<PAGE>
SCHEDULE 14A
(RULE 14a-101)
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/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GENZYME TRANSGENICS CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
175 CROSSING BOULEVARD
FRAMINGHAM, MASSACHUSETTS 01701-9322
(508) 620-9700
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 24, 2000
The annual meeting of the stockholders of Genzyme Transgenics Corporation
("GTC"), will be held at State Street Bank Building, Captain's Room, 225
Franklin Street, 33(rd) Floor, Boston, Massachusetts, at 12:00 p.m. on
Wednesday, May 24, 2000 for the following purposes:
1. To elect one director to serve until the 2003 Annual Meeting of
Stockholders.
2. To approve an amendment to GTC's Restated Articles of Organization to
increase the number of authorized shares of common stock from 40,000,000
to 100,000,000 shares.
3. To approve an amendment to GTC's 1993 Equity Incentive Plan to increase
the number of shares of common stock covered by the plan by 750,000
shares.
4. To approve an amendment to GTC's 1993 Employee Stock Purchase Plan to
increase the number of shares of common stock covered by the plan by
400,000 shares.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Only stockholders of record at the close of business on April 3, 2000 will
be entitled to vote at the annual meeting or at any adjournment.
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 CARD
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 21, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
General Information About Voting............................ 1
SHARE OWNERSHIP............................................. 3
PROPOSAL 1: Election of Directors........................... 5
Board of Directors and Committee Meetings................... 7
Director Compensation....................................... 8
EXECUTIVE COMPENSATION...................................... 9
Compensation Committee Report on Executive Compensation..... 9
SUMMARY COMPENSATION TABLES................................. 12
Summary Compensation Table.................................. 12
Option Grant Table.......................................... 13
Fiscal Year-End Option Table................................ 14
Executive Employment Agreements............................. 14
Compensation Committee Interlocks And Insider
Participation............................................. 15
STOCK PERFORMANCE GRAPH..................................... 17
PROPOSAL 2: AMENDMENT TO OUR RESTATED ARTICLES OF
ORGANIZATION.............................................. 19
PROPOSAL 3: AMENDMENT TO OUR 1993 EQUITY INCENTIVE PLAN..... 20
General..................................................... 20
Proposed Amendment to the Equity Plan....................... 20
Principal Terms of the Equity Plan.......................... 20
Federal Income Tax Consequences Relating to Stock Options... 21
Vote Required............................................... 22
PROPOSAL 4: AMENDMENT TO OUR 1993 EMPLOYEE STOCK PURCHASE
PLAN...................................................... 23
General..................................................... 23
Proposed Amendment to the Purchase Plan..................... 23
Principal Terms of the Purchase Plan........................ 23
Federal Income Tax Consequences Relating to the Purchase
Plan...................................................... 24
Vote Required............................................... 25
CERTAIN TRANSACTIONS........................................ 25
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 25
INFORMATION CONCERNING INDEPENDENT ACCOUNTANTS.............. 25
DEADLINE FOR STOCKHOLDER PROPOSALS.......................... 26
</TABLE>
i
<PAGE>
- --------------------------------------------------------------------------------
PROXY STATEMENT
----------------------------------------------------------------------
Our board of directors is soliciting the enclosed proxy card for use at the
2000 annual meeting of stockholders to be held on Wednesday, May 24, 2000 and at
any adjournments of the meeting. This proxy statement and the accompanying proxy
card are first being sent or given to stockholders of GTC on or about April 21,
2000.
GENERAL INFORMATION ABOUT VOTING
WHO CAN VOTE. You may vote your shares of GTC common stock at the annual
meeting if you were a stockholder of record at the close of business on
April 3, 2000. On that date, there were 28,359,719 shares of common stock
outstanding. You are entitled to one vote for each share of common stock that
you held on the record date.
HOW TO VOTE YOUR SHARES. You may vote your shares either by proxy or by
attending the meeting and voting in person. If you choose to vote by proxy,
please complete, date, sign and return the proxy card in the enclosed postage
prepaid envelope. The proxies named in the proxy card will vote your shares as
you have instructed. If you sign and return the proxy card without indicating
how your votes should be cast, the proxies will vote your shares in favor of
each of the proposals contained in this proxy statement, as recommended by our
board of directors. Even if you plan to attend the meeting, please complete and
mail your proxy card to ensure that your shares are represented at the meeting.
If you attend the meeting, you can still revoke your proxy by voting in person.
PROPOSALS TO BE CONSIDERED AT THE ANNUAL MEETING. The principal business
expected to be transacted at the meeting, as more fully described below, will be
the election of one director, a vote to amend our Restated Articles of
Organization to increase the number of shares of common stock we are authorized
to issue, and a vote to amend both our 1993 Equity Incentive Plan and 1993
Employee Stock Purchase Plan to increase the number of shares of common stock we
may issue under both plans.
QUORUM. A quorum of stockholders is required to transact business at the
meeting. A majority in interest of the outstanding shares of common stock
entitled to vote, represented at the meeting in person or by proxy, constitutes
a quorum for the transaction of business.
NUMBER OF VOTES REQUIRED. The number of votes required to approve the
proposals that are scheduled to be presented at the meeting is as follows:
<TABLE>
<CAPTION>
PROPOSAL REQUIRED VOTE
-------- ---------------------------------------------
<S> <C>
- Election of a nominee as director. The nominee must receive affirmative vote
representing a plurality of the votes cast
for or against the nominee.
- Amendment to our charter to increase The proposal must receive the affirmative
the authorized numb of shares of common votes representing a majority of the
stock. outstanding shares of our common stock.
- Amendment to our Equity Incentive Plan The proposal must receive the affirmative
and Employee Stoc Purchase Plan to votes representing a majority of the shares
increase the number of shares covered of common stock present or represented at the
by the plans. meeting.
</TABLE>
ABSTENTIONS AND BROKER NON-VOTES. Abstentions and broker non-votes will be
counted for determining a quorum. A broker non-vote occurs when a broker cannot
vote a customer's shares registered in the broker's name because the customer
did not send the broker instructions on how to
<PAGE>
vote on the matter. If the broker does not have instructions and is barred by
law or Nasdaq regulations from exercising its discretionary voting authority in
the particular matter, then the shares will not be voted on the matter,
resulting in a "broker non-vote." In voting on the proposal to amend our
charter, abstentions and broker non-votes will count as votes against the
proposal. In voting on the proposals to amend the Equity Incentive Plan and
Employee Stock Purchase Plan, abstentions will count as votes against the
amendments and broker non-votes will not be counted as votes against or as
shares present or represented at the meeting.
DISCRETIONARY VOTING BY PROXIES ON OTHER MATTERS. Aside from the election
of directors and the proposed amendments to our charter, Equity Incentive Plan,
and Employee Stock Purchase Plan, we do not know of any other proposal that may
be presented at the 2000 annual meeting. If another matter is properly presented
for consideration at the meeting, the persons named in the accompanying proxy
card will exercise their discretion in voting on the matter.
HOW YOU MAY REVOKE YOUR PROXY. You may revoke the authority granted by your
executed proxy card at any time before we exercise it by filing with our
corporate clerk, Lynnette C. Fallon, a written revocation or a duly executed
proxy card bearing a later date, or voting in person at the meeting. If your
shares are held in a brokerage account, you must make arrangements with your
broker or bank to vote your shares in person or to revoke your proxy.
EXPENSES OF SOLICITATION. We will bear all costs of soliciting proxies. We
will upon request reimburse brokers, custodians, and fiduciaries for
out-of-pocket expenses incurred in forwarding proxy solicitation materials to
the beneficial owners of stock held in their names. In addition to solicitations
by mail, our directors, officers and employees may solicit proxies from
stockholders in person or by other means of communication, including telephone,
facsimile and e-mail, without additional remuneration.
2
<PAGE>
SHARE OWNERSHIP
The following table shows the amount of our common stock beneficially owned
as of April 3, 2000 by (i) persons known by us to own more than 5% of our common
stock, (ii) the executive officers named in the Summary Compensation Table on
page 12, (iii) our directors, and (iv) all of our current executive officers and
directors as a group.
The number of shares beneficially owned by each person listed below includes
any shares over which a person has sole or shared voting or investment power as
well as shares which the person has the right to acquire by or before June 3,
2000 by exercising a stock option or other right. Unless otherwise noted, each
person has sole investment and voting power (or shares that power with his or
her spouse) over the shares in the table. The percentage ownership of each
person listed in the table was calculated using the total number of shares
outstanding on April 3, 2000, plus any shares the person could acquire upon the
exercise of any options by or before June 3, 2000.
The footnotes to the table include information about persons who also own
common stock of Genzyme Corporation, of which we are a less-than-majority owned
subsidiary. Genzyme has four series of common stock: General Division common
stock ("GENZ Stock"), Tissue Repair Division common stock ("GZTR Stock"),
Molecular Oncology Division common stock ("GZMO Stock") and Genzyme Surgical
Products Division common stock ("GZSP Stock").
<TABLE>
<CAPTION>
OPTIONS OR
WARRANTS
EXERCISABLE
AS OF TOTAL SHARES
SHARES APRIL 3, BENEFICIALLY PERCENT
BENEFICIAL OWNER OWNED(1) 2000 OWNED OF CLASS
- ---------------- --------- ----------- ------------ --------
<S> <C> <C> <C> <C>
Henri A. Termeer (1).............................. 8,485,886 354,324 8,840,210 32.7%
c/o Genzyme Corporation
One Kendall Square, Cambridge, MA 02139
Genzyme Corporation (2)........................... 8,476,386 326,324 8,802,710 32.6%
One Kendall Square, Cambridge, MA 02139
James A. Geraghty................................. 23,214 211,103 234,317 *
Peter H. Glick.................................... 10,060 107,720 117,780 *
John B. Green..................................... 550 107,620 108,170 *
Harry M. Meade.................................... 5,644 99,620 105,264 *
Sandra Nusinoff Lehrman........................... 6,802 94,000 100,802 *
Robert W. Baldridge............................... 3,075 90,000 93,075 *
Michael W. Young.................................. -- 57,220 57,220 *
Francis J. Bullock................................ -- 28,000 28,000 *
Henry E. Blair.................................... 1,000 25,000 26,000 *
Alan W. Tuck...................................... 1,000 25,000 26,000 *
Alan E. Smith..................................... -- 20,000 20,000 *
All current executive officers and directors as a
group (12 persons).............................. 8,863,555 893,283 9,756,838(3) 35.0%
</TABLE>
- ------------------------
* Indicates less than 1%.
(1) Also includes 8,802,710 shares beneficially owned by Genzyme, including
326,324 shares issuable under common stock purchase warrants that are
exercisable by or before June 3, 2000, of which Mr. Termeer disclaims
beneficial ownership. Mr. Termeer is President, CEO and Chairman of the
Board of Genzyme.
(2) Includes 326,324 shares issuable under common stock purchase warrants that
are exercisable by or before June 3, 2000.
3
<PAGE>
(3) Includes 893,283 shares issuable under stock options exercisable by or
before June 3, 2000 and 8,802,710 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 persons named below also own the following shares of GENZ Stock, GZTR
Stock, GZMO Stock or GZSP Stock, as well as stock options exercisable by or
before June 3, 2000 for one or more series of Genzyme common stock. Except for
Mr. Termeer, every person who owns GENZ Stock, GZTR Stock, GZMO Stock or GZSP
Stock, as shown below, owns less than one percent of the outstanding shares of
that series of Genzyme common stock.
<TABLE>
<CAPTION>
TOTAL
TOTAL SHARES SHARES TOTAL SHARES TOTAL SHARES
BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED OF PERCENT OWNED OF PERCENT OWNED OF PERCENT OWNED OF GZSP PERCENT
STOCKHOLDER GENZ STOCK OF CLASS GZTR STOCK OF CLASS GZMO STOCK OF CLASS STOCK OF CLASS
- ----------- ------------ -------- ------------ -------- ------------ -------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Henri A. Termeer..... 738,645(1) * 973,319(1) 3.4 90,909(1) * 261,059(1) 1.8
Alan E. Smith........ 160,522(2) * 40,974(2) * 23,954(2) * 7,836(2) *
Henry E. Blair....... 54,600(3) * 25,341(3) * 23,276(3) * 8,475 *
James A. Geraghty.... 15,458(4) * 10,000(4) * 1,439(4) * 560 *
Harry M. Meade....... -- -- 1,126(5) * 100 * -- --
Totals......... 969,225 1.1% 1,050,760 3.7% 139,678 1.0% 277,930 1.9%
</TABLE>
- ------------------------
* Indicates less than 1%.
(1) Includes 557,400 shares of GENZ Stock, 171,320 shares of GZTR Stock, 71,520
shares of GZMO Stock and 63,000 shares of GZSP Stock issuable under stock
options exercisable by or before June 3, 2000. The GENZ Stock, GZTR Stock
and GZMO Stock beneficially owned by Mr. Termeer also includes 1,123 shares,
6,900 shares and 120 shares, respectively, held by Mr. Termeer's wife, and
500 shares of GENZ Stock and 8,648 shares of GZTR Stock held in trust for
the benefit of Mr. Termeer's son. Mr. Termeer disclaims beneficial
ownership of the shares held by his wife and the trust, of which the total
number of shares of each series represents less than one percent of the
outstanding shares of that series.
(2) Includes 137,226 shares of GENZ Stock, 34,395 shares of GZTR Stock, 23,927
shares of GZMO Stock and 7,800 shares of GZSP Stock issuable under stock
options exercisable by or before June 3, 2000.
(3) Includes 29,600 shares of GENZ Stock, 21,257 shares of GZTR Stock,
10,575 shares of GZMO Stock and 4,000 Shares of GZSP Stock issuable under
stock options exercisable by or before June 3, 2000.
(4) Includes 9,522 shares of GENZ Stock, 9,569 shares of GZTR Stock, and 1,407
shares of GZMO Stock issuable under stock options exercisable by or before
June 3, 2000.
(5) Consists of 1,126 shares of GZTR Stock issuable under stock options
exercisable by or before June 3, 2000.
PROPOSAL 1: ELECTION OF DIRECTORS
Our board of directors has fixed the number of directors at seven for the
coming year. Under our charter, our board 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 stockholders meeting. At the upcoming annual meeting, one
director will be elected to hold office for a term of three years and until her
successor is elected and qualified. The board's nominee, Sandra Nusinoff
Lehrman, has consented to serve if elected. However, if the nominee is unable to
serve, proxies will be voted for any other candidate nominated by the board.
4
<PAGE>
Under our by-laws, directors must be elected by a plurality of votes cast.
Abstentions, votes withheld and broker non-votes will not be treated as votes
cast and, thus, will not affect the outcome of the election.
The following table contains biographical information about the nominees for
director and current directors whose term of office will continue after the
meeting.
<TABLE>
<CAPTION>
PRESENT
DIRECTOR TERM
NAME AND AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS SINCE EXPIRES
- ------------ --------------------------------------------- -------- --------
<S> <C> <C> <C>
*Sandra Nusinoff Lehrman............. Dr. Lehrman has been the President, Chief 1998 2000
Age: 52 Executive Officer and a director of GTC since
July 1998. Before joining GTC, Dr. Lehrman
was President and Chief Executive Officer of
CytoTherapeutics, Inc., a biotechnology
company focused on the development of cell
therapy systems, and Vice President, Drug
Development of Triangle Pharmaceuticals,
Inc., an antiviral drug development company
from July 1995 to July 1996. She also held
several positions from 1983 to 1994 at
Wellcome PLC, the last being International
Director, Biotechnology and Vice President,
General Manager of Burroughs Wellcome Mfg.,
Inc., a biopharmaceutical production
subsidiary.
Robert W. Baldridge.................. Mr. Baldridge is Vice Chairman of the board 1994 2001
Age: 65 of directors of GTC. Mr. Baldridge has
provided consulting services to the Company
since October 1994 and has served as an
independent financial and management
consultant since June 1988.
James A. Geraghty.................... Mr. Geraghty has been Chairman of the board 1993 2001
Age: 45 of directors of GTC since January 1998 and
has been a director since February 1993. Mr.
Geraghty was the President and Chief
Executive Officer of GTC from its
incorporation in February 1993 until July
1998. Since that time, Mr. Geraghty has
served as President of Genzyme Europe.
Henri A. Termeer..................... Mr. Termeer has served as President of 1993 2001
Age: 54 Genzyme since October 1983, its Chief
Executive Officer since December 1985 and its
Chairman of the Board 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>
5
<PAGE>
<TABLE>
<CAPTION>
PRESENT
DIRECTOR TERM
NAME AND AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS SINCE EXPIRES
- ------------ --------------------------------------------- -------- --------
<S> <C> <C> <C>
Henry E. Blair....................... Mr. Blair is President, Chief Executive 1993 2002
Age: 56 Officer and Chairman of the Board of Dyax
Corp., a privately-held bioseparation,
pharmaceutical discovery and development
company, and a consultant to several
companies, including Genzyme. Mr. Blair is
also a director of Genzyme and Celtrix
Pharmaceuticals, Inc.
Francis J. Bullock................... Dr. Bullock has been a senior consultant with 1994 2002
Age: 63 Arthur D. Little, Inc. since September 1993.
Alan W. Tuck......................... Mr. Tuck is Chief Strategic Officer of 1993 2002
Age: 51 Organogenesis Inc., a tissue engineering
firm. 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 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. Mr. Tuck is also a
director of Apogee Technology, Inc., a high
technology audiocompany.
</TABLE>
- ------------------------
* Indicates a nominee for election as director.
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
Our board of directors held eight meetings during 1999. Our board has
standing Audit and Compensation Committees but does not have a Nominating
Committee.
AUDIT COMMITTEE. The primary function of the Audit Committee is to assist
the board in the discharge of its duties and responsibilities by providing the
board with an independent review of our financial health and of the reliability
of our financial controls and financial reporting systems. The committee reviews
the general scope of our annual audit, the fee charged by our independent
accountants and other matters relating to internal control systems. The Audit
Committee, consisting of Messrs. Baldridge, Blair and Tuck, held three meetings
in 1999.
COMPENSATION COMMITTEE. The Compensation Committee determines the
compensation to be paid to our executive officers and also administers our
Equity Incentive Plan. The members of the Compensation Committee are
Messrs. Blair, Bullock and Tuck. The Committee held five meetings in 1999. For
information about the Compensation Committee, see the "Compensation Committee
Report on Executive Compensation" below.
DIRECTOR COMPENSATION
DIRECTOR FEES. All directors, other than the Chairman of the Board, who are
not employees of GTC or Genzyme receive $1,000 for each board meeting they
attend in person, $400 for each board meeting they attend by telephone
conference call and $400 for each committee meeting they attend in
6
<PAGE>
person. Mr. Geraghty, the Chairman of the Board, receives $2,000 for each board
meeting that he attends in person, and $800 for each board meeting he attends by
telephone conference call.
1993 DIRECTOR STOCK OPTION PLAN. All directors who are not employees of GTC
are currently eligible to participate in the our 1993 Director Stock Option Plan
(the "Director Plan"). Under the Director Plan, options are automatically
granted once a year, at the annual meeting of stockholders, to eligible
directors elected or reelected at the meeting. Each eligible director receives
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). Upon an eligible director's election other than at
an annual meeting, the director is automatically granted an option to purchase
5,000 shares of common stock for each year or portion of a year of the term of
office to which he or she is elected. Options vest as to 5,000 shares on the
date the option is granted and on the date of each subsequent annual meeting of
stockholders, so long as the optionee is still a director. The options have a
term of ten years and an exercise price, payable in cash or common stock, equal
to the last sale price of our common stock on the business day immediately
preceding the grant date, as reported on the Nasdaq National Market System. The
directors who are currently eligible to participate in the Director Plan are
Messrs. Baldridge, Blair, Bullock, Geraghty, Smith, Termeer and Tuck.
GERAGHTY CONSULTING AGREEMENT. Under a consulting agreement, Mr. Geraghty,
our former CEO, provides part-time consulting services to GTC. The term of the
consulting agreement ends on June 30, 2000 unless earlier terminated by us for
cause. Thereafter, the term may be extended on a year-to-year basis by mutual
agreement of the parties. Under the current arrangement, Mr. Geraghty receives a
consulting fee at a daily rate of $1,200 for three days per month, or $43,200
annually. In 1999, Mr. Geraghty received $43,200 in consulting fees.
BALDRIDGE CONSULTING AGREEMENT. Under an employment and consulting
agreement among Mr. Baldridge, GTC and TSI Corporation, Mr. Baldridge provides
GTC and Genzyme with part-time consulting services until October 1, 2000.
Mr. Baldridge receives a consulting fee equal to $132,000 per year. Under the
agreement, Mr. Baldridge was granted an option in October 1994 to purchase
35,000 shares of common stock. The option became fully exercisable ending in
October 1998, has a term of ten years and an exercise price of $2.75.
7
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the board of directors determines the
compensation to be paid to the Company's executive officers, including the Chief
Executive Officer. The Committee also administers GTC's 1993 Equity Incentive
Plan, including the grant of stock options and other awards under the Equity
Plan. The Committee is currently composed of Messrs. Bullock (Chairman), Blair
and Tuck. This report is submitted by the Committee and addresses the
compensation policies for fiscal year 1999 as they affected Dr. Lehrman, as
President and Chief Executive Officer during part of 1999, and each of the top
four executive officers other than Dr. Lehrman whose combined salary and bonus
for fiscal year 1999 exceeded $100,000, and who are named in the Summary
Compensation Table.
COMPENSATION PHILOSOPHY
The Company's executive compensation policy is designed to attract, retain
and reward executive officers who contribute to the Company's long-term success
by maintaining a competitive salary structure as compared with other
biotechnology and contract research companies. The compensation program seeks to
align compensation with the achievement of business objectives and individual
and corporate performance. Bonuses are included to encourage effective
individual performance relative to the Company's current plans and objectives.
Stock option grants are key components of the executive compensation program and
are intended to provide executives with an equity interest in the Company so as
to link a meaningful portion of the executive's compensation with the
performance of the Company's common stock.
In executing its compensation policy, the Company seeks to relate
compensation with the Company's financial performance and business objectives as
well as to reward each executive's achievement of designated targets relating to
the Company's annual and long term performance and individual fulfillment of
responsibilities. While compensation survey data are useful guides for
comparative purposes, the Company believes that a successful compensation
program also requires the application of judgment and subjective determinations
of individual performance, and to that extent the Compensation Committee applies
its judgment in reconciling the program's objectives with the realities of
retaining valued employees.
EXECUTIVE COMPENSATION PROGRAM
The Company's executive compensation package for the CEO and the other
executive officers (such non-CEO officers are referred to as "Senior Officers")
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. Each of the four most highly paid Senior Officers other than
Mr. Young, has entered into an employment agreement with the Company. The
minimum annual base salary provided for in each agreement was fixed based upon
the executive's salary history and internal and external equity considerations.
At the beginning of each fiscal year, the Compensation Committee reviews the
base salaries paid to the Senior Officers, including Mr. Young. In 1999, the
annual base salary for each Senior Officer was adjusted in light of the
executive's prior performance, tenure and responsibility, as well as independent
compensation data.
BONUS COMPENSATION. In fiscal 1999, the Committee established a target
bonus opportunity for Mr. Glick equal to 30% of his base salary and for
Messrs. Green and Young and Dr. Meade equal to 25% of each officer's base
salary. Bonuses are tied directly to the Company's financial performance, and
8
<PAGE>
the contribution of the executive to that performance. Under the Company's 1999
Executive Bonus Program adopted by the Committee, 75% of Mr. Glick's 1999 bonus
was based on the quantitative performance of Primedica Corporation, specifically
Primedica's 1999 revenues, profits and cash flow in comparison to budget. The
remaining 25% of his bonus opportunity was based on qualitative criteria, as
evaluated by the CEO. With respect to the 1999 bonus opportunities for
Dr. Meade and Messrs. Green and Young, one-third was based on 1999 Company-wide
quantitative performance, specifically revenues and profits in comparison to
budget. The remaining two-thirds was determined 50% on the basis of qualitative
criteria, as evaluated by the CEO, and 50% on goals criteria that had been
previously agreed to by the executive and the CEO. In addition to bonuses paid
under this program, additional bonus payments were made to Mr. Green,
Dr. Meade, and Mr. Young to reflect the Company's achievement of financing
goals and operating performance in late 1999 and early 2000.
STOCK OPTIONS. Executive officer compensation also includes long-term
incentives afforded by options to purchase common stock. The purposes of the
stock option grant program are to:
- highlight and reinforce the mutuality of long-term interests between
employees and the stockholders, and
- to assist in the attraction and retention of important key executives,
managers and individual contributors who are essential to the Company's
growth and development.
In May 1999, the Committee approved annual option grants of 33,000 shares each
to Dr. Meade and Messrs. Green, Glick, and. Young, as shown in the Summary
Compensation Table.
CHIEF EXECUTIVE OFFICER. The Compensation Committee established a
compensation package for Dr. Lehrman based on an analysis of compensation data
for comparable executive positions gathered from surveys prepared by independent
compensation consultants.
Dr. Lehrman has an employment agreement with the Company which sets her
minimum annual base salary at $260,000. The Committee established a 1999 base
salary of $280,000 for Dr. Lehrman and a target bonus opportunity of 40% of her
base salary. The increase in Dr. Lehrman's 1999 base salary from her 1998 base
compensation resulted from the Committee's determination that Dr. Lehrman's
salary should be at the mid point of a range of chief executive officer salaries
in comparable companies reviewed by the Committee. In addition, the Committee
determined that the 8% increase in Dr. Lehrman's 1999 base salary over her 1998
base salary was merited based in part on Dr. Lehrman's 1998 performance.
Dr. Lehrman's bonus percentage was fixed at 40% of her base salary based on
the terms of her employment agreement with the Company. Pursuant to the
Company's 1999 Executive Bonus Program adopted by the Committee, one-third of
Dr. Lehrman's target bonus opportunity was based on Company-wide revenue and
profit before tax, one-third on the Committee's qualitative evaluation of
Dr. Lehrman's performance, and one-third on certain goals criteria as previously
agreed to between Dr. Lehrman and the Company. In March 2000, the Committee
awarded Dr. Lehrman a bonus of $84,848. The Compensation Committee also
approved a supplement bonus of $27,462 based on the Company's achievement of
its financing objectives in late 1999 and early 2000.
COMPENSATION DEDUCTIBILITY
Section 162(m) of the Internal Revenue Code denies a tax deduction to a
public corporation for annual compensation in excess of one million dollars paid
to its CEO and its four other 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
9
<PAGE>
granted under the plan so that the awards will qualify for the exclusion from
the limitation on deductibility for performance-based compensation. The
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
10
<PAGE>
SUMMARY COMPENSATION TABLES
The following tables contain compensation information for our CEO and our
four other most highly paid executive officers during the fiscal year ended
January 2, 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
---------------------- UNDERLYING COMPENSATION
NAME AND POSITION YEAR SALARY BONUS OPTIONS (3)
- ----------------- -------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Sandra Nusinoff Lehrman................ 1999 $275,400 $112,310 85,000 $31,367(4)
President and Chief 1998 130,000(1) 52,000(2) 150,000 4,470
Executive Officer
Peter H. Glick......................... 1999 199,134 27,351 33,000 4,800
President, Primedica 1998 190,000 21,874 30,000 5,395
Corporation 1997 154,000 27,762 25,000 4,658
Harry M. Meade......................... 1999 180,959 40,747 33,000 3,000
Vice President, Transgenics Research 1998 172,500 25,875 25,000 2,959
1997 156,000 39,500 25,000 2,768
John B. Green.......................... 1999 184,169 45,249 33,000 4,286
Vice President, Chief Financial 1998 172,400 30,502 25,000 4,728
Officer, and Treasurer 1997 150,000 35,808 25,000 3,993
Michael W. Young....................... 1999 172,760 40,207 33,000 3,631
Vice President, Commercial
Development
</TABLE>
- ------------------------
(1) Reflects bonuses earned in 1999, but which will be paid in 2000.
(2) Dr. Lehrman's annual salary of $260,000 for 1998 was prorated for the
portion of the year beginning July 1, 1998, the official date her employment
with GTC commenced. One half of her bonus of $52,000 was paid in
December 1998, and the other half was paid in January 1999.
(3) The amounts in this column represent our contributions on behalf of the
employee under the Genzyme Transgenics Corporation 401(k) Plan.
(4) Includes reimbursement of $27,293 for relocation expenses.
11
<PAGE>
OPTION GRANT TABLE
The following table provides information on stock options granted during
fiscal year 1999 to the executive officers named in the Summary Compensation
Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------
PERCENTAGE OF POTENTIAL REALIZABLE VALUE
NUMBER TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM (2)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ------------------------------
NAME GRANTED(1) FISCAL YEAR SHARE DATE 0% 5% 10%
- ---- ---------- ------------- --------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Sandra Nusinoff Lehrman........... 85,000 15.61% $4.5625 05/25/09 $0 $243,893 $618,073
Peter H. Glick.................... 33,000 6.06% 4.5625 05/25/09 0 94,688 239,958
Harry M. Meade.................... 33,000 6.06% 4.5625 05/25/09 0 94,688 239,958
John B. Green..................... 33,000 6.06% 4.5625 05/25/09 0 94,688 239,958
Michael W. Young.................. 33,000 6.06% 4.5625 05/25/09 0 94,688 239,958
</TABLE>
- ------------------------
(1) The options listed in this column were granted on May 25, 1999 under our
Equity Plan and became exercisable with respect to 20% of the shares on the
grant date. The remaining 80% of the underlying shares of each option will
vest in four equal installments of the next four anniversaries of the grant
date.
(2) The values in this column are given for illustrative purposes, and do not
reflect our estimate or projection of future stock prices. The values are
based on an assumption that our common stock's market price will appreciate
at the stated rate, compounded annually, from the date of the option grant
until the end of the option's 10-year term. Actual gains, if any, on stock
option exercises will depend upon the future performance of our common
stock's price, 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 our common stock would have to be
approximately 63% and 159% above the total weighted average exercise price
of all options described above ($4.5625). The potential value to all our
stockholders if our price appreciates at rates of 5% and 10% over the term
of the options listed above would be $81,373,442 and $206,216,278,
respectively, assuming a purchase of common stock in 1999 at $4.5625 per
share.
12
<PAGE>
FISCAL YEAR-END OPTION TABLE
The following table provides information on the total number of exercisable
and unexercisable stock options held at fiscal year end by the executive
officers named in the Summary Compensation Table.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE AT FISCAL YEAR-END EXERCISABLE/ AT FISCAL YEAR-END
NAME EXERCISE (#) REALIZED UNEXERCISABLE EXERCISABLE/UNEXERCISABLE (1)
- ---- ------------ -------- ------------------------------- -----------------------------
<S> <C> <C> <C> <C>
Sandra Nusinoff
Lehrman............... 0 $0 77,000/158,000 $419,938/$967,250
Harry M. Meade.......... 0 0 81,776/59,144 426,851/357,665
Peter H. Glick.......... 0 0 88,876/62,144 646,408/367,790
John B. Green........... 0 0 89,776/59,144 652,009/357,665
Michael W. Young........ 0 0 41,176/55,544 234,626/339,345
</TABLE>
- ------------------------
(1) Based on the difference between the option's exercise price and the closing
price of $12.50 of the underlying common stock on January 3, 2000 as
reported by the Nasdaq.
EXECUTIVE EMPLOYMENT AGREEMENTS
SANDRA NUSINOFF LEHRMAN. Under the terms of Dr. Lehrman's employment
agreement dated July 1, 1998, as amended on September 21, 1998, Dr. Lehrman is
entitled to a minimum base salary of $260,000 per year, and is eligible to
receive performance and incentive bonuses of not less than 40% of her base
salary. Dr. Lehrman's annual base salary has been set at $303,264 for the 2000
calendar year. She is also entitled to a bonus opportunity of 40% of her base
salary for 2000.
PETER H. GLICK. Under the terms of Mr. Glick's employment agreement entered
into in September 1997, Mr. Glick's is entitled to a base salary of not less
than $154,000 per year, plus performance and incentive bonuses as determined by
the Compensation Committee. Mr. Glick's annual base salary has been set at
$207,480 for the 2000 calendar year, and his maximum cash bonus for 2000 at 30%
of his base salary.
JOHN B. GREEN. Under the terms of Mr. Green's employment agreement entered
into in August 1997, Mr. Green is entitled to a base salary of not less than
$150,000 per year, plus performance and incentive bonuses as determined by the
Compensation Committee. Mr. Green's annual base salary has been set at $192,786
for the 2000 calendar year, and his maximum cash bonus for 2000 at 25% of his
base salary.
HARRY M. MEADE. Under the terms of Dr. Meade's employment agreement, he is
entitled to a base salary of not less than $126,000 per year, plus performance
and incentive bonuses as determined by the Compensation Committee. Dr. Meade's
annual base salary has been set at $189,276 for the 2000 calendar year, and his
maximum cash bonus for 2000 at 25% of his base salary.
Each of these agreements will remain in effect until terminated according to
their terms. In the event that we terminate any of these executives without
cause or if any of them terminates his or her agreement upon a "change of
control" of the company, as that term is defined in the employment agreement,
the executive will immediately be paid the maximum annual bonus for the year he
or she is terminated in one lump sum, prorated for the portion of the year
completed, and will continue to receive his or her then current base salary for
a severance period. In the case of Dr. Lehrman, 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
13
<PAGE>
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 the severance period from a
subsequent employer.
In addition, any unvested stock options held by these executive officers,
would become immediately exercisable in full upon a change of control of GTC
and, in the case of Mr. Glick, a disposition of our contract research
organization businesses.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended January 2, 2000, the Compensation Committee of
the board of directors consisted of Dr. Bullock and Messrs. Blair and Tuck.
Mr. Blair is President, CEO and Chairman of the Board of Dyax and Mr. Tuck is a
strategic advisor to Dyax. We have an agreement with Dyax under which it is
developing a purification media for some of our products.
RELATIONSHIP WITH GENZYME
Four members of our current board serve as directors and/or officers of
Genzyme; Mr. Termeer is Chairman of the Board, President and CEO, Mr. Blair is a
director, and Dr. Smith and Mr. Geraghty are officers. In connection with our
initial public offering in July 1993, we entered into several agreements with
Genzyme as summarized below. In 1999, we paid Genzyme an aggregate of
$2.2 million under the research and development agreement and the services
agreement and the lease agreement described below.
EQUITY POSITION. Genzyme is our largest single stockholder, currently
holding 8,476,386 shares of our common stock, which represents approximately 31%
of our outstanding common stock. In November 1999, we issued in a private
placement $6.6 million of Series B Convertible preferred stock to Genzyme, which
Genzyme converted in February 2000. In connection with the issuance of Series B
stock, we issued to Genzyme warrants to purchase 85,324 shares of our common
stock at $6.30 per share.
TECHNOLOGY TRANSFER AGREEMENT. Under the technology transfer agreement
dated May 1, 1993, Genzyme transferred substantially all of its transgenic
assets and liabilities to us, assigned its relevant contracts and licensed to us
technology owned or controlled by Genzyme in the field of production of
recombinant proteins in the milk of transgenic animals and the purification of
proteins produced in that manner. The license is worldwide and royalty-free as
to Genzyme, although we are 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 us.
R&D AGREEMENT. Under a research and development agreement dated May 1,
1993, we agreed with Genzyme to provide research and development services to the
other relating in our case, to transgenic production of recombinant proteins
and, in Genzyme's case, to the purification of those proteins. We each receive
payments from the other equal to each of our fully allocated cost of the
services, which cannot be less than 80% of the annual budgets established by
both of us under the agreement, plus, in most cases on a month-to-month basis, a
fee equal to 10% of those costs. The original term of the agreement expired
December 31, 1998. We are continuing under this agreement on a month-to-month
basis.
SERVICES AGREEMENT. Under a services agreement between us and Genzyme, we
pay Genzyme a fixed monthly fee for basic laboratory and administrative support
services. The monthly fee is adjusted annually based on the services to be
provided and changes in Genzyme's cost of providing the services. The agreement
is self-renewing annually and may be terminated upon 90 days notice by either
party.
14
<PAGE>
ATIII LLC. In January 1998, we entered into a collaboration agreement with
Genzyme for the development of transgenic ATIII forming the ATIII LLC joint
venture. Under this agreement, Genzyme will fund 70% of the development costs of
transgenic ATIII up to a maximum of $33 million, excluding facility costs. We
will fund the remaining 30% of costs. Development costs in excess of these
amounts will be funded by us equally. Genzyme and GTC will also make capital
contributions to ATIII LLC sufficient to pay 50% each of all new facility costs
to be incurred. In addition to the funding, both of us will contribute
manufacturing, marketing and other resources to ATIII LLC at cost. Genzyme and
GTC each own 50% of the venture although Genzyme is obligated to make the
milestone payments to us of $12,500,000 if and when transgenic ATIII has been
approved by the Food and Drug Administration and certain sales levels have been
reached. Profits and losses are shared according to ownership percentages. The
agreement covers all territories other than Asia.
CONVERTIBLE DEBT AGREEMENT. Under the Amended and Restated Convertible Debt
Agreement dated December 28, 1998, Genzyme agreed to provide a revolving line of
credit to us in the amount of $8.3 million. The credit line was reduced to
$6.3 million in 1999 and was terminated in February 2000 in connection with the
completion of a secondary public offering of our of common stock.
CREDIT LINE GUARANTY, TERM LOAN GUARANTY, AND LIEN. Genzyme guarantees a
credit line and term loan we have with a commercial bank up to $24.6 million
expiring in December 2001. We have agreed to reimburse Genzyme for any liability
it may incur under the guaranty and have granted Genzyme a first lien on all our
assets to secure this obligation. In return for Genzyme's guaranty, we issued
ten-year warrants to purchase 145,000 and 288,000 shares of our common stock at
prices per share of $2.84 and $4.875, respectively.
LEASE. We lease a portion of Genzyme's facilities in Framingham,
Massachusetts for which we paid Genzyme $137,400 under the lease in 1999.
15
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on our
common stock from the period beginning December 30, 1994 to January 2, 2000,
with the cumulative total return of the S&P 500 Composite Index and the Nasdaq
Pharmaceutical Index. Through 1999, we compared the cumulative total shareholder
return on our common stock with the cumulative total return of the
PricewaterhouseCoopers Biotech Index, for which data is no longer available.
Accordingly, we have replaced the industry index used in our stock performance
graph with the Nasdaq Pharmaceutical Index. The Nasdaq Pharmaceutical Index is
comprised of pharmaceutical and biotechnology companies within SIC Code 283
whose securities are traded on the Nasdaq National Market. We believe the Nasdaq
Pharmaceutical Index is representative of peer biotechnology companies. As
required by the rules of the SEC, the graph below contains both the
PricewaterhouseCoopers Index through 1999, the last year for which data was
available and the Nasdaq Pharmaceutical Index.
This graph assumes an initial investment of $100 on December 30, 1994 in our
common stock, the S&P 500 Composite Index, the PricewaterhouseCoopers Biotech
Index, and the Nasdaq Pharmaceutical Index with all dividends, if any, being
reinvested. The total stockholder return is measured by dividing the share price
change of the respective securities plus dividends, if any, for each fiscal year
shown by the share price at the end of the particular fiscal year.
COMPARISON OF THE CUMULATIVE TOTAL RETURN
AMONG GENZYME TRANSGENICS CORPORATION,
THE S&P 500 COMPOSITE INDEX, THE NASDAQ PHARMACEUTICAL INDEX
AND THE PRICEWATERHOUSECOOPERS BIOTECH INDEX*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
12/31/94 12/29/95 12/31/96 12/31/97 1/3/99 1/2/00
<S> <C> <C> <C> <C> <C> <C>
Genzyme Transgenics Corporation 100.00 218.75 306.25 481.25 281.25 631.25
NASDAQ Pharmaceutical Index 100.00 184.48 183.98 189.98 214.68 451.62
PricewaterhouseCoopers Biotech Index 100.00 137.58 169.17 225.61 290.09 351.13
S&P 500 Composite Index 100.00 189.92 218.28 241.09 364.21
</TABLE>
16
<PAGE>
PROPOSAL 2: AMENDMENT TO OUR RESTATED ARTICLES OF ORGANIZATION
Our board of directors has adopted an amendment, subject to shareholder
approval, to Article III of our Restated Articles of Organization to increase
the number of shares of common stock we are authorized to issue from 40,000,000
to 100,000,000 shares. The board of directors believes that increasing the
number authorized shares is essential to ensure that we continue to have an
adequate number of shares of common stock available for future issuance. As of
April 3, 2000 we had 28,359,719 shares of common stock outstanding. An
additional 900,000 shares were reserved under our Employee Stock Purchase Plan,
200,000 shares under our Director Plan, and 3,390,000 shares under our Equity
Plan, of which options to purchase 2,420,725 shares had been issued. There
were also 992,324 shares subject to outstanding common stock purchase warrants.
In addition, we are asking the stockholders to approve increases of 750,000
shares for issuance under the Equity Incentive Plan and 400,000 shares for
issuance under the 1993 Employee Stock Purchase Plan. We only have 8,423,586
shares of common stock available for future use without increasing the number of
authorized shares.
If the stockholders approve this increase, we would be able to issue stock
for any valid corporate purpose that the board may deem advisable, including
stock splits and stock dividends, financings, funding employee benefit plans and
acquisitions. The availability of additional shares of common stock for issuance
will provide us with greater flexibility in taking any of these actions without
the delay or expense of obtaining stockholder approval, except to the extent
required by state law or Nasdaq requirements for the particular transaction.
While our board of directors will authorize the issuance of additional
common stock based on its judgment as to our best interests and that of our
stockholders, future issuance of common stock could have a dilutive effect on
existing stockholders. Common stockholders are not now, and will not be entitled
to preemptive rights to purchase shares of any authorized capital stock if
additional shares are issued later. In addition, the issuance of additional
shares of common stock could have the effect of making it more difficult for a
third party to acquire a majority of our outstanding voting stock.
VOTE REQUIRED
The affirmative vote of holders of a majority of the shares of common stock
outstanding and entitled to vote at the meeting is required to approve the
proposed amendment to our charter. Abstentions and broker non-votes will be
treated as a vote against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
17
<PAGE>
PROPOSAL 3: AMENDMENT TO OUR 1993 EQUITY INCENTIVE PLAN
GENERAL
The Equity Incentive Plan was adopted by the board of directors in May 1993
and approved by Genzyme as the sole stockholder of GTC in June 1993. The Equity
Plan enables us to offer competitive compensation to attract and retain key
employees and consultants of GTC and its affiliates.
Stock options granted under the Equity Plan are a significant element of our
compensation package, as they are in the biotechnology industry generally. In
1999 for example, we granted options to approximately 84% of our employees.
Competition for top scientists, researchers, sales personnel and other skilled
employees has become more intense as biotechnology companies proliferate at a
rapid pace. Our board of directors strongly believes that, in this highly
competitive environment, we need to provide meaningful stock option grants to
retain and motivate key employees. The board considers our ongoing program of
granting stock options broadly across the employee base to be very important to
our ability to compete for top talent and a significant incentive to promote our
success and, therefore, in the best interests of our stockholders. Equity
incentives are equally common and important among our competitors and throughout
the biotechnology industry. Therefore, we continue to consider it crucial that
we have in place appropriate arrangements for granting equity compensation.
PROPOSED AMENDMENT TO THE EQUITY PLAN
Since 1993 an aggregate of 3,390,000 shares of common stock have been
reserved for issuance under the Equity Plan, subject to adjustment for stock
splits and similar capital changes. As of April 3, 2000, 673 employees were
eligible to participate in the Equity Plan and options to purchase an
aggregate of 3,696,460 shares of common stock had been granted, excluding the
options we assumed from TSI Corporation. Of the aggregate options granted to
date, options to purchase 585,791 shares have been cancelled, options to
purchase 870,994 have been exercised and options to purchase 2,239,725 shares
remain outstanding, leaving only 279,331 shares available for new awards
under the Equity Plan. In order to ensure that a sufficient number of shares
are available for awards in the future, the board of directors has voted,
subject to stockholder approval, to increase the number of shares issuable
under the plan by 750,000 shares. The closing price of our common stock on
April 3, 2000, as reported by the Nasdaq was $17.00.
PRINCIPAL TERMS OF THE EQUITY PLAN
The Equity Plan permits us to grant awards to our employees and
consultants and those of our affiliates, including incentive and nonstatutory
stock options, stock appreciation rights, performance shares, restricted
stock and stock units. We have not granted stock appreciation rights or other
rights to acquire our stock other than stock options. In addition, we may
grant options 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. In October 1994, for
example, we granted options to purchase an aggregate of 224,350 of our common
stock in connection with our acquisition of TSI where we assumed the
outstanding options to purchase shares of TSI common stock.
The Equity Plan is administered by the Compensation Committee of the board
of directors. 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 options become exercisable. The Compensation
Committee may delegate to one or more officers the power to make awards under
the Equity Plan to employees who are not executive officers of GTC subject to
the reporting requirements of Section 16 of the Securities Exchange Act of 1934,
as amended.
18
<PAGE>
Although the Compensation Committee has discretion in granting awards, the
exercise price of any incentive stock option ("ISO") may not be less than 100%
of the fair market value of our common stock on the date of the grant.
Nonstatutory options also are generally granted at fair market value. The term
of any ISO granted under the Equity Plan may not exceed ten years, and no ISO
may be granted under the Equity Plan more than ten years from the Equity Plan's
adoption. The options we have granted generally are subject to forfeiture
restrictions that lapse over time during the participant's employment. When a
participant's employment is terminated, vested options are generally cancelled
if not exercised within a specified time. The aggregate number of shares we may
issue under the Equity Plan, as well as those subject to outstanding awards, is
subject to appropriate adjustment in the event of a stock split or other
recapitalization. An option holder may not transfer an ISO granted under the
Equity Plan other than by will or the laws of descent and distribution. Other
awards are transferable to the extent provided by the Compensation Committee.
The Compensation Committee has adopted guidelines for the number of annual
and new hire options awarded to our employees, 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 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 Compensation Committee may change the
guidelines at any time.
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 or ISO under the Equity Plan.
If an optionee does not dispose of shares received upon exercise of an ISO for
at least:
- two years from the date of grant, and
- one year from the date of exercise,
then upon sale of the shares, any amount realized in excess of the exercise
price is taxed to the optionee as long-term capital gain and any loss sustained
will be a long-term capital loss. We may not take a deduction for Federal income
tax purposes. The exercise of an ISO gives rise to an adjustment in computing
alternative minimum taxable income that may result in alternative minimum tax
liability for the optionee.
If the optionee disposes shares of common stock acquired upon the exercise
of an ISO before the end of the one and two-year periods described above (a
"disqualifying disposition") then 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 exercise price. We would be entitled to deduct that
amount. Any further gain realized by the optionee would be taxed as a short-term
or long-term capital gain and would not result in any deduction for us. 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. An optionee does not realize income at the time
a nonstatutory option is granted. Upon exercise of the nonstatutory option, the
optionee realizes ordinary income in an amount equal to the difference between
the exercise price and the fair market value of the shares on the date of
exercise. We would receive 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 or long-term capital gain or loss and will not result in
any deduction for us.
An optionee who receives any accelerated vesting or exercise of options or
stock appreciation rights or accelerated lapse of restrictions on restricted
stock in connection with a change in control
19
<PAGE>
might be deemed to have received an "excess parachute payment" under federal tax
law. In this case, the optionee may be subject to an excise tax and we may be
denied a tax deduction.
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.
20
<PAGE>
PROPOSAL 4: AMENDMENT TO OUR 1993 EMPLOYEE STOCK PURCHASE PLAN
GENERAL
The 1993 Employee Stock Purchase Plan (the "Purchase Plan") was adopted by
the board of directors in May 1993 and approved by Genzyme as the sole
stockholder of GTC in June 1993. The Purchase Plan provides our full-time
employees the opportunity to purchase shares of our common stock by automatic
payroll deduction on favorable terms. Like the Equity Plan, the Purchase Plan
helps us attract and retain top quality personnel, motivates them to acquire an
equity stake in GTC and provides an incentive for them to achieve long-range
performance goals.
PROPOSED AMENDMENT TO THE PURCHASE PLAN
Since 1993, an aggregate of 900,000 shares of common stock have been
reserved for issuance under the Purchase Plan, subject to adjustment for
stock splits and similar capital changes. As of April 3, 2000, 673 employees
were eligible to participate in the Purchase Plan and 870,921 shares had been
purchased under the plan. The closing price of our common stock on April 3,
2000, as reported by the Nasdaq, was $17.00. Our board of directors strongly
believes that the ongoing program of allowing employees to purchase stock
under the Purchase Plan is very important to our ability to compete for top
talent. To ensure that a sufficient number of shares are available for
issuance to eligible employees, the board of directors has voted, subject to
the approval of the stockholders, to increase the aggregate number of shares
issuable under the Purchase Plan by 400,000 shares.
PRINCIPAL TERMS OF THE PURCHASE PLAN
The Purchase Plan is intended to qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code. Our board of directors, at
its discretion, grants rights to purchase shares of common stock under the
Purchase Plan. An administrator of the Purchase Plan, determines the frequency
and duration of individual offerings under the plan and the date(s) when stock
may be purchased. All full-time employees of GTC or any subsidiary designated by
the board of directors, are eligible to participate in the Purchase Plan. The
Purchase Plan may be amended or terminated at any time by the board of
directors, subject to any necessary approval by stockholders. In particular, any
Purchase Plan amendment that would increase the number of shares offered under
the plan would require stockholder approval. The Purchase Plan terminates on
May 1, 2003.
Eligible employees participate voluntarily and may withdraw from any
offering at any time before stock is purchased. Participation terminates
automatically upon termination of employment for any reason. The purchase price
per share in an offering is 85% of the lower of the fair market value of common
stock on the first day of an offering period, or the applicable exercise date
and may be paid through regular payroll deductions, lump sum cash payments or a
combination of both, as determined by the board of directors.
In accordance with Section 423 of the Internal Revenue Code, an employee's
purchases in any calendar year are limited to the lesser of $25,000 worth of
stock, determined by the fair market value of the common stock at the time the
offering begins, or 15% of the employee's annual rate of compensation (or such
lesser percentage as the board of directors may fix). In addition, an employee
may not subscribe for shares under the Purchase Plan if, immediately after
having subscribed, the employee would own 5% or more of the voting power or of
the value of all classes of our stock, including stock which may be purchased
through subscriptions under the Purchase Plan or any other plans.
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FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE PURCHASE PLAN
A participant does not realize taxable income at the commencement of an
offering or at the time shares are purchased under the Purchase Plan. If a
participant does not dispose of shares purchase under the plan for at least:
- two years from the offering commencement date, and
- one year from the purchase date,
then upon sale of the shares, 15% of the fair market value of the stock at the
commencement of the offering period (or, if less, the amount realized on sale of
such shares in excess of the purchase price) is taxed to the participant as
ordinary income, with any additional gain taxed as long-term capital gain, and
any loss sustained taxed as long-term capital loss. No deduction will be allowed
to us for Federal income tax purposes. However, if the participant sells the
shares before either of the prescribed periods, he or she will be treated as
having received taxable compensation income upon sale equal to the excess of the
fair market value of the stock on the date of purchase over the actual purchase
price, and we will be allowed to deduct that amount. In either case, any
difference over or under the participant's tax cost (the purchase price plus the
amount of taxable compensation income that the participant recognizes upon sale
of the shares) will be treated as capital gain or loss.
If the participant dies at any time while owning shares purchased under the
Purchase Plan, then 15% of the fair market value of the stock at the
commencement of the offering period (or, if less, the fair market value of such
shares on the date of death in excess of the purchase price) is taxed to the
participant as ordinary income in the year of death, and we would not be allowed
a deduction for Federal income tax purposes.
If a participant disposed shares of common stock purchased under the
Purchase Plan before the expiration of the one or two-year holding periods
described above, then the participant realizes ordinary income in the year of
disposition in an amount equal to the excess of the fair market value of the
shares on the date of purchase over the purchase price thereof, and we are
entitled to deduct this amount. Any further gain or loss is treated as a
short-term or long-term capital gain or loss and will not result in any
deduction for us.
VOTE REQUIRED
The affirmative vote by the holders of a majority of the shares present, or
represented, and entitled to vote at the meeting is required to approve the
amendment to the Purchase 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, Geraghty, Termeer and Tuck and Dr. Smith are directors and/or
executive officers of Dyax and/or Genzyme. We are involved in various financial
and business transactions with Dyax and Genzyme. See "Compensation Committee
Interlocks and Insider Participation."
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, executive officers
and persons owning more than 10% of our registered equity securities, to file
with the SEC reports of their initial ownership and of changes in their
ownership of our common stock and to provide us with copies of all
Section 16(a) reports they file.
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To our knowledge, based solely on our review of copies of reports furnished
to us and written representations that no other reports were required during the
fiscal year ended January 2, 2000, we believe that during the 1999 fiscal year,
our directors, officers, and 10% stockholders complied with all Section 16(a)
filing requirements, except that one report of one transaction by Mr. Glick was
filed late.
INFORMATION CONCERNING INDEPENDENT ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP, independent accountants, has
examined our financial statements for the year ended January 2, 2000. The board
of directors has appointed PricewaterhouseCoopers to serve as our auditors for
our fiscal year ending December 31, 2000. Representatives of
PricewaterhouseCoopers are expected to attend the annual meeting and be
available to respond to appropriate questions. They will also have the
opportunity to make a statement if they desire.
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DEADLINE FOR STOCKHOLDER PROPOSALS
Assuming the 2001 annual meeting is not more than 30 days before or 30 days
after May 24, 2001, if you wish to bring business before or propose director
nominations at the 2001 annual meeting, you must give written notice to GTC by
March 12, 2001 (the date 75 days before the anniversary of the 2000 annual
meeting).
If you intend to bring such a proposal or nomination at the 2001 annual
meeting, and you would like us to consider the inclusion of your proposal or
nomination in our proxy statement for the meeting, you must provide written
notice to GTC of such proposal or nomination prior to December 23, 2000.
Notices of stockholder proposals and nominations shall be given in writing
to Sandra N. Lehrman, President, Genzyme Transgenics Corporation, 175 Crossing
Boulevard, Framingham, Massachusetts 01701.
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APPENDIX
PROPOSED 1993 EQUITY INCENTIVE PLAN
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.
"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.
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"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.
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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 4,140,000(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 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
- ---------------------
(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.
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(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.
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
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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.
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.
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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 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
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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.
(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.
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(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.
---------------------------
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; APPROVED BY THE
STOCKHOLDERS ON MAY 27, 1998.
7. AS AMENDED BY THE BOARD OF DIRECTORS ON MARCH 3, 1999; APPROVED BY THE
STOCKHOLDERS ON MAY 25, 1999.
8. AS AMENDED BY THE BOARD OF DIRECTORS ON MARCH 1, 2000; APPROVED BY THE
STOCKHOLDERS ON ____________, 2000.
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PROPOSED 1993 EMPLOYEE STOCK PURCHASE PLAN
GENZYME TRANSGENICS CORPORATION
1993 EMPLOYEE STOCK PURCHASE PLAN
l. PURPOSE.
The purpose of this 1993 Employee Stock Purchase Plan (the "Plan") is
to provide employees of Genzyme Transgenics Corporation (the "Company"), and its
subsidiaries, who wish to become shareholders of the Company an opportunity to
purchase Common Stock of the Company (the "Shares"). The Plan is intended to
qualify as an "employee stock purchase plan" within the meaning of Section 423
of the Internal Revenue Code of 1986, as amended (the "Code").
2. ELIGIBLE EMPLOYEES.
Subject to the provisions of Sections 7, 8 and 9 below, any individual
who is a full-time employee (as defined below) of the Company, or any of its
subsidiaries (as defined in Section 424(f) of the Code) the employees of which
are designated by the Board of Directors as eligible to participate in the Plan,
is eligible to participate in any Offering of Shares (as defined in Section 3
below) made by the Company hereunder. Full-time employees shall include all
employees whose customary employment is:
(a) 20 hours or more per week and
(b) more than five months
in the calendar year during which said Offering Date occurs or in the calendar
year immediately preceding such year.
3. OFFERING DATES.
From time to time, the Company, by action of the Board of Directors,
will grant rights to purchase Shares to employees eligible to participate in the
Plan pursuant to one or more offerings (each of which is an "Offering" on a date
or series of dates (each of which is an "Offering Date") designated for this
purpose by the Board of Directors.
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4. PRICES.
The price per share for each grant of rights hereunder shall be the
lesser of:
(a) eighty-five percent (85%) of the fair market value of a
Share on the Offering Date on which such right was granted; or
(b) eighty-five percent (85%) of the fair market value of a
Share on the date such right is exercised.
At its discretion, the Board of Directors may determine a higher price for a
grant of rights.
5. EXERCISE OF RIGHTS AND METHOD OF PAYMENT.
(a) Rights granted under the Plan will be exercisable periodically on
specified dates as determined by the Board of Directors.
(b) The method of payment for Shares purchased upon exercise of rights
granted hereunder shall be through regular payroll deductions or by lump sum
cash payment or both, as determined by the Board of Directors. No interest shall
be paid upon payroll deductions unless specifically provided for by the Board of
Directors.
(c) Any payments received by the Company from a participating employee
and not utilized for the purchase of Shares upon exercise of a right granted
hereunder shall be promptly returned to such employee by the Company after
termination of the right to which the payment relates.
6. TERM OF RIGHTS.
The total period from an Offering Date to the last date on which rights
granted on that Offering Date are exercisable (the "Offering Period") shall in
no event be longer than twenty-seven (27) months. The Board of Directors when it
authorizes an Offering may designate one or more exercise periods during the
Offering Period. Rights granted on an Offering Date shall be exercisable in full
on the Offering Date or in such proportion on the last day of each exercise
period as the Board of Directors determines.
7. SHARES SUBJECT TO THE PLAN.
No more than One Million Three Hundred Thousand (1,300,000) Shares may
be sold pursuant to rights granted under the Plan. Appropriate adjustments in
the above figure, in the number of Shares covered by outstanding rights granted
hereunder, in the exercise price of the rights and in the maximum number of
Shares which an employee may purchase (pursuant to Section 9 below) shall be
made to give effect to any mergers, consolidations, reorganizations,
recapitalizations, stock splits, stock dividends or other relevant changes in
the capitalization of the Company occurring after the effective date of the
Plan, provided that no fractional Shares shall be subject to a right and each
right shall be adjusted downward to the nearest full Share. Any agreement of
merger or consolidation will include provisions for protection of the then
existing rights of participating employees under the Plan. Either authorized and
unissued Shares
2
<PAGE>
or issued Shares heretofore or hereafter reacquired by the Company may be made
subject to rights under the Plan. If for any reason any right under the Plan
terminates in whole or in part, Shares subject to such terminated right may
again be subjected to a right under the Plan.
8. LIMITATIONS ON GRANTS.
(a) No employee shall be granted a right hereunder if such employee,
immediately after the right is granted, would own stock or rights to purchase
stock possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company, or of any subsidiary, computed in
accordance with Section 423(b)(3) of the Code.
(b) No employee shall be granted a right which permits his right to
purchase shares under all employee stock purchase plans of the Company and its
subsidiaries to accrue at a rate which exceeds twenty-five thousand dollars
($25,000) (or such other maximum as may be prescribed from time to time by the
Code) of the fair market value of such Shares (determined at the time such right
is granted) for each calendar year in which such right is outstanding at any
time in accordance with the provisions of Section 423(b)(8) of the Code.
(c) No right granted to any participating employee under an
Offering, when aggregated with rights granted under any other Offering still
exercisable by the participating employee, shall cover more shares than may be
purchased at an exercise price equal to fifteen percent (15%) of the employee's
annual rate of compensation on the date the employee elects to participate in
the Offering or such lesser percentage as the Board of Directors may determine.
9. LIMIT ON PARTICIPATION.
Participation in an Offering shall be limited to eligible employees who
elect to participate in such Offering in the manner, and within the time
limitations, established by the Board of Directors when it authorizes the
Offering.
10. CANCELLATION OF ELECTION TO PARTICIPATE.
An employee who has elected to participate in an Offering may cancel
such election as to all (but not part) of the unexercised rights granted under
such Offering by giving written notice of such cancellation to the Company
before the expiration of any exercise period. Any amounts paid by the employee
for the Shares or withheld for the purchase of Shares from the employee's
compensation through payroll deductions shall be paid to the employee, without
interest, unless otherwise determined by the Board of Directors, upon such
cancellation.
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11. TERMINATION OF EMPLOYMENT.
Upon the termination of employment for any reason, including the death
of the employee, before the date on which any rights granted under the Plan are
exercisable, all such rights shall immediately terminate and amounts paid by the
employee for the Shares or withheld for the purchase of Shares from the
employee's compensation through payroll deductions shall be paid to the employee
or to the employee's estate, without interest unless otherwise determined by the
Board of Directors.
12. EMPLOYEES' RIGHTS AS SHAREHOLDERS.
No participating employee shall have any rights as a shareholder in the
Shares covered by a right granted hereunder until such right has been exercised,
full payment has been made for the corresponding Shares and the Share
certificate is actually issued.
13. RIGHTS NOT TRANSFERABLE.
Rights under the Plan are not assignable or transferable by a
participating employee and are exercisable only by the employee.
14. AMENDMENTS TO OR DISCONTINUATION OF THE PLAN.
The Board of Directors of the Company shall have the right to amend,
modify or terminate the Plan at any time without notice; provided, however, that
the then existing rights of all participating employees shall not be adversely
affected thereby, and provided further that, subject to the provisions of
Section 7 above, no such amendment to the Plan shall, without the approval of
the shareholders of the Company, increase the total number of Shares which may
be offered under the Plan.
15. EFFECTIVE DATE AND APPROVALS.
This Plan became effective on May 1, 1993, the date it was adopted by
the Board of Directors. This Plan was approved by the shareholders of the
Company on June 25, 1993.
The Company's obligation to offer, sell and deliver its Shares under
the Plan is subject to (i) the approval of any governmental authority required
in connection with the authorized issuance or sale of such Shares, (ii)
satisfaction of the listing requirements of any national securities exchange on
which the Shares are then listed and (iii) compliance, in the opinion of the
Company's counsel with, all applicable federal and state securities and other
laws.
16. TERM OF PLAN.
No rights shall be granted under the Plan after May 1, 2003.
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<PAGE>
17. ADMINISTRATION OF THE PLAN.
The Board of Directors or any committee or person(s) to whom it
delegates its authority (the "Administrator") shall administer, interpret and
apply all provisions of the Plan as it deems necessary to meet special
circumstances not anticipated or covered expressly by the Plan. Nothing
contained in this Section shall be deemed to authorize the Administrator to
alter or administer the provisions of the Plan in a manner inconsistent with the
provisions of Section 423 of the Code.
- ---------------------
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 FEBRUARY 7, 1995; APPROVED BY THE
STOCKHOLDERS ON MAY 19, 1995.
3. AMENDED BY THE BOARD OF DIRECTORS ON MARCH 3, 1997; APPROVED BY THE
STOCKHOLDERS ON MAY 28, 1997.
4. AMENDED BY THE BOARD OF DIRECTORS ON MARCH 1, 2000; APPROVED BY THE
STOCKHOLDERS ON __________, 2000.
5
<PAGE>
FORM OF PROXY CARD
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS MAY 24, 2000
GENZYME TRANSGENICS CORPORATION
The undersigned stockholder of Genzyme Transgenics Corporation (the
"Company") hereby appoints Sandra Nusinoff Lehrman, 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 24, 2000, 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.
PLEASE SIGN AND MAIL THIS PROXY TODAY Mark here for |_|
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.) Address
Change
and Note on
Reverse
<PAGE>
(REVERSE SIDE OF PROXY CARD)
PLEASE DATE, SIGN AND MAIL YOUR PROXY
CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
GENZYME TRANSGENICS CORPORATION
May 24, 2000
A |X| Please mark your votes as in this example
WITHHELD
FOR from
the nominee the nominee
1. Proposal to |_| |_|
elect one
director. Nominee: Sandra Nusinoff Lehrman
(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 Restated
Articles of Organization to increase |_| |_| |_|
the number of authorized shares of
common stock from 40,000,000 to
100,000,000 shares.
FOR AGAINST ABSTAIN
3. Proposal to amend the 1993
Equity Incentive Plan to |_| |_| |_|
increase the number of shares of
common stock covered by the
plan by 750,000 shares
FOR AGAINST ABSTAIN
4. Proposal to amend the 1993
Employee Stock Purchase Plan |_| |_| |_|
to increase the number of shares
of common stock covered by the
plan by 400,000 shares.
- ---------------------- ------------- ----------------------------- ----------
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.
