
PRINCIPAL POSITION ($)(1)
- ---------------------------------- -----------------
<S> <C>
Henri A. Termeer.................. 18,504
Chief Executive 16,932
Officer 17,742
Earl M. Collier, Jr............... 2,000
Executive Vice 3,296
President 1,904
Alan E. Smith..................... 2,000
Senior Vice 2,500
President, 2,116
Research; Chief
Scientific Officer
G. Jan van Heek................... 2,000
Executive Vice 2,500
President 1,367
Peter Wirth....................... 2,000
Executive Vice 2,500
President; Chief 2,008
Legal Officer
</TABLE>
- ------------------------
(1) Amounts consist of Genzyme contributions under our retirement savings plan,
a 401(k) plan. For Mr. Termeer, the reported amounts also include the following
insurance premiums we paid for life and disability insurance benefits:
<TABLE>
<S> <C>
1999....................................... $16,504
1998....................................... $14,432
1997....................................... $15,741
</TABLE>
12
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS POTENTIAL REALIZABLE VALUE AT
SECURITIES GRANTED TO EXERCISE OR ASSUMED ANNUAL RATES OF STOCK
UNDERLYING EMPLOYEES BASE PRICE PRICE APPRECIATION FOR OPTION TERM
OPTIONS IN FISCAL ($/SHARE) EXPIRATION -----------------------------------
NAME GRANTED(#)(1) 1999 (1) DATE 5%($)(2) 10%($)(2)
- ---- ------------- ---------- ----------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Henri A. Termeer
GENZ Stock........................ 232,901 8.03 58.88 01/25/09 4,900,809 15,925,954
GZMO Stock........................ 73,899 12.00 5.38 01/25/09 (73,717) 117,941
GZSP Stock........................ 157,500 5.25 6.69 08/26/09 662,452 1,678,785
GZTR Stock........................ 73,899 7.20 7.75 01/25/09 (106,269) 170,023
Earl M. Collier, Jr.
GENZ Stock........................ 92,115 3.17 58.88 01/25/09 1,938,326 6,298,896
GZMO Stock........................ 29,228 4.75 5.38 01/25/09 (29,156) 46,647
GZSP Stock........................ 157,500 5.25 6.69 08/26/09 662,452 1,678,785
GZTR Stock........................ 29,228 2.85 7.75 01/25/09 (42,031) 67,246
Alan E. Smith
GENZ Stock........................ 83,282 2.87 58.88 01/25/09 1,752,458 5,694,889
GZMO Stock........................ 26,425 4.29 5.38 01/25/09 (26,360) 42,174
GZSP Stock........................ 19,500 0.65 6.69 08/26/09 82,018 207,850
GZTR Stock........................ 26,425 2.57 7.75 01/25/09 (38,000) 60,797
G. Jan van Heek
GENZ Stock........................ 88,330 3.04 58.88 01/25/09 1,858,680 6,040,075
GZMO Stock........................ 28,027 4.55 5.38 01/25/09 (27,958) 44,731
GZSP Stock........................ 9,600 0.32 6.69 08/26/09 40,378 102,326
GZTR Stock........................ 28,027 2.73 7.75 01/25/09 (40,304) 64,483
Peter Wirth
GENZ Stock........................ 116,090 4.00 58.88 01/25/09 2,442,819 7,938,325
GZMO Stock........................ 36,835 5.98 5.38 01/25/09 (36,744) 58,788
GZSP Stock........................ 9,600 0.32 6.69 08/26/09 40,378 102,326
GZTR Stock........................ 36,835 3.59 7.75 01/25/09 (52,970) 84,748
All Genzyme stockholders (3)
GENZ Stock........................ -- -- 58.88 -- 3,139,283,432 7,923,961,037
GZMO Stock........................ -- -- 5.38 -- 45,830,041 115,589,040
GZSP Stock........................ -- -- 6.69 -- 62,538,274 158,053,976
GZTR Stock........................ -- -- 7.75 -- 139,224,350 351,484,426
</TABLE>
- ------------------------
(1) Options were granted under the 1990 Equity Incentive Plan and have ten year
terms. These options were granted at:
- 120% of fair market value on the date of grant for GENZ Stock;
- 200% of fair market value on the date of grant for each of GZMO Stock and
GZTR Stock; and
- 100% of fair market value on the date of grant for GZSP Stock.
The GENZ, GZMO and GZTR stock options vest in one-third increments on each of
January 25, 2001, 2002 and 2003. The GZSP Stock options are exercisable 20% on
the date of grant and an additional 20% of the shares will vest annually over
the next four years on the anniversary of the date of grant.
(2) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the SEC and are not intended to forecast future
appreciation, if any, in the price of the securities. No gain is possible
without an increase in the price of the underlying stock, which will benefit all
stockholders. In order to realize the potential values in the 5% and 10% columns
of this table, the trading price of the
13
<PAGE>
stocks would have to be approximately 63% and 159% above the respective exercise
prices for each option, or:
<TABLE>
<CAPTION>
OPTION GRANT 63% PRICE 159% PRICE
EXERCISE PRICE INCREASE INCREASE
-------------- --------- ----------
<S> <C> <C> <C> <C>
- - GENZ Stock $58.88 $95.97 $152.50
- - GZMO Stock $ 5.38 $ 8.77 $ 13.93
- - GZSP Stock $ 6.69 $10.90 $ 17.33
- - GZTR Stock $ 7.75 $12.63 $ 20.07
</TABLE>
(3) The amounts shown for all our stockholders reflect the potential value if
the GENZ, GZMO, GZSP or GZTR Stocks appreciate at the rates shown over the term
of the options, if stockholders bought the shares in 1999 at the listed option
exercise prices.
14
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON VALUE DECEMBER 31, 1999(#) DECEMBER 31, 1999($)
NAME EXERCISE(#) REALIZED($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
- ---- ----------- -------------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Henri A. Termeer
GENZ Stock.......................... 460,000 $20,961,210 518,240/466,781 $12,531,930/$6,029,888
GZMO Stock.......................... -- -- 52,080/119,019 0/120,012
GZSP Stock.......................... -- -- 31,500/126,000 0/0
GZTR Stock.......................... -- -- 150,180/173,474 0/0
GZTC Stock.......................... -- -- 23,000/5,000 137,250/16,563
Earl M. Collier, Jr.
GENZ Stock.......................... -- -- 72,454/126,483 $1,253,951/$587,339
GZMO Stock.......................... -- -- 6,684/35,503 0/47,466
GZSP Stock.......................... -- -- 31,500/126,000 0/0
GZTR Stock.......................... -- -- 18,135/56,470 0/0
GZTC Stock.......................... -- -- 0/0 --/--
Alan E. Smith
GENZ Stock.......................... 59,490 $2,301,916 128,818/165,430 $2,793,785/$1,892,497
GZMO Stock.......................... -- -- 17,618/40,351 0/42,914
GZSP Stock.......................... -- -- 3,900/15,600 0/0
GZTR Stock.......................... -- -- 30,749/47,338 0/0
GZTC Stock.......................... -- -- 20,000/0 100,000/--
G. Jan van Heek
GENZ Stock.......................... -- -- 86,586/156,030 $1,844,160/$1,842,399
GZMO Stock.......................... -- -- 6,350/33,802 0/45,516
GZSP Stock.......................... -- -- 1,920/7,680 0/0
GZTR Stock.......................... -- -- 31,832/59,453 0/0
GZTC Stock.......................... -- -- 800/1,200 0/0
Peter Wirth
GENZ Stock.......................... -- -- 147,119/177,974 $2,623,916/$1,082,651
GZMO Stock.......................... -- -- 20,442/54,995 0/59,820
GZSP Stock.......................... -- -- 1,920/7,680 0/0
GZTR Stock.......................... -- -- 37,463/72,097 0/0
GZTC Stock.......................... -- -- 800/1,200 0/0
</TABLE>
- ------------------------
(1) This number is calculated by subtracting the option exercise price from
either the closing price of the stock on the date of exercise or the actual sale
price of the stock, then multiplying that number by the number of shares
exercised. The amounts in this column may not represent amounts actually
realized by the officer.
(2) This number is calculated by subtracting the option exercise price from the
closing price of the underlying common stock on December 31, 1999, then
multiplying that number by the number of shares under the option. The closing
prices on December 31, 1999 were:
- GENZ Stock, $45.50;
- GZMO Stock, $7.00;
- GZSP Stock, $5.81;
- GZTR Stock, $2.88; and
- GZTC Stock, $12.63.
15
<PAGE>
EXECUTIVE EMPLOYMENT AGREEMENTS
Mr. Termeer has an employment agreement that renews automatically each
January 1 for an additional one year period, unless written notice of
non-renewal is given. The agreement provided for an initial base salary in 1990
of $300,000 and is subject to increases approved by the board or the
compensation committee.
Mr. Wirth has an employment agreement that renews automatically each
January 1 for an additional one year period, unless written notice of
non-renewal is given. The agreement provided for his employment in a half-time
capacity for an initial base salary in 1996 of $225,000. When he became a
full-time employee in October 1996, his base salary increased to $380,000 and is
subject to increases approved by the board or the compensation committee.
Both agreements provide:
- certain life and disability insurance benefits;
- participation in the cash bonus plan;
- participation in equity incentive plans;
- a lump sum payment of two times annual salary and bonus and full vesting
of all rights and options, other than certain performance options, under
stock or other equity incentive plans in the event that employment is
terminated without cause;
- a lump sum severance payment of three times annual salary and bonus if
employment is terminated by us without cause or by him for good reason
following a change in control;
- following termination due to a change in control:
-- a cash payment equal to the additional retirement benefit that would
have been earned under any retirement plan as if employment had
continued for three years;
-- continuation of the life, accident and health insurance coverage for
three years, unless comparable benefits are provided by a new
employer; and
-- in certain circumstances, legal costs and relocation expenses
associated with the termination; and
- customary confidentiality, non-competition and ownership of inventions
provisions.
EXECUTIVE SEVERANCE AGREEMENTS
We have severance agreements with all our executive officers other than
Messrs. Termeer and Wirth. Under these agreements, payments will be made under
certain circumstances following a change in control. The agreements provide for:
- automatic renewal each January 1 unless written notice of non-renewal is
given;
- following termination due to a change in control:
-- a lump sum severance payment of two times annual salary and bonus;
-- a cash payment equal to the additional retirement benefit which would
have been earned under our retirement plan if employment had continued
for two years following the date of termination;
-- participation in life, accident and health insurance plans for such
period, unless comparable benefits are provided by a new employer; and
-- in certain circumstances, legal costs and relocation expenses
associated with such termination.
16
<PAGE>
STOCK PERFORMANCE GRAPHS
These graphs compare the five year cumulative total stockholder returns for
each of our series of common stock to that of the S&P 500 Composite Index and
the Nasdaq Pharmaceutical Index.
GENZ STOCK (1)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GENZ STOCK S&P 500 NASDAQ PHARMACEUTICAL INDEX
<S> <C> <C> <C>
12/31/94 $100 $100 $100
12/31/95 $198 $134 $183
12/31/96 $138 $161 $183
12/31/97 $176 $211 $190
12/31/98 $316 $268 $243
12/31/99 $289 $440 $452
</TABLE>
17
<PAGE>
GZMO STOCK (2)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GZMO STOCK S&P 500 NASDAQ PHARMACEUTICAL INDEX
<S> <C> <C> <C>
11/16/98 $100 $100 $100
12/31/98 $42 $108 $119
12/31/99 $90 $178 $221
</TABLE>
GZSP STOCK (3)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GZSP STOCK S&P 500 NASDAQ PHARMACEUTICAL INDEX
<S> <C> <C> <C>
6/28/99 $100 $100 $100
12/31/99 $124 $108 $172
</TABLE>
18
<PAGE>
GZTR STOCK
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GZTR STOCK S&P 500 NASDAQ PHARMACEUTICAL INDEX
<S> <C> <C> <C>
12/31/94 $100 $100 $100
12/31/95 $423 $134 $183
12/31/96 $190 $161 $183
12/31/97 $183 $211 $190
12/31/98 $60 $268 $243
12/31/99 $77 $440 $452
</TABLE>
- ------------------------
(1) All amounts reflect a 2-for-1 split of GENZ Stock on July 25, 1996. We have
made the following dividends on shares of GENZ Stock:
- December 23, 1994, 0.0675 share of GZTR Stock for one share of GENZ
Stock;
- July 22, 1997, 0.03 share of GZTR Stock for one share of GENZ Stock;
- November 16, 1998, 0.10805 share of GZMO Stock for one share of GENZ
Stock; and
- June 28, 1999, 0.17901 share of GZSP Stock for one share of GENZ Stock.
The cumulative returns are based on a $100 investment on January 1, 1995, with
all dividends, including the GZMO, GZSP and GZTR Stock dividends, being
reinvested.
(2) GZMO Stock was first publicly traded on November 16, 1998. The cumulative
returns are calculated based on a $100 investment made on that date, with all
dividends being reinvested.
(3) GZSP Stock was first publicly traded on June 28, 1999. The cumulative
returns are calculated based on a $100 investment made on that date, with all
dividends being reinvested.
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PROPOSAL TO AMEND THE 1990 EQUITY INCENTIVE PLAN
GENERAL
The purpose of our 1990 Equity Incentive Plan is to:
- attract and retain key employees and consultants;
- provide an incentive for them to achieve long-range performance goals; and
- enable them to participate in our long-term growth.
The plan provides for the grant of both incentive and nonstatutory stock
options, stock appreciation rights, performance shares, restricted stock and
stock units. After March 15, 2000, no incentive stock options may be granted
under the plan.
As of February 29, 2000, the following shares were authorized and available
to grant under the plan:
<TABLE>
<CAPTION>
AUTHORIZED AVAILABLE TO GRANT
---------- ------------------
<C> <S> <C> <C>
- GENZ Stock: 19,800,000 590,250
- GZMO Stock: 1,500,000 557,272
- GZSP Stock: 500,000 4,750
- GZTR Stock: 3,300,000 437,386
</TABLE>
The shares are subject to adjustment for stock splits, stock dividends and
certain transactions affecting our capital stock. Shares may also be issued
through the assumption or substitution of outstanding grants from an acquired
company without reducing the number of shares available for award. As of
February 29, 2000, approximately 3,800 employees were eligible for grants under
the plan. The closing prices of each of our series of stock on February 29, 2000
as reported by Nasdaq were:
- GENZ Stock, $57.44;
- GZMO Stock, $26.69;
- GZSP Stock, $12.63; and
- GZTR Stock, $8.44.
ADMINISTRATION AND ELIGIBILITY
The compensation committee has adopted standards for grants of awards under
the plan relating to all series of stock or any combination of each series to
eligible employees and consultants. The committee also periodically reviews the
standards to determine if the levels of awards appropriately reflect our growth
and the value of our stocks. The committee determines the terms and conditions
of each award, including:
- who is eligible to receive awards;
- the form of payment of the exercise price;
- the number of shares subject to options or other equity rights; and
- when the shares are exercisable.
The exercise price of any stock option grant may not be less than the fair
market value of the GENZ, GZMO, GZSP or GZTR Stock, as the case may be, on the
date of grant.
The standards include a new hire grant matrix and an annual grant matrix.
The new hire grant matrix determines the number of options that may be awarded
to new employees, other than executive officers, when they are hired. The awards
are based on the employee's salary grade at his or her date of hire.
The annual grant matrix is based on an employee's salary grade plus an
individual performance review for the prior year. An employee must have a rating
of "fully meets expectations" in order to qualify for an annual award. The
senior or executive vice president responsible for a division approves the
performance ratings for each employee in that division. The committee has
delegated to our Senior Vice President,
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Human Resources the power to administer the standards and make awards in amounts
consistent with the standards and the recommendations provided by the senior
management.
As of February 29, 2000, we have granted the following shares under the
plan:
<TABLE>
<CAPTION>
NAME GENZ STOCK GZMO STOCK GZSP STOCK GZTR STOCK
- ---- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Henri A. Termeer.............. 1,838,021 171,099 157,500 323,654
Earl M. Collier, Jr........... 198,937 42,187 157,500 74,605
Alan E. Smith................. 459,238 57,969 19,500 78,087
G. Jan van Heek............... 294,616 40,152 9,600 91,285
Peter Wirth................... 325,093 75,437 9,600 109,560
All current executive officers
as a group (15 persons)..... 5,027,669 626,031 466,100 1,157,055
All other employees........... 19,071,252 342,160 32,950 2,624,993
</TABLE>
We have not granted any stock appreciation rights, performance shares,
restricted stock, stock units or other stock-based awards under the plan.
DESCRIPTION OF AMENDMENT TO THE PLAN
On March 2, 2000 our board of directors approved an amendment to the plan,
subject to stockholder approval, to authorize the increase of 175,000 shares of
GZSP Stock under the plan from 500,000 to 675,000 shares. These shares are in
addition to shares of GENZ Stock, GZMO Stock and GZTR Stock currently available
for issuance.
IF THE CREATION OF THE GENZYME BIOSURGERY DIVISION IS APPROVED BY
STOCKHOLDERS AT THE SPECIAL MEETING IN JUNE AND IS SUBSEQUENTLY COMPLETED, THE
GZSP STOCK THAT WE ARE ASKING YOU TO APPROVE HERE WILL BE CONVERTED INTO GENZYME
BIOSURGERY COMMON STOCK IN ACCORDANCE WITH THE PLAN.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE PLAN
INCENTIVE STOCK OPTIONS. An optionee does not realize taxable income when
an incentive stock option is granted or exercised. A taxable event occurs when
the shares are disposed of. The tax treatment depends on how long the shares are
held before disposition.
Incentive stock options can have beneficial tax treatment for an optionee if
certain holding period requirements are met. To qualify for this tax treatment
the shares must be held:
- two years from the date of grant; and
- one year from the date of exercise.
If these holding period requirements are met, then when the shares are
disposed of, the amount realized in excess of the amount paid for the shares is
taxed to the optionee as long-term capital gain and any loss will be a long-term
capital loss. We are not allowed a tax deduction for the amount realized by the
optionee.
If an optionee disposes of the shares before meeting the one-year and
two-year holding periods, known as a disqualifying disposition, the amount
realized in excess of the amount paid for the shares is taxed to the optionee as
ordinary income. We are allowed a tax deduction for the income realized by an
optionee in a disqualifying disposition.
NONSTATUTORY STOCK OPTIONS. An optionee does not realize taxable income
when a nonstatutory option is granted. When the option is exercised, the
optionee will recognize ordinary income in an amount equal to the difference
between the amount paid for the shares and the fair market value of the shares
on the date of exercise. We are allowed a tax deduction for the same amount.
When the shares are disposed of, any additional gain in excess of the market
value of the shares on the date of exercise is treated as
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short-term or long-term capital gain or loss. We are not allowed any additional
tax deduction. Capital gain is short-term if the shares have been held one year
or less, and long-term if held more than one year.
PROPOSAL TO AMEND AND RESTATE OUR CHARTER
INFORMATION IN THIS PROXY STATEMENT REGARDING THE PROPOSED AMENDMENT TO OUR
CORPORATE CHARTER IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE TEXT OF OUR
CHARTER, AS PROPOSED TO BE AMENDED AND RESTATED, WHICH IS ATTACHED TO THIS PROXY
STATEMENT AS APPENDIX A AND INCORPORATED BY REFERENCE. INFORMATION REGARDING OUR
CURRENT CHARTER IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE TEXT OF OUR
CURRENT CHARTER, INCLUDING ALL AMENDMENTS TO DATE, FILED AS EXHIBITS TO OUR MOST
RECENT ANNUAL REPORT ON FORM 10-K.
GENERAL
Our board of directors has authorized, subject to our stockholders'
approval, an amendment to our charter that would modify the terms applicable to
the GZMO, GZSP and GZTR Stocks. The proposed charter amendment would:
- modify and make consistent the provisions governing the treatment of
shares of GZMO, GZSP and GZTR Stock upon a sale of all or substantially
all of the respective division's assets;
- add provisions for GZMO Stock and GZTR Stock, consistent with the existing
provisions governing GZSP Stock, permitting our board of directors to
exchange all shares of GZMO and/or GZTR Stock for GENZ Stock at no premium
in the event that a change in federal tax law or regulations results or
has the potential to result in adverse tax treatment of our tracking stock
structure;
- add provisions for GZMO Stock and GZTR Stock, consistent with the existing
provisions governing GZSP Stock, which, in the event that a change in
federal tax law or regulations results or has the potential to result in
adverse tax treatment of our tracking stock structure, would permit:
-- our stockholders, voting together as a single class, to eliminate
special voting rights; and
-- our board of directors to modify or eliminate certain exchange
provisions;
- add provisions permitting Genzyme to "spin off" Genzyme Molecular
Oncology, Genzyme Surgical Products or Genzyme Tissue Repair to the
holders of that respective business unit's tracking stock; and
- modify the provisions governing generally the contents of notices to our
stockholders regarding exchanges of or distributions on our tracking
stock.
In considering this charter amendment you should be aware that we intend to
convene a special meeting of Genzyme stockholders in June. At the special
meeting we will ask you to approve the creation of a new series of common stock
to track a new division that we anticipate calling Genzyme Biosurgery. Genzyme
Biosurgery will combine the businesses of Genzyme Surgical Products and Genzyme
Tissue Repair with Biomatrix, Inc., with whom we signed a merger agreement on
March 6, 2000. We will also ask GZSP and GZTR stockholders to approve the
transfer of the Genzyme Surgical Products and Genzyme Tissue Repair assets into
this new division and the conversion of their shares of GZSP and GZTR Stock into
the tracking stock of this new division (which we expect to call GZBX Stock).
The GZBX Stock is expected to have identical terms, rights and preferences to
those of the GZMO, GZSP and GZTR Stock proposed by the amendment described in
this proxy statement.
DESCRIPTION OF THE AMENDMENT
The following discussion describes the amendments that our board of
directors proposes for adoption. This description is only a summary; you are
encouraged to read the entire text of the proposed amendment and restatement of
our charter contained in Appendix A to this proxy statement.
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AMENDMENT TO THE MANDATORY EXCHANGE PROVISIONS
Under our current charter, if we sell all or substantially all of the assets
of Genzyme Molecular Oncology, Genzyme Surgical Products or Genzyme Tissue
Repair, the division's stockholders are entitled to receive GENZ Stock and/or
cash in exchange for their division stock. The amount of GENZ Stock and/or cash
they receive would be based on the fair market value of their division stock
calculated before announcement of the sale. Specifically, the fair market value
of the division stock, as well as of any GENZ Stock given in exchange, would be
based on the average 20-day closing price of the stock beginning the 30(th)
business day PRIOR to the public announcement of the sale. In the case of a sale
of the assets of Genzyme Molecular Oncology or Genzyme Tissue Repair, the
division's stockholders are entitled to receive shares of GENZ Stock and/or cash
with a fair market value equal to 130% of the fair market value of their
tracking stock. In the case of a sale of Genzyme Surgical Products assets, GZSP
stockholders are entitled to receive shares of GENZ Stock and/or cash with a
fair market value equal to 100% of the fair market value of the GZSP Stock.
The proposed amendment would change this mandatory exchange feature.
Following the sale of all or substantially all of the division's assets, the
division stockholders would instead receive either (1) cash, securities
(excluding Genzyme common stock) and/or other property equal in value to the
after-tax net proceeds of the sale, or (2) shares of GENZ Stock equal in value
to 110% of the average closing price of their division stock during a 10-day
trading period beginning after we publicly announce the estimated net proceeds
from the sale. In particular, the new exchange provision would have the features
described below.
METHOD AND FORM OF PAYMENT. Subject to the exceptions described below, our
board of directors would be required to select, in its discretion, one of the
following payment methods:
- PAYMENT METHOD 1. A pro rata dividend payment of cash, securities (other
than Genzyme common stock) or other property to division stockholders in
an amount equal to the after-tax net proceeds of the sale.
- PAYMENT METHOD 2. A redemption of all or a portion of the division's
outstanding stock. If all of the division's assets were sold, Genzyme
would redeem all outstanding division stock for cash, securities (other
than Genzyme common stock) or other property in an amount equal to the
sale's net proceeds. If substantially all (but not all) of the division's
assets were sold, Genzyme would redeem a pro rata portion of the
division's stock in an amount equal to the sale's net proceeds.
- PAYMENT METHOD 3. An exchange of each share of division stock for shares
of GENZ Stock equal to 110% of the average closing price of the division's
stock. The average closing price of each stock would be calculated during
the 10-day trading period beginning on the fifth trading day AFTER our
announcement of the sale's estimated net proceeds.
The board's decision may be made at any time prior to 20 business days after
the date it announces the estimated net proceeds achieved from the sale. The
redemption or dividend payment under methods 1 and 2 described above could be in
the form of cash, securities or other property, but not Genzyme common stock,
and need not be in the same form as the cash, securities and/or other property
paid by the third party purchasing the division's assets. An exchange under
method 3, on the other hand, could be completed only with GENZ Stock.
CALCULATION AND VALUATION OF NET PROCEEDS. To determine the amount of cash,
securities or other property distributable to division stockholders after the
sale of the division's assets, two calculations would be made. First, the net
proceeds of the sale would be computed. Net proceeds would equal the gross
proceeds of the sale, less taxes, transactional costs, liabilities assumed by
another Genzyme division because of the sale, and amounts payable to any
preferred stockholders of the division. Second, the amount of net proceeds
allocable for distribution to the division's stockholders would be calculated.
This amount is the product of the net proceeds multiplied by a fraction. The
fraction equals the outstanding shares of the division divided by the sum of the
outstanding shares of the division plus the shares of the division then
"designated" for the benefit of Genzyme General. Designated shares are
authorized shares
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<PAGE>
of GZMO, GZSP and GZTR Stock that are not issued and outstanding, but which our
board of directors may issue, sell or distribute without allocating the proceeds
to the division that the series of stock tracks. We create designated shares
when we transfer cash or other assets from Genzyme General to our other
divisions or from other interdivision transactions.
In establishing a value to the cash, property and/or securities that
comprise the gross proceeds of a sale:
- cash will be valued at face value;
- securities will be valued at the average of their intra-day high and low
trading prices (or if there is no market for the security, at their fair
value determined by our board of directors) on the date of the sale; and
- property, other than cash and securities, will be valued at its fair value
on the date of the sale, as determined by our board of directors.
Similarly, the value of cash, property and/or securities (other than GENZ
Stock distributed under Payment Method 3) distributed to division stockholders
will be established the same way as of the date of the sale. Interest earned on
any cash net proceeds distributed to division stockholders will be included in
that distribution payment.
TIMING OF THE PAYMENT. Our board must announce the estimated net proceeds
of the sale no later than 20 business days after the sale is completed. Within
20 business days following that announcement, our board must choose and announce
which of the three payment methods it will use. Within 60 business days after
the announcement of the payment method selected, Genzyme must complete the
distribution to the division's stockholders.
EXCEPTIONS FROM THE MANDATORY EXCHANGE PROVISION. Under our current
charter, there are three types of asset sales that would not trigger a mandatory
payment to division stockholders, namely:
- a sale of all or substantially all of Genzyme's assets;
- a transfer of a division's assets to a wholly-owned entity of Genzyme; or
- a transfer of a division's assets to an entity formed by Genzyme to
finance the division's programs or products, where Genzyme has an option
to reacquire those assets or retain or obtain substantial manufacturing or
marketing rights for products developed by the entity for the benefit of
the division.
Under the proposed amendment, the second and third exceptions listed above
would be eliminated and replaced by the following:
- a sale of a division's assets to an entity controlled, as determined by
our board of directors, by Genzyme;
- a sale of a division's assets primarily for equity in a buyer that our
board of directors determines is engaged primarily in a business similar
or complementary to that of the division;
- a distribution to a division's stockholders of Genzyme's equity interest
(which is allocated entirely to the division) in one or more Genzyme
subsidiaries that hold all of a division's assets (and only that
division's assets)--namely, a "spin off" of our ownership interest in the
division to the stockholders of the division; and
- a sale of a division's assets conditioned on the affirmative vote of that
division's stockholders voting as a single class.
AMENDMENTS ADDRESSING CONSEQUENCES OF ADVERSE TAX LAWS
EXCHANGE DUE TO AN ADVERSE TAX LAW. Under our current charter, our board of
directors can exchange GZMO, GZSP or GZTR Stock at any time for any combination
of GENZ Stock and/or cash. If it does so,
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<PAGE>
it must exchange each share of the applicable tracking stock for the number of
shares of GENZ Stock with a fair market value equal to 130% of the fair market
value of the stock being exchanged. An additional term of the GZSP Stock, which
is not currently a term of the GZMO or GZTR Stock, permits our board of
directors to exchange GZSP Stock for GENZ Stock (but not for cash) at 100% of
the GZSP Stock's fair market value if a change in federal tax law or regulations
results or, in the opinion of our counsel, would more likely than not result in
adverse tax treatment of Genzyme's tracking stock structure. Adverse tax laws or
regulations include those that would subject Genzyme or our stockholders to a
tax due to the issuance, receipt or holding of tracking stock, or would cause
the tracking stock in question or GENZ Stock not to be treated solely as Genzyme
stock for tax purposes. The amendment would make the terms of the GZMO and GZTR
Stock consistent with the terms of the GZSP Stock by adding a provision
permitting an exchange of GZMO and GZTR Stock for GENZ Stock, but not for cash,
at 100% of the division stock's fair market value in the event of an adverse tax
law development.
MODIFICATION OF EXCHANGE RIGHTS UPON A TAX EVENT. The current terms of the
GZSP Stock provide that, if necessary to avoid adverse tax consequences, our
board can eliminate the right to use cash or any other property that is not
Genzyme stock for effecting a mandatory or optional exchange. Those exchange
rights could be eliminated only if we receive an opinion of counsel stating that
adverse tax consequences would or would be likely to occur unless the rights are
eliminated. There is no comparable provision in the terms of the GZMO or GZTR
Stock. The amendment would make the terms of the GZMO and GZTR Stocks identical
in this regard to the terms of the GZSP Stock allowing our board to eliminate
cash/property exchange rights in response to an adverse tax change. In the case
of the mandatory exchange feature, elimination of the cash exchange right will
result in the new mandatory exchange provision requiring us to exchange the
stock of the division whose assets are being sold into shares of GENZ Stock
based on both stocks' fair market value as of the date of the sale announcement
and at no premium.
ELIMINATION OF SPECIAL VOTING RIGHTS UPON A TAX EVENT. The GZMO, GZTR and
GZSP Stocks have special, series-based voting rights. These voting rights
require that a division's stockholders, voting separately as a class, approve:
- the use by another division of the proceeds from a sale of the division's
assets, unless fair compensation is provided to the division;
- the use by another division of the division's properties or assets, unless
fair compensation is provided to the division;
- any adverse change in the rights or preferences of the division's stock;
and
- any merger where Genzyme common stockholders would own less than 50% of
the voting power of the surviving company and the holders of any series of
our stock would not receive the same form of consideration as each other
series, distributed among them based on the relative market
capitalizations of the underlying divisions.
If we receive an opinion of counsel stating that these special voting rights
would or would be likely to cause adverse tax consequences, the terms of the
GZSP Stock require only a vote of all series of Genzyme's common stock, voting
together as a single class, to eliminate the GZSP Stock's special series-based
voting rights. Without that provision, Massachusetts law would otherwise require
an additional separate series vote of the GZSP Stock to approve the elimination
of the GZSP Stock's special voting rights. There is currently no comparable
provision in the terms of the GZMO or GZTR Stock.
The amendment would make the terms of the GZMO and GZTR Stocks identical to
the terms of the GZSP Stock permitting holders of Genzyme common stock, voting
together as one class, to eliminate special series-based voting rights.
OTHER AMENDMENTS
EXCHANGE TO EFFECT A "SPIN OFF." The amendment would add a provision to our
charter permitting our board--at any time at which all of a division's assets
(and only that division's assets) are held by a wholly-
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owned subsidiary (or subsidiaries) of Genzyme--to redeem all of the division's
outstanding stock in exchange for all of the subsidiary's stock. This type of
transaction is commonly referred to as a "spin off" of a line of business. If
this type of spin off is completed, the division would continue as a separate
corporate entity owned by the former stockholders of the division.
AMENDMENTS RELATED TO THE CONTENT OF EXCHANGE NOTICES. Our current charter
specifies information that must be contained in a notice sent to stockholders
when Genzyme intends to effect an exchange of their stock. The amendment would
require that the following additional information be contained in that notice:
- the total number of shares outstanding of the stock to be exchanged;
- the total number of shares being exchanged (not only, as under our current
charter, the number of the holder's shares to be exchanged);
- the aggregate amount of consideration to be paid to all holders in the
exchange;
- a statement, if applicable, that dividends will cease to be paid as of the
exchange date;
- the number of shares of the stock to be exchanged for shares issuable
under outstanding convertible securities, and their conversion prices; and
- in notices to holders of convertible securities, information regarding the
effect of the exchange on the stock underlying their convertible
securities.
The purpose of modifying the content of notices sent to stockholders in
connection with an exchange is to provide more complete information. Because
this amendment would apply to any notice of exchange effected under the charter,
and is neither specific nor adverse to any particular series, this amendment
will be adopted if approved by all our common stockholders voting as one class,
and is not subject to separate approval by any series.
REASONS FOR THE AMENDMENT
We are proposing the above-described amendment because we believe it will
improve the marketability of our GZMO, GZSP and GZTR tracking stocks and create
greater operational flexibility by:
- making it more likely that upon a sale of all or substantially all of a
division's assets stockholders will receive a distribution that more
accurately reflects the value assigned to those assets by a third party
purchaser;
- permitting us to inform investors that these three tracking stocks have
been updated to include the terms generally contained in more recently
introduced tracking stock structures of other companies;
- making the terms of these three tracking stocks consistent and thereby
eliminating for investors valuation considerations based solely on a
comparison of the relative advantages or disadvantages of each division's
charter provisions; and
- extending to Genzyme the benefits of an updated and uniform charter for
these three divisions which will allow us to operate, finance and grow the
businesses of these divisions more effectively.
As noted earlier, at a special stockholders meeting that we intend to
convene in June, we will ask you to approve the creation of a new GZBX Stock in
connection with our acquisition of Biomatrix. The GZBX Stock would track a new
division of Genzyme created by the combination of Biomatrix, Genzyme Surgical
Products and Genzyme Tissue Repair. In creating the new division, which we
intend to call Genzyme Biosurgery, we would convert the outstanding shares of
GZSP and GZTR Stock into shares of GZBX Stock. The proposed terms of the GZBX
Stock are meant to be identical to the terms of the GZMO, GZSP and GZTR Stock as
proposed to be amended in this proxy statement. If you approve the creation of
the GZBX Stock, and the GZBX Stock is in fact created, the terms of the GZMO
Stock would be consistent with the terms of the new GZBX Stock only if the
amendment you are being asked to approve in this proxy statement were adopted
and made effective.
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The purpose of eliminating the exception to the mandatory exchange provision
for transfers to financing vehicles set up by Genzyme is that recent accounting
changes have substantially reduced the use of these types of financing vehicles.
The purpose of the additional exceptions to the mandatory exchange provision
is to:
- permit the board greater flexibility in effecting a corporate
restructuring involving the transfer of a division's assets into and/or
among Genzyme controlled entities or through spin offs;
- permit us to transfer assets to an entity engaged in a similar or
complementary business without triggering a mandatory payment to that
division's stockholders so long as we hold an equity interest in that
entity--for example, to a joint venture in which we hold an equity
interest, even if we do not control the joint venture; and
- permit a division's stockholders to approve an alternative treatment of
their shares upon a sale of all or substantially all their division's
assets, without requiring the approval of the entire class of Genzyme
common stockholders.
Our board is proposing the amendments to GZMO and GZTR Stock dealing with
the tax law consequences of tracking stock to make the terms of those series
consistent with those of GZSP Stock. The proposed terms are a response to past
Clinton Administration proposals. In 1999, the Clinton Administration proposed
legislation that would have imposed a corporate level tax on issuances of
tracking stock. In February 2000, the Administration proposed legislation that
would tax stockholders upon their receipt of tracking stock from the issuing
corporation in a distribution or recapitalization. Although Congress has not
enacted these proposals into law, if these or similar proposals were enacted
into law or effected through Treasury regulations, Genzyme could be taxed on the
gain realized in future financings in which we sell tracking stock. Also, any
use of our tracking stock to acquire other companies could be taxed. We may also
be taxed if we distribute to stockholders "designated" shares of tracking stock.
In addition, stockholders could be taxed if they receive a distribution of
designated shares of tracking stock or if they receive shares of tracking stock
in exchange for other Genzyme stock. To avoid these or similar adverse tax
consequences, we are seeking your approval of amendments that would permit our
board to:
- eliminate the specific terms of a tracking stock that would trigger the
adverse tax consequence, and
- exchange any or all other series of tracking stock for GENZ Stock with a
value equal to 100% of the exchanged stock's fair market value
if we receive an opinion of counsel advising us that, unless such action were
taken by our board, our tracking stock structure could result in adverse tax
consequences. Currently, if the board deemed it necessary under such
circumstances to unwind its tracking stock structure we could exchange shares of
GZMO and GZTR Stock for GENZ Stock equal in value to 130% of the GZMO and GZTR
Stocks' respective fair market values. Alternatively, we could offer those
stockholders an exchange on different terms. The amendment would enable us to
avoid incurring the substantial cost and dilution of exchanging the GZMO and
GZTR Stocks at a 30%, or some other, premium to their fair market value in a
situation that arises solely because of an adverse tax development.
An additional consideration relating to the amendment that would permit our
board to spin off a division's business into a separate corporation is that due
to adverse tax consequences that may be associated with acquiring a company that
has recently done a spin off, a spin off could be used by our Board as a
deterrent measure in response to an unsolicited takeover proposal.
DISSENTERS' APPRAISAL RIGHTS
Under Massachusetts law, GZMO, GZSP and GZTR stockholders who object to the
proposed amendment will have the right to demand payment from Genzyme for their
shares if the amendment, as it relates to that holder's series of tracking
stock, becomes effective. Our board of directors has resolved that if
stockholders demand payment for greater than 5% of the outstanding shares of any
of these three
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tracking stocks, then the proposed amendment as it relates to that series will
not be adopted. However, our board of directors reserves the right to waive this
condition in part or entirely at any time.
If you exercise your rights of appraisal, you should refer to Chapter 156B
of the General Laws of Massachusetts, sections 86 to 98, inclusive, which set
forth your and Genzyme's rights and duties and the procedures governing the
appraisal of your shares. A copy of those sections of the statute are attached
to this proxy statement as Appendix B.
HOW TO DEMAND PAYMENT FOR AND APPRAISAL OF YOUR SHARES
If our stockholders approve the proposed amendment to our charter, we intend
to file the amendment with the Secretary of the Commonwealth of Massachusetts as
soon as practicable after the annual meeting. Once the Secretary declares the
amendment effective, holders of GZMO, GZSP and GZTR Stock who objected to the
amendment will be entitled to appraisal rights under Massachusetts law if the
charter amendments related specifically to that series have been adopted. If you
wish to exercise your appraisal rights, you must strictly adhere to the
procedures set forth in the Massachusetts statute. The following is a summary of
those procedures:
- You must file a written objection to the charter amendment with Genzyme
Corporation, One Kendall Square, Cambridge, Massachusetts 02139,
Attention: Clerk, prior to the annual meeting, stating your intention to
demand payment for your shares of GZMO, GZSP or GZTR Stock if the
amendment is approved and made effective. If you file your objection with
Genzyme prior to the annual meeting, you do not need to vote against the
amendment. A vote by proxy or in person against the amendment alone does
not constitute a demand for payment and appraisal.
- You must not vote in favor of the amendment, otherwise you will have
waived your rights of appraisal.
- We will notify you within ten (10) days of the amendment becoming
effective. You must send us a written demand for payment for your shares
of GZMO, GZSP or GZTR Stock within twenty (20) days after receiving our
notice.
If you have followed the procedures summarized above and the amendment
becomes effective, Genzyme will contact you in order to determine the fair value
of your stock. The "fair value" of your stock will be determined as of the day
before Genzyme stockholders approved adoption of the amendment and will exclude
any value arising from the expectation or effectiveness of the amendment. If
Genzyme and you have not agreed as to the fair value of your stock within fifty
(50) days after you receive our notice that the amendment became effective, both
you and Genzyme will have the right to have the court determine the fair value
by filing a bill in equity in the Superior Court Department of Middlesex County,
Massachusetts no later than four (4) months after the expiration of the
negotiation period. The determination of fair value of, plus any accrued
interest on, the shares as made by the court will be binding on and enforceable
by you and the other stockholders who have properly exercised their appraisal
rights.
Stockholders considering seeking appraisal of their shares of GZMO, GZSP or
GZTR Stock should note that the fair value of their shares determined under the
Massachusetts statute could be more, the same or less than the market price of
that stock after effectiveness of the amendment. The costs of the appraisal
proceeding may be determined by the court and allocated among the parties as the
court deems equitable in the circumstances. Your appraisal rights are your only
remedy if you object to adoption of the amendment, unless adoption of the
amendment is determined to have been illegal, fraudulent or in breach of our
board's fiduciary duties.
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CERTAIN TRANSACTIONS
GELTEX. In June 1997, Genzyme and GelTex Pharmaceuticals established
RenaGel LLC, a joint venture to complete the development and commercialization
of Renagel-Registered Trademark- capsules. Renagel-Registered Trademark-
capsules are prescribed to control the elevated serum phosphate levels that
cause serious complications in chronic kidney failure patients. Genzyme and
GelTex each hold a 50% ownership interest in RenaGel LLC. Each is funding half
of the joint venture's costs and expenses, and will share equally in the
profits. If either one fails to fund its share of costs and expenses, the profit
sharing interests and the future funding obligations may be proportionately
adjusted. GelTex contributed Renagel-Registered Trademark- capsules and its
underlying patents and technologies to the joint venture. Under the joint
venture agreement, we:
- purchased 100,000 shares of GelTex common stock at $25.00 per share in
June 1997. This represents less than 1% ownership in GelTex;
- made a $15.0 million payment to GelTex in November 1998 when
Renagel-Registered Trademark- capsules received FDA marketing approval;
and
- made a $10.0 milion payment to GelTex in November 1999, one year after
Renagel-Registered Trademark- capsules received marketing approval.
The joint venture has rights to commercialize Renagel-Registered Trademark-
capsules worldwide, except in Japan and Pacific Rim countries. We will market
and sell products for the joint venture as exclusive distributor. Mr. Carpenter
is chairman of the board of directors and Mr. Termeer is a director of GelTex.
DYAX. In March 1996, we entered into two license agreements with Dyax and
Protein Engineering Corporation, a wholly-owned subsidiary of Dyax, for Dyax's
phage display technology. We paid an initial license fee of $53,700 and we pay
annual license maintenance fees of $50,000. We will also make milestone payments
and pay royalties on net sales of diagnostic and therapeutic products
discovered, made or developed using the licensed technology.
In September 1996, we subleased office and laboratory space in Cambridge,
Massachusetts to Dyax. Current rent under this sublease is $53,943 per month.
Dyax paid approximately $615,000 in sublease fees to us during 1999.
In October 1998, we entered into a collaboration with Dyax to develop and
commercialize one of Dyax's proprietary compounds for the treatment of chronic
inflammatory diseases. Dyax will fund the first $6 million in development costs,
and the parties will split all subsequent development costs equally. In
connection with that agreement, we made an investment of $3 million in the
convertible preferred stock of Dyax and made a $3 million line of credit
available to help Dyax fund its operations. To date, Dyax has not borrowed any
money under the line of credit. We will make milestone payments to Dyax upon FDA
approval of products that arise out of the collaboration, and we will share
equally with Dyax all profits from the sale of these products.
Mr. Blair is chairman and chief executive officer of Dyax and each of
Mr. Blair, Dr. Anagnostopoulos and Mr. Lewis are directors of Dyax.
GDP. In September 1989, we sponsored Genzyme Development Partners, L.P., a
research and development limited partnership. We entered into a development
contract with the partnership to perform research and development of certain
products based on hyaluronic acid that we refer to as the Sepra products. In
December 1997, we made a $1.5 million capital contribution to the partnership
through Genzyme Development Corporation II, a wholly-owned subsidiary of Genzyme
and the general partner of the partnership. We have the option to purchase all
of the outstanding partnership interests in the partnership for approximately
$26 million in cash, common stock or a combination of both, plus future royalty
payments on the sale of the Sepra products. We can exercise this option during
the 90-day period beginning August 31, 2000. We have funded, and intend to fund
during 2000, the partnership's research and development activities. Mr. Termeer
is the president and a director, and our chief financial officer,
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Michael S. Wyzga, is treasurer, of Genzyme Development Corporation II.
Messrs. Termeer and Wyzga receive no compensation from either Genzyme
Development Corporation II or the partnership.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our executive officers and directors are required under Section 16(a) of the
Securities Exchange Act of 1934 to file reports of ownership and changes in
ownership of our securities with the SEC. Based on a review of the copies of
reports furnished to us and written representations that no other reports were
required, we believe that during 1999 our executive officers and directors
complied with all Section 16(a) filing requirements, except that Dr. Richard
Moscicki reported on February 14, 2000 the purchase of 5,000 shares of GZSP
Stock. The report for this purchase was due on August 10, 1999.
INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP, independent accountants, audited our
financial statements for the years ending December 31, 1999, 1998 and 1997. Our
board of directors has appointed them to serve as our auditors for the fiscal
year ending December 31, 2000. Representatives of PricewaterhouseCoopers are
expected to attend the annual meeting to answer any questions and will have the
opportunity to make a statement if they wish.
STOCKHOLDER PROPOSALS
To be included in our 2001 annual proxy statement to bring business before
the annual meeting, a shareholder proposal must be received by us in writing no
later than February 25, 2001. Our by-laws permit you to bring business before or
propose director nominations to be considered at an annual meeting. The notice
must contain specified information about you and the proposed business or
nomination. If any stockholder proposal is submitted after March 27, 2001, our
board will be allowed to use its discretionary voting authority when the
proposal is raised at the annual meeting without any discussion of the matter in
the proxy statement. If you are interested in the procedures required to submit
a proposal, please contact Genzyme Corporation, One Kendall Square, Cambridge,
Massachusetts 02139, Attention: Clerk, phone: (617) 252-7500.
WHERE YOU CAN FIND MORE INFORMATION
The following information contained in our 1999 annual report on Form 10-K
filed with the SEC on March 30, 2000 is incorporated by this reference into this
proxy statement:
- the information in Exhibit 13.1 to our Form 10-K reproducing the text from
the 1999 Genzyme General Annual Report under the heading "Management's
Discussion and Analysis of Genzyme General's Financial Condition and
Results of Operations" and "Genzyme General Combined Financial Statements"
and notes thereto;
- the information in Exhibit 13.2 to our Form 10-K reproducing the text from
the 1999 Genzyme Molecular Oncology Annual Report under the heading
"Management's Discussion and Analysis of Genzyme Molecular Oncology's
Financial Condition and Results of Operations" and "Genzyme Molecular
Oncology Combined Financial Statements" and notes thereto;
- the information in Exhibit 13.3 to our Form 10-K reproducing the text from
the 1999 Genzyme Surgical Products Annual Report under the heading
"Management's Discussion and Analysis of Genzyme Surgical Products'
Financial Condition and Results of Operations" and "Genzyme Surgical
Products Combined Financial Statements" and notes thereto;
- the information in Exhibit 13.4 to our Form 10-K reproducing the text from
the 1999 Genzyme Tissue Repair Annual Report under the heading
"Management's Discussion and Analysis of
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Genzyme Tissue Repair's Financial Condition and Results of Operations" and
"Genzyme Tissue Repair Combined Financial Statements" and notes thereto;
- the information in Exhibit 13.5 to our Form 10-K reproducing the text from
the Genzyme General Annual Report under the heading "Management's
Discussion and Analysis of Genzyme Corporation and Subsidiaries' Financial
Condition and Results of Operations" and "Genzyme Corporation and
Subsidiaries' Consolidated Financial Statements" and notes thereto; and
- the information in our annual report on Form 10-K under the heading
"Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure."
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them from the SEC at its
Internet web site at HTTP://WWW.SEC.GOV or at its Public Reference Room at 450
Fifth Street, N.W., Room 1024, Washington, DC 20549. The documents are also
available from us without charge by requesting them in writing or by telephone
from Genzyme Corporation, One Kendall Square, Cambridge, Massachusetts 02139,
Attention: Shareholder Relations, phone: (617) 252-7526.
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APPENDIX A
PROPOSED AMENDMENT AND RESTATEMENT TO GENZYME'S
ARTICLES OF ORGANIZATION
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.
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.
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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 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
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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 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.
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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 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;
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(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 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, 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 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
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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
(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
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(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
(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
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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 Proceeds Announcement"). Not
earlier than the day immediately following the 10th Business Day, nor
later than the 20th 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 20th
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.
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(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 20th 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 20th 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 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
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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.
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
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allocated tax liability may be allocated to any other Division without any
compensating payment or allocation.
(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 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 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
(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
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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 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.
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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
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.
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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 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, 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.
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(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 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
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(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 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.
(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
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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 20th Business
Day, following the date of the Estimated GSP Net Proceeds
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
20th 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
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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 20th 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 20th 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.
(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
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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 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
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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.
(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 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 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.
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(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 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:
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.
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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 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
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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, 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 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
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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 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
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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:
(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.
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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 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 20th 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 20th
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.
(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
20th 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
20th Business Day following the date
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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
(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),
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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 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
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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.
(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-Registered Trademark- 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
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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, 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 reallocations that represent sales
at fair value between such Divisions or 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 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
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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 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 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
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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.
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.
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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, 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
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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 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.
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(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.
(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
1. UNDESIGNATED PREFERRED STOCK. Shares of Preferred Stock may be issued
from time to time in one or more 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. The Board of Directors shall determine the number of
shares constituting each series of Preferred Stock and each series shall have a
distinguishing designation.
2. TERMS OF THE SERIES A, SERIES B, SERIES C AND SERIES D JUNIOR
PARTICIPATING PREFERRED STOCK.
(a) AUTHORIZED AMOUNTS AND DESIGNATIONS. Two million shares of
Preferred Stock of the Corporation are designated as Series A Junior
Participating Preferred Stock (the "Series A Preferred Stock"), 400,000
shares of Preferred Stock are designated as Series B Junior Participating
Preferred Stock (the "Series B Preferred Stock"), 400,000 shares of
Preferred Stock are designated as Series C Junior Participating Preferred
Stock (the "Series C Preferred Stock,") and 400,000 shares of Preferred
Stock are designated as Series D Junior Preferred Stock (the "Series D
Preferred Stock" and, together with the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock and any other series
of Preferred Stock so designated by the Corporation's Board of Directors,
the "Junior Preferred Stock"). To the extent legally permitted, such numbers
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 Junior
Preferred Stock of any series 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 Junior Preferred Stock.
(b) SERIES A PREFERRED STOCK. A description of the Series A Preferred
Stock and a statement of its preferences, voting powers, qualifications and
special or relative rights or privileges is as follows:
(1) DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and
superior to the Series A Preferred Stock with respect to
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dividends, the holders of shares of Series A Preferred Stock, in
preference to the holders of all shares of common stock of the
Corporation (the "Common Shares"), and of any other junior stock,
shall be entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Series A Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater
of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions,
other than a dividend on shares of Genzyme General Division Common
Stock (the "GGD Stock") payable in shares of GGD Stock or a
subdivision of the outstanding shares of GGD Stock (by
reclassification or otherwise), declared on the GGD Stock since the
immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred
Stock. In the event the Corporation shall at any time after June 12,
1997 declare or pay any dividend on shares of GGD Stock payable in
shares of GGD Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of GGD Stock (by
reclassification or otherwise than by payment of a dividend in shares
of GGD Stock) into a greater or lesser number of shares of GGD Stock,
then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of GGD Stock outstanding immediately after such
event and the denominator of which is the number of shares of GGD
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in Section IV.H.2(b)(1)(A)
immediately after it declares a dividend or distribution on any
shares of GGD Stock (other than a dividend payable in shares of GGD
Stock), provided that, in the event no dividend or distribution shall
have been declared on the GGD Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series A Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the
payment thereof.
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(2) VOTING RIGHTS. The holders of shares of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the
holder thereof to 100 votes on all matters submitted to a vote of the
stockholders of the Corporation. In the event the Corporation shall
at any time after June 12, 1997 declare or pay any dividend on any
shares of GGD Stock payable in shares of GGD Stock, or effect a
subdivision or combination or consolidation of the outstanding shares
of GGD Stock (by reclassification or otherwise than by payment of a
dividend in shares of GGD Stock) into a greater or lesser number of
shares of GGD Stock, then in each such case the number of votes per
share to which holders of shares of Series A Preferred Stock were
entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction, the numerator of which is the
number of shares of GGD Stock outstanding immediately after such
event and the denominator of which is the number of shares of GGD
Stock that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in the Articles of
Organization, in any other vote of the Board of Directors of the
Corporation creating a series of Preferred Stock, or by law, the
holders of shares of Series A Preferred Stock and the holders of
Common Shares and any other capital stock of the Corporation having
general voting rights shall vote together as one series on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein or as otherwise provided by law,
holders of Series A Preferred Stock shall have no voting rights.
(3) LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be
made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Stock unless, prior thereto, the holders of shares of
Series A Preferred Stock shall have received $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, provided that the
holders of shares of Series A Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount
to be distributed per share to holders of shares of GGD Stock, or (2) to
the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all other such parity stock in proportion to
the total amounts to which the holders of all such shares are entitled
upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time after June 12, 1997 declare or pay any
dividend on shares of GGD Stock payable in shares of GGD Stock, or effect
a subdivision or combination or consolidation of the outstanding shares
of GGD Stock (by reclassification or otherwise than by payment of a
dividend in shares of GGD Stock) into a greater or lesser number of
shares of GGD Stock, then in each such case the aggregate amount to which
holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under the proviso in clause (1) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of GGD Stock outstanding
immediately after such event and the denominator of which is the number
of shares of GGD Stock that were outstanding immediately prior to such
event.
(4) CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which
Common Shares are exchanged for or changed into other stock or
securities, cash and or any other property, then in any such case each
share of Series A Preferred Stock shall at the same time be similarly
exchanged or changed into
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an amount per share (subject to the provision for adjustment hereinafter
set forth) equal to 100 times the aggregate amount of stock, securities,
cash and or any other property (payable in kind), as the case may be,
into which or for which each share of GGD Stock is changed or exchanged.
In the event the Corporation shall at any time after June 12, 1997
declare or pay any dividend on any shares of GGD Stock payable in shares
of GGD Stock, or effect a subdivision or combination or consolidation of
the outstanding shares of GGD Stock (by reclassification or otherwise
than by payment of a dividend in shares of GGD Stock) into a greater or
lesser number of shares of GGD Stock, then in each such case the amount
set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Preferred Stock shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of GGD Stock outstanding immediately after such event
and the denominator of which is the number of shares of GGD Stock that
were outstanding immediately prior to such event.
(c) SERIES B PREFERRED STOCK. A description of the Series B Preferred
Stock and a statement of its preferences, voting powers, qualifications and
special or relative rights or privileges is as follows:
(1) DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and
superior to the Series B Preferred Stock with respect to dividends,
the holders of shares of Series B Preferred Stock, in preference to
the holders of all Common Shares, and of any other junior stock,
shall be entitled to receive, when, as and if declared by the Board
of Directors out of funds legally available for the purpose,
quarterly dividends payable in cash on the first day of March, June,
September and December in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a
share or fraction of a share of Series B Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater
of (a) $1.00 or (b) subject to the provision for adjustment
hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions,
other than a dividend on shares of Genzyme Tissue Repair Division
Common Stock (the "GTR Stock") payable in shares of GTR Stock or a
subdivision of the outstanding shares of GTR Stock (by
reclassification or otherwise), declared on the GTR Stock since the
immediately preceding Quarterly Dividend Payment Date or, with
respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series B Preferred
Stock. In the event the Corporation shall at any time after June 12,
1997 declare or pay any dividend on any shares of GTR Stock payable
in shares of GTR Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of GTR Stock (by
reclassification or otherwise than by payment of a dividend in shares
of GTR Stock) into a greater or lesser number of shares of GTR Stock,
then in each such case the amount to which holders of shares of
Series B Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of GTR Stock outstanding immediately after such
event and the denominator of which is the number of shares of GTR
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series B Preferred Stock as provided in Section IV.H.2(c)(1)(A)
immediately after it declares a dividend or distribution on any
shares of GTR Stock (other than a dividend payable in shares of GTR
Stock), provided that, in the event no dividend or distribution shall
have been declared on the GTR Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the
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Series B Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series B Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series B Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series B Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series B Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the
payment thereof.
(2) VOTING RIGHTS. The holders of shares of Series B Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series B Preferred Stock shall entitle the
holder thereof to 100 times the number of votes to which the holder
of each outstanding share of GTR Stock is then entitled on all
matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time after June 12, 1997
declare or pay any dividend on shares of GTR Stock payable in shares
of GTR Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of GTR Stock (by reclassification or
otherwise than by payment of a dividend in shares of GTR Stock) into
a greater or lesser number of shares of GTR Stock, then in each such
case the number of votes per share to which holders of shares of
Series B Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction, the
numerator of which is the number of shares of GTR Stock outstanding
immediately after such event and the denominator of which is the
number of shares of GTR Stock that were outstanding immediately prior
to such event.
(B) Except as otherwise provided herein, in the Articles of
Organization, in any other vote of the Board of Directors of the
Corporation creating a series of Preferred Stock, or by law, the
holders of shares of Series B Preferred Stock and the holders of
Common Shares and any other capital stock of the Corporation having
general voting rights shall vote together as one series on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein or as otherwise provided by law,
holders of Series B Preferred Stock shall have no voting rights.
(3) LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be
made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series B Preferred Stock unless, prior thereto, the holders of shares of
Series B Preferred Stock shall have received $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, provided that the
holders of shares of Series B Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate
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amount to be distributed per share to holders of shares of GTR Stock, or
(2) to the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series B Preferred Stock, except distributions made ratably on the
Series B Preferred Stock and all other such parity stock in proportion to
the total amounts to which the holders of all such shares are entitled
upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time after June 12, 1997 declare or pay any
dividend on any shares of GTR Stock payable in shares of GTR Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of GTR Stock (by reclassification or otherwise than by payment of
a dividend in shares of GTR Stock) into a greater or lesser number of
shares of GTR Stock, then in each such case the aggregate amount to which
holders of shares of Series B Preferred Stock were entitled immediately
prior to such event under the proviso in clause (1) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of GTR Stock outstanding
immediately after such event and the denominator of which is the number
of shares of GTR Stock that were outstanding immediately prior to such
event.
(4) CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which
Common Shares are exchanged for or changed into other stock or
securities, cash and or any other property, then in any such case each
share of Series B Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate
amount of stock, securities, cash and or any other property (payable in
kind), as the case may be, into which or for which each share of GTR
Stock is changed or exchanged. In the event the Corporation shall at any
time after June 12, 1997 declare or pay any dividend on any shares of GTR
Stock payable in shares of GTR Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of GTR Stock (by
reclassification or otherwise than by payment of a dividend in shares of
GTR Stock) into a greater or lesser number of shares of GTR Stock, then
in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series B Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of GTR Stock outstanding immediately
after such event and the denominator of which is the number of shares of
GTR Stock that were outstanding immediately prior to such event.
(d) SERIES C PREFERRED STOCK. A description of the Series C Preferred
Stock and a statement of its preferences, voting powers, qualifications and
special or relative rights or privileges is as follows:
(1) DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and
superior to the Series C Preferred Stock with respect to dividends,
the holders of shares of Series C Preferred Stock, in preference to
the holders of Common Shares, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share
or fraction of a share of Series C Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of
(a) $1.00 or (b) subject to the provision for adjustment hereinafter
set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a
dividend on shares of Genzyme Molecular Oncology Division Common
Stock (the "GMO Stock") payable in shares of GMO Stock or a
subdivision of the outstanding shares of GMO Stock (by
reclassification or otherwise), declared on the GMO
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Stock since the immediately preceding Quarterly Dividend Payment Date
or, with respect to the first Quarterly Dividend Payment Date, since
the first issuance of any share or fraction of a share of Series C
Preferred Stock. In the event the Corporation shall at any time after
June 12, 1997 declare or pay any dividend on any shares of GMO Stock
payable in shares of GMO Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of GMO Stock
(by reclassification or otherwise than by payment of a dividend in
shares of GMO Stock) into a greater or lesser number of shares of GMO
Stock, then in each such case the amount to which holders of shares
of Series C Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the
number of shares of GMO Stock outstanding immediately after such
event and the denominator of which is the number of shares of GMO
Stock that were outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series C Preferred Stock as provided in Section IV.H.2(d)(1)(A)
immediately after it declares a dividend or distribution on any
shares of GMO Stock (other than a dividend payable in shares of GMO
Stock), provided that, in the event no dividend or distribution shall
have been declared on the GMO Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series C
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series C Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series C Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series C Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and
payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series C Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the
payment thereof.
(2) VOTING RIGHTS. The holders of shares of Series C Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series C Preferred Stock shall entitle the
holder thereof to 100 times the number of votes to which the holder
of each outstanding share of GMO Stock is then entitled on all
matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time after June 12, 1997
declare or pay any dividend on any shares of GMO Stock payable in
shares of GMO Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of GMO Stock (by
reclassification or otherwise than by payment of a dividend in shares
of GMO Stock) into a greater or lesser number of shares of GMO Stock,
then in each such case the number of votes per share to which holders
of shares of Series C Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a
fraction, the numerator of which is the number of shares of GMO
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Stock outstanding immediately after such event and the denominator of
which is the number of shares of GMO Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in the Articles of
Organization, in any other vote of the Board of Directors of the
Corporation creating a series of Preferred Stock, or by law, the
holders of shares of Series C Preferred Stock and the holders of
Common Shares and any other capital stock of the Corporation having
general voting rights shall vote together as one series on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein or as otherwise provided by law,
holders of Series C Preferred Stock shall have no voting rights.
(3) LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be
made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series C Preferred Stock unless, prior thereto, the holders of shares of
Series C Preferred Stock shall have received $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, provided that the
holders of shares of Series C Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount
to be distributed per share to holders of shares of GMO Stock, or (2) to
the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series C Preferred Stock, except distributions made ratably on the
Series C Preferred Stock and all other such parity stock in proportion to
the total amounts to which the holders of all such shares are entitled
upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time after June 12, 1997 declare or pay any
dividend on any shares of GMO Stock payable in shares of GMO Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of GMO Stock (by reclassification or otherwise than by payment of
a dividend in shares of GMO Stock) into a greater or lesser number of
shares of GMO Stock, then in each such case the aggregate amount to which
holders of shares of Series C Preferred Stock were entitled immediately
prior to such event under the proviso in clause (1) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of GMO Stock outstanding
immediately after such event and the denominator of which is the number
of shares of GMO Stock that were outstanding immediately prior to such
event.
(4) CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which
Common Shares are exchanged for or changed into other stock or
securities, cash and or any other property, then in any such case each
share of Series C Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate
amount of stock, securities, cash and or any other property (payable in
kind), as the case may be, into which or for which each share of GMO
Stock is changed or exchanged. In the event the Corporation shall at any
time after June 12, 1997 declare or pay any dividend on shares of GMO
Stock payable in shares of GMO Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of GMO Stock (by
reclassification or otherwise than by payment of a dividend in shares of
GMO Stock) into a greater or lesser number of shares of GMO Stock, then
in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series C Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of GMO Stock outstanding immediately
after such event and the denominator of which is the number of shares of
GMO Stock that were outstanding immediately prior to such event.
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(e) SERIES D PREFERRED STOCK. A description of the Series D Preferred
Stock and a statement of its preferences, voting powers, qualifications and
special or relative rights or privileges is as follows:
(1) DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and
superior to the Series D Preferred Stock with respect to dividends,
the holders of shares of Series D Preferred Stock, in preference to
the holders of Common Shares, and of any other junior stock, shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly
dividends payable in cash on the first day of March, June, September
and December in each year (each such date being referred to herein as
a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share
or fraction of a share of Series D Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to the greater of
(a) $1.00 or (b) subject to the provision for adjustment hereinafter
set forth, 100 times the aggregate per share amount of all cash
dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a
dividend on shares of Genzyme Surgical Products Division Common Stock
(the "GSP Stock") payable in shares of GSP Stock or a subdivision of
the outstanding shares of GSP Stock (by reclassification or
otherwise), declared on the GSP Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series D Preferred Stock. In the
event the Corporation shall at any time after May 26, 1999 declare or
pay any dividend on any shares of GSP Stock payable in shares of GSP
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of GSP Stock (by reclassification or otherwise
than by payment of a dividend in shares of GSP Stock) into a greater
or lesser number of shares of GSP Stock, then in each such case the
amount to which holders of shares of Series D Preferred Stock were
entitled immediately prior to such event under clause (b) of the
preceding sentence shall be adjusted by multiplying such amount by a
fraction, the numerator of which is the number of shares of GSP Stock
outstanding immediately after such event and the denominator of which
is the number of shares of GSP Stock that were outstanding
immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on
the Series D Preferred Stock as provided in Section IV.H.2(e)(1)(A)
immediately after it declares a dividend or distribution on any
shares of GSP Stock (other than a dividend payable in shares of GSP
Stock), provided that, in the event no dividend or distribution shall
have been declared on the GSP Stock during the period between any
Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series D
Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series D Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such
shares, unless the date of issue of such shares is prior to the
record date for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of Series D Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest.
Dividends paid on the shares of Series D Preferred Stock in an amount
less than the total amount of such dividends at the time
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accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding.
The Board of Directors may fix a record date for the determination of
holders of shares of Series D Preferred Stock entitled to receive
payment of a dividend or distribution declared thereon, which record
date shall be not more than 60 days prior to the date fixed for the
payment thereof.
(2) VOTING RIGHTS. The holders of shares of Series D Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series D Preferred Stock shall entitle the
holder thereof to 100 times the number of votes to which the holder
of each outstanding share of GSP Stock is then entitled on all
matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time after May 26, 1999
declare or pay any dividend on any shares of GSP Stock payable in
shares of GSP Stock, or effect a subdivision or combination or
consolidation of the outstanding shares of GSP Stock (by
reclassification or otherwise than by payment of a dividend in shares
of GSP Stock) into a greater or lesser number of shares of GSP Stock,
then in each such case the number of votes per share to which holders
of shares of Series D Preferred Stock were entitled immediately prior
to such event shall be adjusted by multiplying such number by a
fraction, the numerator of which is the number of shares of GSP Stock
outstanding immediately after such event and the denominator of which
is the number of shares of GSP Stock that were outstanding
immediately prior to such event.
(B) Except as otherwise provided herein, in the Articles of
Organization, in any other vote of the Board of Directors of the
Corporation creating a series of Preferred Stock, or by law, the
holders of shares of Series D Preferred Stock and the holders of
Common Shares and any other capital stock of the Corporation having
general voting rights shall vote together as one series on all
matters submitted to a vote of stockholders of the Corporation.
(C) Except as set forth herein or as otherwise provided by law,
holders of Series D Preferred Stock shall have no voting rights.
(3) LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be
made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series D Preferred Stock unless, prior thereto, the holders of shares of
Series D Preferred Stock shall have received $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, provided that the
holders of shares of Series D Preferred Stock shall be entitled to
receive an aggregate amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount
to be distributed per share to holders of shares of GSP Stock, or (2) to
the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series D Preferred Stock, except distributions made ratably on the
Series D Preferred Stock and all other such parity stock in proportion to
the total amounts to which the holders of all such shares are entitled
upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time after May 26, 1999 declare or pay any
dividend on any shares of GSP Stock payable in shares of GSP Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of GSP Stock (by reclassification or otherwise than by payment of
a dividend in shares of GSP Stock) into a greater or lesser number of
shares of GSP Stock, then in each such case the aggregate amount to which
holders of shares of Series D Preferred Stock were entitled immediately
prior to such event under the proviso in clause (1) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of GSP Stock outstanding
immediately after such event and the
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denominator of which is the number of shares of GSP Stock that were
outstanding immediately prior to such event.
(4) CONSOLIDATION, MERGER, ETC. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which
Common Shares are exchanged for or changed into other stock or
securities, cash and or any other property, then in any such case each
share of Series D Preferred Stock shall at the same time be similarly
exchanged or changed into an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 100 times the aggregate
amount of stock, securities, cash and or any other property (payable in
kind), as the case may be, into which or for which each share of GSP
Stock is changed or exchanged. In the event the Corporation shall at any
time after May 26, 1999 declare or pay any dividend on shares of GSP
Stock payable in shares of GSP Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of GSP Stock (by
reclassification or otherwise than by payment of a dividend in shares of
GSP Stock) into a greater or lesser number of shares of GSP Stock, then
in each such case the amount set forth in the preceding sentence with
respect to the exchange or change of shares of Series D Preferred Stock
shall be adjusted by multiplying such amount by a fraction, the numerator
of which is the number of shares of GSP Stock outstanding immediately
after such event and the denominator of which is the number of shares of
GSP Stock that were outstanding immediately prior to such event.
(f) GENERAL PROVISIONS. Except as otherwise specifically provided in a
particular series of Junior Preferred Stock, the following provisions shall
apply to all series of Junior Preferred Stock:
(1) CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Preferred Stock are in arrears,
thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Junior Preferred
Stock outstanding shall have been paid in full, the Corporation shall
not:
(i) declare or pay dividends, or make any other
distributions, on any shares of stock ranking junior (either as
to dividends or upon liquidation, dissolution or winding up) to
the Junior Preferred Stock;
(ii) declare or pay dividends, or make any other
distributions, on any shares of stock ranking on a parity (either
as to dividends or upon liquidation, dissolution or winding up)
with the Junior Preferred Stock, except dividends paid ratably on
the Junior Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total
amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the
Junior Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Junior Preferred
Stock; or
(iv) redeem, purchase or otherwise acquire for consideration
any shares of Junior Preferred Stock, or any shares of stock
ranking on a parity with the Junior Preferred Stock, except in
accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all
holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series
and classes, shall determine in good faith will result in fair
and equitable treatment among the respective series or classes.
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(2) The Corporation shall not permit any subsidiary of the Corporation
to purchase or otherwise acquire for consideration any shares of stock of
the Corporation unless the Corporation could, under Section IV.G.2(f)(1)(A)
purchase or otherwise acquire such shares at such time and in such manner.
(g) REACQUIRED SHARES. Any shares of Junior Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares
of Preferred Stock and may be reissued as shares of the same series of
Preferred Stock or as part of a new series of Preferred Stock, subject to
the conditions and restrictions on issuance set forth herein, in the
Articles of Organization, in any other vote of the Board of Directors of the
Corporation creating a series of Preferred Stock, or as otherwise required
by law.
(h) REDEMPTION. The shares of Junior Preferred Stock shall not be
redeemable.
(i) RANK. The Series A Preferred Stock, the Series B Preferred Stock,
the Series C Preferred Stock and the Series D Preferred Stock shall rank
equally with respect to the payment of dividends and the distribution of
assets together with any other series of the Corporation's Preferred Stock
that specifically provide that they shall rank equally with Junior Preferred
Stock. The Junior Preferred 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 Junior Preferred Stock. Nothing herein shall preclude the Board
from creating any series of Preferred Stock ranking on a parity with or
prior to the Junior Preferred Stock as to the payment of dividends or the
distribution of assets.
(j) AMENDMENT. The Articles of Organization of the Corporation shall
not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the holders of Junior Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of at least two-thirds of each outstanding series of Junior
Preferred Stock, voting together as a single series, provided that, any two
or more series of Junior Preferred Stock that are adversely affected in the
same manner shall vote together as a single class.
(k) FRACTIONAL SHARES. The Junior Preferred 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 the Junior Preferred Stock.
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APPENDIX B
MASSACHUSETTS APPRAISAL LAW
CHAPTER 156B OF THE GENERAL LAWS OF MASSACHUSETTS
SECTION 86. SECTIONS APPLICABLE TO APPRAISAL; PREREQUISITES
If a corporation proposes to take a corporate action as to which any section
of this chapter provides that a stockholder who objects to such action shall
have the right to demand payment for his shares and an appraisal thereof,
sections eighty-seven to ninety-eight, inclusive, shall apply except as
otherwise specifically provided in any section of this chapter. Except as
provided in sections eighty-two and eight-three, no stockholder shall have such
right unless (1) he files with the corporation before the taking of the vote of
the shareholders on such corporate action, written objection to the proposed
action stating that he intends to demand payment for his shares if the action is
taken and (2) his shares are not voted in favor of the proposed action.
SECTION 87. STATEMENT OF RIGHTS OF OBJECTING STOCKHOLDERS IN NOTICE OF MEETING;
FORM
The notice of the meeting of stockholders at which the approval of such
proposed action is to be considered shall contain a statement of the rights of
objecting stockholders. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock, and the directors may authorize the inclusion in any such notice of a
statement of opinion by the management as to the existence or non-existence of
the right of the stockholders to demand payment for their stock on account of
the proposed corporate action. The notice may be in such form as the directors
or officers calling the meeting deem advisable, but the following form of notice
shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting and
effected by the corporation, any stockholder (1) who files with the corporation
before the taking of the vote on the approval of such action, written objection
to the proposed action stating the he intends to demand payment for his shares
if the action is taken and (2) whose shares are not voted in favor of such
action has or may have the right to demand in writing from the corporation (OR,
IN THE CASE OF A CONSOLIDATION OR MERGER, THE NAME OF THE RESULTING OR SURVIVING
CORPORATION SHALL BE INSERTED), within twenty days after the date of mailing to
him of notice in writing that the corporate action has become effective,
payments for his shares and an appraisal of the value thereof. Such corporation
and any such stockholder shall in such cases have the rights and duties and
shall follow the procedure set forth in sections 88 to 98, inclusive, of chapter
156B of the General Laws of Massachusetts."
SECTION 88. NOTICE OF EFFECTIVENESS OF ACTION OBJECTED TO
The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
stockholder who filed a written objection meeting the requirements of section
eighty-six and whose shares were not voted in favor of the approval of such
action, that the action approved at the meeting of the corporation of which he
is a stockholder has become effective. The giving of such notice shall not be
deemed to create any rights in any stockholder receiving the same to demand
payment for his stock. The notice shall be sent by registered or certified mail,
addressed to the stockholder at his last known address as it appears in the
records of the corporation.
B-1
<PAGE>
SECTION 89. DEMAND FOR PAYMENT; TIME FOR PAYMENT
If within twenty days after the date of mailing of a notice under subsection
(e) of section eight-two, subsection (f) of section eighty-three, or section
eighty-eight, any stockholder to whom the corporation was required to give such
notice shall demand in writing from the corporation taking such action, or in
the case of a consolidation or merger from the resulting or surviving
corporation, payment for his stock, the corporation upon which such demand is
made shall pay to him the fair value of his stock within thirty days after the
expiration of the period during which such demand may be made.
SECTION 90. DEMAND FOR DETERMINATION OF VALUE; BILL IN EQUITY; VENUE
If during the period of thirty days provided for in section eighty-nine the
corporation upon which such demand is made and any such objecting stockholder
fail to agree as to the value of such stock, such corporation or any such
stockholder may within four months after the expiration of such thirty-day
period demand a determination of the value of the stock of all such objecting
stockholders by a bill in equity filed in the superior court in the county where
the corporation in which such objecting stockholder held stock had or has its
principal office in the commonwealth.
SECTION 91. PARTIES TO SUIT TO DETERMINE VALUE; SERVICE
If the bill is filed by the corporation, it shall name as parties respondent
all stockholders who have demanded payment for their shares and with whom the
corporation has not reached agreement as to the value thereof. If the bill is
filed by a stockholder, he shall bring the bill in his own behalf and in behalf
of all other stockholders who have demanded payment for their shares and with
whom the corporation has not reached agreement as to the value thereof, and
service of the bill shall be made upon the corporation by subpoena with a copy
of the bill annexed. The corporation shall file with its answer a duly verified
list of all such other stockholders, and such stockholders shall thereupon be
deemed to have been added as parties to the bill. The corporation shall give
notice in such form and returnable on such date as the court shall order to each
stockholder party to the bill by registered or certified mail, addressed to the
last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eighty-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be a
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
SECTION 92. DECREE DETERMINING VALUE AND ORDERING PAYMENT; VALUATION DATE
After hearing the court shall enter a decree determining the fair value of
the stock of those stockholders who have become entitled to the valuation of and
payment for their shares, and shall order the corporation to make payment of
such value, together with interest, if any, as hereinafter provided, to the
stockholders entitled thereto upon the transfer by them to the corporation of
the certificates representing such stock if certificated or, if uncertificated,
upon receipt of an instruction transferring such stock to the corporation. For
this purpose, the value of the shares shall be determined as of the day
preceding the date of the vote approving the proposed corporate action and shall
be exclusive of any element of value arising from the expectation or
accomplishment of the proposed corporate action.
B-2
<PAGE>
SECTION 93. REFERENCE TO SPECIAL MASTER
The court in its discretion may refer the bill or any question arising
thereunder to a special master to hear the parties, make findings and report the
same to the court, all in accordance with the usual practice in suits in equity
in the superior court.
SECTION 94. NOTATION ON STOCK CERTIFICATES OF PENDENCY OF BILL
On motion the court may order stockholder parties to the bill to submit
their certificates of stock to the corporation for the notation thereon of the
pendency of the bill and may order the corporation to note such pendency in its
records with respect to any uncertificated shares held by such stockholders
parties, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order.
SECTION 95. COSTS; INTEREST
The costs of the bill, including the reasonable compensation and expenses of
any master appointed by the court, but exclusive of fees of counsel or of
experts retained by any party, shall be determined by the court and taxed upon
the parties to the bill, or any of them, in such manner as appears to be
equitable, except that all costs of giving notice to stockholders as provided in
this chapter shall be paid by the corporation. Interest shall be paid upon any
award from the date of the vote approving the proposed corporate action, and the
court may on application of any interested party determine the amount of
interest to be paid in the case of any stockholder.
SECTION 96. DIVIDENDS AND VOTING RIGHTS AFTER DEMAND FOR PAYMENT
Any stockholder who has demanded payment for his stock as provided in this
chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the date of the vote approving the proposed corporate action) unless:
(1) bill shall not be filed within the time provided in section ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the corporation, or
in the case of a consolidation or merger, the resulting or surviving
corporation, deliver to it a written withdrawal of his objections to and
an acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3), inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
SECTION 97. STATUS OF SHARES PAID FOR
The shares of the corporation paid for by the corporation pursuant to the
provisions of this chapter shall have the status of treasury stock, or in the
case of a consolidation or merger the shares or the securities of the resulting
or surviving corporation into which the shares of such objecting stockholder
would have been converted had he not objected to such consolidation or merger
shall have the status of treasury stock or securities.
SECTION 98. EXCLUSIVE REMEDY; EXCEPTION
The enforcement by a stockholder of his right to receive payment for his
shares in the manner provided in this chapter shall be an exclusive remedy
except that this chapter shall not exclude the right of such stockholder to
bring or maintain an appropriate proceeding to obtain relief on the ground that
such corporate action will be or is illegal or fraudulent as to him.
B-3
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
GENZYME GENERAL DIVISION COMMON STOCK
By signing this proxy, I appoint Henri A. Termeer, Michael S. Wyzga and
Peter Wirth, and each of them acting singly, my attorney and proxy, with full
power of substitution, to vote on my behalf all of the shares of Genzyme General
Division common stock that I am entitled to vote at the Annual Meeting of
Stockholders to be held on May 25, 2000, and at any adjournments of the meeting.
This proxy revokes any earlier proxy I have signed with respect to these shares.
If properly executed, this proxy will be voted in the manner you specify. If
no specification is made, your shares of Genzyme General stock will be voted FOR
each of the proposals. The proxies are authorized to vote your shares, in their
discretion, on any other matter that is properly brought before the meeting.
PLEASE SIGN AND MAIL YOUR PROXY TODAY.
<TABLE>
<S> <C> <C> <C>
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. Proposal to elect one director. [ ] FOR [ ] WITHHELD
</TABLE>
<TABLE>
<S> <C>
NOMINEE: Henri A. Termeer
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
2. Proposal to amend the 1990 Equity Incentive Plan to [ ] [ ] [ ]
increase the number of shares of Genzyme Surgical
Products common stock available for grant.
3. Proposal to approve and adopt the amendment to the [ ] [ ] [ ]
Genzyme charter SUBJECT TO THE CONDITION THAT if the
holders of less than a majority of any of the GZMO
Stock, GZSP Stock or GZTR Stock outstanding and
entitled to vote fail to approve and adopt the
amendment, then the provisions of the proposed
amendment (other than the provision contained at
Article IV, Section G, governing generally all series
of stock) shall not be adopted for that series.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Signature: ------------------------- Date: ------------------------- Signature: ------------------------- Date:
(if held jointly)
<S> <C>
Signature:
</TABLE>
NOTE: Please sign exactly as your name appears on your stock certificate. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by authorized officer. If a
partnership, please sign in partnership name by authorized person.
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS OF GENZYME CORPORATION
THURSDAY, MAY 25, 2000
- --------------------------------------------------------------------------------
PROXY VOTING INSTRUCTIONS
- --------------------------------------------------------------------------------
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.
- --------------------------------------------------------------------------------
YOUR CONTROL NUMBER IS:
- --------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
GENZYME SURGICAL PRODUCTS DIVISION COMMON STOCK
By signing this proxy, I appoint Henri A. Termeer, Michael S. Wyzga and
Peter Wirth, and each of them acting singly, my attorney and proxy, with full
power of substitution, to vote on my behalf all of the shares of Genzyme
Surgical Products Division common stock that I am entitled to vote at the Annual
Meeting of Stockholders to be held on May 25, 2000, and at any adjournments of
the meeting. This proxy revokes any earlier proxy I have signed with respect to
these shares.
If properly executed, this proxy will be voted in the manner you specify. If
no specification is made, your shares of Genzyme Surgical Products stock will be
voted FOR each of the proposals. The proxies are authorized to vote your shares,
in their discretion, on any other matter that is properly brought before the
meeting.
PLEASE SIGN AND MAIL YOUR PROXY TODAY.
<TABLE>
<S> <C> <C> <C>
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. Proposal to elect one director. [ ] FOR [ ] WITHHELD
</TABLE>
<TABLE>
<S> <C>
NOMINEE: Henri A. Termeer
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
2. Proposal to amend the 1990 Equity Incentive Plan to [ ] [ ] [ ]
increase the number of shares of Genzyme Surgical
Products common stock available for grant.
3. Proposal to approve and adopt the amendment to the [ ] [ ] [ ]
Genzyme charter SUBJECT TO THE CONDITION THAT if the
holders of less than a majority of any of the GZMO
Stock, GZSP Stock or GZTR Stock outstanding and
entitled to vote fail to approve and adopt the
amendment, then the provisions of the proposed
amendment (other than the provision contained at
Article IV, Section G, governing generally all series
of stock) shall not be adopted for that series.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Signature: ------------------------- Date: ------------------------- Signature: ------------------------- Date:
(if held jointly)
<S> <C>
Signature:
</TABLE>
NOTE: Please sign exactly as your name appears on your stock certificate. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by authorized officer. If a
partnership, please sign in partnership name by authorized person.
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS OF GENZYME CORPORATION
THURSDAY, MAY 25, 2000
- --------------------------------------------------------------------------------
PROXY VOTING INSTRUCTIONS
- --------------------------------------------------------------------------------
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.
- --------------------------------------------------------------------------------
YOUR CONTROL NUMBER IS:
- --------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
GENZYME TISSUE REPAIR DIVISION COMMON STOCK
By signing this proxy, I appoint Henri A. Termeer, Michael S. Wyzga and
Peter Wirth, and each of them acting singly, my attorney and proxy, with full
power of substitution, to vote on my behalf all of the shares of Genzyme Tissue
Repair Division common stock that I am entitled to vote at the Annual Meeting of
Stockholders to be held on May 25, 2000, and at any adjournments of the meeting.
This proxy revokes any earlier proxy I have signed with respect to these shares.
If properly executed, this proxy will be voted in the manner you specify. If
no specification is made, your shares of Genzyme Tissue Repair stock will be
voted FOR each of the proposals. The proxies are authorized to vote your shares,
in their discretion, on any other matter that is properly brought before the
meeting.
PLEASE SIGN AND MAIL YOUR PROXY TODAY.
<TABLE>
<S> <C> <C> <C>
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. Proposal to elect one director. [ ] FOR [ ] WITHHELD
</TABLE>
<TABLE>
<S> <C>
NOMINEE: Henri A. Termeer
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
2. Proposal to amend the 1990 Equity Incentive Plan to [ ] [ ] [ ]
increase the number of shares of Genzyme Surgical
Products common stock available for grant.
3. Proposal to approve and adopt the amendment to the [ ] [ ] [ ]
Genzyme charter SUBJECT TO THE CONDITION THAT if the
holders of less than a majority of any of the GZMO
Stock, GZSP Stock or GZTR Stock outstanding and
entitled to vote fail to approve and adopt the
amendment, then the provisions of the proposed
amendment (other than the provision contained at
Article IV, Section G, governing generally all
series of stock) shall not be adopted for that
series.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Signature: ------------------------- Date: ------------------------- Signature: ------------------------- Date:
(if held jointly)
<S> <C>
Signature:
</TABLE>
NOTE: Please sign exactly as your name appears on your stock certificate. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by authorized officer. If a
partnership, please sign in partnership name by authorized person.
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS OF GENZYME CORPORATION
THURSDAY, MAY 25, 2000
- --------------------------------------------------------------------------------
PROXY VOTING INSTRUCTIONS
- --------------------------------------------------------------------------------
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.
- --------------------------------------------------------------------------------
YOUR CONTROL NUMBER IS:
- --------------------------------------------------------------------------------
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
GENZYME MOLECULAR ONCOLOGY DIVISION COMMON STOCK
By signing this proxy, I appoint Henri A. Termeer, Michael S. Wyzga and
Peter Wirth, and each of them acting singly, my attorney and proxy, with full
power of substitution, to vote on my behalf all of the shares of Genzyme
Molecular Oncology Division common stock that I am entitled to vote at the
Annual Meeting of Stockholders to be held on May 25, 2000, and at any
adjournments of the meeting. This proxy revokes any earlier proxy I have signed
with respect to these shares.
If properly executed, this proxy will be voted in the manner you specify. If
no specification is made, your shares of Genzyme Molecular Oncology stock will
be voted FOR each of the proposals. The proxies are authorized to vote your
shares, in their discretion, on any other matter that is properly brought before
the meeting.
PLEASE SIGN AND MAIL YOUR PROXY TODAY.
<TABLE>
<S> <C> <C> <C>
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. Proposal to elect one director. [ ] FOR [ ] WITHHELD
</TABLE>
<TABLE>
<S> <C>
NOMINEE: Henri A. Termeer
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
FOR AGAINST ABSTAIN
2. Proposal to amend the 1990 Equity Incentive Plan to [ ] [ ] [ ]
increase the number of shares of Genzyme Surgical
Products common stock available for grant.
3. Proposal to approve and adopt the amendment to the [ ] [ ] [ ]
Genzyme charter SUBJECT TO THE CONDITION THAT if the
holders of less than a majority of any of the GZMO
Stock, GZSP Stock or GZTR Stock outstanding and
entitled to vote fail to approve and adopt the
amendment, then the provisions of the proposed
amendment (other than the provision contained at
Article IV, Section G, governing generally all series
of stock) shall not be adopted for that series.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Signature: ------------------------- Date: ------------------------- Signature: ------------------------- Date:
(if held jointly)
<S> <C>
Signature:
</TABLE>
NOTE: Please sign exactly as your name appears on your stock certificate. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by authorized officer. If a
partnership, please sign in partnership name by authorized person.
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS OF GENZYME CORPORATION
THURSDAY, MAY 25, 2000
- --------------------------------------------------------------------------------
PROXY VOTING INSTRUCTIONS
- --------------------------------------------------------------------------------
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
TO VOTE BY TELEPHONE (TOUCH-TONE PHONE ONLY)
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
TO VOTE BY INTERNET
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.
- --------------------------------------------------------------------------------
YOUR CONTROL NUMBER IS:
- --------------------------------------------------------------------------------
