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EXHIBIT 4.15
THIS DEBENTURE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS A REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT
THERETO, OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE, TRANSFER OR
DISPOSITION. THIS DEBENTURE (THIS "DEBENTURE" AND TOGETHER WITH THE OTHER
GENZYME GENERAL DIVISION ("GGD") CONVERTIBLE DEBENTURES, THE "DEBENTURES") HAS
BEEN ISSUED PURSUANT TO AN EXCHANGE FOR ALL OR PART OF THE PRINCIPAL AMOUNT OF A
GENZYME MOLECULAR ONCOLOGY DIVISION ("GMO") CONVERTIBLE DEBENTURE, THE FORM OF
WHICH IS ATTACHED HERETO (THE "GMO DEBENTURE" AND TOGETHER WITH THE OTHER GMO
DEBENTURES OF EVEN DATE THEREWITH, THE "GMO DEBENTURES"). THE DEBENTURES AND THE
GMO DEBENTURES ARE SUBJECT TO THE TERMS OF (A) A PURCHASE AGREEMENT, DATED AS OF
AUGUST 29, 1997 ("PURCHASE AGREEMENT"), BY AND AMONG GENZYME CORPORATION AND THE
PURCHASERS NAMED THEREIN AND (B) A REGISTRATION RIGHTS AGREEMENT, DATED AUGUST
29, 1997 ("REGISTRATION RIGHTS AGREEMENT"), BY AND AMONG GENZYME CORPORATION AND
SUCH PURCHASERS.
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GENZYME CORPORATION
GGD CONVERTIBLE DEBENTURE
New York, New York $[ ]
August 29, 1998
FOR VALUE RECEIVED, Genzyme Corporation, a Massachusetts
corporation (the "COMPANY"), hereby promises to pay to the order of [ ] or its
assignees (the "HOLDER") the sum of
[ ] DOLLARS ($[ ]) in same day funds, on or before August 29, 2003 (the
"MATURITY DATE"), and to pay interest thereon from the date hereof (the "ISSUE
DATE") as provided herein.
The following terms shall apply to this Debenture:
1. CONVERSION.
(a) RIGHT TO CONVERT. Subject to the limitation contained in
paragraph 1(g) below, the holder of this Debenture (the "HOLDER") shall have the
right to convert all or any part of the outstanding unpaid principal of this
Debenture at any time and from time to time on or after the Issue Date into
fully paid and non-assessable shares, free and clear of any liens, claims,
preemptive rights or encumbrances imposed by or through the Company (the
"CONVERSION SHARES"), of Genzyme General Division Common Stock, $.01 par value
(the "GGD STOCK"), in accordance with the terms hereof (a "CONVERSION").
(b) CONVERSION NOTICE. In order to convert principal of this
Debenture, or any portion thereof, the Holder shall send by facsimile
transmission, at any time prior to 11:59 p.m., eastern time, on the date on
which the Holder wishes to effect such Conversion (the "CONVERSION DATE"), a
notice of conversion to the Company and to its designated transfer agent for the
GGD Stock (the "TRANSFER AGENT") stating the principal amount to be converted,
the amount of interest accrued on the then unpaid principal balance of this
Debenture as provided herein up to and including the Conversion Date, the
applicable Conversion Price and a calculation of the number of shares of GGD
Stock issuable upon such Conversion (a "CONVERSION NOTICE"). The Holder shall
not be required to physically surrender this Debenture to the Company in order
to effect a Conversion. The Company shall maintain a record showing, at any
given time, the unpaid principal amount of this Debenture and the date of each
Conversion or other payment of principal hereof. The Holder shall amend
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Annex I hereto upon any such Conversion or payment of principal to reflect the
unpaid principal amount hereof. In the case of a dispute as to the calculation
of the Conversion Price or the number of Conversion Shares issuable upon a
Conversion, the Company shall promptly issue to the Holder the number of
Conversion Shares that are not disputed and shall submit the disputed
calculations to its independent accountants within one (1) business day of
receipt of the Holder's Conversion Notice. The Company shall cause such
accountant to calculate the Conversion Price and the number of Conversion Shares
issuable as provided herein and to notify the Company and the Holder of the
results in writing no later than two (2) business days following the day on
which it received the disputed calculations. Such accountant's calculation shall
be deemed conclusive absent manifest error. The fees of any such accountant
shall be borne by the Company.
(c) NUMBER OF CONVERSION SHARES; CONVERSION PRICE. The number of
Conversion Shares to be delivered by the Company pursuant to a Conversion shall
be equal to the principal amount of this Debenture specified in the Conversion
Notice DIVIDED BY the Conversion Price. The "CONVERSION PRICE" shall mean (x)
the average of the Closing Bid Prices for the GGD Stock on the five (5) Trading
Days occurring immediately prior to (but not including) GGD Issue Date (as
defined in the GMO Debentures) TIMES (y) one hundred and thirteen percent
(113%). Conversions may be effected in minimum principal amounts of $100,000 (or
such smaller amount of principal as may remain unpaid at the time of such
Conversion).
(d) DELIVERY OF GGD STOCK UPON CONVERSION. Upon receipt of a
Conversion Notice pursuant to paragraph 1(b) above, the Company shall, no later
than the close of business on the third (3rd) business day following the
Conversion Date set forth in such Conversion Notice (the "DELIVERY DATE"), issue
and deliver or caused to be delivered to the Holder the number of Conversion
Shares as shall be determined as provided herein. If any Conversion would create
a fractional Conversion Share, such fractional Conversion Share shall be
disregarded and the number of Conversion Shares issuable upon such Conversion,
in the aggregate, shall be the next higher number of Conversion Shares.
Certificates representing Conversion Shares shall not contain any restrictive
legend as long as the sale of such Conversion Shares is covered by an effective
Registration Statement (as defined in the Registration Rights Agreement) or may
be made pursuant to Rule 144(k) under the Securities Act or any successor rule
or provision.
(e) FAILURE TO DELIVER CONVERSION SHARES. In the event that the
Company fails to deliver to the Holder the number of Conversion Shares specified
in the applicable Conversion Notice on or before the Delivery Date therefor for
any reason (a "CONVERSION DEFAULT"), and such Conversion Default continues for
longer than seven (7) business days, the Company shall pay to the Holder
payments ("CONVERSION DEFAULT PAYMENTS") in the amount of (i) (N/365) MULTIPLIED
BY (ii) the unpaid principal amount of this Debenture represented by the
Conversion Shares which remain the subject of such Conversion Default MULTIPLIED
BY (iii) the lower of twenty-four percent (24%) and the maximum
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rate permitted by applicable law, where "N" equals the number of days elapsed
between the original Delivery Date of such Conversion Shares and the earlier to
occur of (A) the date on which all of such Conversion Shares are issued and
delivered to the Holder and (B) the date on which the principal amount
represented thereby is redeemed pursuant to the terms of this Debenture. Cash
amounts payable hereunder shall be paid on or before the fifth (5th) business
day of the calendar month following the calendar month in which such amount has
accrued. Nothing herein shall limit the Holder's right to pursue remedies with
respect to its actual damages resulting from a Conversion Default (including,
without limitation, damages relating to any purchase of shares of GGD Stock by
the Holder to make delivery on a sale effected in anticipation of receiving
Conversion Shares upon Conversion), and the Holder shall have the right to
pursue all remedies available to it at law or in equity (including, without
limitation, a decree of specific performance and/or injunctive relief).
(f) PAYMENT OF PRINCIPAL AT MATURITY; OPTIONAL CONVERSION. On the
Maturity Date, the Company shall pay to the Holder the amount of the unpaid
principal amount of this Debenture in same day funds; PROVIDED, however, that if
(i) the Holder agrees to receive such payment in shares of GGD Stock and (ii)
the Company has satisfied each of the Optional Conversion Conditions (as defined
below), such unpaid principal amount may be converted into the number of shares
of GGD Stock equal to the amount of such unpaid principal amount DIVIDED BY the
Conversion Price (an "OPTIONAL CONVERSION"), and the Maturity Date shall be
deemed the Conversion Date with respect to such Optional Conversion. If an
Optional Conversion occurs, the Company and the Holder shall follow the
procedures for Conversion set forth in this Section 1; PROVIDED, HOWEVER, that
the Holder shall not be required to send the Conversion Notice contemplated by
paragraph 1(b) above. The "OPTIONAL CONVERSION Conditions" are as follows:
(i) the GGD Common Stock shall be designated for
quotation on the Nasdaq National Market system or listed on the New York Stock
Exchange ("NYSE") or the American Stock Exchange ("ASE");
(ii) the market value of the outstanding shares of GGD
Stock on the Maturity Date (not including any such shares represented by the
outstanding principal balance of this Debenture) shall be greater than eighty
million ($80,000,000); and
(iii) the GGD Stock shall have an average daily trading
volume of at least eight hundred thousand dollars $800,000 for the period of one
hundred and eighty (180) days immediately prior to the fifteenth (15th) day of
the calendar month occurring immediately prior to the calendar month in which
the Maturity Date occurs (based on the weighted average of the Closing Bid
Prices of the GGD Stock during such period).
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(g) LIMITATIONS ON RIGHT TO CONVERT. In no event shall the Holder
be permitted to convert principal of this Debenture in excess of that amount of
principal upon the Conversion of which (x) the number of shares of GGD Stock
beneficially owned by the Holder (other than shares of GGD Stock which may be
deemed beneficially owned except for being subject to a limitation on conversion
or exercise analogous to the limitation contained in this paragraph (g)) PLUS
(y) the number of shares of GGD Stock issuable upon the Conversion of such
principal amount is equal to or exceeds (z) 4.99% of the number of shares of GGD
Stock then issued and outstanding. The determination of whether the limitation
contained in this paragraph (g) applies and whether principal of this Debenture
is convertible (in relation to other securities owned by the Holder) shall be in
the sole discretion of the Holder, and the submission of a Conversion Notice
shall be deemed to be such Holder's determination that such limitation does not
apply and that the principal amount of this Debenture to which such Conversion
Notice relates is convertible. This paragraph may be amended (A) in order to
clarify an ambiguity or otherwise to give effect to the limitation contained in
this paragraph (g), by the Board of Directors of the Company and the written
consent of the Holders of at least 66% of the aggregate unpaid principal amount
of the Debentures then outstanding and (B) for any other reason, with the
further consent of the holders of a majority of the shares of the Company's
common stock then outstanding. In the event that the limitation contained in
this paragraph (g) applies to all or a portion of the unpaid principal amount of
this Debenture, nothing contained herein shall be deemed to restrict the right
of the Holder to convert such principal amount at such time as such Conversion
will not violate such limitation.
(h) CERTAIN DEFINITIONS. "TRADING DAY" shall mean any day on which
the GGD Stock is traded for any period on the Nasdaq National Market or on the
principal securities exchange or market on which the GGD Stock is then traded.
"CLOSING BID PRICE" means, with respect to a security, the closing bid price of
such security on the principal securities exchange or trading market where such
security is listed or traded as reported (i) if the Nasdaq National Market is
the principal market on which the GGD Stock is then traded, by Nasdaq and (ii)
if the Nasdaq National Market is not such principal market, by Bloomberg
Financial Markets or, if Bloomberg Financial Markets is not then reporting
closing bid prices of such security, a comparable reporting service of national
reputation selected by the Company and reasonably acceptable to holders of a
majority of the unpaid principal amount of the Debentures then outstanding
(collectively, "BLOOMBERG"), or if the foregoing does not apply, the last
reported sale price of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no
sale price is reported for such security by Bloomberg, the average of the bid
prices of all market makers for such security as reported in the "pink sheets"
by the National Quotation Bureau, Inc. If the Closing Bid Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Closing Bid Price of such security on such date shall be the fair market value
as reasonably determined by an investment banking firm selected by the Holders
(which may be a holder) of at least 50% of the
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aggregate unpaid principal amount of the Debentures then outstanding, with the
reasonable costs of such appraisal to be borne by the Company.
2. ADJUSTMENTS TO CONVERSION PRICE.
(a) ADJUSTMENT TO CONVERSION PRICE DUE TO STOCK SPLIT, STOCK
DIVIDEND, ETC. If prior to the Conversion of the entire principal amount of this
Debenture, (A) the number of outstanding shares of GGD Stock is increased by a
stock split, stock dividend, reclassification, the distribution to holders of
GGD Stock of rights or warrants entitling them to subscribe for or purchase GGD
Stock at less than the current market price thereof as of the date such right or
warrant first becomes exercisable (other than pursuant to the Company's equity
incentive plan, 401(k) plan, stock option plans, employee stock purchase plan or
any warrants outstanding as of the Issue Date), or other similar event, the
Conversion Price shall be proportionately reduced, or (B) the number of
outstanding shares of GGD Stock is decreased by a reverse stock split,
combination or reclassification of shares or other similar event, the Conversion
Price shall be proportionately increased. In such event, the Company shall
notify the Transfer Agent of such change on or before the effective date
thereof. For purposes of this paragraph 2(a), the "CURRENT MARKET PRICE" per
share of GGD Stock on any date shall be the average of the Closing Bid Prices
for the GGD Stock on the five (5) consecutive Trading Days occurring immediately
prior to (but not including) such date. Nothing contained herein shall be
construed to require the adjustment of the Conversion Price in the event that
the Company issues additional series or classes of its common stock as long as
any such issuance does not result in dilution of the shares of GGD Stock then
outstanding.
(b) ADJUSTMENT TO CONVERSION PRICE. If during the reference period
for determination of the Conversion Price, the number of outstanding shares of
GGD Stock is increased or decreased by a stock split, stock dividend,
combination, reclassification or other similar event, the Conversion Price shall
be calculated giving appropriate effect to the stock split, stock dividend,
combination, reclassification or other similar event for all Trading Days
included in such calculation.
(c) ADJUSTMENT DUE TO MERGER, CONSOLIDATION, ETC. If, prior to the
Conversion of the entire principal amount of this Debenture, there shall be any
merger, consolidation, exchange of shares, recapitalization, reorganization,
redemption or other similar event, as a result of which shares of GGD Stock
shall be changed into the same or a different number of shares of the same or
another class or classes of stock or securities of the Company or another entity
or there is a sale of all or substantially all the Company's assets or there is
a change of control transaction with respect to which, in any such case, the
Holder does not exercise its right to a Mandatory Redemption (as defined below)
of the outstanding principal hereof, then the Holder shall thereafter have the
right to receive upon Conversion of the principal amount of this Debenture, upon
the terms and conditions specified herein and in lieu of the shares of GGD Stock
immediately theretofore issuable upon
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conversion, such stock, securities and/or other assets, if any, which the Holder
would have been entitled to receive in such transaction had such principal
amount been converted immediately prior to such transaction, and in any such
case appropriate provisions shall be made with respect to the rights and
interests of the Holder to the end that the provisions hereof (including,
without limitation, provisions for the adjustment of the Conversion Price and of
the number of shares issuable upon a Conversion) shall thereafter be applicable
as nearly as may be practicable in relation to any securities thereafter
deliverable upon the exercise hereof. The Company shall not effect any
transaction described in this paragraph 2(c) unless (i) it first gives to the
Holder prior notice of such merger, consolidation, exchange of shares,
recapitalization, reorganization, redemption or other similar event, and makes a
public announcement of such event at the same time that it gives such notice and
(ii) the resulting successor or acquiring entity (if not the Company) assumes by
written instrument the obligations of the Company under this Debenture,
including the terms of this paragraph 2(c).
(d) DISTRIBUTION OF ASSETS. If, prior to the Conversion of the
entire principal amount of this Debenture, the Company shall declare or make any
distribution of its assets (or rights to acquire its assets) to holders of GGD
Stock as a partial liquidating dividend, by way of return of capital or
otherwise, including any dividend or distribution in cash or shares of capital
stock of a subsidiary of the Company (collectively, a "DISTRIBUTION"), then,
upon a Conversion by the Holder occurring after the record date for determining
shareholders entitled to such Distribution but prior to the effective date of
such Distribution, the Holder shall be entitled to receive the amount of such
assets which would have been payable to the Holder had the Holder been the
holder of such shares of GGD Stock on the record date for the determination of
shareholders entitled to such Distribution. The Conversion Price for amounts of
principal of this Debenture not converted prior to the effective date of a
Distribution shall be reduced to a price determined by decreasing the Conversion
Price in effect immediately prior to the record date of the Distribution by an
amount equal to the fair market value of the assets so distributed, as
determined by mutual agreement of the Company and the Holder.
(e) NO FRACTIONAL SHARES. If any adjustment under this Section 2
would create a fractional share of GGD Stock or a right to acquire a fractional
share of GGD Stock, such fractional share shall be disregarded and the number of
shares of GGD Stock issuable upon Conversion shall be the next higher number of
shares.
3. INTEREST.
(a) INTEREST RATE; STOCK PAYMENT OPTION. This Debenture shall bear
interest on the unpaid principal amount hereof at an annual rate of five percent
(5%) from the Issue Date, computed on the basis of a 360-day year of twelve
30-day months for the actual number of days elapsed. Interest accrued hereunder
shall be due and payable on each Conversion Date, on a Redemption Date (as
defined herein) and on the Maturity Date, but, in the case of interest which is
due on a Conversion
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Date and payable in cash, such interest may be paid on the following business
day in the event that a Conversion Notice (as defined herein) is delivered to
the Company after 2 p.m., eastern time, on the Conversion Date. Interest accrued
hereunder shall not be subject to a "gross-up" in the event that backup
withholding is required by applicable law. Interest due on a Conversion Date or
an Optional Redemption Date may be paid either in cash or, at the option of the
Company (the "STOCK PAYMENT OPTION"), and upon satisfaction of the conditions
set forth in paragraph 3(b) below, in shares of GGD Stock or in shares of
capital stock into which such GGD Stock may be changed or reclassified. The
shares of GGD Stock to be issued and delivered by the Company pursuant to the
Stock Payment Option shall be fully paid and non-assessable, free and clear of
any liens, claims, preemptive rights or encumbrances imposed by or through the
Company, in an amount calculated in accordance with paragraph 3(c) below (the
"INTEREST PAYMENT SHARES"). Any amount of interest payable on this Debenture in
cash which is not paid within three (3) business days of the date when the same
becomes due and payable hereunder (the "PAYABLE DATE") shall bear interest at an
annual rate equal to the lower of (x) the "prime" rate (as published in the Wall
Street Journal) on the Payable Date PLUS three percent (3%) and (y) the highest
rate permitted by applicable law, for the number of days elapsed from such third
(3rd) business day until such amount is paid in full ("DEFAULT INTEREST"). The
Company may not make payments of Default Interest in shares of GGD Stock.
(b) CONDITIONS TO STOCK PAYMENT OPTION. If the Company wishes to
exercise the Stock Payment Option, it may do so only if each of the following
conditions has been satisfied as of the relevant Conversion Date:
(i) the number of shares of GGD Stock authorized,
unissued and unreserved for all other purposes, or held in the Company's
treasury, is sufficient to pay the aggregate number of (x) Conversion Shares
issuable on such Conversion Date assuming the conversion in full of the
Debentures at the Conversion Price and (y) the number of Interest Payment Shares
issuable pursuant to such option;
(ii) the Interest Payment Shares are authorized for
quotation on the Nasdaq National Market or for listing or quotation on any other
national securities exchange or market on which the GGD Stock may be listed;
(iii) the GGD Registration Statement (as defined in the
Registration Rights Agreement) is effective and available for the sale of the
Interest Payment Shares by the Holder;
(iv) a Mandatory Redemption Event (as defined herein)
shall not have occurred and be continuing;
(v) the Company has delivered to the Holder a
certificate, signed by an executive officer of the Company, setting forth:
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. the amount of the interest payment to which
the Holder is entitled and, if not the same,
the amount of such payment to be made in
Interest Payment Shares;
. the number of Interest Payment Shares to be
delivered in payment of such interest, and
the calculation therefor; and
. a statement to the effect that all of the
conditions set forth in paragraphs 3(b)(i) -
(iv) have been satisfied;
and
(vi) the Holder shall have consented in writing to the
Company's use of the Stock Payment Option on such Conversion Date.
(c) DELIVERY OF INTEREST PAYMENT SHARES. If the Company elects to
exercise the Stock Payment Option, the Company shall deliver to such Holder, on
or before the third (3rd) business day following the applicable Conversion Date
(the "INTEREST PAYMENT SHARE DELIVERY DATE"), one or more certificates
representing the aggregate number of whole Interest Payment Shares that is
determined by dividing (x) the amount of interest which would otherwise be
payable in cash to such Holder on the applicable Conversion Date by (y) the
Conversion Price. No fractional Interest Payment Shares shall be issued; the
Company shall, in lieu thereof, either issue a number of Interest Payment Shares
which reflects a rounding up to the next whole number of shares or pay such
amount in cash.
(d) FAILURE TO DELIVER INTEREST PAYMENTS SHARES. If the Company
fails to issue and deliver the appropriate number of Interest Payment Shares to
such Holder on or before the tenth (10th) business day following the Interest
Payment Share Delivery Date, the Company shall not be entitled to utilize the
Stock Payment Option in respect of such interest payment, but instead must
immediately pay such interest payment in cash, together with Default Interest on
such unpaid amount calculated from the applicable Payable Date until the date on
which such amount is paid.
(e) NOTICE OF EXERCISE. Not later than five (5) business days
immediately prior to the first day of each calendar month during which any
principal of this Debenture remains unpaid and outstanding, the Company shall
notify the Holder in writing whether the Company intends, assuming satisfaction
of the conditions set forth in subparagraph (b) above, to pay interest in
Interest Payment Shares in lieu of cash on any Conversion Date occurring during
that month or during such longer period as the Company may specify.
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4. PRIORITY; SUBORDINATION.
(a) NO PAYMENT IF DEFAULT ON SENIOR INDEBTEDNESS. No payment of
principal of, premium, if any, or interest on this Debenture or on account of
any purchase or redemption or other acquisition of the Debenture, whether at
maturity or otherwise, shall be made upon, or accepted with respect to, this
Debenture, and the Holder shall not initiate any action to accelerate the
maturity of the Debenture or exercise any remedy to seek collection if at the
time of such payment the Holder has received written notice from the Company or
a holder of Senior Debt (as defined below) that there exists or, after giving
effect to such payment, there would exist any default in respect of any Senior
Debt or under any agreement pursuant to which such Senior Debt was issued (a
"DEFAULT"); PROVIDED, HOWEVER, that the foregoing restriction shall cease to
apply with respect to a Default upon the earliest to occur of (i) the
commencement by any holder of Senior Debt of the exercise of its remedies
against the Company or its property including, without limitation, any action,
suit or other legal proceeding against the Company or its property based upon
such Default, or (ii) at the expiration of 180 days after the date of such
notice if no holder of Senior Debt shall have commenced the exercise of its
remedies against the Company or its property including, without limitation, any
action, suit or other legal proceeding against the Company or its property based
upon such Default. Upon the maturity of any Senior Debt by lapse of time,
acceleration or otherwise, all principal of, premium, if any, interest and other
amounts due or to become due on all such Senior Debt shall first be paid in full
in cash, cash equivalents or in any other manner acceptable to the holders of
Senior Debt (hereinafter, "PAYMENT IN FULL" or "PAID IN FULL"), or such payment
shall have been provided for to the satisfaction of the holders of Senior Debt,
before any payment on account of principal of, premium, if any, interest or any
other amounts shall be made upon this Debenture. This Debenture shall rank in
priority as to payments of interest, principal, dividends and penalties (if
any), upon the occurrence of a Liquidation Event (as defined below) or
otherwise, senior to all capital stock of the Company and pari passu with any
security or debt instrument which by its terms ranks pari passu with this
Debenture.
(b) PAYMENT UPON DISSOLUTION, ETC.
(i) In the event of (x) any insolvency or bankruptcy
proceedings, or any receivership, liquidation, reorganization or other similar
proceedings in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, or (y) the dissolution or other winding up
of the Company whether total or partial, whether voluntary or involuntary and
whether or not involving insolvency or bankruptcy proceedings or (z) any
assignment for the benefit of creditors or any marshalling of the material
assets or material liabilities of the Company, then, and in any such event
(collectively, a "LIQUIDATION EVENT"), (A) the holders of all Senior Debt shall
first be entitled to receive Payment in Full of all principal, premium, if any,
interest and other amounts due or to become due on the Senior Debt (including,
without limitation, any interest and charges accruing
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thereon in any such proceeding, notwithstanding any law to the contrary) before
any payment on account of principal, premium, if any, interest or any other
amounts is made on this Debenture, and (B) in any such proceedings, any payment
that may be payable or deliverable in respect of this Debenture shall be paid to
the holders of the Senior Debt or their representatives, unless and until the
principal of, premium, if any, interest and other amounts due or to become due
on all such Senior Debt shall have been Paid in Full; PROVIDED, HOWEVER, that in
the event that such payment consists solely of shares of stock or securities of
the Company as reorganized the payment of which is subordinated, at least to the
same extent as the Debenture, to the payment of all Senior Debt and such payment
is authorized by an order or decree made by a court of competent jurisdiction in
a reorganization proceeding under any applicable law pursuant to a plan of
reorganization and the rights of the holders of Senior Debt are not impaired or
otherwise altered adversely by such reorganization or adjustment, no such
payment shall be required hereby to be made to the holders of the Senior Debt or
their representatives.
(ii) In the event that any such payment shall be received
by the Holder in violation of the subordination provisions hereof before all
Senior Debt is Paid in Full, such payment or distribution shall be received and
held in trust for and shall be paid over to the holders of all Senior Debt
remaining unpaid, or their representatives, until such Senior Debt shall have
been Paid in Full, after giving effect to any concurrent payment or distribution
or provision thereof to the holders of such Senior Debt.
(c) SUBROGATION. Subject to the prior Payment in Full of all
Senior Debt, the Holder shall be subrogated to the rights of the holders of
Senior Debt to receive payments or distributions of assets of the Company
applicable to the Senior Debt to the extent that payments otherwise payable to
the Holder under the Debenture have been applied to the payment of the Senior
Debt; PROVIDED, HOWEVER, that the subrogation rights of the holder of the
Debenture shall be fully subordinated to the rights and remedies of the holders
of Senior Debt.
(d) AGREEMENTS OF HOLDER.
(i) The Holder agrees that upon the commencement of any
bankruptcy, insolvency or other similar case or proceeding relative to the
Company, or to its creditors, as such, or to its assets, the Holder shall take
such actions as may be necessary or appropriate to effectuate the subordination
provisions hereof, including, without limitation, that the Holder shall (i)
timely file a proof of claim in respect of the Debenture and the indebtedness
and obligations evidenced hereby, provided, however, that if the Holder fails
within thirty (30) days prior to the expiration of any claims bar date to file a
proof of claim, any holder of Senior Debt shall be entitled to file such a proof
of claim in respect thereof in the name of the Holder and the Holder irrevocably
appoints the holders of Senior Debt and their representatives as its
attorney-in-fact solely for such purpose; (ii) not
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oppose any motion filed or supported by any holder of Senior Debt for relief
from stay or adequate protection in respect of the Senior Debt; and (iii) not
file or accept any reorganization plan that impairs or otherwise alters
adversely the rights of the holders of Senior Debt.
(ii) The Company and the Holder, for themselves and their
successors and assigns, covenant to execute and deliver to the holders of Senior
Debt, such further instruments and to take such further action as the holders of
Senior Debt may at any time or times reasonably request in order to carry out
the provisions hereof.
(iii) No holder of Senior Debt shall be prejudiced in its
right to enforce the subordination of this Debenture by any act or failure to
act on the part of the Company.
(iv) Without notice to or the consent of the Holder, the
holders of Senior Debt may at any time and from time to time, in their
discretion, without impairing or releasing the subordination herein made, change
the manner, place or terms of payment, or change or extend the time of payment
of or renew or alter the Senior Debt, or amend or supplement in any manner any
instrument evidencing the Senior Debt, any agreement pursuant to which the
Senior Debt was issued or incurred or any instrument securing or relating to the
Senior Debt; release any person liable in any manner for the payment or
collection of the Senior Debt; exercise or refrain from exercising any rights in
respect of the Senior Debt against the Company or any other person; apply any
moneys or other property paid by any person or release in any manner to the
Senior Debt; or accept or release any security for the Senior Debt.
(e) CONTINUING OFFER. This Section shall constitute a continuing
offer to all persons who, in reliance on such provisions, become holders of, or
continue to hold, Senior Debt, and such provisions of this Section are made for
the benefit of such holders and may not be amended, modified, changed or waived
without the prior written consent of the holders of Senior Debt.
(f) RIGHTS OF HOLDERS UNIMPAIRED. The foregoing provisions as to
subordination are solely for the purpose of defining the relative rights of the
holders of the Senior Debt on the one hand and the Holder on the other hand.
None of such provisions shall impair, as between the Company and the Holder, the
obligation of the Company, which is unconditional and absolute, to pay the
Holder of this Debenture the amounts due on this Debenture in accordance with
the terms hereof and of the Purchase Agreement, nor shall any such provisions
prevent the Holder from exercising all remedies otherwise permitted by law.
Moreover, nothing contained herein shall be deemed to limit in any way the right
of the Holder to convert, at any time and from time to time, the principal
balance of this Debenture into shares of GGD Stock pursuant to Section 1 hereof
or to receive shares of GGD Stock as payment of interest hereon pursuant to
Section 3 hereof.
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(g) DEFINITION OF SENIOR DEBT. For purposes hereof, "SENIOR DEBT"
shall mean (a) the principal of, premium, if any, accrued and unpaid interest
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company), and any other
monetary obligations on (i) indebtedness of the Company for money borrowed,
whether outstanding on the date of this Debenture or thereafter created,
incurred or assumed (including but not limited to nonrecourse borrowings secured
by receivables), (ii) guaranties by the Company of indebtedness for money
borrowed by any other person, or reimbursement obligations under letters of
credit, in either case, whether outstanding on the date of this Debenture or
thereafter created, incurred or assumed, and (iii) indebtedness evidenced by
notes, debentures, bonds or other instruments of indebtedness (other than this
Debenture) for the payment of which the Company is responsible or liable, by
guarantees or otherwise, whether outstanding on the date of this Debenture or
thereafter created, incurred or assumed, and (b) modifications, renewals,
extensions, refinancings, refundings and replacements of any such indebtedness,
obligations or guarantees; unless, in the instrument creating or evidencing the
same or pursuant to which the same is outstanding, it is expressly provided that
such indebtedness, obligations or guarantees or such modification, renewal,
extension, refinancing, refunding or replacement thereof are not superior in
right of payment to this Debenture and the holder of such indebtedness has
consented to same; provided, HOWEVER, that Senior Debt shall not be deemed to
include any obligations of the Company to any of its subsidiaries. Without in
any way limiting the scope of the foregoing, it is expressly acknowledged and
agreed that Senior Debt shall include all indebtedness, obligations and
guaranties of the Company and its subsidiaries under that certain Credit
Agreement dated November 14, 1996 among the Company, certain of its
subsidiaries, Fleet National Bank, as administrative agent, The First National
Bank of Boston, as documentation agent, and the lender parties thereto and under
all notes, instruments, agreements and documents entered into pursuant thereto
or in connection therewith and all modifications, renewals, extensions,
refinancings, refundings and replacements thereof.
5. OPTIONAL REDEMPTION BY THE COMPANY.
(a) OPTIONAL REDEMPTION. At any time beginning after the period of
thirty-six (36) months following the Issue Date, the Company shall have the
right, in its sole discretion, to redeem (an "OPTIONAL REDEMPTION"), any or all
of the principal amount of this Debenture then outstanding at the Optional
Redemption Price (as defined herein); PROVIDED, HOWEVER, that in order to effect
an Optional Redemption, the Company shall have provided to the Holder thirty
(30) Trading Days' prior written notice of the effective date of the Optional
Redemption (the "OPTIONAL REDEMPTION DATE") and each of the Optional Redemption
Conditions (as defined below) has been satisfied as of the date of such notice
and as of the Optional Redemption Date. The Company shall be entitled to four
(4) Optional Redemptions during the term of this Debenture. Nothing contained
herein shall prevent the Holder from converting any or all of the unpaid
principal amount of this Debenture at any time or from time to time prior to the
Optional Redemption Date.
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(b) OPTIONAL REDEMPTION PRICE. The "OPTIONAL REDEMPTION PRICE"
shall mean the principal amount of this Debenture being redeemed MULTIPLIED BY
the Optional Redemption Percentage. The "OPTIONAL REDEMPTION PERCENTAGE" shall
mean, where "X" represents the Issue Date:
Number of Months
After Issue Date Optional Redemption Percentage
---------------- ------------------------------
36 [smaller than] X [smaller than or equal to] 48 103%
48 [smaller than] X [smaller than or equal to] 60 100%
(c) PAYMENT OF OPTIONAL REDEMPTION PRICE.
(i) The Company shall pay the Optional Redemption Price
to the Holder within five (5) business days of the Optional Redemption Date. In
the event that the Company redeems the entire remaining unpaid principal amount
of this Debenture, and pays to the Holder all interest accrued thereon and all
other amounts due in connection therewith, the Holder shall return this
Debenture to the Company for cancellation.
(ii) The Company may, upon fifteen (15) business days'
prior written notice to the Holder, pay the Optional Redemption Price in shares
of GGD Stock in lieu of cash. The number of shares of GGD Stock to be delivered
to the Holder in the event that the Company exercises such option shall be
determined by dividing the Optional Redemption Price by the Conversion Price.
The Company may exercise its option to pay the Optional Redemption Price in
shares of GGD Stock only if (A) the aggregate number of such shares and of all
Conversion Shares and Interest Payment Shares issuable upon the conversion of
the aggregate principal amount of the Debentures outstanding immediately
following such Optional Redemption has been reserved for issuance upon such
conversion and (B) the GGD Stock is designated for quotation on the Nasdaq
National Market system or listed on the NYSE or ASE, and actively traded thereon
and (C) the Holder agrees to receive such payment in shares of GGD Stock.
(iii) If the Company fails to issue and deliver the
appropriate number of Conversion Shares to such Holder on or before the tenth
(10th) business day following the Optional Redemption Date, the Company shall
not be entitled to pay the Optional Redemption Price in shares of GGD Stock, but
instead must immediately pay such amount in cash, together with Default Interest
on such unpaid amount calculated from the Optional Redemption Date until the
date on which such amount is paid.
-14-
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(d) OPTIONAL REDEMPTION CONDITIONS. The "OPTIONAL REDEMPTION
CONDITIONS" are as follows:
(i) The GGD Registration Statement (as defined in the
Registration Rights Agreement) is effective and available for resales of the
Conversion Shares, or the Conversion Shares may be sold pursuant to Rule 144(k)
under the Securities Act or any successor rule or provision; and
(ii) the GGD Stock is designated for quotation on the
Nasdaq National Market system, or listed on the NYSE or the ASE.
6. MANDATORY REDEMPTION BY THE COMPANY.
(a) MANDATORY REDEMPTION. In the event that a Mandatory Redemption
Event (as defined herein) occurs, the Holder shall have the right, upon written
notice to the Company, to have all or any portion of the unpaid principal amount
of this Debenture redeemed by the Company (a "MANDATORY REDEMPTION") at the
Mandatory Redemption Price (as defined herein) in same day funds. Such notice
shall specify the effective date of such Mandatory Redemption (the "MANDATORY
REDEMPTION DATE") and the amount of principal to be redeemed. The Optional
Redemption Date and the Mandatory Redemption Date are sometimes each referred to
herein as a "REDEMPTION DATE".
(b) MANDATORY REDEMPTION PRICE. The "MANDATORY REDEMPTION PRICE"
shall be equal to (A) the unpaid principal amount of this Debenture being
redeemed MULTIPLIED BY one hundred and twenty percent (120%) PLUS (B) in the
event of a Mandatory Redemption where the Mandatory Redemption Date occurs after
the last day of the third anniversary of the Issue Date, an amount equal to
interest on such unpaid principal amount at an annual rate of fifteen percent
(15%) computed on the basis of a 360-day year of twelve 30-day months for the
actual number of days elapsed (compounded annually) from the such last day
through the Mandatory Redemption Date.
(c) PAYMENT OF MANDATORY REDEMPTION PRICE.
(i) The Company shall pay the Mandatory Redemption Price
to the Holder within five (5) business days of the Mandatory Redemption Date. In
the event that the Company redeems the entire remaining unpaid principal amount
of this Debenture, and pays to the Holder all interest accrued thereon and all
other amounts due in connection therewith, the Holder shall return this
Debenture to the Company for cancellation.
(ii) If Company fails to pay the Mandatory Redemption
Price to the Holder within five (5) business days of the Mandatory Redemption
Date, the Holder shall be entitled to interest thereon at an annual rate equal
to the lower of (x) the "prime" rate (as published in the Wall Street Journal)
on such fifth (5th) business day PLUS three percent (3%) and (y) the highest
rate permitted by
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applicable law from the Mandatory Redemption Date until the Mandatory Redemption
Price has been paid in full.
(d) MANDATORY REDEMPTION EVENT. Each of the following events shall
be deemed a "MANDATORY REDEMPTION EVENT":
(i) the Company fails for any reason (including without
limitation as a result of not having a sufficient number of shares of GGD Stock
authorized and reserved for issuance) to issue certificates representing shares
of GGD Stock to the Holder in accordance with the provisions of this Debenture
upon Conversion of any principal amount hereof, and such failure continues for
ten (10) business days;
(ii) the Company breaches, in a material respect, any
covenant or other material term or condition of this Debenture, the Purchase
Agreement, the Registration Rights Agreement or any other agreement, certificate
or instrument delivered by the Company at the Closing (as defined in the
Purchase Agreement)(the "TRANSACTION DOCUMENTS"), and such breach continues for
a period of ten (10) business days after written notice thereof to the Company
from the Holder;
(iii) the GGD Registration Statement (as defined in the
Registration Rights Agreement) is not declared effective on or prior to the GGD
Registration Deadline (as defined in the Registration Rights Agreement) or if
the GGD Registration Statement has been declared effective by such date, and the
effectiveness of the GGD Registration Statement lapses for any reason (including
without limitation, the issuance of a stop order) or is unavailable to the
Holder for sale of Conversion Shares in accordance with the terms of the GGD
Registration Rights Agreement, and such lapse or unavailability continues for a
period of five (5) business days, PROVIDED that the cause of such lapse or
unavailability is not due to factors solely within the control of the Holder,
and PROVIDED, FURTHER, that the GGD Registration Statement shall not be deemed
to be unavailable to the Holder, for purposes of this paragraph (iii) only,
during any Standstill Period (as defined in the Registration Rights Agreement);
(iv) the GGD Stock is not quoted on the Nasdaq National
Market or listed on the NYSE or the Amex;
(v) the sale, conveyance or disposition of all or
substantially all of the assets of the Company or all or substantially all of
the assets comprising the Genzyme General Division, the effectuation of a
transaction or series of transactions, in which more than fifty percent (50%) of
the voting power of the Company is disposed of, or the consolidation, merger or
other business combination of the Company with or into any other entity,
immediately following which the prior stockholders of the Company fail to own,
directly or indirectly, at least fifty percent (50%) of the surviving entity;
and
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(vi) the Company or any subsidiary of the Company shall
make an assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business; or such a receiver or trustee shall otherwise be
appointed; or bankruptcy, insolvency, reorganization or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any law for the
relief of debtors shall be instituted by or against the Company or any
subsidiary of the Company and, in the case of an involuntary action or other
proceeding, remains undismissed and unstayed for a period of sixty (60) days.
(e) FAILURE TO PAY REDEMPTION AMOUNTS. If the Company fails to pay
the Mandatory Redemption Price within ten (10) business days of the Payable Date
therefor, then the Holder shall have the right at any time, so long as the
Company remains in default, to require the Company, upon written notice, to
immediately issue, in lieu of the Mandatory Redemption Price, the number of
shares of GGD Stock of the Company equal to the Mandatory Redemption Price
DIVIDED BY the Conversion Price in effect on such Conversion Date as is
specified by the Holder in writing to the Company.
7. MISCELLANEOUS.
(a) FAILURE TO EXERCISE RIGHTS NOT WAIVER. No failure or delay on
the part of the Holder in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude any other or further
exercise thereof. All rights and remedies of the Holder hereunder are cumulative
and not exclusive of any rights or remedies otherwise available.
(b) NOTICES. Any notice, demand or request required or permitted
to be given by the Company or the Holder pursuant to the terms of this Debenture
shall be in writing and shall be deemed given (i) when delivered personally or
by verifiable facsimile transmission (with a hard copy to follow), (ii) on the
next business day after timely delivery to a nationally recognized overnight
courier and (iii) on the third (3rd) business day after deposit in the U.S. mail
(certified or registered mail, return receipt requested, postage prepaid),
addressed as follows:
If to the Company:
Genzyme Corporation
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chief Legal Officer
Tel: 000-000-0000
Fax: 000-000-0000
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and if to the Holder, at such address and facsimile number as the Holder shall
have furnished the Company in the Purchase Agreement or at such other address or
facsimile number as the Holder shall have furnished to the Company in accordance
with this paragraph 7(b).
(c) AMENDMENTS. No amendment, modification or other change may be
made to this Debenture unless such amendment, modification or change is set
forth in writing and is signed by the Company and the Holder.
(d) TRANSFER OF DEBENTURE. With the prior consent of the Company,
which consent shall not be unreasonably withheld, the Holder may sell, transfer
or otherwise dispose of all, but not less than all, of this Debenture to any
person or entity as long as such sale, transfer or disposition is the subject of
an effective registration statement under the Securities Act or is exempt from
registration thereunder; PROVIDED, HOWEVER that such consent shall not be
required (but the Company shall nonetheless be entitled to receive written
notice thereof) in the event of a sale, transfer or disposition of this
Debenture to an affiliate (as defined in the Purchase Agreement) of the Holder.
On or before the effective date of any such sale, transfer or disposition, the
transferee shall deliver to the Company a Form W-8 or W-9, as applicable, duly
executed by such transferee, confirming that such transferee is not subject to
backup withholding. From and after the date of such sale, transfer or
disposition, the transferee hereof shall be deemed to be the Holder. Upon any
such sale, transfer or disposition, the Company shall, promptly following the
return of this Debenture by the transferee hereof, issue and deliver to such
transferee a new Debenture identical in all respects to this Debenture, in the
name of such transferee, except that the principal amount of such new Debenture
may reflect the unpaid principal amount of this Debenture at the time of such
sale, transfer or disposition.
(e) LOST OR STOLEN DEBENTURE. Upon receipt by the Company of
evidence of the loss, theft, destruction or mutilation of this Debenture, and
(in the case of loss, theft or destruction) of indemnity or security reasonably
satisfactory to the Company, and upon surrender and cancellation of the
Debenture, if mutilated, the Company shall execute and deliver to the Holder a
new debenture identical in all respects to this Debenture. Upon the issuance of
any new Debenture hereunder, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge and any expenses
(including reasonable fees and expenses of counsel) in connection therewith.
(f) GOVERNING LAW. This Debenture shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the conflict of law provisions thereof.
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20
IN WITNESS WHEREOF, the Company has caused this Debenture to be
executed in its name by its duly authorized officer on the date first above
written.
GENZYME CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------------
Name: Xxxxx X. XxXxxxxxx
Title: Executive Vice President,
Finance and Chief Financial Officer
-19-
21
ANNEX I
Schedule of Principal
Payments and Conversions
------------------------
Principal Amount Paid Date of
Balance or Converted Payment or Conversion
------- ------------ ---------------------
$[ ],000,000
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Schedule 1
The GGD Convertible Debentures dated August 29, 1998 are identical
except with respect to the names of the holders and the principal amounts of the
debentures. Pursuant to Instruction 2 to Item 601 of Regulation S-K, this
schedule lists all of the holders of the GGD Convertible Debentures as of the
date of this registration statement and the principal amounts of their
respective debentures.
Principal Amount
Holder of Debenture
------ ------------
Credit Suisse First Boston Corporation $ 1,060,000
Credit Suisse First Boston Corporation $10,600,000
Credit Suisse First Boston Corporation $ 1,855,000
Credit Suisse First Boston Corporation $ 2,120,000
Shepherd Investments International, Ltd. $ 795,000
SoundShore Holdings Ltd. $ 1,060,000
Xxxxx International $ 795,000
Tribeca Investments L.L.C. $ 1,060,000
UBS AG -- London Branch $ 1,855,000
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