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SUPPLEMENT
DATED MAY 25, 2000
TO
PROXY STATEMENT
OF
TRANSKARYOTIC THERAPIES, INC.
INTRODUCTION
This supplement is being provided to holders of Common Stock, $.01 par value
per share, of Transkaryotic Therapies, Inc., a Delaware corporation ("TKT"), for
the purpose of supplementing the Proxy Statement dated May 15, 2000, which was
furnished to holders of TKT Common Stock in connection with the solicitation of
proxies by the Board of Directors of TKT for use at the Annual Meeting of
Stockholders of TKT (the "Annual Meeting"). The Annual Meeting is scheduled to
be held on Thursday, June 15, 2000, at the offices of Hale and Dorr LLP, 60
State Street, Boston, Massachusetts, commencing at 10:00 a.m., local time.
As more fully described in the Proxy Statement, at the Annual Meeting you
will be asked to vote on proposals relating to the election of six directors to
serve until the 2001 Annual Meeting of Stockholders and to the approval of an
amendment to TKT's Amended and Restated Certificate of Incorporation increasing
the number of authorized shares of Common Stock of TKT from 30,000,000 shares to
100,000,000 shares (the "Charter Amendment").
This supplement is first being mailed to our stockholders on or about
May 25, 2000. This supplement should be read in conjunction with TKT's Proxy
Statement dated May 15, 2000.
BACKGROUND
In February 2000, our Board of Directors unanimously approved and
recommended that the stockholders of TKT approve the Charter Amendment
increasing the number of authorized shares of Common Stock from 30,000,000
shares to 100,000,000 shares. In the Proxy Statement, we noted under the caption
"Approval of Amendment Increasing Authorized Common Stock" that the
authorization of the additional shares of Common Stock was necessary to provide
shares for issuance in connection with the exercise of stock options expected to
be granted under our stock option plans, possible future stock dividends,
financings, joint ventures, acquisitions and other general corporate purposes.
If the Charter Amendment is approved by the TKT stockholders, our Board of
Directors will have the authority to issue shares of Common Stock without the
necessity of further stockholder action. We also stated in the Proxy Statement
that there were no existing plans, understandings or agreements for the issuance
of any shares of Common Stock.
The purpose of this supplement is to inform you that since the Proxy
Statement was mailed to our stockholders, we have entered into an arrangement
for the issuance of shares of Common Stock. On May 18, 2000, we entered into a
Stock Purchase Agreement, with investment funds associated with E.M. Warburg,
Pincus & Co., L.L.C. ("Warburg Pincus") pursuant to which Warburg Pincus agreed
to purchase 10,000 shares of our Series A convertible preferred stock, $0.01 par
value per share (the "Series A Stock"), for an aggregate price of $100,000,000.
The Series A Stock would be convertible at the option of Warburg Pincus into
approximately 3,570,000 shares of Common Stock at a conversion price of $28.00
per share.
Pursuant to the terms of the Purchase Agreement, Warburg Pincus has agreed
to purchase the Series A Stock at two closings. Warburg Pincus has agreed to
purchase 9,000 shares of Series A Stock for an aggregate price of $90,000,000 at
the first closing. This closing is subject to the satisfaction of
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certain closing conditions, including regulatory approval under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act").
Warburg Pincus has agreed to purchase the remaining 1,000 shares of
Series A Stock for an aggregate price of $10,000,000 at the second closing. This
closing is subject to the satisfaction of certain closing conditions, including
the HSR Act condition described above and stockholder approval of the Charter
Amendment. If the Charter Amendment is not approved by TKT stockholders by
December 31, 2000, Warburg Pincus will not purchase the remaining 1,000 shares
of Series A Stock.
Although we are not seeking your consent to the sale of Series A Stock to
Warburg Pincus, the Purchase Agreement or the other transactions contemplated by
the Purchase Agreement, we would like to give you an opportunity to assess the
impact of the Warburg Pincus transaction on your vote for the Charter Amendment.
SALE OF SERIES A STOCK TO WARBURG PINCUS
In connection with Warburg Pincus' purchase of Series A Stock and under the
Purchase Agreement, we have agreed that at or prior to the first closing we will
(1) enter into a registration rights agreement with Warburg Pincus providing
Warburg Pincus certain demand and piggyback registration rights to have us
register under the Securities Act of 1933, as amended, the shares of Common
Stock issuable upon conversion of the Series A Stock purchased by them and
(2) file a Certificate of Designation setting forth the rights, preferences and
powers of the Series A Stock with the Secretary of State of the State of
Delaware.
The rights, preferences and powers of the Series A Stock include:
- THE RIGHT TO ELECT A DIRECTOR. Pursuant to the Certificate of
Designation, so long as 9,000 shares of the Series A Stock remain outstanding,
holders of the Series A Stock will have the exclusive right, voting separately
as a class, to elect one director to our Board of Directors. In addition, we
have agreed to nominate, recommend the election by our stockholders and use our
best efforts to effect the election to our Board of Directors of (1) two
individuals designated by Warburg Pincus if Warburg Pincus beneficially owns 20%
of our outstanding Common Stock, including the shares of Common Stock issuable
upon conversion of the Series A Stock, and (2) one individual designated by
Warburg Pincus if Warburg Pincus beneficially owns at least 10% of our
outstanding Common Stock, including the shares of Common Stock issuable upon
conversion of the Series A Stock, or at least 90% of the shares purchased by
Warburg Pincus pursuant to the Purchase Agreement. Any director elected by the
holders of the Series A Stock will satisfy our obligation to nominate a designee
of Warburg Pincus. We expect that following the second closing, the holders of
Series A Stock will elect a director to our Board of Directors.
- OTHER VOTING RIGHTS. The Series A Stock will vote together with our
Common Stock on an as-converted basis. Additionally, we have agreed that,
without the consent of the holders of a majority of the outstanding shares of
the Series A Stock, we will not (1) authorize any additional shares of Series A
Stock, (2) authorize or issue any shares of preferred stock ranking on
liquidation prior and in preference to the Series A Stock or (3) otherwise
amend, alter or repeal the preferences, special rights or other powers of the
Series A Stock so as to affect adversely the Series A Stock.
- LIQUIDATION PREFERENCE. Pursuant to the Certificate of Designation, upon
a voluntary or involuntary liquidation, dissolution or winding up of TKT, the
holders of the Series A Stock will be
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entitled to be paid out of TKT's assets available for distribution prior to any
distribution to the holders of Common Stock an amount equal to $10,000 per
share, plus any declared but unpaid dividends on the Series A Stock. A merger,
consolidation or sale of all or substantially all of our assets will not be
deemed a liquidation, dissolution or winding up.
- CONVERSION RIGHTS. The holders of Series A Stock have the right, at any
time at their option, to convert the Series A Stock into a number of shares of
Common Stock determined by dividing $10,000 by the conversion price of $28.00
per share. The $28.00 conversion price is subject to adjustment in the case of
any stock dividend, stock split, combination, capital reorganization,
reclassification or merger or consolidation.
- REDEMPTION RIGHTS. We may, at our option, redeem the Series A Stock at a
price equal to $10,000 per share, plus declared but unpaid dividends. This
redemption right may be exercised at any time after December 15, 2000 if the
average of the closing prices of our Common Stock for any 20 consecutive trading
days equals at least $35.00 per share.
VOTING PROCEDURES
Enclosed for your convenience is a duplicate Proxy Card. If you have not
already voted or would like to change your vote, please complete, sign, date and
promptly return the enclosed Proxy Card in the enclosed envelope. If we receive
the enclosed Proxy Card, duly executed and dated, prior to the Annual Meeting,
any proxy that you previously granted will be, without further action, revoked.
Any proxy previously granted to us may also be revoked by delivering written
notice of revocation to the Secretary of TKT, prior to the time voting is
declared closed or by attending the Annual Meeting and voting in person.
IF YOU HAVE ALREADY RETURNED A PROXY CARD AND DO NOT WISH TO
CHANGE YOUR VOTE, NO FURTHER ACTION IS REQUIRED.
If you have questions or require an additional copy of the proxy statement,
please contact us at 617-349-0200. Please address all written requests to
Transkaryotic Therapies, Inc. 195 Albany Street, Cambridge, Massachusetts 02139,
Attention: Corporate Communications.
By order of the Board of Directors
Daniel E. Geffken, SECRETARY
Cambridge, Massachusetts
May 25, 2000
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