GENZYME TRANSGENICS CORP, DEF 14A, 1998-04-23

GENZYME TRANSGENICS CORP
DEF 14A, 1998-04-23
BIOLOGICAL PRODUCTS, (NO DIAGNOSTIC SUBSTANCES)

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INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ___)

Filed by the registrant [x]
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Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential: for Use of the
[x] Definitive proxy statement Commission Only (as permitted
[ ] Definitive additional materials by Rule 14a-6(e)(2))
[ ] Soliciting material pursuant to Rule
14a-11(c) or Rule 14a-12

Genzyme Transgenics Corporation
- ------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement; if other than the Registrant)

Payment of filing fee (Check the appropriate box):
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[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1

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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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1 Set forth the amount on which the filing fee is calculated and state how it
was determined.

<PAGE>

GENZYME TRANSGENICS CORPORATION

Five Mountain Road, Framingham, Massachusetts 01701
(508) 620-9700

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The annual meeting of the stockholders of Genzyme Transgenics
Corporation, a Massachusetts corporation, will be held at The First National
Bank of Boston, 100 Federal Street, Second Floor, Boston, Massachusetts, at
12:00 p.m. on Wednesday, May 27, 1998 for the following purposes:

1. To elect three directors of the Company.

2. To vote on a proposed amendment to the Company's 1993 Equity
Incentive Plan to increase the number of shares of Common
Stock covered by the plan by 500,000 shares.

3. To vote on a proposed amendment to the Company's 1993 Director
Stock Option Plan to increase the number of shares of Common
Stock covered by the plan by 100,000 shares.

4. To transact such other business as may properly come before
the meeting.

Only stockholders of record at the close of business on April 1, 1998
will be entitled to vote at the meeting.

IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE YOUR
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN
PERSON, YOUR PROXY WILL NOT BE USED.

By order of the Board of Directors,

Lynnette C. Fallon
Clerk

Dated: April 23, 1998

<PAGE>

GENZYME TRANSGENICS CORPORATION

Five Mountain Road, Framingham, Massachusetts 01701
Telephone (508) 620-9700

-------------------

Proxy Statement

-------------------

GENERAL INFORMATION

The enclosed proxy is solicited on behalf of the Board of Directors of
Genzyme Transgenics Corporation (the "Company") for use at the annual meeting of
stockholders to be held on Wednesday, May 27, 1998, and at any adjournments
thereof.

The authority granted by an executed proxy may be revoked at any time
before its exercise by filing with the Clerk of the Company a written revocation
or a duly executed proxy bearing a later date, or by voting in person at the
meeting. Shares represented by valid proxies will be voted in accordance with
the specifications in the proxies. If no specifications are made, the proxies
will be voted in favor of the proposals set forth in the accompanying Notice of
Annual Meeting of Stockholders.

On April 1, 1998, the Company had outstanding 17,603,138 shares of
common stock, $.01 par value (the "Common Stock"), which is its only outstanding
class of voting stock. Only stockholders of record at the close of business on
April 1, 1998 will be entitled to vote at the meeting. A majority in interest of
all stock issued, outstanding and entitled to vote at the meeting, represented
at the meeting, in person or by proxy, constitutes a quorum for the transaction
of business.

The approximate date on which this proxy statement and accompanying
proxy are first being sent or given to stockholders is April 23, 1998.

Dated: April 23, 1998

<PAGE>

SHARE OWNERSHIP

The following table and footnotes set forth certain information
regarding the beneficial ownership of the Company's Common Stock and the General
Division Common Stock ("General Division Stock"), the Tissue Repair Division
Common Stock ("TR Stock") and the Genzyme Molecular Oncology Common Stock ("GMO
Stock") of Genzyme Corporation ("Genzyme"), as of April 1, 1998 by (i) persons
known by the Company to be beneficial owners of more than 5% of its Common
Stock, (ii) the Chief Executive Officer and the three named executive officers,
other than the Chief Executive Officer, of the Company, (iii) each director of
the Company, and (iv) all current executive officers and directors of the
Company as a group:

Shares of Common Stock
Beneficially Owned (1)
----------------------------
Beneficial Owner Shares Percent
---------------- ------------ -------
<S> <C> <C>
Henri A. Termeer...................................... 7,595,865 (2) 43.2%
c/o Genzyme Corporation
One Kendall Square, Cambridge, MA 02139

Genzyme Corporation................................... 7,573,365 (3) 43.0%
One Kendall Square, Cambridge, MA 02139

James A. Geraghty..................................... 168,816 (4) 1.0%

Harry M. Meade........................................ 81,299 (5) *

Robert W. Baldridge................................... 76,075 (6) *

Peter H. Glick........................................ 73,151 (7) *

John B. Green......................................... 66,151 (8) *

Francis J. Bullock.................................... 15,000 (9) *

Henry E. Blair........................................ 13,000 (10) *

Alan W. Tuck.......................................... 13,000 (11) *

Alan E. Smith......................................... 12,000 (12) *

All current executive officers and directors as
a group (10 persons).............................. 8,114,357 (13) 46.1%
</TABLE>

* Indicates less than 1%.

<PAGE>

______________________________________

(1) Unless otherwise indicated in these footnotes, each stockholder has
sole voting and investment power with respect to the shares listed in
the table. Except as described with respect to Mr. Termeer, ownership
of shares of General Division Stock, TR Stock and GMO Stock set forth
in these footnotes represents, with respect to each named person, less
than one percent of the outstanding shares of each class of stock.

(2) Includes 13,000 shares subject to stock options currently exercisable
or exercisable within the 60-day period following April 1, 1998. Also
includes 7,573,365 shares beneficially owned by Genzyme, including
145,000 shares subject to a currently exercisable common stock warrant,
as to all of which Mr. Termeer disclaims beneficial ownership. Mr.
Termeer is President, Chief Executive Officer and Chairman of the Board
of Genzyme. Mr. Termeer also beneficially owns 1,022,970 shares,
191,061 shares and 28,622 shares of General Division Stock, TR Stock
and GMO Stock, respectively, which figures include options to purchase
938,700 shares, 155,509 shares, and 26,400 shares of General Division
Stock, TR Stock and GMO Stock, respectively, that are currently
exercisable or exercisable within the 60-day period following April 1,
1998. In the aggregate, such ownership represents 1.3% of the
outstanding shares of General Division Stock and less than one percent
of the outstanding shares of each of TR Stock and GMO Stock.

(3) Includes 145,000 shares subject to a common stock purchase warrant
which is currently exercisable.

(4) Includes 146,111 shares subject to stock options currently exercisable
or exercisable and within the 60-day period following April 1, 1998.
Mr. Geraghty also beneficially owns 14,400 shares and 1,755 shares of
General Division Stock and TR Stock, respectively, which consist of
options to purchase such shares that are currently exercisable or
exercisable within the 60-day period following April 1, 1998.

(5) Includes 77,732 shares subject to stock options currently exercisable
or exercisable within the 60-day period following April 1, 1998. Dr.
Meade also beneficially owns 2,400 shares and 1,126 shares of General
Division Stock and TR Stock, respectively, which consist of options to
purchase such shares that are currently exercisable or exercisable
within the 60-day period following April 1, 1998.

(6) Includes 73,000 shares subject to stock options currently exercisable
or exercisable within the 60-day period following April 1, 1998.

(7) Includes 55,972 shares subject to stock options currently exercisable
or exercisable within the 60-day period following April 1, 1998.

(8) Includes 66,092 shares subject to stock options currently exercisable
or exercisable within the 60-day period following April 1, 1998.

(9) Consists of shares subject to stock options currently exercisable or
exercisable within the 60- day period following April 1, 1998.

<PAGE>

(10) Includes 12,000 shares subject to stock options currently exercisable
or exercisable within the 60-day period following April 1, 1998. Mr.
Blair also beneficially owns 46,600 shares, 17,670 shares and 2,700
shares of General Division Stock, TR Stock and GMO stock, respectively,
which include options to purchase 21,600 shares, 13,586 shares and
2,700 shares of General Division Stock, TR Stock and GMO Stock,
respectively, that are currently exercisable or exercisable within the
60-day period following April 1, 1998.

(11) Consists of 12,000 shares subject to stock options currently
exercisable or exercisable within the 60-day period following April 1,
1998 and 1,000 shares as to which Mr. Tuck shares voting and investment
power with his wife.

(12) Consists of shares subject to stock options currently exercisable or
exercisable within the 60- day period following April 1, 1998. Dr.
Smith also beneficially owns 152,595 shares, 32,493 shares and 10,000
shares of General Division Stock, TR Stock and GMO Stock, respectively,
which include options to purchase 152,308 shares, 30,847 shares and
10,000 shares of General Division Stock, TR Stock and GMO Stock,
respectively, that are currently exercisable or exercisable within the
60-day period following April 1, 1998.

(13) Includes 482,907 shares subject to stock options currently exercisable
or exercisable within the 60-day period following April 1, 1998 and
7,573,365 shares owned by Genzyme, a corporation of which Mr. Termeer
and Mr. Blair are directors and of which Mr. Termeer and Dr. Smith are
officers. The Company's current directors and executive officers as a
group beneficially own an aggregate of 1,238,965 shares, 244,105 shares
and 41,322 shares of General Division Stock, TR Stock and GMO Stock,
respectively, which figures include options to purchase 1,129,408
shares, 202,823 shares and 39,100 shares of General Division Stock, TR
Stock and GMO Stock, respectively, that are currently exercisable or
exercisable within the 60-day period following April 1, 1998. Such
ownership represents 1.6%, 1.2% and 1.1% of the outstanding shares of
General Division Stock, TR Stock and GMO Stock, respectively.

ELECTION OF DIRECTORS

The Board of Directors has fixed the number of directors at seven for
the coming year. Pursuant to the Company's Restated Articles of Organization,
the Board of Directors of the Company is divided into three classes, with each
class being as nearly equal in number of directors as possible. The term of one
class expires, and their successors are elected for a term of three years, at
each annual meeting of the Company's stockholders. At the annual meeting of
stockholders to be held on May 27, 1998, three directors will be elected to hold
office for a term of three years and until their successors are elected and
qualified. The Board of Directors' nominees, Robert W. Baldridge, James A.
Geraghty and Henri A. Termeer, have consented to serve if elected. However, if
any such nominee is unable to serve, proxies will be voted for such other
candidate or candidates as may be nominated by the Board of Directors.

Pursuant to the Company's by-laws, directors must be elected by a
plurality of the votes properly cast at the meeting. Abstentions, votes
withheld and broker non-votes will not be treated as votes properly cast and

<PAGE>

will not affect the outcome of the election. A "broker non-vote" occurs when a
registered broker holding a customer's shares in the name of the broker has not
received voting instructions on a matter from the customer, is barred by
applicable rules from exercising discretionary authority to vote on the matter
and so indicates on the proxy.

The following table contains certain information about the nominees for
director and each other person whose term of office as a director will continue
after the meeting.

Business Experience During Present
Past Five Years Director Term
Name and Age and Other Directorships Since Expires
- ----------------------- --------------------------- -------- --------
<S> <C> <C> <C>
*Robert W. Baldridge Mr. Baldridge is Vice Chairman of the Board of 1994 1998
Age: 63 Directors of the Company. Mr. Baldridge served as a
director of TSI Corporation from November 1990
until its acquisition by the Company in October
1994, and was Chairman and Chief Executive
Officer of TSI from April 1993 to October 1994.
Mr. Baldridge has provided consulting services
to the Company during the period since October
1994 pursuant to a Consulting Agreement and has
served as an independent financial and
management consultant since June 1988.

*James A. Geraghty Mr. Geraghty has been the President, Chief Executive 1993 1998
Age: 43 Officer and a director of the Company since its
incorporation in February 1993 and Chairman of
the Board since January 1998. Mr. Geraghty
announced in November 1997 that upon the
engagement of his successor as Chief Executive
Officer of the Company, he would resign from
such position and accept a position as President
of the European Therapeutic Operation of Genzyme
Corporation. Mr. Geraghty joined Genzyme in
September 1992, where he was a Vice President
for Corporate Development and the General
Manager of the transgenics business unit until
the incorporation of the Company.

*Henri A. Termeer Mr. Termeer has served as President of Genzyme since 1993 1998
Age: 52 October 1983, Chief Executive Officer of Genzyme
since December 1985 and Chairman of the Board of
Genzyme since May 1988. Mr. Termeer is a director of
Abiomed, Inc., AutoImmune Inc., Geltex
Pharmaceuticals, Inc. and Diacrin, Inc., as well as a
trustee of Hambrecht & Quist Healthcare Investors and
Hambrecht & Quist Healthcare Life Sciences Investors.
</TABLE>

<PAGE>

Business Experience During Present
Past Five Years Director Term
Name and Age and Other Directorships Since Expires
- ----------------------- --------------------------- -------- --------
<S> <C> <C> <C>
Henry E. Blair Mr. Blair is President, Chief Executive Officer and 1993 1999
Age: 54 Chairman of the Board of Dyax Corp. ("Dyax"), 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
and Celtrix Pharmaceuticals, Inc.

Francis J. Bullock Dr. Bullock has been a senior consultant with Arthur 1994 1999
Age: 61 D. Little, Inc. since September 1993, prior to which
he was Senior Vice President, Research
Operations, of Schering-Plough Research
Institute, a position he held from 1981 until
August 1993.

Alan W. Tuck Mr. Tuck is Chief Strategic Officer of Organogenesis 1993 1999
Age: 49 Inc., a tissue engineering firm, and a strategic
advisor to Dyax. From September 1996 until July
1997, Mr. Tuck was Executive Vice President and Chief
Strategic Officer of Biocode, Inc., a privately-held
biotechnology company focused on covert product
marking and, from September 1996 until March 1997,
was Chief Strategic Officer of Immulogic
Pharmaceutical Corporation, a publicly-held
biotechnology company focused on diseases of the
immune system. From February 1992 through May 1996,
Mr. Tuck was President and Chief Executive Officer of
T Cell Sciences, Inc. ("T Cell"). Mr. Tuck joined T
Cell after four years as Vice President, Marketing
and Business Development of Biogen, Inc.
</TABLE>

<PAGE>

Business Experience During Present
Past Five Years Director Term
Name and Age and Other Directorships Since Expires
- ----------------------- --------------------------- -------- --------
<S> <C> <C> <C>
Alan E. Smith Dr. Smith has been the Senior Vice President, 1993 2000
Age: 52 Research of Genzyme since August 1989 and its Chief
Scientific Officer since September 1996. Prior
to joining Genzyme, he was Vice
President-Scientific Director of Integrated
Genetics, Inc., a biotechnology company, from
November 1984 until its acquisition by Genzyme
in August 1989. From October 1980 to October
1984, Dr. Smith was head of the Biochemistry
Division of the National Institute for Medical
Research in London.
</TABLE>
- --------------------------
* Indicates a nominee for election as director.

The Board of Directors held five meetings during fiscal year 1997. The
Company has standing Audit and Compensation Committees of the Board of Directors
but does not have a Nominating Committee. The Audit Committee, consisting of
Messrs. Baldridge, Blair and Tuck, held three meetings in 1997. The primary
function of the Audit Committee is to assist the Board of Directors in the
discharge of its duties and responsibilities by providing the Board with an
independent review of the financial health of the Company and of the reliability
of the Company's financial controls and financial reporting systems. The
committee reviews the general scope of the Company's annual audit, the fee
charged by the Company's independent accountants and other matters relating to
internal control systems. For information about the Compensation Committee, see
the "Compensation Committee Report on Executive Compensation" below.

Director Compensation

Director Fees. All directors not employed by the Company or Genzyme
receive $1,000 for each meeting of the Board of Directors attended in person,
$400 for each meeting of the Board of Directors attended by telephone conference
call and $400 for each committee meeting attended in person.

1993 Director Stock Option Plan. All of the directors who are not
employees of the Company (the "Eligible Directors") are currently eligible to
participate in the Company's 1993 Director Stock Option Plan (the "Director
Plan"). Under the Director Plan, as amended through March 1998, options are
automatically granted once a year, at the annual meeting of stockholders of
the Company, to Eligible Directors elected or reelected at the meeting. Upon
an Eligible Director's first election to the Board, such Eligible Director
will receive an option to purchase 5,000 shares of Common Stock for each year
of the term of office to which the director is elected (normally 15,000
shares for election to a three-year term of office), which becomes
exercisable with respect to 5,000 shares on the grant date and on each annual
meeting thereafter until fully exercisable, so long as the optionee is then a
director of the Company. An Eligible Director being re-elected at an annual
meeting automatically receives an option to purchase 3,000 shares of Common
Stock for each year or portion thereof of the term of office to which he or
she is elected, which becomes exercisable with respect to 3,000 shares on the
date on which the option was granted and on the date of each annual meeting
of stockholders thereafter, so long as the optionee is then a director of the
Company. The options have a term of ten years and an exercise price, payable
in cash or shares of Common Stock, equal to the last sale price for

<PAGE>

the Common Stock on the business day immediately preceding the date of grant, as
reported by the Nasdaq National Market System.

Grant of Stock Options. On May 28, 1997, the Board of Directors voted
to grant Mr. Termeer a non-qualified stock option to purchase 3,000 shares of
Common Stock. The option became fully exercisable on the date of the grant, has
a term of ten years and has an exercise price of $7.375, payable in cash or
shares of Common Stock.

Consulting Agreement. Under the terms of an Employment and Consulting
Agreement dated October 1, 1994 among the Company, TSI and Mr. Baldridge, Mr.
Baldridge agreed to provide full-time services to the Company for a one-year
term that expired on October 1, 1995 and part-time consulting services to the
Company and Genzyme during the five-year period thereafter. During the current
five-year consulting term, Mr. Baldridge receives a consulting fee equal to
$132,000 per year. Pursuant to the Employment and Consulting Agreement, Mr.
Baldridge was granted an option to purchase 35,000 shares of Common Stock in
October 1994. By its terms, such option became exercisable with respect to 20%
of such shares on the date of grant and with respect to an additional 20% in
each of October 1995, 1996 and 1997. Such option will become exercisable with
respect to the remaining 20% of such shares in October 1998.

<PAGE>

EXECUTIVE COMPENSATION

The Compensation Committee Report set forth below describes the
compensation policies applicable to executive officers and the bases for Mr.
Geraghty's compensation as Chief Executive Officer. The following graph shows
the cumulative total shareholder return on the Company's Common Stock over the
period from July 9, 1993 (the day the Company's Common Stock began trading
publicly) to December 31, 1997, as compared with that of the S&P 500 Composite
Index and the Coopers & Lybrand Biotech Index.

Comparison of the Cumulative Total Return Among
Genzyme Transgenics Corporation, the S&P 500 Composite Index
and the Coopers & Lybrand Biotech Index*

7/09/93 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97

<S> <C> <C> <C> <C> <C> <C>
Genzyme Transgenics Corporation 100 83 25 54 75 123

S&P 500 Composite Index 100 105 106 146 180 240

Coopers & Lybrand Biotech Index 100 122 117 223 256 283
</TABLE>

* Assumes $100 invested on July 9, 1993 in Genzyme Transgenics
Corporation Common Stock and the S&P 500 Composite Index and on
June 30, 1993 in the Coopers & Lybrand Biotech Index, with all
dividends, if any, being reinvested.

<PAGE>

Compensation Committee Report on Executive Compensation

One of the Company's executive officers during 1997, Henri A. Termeer,
Chairman of the Board, is an officer of and is compensated by Genzyme. Mr.
Termeer resigned as Chairman of the Company effective January 1, 1998. See
"Compensation Committee Interlocks and Insider Participation."

The Compensation Committee of the Board of Directors determines the
compensation to be paid to executive officers of the Company, including the
Chief Executive Officer. The Compensation Committee also administers the
Company's 1993 Equity Incentive Plan (the "Equity Plan"), including the grant of
stock options and other awards under the Equity Plan. The Compensation
Committee, which held six meetings during 1997, is currently composed of Dr.
Bullock (Chairman) and Messrs. Blair and Tuck.

The Company's executive compensation policy is designed to attract,
retain and reward executive officers who contribute to the long-term success of
the Company by maintaining a competitive salary structure as compared with other
biotechnology and contract research companies and by aligning compensation with
the achievement of business objectives and individual and corporate performance.
The Company's executive compensation package is composed of three elements: base
salary, annual incentive bonuses based on corporate and individual performance,
and initial, annual and other periodic grants of stock options under the Equity
Plan.

Base Salary and Bonus Compensation.

Executive Officers Other than Mr. Geraghty. The 1997 base salary and
maximum potential bonus for each of Mr. Glick, Mr. Green and Dr. Meade were
fixed by the Committee, based on the executive's prior performance, tenure and
responsibility, as well as independent compensation data. The Committee
established a target bonus opportunity for each such executive equal to 25% of
his base salary. Pursuant to the Company's 1997 Executive Bonus Program, adopted
by the Committee in March 1997, the determination of the achievement of 1997
bonuses to executive officers was based one-third on quantitative performance of
the Company by reference, in equal part, to both company-wide or, as
appropriate, unit-specific revenue and profit before tax, each as compared to
budget projections. One third of an executive's target bonus opportunity was
determined on the basis of qualitative criteria, as evaluated by the Chief
Executive Officer, and the remaining one third on goals criteria, which goals
had been previously agreed upon between the executive and the Chief Executive
Officer.

Chief Executive Officer. In light of the Company's analysis of
compensation data for comparable executive positions gathered from surveys
prepared by independent compensation consultants, the Committee established a
1997 base salary of $234,000 for Mr. Geraghty and a target bonus opportunity of
40% of such base salary. Mr. Geraghty's 1997 base salary reflected a significant
increase from his 1996 base compensation. This increase resulted from a
determination by the Committee that Mr. Geraghty's salary should be at the
midpoint of a range of Chief Executive Officer salaries in the comparable
companies reviewed by the Committee. In addition, the Committee determined that
the 14% increase in his 1997 base salary over his 1996 base salary was merited
in part by Mr. Geraghty's 1996 performance.

Mr. Geraghty's bonus percentage was fixed at the same percentage of
base salary as it had been in 1996. Achievement of his target bonus opportunity
was based one-third on company-wide revenue and profit

<PAGE>

before tax, one-third on the Committee's qualitative evaluation of Mr.
Geraghty's performance, and one-third on certain goals criteria as previously
agreed to between Mr. Geraghty and the Committee. In March 1998, the Committee
awarded Mr. Geraghty a bonus of $84,167 under the 1997 Executive Bonus Program,
representing approximately 90% of Mr. Geraghty's target bonus opportunity for
1997. The Committee noted Mr. Geraghty's achievement of specific goals, such as
the advancement of clinical trials for AT-III and the initiation of new
transgenic development programs. Certain other specific goals were not achieved,
resulting in Mr. Geraghty's less than target bonus award.

Stock Options.

In May 1997, the Committee approved an annual option grant to purchase
50,000 shares of Common Stock to Mr. Geraghty. The decision to do so was made in
light of the number and percentage of outstanding stock options currently held
by Mr. Geraghty and in light of the size of the annual stock option grants to
the other executive officers. The Committee concluded that such a grant,
considered with prior grants, was in keeping with ranges for equity compensation
for Chief Executive Officers of similar companies. Also in May 1997, the
Committee approved annual option grants covering 25,000 shares to each of the
Company's other executive officers. The option exercise price for each of these
annual option grants is $7.375 per share.

Compensation Deductibility.

Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), denies a tax deduction to a public corporation for annual
compensation in excess of one million dollars paid to its chief executive
officer and its other four highest compensated officers. This provision
excludes certain forms of "performance based compensation" from the
compensation taken into account for purposes of that limit. Although the
Company currently does not expect to have compensation exceeding this
one-million-dollar limit, the Equity Plan contains an individual annual limit
on the number of stock options and stock appreciation rights that may be
granted thereunder to permit such awards to qualify for the exclusion from
the limitation on deductibility for performance-based compensation. The
Compensation Committee will continue to assess the impact of Section 162(m)
on its compensation practices and determine what further action, if any, is
appropriate.

By the Compensation Committee,

Henry E. Blair
Francis J. Bullock
Alan W. Tuck

<PAGE>

The following tables set forth certain compensation information for the
Chief Executive Officer of the Company and the three named executive officers of
the Company, other than the Chief Executive Officer, during the fiscal year
ended December 28, 1997.

Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
Annual Compensation ------------
---------------------------- Securities Underlying All Other
Name and Position Year Salary Bonus Options (#) Compensation
- ----------------------- ---- -------- ------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
James A. Geraghty 1997 $234,000 $84,167 50,000 $4,566 (2)
Chief Executive Officer 1996 197,500 79,250 32,103 4,002 (2)
1995 175,000 65,275 60,000 14,235 (1)

Harry M. Meade 1997 $156,000 $39,500 25,000 $2,768 (2)
VP, Transgenics Research 1996 126,000 31,500 12,720 2,177 (2)
1995 120,000 22,038 20,000 697 (2)

Peter H. Glick 1997 $154,000 $27,762 25,000 $4,658 (2)
VP, Marketing and 1996 135,000 25,313 12,720 4,668 (2)
Business Development 1995 119,808 20,774 20,000 3,594 (2)

John B. Green 1997 $150,000 $35,808 25,000 $3,993 (2)
VP, Chief Financial 1996 135,000 29,531 12,720 4,007 (2)
Officer 1995 122,635 14,367 25,000 3,548 (2)

</TABLE>

- -----------------------------------
(1) The reported amount includes employer contributions of $741 under the
Genzyme Transgenics Corporation 401(k) Plan and relocation expenses of
$13,494.

(2) The reported amount represents employer contributions under the Genzyme
Transgenics Corporation 401(k) Plan.

<PAGE>

Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>

Individual Grants Potential Realizable Value
-------------------------------------------------- at Assumed
Number Percent of Annual Rates of Stock
Securities Total Options Price Appreciation
Underlying Granted to Exercise for Option Term (2)
Options Employees in Price Expiration ------------------------------------
Name Granted(1) Fiscal Year ($/share) Date 0%($) 5%($) 10%($)
---- ---------- ----------- --------- ---------- ----- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
James A. Geraghty 50,000 7.8% 7.375 5/28/07 0 231,905 587,693

Harry M. Meade 25,000 3.9% 7.375 5/28/07 0 115,952 293,846

Peter H. Glick 25,000 3.9% 7.375 5/28/07 0 115,952 293,846

John B. Green 25,000 3.9% 7.375 5/28/07 0 115,952 293,846

All Stockholders -- -- -- -- 0 81,645,077 206,904,655
</TABLE>

(1) The options listed in this column were granted under the Equity Plan on
May 28, 1997 and are exercisable with respect to 20% of the underlying
shares on the date of grant and an additional 20% of the underlyin
shares on each of the next four anniversaries of such date.

(2) The dollar amounts under these columns are the result of calculations
at the 5% and 10% rates set by the Securities and Exchange Commission
and, therefore, are not intended to forecast possible future
appreciation, if any, in the price of the underlying Common Stock. No
gain to the optionees is possible without an increase in price of the
Common Stock, which will benefit all stockholders proportionately. In
order to realize the potential values set forth in the 5% and 10%
columns of this table, the per share price of the Common Stock would
have to be approximately 63% and 159% above the respective weighted
average exercise or base price shown. The amount shown for all
stockholders reflects the potential value to all stockholders if the
price of the Common Stock appreciates at such rates over the term of
the options, assuming a purchase in 1997 at the total weighted average
exercise price of all options described above ($7.375).

<PAGE>

Aggregated Option Exercises In Last Fiscal Year And
Fiscal Year-End Option Value

Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money
Options at Options at
Shares Fiscal Year-End (#) Fiscal Year-End ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable (1)
---- ------------ ------------ ------------- -----------------

<S> <C> <C> <C> <C>
James A. Geraghty 0 0 157,340 / 82,013 647,833 / 289,730

Harry M. Meade 0 0 68,288 / 35,432 247,124 / 114,979

Peter H. Glick 0 0 47,728 / 40,292 282,210 / 148,750

John B. Green 0 0 56,848 / 41,272 298,604 / 155,456
</TABLE>

(1) Based on the difference between the option exercise price and the
closing price of the underlying Common Stock on December 26, 1997 as
reported by the Nasdaq National Market System, which closing price was
$10.00.

EXECUTIVE EMPLOYMENT AGREEMENTS

James A. Geraghty. Under the terms of the Amended and Restated
Employment Agreement entered into between Mr. Geraghty and the Company in August
1997, Mr. Geraghty's annual base salary, which has been set at $269,000 for the
1998 calendar year, will be no less than $234,000 per annum. He is also eligible
to receive performance and incentive bonuses as determined by the Company's
Compensation Committee, which has set his maximum cash bonus for 1998 at 40% of
such base salary.

Peter H. Glick. Under the terms of the Amended and Restated Employment
Agreement entered into between Mr. Glick and the Company in September 1997, Mr.
Glick's annual base salary, which has been set at $165,000 for the 1998 calendar
year, will be no less than $154,000 per annum. He is also eligible to receive
performance and incentive bonuses as determined by the Company's Compensation
Committee, which has set his maximum cash bonus for 1998 at 25% of such base
salary.

John B. Green. Under the terms of the Amended and Restated Employment
Agreement entered into between Mr. Green and the Company in August 1997, Mr.
Green's annual base salary, which has been set at $172,400 for the 1998 calendar
year, will be no less than $150,000 per annum. He is also eligible to receive
performance and incentive bonuses as determined by the Company's Compensation
Committee, which has set his maximum cash bonus for 1998 at 25% of such base
salary.

<PAGE>

Harry M. Meade. Under the terms of an Employment Agreement between Dr.
Meade and the Company, Dr. Meade's annual base salary, which has been set at
$172,500 for the 1998 calendar year, will be no less than $126,000 per annum.
Under the agreement, he is also eligible to receive bonuses based on individual
and Company performance, and the Company's Compensation Committee has
established a maximum bonus for 1998 equal to 25% of such base salary.

Each of the foregoing agreements will remain in effect until terminated
in accordance with its terms. In the event that the Company terminates any of
the foregoing employees without cause or if any of such employees terminates his
agreement upon a "change of control" of the Company, as such term is defined in
each of the employment agreements, such employee will immediately be paid the
maximum bonus for the year of termination, prorated on the basis of the portion
of the year completed, and will continue to receive his then current base salary
for a severance period. In the case of Mr. Geraghty, the severance period is two
years. In the case of Mr. Green, the severance period in the event of a "change
of control" is two years and otherwise is one year. In the case of Mr. Glick,
the severance period in the event of a disposition by the Company of all or
substantially all of its contract research organization businesses is two years
and otherwise is one year. In the case of Dr. Meade, the severance period is one
year. If Dr. Meade terminates his agreement upon a change of control, his
severance payments will be reduced by income which he derives during such
severance period from a subsequent employer. In any case in which the Company
must pay severance upon a change of control (plus, in the case of Mr. Glick, a
disposition of the contract research organization businesses), outstanding stock
options held by the affected employee which are not then exercisable shall
immediately become exercisable.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the fiscal year ended December 28, 1997, the Company's
Compensation Committee consisted of Dr. Bullock and Messrs. Blair and Tuck.

Mr. Blair is President, Chief Executive Officer and Chairman of the
Board and Mr. Tuck is a strategic advisor to Dyax. The Company and Dyax are
parties to an agreement under which Dyax has agreed to develop a purification
media for certain of the Company's products. At December 28, 1997, the Company
had paid Dyax an aggregate of $30,000 pursuant to such agreement.

Three members of the Company's Board of Directors serve as directors
and/or executive officers of Genzyme; Mr. Termeer is Chairman of the Board,
President and Chief Executive Officer, Mr. Blair is a director, and Dr. Smith is
an executive officer of Genzyme. In connection with and following the Company's
initial public offering in July 1993, the Company entered into various
agreements with Genzyme which are summarized below. In 1997, the Company paid
Genzyme an aggregate of $8,730,000 million and received an aggregate of
$7,011,000 from Genzyme pursuant to the research and development agreement, the
services agreement and the lease agreement described below.

Technology Transfer Agreement. Under the Technology Transfer Agreement
dated May 1, 1993, Genzyme transferred substantially all of its transgenic
assets and liabilities to GTC, including its ownership interest in SMI Genzyme
Ltd., a joint venture between Genzyme and Sumitomo Metal Industries Ltd. (the
"Joint Venture"), assigned its relevant contracts and licensed to the Company
technology owned or controlled

<PAGE>

by it and relating to the production of recombinant proteins in the milk of
transgenic animals (the "Field") and the purification of proteins produced in
that matter. The license is worldwide and royalty-free as to Genzyme, although
GTC is obligated to Genzyme's licensors for any royalties due them. As long as
Genzyme owns less than 50% of GTC, Genzyme may use the transferred technology,
or any other technology it subsequently acquires relating to the Field, without
any royalty obligation to the Company, provided Genzyme may not offer transgenic
production services to third parties.

Research & Development Agreement. Pursuant to the Research and
Development Agreement (the "R&D Agreement"), Genzyme and GTC agreed, until May
1, 1998, to provide research and development services to each other relating, in
the case of GTC, to transgenic production of recombinant proteins and, in the
case of Genzyme, to the purification of such proteins. Each company receives
payments from the other equal to the performing party's fully allocated cost of
such services, which can be no less than 80% of the annual budgets established
by the parties under the R&D Agreement, plus, in most cases, a fee equal to 10%
of such costs.

Services Agreement. Under a services agreement between GTC and Genzyme
(the "Services Agreement"), GTC pays Genzyme a fixed monthly fee for basic
laboratory and administrative support services provided by Genzyme. The monthly
fee is adjusted annually, based on the services to be provided and changes in
Genzyme's cost of providing the services. The Services Agreement is
self-renewing annually and may be terminated upon 90 days notice by either party
to the other party.

Lease. GTC leases a portion of Genzyme's facilities in Framingham,
Massachusetts (the "Lease"). GTC paid Genzyme $280,000 under the Lease in 1997.

The Company and Genzyme have also entered into the following
agreements.

AT-III Development Funding. In December 1997, the Company and Genzyme
established a limited liability company as a vehicle to continue their joint
development and commercialization of transgenic AT-III. Under the terms of a
collaboration agreement, Genzyme will provide 70 percent and the Company will
fund the other 30 percent of the first $33 million in development costs. The
companies will split equally the costs thereafter. Both companies will also
split equally profits from product sales.

Convertible Debt Agreement. Under the Amended and Restated Convertible
Debt Agreement dated September 4, 1997 (the "Convertible Debt Agreement"),
Genzyme has agreed to provide to the Company a revolving line of credit in the
amount of $8.3 million, which expires on March 31, 2000 and has an option, at
that date, for the Company to convert the outstanding balance to a three-year
term loan. As of December 28, 1997, there was $6,000,000 outstanding on the line
of credit.

Credit Line Guaranty, Term Loan Guaranty and Lien. The Company obtained
a credit line in July 1995 and a term loan in December 1995 with a commercial
bank, each secured by Genzyme's guaranty of the Company's obligations thereunder
(up to $9.8 million at December 28, 1997). The Company has agreed to reimburse
Genzyme for any liability Genzyme may incur under such guaranty and has granted
Genzyme a first lien on all of the Company's assets to secure such obligation.

<PAGE>

PROPOSAL TO AMEND THE 1993 EQUITY INCENTIVE PLAN

General

The Equity Plan was adopted by the Board of Directors in May 1993 and
approved by Genzyme as the sole stockholder of the Company in June 1993. The
purpose of the Equity Plan is to attract and retain key employees and
consultants of the Company and its affiliates. The Equity Plan provides for the
grant of stock options (incentive and nonstatutory), stock appreciation rights,
performance shares, restricted stock and stock units ("Awards") to employees and
consultants of the Company and its affiliates ("Eligible Persons").

Currently, Awards may be made under the Equity Plan for up to a total
of 2,515,000 shares of Common Stock, subject to adjustment for stock splits and
similar capital changes. In addition, options to purchase an aggregate of
224,350 shares of Common Stock (the "Assumed Options") were granted as a result
of the Company's assumption of outstanding options to purchase shares of Common
Stock of TSI Corporation ("TSI") in connection with the October 1994 acquisition
of TSI by the Company. Options may be granted under the Equity Plan through the
assumption or substitution of outstanding grants from an acquired company
without reducing the number of shares available for award under the Equity Plan.

As of April 1, 1998, 575 employees were eligible to participate in the
Equity Plan and options to purchase an aggregate of 2,520,468 shares of Common
Stock had been granted, excluding the Assumed Options. Of these options, options
to purchase 351,926 shares had been cancelled, options to purchase 292,741 had
been exercised and options to purchase an aggregate of 1,875,801 shares remained
outstanding, leaving only 346,458 shares available for new Awards under the
Equity Plan. No stock appreciation rights, performance shares, restricted stock,
stock units or other stock-based awards have been granted under the Equity Plan.
The closing price of the Company's Common Stock on April 1, 1998, as reported by
the Nasdaq National Market System, was $11.9375.

Administration and Eligibility

Awards are made by the Compensation Committee which has been designated
by the Board of Directors to administer the Equity Plan. The Compensation
Committee may delegate to one or more officers the power to make awards under
the Equity Plan to persons other than officers of the Company who are subject to
the reporting requirements of Section 16 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act").

Awards under the Equity Plan are granted at the discretion of the
Compensation Committee, which determines the recipients and establishes the
terms and conditions of each award, including the exercise price, the form of
payment of the exercise price, the number of shares subject to options or other
equity rights and the time at which such options become exercisable. However,
the exercise price of any stock option granted under the Equity Plan may not be
less than the fair market value of the Common Stock on the date of grant.

The Compensation Committee has adopted guidelines for the number of
annual and new hire options awarded to employees of the Company, other than
employees who are subject to Section 16 of the Exchange Act. These guidelines
are based on the salary grade of the employee and provide for the grant of
incentive

<PAGE>

stock options at fair market value on the date of grant. The Compensation
Committee has delegated to the President the power to make awards under the
Equity Plan, in amounts consistent with the guidelines, to employees that are
not subject to Section 16 of the Exchange Act. The guidelines may be changed by
the Compensation Committee at any time.

Proposed Amendment to the 1993 Equity Incentive Plan

The Board of Directors has voted, subject to approval of the
stockholders, to increase the number of shares of Common Stock that may be
subject to Awards under the Equity Plan by 500,000 shares (the "Additional
Shares") to an aggregate of 3,015,000 shares, subject to adjustment for stock
splits and similar capital changes. This proposed amendment is intended to
ensure that a sufficient number of shares of Common Stock are available to be
issued to Eligible Persons in the future.

Federal Income Tax Consequences Relating to Stock Options

Incentive Stock Options. An optionee does not realize taxable income
upon the grant or exercise of an incentive stock option ("ISO") under the Equity
Plan.

If no disposition of shares issued to an optionee pursuant to the
exercise of an ISO is made by the optionee both within two years from the date
of grant and within one year from the date of exercise, then (a) upon sale of
such shares, any amount realized in excess of the option price (the amount paid
for the shares) is taxed to the optionee as mid-term or long-term capital gain
and any loss sustained will be a mid-term or long-term capital loss and (b) no
deduction is allowed to the Company for Federal income tax purposes. The
exercise of ISOs gives rise to an adjustment in computing alternative minimum
taxable income that may result in alternative minimum tax liability for the
optionee.

If shares of Common Stock acquired upon the exercise of an ISO are
disposed of prior to the expiration of either the two-year or the one-year
holding period described above (a "disqualifying disposition") then (a) the
optionee realizes ordinary income in the year of disposition in an amount equal
to the excess (if any) of the fair market value of the shares at exercise (or,
if less, the amount realized on a sale of such shares) over the option price
thereof and (b) the Company is entitled to deduct such amount. Any further gain
realized is taxed as a short-term, mid-term or long-term capital gain and does
not result in any deduction to the Company. A disqualifying disposition in the
year of exercise will generally avoid the alternative minimum tax consequences
of the exercise of an ISO.

Nonstatutory Stock Options. No income is realized by the optionee at
the time a nonstatutory option is granted. Upon exercise, (a) ordinary income is
realized by the optionee in an amount equal to the difference between the option
price and the fair market value of the shares on the date of exercise and (b)
the Company receives a tax deduction for the same amount. Upon disposition of
the shares, appreciation or depreciation after the date of exercise is treated
as a short-term, mid-term or long-term capital gain or loss and will not result
in any deduction by the Company.

<PAGE>

Vote Required

The affirmative vote by the holders of a majority of the shares
present, or represented by proxy, and entitled to vote at the meeting is
required to approve the amendment to the Equity Plan. Broker non-votes will not
be counted as present or represented for this purpose. Abstentions will be
counted as present and entitled to vote and, accordingly, will have the effect
of a negative vote.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.

PROPOSAL TO AMEND THE 1993 DIRECTOR STOCK OPTION PLAN

General

The purpose of the Director Plan is to attract and retain qualified
persons, who are not also officers or employees of the Company, to serve as
directors of the Company and to encourage stock ownership in the Company by such
directors so as to provide additional incentives to promote the Company's
success. The Director Plan currently authorizes the grant of nonstatutory stock
options for the purchase of a maximum of 100,000 shares of Common Stock, subject
to adjustment for stock splits and similar capital changes, to Eligible
Directors as defined below. As of April 1, 1998, options to purchase an
aggregate of 66,000 shares of Common Stock have been granted under the Director
Plan, of which options to purchase 8,000 shares have been cancelled, leaving
58,000 shares available for future grants.

All non-employee directors of the Company ("Eligible Directors") are
eligible to participate in the Director Plan. Currently, five of the Company's
seven directors are eligible to participate in the Director Plan.

In March 1998, the Board of Directors approved an increase in the size
of each grant under the Director Plan from 2,000 shares for each year in the
term to which a director is elected to 5,000 shares for each such year. The
increase reflects the Board's determination that the grant size was below the
average size of grants under director option plans implemented by comparable
companies. As a result of the increased grant size, the Board anticipated a need
to increase the number of shares reserved for issuance under the Director Plan.
For a description of the Director Plan, see "Election of Directors-Director
Compensation."

Proposed Amendment to the 1993 Director Stock Option Plan

The Board of Directors has voted, subject to approval of the
stockholders, to increase the number of shares of Common Stock that may be
subject to grants under the Director Plan by 100,000 shares to an aggregate of
200,000 shares, subject to adjustment for stock splits and similar capital
changes. This proposed amendment is intended to ensure that a sufficient number
of shares of Common Stock are available to be issued to Eligible Directors in
the future.

<PAGE>

Federal Income Tax Consequences Relating to Director Plan Options

Options granted under the Director Plan are nonstatutory stock options.
No income is realized by the director at the time a nonstatutory option is
granted. Upon exercise, (a) ordinary income is realized by the director in an
amount equal to the difference between the option price and the fair market
value of the shares on the date of exercise and (b) the Company receives a tax
deduction for the same amount. Upon disposition of the shares, appreciation or
depreciation after the date of exercise is treated as a short-term, mid-term or
long-term capital gain or loss and will not result in any deduction by the
Company.

Vote Required

The affirmative vote of the holders of a majority in interest of the
Common Stock present, or represented by proxy, and entitled to vote at the
meeting is required to approve the proposed amendment to the Director Plan.
Broker non-votes will not be counted as present or represented for this purpose.
Abstentions will be counted as present and entitled to vote and, accordingly,
will have the effect of a negative vote.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL

CERTAIN TRANSACTIONS

Messrs. Blair, Termeer and Tuck and Dr. Smith are directors and/or
executive officers of Dyax and/or Genzyme. The Company is involved in various
financial and business transactions with Dyax and Genzyme. See "Compensation
Committee Interlocks and Insider Participation." In addition, Evan M. Lebson,
who served as an officer of the Company until his resignation as Vice President
and Treasurer in August 1997, is an officer of Genzyme, and both he and Mr.
Termeer were compensated by Genzyme, although the Company reimbursed Genzyme for
a part of Mr. Lebson's cash compensation under the Services Agreement between
the Company and Genzyme. See "Compensation Committee Interlocks and Insider
Participation -- Services Agreement."

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the Securities and
Exchange Commission ("SEC") initial reports of ownership and reports of changes
in ownership of Common Stock. Officers, directors and greater-than-ten-percent
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) reports they file.

To the Company's knowledge, based solely on its review of copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 28, 1997, all
Section 16(a) filing requirements applicable to ten percent stockholders known
to the Company were complied with and all Section 16(a) filing requirements
applicable to its officers and directors were

<PAGE>

complied with, except that five reports of six transactions by Mr. Green and two
reports of two transactions by Dr. Meade were filed late.

INFORMATION CONCERNING INDEPENDENT ACCOUNTANTS

The firm of Coopers & Lybrand L.L.P., independent accountants, examined
the Company's financial statements for the year ended December 28, 1997. The
Board of Directors has appointed Coopers & Lybrand L.L.P. to serve as the
Company's auditors for its fiscal year ending January 3, 1999. Representatives
of Coopers & Lybrand L.L.P. are expected to attend the annual meeting to respond
to appropriate questions and will have the opportunity to make a statement if
they desire.

DEADLINE FOR STOCKHOLDER PROPOSALS

In order for a stockholder proposal to be considered for inclusion in the
Company's proxy materials for the 1999 annual meeting of stockholders, it must
be received by the Company at Five Mountain Road, Framingham, Massachusetts
01701, Attention: John B. Green, no later than December 24, 1998.

ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER PROPOSALS AND NOMINATIONS

The by-laws of the Company provide that, in order for a stockholder to
bring business before or propose director nominations at an annual meeting, the
stockholder must give written notice to the Chairman of the Board, President,
Treasurer or Clerk of the Company not less than 50 days nor more than 75 days
prior to the meeting. The notice must contain specified information about the
proposed business or each nominee, and the stockholder making the proposal or
nomination. If the annual meeting is scheduled for a date other than the third
Thursday in May and notice thereof is mailed to stockholders or publicly
disclosed less than 65 days in advance, the notice given by the stockholder must
be received not later than the 15th day following the day on which the notice of
such annual meeting date was mailed or public disclosure made, whichever first
occurs.

EXPENSES OF SOLICITATION

The Company will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others of forwarding
solicitation material to beneficial owners of stock. In addition to the use of
mails, proxies may be solicited by officers and employees of the Company, in
person or by telephone.

OTHER MATTERS

The Board of Directors does not know of any business to come before the
meeting other than the matters described in the notice. If other business is
properly presented for consideration at the meeting, the enclosed proxy
authorizes the persons named therein to vote the shares in their discretion.

21
<PAGE>

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS MAY 27, 1998

GENZYME TRANSGENICS CORPORATION

The undersigned stockholder of Genzyme Transgenics Corporation (the
"Company") hereby appoints James A. Geraghty, John B. Green and Lynnette C.
Fallon, and each of them acting singly, the attorneys and proxies of the
undersigned, with full power of substitution, to vote on behalf of the
undersigned all of the shares of capital stock of the Company that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on May 27, 1998, and at all adjournments thereof, hereby
revoking any proxy heretofore given with respect to such shares.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE ALSO AUTHORIZED
TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.

<PAGE>

PLEASE SIGN AND MAIL THIS PROXY TODAY

(Continued and to be signed on reverse side.)

Mark here for
Address Change / /
and Note on
Reverse

Please date, sign and mail your
proxy card back as soon as possible!

Annual Meeting of Stockholders
GENZYME TRANSGENICS CORPORATION

May 27, 1998

A / X / Please mark your
votes as in this example

WITHHELD
FOR from
all nominees all nominees

1. Proposal to / / / / Nominees: Robert W. Baldridge
elect James A. Geraghty
directors. Henri A. Termeer

(INSTRUCTIONS: To withhold authority to vote for
any person, strike a line through the nominee's
name.)

FOR AGAINST ABSTAIN
2. Proposal to amend the 1993
Equity Incentive Plan to / / / / / /
increase the number of
shares covered by the plan.

3. Proposal to amend the 1993
Director Stock Option Plan / / / / / /
to increase the number of
shares covered by the plan.

- ----------------- --------- --------------------------- --------------
SIGNATURE DATE: SIGNATURE (IF HELD JOINTLY) DATE:

Note: Please sign exactly as name appears on stock certificate. When shares
are held by joint tenants, both should sign. When signing as
executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign
in partnership name by authorized person.

<PAGE>
EXHIBIT 1

1. Adopted by the Board of Directors on May 1, 1993; Approved by the
stockholders on June 25, 1993.
2. Amended by the Board of Directors on September 24, 1993 (No stockholder
approval required).
3. Amended by the Board of Directors on October 24, 1994, March 17, 1995 and
April 6, 1995; Approved by the stockholders on May 19, 1995.
4. Amended by the Board of Directors on March 13, 1996; Approved by the
stockholders on May 15, 1996.
5. Amended by the Board of Directors on March 3, 1997; Approved by the
stockholders on May 28, 1997.
6. As amended by the Board of Directors on March 4, 1998 (subject to
stockholder approval on May 27, 1998).

GENZYME TRANSGENICS CORPORATION

1993 Equity Incentive Plan

Section 1. Purpose

The purpose of the Genzyme Transgenics Corporation 1993 Equity Incentive
Plan (the "Plan") is to attract and retain key employees and consultants to
provide an incentive for them to assist the Company to achieve long-range
performance goals, and to enable them to participate in the long-term growth of
the Company.

Section 2. Definitions

"Affiliate" means any business entity in which the Company owns directly or
indirectly 50% or more of the total combined voting power or has a significant
financial interest as determined by the Committee.

"Award" means any Option, Stock Appreciation Right, Performance Share,
Restricted Stock or Stock Unit awarded under the Plan.

"Board" means the Board of Directors of the Company.

"Code" means the Internal Revenue Code of 1986, as amended from time to
time.

"Committee" means either any one of one or more committees of the Board
appointed by the Board to administer the Plan, the members of which are
"Non-Employee Directors" within the meaning of Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, or any successor provision (the "Rule") to the
extent necessary to comply with the Rule.

"Common Stock" or "Stock" means the Common Stock, $0.01 par value, of the
Company.

<PAGE>

"Company" means Genzyme Transgenics Corporation.

"Designated Beneficiary" means the beneficiary designated by a Participant,
in a manner determined by the Committee, to receive amounts due or exercise
rights of the Participant in the event of the Participant's death. In the
absence of an effective designation by a Participant, designated Beneficiary
shall mean the Participant's estate.

"Fair Market Value" means, with respect to Common Stock or any other
property, the fair market value of such property as determined by the Committee
in good faith or in the manner established by the Committee from time to time.

"Incentive Stock Option" means an option to purchase shares of Common Stock
awarded to a Participant under Section 6 which is intended to meet the
requirements of Section 422 of the Code or any successor provision.

"Nonstatutory Stock Option" means an option to purchase shares of Common
Stock awarded to a Participant under Section 6 which is not intended to be an
Incentive Stock Option.

"Option" means an Incentive Stock Option or a Nonstatutory Stock Option.

"Participant" means a person selected by the Committee to receive an Award
under the Plan.

"Performance Cycle" or "Cycle" means the period of time selected by the
Committee during which performance is measured for the purpose of determining
the extent to which an award of Performance Shares has been earned.

"Performance Shares" mean shares of Common Stock which may be earned by the
achievement of performance goals awarded to a Participant under Section 8.

"Reporting Person" means a person subject to Section 16 of the Securities
Exchange Act of 1934 or any successor provision.

"Restricted Period" means the period of time selected by the Committee
during which an award of Restricted Stock may be forfeited to the Company.

"Restricted Stock" means shares of Common Stock subject to forfeiture
awarded to a Participant under Section 9.

"Stock Appreciation Right" or "SAR" means a right to receive any excess in
value of shares of Common Stock over the exercise price awarded to a Participant
under Section 7.

"Stock Unit" means an award of Common Stock or units that are valued in
whole or in part by reference to, or otherwise based on, the value of Common
Stock, awarded to a Participant under Section 10.

<PAGE>

Section 3. Administration

The Plan shall be administered by the Committee. The Committee shall have
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the operation of the Plan as it shall from time to time
consider advisable, and to interpret the provisions of the Plan. The
Committee's decisions shall be final and binding. To the extent permitted by
applicable law, the Committee may delegate to one or more executive officers of
the Company the power to make Awards to Participants who are not Reporting
Persons and all determinations under the Plan with respect thereto, provided
that the Committee shall fix the maximum amount of such Awards for the group and
a maximum for any one Participant.

Section 4. Eligibility

All employees, and in the case of Awards other than Incentive Stock
Options, consultants of the Company or any Affiliate capable of contributing
significantly to the successful performance of the Company, other than a person
who has irrevocably elected not to be eligible, are eligible to be Participants
in the Plan.

Section 5. Stock Available for Awards

(a) Subject to adjustment under subsection (b), Awards may be made under
the Plan for up to 3,015,000 (1) shares of Common Stock. If any Award in
respect of shares of Common Stock expires or is terminated unexercised or is
forfeited for any reason or settled in a manner that results in fewer shares
outstanding than were initially awarded, including without limitation the
surrender of shares in payment for the Award or any tax obligation thereon, the
shares subject to such Award or so surrendered, as the case may be, to the
extent of such expiration, termination, forfeiture or decrease, shall again be
available for award under the Plan, subject, however, in the case of Incentive
Stock Options, to any limitation required under the Code. Common Stock issued
through the assumption or substitution of outstanding grants from an acquired
company shall not reduce the shares available for Awards under the Plan. Shares
issued under the Plan may consist in whole or in part of authorized but unissued
shares or treasury shares.

(b) In the event that the Committee determines that any stock dividend,
extraordinary cash dividend, creation of a class of equity securities,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase Common
Stock at a price substantially below fair market value, or other similar
transaction affects the Common Stock such that an adjustment

- ---------------
(1) This number includes 224,350 shares reserved for issuance upon the exercise
of outstanding options to purchase shares of common stock of TSI Corporation,
which options were assumed by the Company in October 1994 in connection with the
Company's acquisition of TSI Corporation.

<PAGE>

is required in order to preserve the benefits or potential benefits intended to
be made available under the Plan, then the Committee, subject, in the case of
Incentive Stock Options, to any limitation required under the Code, shall
equitably adjust any or all of (i) the number and kind of shares in respect of
which Awards may be made under the Plan, (ii) the number and kind of shares
subject to outstanding Awards, and (iii) the award, exercise or conversion price
with respect to any of the foregoing, and if considered appropriate, the
Committee may make provision for a cash payment with respect to an outstanding
Award, provided that the number of shares subject to any Award shall always be a
whole number.

Section 6. Stock Options

(a) Subject to the provisions of the Plan, the Committee may award
Incentive Stock Options and Nonstatutory Stock Options and determine the number
of shares to be covered by each Option, the option price therefor and the
conditions and limitations applicable to the exercise of the Option. The terms
and conditions of Incentive Stock Options shall be subject to and comply with
Section 422 of the Code, or any successor provision, and any regulations
thereunder.

(b) The Committee shall establish the option price at the time each Option
is awarded, which price shall not be less than 100% of the Fair Market Value of
the Common Stock on the date of award.

(c) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may specify in the applicable Award or
thereafter. The Committee may impose such conditions with respect to the
exercise of Options, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.

(d) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the option price therefor is received by the Company.
Such payment may be made in whole or in part in cash or, to the extent permitted
by the Committee at or after the award of the Option, by delivery of a note or
shares of Common Stock owned by the optionee, including Restricted Stock, valued
at their Fair Market Value on the date of delivery, or such other lawful
consideration as the Committee may determine.

(e) The Committee may provide for the automatic award of an Option upon
the delivery of shares to the Company in payment of an Option for up to the
number of shares so delivered.

<PAGE>

Section 7. Stock Appreciation Rights

(a) Subject to the provisions of the Plan, the Committee may award SARs in
tandem with an Option (at or after the award of the Option), or alone and
unrelated to an Option. SARs in tandem with an Option shall terminate to the
extent that the related Option is exercised, and the related Option shall
terminate to the extent that the tandem SARs are exercised. SARs shall have an
exercise price of not less than the Fair Market Value of the Common Stock on the
date of award, or in the case of SARs in tandem with Options, the exercise price
of the related Option.

(b) An SAR related to an Option which can only be exercised during limited
periods following a change in control of the Company, may entitle the
Participant to receive an amount based upon the highest price paid or offered
for Common Stock in any transaction relating to the change in control or paid
during the thirty-day period immediately preceding the occurrence of the change
in control in any transaction reported in the stock market in which the Common
Stock is normally traded.

Section 8. Performance Shares

(a) Subject to the provisions of the Plan, the Committee may award
Performance Shares and determine the number of such shares for each Performance
Cycle and the duration of each Performance Cycle. There may be more than one
Performance Cycle in existence at any one time, and the duration of Performance
Cycles may differ from each other. The payment value of Performance Shares
shall be equal to the Fair Market Value of the Common Stock on the date the
Performance Shares are earned or, in the discretion of the Committee, on the
date the Committee determines that the Performance Shares have been earned.

(b) The Committee shall establish performance goals for each Cycle, for
the purpose of determining the extent to which Performance Shares awarded for
such Cycle are earned, on the basis of such criteria and to accomplish such
objectives as the Committee may from time to time select. During any Cycle, the
Committee may adjust the performance goals for such Cycle as it deems equitable
in recognition of unusual or non-recurring events affecting the Company, changes
in applicable tax laws or accounting principles, or such other factors as the
Committee may determine.

(c) As soon as practicable after the end of a Performance Cycle, the
Committee shall determine the number of Performance Shares which have been
earned on the basis of performance in relation to the established performance
goals. The payment values of earned Performance Shares shall be distributed to
the Participant or, if the Participant has died, to the Participant's Designated
Beneficiary, as soon as practicable thereafter. The Committee shall determine,
at or after the time of award, whether payment values will be settled in whole
or in part in cash or other property, including Common Stock or Awards.

<PAGE>

Section 9. Restricted Stock

(a) Subject to the provisions of the Plan, the Committee may award shares
of Restricted Stock and determine the duration of the Restricted Period during
which, and the conditions under which, the shares may be forfeited to the
Company and the other terms and conditions of such Awards. Shares of Restricted
Stock shall be issued for no cash consideration or such minimum consideration as
may be required by applicable law.

(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as permitted by the Committee, during
the Restricted Period. Shares of Restricted Stock shall be evidenced in such
manner as the Committee may determine. Any certificates issued in respect of
shares of Restricted Stock shall be registered in the name of the Participant
and unless otherwise determined by the Committee, deposited by the Participant,
together with a stock power endorsed in blank, with the Company. At the
expiration of the Restricted Period, the Company shall deliver such certificates
to the Participant or if the Participant has died, to the Participant's
Designated Beneficiary.

Section 10. Stock Units

(a) Subject to the provisions of the Plan, the Committee may award Stock
Units subject to such terms, restrictions, conditions, performance criteria,
vesting requirements and payment rules as the Committee shall determine.

(b) Shares of Common Stock awarded in connection with a Stock Unit Award
shall be issued for no cash consideration or such minimum consideration as may
be required by applicable law.

Section 11. General Provisions Applicable to Awards

(a) Limitations on Transferability. Options shall not be transferable by
the recipient other than by will or the laws of descent and distribution and are
exercisable during such person's lifetime only by such person or by such
person's guardian or legal representative; provided that the Committee may in
its discretion waive such restriction in any case.

(b) Documentation. Each Award under the Plan shall be evidenced by a
writing delivered to the Participant specifying the terms and conditions thereof
and containing such other terms and conditions not inconsistent with the
provisions of the Plan as the Committee considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable tax and regulatory
laws and accounting principles.

(c) Committee Discretion. Each type of Award may be made alone, in
addition to or in relation to any other type of Award. The terms of each type
of Award need not be identical, and the Committee need not treat Participants
uniformly. Except as otherwise

<PAGE>

provided by the Plan or a particular Award, any determination with respect to an
Award may be made by the Committee at the time of award or at any time
thereafter.

(d) Settlement. The Committee shall determine whether Awards are settled
in whole or in part in cash, Common Stock, other securities of the Company,
Awards or other property. The Committee may permit a Participant to defer all
or any portion of a payment under the Plan, including the crediting of interest
on deferred amounts denominated in cash and dividend equivalents on amounts
denominated in Common Stock.

(e) Dividends and Cash Awards In the discretion of the Committee, any
Award under the Plan may provide the Participant with (i) dividends or dividend
equivalents payable currently or deferred with or without interest, and (ii)
cash payments in lieu of or in addition to an Award.

(f) Termination of Employment. The Committee shall determine the effect
on an Award of the disability, death, retirement or other termination of
employment of a Participant and the extent to which, and the period during
which, the Participant's legal representative, guardian or Designated
Beneficiary may receive payment of an Award or exercise rights thereunder.

(g) Change in Control. In order to preserve a Participant's rights under
an Award in the event of a change in control of the Company, the Committee in
its discretion may, at the time an Award is made or at any time thereafter, take
one or more of the following actions: (i) provide for the acceleration of any
time period relating to the exercise or realization of the Award, (ii) provide
for the purchase of the Award upon the Participant's request for an amount of
cash or other property that could have been received upon the exercise or
realization of the Award had the Award been currently exercisable or payable,
(iii) adjust the terms of the Award in a manner determined by the Committee to
reflect the change in control, (iv) cause the Award to be assumed, or new rights
substituted therefor, by another entity, or (v) make such other provision as the
Committee may consider equitable and in the best interests of the Company.

(h) Withholding. The Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, any taxes required by
law to be withheld in respect of Options under the Plan no later than the date
of the event creating the tax liability. The Company and its Affiliates may, to
the extent permitted by law, deduct any such tax obligations from any payment of
any kind otherwise due to the Participant. In the Committee's discretion, the
Participant may pay any taxes due with respect to an Option in whole or in part
in shares of Common Stock, including shares retained from the Option creating
the tax obligation, valued at their Fair Market Value on the date of retention
or delivery.

(i) Foreign Nationals. Awards may be made to Participants who are foreign
nationals or employed outside the United States on such terms and conditions
different from those specified in the Plan as the Committee considers necessary
or advisable to achieve the purposes of the Plan or comply with applicable laws.

<PAGE>

(j) Amendment of Award. The Committee may amend, modify or terminate any
outstanding Award, including substituting therefor another Award of the same or
a different type, changing the date of exercise or realization and converting an
Incentive Stock Option to a Nonstatutory Stock Option, provided that the
Participant's consent to such action shall be required unless the Committee
determines that the action, taking into account any related action, would not
materially and adversely affect the Participant.

Section 12. Miscellaneous

(a) Limitation on Number of Shares Granted. Notwithstanding any other
provision of the Plan, the aggregate number of shares of Common Stock subject to
Options and SARs that may be granted within any fiscal year to any one Eligible
Person under the Plan shall not exceed that number of shares equal to 20% of the
total number of shares reserved for issuance under the Plan, except for grants
to new hires during the fiscal year of hiring which shall not exceed that number
of shares equal to 30% of the total number of shares reserved for issuance under
the Plan.

(b) No Right To Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as giving a
Participant the right to continued employment. The Company expressly reserves
the right at any time to dismiss a Participant free from any liability or claim
under the Plan, except as expressly provided in the applicable Award.

(c) No Rights As Shareholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
shareholder with respect to any shares of Common Stock to be distributed under
the Plan until he or she becomes the holder thereof. A Participant to whom
Common Stock is awarded shall be considered the holder of the Stock at the time
of the Award except as otherwise provided in the applicable Award.

(d) Effective Date. Subject to the approval of the shareholders of the
Company, the Plan shall be effective on May 1, 1993. Prior to such approval,
Awards may be made under the Plan expressly subject to such approval.

(e) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time, provided that no amendment shall be made
without shareholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement.

(f) Governing Law. The provisions of the Plan shall be governed by and
interpreted in accordance with the laws of the Commonwealth of Massachusetts.

<PAGE>
EXHIBIT 2

1. As adopted by the Board of Directors on May 11, 1993 and approved by the
stockholders on June 25, 1993.
2. As amended by the Board of Directors on March 3, 1997, and approved by the
stockholders on May 28, 1997.
3. As amended by the Board of Directors on May 28, 1997 (no stockholder
approval required).
4. As amended by the Board of Directors on March 4, 1998 (subject to
stockholder approval on May 27, 1998.)

GENZYME TRANSGENICS CORPORATION

1993 Director Stock Option Plan

The purpose of this 1993 Director Stock Option Plan (the "Plan") of
Genzyme Transgenics Corporation (the "Company") is to attract and retain
highly qualified non-employee directors of the Company and to encourage
ownership of stock of the Company by such Directors so as to provide
additional incentives to promote the success of the Company.

1. Administration of the Plan.

Grants of stock options under the Plan shall be automatic as provided in
Section 6. However, all questions of interpretation with respect to the Plan
and options granted under it shall be determined by the Board of Directors of
the Company (the "Board") or by a committee consisting of one or more
directors appointed by the Board and such determination shall be final and
binding upon all persons having an interest in the Plan.

2. Persons Eligible to Participate in the Plan.

All directors of the Company who are not employees of the Company or of
any subsidiary of the Company shall be eligible to participate in the Plan,
unless such director irrevocably elects not to participate on or after May
29, 1997.

3. Shares Subject to the Plan.

(a) The aggregate number of shares of the Company's Common Stock which
may be optioned under this Plan is 200,000 shares. Shares issued under the
Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.

(b) In the event of a stock dividend, split-up, combination or
reclassification of shares, recapitalization or other similar capital change
relating to the Company's Common Stock, the maximum aggregate number and kind
of shares or securities of the Company as to which options may be granted
under this Plan and as to which options then outstanding shall be
exercisable, and the option price of such options shall be appropriately
adjusted so that the proportionate number of shares or other securities as to
which options may be granted and

<PAGE>

the proportionate interest of holders of outstanding options shall be maintained
as before the occurrence of such event.

(c) In the event of a consolidation or merger of the Company with
another corporation where the Company's stockholders do not own a majority in
interest of the surviving or resulting corporation, or the sale or exchange
of all or substantially all of the assets of the Company, or a reorganization
or liquidation of the Company, any deferred exercise period shall be
automatically accelerated and each holder of an outstanding option shall be
entitled to receive upon exercise and payment in accordance with the terms of
the option the same shares, securities or property as he would have been
entitled to receive upon the occurrence of such event if he had been,
immediately prior to such event, the holder of the number of shares of Common
Stock purchasable under his or her option; provided, however, that in lieu of
the foregoing the Board may upon written notice to each holder of an
outstanding option or right under the Plan, provide that such option or right
shall terminate on a date not less than 20 days after the date of such notice
unless theretofore exercised.

(d) Whenever options under this Plan lapse or terminate or otherwise
become unexercisable the shares of Common Stock which were subject to such
options may again be subjected to options under this Plan. The Company shall
at all times while this Plan is in force reserve such number of shares of
Common Stock as will be sufficient to satisfy the requirements of this Plan.

4. Non-Statutory Stock Options.

All options granted under this Plan shall be non-statutory options not
entitled to special tax treatment under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").

5. Form of Options.

Options granted hereunder shall be in such form as the Board or any
committee appointed pursuant to Section 1 above may from time to time
determine.

6. Grant of Options and Option Terms.

(a) Automatic Grant of Options. Upon the first eligibility of a
director under this Plan, such director shall automatically be granted an
option to purchase 5,000 shares of Common Stock for each year of the term of
office to which he or she is elected. If such director is elected on a date
other than the date of an annual meeting of stockholders (whether elected by
the Board or the stockholders and whether to fill a vacancy or otherwise),
such director shall automatically be granted options to purchase 5,000 shares
of Common Stock for each year or portion thereof of the term of office to
which he or she is elected. Any eligible director who is being re-elected at
an annual meeting of stockholders, provided that on the date of such annual
meeting of stockholders all options granted under

<PAGE>

this Plan to such director are exercisable, shall automatically be granted an
option to purchase 3,000 shares of Common Stock for each year in the term of
office to which he or she is being re-elected. No options shall be granted
hereunder after ten years from the date on which this Plan was initially
approved and adopted by the Board.

(b) Date of Grant. The "Date of Grant" for options granted under this
Plan shall be the date of election or re-election as a director, as the case
may be.

(c) Option Price. The option price for each option granted under this
Plan shall be the current fair market value of a share of Common Stock of the
Company as determined (i) prior to date on which the Company becomes subject
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), by
the Board in good faith or in the manner established by the Board from time
to time, and (ii) on or after the date on which the Company is subject to the
Exchange Act, by the last sale price for the Company's Common Stock as
reported by the National Association of Securities Dealers Automated
Quotations National Market System for the business day immediately preceding
the Date of Grant.

(d) Term of Option. The term of each option granted under this Plan
shall be ten years from the Date of Grant.

(e) Exercisability of Options. Options granted under this Plan to a
director on such director's first eligibility under the Plan shall become
exercisable with respect to 5,000 shares on the Date of Grant and on each
annual meeting of stockholders of the Company following the Date of Grant if
and only if the option holder is a member of the Board at the opening of
business on that date (e.g., an option to purchase 15,000 shares of Common
Stock granted at the 1998 annual meeting would become exercisable with
respect to 5,000 shares at each of the 1998, 1999 and 2000 annual meetings).
Options granted to a director under this Plan upon such director's
re-election shall become exercisable with respect to 3,000 shares on the Date
of Grant and on each annual meeting of stockholders of the Company following
the Date of Grant if and only if the option holder is a member of the Board
at the opening of business on that date.

(f) General Exercise Terms. Directors holding exercisable options
under this Plan who cease to serve as members of the Board may, during their
lifetime, exercise the rights they had under such options at the time they
ceased being a director for the full unexpired term of such option. Any
rights that have not yet become exercisable shall terminate upon cessation of
membership on the Board. Upon the death of a director, those entitled to do
so shall have the right, at any time within twelve months after the date of
death, to exercise in whole or in part any rights which were available to the
director at the time of his or her death. The rights of the option holder
may be exercised by the holder's guardian or legal representative in the case
of disability and by the beneficiary designated by the holder in writing
delivered to the Company or, if none has been designated, by the holder's
estate or his or her transferee on death in accordance with this Plan, in the
case of death. Options granted under the Plan shall terminate, and no rights
thereunder may be exercised, after the expiration of the applicable exercise
period. Notwithstanding the foregoing provisions of this section, no rights
under any options may be exercised after the expiration of ten years from
their Date of Grant.

<PAGE>

(g) Method of Exercise and Payment. Options may be exercised only by
written notice to the Company at its head office accompanied by payment of
the full option price for the shares of Common Stock as to which they are
exercised. The option price shall be paid in cash or by check or in shares of
Common Stock of the Company, or in any combination thereof. Shares of Common
Stock surrendered in payment of the option price shall have been held by the
person exercising the option for at least six months, unless otherwise
permitted by the Board. The value of shares delivered in payment of the
option price shall be their fair market value, as determined in accordance
with Section 6(c) above, as of the date of exercise. Upon receipt of such
notice and payment, the Company shall promptly issue and deliver to the
optionee (or other person entitled to exercise the option) a certificate or
certificates for the number of shares as to which the exercise is made.

(h) Limitations on Transferability. Options granted under this Plan
shall not be transferable by the recipient other than by will or the laws of
descent and distribution and are exercisable during such person's lifetime
only by such person or by such person's guardian or legal representative,
provided the Board or any committee appointed by the Board may in its
discretion waive such restriction in any case.

7. Limitation of Rights.

(a) No Right to Continue as a Director. Neither the Plan, nor the
granting of an option or any other action taken pursuant to the Plan, shall
constitute an agreement or understanding, express or implied, that the
Company will retain an option holder as a director for any period of time or
at any particular rate of compensation.

(b) No Stockholders' Rights for Options. A director shall have no
rights as a stockholder with respect to the shares covered by options until
the date the director exercises such options and pays the option price to the
Company, and no adjustment will be made for dividends or other rights for
which the record date is prior to the date such option is exercised and paid
for.

8. Amendment or Termination.

The Board may amend or terminate this Plan at any time. The Board may
amend or modify any outstanding option in any respect, provided that the
optionee's consent to such action shall be required unless the Board
determines that the action, taking into account any relative action, would
not materially and adversely affect the optionee.

9. Stockholder Approval.

This Plan was approved by the Stockholders on June 25, 1993 and the
amendments approved by the Board of Directors on March 3, 1997 and any
further amendments hereto shall be subject to stockholder approval to the
extent (i) required by law, (ii) required by Nasdaq or stock exchange listing
requirements, as determined by the Board of Directors, or (iii) as desirable,
as determined by the Board of Directors, to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended. In the event any approval is
not obtained,

<PAGE>

all options granted under this Plan after such further amendment shall be void
and without effect.

10. Governing Law.

This Plan shall be governed by and interpreted in accordance with the laws
of the Commonwealth of Massachusetts.