AGREEMENT AND PLAN OF MERGER
AMONG
GENZYME CORPORATION,
SEAGULL MERGER CORPORATION,
AND
BIOMATRIX, INC.
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DATED AS OF MARCH 6, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I - THE MERGER............................................................. 2
1.1 The Merger............................................................... 2
1.2 Closing.................................................................. 3
1.3 Effective Time........................................................... 3
1.4 Articles of Organization and By-Laws..................................... 3
1.5 Directors and Officers................................................... 3
ARTICLE II - CONVERSION OF SECURITIES.............................................. 3
2.1 Conversion of Common Stock............................................... 3
2.2 Seller Common Stock Elections............................................ 5
2.3 Proration of Cash Election Price......................................... 6
2.4 Anti-Dilution............................................................ 8
2.5 Stock Option Plans....................................................... 8
2.6 Biomatrix Convertible Note............................................... 10
2.7 Dissenting Shares........................................................ 10
2.8 Exchange of Certificates................................................. 11
2.9 No Transfers............................................................. 11
2.10 No Liability............................................................. 11
2.11 Lost Certificates........................................................ 12
2.12 Withholding Rights....................................................... 12
2.13 Distributions with Respect to Unexchanged Shares......................... 12
2.14 Further Assurances....................................................... 12
ARTICLE III - CERTAIN RELATED TRANSACTIONS......................................... 13
3.1 Funding of Cash Merger Consideration..................................... 13
3.2 Reorganization........................................................... 13
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BIOMATRIX........................... 14
4.1 Incorporation; Authority................................................. 14
4.2 Authorization and Enforceability......................................... 14
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4.3 Capitalization........................................................... 15
4.4 Biomatrix Subsidiaries................................................... 16
4.5 SEC Filings; Financial Statements........................................ 17
4.6 Absence of Undisclosed Liabilities....................................... 18
4.7 Absence of Certain Events................................................ 18
4.8 Contracts and Other Agreements........................................... 18
4.9 Compliance with Laws..................................................... 19
4.10 Legal Proceedings........................................................ 21
4.11 Intellectual Property.................................................... 21
4.12 Insurance................................................................ 22
4.13 Commercial Relationships................................................. 22
4.14 Tax Matters.............................................................. 23
4.15 Employee Benefit Plans................................................... 24
4.16 Employee Relations....................................................... 26
4.17 Environmental Matters.................................................... 27
4.18 No Breach................................................................ 28
4.19 Board Approval........................................................... 28
4.20 Anti-Takeover Laws....................................................... 29
4.21 Opinion of Biomatrix's Financial Advisor................................. 29
4.22 Brokerage................................................................ 29
4.23 Investment Company Act................................................... 29
4.24 Proxy Statement and Registration Statement............................... 29
4.25 Year 2000 Matters........................................................ 30
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF GENZYME.............................. 30
5.1 Incorporation; Authority................................................. 30
5.2 Authorization and Enforceability......................................... 31
5.3 Capitalization........................................................... 32
5.4 SEC Filings; Financial Statements........................................ 33
5.5 Absence of Undisclosed Genzyme Liabilities............................... 34
5.6 Absence of Certain Events................................................ 35
5.7 Contracts and Other Agreements........................................... 35
5.8 Compliance with Laws..................................................... 36
5.9 Legal Proceedings........................................................ 37
5.10 No Breach................................................................ 37
5.11 Intellectual Property.................................................... 38
5.12 Insurance................................................................ 39
5.13 Employee Benefit Plans................................................... 39
5.14 Employee Relations....................................................... 40
5.15 Environmental Matters.................................................... 41
5.16 Board Approval........................................................... 41
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5.17 Brokerage................................................................ 42
5.18 Year 2000 Matters........................................................ 42
5.19 Proxy Statement and Registration Statement............................... 42
5.20 Available Funds.......................................................... 42
ARTICLE VI - COVENANTS AND AGREEMENTS.............................................. 43
6.1 Biomatrix Conduct of Business............................................ 43
6.2 Genzyme Conduct of Business.............................................. 46
6.3 Tax-Free Reorganization Treatment........................................ 49
6.4 Corporate Examinations and Investigations................................ 49
6.5 Expenses................................................................. 50
6.6 Third-Party Consents..................................................... 50
6.7 Further Assurances....................................................... 50
6.8 Preparation of Disclosure Documents...................................... 51
6.9 Public Announcements..................................................... 52
6.10 Nasdaq Matters........................................................... 53
6.11 No Solicitation.......................................................... 53
6.12 Regulatory Filings....................................................... 54
6.13 Notification of Certain Matters.......................................... 55
6.14 Registration of Option Shares............................................ 55
6.15 Employee Matters......................................................... 55
6.16 Indemnification.......................................................... 56
6.17 Agreement of Affiliates.................................................. 57
ARTICLE VII - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY TO
CONSUMMATE THE MERGER.............................................................. 57
7.1 Stockholder Approval..................................................... 57
7.2 Registration Statement................................................... 57
7.3 Absence of Order......................................................... 57
7.4 Regulatory Approvals..................................................... 58
7.5 HSR Act.................................................................. 58
7.6 Nasdaq................................................................... 58
ARTICLE VIII - CONDITIONS PRECEDENT TO THE OBLIGATION OF GENZYME AND MERGER SUB
TO CONSUMMATE THE MERGER........................................................... 58
8.1 Representations, Warranties and Covenants................................ 58
8.2 Delaware Certificates.................................................... 58
8.3 Secretary's Certificates................................................. 58
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8.4 Tax Opinion.............................................................. 59
8.5 Merger Filings........................................................... 59
ARTICLE IX - CONDITIONS PRECEDENT TO THE OBLIGATION OF BIOMATRIX TO CONSUMMATE
THE MERGER......................................................................... 59
9.1 Representations, Warranties and Covenants................................ 59
9.2 Massachusetts Certificates............................................... 60
9.3 Clerk's Certificates..................................................... 60
9.4 Tax Opinion.............................................................. 60
9.5 Reorganization........................................................... 60
9.6 Merger Filings........................................................... 60
ARTICLE X - TERMINATION, AMENDMENT AND WAIVER...................................... 61
10.1 Termination.............................................................. 61
10.2 Effect of Termination.................................................... 63
10.3 Termination Fee By Biomatrix............................................. 63
10.4 Termination Fee By Genzyme............................................... 64
10.5 Amendment................................................................ 68
10.6 Waiver................................................................... 68
ARTICLE XI - MISCELLANEOUS......................................................... 68
11.1 No Survival.............................................................. 68
11.2 Notices.................................................................. 68
11.3 Entire Agreement......................................................... 69
11.4 Governing Law............................................................ 70
11.5 Binding Effect; No Assignment; No Third-Party Beneficiaries.............. 70
11.6 Section Headings, Construction........................................... 70
11.7 Counterparts............................................................. 70
11.8 Severability............................................................. 70
11.9 Submission to Jurisdiction; Waiver....................................... 71
11.10 Waiver of Jury Trial..................................................... 71
11.11 Enforcement.............................................................. 71
11.12 Rules of Construction.................................................... 72
EXHIBITS
A-1 Revised Divisional Policies
A-2 Terms of GBS Division Common Stock
B Form of Affiliate Letter
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "AGREEMENT"), dated as of March
6, 2000, is by and among Genzyme Corporation ("GENZYME"), a Massachusetts
corporation, Seagull Merger Corporation, a Massachusetts corporation and a
wholly owned subsidiary of Genzyme ("MERGER SUB"), and Biomatrix, Inc.
("BIOMATRIX"), a Delaware corporation.
WHEREAS, the Boards of Directors of Genzyme and Biomatrix deem it
advisable and in the best interests of each corporation and its respective
stockholders that Genzyme and Biomatrix combine as described below in order to
advance the long-term business interests of Genzyme and Biomatrix;
WHEREAS, Genzyme through its Genzyme Surgical Products Division (the
"GSP DIVISION") engages in the business of developing, manufacturing and
marketing surgical products for cardiovascular surgery and general surgery, and
Genzyme has issued shares of its Genzyme Surgical Products Division Common
Stock, $.01 par value per share (the "GSP DIVISION COMMON STOCK") to reflect the
value and track the performance of the GSP Division and, with respect to each
such share, a certain number of GSP Stock Purchase Rights issued pursuant to the
Amended and Restated Renewed Rights Agreement associated therewith (the "GENZYME
RIGHTS PLAN", with the GSP Stock Purchase Rights associated therewith referred
to collectively as the "GSP STOCK PURCHASE RIGHTS");
WHEREAS, Genzyme through its Genzyme Tissue Repair Division (the "GTR
DIVISION") engages in the business of developing and marketing biological
products for orthopedic injuries, such as cartilage repair, and severe xxxxx,
and Genzyme has issued shares of its Genzyme Tissue Repair Common Stock (the
"GTR DIVISION COMMON STOCK") to reflect the value and track the performance of
the GTR Division and, with respect to each such share, a certain number of GTR
Stock Purchase Rights issued pursuant to the Genzyme Rights Plan), with the GTR
Stock Purchase Rights associated therewith referred to collectively as the "GTR
STOCK PURCHASE RIGHTS");
WHEREAS, Genzyme and Biomatrix would like to combine the business of
Biomatrix with the businesses of the GSP Division and the GTR Division into a
new division, currently referred to as the "Genzyme BioSurgery Division" (the
"GBS DIVISION");
WHEREAS, in connection with the formation of the GBS Division Genzyme
will authorize a new series of common stock to be known as "Genzyme BioSurgery
Division Common Stock" ("GBS DIVISION COMMON
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STOCK") to reflect the value and track the performance of the GBS Division,
and with respect to each such share, a certain number of GBS Stock Purchase
Rights issued pursuant to the Genzyme Rights Plan, as amended to reflect the
creation and issuance of the GBS Division Common Stock.
WHEREAS, the combination of Genzyme and Biomatrix shall be effected by
the terms of this Agreement through a merger of Biomatrix with and into Merger
Sub, as a result of which Biomatrix stockholders will have the right to receive
cash and GBS Division Common Stock (the "MERGER");
WHEREAS, in connection with the Merger, Genzyme wishes to combine the
GSP Division and the GTR Division with the GBS Division, and in connection with
such combination, the shares of GSP Division Common Stock and GTR Division
Common Stock will be exchanged for shares of GBS Division Common Stock.
WHEREAS, as a condition to, and concurrently with, the execution of
this Agreement, certain Biomatrix stockholders have executed and delivered to
Genzyme stockholder voting agreements; and
WHEREAS, as a condition to, and concurrently with, the execution of
this Agreement, Genzyme and Biomatrix have entered into an option agreement (the
"STOCK OPTION AGREEMENT"), dated the date hereof, granting Genzyme an option to
purchase shares of Biomatrix Common Stock, par value $.0001 per share
("BIOMATRIX COMMON STOCK"); and
WHEREAS, it is intended that the Merger shall qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "CODE") for federal income tax purposes;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I - THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions herein,
and in accordance with the General Corporation Law of the State of Delaware (the
"DGCL") and the Massachusetts Business Corporation Law ("MBCL"), Biomatrix shall
be merged with and into Merger Sub. The Merger shall occur at the Effective Time
(as defined herein). Following the Merger, Merger Sub shall continue as the
surviving corporation (sometimes referred herein as the "SURVIVING CORPORATION")
and Biomatrix shall cease to exist as a separate corporation.
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1.2 CLOSING. The closing of the Merger (the "CLOSING") will take
place at 10:00 a.m., Boston time, on a date to be specified by Genzyme and
Biomatrix (the "CLOSING DATE"), which shall be no later than the fifth
business day after satisfaction or waiver of the conditions set forth in
Articles VII, VIII and IX (other than delivery of items to be delivered at
the Closing), at the offices of Xxxxxxx Xxxx LLP, 000 Xxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx, unless another date, place or time is agreed to by Genzyme and
Biomatrix.
1.3 EFFECTIVE TIME. At the Closing, the parties shall cause a
Certificate of Merger with respect to the Merger to be filed and recorded in
accordance with the DGCL and Articles of Merger with respect to the Merger to be
filed in accordance with the MBCL (collectively, the "MERGER FILINGS"), and
shall take all such further actions as may be required by law to make the Merger
effective. The Merger shall be effective at such time as the applicable Merger
Filing is duly filed with the Secretary of State of Delaware in accordance with
the DGCL and the Massachusetts Secretary of State in accordance with the MBCL,
or at such later time as is specified in the Merger Filings (the "EFFECTIVE
TIME"). The Merger shall have the effects set forth in Sections 259, 260 and 261
of the DGCL and Sections 78-85 of the MBCL.
1.4 ARTICLES OF ORGANIZATION AND BY-LAWS. The Articles of
Organization and By-Laws of Merger Sub, in each case as and By-Laws in effect
immediately prior to the Effective Time, shall be the Articles of
Organization and By-Laws of the Surviving Corporation until thereafter
changed as provided therein or by applicable law, except that the name of the
Surviving Corporation shall be changed to "GENZYME BIOSURGERY CORPORATION" or
such other name as Genzyme may designate.
1.5 DIRECTORS AND OFFICERS. The directors and officers of Merger Sub
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation, in each case until the earlier of his or her
resignation or removal or otherwise ceasing to be a director or officer, as the
case may be, or until his or her respective successor is duly elected and
qualified.
ARTICLE II - CONVERSION OF SECURITIES
2.1 CONVERSION OF COMMON STOCK.
(a) At the Effective Time, by virtue of the Merger and without
any action on the part of Genzyme, Biomatrix or Merger Sub:
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(i) Each share of Biomatrix Common Stock owned by
Biomatrix or by any Biomatrix Subsidiary (as defined in Section 4.4(a)) shall
be cancelled and extinguished and no payment shall be made with respect thereto.
(ii) Subject to payment of cash in lieu of fractional
shares as provided in Section 2.1(b) and subject to Sections 2.2 - 2.14, each
share of Biomatrix Common Stock outstanding immediately prior to the Effective
Time (other than any Dissenting Shares (as defined in Section 2.7) and shares
held by Biomatrix or any Biomatrix Subsidiary), shall be cancelled and
extinguished and automatically converted into the following (the "Merger
Consideration"):
(A) for each such share of Biomatrix Common Stock with respect
to which an election to receive cash has been effectively made and not
revoked or lost, pursuant to Sections 2.2 and 2.3 hereof (the "ELECTING
SHARES"), the right to receive in cash from Genzyme an amount equal to
$37.00 (the "CASH ELECTION PRICE"); or
(B) for each such share of Biomatrix Common Stock (other than
Electing Shares), the right to receive from Genzyme one (1) (the
"CONVERSION NUMBER") share of GBS Division Common Stock, together with
that number of GBS Stock Purchase Rights issued pursuant to the Genzyme
Rights Plan.
(iii) Each share of common stock, $0.01 par value per
share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall continue to be outstanding following, and shall be
unaffected by, the Merger.
(b) In lieu of the issuance of fractional shares of GBS
Division Common Stock, cash adjustments will be paid (without interest) to
the holders of Biomatrix Common Stock immediately prior to the Effective Time
in respect of any fractional share of GBS Division Common Stock that would
otherwise be issuable to them. The amount of such cash adjustments will be
determined by multiplying each relevant holder's fractional interest by the
reported last sale price on the Nasdaq National Market ("NASDAQ") for the GBS
Division Common Stock on the trading day immediately preceding the Closing
Date or, if the GBS Division Common Stock is not then traded on Nasdaq, the
value of the GBS Division Common Stock on such day as determined in good
faith by Genzyme.
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2.2 BIOMATRIX COMMON STOCK ELECTIONS. (a) Each person who, on or
prior to the Election Date referred to in Section 2.2(b) hereof, is a record
holder of shares of Biomatrix Common Stock will be entitled, with respect to
all or any portion of his shares, to make an unconditional election (a "CASH
ELECTION") on or prior to such Election Date to receive the Cash Election
Price, on the basis hereinafter set forth.
(b) Biomatrix shall prepare and mail a form of election (the
"FORM OF ELECTION") with the Proxy Statement/Prospectus to the record
holders of Biomatrix Common Stock as of the record date for the meeting
of the stockholders of Biomatrix referred to in Section 6.8 hereof,
which Form of Election shall be used by each record holder of shares of
Biomatrix Common Stock who wishes to elect to receive the Cash Election
Price for any or all shares of Biomatrix Common Stock held by such
holder. Any such holder's election to receive the Cash Election Price
shall have been properly made only if the Exchange Agent designated
pursuant to Section 2.8 shall have received at its designated office,
by 5:00 p.m., Boston time on the business date (the "ELECTION DATE")
immediately preceding the date of the meeting of the stockholders of
Biomatrix referred to in Section 6.8 hereof, a Form of Election
properly completed and signed and accompanied by certificates for the
shares of Biomatrix Common Stock to which such Form of Election relates
duly endorsed in blank or otherwise in form acceptable for transfer on
the books of Biomatrix.
(c) Any Form of Election may be revoked by the stockholder
submitting it to the Exchange Agent only by written notice received by
the Exchange Agent (i) prior to 5:00 p.m., Boston time on the Election
Date or (ii) after the date of the Biomatrix Stockholder Meeting (as
defined in Section 6.8), if (and to the extent that) the Exchange Agent
is legally required to permit revocations and the Effective Time shall
not have occurred prior to such date. In addition, all Forms of
Election shall automatically be revoked if the Exchange Agent is
notified in writing by Biomatrix and Genzyme that this Agreement has
been terminated in accordance with Article X hereof. If a Form of
Election is revoked, the certificate or certificates (or guarantees of
delivery, as appropriate) for the shares of Biomatrix Common Stock to
which such Form of Election relates shall be promptly returned to the
stockholder submitting the same to the Exchange Agent.
(d) Any determination of the Exchange Agent as to whether
elections to receive the Cash Election Price have been properly made or
revoked pursuant to this Section 2.2 with respect to shares of
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Biomatrix Common Stock and as to when elections and revocations were
received by it shall be binding. If the Exchange Agent determines that
any election to receive the Cash Election Price was not properly made
with respect to shares of Biomatrix Common Stock, such shares shall be
treated by the Exchange Agent as shares which were not Electing Shares
at the Effective Time, and, subject to Section 2.3, such shares shall
be exchanged in the Merger for shares of GBS Division Common Stock and
GBS Purchase Rights pursuant to Section 2.1(a)(ii)(B). The Exchange
Agent shall also make all computations as to the allocation and the
proration contemplated by Section 2.3, and any such computation shall
be conclusive and binding on the holders of shares of Biomatrix Common
Stock. The Exchange Agent may, with the mutual agreement of Biomatrix
and Genzyme, make such rules as are consistent with this Section 2.2
for the implementation of the elections provided for herein as shall be
necessary or desirable to effect fully such elections.
2.3. PRORATION OF CASH ELECTION PRICE. (a) Notwithstanding anything in
this Agreement to the contrary (except as provided in Section 2.3(e)), the
number of shares of Biomatrix Common Stock to be converted into the right to
receive cash at the Effective Time (the "CASH ELECTION NUMBER") shall equal
28.38% of the number of shares of Biomatrix Common Stock outstanding immediately
prior to the Effective Time (excluding for this purpose any shares of Biomatrix
Common Stock to be canceled pursuant to Section 2.1(a)(i)), LESS the number of
shares owned by Dissenting Holders with respect to which, at the Effective Time,
demands for or rights of appraisal have not been withdrawn or lost.
(b) If the number of Electing Shares exceeds the Cash Election
Number, then such Electing Shares shall be converted into the right to
receive cash and shares of GBS Division Common Stock and GBS Stock
Purchase Rights in accordance with the terms of Section 2.1(a)(ii) in
the following manner:
(i) a cash proration factor (the "CASH PRORATION FACTOR")
shall be determined by dividing the Cash Election Number by the
total number of Electing Shares;
(ii) the number of Electing Shares covered by each Cash
Election to be converted into the right to receive the Cash
Election Price shall be determined by multiplying the Cash
Proration Factor by the total number of Electing Shares covered
by such Cash Election; and
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(iii) all Electing Shares, other than those shares converted
into the right to receive the Cash Election Price in accordance
with Section 2.3(b)(ii) hereof, shall be converted into the right
to receive shares of GBS Division Common Stock and GBS Purchase
Rights in accordance with the terms of Section 2.1(a)(ii)(B) as
if such shares were not Electing Shares.
(c) If the number of Electing Shares is less than the Cash
Election Number, then such Electing Shares shall be converted into the
right to receive the Cash Election Price and all shares of Biomatrix
Common Stock other than Electing Shares ("NON-ELECTING SHARES") shall
be converted into the right to receive cash and shares of GBS Division
Common Stock and GBS Stock Purchase Rights in accordance with the terms
of Section 2.1(a)(ii) in the following manner:
(i) another cash pro ration factor (the "SECOND CASH
PRORATION FACTOR") shall be determined by dividing (i) an
amount equal to the Cash Election Number less the total number
of Electing Shares by (ii) the total number of Non-Electing
Shares;
(ii) the number of Non-Electing Shares held by any holder
that will also be treated as Electing Shares and converted into
the right to receive cash in accordance with Section
2.1(a)(ii)(A) will be determined by multiplying the Second Cash
Proration Factor by the total number of Non-Electing Shares held
by such holder; and
(iii) all Non-Electing Shares, other than those shares
converted into the right to receive the Cash Election Price in
accordance with Section 2.3(c)(ii) hereof, shall be converted
into the right to receive shares of GBS Division Common Stock
and GBS Stock Purchase Rights in accordance with the terms of
Section 2.1(a)(ii)(B).
(d) If the number of Electing Shares is equal to the Cash
Election Number, then all Electing Shares shall be converted into the
right to receive the Cash Election Price in accordance with the terms
of Section 2.1(a)(ii)(A), and all other shares of Biomatrix Common
Stock other than Electing Shares (and subject to Section 2.7 hereof)
shall be converted into the right to receive GBS Division Common Stock
in accordance with Section 2.1(a)(ii)(B).
(e) In the event that the GBS Division Common Stock (excluding
fractional shares to be paid in cash pursuant to Section
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2.1(b)) to be issued in the Merger in exchange for shares of
Biomatrix Common Stock, valued at the average of the high and low
trading prices of the GBS Division Common Stock as reported on the
Nasdaq for the Effective Date (or, if there is no such trading, as
otherwise determined in good faith by Genzyme with the advice of tax
counsel), minus the aggregate discount, if any, due to trading
restrictions on the GBS Division Common Stock to be issued in the
Merger (the "GENZYME COMMON STOCK VALUE") is less than 45% of the
total Merger Consideration to be paid in exchange for the shares of
Biomatrix Common Stock (including without limitation the amount of
cash to be paid in lieu of fractional shares pursuant to Section
2.1(b) and the amount of cash paid for Dissenting Shares pursuant to
Section 2.7 and any other payments required to be considered in
determining whether the continuity of interest requirement applicable
to reorganizations under Section 368 of the Code has been satisfied)
(the "TOTAL CONSIDERATION"), then the number of Electing Shares
shall be reduced, and the number of Non-Electing Shares shall be
correspondingly increased, to the extent necessary to ensure that
the GBS Division Common Stock Value is 45% of the Total Consideration.
2.4 ANTI-DILUTION. In the event that, subsequent to the date of this
Agreement but prior to the Effective Time, the outstanding shares of GBS
Division Common Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities through
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split, or other like changes in Genzyme's capitalization, other
than pursuant to this Agreement, as the case may be (a "RECAPITALIZATION"), then
an appropriate and proportionate adjustment shall be made to the Conversion
Number and the Cash Election Price so that each holder of Biomatrix Common Stock
shall receive under Section 2.1(a)(ii) hereof the number of shares of GBS
Division Common Stock (except for fractional shares) and associated GBS Stock
Purchase Rights or the amount of cash that such holder would have held
immediately following the Recapitalization if the Merger had occurred
immediately prior to the Recapitalization or the record date therefor, as
applicable.
2.5. STOCK OPTION PLANS.
(a) As soon as practicable following the date of this
Agreement, the Board of Directors of Biomatrix (or, if appropriate, any
committee administering the Biomatrix Stock Option Plans (as defined below))
shall adopt such resolutions or take such other actions as may be required to
effect the following:
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(i) adjust the terms of all outstanding employee or
director or consultant stock options to purchase shares of Biomatrix
Common Stock granted under Biomatrix's 1994 Stock Option Plan or
Biomatrix's Nonemployee Director Option Plan (the "BIOMATRIX STOCK
OPTION PLANS"), with such options referred to as "BIOMATRIX STOCK
OPTIONS"), to provide that, at the Effective Time of the Merger,
each Biomatrix Stock Option outstanding immediately prior to the
Effective Time of the Merger shall be assumed by Genzyme; each
Biomatrix Option so assumed by Genzyme under this Agreement will
continue to have, and be subject to, the same terms and conditions
set forth in the applicable Biomatrix Stock Option Plan and option
agreements issued thereunder immediately prior to the Effective Time
(including, without limitation, any repurchase rights, but taking
into account as if in effect prior to the Effective Time any
modification of Biomatrix Options required of or permitted to
Biomatrix pursuant to this Agreement), except that (x) each
Biomatrix Option will be exercisable (or will become exercisable in
accordance with its terms) for that number of shares of GBS Division
Common Stock and associated GBS Stock Purchase Rights equal to the
product of the number of shares of Biomatrix Common Stock that were
issuable upon exercise of such Biomatrix Option immediately prior to
the Effective Time multiplied by the Conversion Number, rounded down
to the nearest whole number of shares of GBS Division Common Stock,
and (y) the per share exercise price for the shares of GBS Division
Common Stock issuable upon exercise of such assumed Biomatrix Option
will be equal to the quotient determined by dividing the exercise
price per share of Biomatrix Common Stock at which such Biomatrix
Option was exercisable immediately prior to the Effective Time by
the Conversion Number, rounded up to the nearest whole cent,
PROVIDED, HOWEVER, that in the case of any option to which Section
422 of the Code applies ("STATUTORY STOCK OPTIONS"), Biomatrix shall
use reasonable efforts to cause the option price, the number of
shares purchasable to such option and the terms and conditions of
exercise of such option to be determined in order to comply with
Section 424(a) of the Code; and
(ii) except as provided herein or as otherwise agreed to
by Biomatrix and Genzyme, the Biomatrix Stock Option Plans and any
other plan, program or arrangement providing for the issuance or
grant of any other interest in respect of the capital stock of
Biomatrix or any subsidiary shall terminate as of the Effective Time
of the Merger, and Biomatrix shall ensure that following the Effective
Time of the Merger no holder of a Biomatrix Stock Option nor any
participant in any Biomatrix Stock Option Plan shall have any right
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thereunder to acquire equity securities of Biomatrix or the Surviving
Corporation; and
(iii) adjust the terms of the Biomatrix Stock Options to
provide for accelerated vesting under certain circumstances as provided
in Section 2.5 of the Biomatrix Disclosure Schedule.
(b) Genzyme agrees to assume Biomatrix Stock Options as
provided in paragraph (a) above. After the Effective Time, Genzyme will issue to
each holder of an outstanding Biomatrix Option a notice describing the foregoing
assumption of such Biomatrix Options by Genzyme.
2.6 BIOMATRIX CONVERTIBLE NOTE. At the Effective Time, the
outstanding 6.9% Convertible Subordinated Note Due May 14, 2003 made by
Biomatrix in favor of SBC Warburg Dillon Read Inc. (the "BIOMATRIX
CONVERTIBLE NOTE") to purchase shares of Biomatrix Common Stock will be
assumed by Merger Sub. The Biomatrix Convertible Note so assumed by Merger
Sub under this Agreement will continue to have, and be subject to, the same
terms and conditions set forth in the Biomatrix Convertible Note immediately
prior to the Effective Time, except that (i) the Biomatrix Convertible Note
shall be convertible into such amount of cash and such number of shares of
GBS Division Common Stock and the associated GBS Stock Purchase Rights,
rounded to the nearest whole number of shares of GBS Division Common Stock,
as the holder of the Biomatrix Convertible Note would have received had such
holder converted the Biomatrix Convertible Note in full immediately prior to
the Election Date and failed to make a Cash Election on or prior to such date
and (ii) the Conversion Rate (as defined in the Biomatrix Convertible Note)
will be equal to the product determined by multiplying the Conversion Rate
then in effect by the Conversion Number, rounded to the nearest whole cent,
subject to subsequent adjustment as provided in Section 2 of the Biomatrix
Convertible Note. Prior to the Effective Time, Merger Sub shall execute and
deliver to the holder of the Biomatrix Convertible Note a supplemental
agreement regarding the conversion of the Biomatrix Convertible Note
following the Effective Time in accordance with Section 2(h) thereof and
providing registration rights with respect to the shares issuable upon
conversion of the Biomatrix Convertible Note pursuant to the agreement
described in Section 2.6 of the Biomatrix Disclosure Schedule.
2.7 DISSENTING SHARES. Each share of Biomatrix Common Stock that,
immediately before the Effective Time, was held by any person who has duly
exercised the appraisal rights afforded to dissenting stockholders pursuant to
Section 262 of the DGCL (such shares, collectively, "DISSENTING
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SHARES") will be converted into the right to receive the fair value of such
shares as determined in accordance with the provisions of the DGCL.
2.8 EXCHANGE OF CERTIFICATES. At or prior to the date the Proxy
Statement/Prospectus (as defined in Section 6.8) is mailed to shareholders of
Biomatrix, Genzyme shall appoint an exchange agent (the "EXCHANGE AGENT").
Promptly after the Effective Time, Genzyme shall make available to the Exchange
Agent certificates representing the shares of GBS Division Common Stock to be
issued and shall pay to the Exchange Agent the aggregate cash amount to be paid,
pursuant to this Agreement, in exchange for the outstanding shares of Biomatrix
Common Stock. As promptly as practicable after the Effective Time, Genzyme or
the Exchange Agent will send to each former holder of record of shares of
Biomatrix Common Stock that were converted into the right to receive shares of
GBS Division Common Stock and/or cash pursuant to this Agreement transmittal
materials for use in exchanging Certificates for certificates representing the
shares of GBS Division Common Stock and/or cash into which such holder's shares
of Biomatrix Common Stock have been converted. Upon surrender of a Certificate
to Genzyme or the Exchange Agent, together with a duly executed letter of
transmittal and any other reasonably required documents, the holder of such
Certificate will be entitled to receive, in exchange therefor, (x) a certificate
for the number of shares of GBS Division Common Stock to which such holder is
entitled, plus (y) a check in the amount of any cash due pursuant to Section
2.1(a)(ii)(A), Section 2.1(b) or Section 2.13, and such Certificate will be
canceled. No interest will be paid or will accrue on any such amounts.
Notwithstanding the foregoing, any surrendered Certificate that represents
Dissenting Shares will be returned to the person surrendering such Certificate.
2.9 NO TRANSFERS. After the Effective Time, no transfers of shares
of Biomatrix Common Stock will be made in the stock transfer books of
Biomatrix. If, after the Effective Time, any certificate representing shares
of Biomatrix Common Stock (a "CERTIFICATE") is presented (for transfer or
otherwise) to the Surviving Corporation or its transfer agent or the Exchange
Agent, such certificates will be canceled and exchanged in accordance with
Section 2.8.
2.10 NO LIABILITY. Neither the Surviving Corporation nor the Exchange
Agent shall be liable to any person in respect of any shares (or dividends or
distributions with respect thereto) or cash payments delivered to a public
official pursuant to any applicable escheat, abandoned property or similar law.
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2.11 LOST CERTIFICATES. In the event that any Certificate has been
lost, stolen, or destroyed, then upon receipt of appropriate evidence as to the
ownership, loss, theft, or destruction of such Certificate and of a customary
indemnification agreement, Genzyme or its transfer agent or the Exchange Agent
will issue in exchange for the lost, stolen, or destroyed Certificate (x) a
certificate representing shares of GBS Division Common Stock and (y) a check in
the amount of any cash due pursuant to Section 2.1(a)(ii)(A), Section 2.1(b) or
Section 2.13; PROVIDED, HOWEVER, that notwithstanding the foregoing, the record
holder of any such Certificate representing Dissenting Shares shall, instead
retain the right to receive the fair value of such shares as determined in
accordance with the provisions of the DGCL.
2.12 WITHHOLDING RIGHTS. Genzyme shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement to
any holder of shares of Biomatrix Common Stock such amounts as it is required to
deduct and withhold with respect to the making of such payment under the Code,
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by Genzyme, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Biomatrix Common Stock in respect of which such deduction and withholding was
made.
2.13 DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividend or
other distribution declared with respect to GBS Division Common Stock or GBS
Stock Purchase Rights with a record date after the Effective Time will be paid
to holders of unsurrendered Certificates until such holders surrender such
Certificates. Upon the surrender of such Certificates in accordance with Section
2.8, there shall be paid to such holders, promptly after such surrender, the
amount of dividends or other distributions, without interest, declared with a
record date after the Effective Time and not paid because of the failure to
surrender such Certificates for exchange.
2.14 FURTHER ASSURANCES. At and after the Effective Time, the officers
and directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of Biomatrix, any deeds, bills of sale,
assignments or assurances and to take and do, in the name and on behalf of
Biomatrix, any other actions and things to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title and interest in,
to and under any of the rights, properties or assets acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger.
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ARTICLE III - CERTAIN RELATED TRANSACTIONS
3.1 FUNDING OF CASH MERGER CONSIDERATION.
(a) Genzyme agrees that it will fund the total cash
portion of the Merger Consideration payable pursuant to Section 2.1(a)(ii)(A)
out of (i) cash currently on hand; and (ii) borrowings under Genzyme's
existing credit facility with Fleet National Bank (as it may be amended,
expanded or replaced) or other borrowings on commercially reasonable terms
(the "GENZYME CREDIT FACILITY", with the total amount of such borrowings
referred to as the "ALLOCATED BORROWINGS").
(b) Biomatrix and Genzyme agree that the Allocated
Borrowings will be allocated to the GBS Division in accordance with Genzyme's
Divisional Policies (referred to in Section 3.2).
3.2. REORGANIZATION.
(a) Genzyme agrees that, subject to receipt of the Genzyme
Stockholder Approvals (as defined in Section 5.1(d)), it will (i) create the GBS
Division, (ii) establish the GBS Division Common Stock, (iii) combine the GSP
Division and GTR Division with the GBS Division, (iv) exchange each share of GSP
Division Common Stock for 0.6060 shares of GBS Division Common Stock, (v)
exchange each share of GTR Division Common Stock for 0.3352 shares of GBS
Division Common Stock, (vi) amend its "Management and Accounting Policies
Governing the Relationship of Genzyme Divisions" (the "DIVISIONAL POLICIES") to
make conforming changes to incorporate the GBS Division therein, to be
substantially in the form of EXHIBIT A-1 hereto, (vii) convert all outstanding
options to acquire GSP Division Common Stock and GTR Division Common Stock into
options to acquire shares of GBS Division Common Stock on a basis comparable to
the procedures set forth in Section 2.5 and (viii) make appropriate amendments
to the Genzyme Rights Plan (collectively, the "REORGANIZATION"). Genzyme agrees
that it will use reasonable commercial efforts to complete the Reorganization
prior to or contemporaneous with the Effective Time.
(b) The terms of the GBS Division Common Stock shall be
substantially in the form of EXHIBIT A-2 hereto, and Genzyme agrees that it will
not amend the terms of the GBS Division Common Stock in any material respect
prior to the Effective Time without the consent of Biomatrix. In addition,
Genzyme will not amend the exchange ratios described in paragraph (a) above
without Biomatrix's prior consent.
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ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BIOMATRIX
Except as set forth on the disclosure schedule delivered by Biomatrix
to Genzyme on the date hereof (the "BIOMATRIX DISCLOSURE SCHEDULE"), the Section
numbers of which are numbered to correspond to the Section numbers of this
Agreement to which they refer, Biomatrix hereby makes the following
representations and warranties to Genzyme:
4.1 INCORPORATION; AUTHORITY.
(a) Each of Biomatrix and each Biomatrix Subsidiary is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has the
requisite corporate or similar power and authority to own, lease and operate its
properties and to carry on its business as now conducted. Each of Biomatrix and
each Biomatrix Subsidiary is qualified or otherwise authorized to transact
business as a foreign corporation or other organization in all jurisdictions in
which such qualification or authorization is required by law, except for
jurisdictions in which the failure to be so qualified or authorized would not
reasonably be expected to have a material adverse effect on the assets,
properties, business or financial condition of Biomatrix and the Biomatrix
Subsidiaries, taken as a whole (a "BIOMATRIX MATERIAL ADVERSE EFFECT");
provided, however, that any or all of (i) a decline in the market price of a
share of Biomatrix Common Stock or (ii) litigation arising out of or resulting
from the Merger.
(b) Biomatrix has previously made available to Genzyme true
and complete copies of the charter and bylaws or other organizational documents
of Biomatrix and each Biomatrix Subsidiary as presently in effect, and none of
Biomatrix or any Biomatrix Subsidiary is in default in the performance,
observation or fulfillment of such documents, except, in the case of Biomatrix
Subsidiaries, such defaults that would not reasonably be expected to have a
Biomatrix Material Adverse Effect.
4.2 AUTHORIZATION AND ENFORCEABILITY. Biomatrix has the corporate
power and authority to enter into, execute and deliver this Agreement and,
subject, in the case of consummation of the Merger to the adoption of this
Agreement by the holders of Biomatrix Common Stock, to perform fully its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors of Biomatrix. No other action on the
part of Biomatrix is necessary to consummate the transactions contemplated
hereby (other than adoption of this Agreement by the holders of Biomatrix
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Common Stock). This Agreement has been duly executed and delivered by
Biomatrix and constitutes a valid and binding obligation of Biomatrix,
enforceable in accordance with its terms.
4.3 CAPITALIZATION.
(a) The authorized capital stock of Biomatrix consists of
60,000,000 shares of Biomatrix Common Stock, of which 23,382,465 shares were
issued and 23,290,171 shares were outstanding as of January 31, 2000, and
3,000 shares of preferred stock, par value $.0001 per share, none of which
were issued and outstanding as of January 31, 2000. All of the issued and
outstanding shares of Biomatrix's Common Stock are duly authorized, validly
issued, fully paid, nonassessable and free of pre-emptive rights.
(b) Biomatrix has reserved 500,000 shares of Biomatrix Common
Stock for issuance upon conversion of the Biomatrix Convertible Note. A true
and complete copy of the Biomatrix Convertible Note has been furnished
previously to Genzyme.
(c) As of January 31, 2000, Biomatrix has reserved 4,145,311
shares of Biomatrix Common Stock for issuance pursuant to Biomatrix Options.
Biomatrix Options to purchase 2,784,028 shares of Biomatrix Common Stock were
outstanding as of January 31, 2000. Section 4.3(c) of the Biomatrix Disclosure
Schedule includes a true and complete list of all Biomatrix Options
outstanding as of January 31, 2000, and the exercise prices of such Biomatrix
Options.
(d) Except for (i) shares indicated as issued and outstanding on
January 31, 2000, in Section 4.3(a), and (ii) shares issued after such date
upon (A) the conversion of the Biomatrix Convertible Note and (B) the exercise
of outstanding Biomatrix Options listed in Section 4.3(c) of the Biomatrix
Disclosure Schedule, there are not as of the date hereof, and at the Effective
Time there will not be, any shares of Biomatrix Common Stock issued and
outstanding.
(e) There are not as of the date hereof, and at the Effective Time
there will not be, authorized or outstanding any subscriptions, options,
conversion or exchange rights, warrants, repurchase or redemption agreements,
or other agreements, claims or commitments of any nature whatsoever obligating
Biomatrix to issue, transfer, deliver or sell, or cause to be issued,
transferred, delivered, sold, repurchased or redeemed, additional shares of
the capital stock or other securities of Biomatrix or obligating Biomatrix to
grant, extend or enter into any such agreement, other than the Biomatrix
Convertible Note and the Biomatrix Options listed in Section 4.3(c)
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of the Biomatrix Disclosure Schedule. To the best knowledge of Biomatrix,
there are no stockholder agreements, voting trusts, proxies or other
agreements, instruments or understandings with respect to the voting of the
capital stock of Biomatrix, except as set forth in Section 4.3(e) of the
Biomatrix Disclosure Schedule.
(f) Neither Biomatrix nor any Biomatrix Subsidiary beneficially
owns any shares of capital stock of Genzyme.
(g) Biomatrix has no outstanding bonds, debentures, notes or other
indebtedness which have the right to vote on any matters on which stockholders
may vote.
4.4 BIOMATRIX SUBSIDIARIES.
(a) Section 4.4(a) of the Biomatrix Disclosure Schedule sets forth
all of the Biomatrix Subsidiaries and the jurisdiction in which each is
incorporated or organized. Except as set forth in Section 4.4(a) of the
Biomatrix Disclosure Schedule, all issued and outstanding shares or other
equity interests of each Biomatrix Subsidiary are owned directly by Biomatrix
free and clear of any charges, liens, encumbrances, security interests or
adverse claims. As used in this Agreement, "BIOMATRIX SUBSIDIARY" means any
corporation, partnership or other organization, whether incorporated or
unincorporated, (i) of which Biomatrix or any Biomatrix Subsidiary is a
general partner or (ii) of which at least 50% of the securities or other
interests having voting power to elect a majority of the board of directors or
others performing similar functions with respect to such corporation,
partnership or other organization are directly or indirectly owned or
controlled by Biomatrix or by any Biomatrix Subsidiary, or by Biomatrix and
one or more Biomatrix Subsidiary.
(b) There are not as of the date hereof, and at the Effective Time
there will not be, any subscriptions, options, conversion or exchange rights,
warrants, repurchase or redemption agreements, or other agreements, claims or
commitments of any nature whatsoever obligating any Biomatrix Subsidiary to
issue, transfer, deliver or sell, or cause to be issued, transferred,
delivered, sold, repurchased or redeemed, shares of the capital stock or other
securities of Biomatrix or any Biomatrix Subsidiary or obligating Biomatrix or
any Biomatrix Subsidiary to grant, extend or enter into any such agreement. To
the best knowledge of Biomatrix, there are no stockholder agreements, voting
trusts, proxies or other agreements, instruments or understandings with
respect to the voting of the capital stock of any Biomatrix Subsidiary.
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(c) Section 4.4(c) of the Biomatrix Disclosure Schedule sets forth
all equity interests held by Biomatrix as of the date of this Agreement in any
entity that is not a Biomatrix Subsidiary, other than equity interests held
for passive investment purposes that represent less than 10% of the relevant
class of equity of the entity.
4.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Biomatrix has previously made available to Genzyme its (a)
Annual Report on Form 10-K for the year ended December 31, 1998 (the
"BIOMATRIX 10-K"), as filed with the Securities and Exchange Commission (the
"SEC"), (b) the proxy statements relating to Biomatrix's meeting of
stockholders held after December 31, 1998 and (c) all other documents filed by
Biomatrix with the SEC under the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT") since December 31, 1998. As of their respective dates,
such documents complied, and all documents filed by Biomatrix with the SEC
under the Exchange Act between the date of this Agreement and the Closing Date
will comply, in each case in all material respects, with applicable SEC
requirements and did not, or in the case of documents filed on or after the
date hereof will not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Since December 31, 1998, Biomatrix has timely filed, and
between the date of this Agreement and the Closing Date will timely file, with
the SEC all reports required to be filed by it under the Exchange Act. No
Biomatrix Subsidiary is required to file any form, report or other document
with the SEC.
(b) The consolidated financial statements contained in the
Biomatrix 10-K and in Biomatrix's quarterly report on Form 10-Q for the
quarter ended September 30, 1999 (the "BIOMATRIX 10-Q") and the unaudited
consolidated financial statements for the year ended December 31, 1999
previously furnished to Genzyme (the "1999 FINANCIAL STATEMENTS") have been
prepared from, and are in accordance with, the books and records of Biomatrix
and present fairly, in all material respects, the consolidated financial
condition, results of operations and cash flows of Biomatrix and the Biomatrix
Subsidiaries as of and for the periods presented therein, all in conformity
with generally accepted accounting principles applied on a consistent basis,
except as otherwise indicated therein and subject in the case of the unaudited
financial statements included in the Biomatrix 10-Q to normal year-end
adjustments, which in the aggregate are not material, and the absence of
footnote disclosures.
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4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Since December 31, 1999 to the
date of this Agreement, neither Biomatrix nor any Biomatrix Subsidiary has
incurred or been subject to any material liabilities of any nature, whether
accrued, absolute, contingent or otherwise (including without limitation,
liabilities as guarantor or otherwise with respect to obligations of others or
liabilities for taxes due or then accrued or to become due), that would be
required under generally accepted accounting principles to be reflected or
disclosed in a consolidated balance sheet of Biomatrix as of the date of this
Agreement (or the notes thereto), other than liabilities (a) adequately
reflected or reserved against on Biomatrix's consolidated balance sheet as of
December 31, 1999 (or the notes thereto) included in the 1999 Financial
Statements, (b) included in Section 4.6 of the Biomatrix Disclosure Schedule
or (c) incurred since December 31, 1999 in the ordinary course of business
consistent with past practice.
4.7 ABSENCE OF CERTAIN EVENTS. Since December 31, 1999, (a) there has
not been any event that has had, or is reasonably likely to have, a Biomatrix
Material Adverse Effect and (b) Biomatrix has operated its business in the
ordinary course consistent with past practice (including without limitation
taking any of the actions described in clauses (i), (vi) or (xi) of Section
6.1(b) or agreeing or obligating itself to do so), except for any actions
after the date of this Agreement effected in compliance with Section 6.1 or
otherwise required under this Agreement.
4.8 CONTRACTS AND OTHER AGREEMENTS.
(a) Except for any contracts or agreements entered into after the
date of this Agreement in compliance with Section 6.1, neither Biomatrix nor
any Biomatrix Subsidiary is a party to or bound by, and neither they nor their
properties are subject to, any contract or other agreement required to be
disclosed in a Form 10-K, Form 10-Q or Form 8-K of the SEC which is not
disclosed in the Biomatrix 10-K or in any quarterly report on Form 10-Q or
current report on Form 8-K filed by Biomatrix since December 31, 1998. All of
such contracts and other agreements and all of the contracts required to be
set forth in Section 4.8 of the Biomatrix Disclosure Schedule are valid,
subsisting, in full force and effect, binding upon Biomatrix or the applicable
Biomatrix Subsidiary, and, to the best knowledge of Biomatrix, binding upon
the other parties thereto in accordance with their terms, and Biomatrix and
the Biomatrix Subsidiaries are not in default under any of them, nor does any
condition exist that with notice or lapse of time or both would constitute a
default thereunder.
(b) Section 4.8 of the Biomatrix Disclosure Schedule sets forth a
list of the following contracts and other agreements to which
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Biomatrix or any Biomatrix Subsidiary, as of the date of this Agreement, is a
party or by or to which they or their assets or properties are bound or
subject:
(i) any agreement (A) involving research, development or the
license of Proprietary Rights (as defined in Section 4.11(a)), (B) granting a
right of first refusal, or right of first offer or comparable right with
respect to Proprietary Rights, (C) relating to a joint venture, partnership or
other arrangement involving a sharing of profits, losses, costs or liabilities
with another person or entity, (D) providing for the payment or receipt by
Biomatrix or a Biomatrix Subsidiary of milestone payments or royalties, or (E)
that individually requires aggregate expenditures by Biomatrix and/or any
Biomatrix Subsidiary in any one year of more than $250,000;
(ii) any indenture, trust agreement, loan agreement, note,
agreement of surety, guarantee (other than the endorsement of checks) or
indemnification that involves or evidences outstanding or potential
indebtedness, obligations or liabilities for borrowed money in excess of
$250,000;
(iii) any agreement that limits or restricts Biomatrix, any
Biomatrix Subsidiary or any of their affiliates or successors in competing or
engaging in any line of business, in any geographic area or with any person;
(iv) any interest rate, equity or other swap or derivative
instrument; or
(v) any agreement obligating Biomatrix to register
securities under the Securities Act of 1933, as amended (the "SECURITIES ACT").
(c) Except as set forth in Section 4.8 of the Biomatrix Disclosure
Schedule, to the best of Biomatrix's knowledge, no executive officer or
director of Biomatrix has, directly or indirectly (through another entity in
which such person has a material interest, other than as the holder of less
than 5% of a class of capital stock), any material interest in any property or
assets of Biomatrix (except as a stockholder) or a Biomatrix Subsidiary, any
competitor, customer, supplier or agent of Biomatrix or a Biomatrix Subsidiary
or any person that is currently a party to any material contract or agreement
with Biomatrix or a Biomatrix Subsidiary.
4.9 COMPLIANCE WITH LAWS.
(a) Except as set forth in Section 4.9 of the Biomatrix
Disclosure Schedule, Biomatrix and the Biomatrix Subsidiaries have all
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licenses, permits, franchises, orders or approvals of any federal, state,
local or foreign governmental or regulatory body material to the conduct of
their businesses (collectively, "PERMITS"); such Permits are in full force and
effect; and no proceeding is pending or, to the best knowledge of Biomatrix,
threatened to revoke or limit any Permit.
(b) Except as set forth in Section 4.9 of the Biomatrix Disclosure
Schedule, Biomatrix and the Biomatrix Subsidiaries are not in violation of and
have no liabilities, whether accrued, absolute, contingent or otherwise, under
any federal, state, local or foreign law, ordinance or regulation or any
order, judgment, injunction, decree or other requirement of any court,
arbitrator or governmental or regulatory body, relating to the operation of
clinical testing laboratories, labor and employment practices, health and
safety, zoning, pollution or protection of the environment, except for
violations of or liabilities under any of the foregoing which would not, in
the aggregate, reasonably be expected to have a Biomatrix Material Adverse
Effect.
(c) Each product or product candidate subject to (i) the United
States Food and Drug Administration (the "FDA") jurisdiction under the Federal
Food, Drug and Cosmetic Act ("FDCA") or (ii) the European Medicines Evaluation
Agency (the "EMEA") that is manufactured, tested, distributed, held, and/or
marketed by Biomatrix or any Biomatrix Subsidiary is being manufactured,
tested, distributed, held and marketed in compliance in all material respects
with all applicable requirements under the FDCA or the rules and regulations
of the EMEA, as the case may be, including, but not limited to, those relating
to investigational use, premarket clearance, good manufacturing practices,
labeling, advertising, record keeping, filing of reports and security and
neither Biomatrix nor any Biomatrix Subsidiary has received any notice and
there has been no threat from any regulatory agency, including without
limitation the FDA or EMEA, claiming or alleging any lack of compliance with
any of the foregoing, except for any of the foregoing that would not
reasonably be expected to have a Biomatrix Material Adverse Effect.
(d) Neither Biomatrix nor any Biomatrix Subsidiary nor, to the
best of Biomatrix's knowledge, any director, officer, agent, employee or other
person acting on behalf of Biomatrix, or any Biomatrix Subsidiary, has used
any corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, or made any unlawful expenditures relating to political
activity to government officials or others, or established or maintained any
unlawful or unrecorded funds in violation of the Foreign Corrupt Practices Act
of 1977, as amended, or any other domestic or foreign law. Neither Biomatrix
nor any Biomatrix Subsidiary nor, to the best of Biomatrix's
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knowledge, any director, officer, agent, employee or other person acting on
behalf of Biomatrix or any Biomatrix Subsidiary, has accepted or received any
unlawful contributions, payments, gifts or expenditures.
4.10 LEGAL PROCEEDINGS. Except as set forth in Section 4.10 of the
Biomatrix Disclosure Schedule, there are no outstanding orders, judgments,
injunctions, decrees or other requirements of any court, arbitrator or
governmental or regulatory body against Biomatrix, any Biomatrix Subsidiary or
any of their assets or properties. Except as set forth in Section 4.10 of the
Biomatrix Disclosure Schedule, there are no actions, suits or claims or legal,
administrative or arbitration proceedings pending or, to the best knowledge of
Biomatrix, threatened against Biomatrix, any Biomatrix Subsidiary or any of
their securities, assets or properties.
4.11 INTELLECTUAL PROPERTY.
(a) Biomatrix and the Biomatrix Subsidiaries own, or are licensed
to use, or otherwise have the right to use all patents, trademarks, service
marks, trade names, trade secrets, franchises, inventions, copyrights, and all
other technology and intellectual property (including, without limitation,
biological materials), all registrations of any of the foregoing, or
applications therefor, and all grants and licenses or other rights running to
or from Biomatrix or a Biomatrix Subsidiary relating to any of the foregoing
that are material to their businesses as presently conducted, including those
that are related to the hylan technology described in the Biomatrix 10-K
(collectively, the "PROPRIETARY RIGHTS"), subject to out licenses listed on
Section 4.11 of the Biomatrix Disclosure Schedule and any other out licenses
entered into after the date of this Agreement in compliance with Section 6.1.
(b) A list of all copyrights, trademarks, service marks, trade
names, patents and patent applications held by Biomatrix or a Biomatrix
Subsidiary, as of the date if this Agreement, has been delivered previously to
Genzyme and is included in Section 4.11 of the Biomatrix Disclosure Schedule.
All patents, registered trademarks and copyrights set forth on the list
referred to above are valid and subsisting.
(c) Biomatrix is not aware of any claim by any third party that
the businesses of Biomatrix or the Biomatrix Subsidiaries infringe upon the
proprietary rights of others, nor has Biomatrix or any Biomatrix Subsidiary
received any written notice or claim of infringement from any third party,
except for any claims that would not reasonably be expected to have a
Biomatrix Material Adverse Effect. Biomatrix is not aware of any existing or
threatened infringement by any third party on, or any competing claim of right
to use or own any of, the Proprietary Rights. Except as
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disclosed in Section 4.11 of the Biomatrix Disclosure Schedule, to the best of
Biomatrix's knowledge, Biomatrix and the Biomatrix Subsidiaries have the
unencumbered right to sell their products and services free from any royalty
or other financial obligations to third parties.
(d) Except as set forth in Section 4.11 of the Biomatrix
Disclosure Schedule, to the best knowledge of Biomatrix, none of the
activities of the employees of Biomatrix or any Biomatrix Subsidiary on behalf
of such entity violates any agreement or arrangement which any such employees
have with former employers. To the best of Biomatrix's knowledge, all
employees and consultants who contributed to the discovery or development of
any of the Proprietary Rights (other than Proprietary Rights licensed to
Biomatrix or a Biomatrix Subsidiary by any party other than a consultant to
Biomatrix or Biomatrix Subsidiary) did so either (i) within the scope of his
or her employment such that, in accordance with applicable law, all
Proprietary Rights arising therefrom became the exclusive property of
Biomatrix or the Biomatrix Subsidiary or (ii) pursuant to written agreements
assigning all Proprietary Rights arising therefrom to Biomatrix or the
Biomatrix Subsidiary.
4.12 INSURANCE. Section 4.12 of the Biomatrix Disclosure Schedule sets
forth a true and complete list of all policies or binders of fire, liability,
product liability, workmen's compensation, vehicular, directors' and officers'
and other insurance held by or on behalf of Biomatrix and the Biomatrix
Subsidiaries as of the date of this Agreement. Neither Biomatrix nor any
Biomatrix Subsidiary is in default with respect to any provision contained in
such policy or binder nor has any of Biomatrix or a Biomatrix Subsidiary
failed to give any notice or present any claim under any such policy or binder
in due and timely fashion. There are no outstanding unpaid claims under any
such policy or binder. Neither Biomatrix nor any Biomatrix Subsidiary has
received notice of cancellation or non-renewal of any such policy or binder.
4.13 COMMERCIAL RELATIONSHIPS. The relationships of Biomatrix and the
Biomatrix Subsidiaries with their distributors are generally good commercial
working relationships. Except as set forth in Section 4.13 of the Biomatrix
Disclosure Schedule, no such entity has canceled or otherwise terminated its
relationship with Biomatrix or a Biomatrix Subsidiary or has, during the last
twelve months, materially altered its relationship with Biomatrix or a
Biomatrix Subsidiary. Except as set forth in Section 4.13 of the Biomatrix
Disclosure Schedule, Biomatrix does not know of any plan or intention of any
such entity, and has not received any written threat or notice from any such
entity, to terminate, cancel or otherwise materially and adversely modify its
relationship with Biomatrix or a Biomatrix Subsidiary.
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4.14 TAX MATTERS.
(a) For purposes of this Agreement, the term "TAX" (and, with
correlative meaning, "TAXES" and "TAXABLE") means all United States federal,
state, and local, and all foreign, income, profits, franchise, gross receipts,
payroll, transfer, sales, employment, use, property, excise, value added, ad
valorem, estimated, stamp, alternative or add-on minimum, recapture,
environmental, withholding and any other taxes, charges, duties, impositions
or assessments, together with all interest, penalties, and additions imposed
on or with respect to such amounts, including any liability for taxes of a
predecessor entity. "TAX RETURN" means any return, declaration, report, claim
for refund, or information return or statement filed or required to be filed
with any domestic or foreign taxing authority in connection with the
determination, assessment, collection or imposition of any Taxes.
(b) All Tax Returns required to be filed on or before the date
hereof by or with respect to Biomatrix and the Biomatrix Subsidiaries have
been filed within the time and in the manner prescribed by law. All such Tax
Returns are true, correct and complete in all material respects, and all Taxes
owed by Biomatrix or the Biomatrix Subsidiaries, whether or not shown on any
Tax Return, have been paid. Biomatrix and the Biomatrix Subsidiaries file Tax
Returns in all jurisdictions where they are required to so file.
(c) There are no liens or other encumbrances with respect to Taxes
upon any of the assets or properties of Biomatrix or the Biomatrix
Subsidiaries, other than with respect to Taxes not yet due and payable.
(d) No audit is pending with respect to any Tax Return of
Biomatrix or the Biomatrix Subsidiaries, nor is Biomatrix or its officers or
directors aware of any information which has caused or should cause them to
believe that an audit by any tax authority may be forthcoming. No deficiency
for any Taxes has been proposed in writing against Biomatrix or the Biomatrix
Subsidiaries, which deficiency has not been paid in full. No issue relating to
Biomatrix or the Biomatrix Subsidiaries or involving any Tax for which
Biomatrix or the Biomatrix Subsidiaries might be liable has been resolved in
favor of any taxing authority in any audit or examination which, by
application of the same principles, would reasonably be expected to result in
a deficiency for Taxes of Biomatrix or the Biomatrix Subsidiaries for any
subsequent period, and neither Biomatrix nor its officers or directors knows
of any other basis for the assertion of such a deficiency.
(e) Biomatrix has made available to Genzyme complete and correct
copies of all income Tax Returns, audit reports and statements of
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deficiencies for each of the last three taxable years filed by or issued to or
with respect to Biomatrix or the Biomatrix Subsidiaries.
(f) No consent to the application of Section 341(f)(2) of the Code
(or any predecessor provision) has been made or filed by or with respect to
Biomatrix or the Biomatrix Subsidiary or any of their assets or properties.
(g) Biomatrix and the Biomatrix Subsidiaries are not a party to or
bound by, nor do they have any obligation under, any Tax sharing agreement or
similar contract or arrangement. Neither Biomatrix nor any Biomatrix
Subsidiary has any liability for the Taxes of any other person under Treasury
Regulation 1.1502-6 (or any similar provision of state, local or foreign law),
as a transferee or successor, by contract, or otherwise.
(h) There is no contract or agreement, plan or arrangement
obligating Biomatrix or the Biomatrix Subsidiaries to make any payment that
would not be deductible by reason of Section 162(m) or 280G of the Code.
Neither Biomatrix nor any Biomatrix Subsidiary has agreed to, or is required
to, make any adjustments under Section 481(a) of the Code by reason of a
change in accounting method or otherwise.
(i) There are no outstanding rulings of, or requests for rulings
with, any Tax authority addressed to Biomatrix or any Biomatrix Subsidiary
that are, or if issued would be, binding on Biomatrix or any Biomatrix
Subsidiary.
4.15 EMPLOYEE BENEFIT PLANS.
(a) Except as described in Section 4.15 of the Biomatrix
Disclosure Schedule, neither Biomatrix nor any Biomatrix Subsidiary now
maintains or contributes to, nor has any outstanding liability with respect
to, any pension, profit-sharing, deferred compensation, restricted stock
bonus, stock option, share appreciation right, severance, group or individual
health, dental, medical, life insurance, survivor benefit, or similar plan,
policy, or arrangement for the benefit of any director, officer, consultant or
employee, whether active or terminated, of Biomatrix or any Biomatrix
Subsidiary. Each of the arrangements set forth in Section 4.15 of the
Biomatrix Disclosure Schedule is hereinafter referred to as an "EMPLOYEE
BENEFIT PLAN."
(b) Biomatrix has delivered to Genzyme true, correct, and complete
copies of each Employee Benefit Plan, and with respect to each such plan (i)
any associated trust, custodial, insurance, or service agreements, (ii) the
annual reports for the three most recent years and summary plan descriptions
submitted to any governmental agency or distributed to
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participants or beneficiaries thereunder, and (iii) the most recently received
Internal Revenue Service ("IRS") determination letters and any governmental
advisory opinions or rulings expressly applicable thereto, and (iv) tests
performed for each of the three most recent years for each plan that is
required to be tested for nondiscrimination under Section 401(a)(4), 401(k) or
401(m) of the Code.
(c) Each Employee Benefit Plan is and has heretofore been
maintained and operated in compliance in all material respects with the terms
of such plan and with the requirements prescribed (whether as a matter of
substantive law or as necessary to secure favorable tax treatment) by any and
all statutes, governmental or court orders, and governmental rules or
regulations in effect from time to time, including but not limited to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and the
Code and applicable to such plan.
(d) (i) There is no pending, or to the best of Biomatrix's
knowledge, threatened, legal action, proceeding, or investigation, other than
routine claims for benefits, concerning any Employee Benefit Plan, or to the
best of Biomatrix's knowledge, any fiduciary or service provider thereof
relating to such Plan.
(ii) Neither Biomatrix nor any Biomatrix Subsidiary has ever
sponsored or participated in a defined benefit pension plan within the meaning
of Section 414(j) of the Code. No liability (contingent or otherwise) to the
Pension Benefit Guaranty Corporation ("PBGC") or any multi-employer plan has
been incurred by Biomatrix or any Biomatrix Subsidiary (other than insurance
premiums satisfied in due course).
(iii) No Employee Benefit Plan nor any party in interest with
respect thereof, has engaged in a prohibited transaction that would subject
Biomatrix or any Biomatrix Subsidiary directly or indirectly to liability
under Section 409 or 502(i) of ERISA or Section 4975 of the Code.
(iv) No Employee Benefit Plan provides welfare benefits
subsequent to termination of employment to employees or their beneficiaries
(except to the extent required by applicable state insurance laws and Title I,
Part 6 of ERISA).
(e) With respect to each Employee Benefit Plan for which a
separate fund of assets is or is required to be maintained, full payment has
been made of all amounts that Biomatrix or any Biomatrix Subsidiary is
required, under the terms of each such plan, to have paid as contributions to
that plan as of the end of the most recently ended plan year of that plan.
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(f) Except as described on Section 4.15 of the Biomatrix
Disclosure Schedule, the execution of this Agreement and the consummation of
the transactions contemplated hereby will not result in any payment (whether
of severance pay or otherwise) becoming due from any Employee Benefit Plan to
any current or former director, officer, consultant, or employee of Biomatrix
or any Biomatrix Subsidiary or result in the vesting, acceleration of payment,
or increases in the amount of any benefit payable to or in respect of any such
current or former director, officer, consultant, or employee.
(g) No Employee Benefit Plan is a multi-employer plan (within the
meaning of Section 3 of ERISA) or subject to Section 302 of ERISA or Section
412 of the Code.
4.16 EMPLOYEE RELATIONS.
(a) Except as indicated in Section 4.16 of the Biomatrix
Disclosure Schedule, upon termination of the employment of any employees, none
of Biomatrix, the Biomatrix Subsidiaries nor Genzyme will be liable, by reason
of the Merger or anything done prior to the Effective Time, to any of such
employees for severance pay or any other payments (other than accrued salary,
vacation or sick pay in accordance with normal policies). True and complete
information as to all current directors, officers, employees or consultants of
Biomatrix and the Biomatrix Subsidiaries including, in each case, name,
current job title and annual rate of compensation has been made available
previously to Genzyme.
(b) No work stoppage or labor strike against Biomatrix or any
Biomatrix Subsidiary is pending or threatened. Neither Biomatrix nor any
Biomatrix Subsidiary is involved in or, to the knowledge of Biomatrix,
threatened with, any labor dispute, grievance, or litigation relating to
labor, safety or discrimination matters involving any employee, including
without limitation charges of unfair labor practices or discrimination
complaints, that, if adversely determined, would result in material liability
to Biomatrix. Neither Biomatrix nor any Biomatrix Subsidiary has engaged in
any unfair labor practices within the meaning of the National Labor Relations
Act that would, directly or indirectly, result in material liability to
Biomatrix. Neither Biomatrix nor any Biomatrix Subsidiary is presently, nor
has it been in the past, a party to or bound by any collective bargaining
agreement or union contract with respect to employees other than as set forth
in Section 4.16 of the Biomatrix Disclosure Schedule and no collective
bargaining agreement is being negotiated by Biomatrix or any Biomatrix
Subsidiary. No union organizing campaign or activity with respect to non-union
employees of
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Biomatrix or any Biomatrix Subsidiary is ongoing, pending or, to the best
knowledge of Biomatrix, threatened.
4.17 ENVIRONMENTAL MATTERS
(a) Except as disclosed in documents filed prior to the date
hereof by Biomatrix with the SEC under the Exchange Act and except for such
matters that, individually or in the aggregate, are not reasonably likely to
have a Biomatrix Material Adverse Effect: (i) Biomatrix and the Biomatrix
Subsidiaries have obtained all permits required by any Environmental Law
necessary to conduct their respective businesses, and complied with all
applicable Environmental Laws (as defined in Section 4.17(b)) and such
permits; (ii) to the knowledge of Biomatrix, the properties currently owned or
operated by Biomatrix and the Biomatrix Subsidiaries (including soils,
groundwater, surface water, air, buildings or other structures) are not
contaminated with any Hazardous Substances (as defined in Section 4.17(c));
(iii) to the knowledge of Biomatrix, the properties formerly owned or operated
by Biomatrix or any of the Biomatrix Subsidiaries were not contaminated with
Hazardous Substances during the period of ownership or operation by Biomatrix
or any of the Biomatrix Subsidiaries; (iv) neither Biomatrix nor any of the
Biomatrix Subsidiaries are subject to liability or obligated to report or
respond in any way for any Hazardous Substance placement, release disposal or
contamination on the property of any third party; (v) neither Biomatrix nor
any of the Biomatrix Subsidiaries have generated, used, handled, transported,
stored or released from or at any location, including without limitation any
properties currently or formerly owned or operated by or for the benefit of
Biomatrix or any of the Biomatrix Subsidiaries, any Hazardous Substance except
in compliance with applicable law; and (vi) neither Biomatrix nor any of the
Biomatrix Subsidiaries has received any written notice, demand, letter, claim
or request for information alleging that Biomatrix or any of the Biomatrix
Subsidiaries may be in violation of, liable under or have obligations under
any Environmental Law.
(b) As used herein, the term "ENVIRONMENTAL LAW" means any
federal, state, local or foreign law, regulation, order, decree, permit,
authorization, opinion, common law or agency requirement relating to: (i)
pollution, the protection, investigation or restoration of the environment,
health and safety, or natural resources, (ii) the handling, use, presence,
disposal, release or threatened release of any Hazardous Substance or (iii)
noise, odor, wetlands, pollution, contamination or any injury or threat of
injury to persons or property.
(c) As used herein, the term "HAZARDOUS SUBSTANCE" means any
substance that is: (i) listed, classified, regulated or which falls within the
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definition of a "hazardous substance" or "hazardous material" pursuant to any
Environmental Law; (ii) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing,
polychlorinated biphenyls, radioactive materials or radon; or (iii) any other
substance which is the subject of regulatory action by any governmental entity
pursuant to any Environmental Law.
(d) Biomatrix and the Biomatrix Subsidiaries own no real property
except as set forth in filings with the SEC under the Exchange Act.
4.18 NO BREACH. Except for (a) filings with the SEC under the Exchange
Act, (b) the filing of the Merger Filings as provided in Section 1.3, (c) the
filing of a Notification and Report Form under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act, as amended (the "HSR ACT") and (d) matters listed in Section
4.18 of the Biomatrix Disclosure Schedule, the execution, delivery and
performance of this Agreement by Biomatrix and the consummation by Biomatrix
of the transactions contemplated hereby will not (i) violate any provision of
the Certificate of Incorporation or By-Laws of Biomatrix, (ii) violate,
conflict with or result in the breach of any of the terms or conditions of,
result in modification of, or otherwise give any other contracting party the
right to terminate, accelerate obligations under or receive payment under or
constitute (or with notice or lapse of time or both constitute) a material
default under, any material instrument, contract or other agreement to which
Biomatrix or any Biomatrix Subsidiary is a party or to which any of them or
any of their assets or properties is bound or subject, (iii) violate any law,
ordinance or regulation or any order, judgment, injunction, decree or other
requirement of any court, arbitrator or governmental or regulatory body
applicable to Biomatrix or the Biomatrix Subsidiaries or by which any of
Biomatrix's or the Biomatrix Subsidiaries' assets or properties is bound, (iv)
violate any Permit, (v) require any filing with, notice to, or permit, consent
or approval of, any governmental or regulatory body or (vi) result in the
creation of any lien or other encumbrance on the assets or properties of
Biomatrix or a Biomatrix Subsidiary, excluding from the foregoing clauses
(iii), (iv), (v) and (vi) violations, breaches and defaults which, and
filings, notices, permits, consents and approvals the absence of which, in the
aggregate, would not reasonably be expected to have a Biomatrix Material
Adverse Effect or interfere with the ability of Biomatrix to consummate the
transactions contemplated hereby.
4.19 BOARD APPROVAL. The Board of Directors of Biomatrix, as of the
date of this Agreement, has determined (a) that the Merger is fair to, and in
the best interests of, Biomatrix and its stockholders, (b) to propose this
Agreement for adoption by Biomatrix's stockholders and to declare the
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advisability of this Agreement, and (c) to recommend that the stockholders of
Biomatrix adopt this Agreement.
4.20 ANTI-TAKEOVER LAWS. Biomatrix has taken all action necessary such
that no "fair price," "control share acquisition," "business combination" or
similar statute (including Section 203 of the DGCL) will apply to the
execution, delivery or performance of this Agreement.
4.21 OPINION OF BIOMATRIX'S FINANCIAL ADVISOR. Biomatrix has received the
opinion of Xxxxxx Brothers, dated the date of this Agreement, to the effect
that, as of such date, the Merger Consideration is fair, from a financial
point of view, to the holders of Biomatrix Common Stock.
4.22 BROKERAGE. Other than Xxxxxx Brothers, no broker, finder, agent or
similar intermediary has acted on behalf of Biomatrix in connection with this
Agreement or the transactions contemplated hereby, and there are no brokerage
commissions, finders' fees or similar fees or commissions payable in
connection herewith based on any agreement, arrangement or understanding with
Biomatrix, or any action taken by Biomatrix. Biomatrix previously has provided
Genzyme with a copy of Xxxxxx Brothers' engagement letter.
4.23 INVESTMENT COMPANY ACT. Neither Biomatrix nor any Biomatrix
Subsidiary is an "Investment Company" within the meaning of such term under
the Investment Company Act of 1940.
4.24 PROXY STATEMENT AND REGISTRATION STATEMENT. None of the information
supplied or to be supplied by Biomatrix for inclusion or incorporation by
reference in the registration statement on Form S-4 to be filed with the SEC
in connection with the issuance of shares of Genzyme Common Stock in the
Merger (the "REGISTRATION STATEMENT") will, at the time the Registration
Statement is filed with the SEC, at any time it is amended or supplemented or
at the time it becomes effective under the Securities Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by Biomatrix for inclusion
or incorporation by reference in the proxy statement/prospectus included in
the Registration Statement (the "PROXY STATEMENT/PROSPECTUS"), on the date it
is first mailed to holders of Biomatrix Common Stock and holders of Genzyme
Common Stock or at the time of the Biomatrix Stockholders Meeting (as defined
in Section 6.8(b)) or the Genzyme Stockholders Meeting] (as defined in Section
6.8(c)), will contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light
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of the circumstances under which they were made, not misleading. The Proxy
Statement/Prospectus, insofar as it relates to the information required to be
supplied by Biomatrix, will comply as to form in all material respects with
the requirements of the Exchange Act and the Securities Act and the rules and
regulations of the SEC thereunder.
4.25 YEAR 2000 MATTERS. Biomatrix and the Biomatrix Subsidiaries have not
experienced, and do not reasonably expect to experience, any material problems
related to computer hardware, firmware, software, systems, databases, devices,
machinery, equipment and related items (including embedded microcontrollers in
non-computer equipment) ("SYSTEMS") failing to be Year 2000 Compliant. For
purposes of this Agreement, "YEAR 2000 COMPLIANT" means, when used with
respect to Systems, that such Systems whether used alone or in combination,
will correctly differentiate between years, in different centuries, and will
accurately process date/time data (including, where applicable, calculating,
comparing and sequencing) from, into and between the twentieth and
twenty-first centuries, including leap year calculations and unusual date
situations, without interruption.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF GENZYME
Except as set forth on the disclosure schedule delivered by Genzyme to
Biomatrix in the date hereof (the "GENZYME DISCLOSURE SCHEDULE"), the Section
numbers of which are numbered to correspond to the Section numbers of this
Agreement to which they refer, Genzyme and Merger Sub, jointly and severally,
hereby make the following representations and warranties to Biomatrix:
5.1 INCORPORATION; AUTHORITY.
(a) Each of Genzyme and each Genzyme Subsidiary is a corporation
or other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization and has the requisite
corporate or similar power and authority to own, lease and operate its assets
and to carry on its business as now being conducted. Each of Genzyme and each
Genzyme Subsidiary is qualified or otherwise authorized to transact business
as a foreign corporation or other organization in all jurisdictions in which
such qualification or authorization is required by law, except for
jurisdictions in which the failure to be so qualified or authorized would not
reasonably be expected to have a material adverse effect on the assets,
properties, business or financial condition of (i) Genzyme and Genzyme
Subsidiaries, taken as a whole or (ii) the GSP Division and GTR Division,
taken as a whole (the "COMBINING GENZYME BUSINESSES"), (with
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each of the foregoing referred to as a "GENZYME MATERIAL ADVERSE EFFECT");
PROVIDED, HOWEVER, that any or all of (i) a decline in the share price of any
series of Genzyme Common Stock or (ii) litigation arising out of or resulting
from the Merger shall not be considered a Genzyme Material Adverse Effect. As
used in this Agreement, "GENZYME SUBSIDIARY" means Merger Sub and any other
corporation, partnership or other organization, whether incorporated or
unincorporated, (i) of which Genzyme or any Genzyme Subsidiary is a general
partner or (ii) of which at least 50% of the securities or other interests
having voting power to elect a majority of the board of directors or others
performing similar functions with respect to such corporation, partnership or
other organization are directly or indirectly owned or controlled by Genzyme
or by any Genzyme Subsidiary, or by Genzyme and one or more Genzyme Subsidiary.
(b) Merger Sub has been formed solely for the purpose of engaging
in the transactions contemplated by this Agreement and, prior to the Effective
Time, will not have engaged in any other business activities.
(c) Genzyme has previously made available to Biomatrix true and
complete copies of its charter and bylaws and the Divisional Policies as
presently in effect, and none of Genzyme or any Genzyme Subsidiary is in
default in the performance, observation or fulfillment of its organizational
documents or the Divisional Policies, except, (i) with respect to the
Divisional Policies and (ii) in the case of Genzyme Subsidiaries, such
defaults that would not reasonably be expected to have a Genzyme Material
Adverse Effect.
(d) Section 5.1 of the Genzyme Disclosure Schedule accurately
describes all the votes of Genzyme stockholders required for Genzyme to be
authorized to consummate the Merger and the Reorganization (the "GENZYME
STOCKHOLDER APPROVALS").
5.2 AUTHORIZATION AND ENFORCEABILITY. Each of Genzyme and Merger Sub has
the corporate power and authority to enter into, execute and deliver this
Agreement and to perform fully its obligations hereunder, subject to any
required stockholder approvals. Except for the Genzyme Stockholder Approvals,
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of each of Genzyme and Merger Sub. This Agreement
has been duly executed and delivered by each of Genzyme and Merger Sub and
constitutes the valid and binding obligation of each of Genzyme and Merger
Sub, enforceable in accordance with its terms.
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5.3 CAPITALIZATION.
(a) The authorized capital stock of Genzyme consists of
390,000,000 shares of common stock ("GENZYME COMMON STOCK") and 10,000,000
shares of preferred stock, $0.01 par value per share ("GENZYME PREFERRED
STOCK"). Of the Genzyme Common Stock, as of the date of this Agreement,
200,000,000 shares have been designated Genzyme General Division Common Stock
("GGD DIVISION COMMON STOCK"), 40,000,000 shares have been designated GTR
Division Common Stock, 40,000,000 have been designated Molecular Oncology
Division Common Stock, $0.01 par value per share ("GMO DIVISION COMMON
STOCK"), 60,000,000 shares have been designated GSP Division Common Stock and
50,000,000 shares have been undesignated as to series. As of January 31, 2000,
84,345,052 shares of GGD Division Common Stock were issued and outstanding,
28,503,599 shares of GTR Division Common Stock were issued and outstanding,
13,431,794 shares of GMO Division Common Stock were issued and outstanding,
and 14,847,687 shares of GSP Division Common Stock were issued and
outstanding. As of the date of this Agreement, no shares of Genzyme's
Preferred Stock are outstanding. Of the Genzyme Preferred Stock, as of the
date of this Agreement, 2,000,000, 400,000, 400,000 and 600,000 shares have
been designated as Series A Junior Participating Preferred Stock, Series B
Junior Participating Preferred Stock, Series C Junior Participating Preferred
Stock and Series D Junior Participating Preferred Stock, respectively, and
reserved for issuance under Genzyme's Rights Plan. All issued and outstanding
shares of GGD Division Common Stock, GTR Division Common Stock, GMO Division
Common Stock and GSP Division Common Stock are validly issued, fully paid,
non-assessable and free of any preemptive rights. The shares of GBS Division
Common Stock to be issued pursuant to this Agreement will have been duly
authorized and when issued as provided in this Agreement, will be validly
issued and fully paid and non-assessable and issued free of preemptive rights.
All of the capital stock of Merger Sub is as of the date hereof, and will be
at the Effective Time, duly authorized, validly issued, fully paid and
nonassessable and owned of record and beneficially by Genzyme.
(b) As of the Effective Time, Genzyme shall have sufficient shares
of GBS Division Common Stock reserved under its stock option plans for the
Biomatrix Options assumed pursuant to Section 2.5.
(c) As of January 31, 2000, Genzyme has reserved 8,484,135 shares
of GSP Division Common Stock and GTR Division Common Stock for issuance
pursuant to outstanding options and warrants. Options and warrants to purchase
7,038,727 shares of GSP Division Common Stock and GTR Division Common Stock
were outstanding as of January 31, 2000.
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Section 5.3(c) of the Genzyme Disclosure Schedule includes a true and complete
summary of all options and warrants to acquire GSP Division Common Stock or
GTR Division Common Stock outstanding as of January 31, 2000, and the exercise
prices of such options and warrants.
(d) There are not as of the date hereof, and at the Effective Time
there will not be, authorized or outstanding any subscriptions, options,
conversion or exchange rights, warrants, repurchase or redemption agreements,
or other agreements, claims or commitments of any nature whatsoever obligating
Genzyme to issue, transfer, deliver or sell, or cause to be issued,
transferred, delivered, sold, repurchased or redeemed, additional shares of
GSP Division Common Stock or GTR Division Common Stock or obligating Genzyme
to grant, extend or enter into any such agreement, other than the options and
warrants or convertible notes referred to in Sections 5.3(c) and 5.3(d) of the
Genzyme Disclosure Schedule and any options or warrants granted after the date
of this Agreement in compliance with Section 6.2. To the best knowledge of
Genzyme, there are no stockholder agreements, voting trusts, proxies or other
agreements, instruments or understandings with respect to the voting of the
GSP Division Common Stock or GTR Division Common Stock, except as set forth in
Section 5.3(d) of the Genzyme Disclosure Schedule.
(e) Since January 31, 2000 Genzyme has not issued any shares of
GSP Division Common Stock or shares of GTR Common Stock except for issuances
upon the exercise of outstanding options, warrants or convertible securities.
5.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Genzyme previously has made available to Biomatrix its (a)
Annual Report on Form 10-K for the year ended December 31, 1998 (the "GENZYME
10-K"), as filed with the SEC, (b) all proxy statements relating to Genzyme's
meetings of stockholders held since December 31, 1998 and (c) all other
documents filed by Genzyme with the SEC under the Exchange Act since December
31, 1998 (together with the documents filed by Genzyme with the SEC under the
Exchange Act prior to the Effective Time, the "GENZYME SEC REPORTS"). As of
their respective dates, such documents complied, and all documents filed by
Genzyme with the SEC under the Exchange Act between the date of this Agreement
and the Closing Date will comply, in each case in all material respects with
applicable SEC requirements and did not, and in the case of documents filed on
or after the date hereof, will not, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not
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misleading. Since December 31, 1998, Genzyme has timely filed, and between the
date of this Agreement and the Closing Date, will timely file with the SEC all
documents required to be filed under Sections 13, 14 or 15(d) of the Exchange
Act.
(b) The consolidated financial statements contained in the Genzyme
10-K and in Genzyme's quarterly report on Form 10-Q for the quarter ended
September 30, 1999 (the "GENZYME 10-Q") have been prepared from, and are in
accordance with, the books and records of Genzyme and present fairly, in all
material respects, the consolidated financial condition, results of operations
and cash flows of Genzyme and its consolidated subsidiaries as of and for the
periods presented therein, all in accordance with generally accepted
accounting principles applied on a consistent basis, except as otherwise
indicated therein and subject, in the case of the unaudited financial
statements included in the Genzyme 10-Q, to normal year-end and audit
adjustments, which in the aggregate are not material, and the absence of
footnote disclosures.
(c) The combined financial statements for the GSP Division
contained in the Genzyme Current Report on Form 8-K dated June 11, 1999 and
the Genzyme 10-Q have been prepared from, and are in accordance with, the
books and records of Genzyme and fairly present in all material respects the
combined financial condition, results of operations and cash flows of the GSP
Division as of and for the periods presented therein, all in accordance with
generally accepted accounting principles applied on a consistent basis, except
as otherwise indicated therein and subject, in the case of the unaudited
financial statements included in the Genzyme 10-Q, to normal year-end and
audit adjustments, which in the aggregate are not material, and the absence of
footnote disclosures.
(d) The combined financial statements for the GTR Division
contained in the Genzyme 10-K and the Genzyme 10-Q have been prepared from,
and are in accordance with, the books and records of Genzyme and fairly
present in all material respects the combined financial condition, results of
operations and cash flows of the GTR Division as of and for the periods
presented therein, all in accordance with generally accepted accounting
principles applied on a consistent basis, except as otherwise indicated
therein and subject, in the case of the unaudited financial statements
included in the Genzyme 10-Q, to normal year-end and audit adjustments, which
in the aggregate are not material, and the absence of footnote disclosures.
5.5 ABSENCE OF UNDISCLOSED GENZYME LIABILITIES. Since September 30, 1999
to the date of this Agreement, neither Genzyme nor any Genzyme
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Subsidiary has incurred any material liabilities of any nature, whether
accrued, absolute, contingent or otherwise (including, without limitation,
liabilities as guarantor or otherwise with respect to obligations of others or
liabilities for taxes due or then accrued or to become due), that would be
required under generally accepted accounting principles to be reflected or
disclosed in a consolidated balance sheet of Genzyme as of the date of this
Agreement (or the notes thereto), other than liabilities (a) adequately
reflected or reserved against on Genzyme's audited consolidated balance sheet
as of December 31, 1998 included in the Genzyme 10-K, (b) reflected in
Genzyme's unaudited consolidated balance sheet (or the notes thereto) dated
September 30, 1999, (c) incurred since September 30, 1999 in the ordinary
course of business or (d) that would not have a Genzyme Material Adverse
Effect.
5.6 ABSENCE OF CERTAIN EVENTS. Since September 30, 1999, (a) there
has not been any event that has had, or is reasonably likely to have, a
Genzyme Material Adverse Effect and (b) in so far as it relates to the
Combining Genzyme Businesses, Genzyme has operated its business in the
ordinary course consistent with past practice, except for any actions after
the date of this Agreement effected in compliance with Section 6.2 or
otherwise required under this Agreement.
5.7 CONTRACTS AND OTHER AGREEMENTS.
(a) Except for any contracts or agreements entered into after the
date of this Agreement in compliance with Section 6.2 or for which no consent
is required under Section 6.2, neither Genzyme nor any Genzyme Subsidiary is a
party to or bound by, and neither they nor their properties are subject to,
any contract or other agreement required to be disclosed in a Form 10-K, Form
10-Q or Form 8-K of the SEC which is not disclosed in the Genzyme 10-K or in
any quarterly report on Form 10-Q or current report on Form 8-K filed by
Genzyme since December 31, 1998. All of such contracts and other agreements
which relate to or affect the Combining Genzyme Businesses and all of the
contracts required to be set forth in Section 5.7 of the Genzyme Disclosure
Schedule are valid, subsisting, in full force and effect, binding upon Genzyme
or the applicable Genzyme Subsidiary, and, to the best knowledge of Genzyme,
binding upon the other parties thereto in accordance with their terms, and
Genzyme and the Genzyme Subsidiaries are not in default under any of them, nor
does any condition exist that with notice or lapse of time or both would
constitute a default thereunder.
(b) Section 5.7 of the Genzyme Disclosure Schedule sets forth a
list of:
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(i) any agreement that limits or restricts Genzyme, any
Genzyme Subsidiary or any of their affiliates or successors in competing or
engaging in any line of business of the Combining Genzyme Businesses, in any
geographic area or with any person and which would reasonably be expected to
materially interfere with the conduct of the Combining Genzyme Businesses as
currently conducted; and
(ii) any agreement obligating Genzyme to register
securities under the Securities Act.
(c) Except as set forth in Section 5.7 of the Genzyme Disclosure
Schedule, to the best of Genzyme's knowledge, no executive officer or director
of Genzyme has, directly or indirectly (through another entity in which such
person has a material interest, other than as the holder of less than 5% of a
class of capital stock), any material interest in any property or assets of
the Combining Genzyme Businesses (except as a stockholder), any competitor,
customer, supplier or agent of the Combining Genzyme Businesses or any person
that is currently a party to any material contract or agreement with the
Combining Genzyme Businesses.
5.8 COMPLIANCE WITH LAWS.
(a) Except as set forth in Section 5.8 of the Genzyme Disclosure
Schedule, insofar as it relates to the Combining Genzyme Businesses, Genzyme
and the Genzyme Subsidiaries have all licenses, permits, franchises, orders or
approvals of any federal, state, local or foreign governmental or regulatory
body material to the conduct of their businesses (collectively, "GENZYME
PERMITS"); such Genzyme Permits are in full force and effect; and no
proceeding is pending or, to the best knowledge of Genzyme, threatened to
revoke or limit any such Genzyme Permit.
(b) Except as set forth in Section 5.8 of the Genzyme Disclosure
Schedule, insofar as it relates to the Combining Genzyme Businesses, Genzyme
and the Genzyme Subsidiaries are not in violation of and have no liabilities,
whether accrued, absolute, contingent or otherwise, under any federal, state,
local or foreign law, ordinance or regulation or any order, judgment,
injunction, decree or other requirement of any court, arbitrator or
governmental or regulatory body, relating to the operation of clinical testing
laboratories, labor and employment practices, health and safety, zoning,
pollution or protection of the environment, except for violations of or
liabilities under any of the foregoing which would not, in the aggregate,
reasonably be expected to have a Genzyme Material Adverse Effect.
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(c) Each product or product candidate subject to (i) FDA
jurisdiction under the FDCA or (ii) the EMEA that is manufactured, tested,
distributed, held, and/or marketed by Genzyme or any Genzyme Subsidiary and
which relates to the Combining Genzyme Businesses is being manufactured,
tested, distributed, held and marketed in compliance in all material respects
with all applicable requirements under the FDCA or the rules and regulations
of the EMEA, as the case may be, including, but not limited to, those relating
to investigational use, premarket clearance, good manufacturing practices,
labeling, advertising, record keeping, filing of reports and security and
neither Genzyme nor any Genzyme Subsidiary has received any notice and there
has been no threat from any regulatory agency, including without limitation
the FDA or EMEA, claiming or alleging any lack of compliance with any of the
foregoing, except for any of the foregoing that would not reasonably be
expected to have a Genzyme Material Adverse Effect.
(d) Neither Genzyme nor any Genzyme Subsidiary nor, to the best
of Genzyme's knowledge, any director, officer, agent, employee or other person
acting on behalf of Genzyme, or any Genzyme Subsidiary, has, with respect to
the Combining Genzyme Businesses, used any corporate or other funds for
unlawful contributions, payments, gifts, or entertainment, or made any
unlawful expenditures relating to political activity to government officials
or others, or established or maintained any unlawful or unrecorded funds in
violation of the Foreign Corrupt Practices Act of 1977, as amended, or any
other domestic or foreign law. Insofar as it relates to the Combining Genzyme
Businesses, neither Genzyme nor any Genzyme Subsidiary nor, to the best of
Genzyme's knowledge, any director, officer, agent, employee or other person
acting on behalf of Genzyme or any Genzyme Subsidiary, has accepted or
received any unlawful contributions, payments, gifts or expenditures.
5.9 LEGAL PROCEEDINGS. Except as set forth in Genzyme SEC Reports,
there are no outstanding orders, judgments, injunctions, decrees or other
requirements of any court, arbitrator or governmental or regulatory body
against Genzyme, any Genzyme Subsidiary or any of their assets or properties
that could reasonably be expected to have a Genzyme Material Adverse Effect.
Except as set forth in Genzyme SEC Reports, there are no actions, suits or
claims or legal, administrative or arbitration proceedings pending or, to the
best knowledge of Genzyme, threatened against Genzyme, any Genzyme Subsidiary
or any of their securities, assets or properties that could reasonably be
expected to have a Genzyme Material Adverse Effect.
5.10 NO BREACH. Except for (a) the filing of the Registration
Statement with the SEC, (b) filings required under the Exchange Act, (c) the
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filing of the Merger Filings as provided in Section 1.3, (d) the filing of a
Notification and Report form under the HSR Act, (e) any required Genzyme
stockholder approvals identified in Section 5.9 of the Genzyme Disclosure
Schedule and (f) any approvals required under Genzyme's debt arrangements or
other matters identified in Section 5.10 of the Genzyme Disclosure Schedule,
the execution, delivery and performance of this Agreement by Genzyme and
consummation by it of the transactions contemplated hereby will not (i)
violate any provision of the charter or by-laws of Genzyme or Merger Sub, (ii)
violate, conflict with or result in the breach of any of the terms or
conditions of, result in modification of, or otherwise give any other
contracting party the right to terminate or accelerate obligations under, or
constitute (or with notice or lapse of time or both constitute) a material
default under, any material instrument, contract or other agreement to which
Genzyme or a Genzyme Subsidiary is a party or to which any of them or any of
their assets or properties is bound or subject, (iii) violate any law,
ordinance or regulation or any order, judgment, injunction, decree or
requirement of any court, arbitrator or governmental or regulatory body
applicable to Genzyme or a Genzyme Subsidiary or by which any of their assets
or properties is bound, (iv) require any filing with, notice to, or permit,
consent or approval of, any governmental or regulatory body or (v) result in
the creation of any lien or other encumbrance on the assets or properties of
Genzyme or a Genzyme Subsidiary, excluding from the foregoing clauses (ii),
(iii), (iv) and (v) violations, breaches and defaults which, and filings,
notices, permits, consents and approvals the absence of which, in the
aggregate, would not reasonably be expected to have a Genzyme Material Adverse
Effect or materially interfere with the ability of Genzyme or Merger Sub to
consummate the transactions contemplated hereby.
5.11 INTELLECTUAL PROPERTY.
(a) Genzyme and the Genzyme Subsidiaries own, or are licensed to
use, or otherwise have the right to use all patents, trademarks, service
marks, trade names, trade secrets, franchises and copyrights, and all
applications for any of the foregoing, and all technology, know how and
processes necessary for the conduct of the businesses of the Combining Genzyme
Businesses as presently conducted (the "GENZYME PROPRIETARY RIGHTS") except
(i) to the extent failure to have such ownership or licenses would not
reasonably be expected to have a Genzyme Material Adverse Effect or (ii) as
disclosed in the Genzyme SEC Reports.
(b) Genzyme is not aware of any claim by any third party that
the businesses of the Combining Genzyme Businesses infringe upon the
proprietary rights of others, nor has Genzyme or any Genzyme Subsidiary
received any written notice or claim of infringement with respect to such
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businesses from any third party other than any claims that would not
reasonably be expected to have a Genzyme Material Adverse Effect. Genzyme is
not aware of any existing or threatened infringement by any third party on, or
any competing claim of right to use or own any of, the Genzyme Proprietary
Rights. Except as disclosed in Section 5.11 of the Genzyme Disclosure
Schedule, to the best of Genzyme's knowledge, Genzyme and the Genzyme
Subsidiaries have the unencumbered right to sell the products and services of
the Combining Genzyme Businesses free from any royalty or other financial
obligations to third parties.
(c) Except as set forth in Section 5.11 of the Genzyme
Disclosure Schedule, to the best knowledge of Genzyme, insofar as it relates
to the Combining Genzyme Businesses, none of the activities of the employees
of Genzyme or any Genzyme Subsidiary on behalf of such entity violates any
agreement or arrangement which any such employees have with former employers.
To the best of Genzyme's knowledge, all employees and consultants who
contributed to the discovery or development of any of the Genzyme Proprietary
Rights (other than Proprietary Rights licensed to Genzyme or a Genzyme
Subsidiary by any party other than a consultant to Genzyme or Genzyme
Subsidiary) did so either (i) within the scope of his or her employment such
that, in accordance with applicable law, all Genzyme Proprietary Rights
arising therefrom became the exclusive property of Genzyme or the Genzyme
Subsidiary or (ii) pursuant to written agreements assigning all Genzyme
Proprietary Rights arising therefrom to Genzyme or the Genzyme Subsidiary.
5.12 INSURANCE. Genzyme maintains policies or binders of fire,
liability, product liability, workmen's compensation, vehicular, directors'
and officers' and other insurance as are customary for similar well-managed
businesses. Section 5.12 of the Genzyme Disclosure Schedule describes the
products liability insurance (including any related umbrella coverage)
maintained by Genzyme. Neither Genzyme nor any Genzyme Subsidiary is in
default with respect to any provision contained in such policy or binder nor
has any of Genzyme or a Genzyme Subsidiary failed to give any notice or
present any claim under any such policy or binder in due and timely fashion.
There are no outstanding unpaid claims under any such policy or binder.
Neither Genzyme nor any Genzyme Subsidiary has received notice of cancellation
or non-renewal of any such policy or binder.
5.13 EMPLOYEE BENEFIT PLANS.
(a) Except as described in Section 5.13 of the Genzyme
Disclosure Schedule, neither Genzyme nor any Genzyme Subsidiary now maintains
or contributes to, nor has any outstanding liability with respect to,
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any pension, profit-sharing, deferred compensation, restricted stock bonus,
stock option, share appreciation right, severance, group or individual health,
dental, medical, life insurance, survivor benefit, or similar plan, policy, or
arrangement for the benefit of any director, officer, consultant or employee,
whether active or terminated, of Genzyme or any Genzyme Subsidiary and related
to the Genzyme Combining Businesses. Each of the arrangements set forth in
Section 5.13 of the Genzyme Disclosure Schedule is hereinafter referred to as
a "GENZYME EMPLOYEE BENEFIT PLAN."
(b) Genzyme has delivered to Genzyme true, correct, and complete
copies of each Genzyme Employee Benefit Plan.
(c) Each Genzyme Employee Benefit Plan is and has heretofore
been maintained and operated in compliance in all material respects with the
terms of such plan and with the requirements prescribed (whether as a matter
of substantive law or as necessary to secure favorable tax treatment) by any
and all statutes, governmental or court orders, and governmental rules or
regulations in effect from time to time, including but not limited to ERISA
and the Code and applicable to such plan.
(d) There is no pending, or to the best of Genzyme's knowledge,
threatened, legal action, proceeding, or investigation, other than routine
claims for benefits, concerning any Genzyme Employee Benefit Plan, or to the
best of Genzyme's knowledge, any fiduciary or service provider thereof
relating to such Plan.
(e) With respect to each Genzyme Employee Benefit Plan for which
a separate fund of assets is or is required to be maintained, full payment has
been made of all amounts that Genzyme or any Genzyme Subsidiary is required,
under the terms of each such plan, to have paid as contributions to that plan
as of the end of the most recently ended plan year of that plan.
5.14 EMPLOYEE RELATIONS. No work stoppage or labor strike against
Genzyme or any Genzyme Subsidiary and relating to or affecting the Genzyme
Combining Businesses is pending or threatened. Neither Genzyme nor any Genzyme
Subsidiary is involved in or, to the knowledge of Genzyme, threatened with,
any labor dispute, grievance, or litigation relating to labor, safety or
discrimination matters involving any employee of the Genzyme Combining
Businesses, including without limitation charges of unfair labor practices or
discrimination complaints, that, if adversely determined, would result in
material liability to Genzyme. Neither Genzyme nor any Genzyme Subsidiary has
engaged in any unfair labor practices within the meaning of the National Labor
Relations Act with respect to the Genzyme Combining
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Businesses that would, directly or indirectly result in material liability to
Genzyme. Neither Genzyme nor any Genzyme Subsidiary is presently, nor has it
been in the past, a party to or bound by any collective bargaining agreement
or union contract with respect to employees of the Genzyme Combining
Businesses other than as set forth in Section 5.14 of the Genzyme Disclosure
Schedule and no such collective bargaining agreement is being negotiated by
Genzyme or any Genzyme Subsidiary. No union organizing campaign or activity
with respect to non-union employees of the Genzyme Combining Businesses is
ongoing, pending or, to the best knowledge of Genzyme, threatened.
5.15 ENVIRONMENTAL MATTERS. Except as disclosed in documents filed
prior to the date hereof by Genzyme with the SEC under the Exchange Act and
except for such matters that, individually or in the aggregate, are not
reasonably likely to have a Genzyme Material Adverse Effect, insofar as it
relates to the Combining Genzyme Businesses: (i) Genzyme and the Genzyme
Subsidiaries have obtained all permits required by any Environmental Law
necessary to conduct their respective businesses, and complied with all
applicable Environmental Laws and such permits; (ii) to the knowledge of
Genzyme, the properties currently owned or operated by Genzyme and the Genzyme
Subsidiaries (including soils, groundwater, surface water, air, buildings or
other structures) are not contaminated with any Hazardous Substances; (iii) to
the knowledge of Genzyme, the properties formerly owned or operated by Genzyme
or any of the Genzyme Subsidiaries were not contaminated with Hazardous
Substances during the period of ownership or operation by Genzyme or any of
the Genzyme Subsidiaries; (iv) neither Genzyme nor any of the Genzyme
Subsidiaries are subject to liability or obligated to report or respond in any
way for any Hazardous Substance placement, release disposal or contamination
on the property of any third party; (v) neither Genzyme nor any of the Genzyme
Subsidiaries have generated, used, handled, transported, stored or released
from or at any location including without limitation any properties currently
or formerly owned or operated by or for the benefit of Genzyme or any Genzyme
Subsidiary any Hazardous Substance except in compliance with applicable law;
and (vi) neither Genzyme nor any of the Genzyme Subsidiaries has received any
written notice, demand, letter, claim or request for information alleging that
Genzyme or any of the Genzyme Subsidiaries may be in violation of, liable
under or have obligations under any Environmental Law.
5.16 BOARD APPROVAL. The Board of Directors of Genzyme, as of the
date of this Agreement, has determined (a) to propose that Genzyme's
stockholders approve the Reorganization and the issuance of the shares of GBS
Division Common Stock issuable pursuant to this Agreement and (b)
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recommend that the stockholders of Genzyme approve the Reorganization and the
issuance of the shares of GBS Division Common Stock issuable pursuant to this
Agreement.
5.17 BROKERAGE. Other xxxx Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, no broker, finder, agent or similar intermediary has acted on
behalf of Genzyme in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders' fees or
similar fees or commissions payable in connection herewith based on any
agreement, arrangement or understanding with Genzyme, or any action taken by
Genzyme.
5.18 YEAR 2000 MATTERS. Insofar as it relates to or affects the
Combining Genzyme Businesses, Genzyme and the Genzyme Subsidiaries have not
experienced, and do not reasonably expect to experience, any material problems
related to Systems failing to be Year 2000 Compliant.
5.19 PROXY STATEMENT AND REGISTRATION STATEMENT. None of the
information supplied or to be supplied by Genzyme for inclusion in the
Registration Statement will, at the time the Registration Statement is filed
with the SEC, at any time it is amended or supplemented or at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading. None of the
information supplied or to be supplied by Genzyme for inclusion or
incorporation by reference in the Proxy Statement/Prospectus will, at the date
it is first mailed to holders of Biomatrix Common Stock or holders of any
series of Genzyme Common Stock or at the time of the Biomatrix Stockholders
Meeting or Genzyme Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy
Statement/Prospectus, insofar as it relates to the information required to be
supplied by Genzyme, will comply as to form in all material respects with the
requirements of the Exchange Act and the Securities Act and the rules and
regulations of the SEC thereunder.
5.20 AVAILABLE FUNDS. Genzyme has sufficient funds on hand or
available to it under the Genzyme Credit Facility as necessary to satisfy all
of Genzyme's and Merger Sub's obligations under this Agreement and in
connection with the transactions contemplated hereby, including, without
limitation, the obligation to pay the cash portion of the Merger Consideration
and to pay all related fee and expenses in connection with the Merger.
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ARTICLE VI - COVENANTS AND AGREEMENTS
6.1 BIOMATRIX CONDUCT OF BUSINESS. Except with the prior written
consent of Genzyme and except as otherwise contemplated herein or referred to
in Section 6.1 of the Biomatrix Disclosure Schedule, during the period from
the date hereof to the Closing Date, Biomatrix shall observe the following
covenants:
(a) AFFIRMATIVE COVENANTS PENDING CLOSING. Biomatrix shall:
(i) PRESERVE THE BUSINESS; MAINTAIN PROPERTIES, CONTRACTS.
Use reasonable commercial efforts to preserve the business of Biomatrix, and
perform and comply in all material respects with the terms of the contracts
referred to in Section 4.8;
(ii) OPERATE IN THE ORDINARY COURSE OF BUSINESS. Operate
Biomatrix's business in the ordinary course consistent with past practices;
(iii) PROTECT INTELLECTUAL PROPERTY RIGHTS. Use reasonable
commercial efforts to preserve and protect the Proprietary Rights;
(iv) RETAIN EMPLOYEES. Use reasonable commercial efforts
consistent with past practices to preserve intact and keep available the
services of present employees of Biomatrix and the Biomatrix Subsidiaries;
(v) COMPLY WITH BIOMATRIX OPTIONS AND CONVERTIBLE NOTE.
Take all actions necessary with respect to Biomatrix Options and the Biomatrix
Convertible Note to effectuate the terms of this Agreement, provided, however,
that Genzyme shall have the right to approve any agreements to modify terms of
the underlying instruments;
(vi) MAINTAIN INSURANCE. Use reasonable commercial
efforts to keep in effect casualty, public liability, worker's compensation
and other insurance policies in coverage amounts not less than those in effect
at the date of this Agreement;
(vii) NOTIFY ON FDA MATTERS. Subject to the terms of
applicable contracts, notify Genzyme promptly (A) after receipt of any
material communication from the FDA and before giving any material submission
to the FDA, except with respect to any product for which Genzyme has or is
developing a competing product, and (B) prior to the addition of new clinical
trials; and
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(viii) TAXES. Pay all taxes when due and, except where
Biomatrix has filed for extensions, file all Tax Returns due between the date
hereof and the Effective Time.
(b) NEGATIVE COVENANTS PENDING CLOSING. Biomatrix shall not:
(i) DISPOSE OF ASSETS. Sell or transfer, or mortgage,
pledge, lease or otherwise encumber any of its assets, including its
Proprietary Rights, other than sales or transfers in the ordinary course of
business and in amounts not exceeding $250,000;
(ii) INCUR LIABILITIES. Incur any indebtedness for
borrowed money, obligation or liability or enter into any contracts or
commitments involving potential payments to or by Biomatrix or any Biomatrix
Subsidiary of $250,000 or more or issue or incur any indebtedness that is
convertible into equity securities or has voting rights;
(iii) PAY COMPENSATION. Except as is otherwise disclosed
in this Agreement, increase the compensation payable to any officer, director,
employee, agent or consultant; or enter into any employment, severance or
other agreement with any officer or director of Biomatrix or a Biomatrix
Subsidiary; or adopt, or increase the benefits under, any employee benefit
plan, except as required by law;
(iv) CHANGE CAPITAL STOCK. Make any change in the number
of shares of its capital stock authorized, issued or outstanding or grant or
accelerate the exercisability of, any option, warrant or other right to
purchase, or convert any obligation into, shares of its capital stock, or
declare or pay any dividend or other distribution with respect to any shares
of its capital stock, or sell or transfer any shares of its capital stock, or
redeem or otherwise repurchase any shares of its capital stock, except (1)
issuances upon the exercise or conversion of options, warrants and convertible
securities outstanding on the date of this Agreement and disclosed in the
Biomatrix Disclosure Schedule and (2) repurchases from employees and
consultants pursuant to the terms of agreements in existence on the date of
this Agreement;
(v) AMEND CHARTER AND BY-LAWS. Cause, permit or propose
any amendments to the Certificate of Incorporation or By-laws of Biomatrix;
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(vi) MAKE ACQUISITIONS. Make, or permit to be made,
any material acquisition of property or assets outside the ordinary course of
business;
(vii) EXPEND CAPITAL. Authorize any single capital
expenditure in excess of $100,000 or capital expenditures which in the
aggregate exceed $500,000;
(viii) CHANGE ACCOUNTING POLICIES. Except as may be
required as a result of a change in law or in generally accepted accounting
principles, change any of the accounting practices or principles used by it
or restate, or become obligated to restate, the financial statements included
in the Biomatrix 10-K or Biomatrix 10-Q;
(ix) MAKE CHANGES RELATING TO TAXES. Settle or
compromise any material federal, state, local or foreign Tax liability,
change any annual tax accounting period, change any method of Tax accounting,
enter into any closing agreement relating to any Tax or surrender any right
to claim a Tax refund or make any election with respect to Taxes;
(x) SETTLE LEGAL PROCEEDINGS. Settle or compromise
any pending or threatened suit, action or claim which is material or which
relates to the transactions contemplated hereby; provided that, at the
request of Genzyme, Biomatrix shall use its reasonable commercial efforts to
settle any such matter prior to the Effective Date on terms mutually
satisfactory to Biomatrix and Genzyme;
(xi) ENTER INTO EXTRAORDINARY TRANSACTIONS. Adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of Biomatrix or any
of the Biomatrix Subsidiaries (other than the Merger);
(xii) DISCHARGE INDEBTEDNESS. Pay, discharge or satisfy
any material claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business and consistent with past
practice, of liabilities reflected or reserved against in the balance sheet
included in the 1999 Financial Statements or incurred in the ordinary course
of business and other than the payment, discharge or satisfaction of expenses
incurred in connection with the transactions contemplated by this Agreement;
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(xiii) TRIGGER WARN ACT OBLIGATIONS. Effectuate a "plant
closing" or "mass layoff," as those terms are defined in the Worker
Adjustment and Retraining Notification Act of 1988;
(xiv) ENTER INTO NEW AGREEMENTS/AMENDMENTS. Enter into or
modify in any material respect, or permit a Biomatrix Subsidiary to enter
into or modify in any material respect, any license, development, research or
collaboration agreement with any other person or entity other than
modifications contemplated by such agreements; or
(xv) ASSUME OBLIGATIONS. Agree or obligate itself to
do any of the foregoing. Nothing contained in this Agreement shall give
Genzyme, directly or indirectly, the right to control or direct Biomatrix's
operations prior to the Effective Time. Prior to the Effective Time,
Biomatrix shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its operations. In the event
Genzyme's consent is required under this Section 6.1, such consent shall not
be unreasonably withheld or delayed.
6.2. GENZYME CONDUCT OF BUSINESS. Except with the prior written
consent of Biomatrix and except as otherwise contemplated herein or referred
to in Section 6.2 of the Genzyme Disclosure Schedule, during the period from
the date hereof to the Closing Date, Genzyme shall observe the following
covenants:
(a) AFFIRMATIVE COVENANTS PENDING CLOSING. Genzyme shall,
insofar as it relates to the Combining Genzyme Businesses:
(i) PRESERVE THE BUSINESS; MAINTAIN PROPERTIES,
CONTRACTS. Use reasonable commercial efforts to preserve the business of
Genzyme, and perform and comply in all material respects with the terms of
the contracts referred to in Section 5.7;
(ii) OPERATE IN THE ORDINARY COURSE OF BUSINESS.
Operate Genzyme's business in the ordinary course consistent with past
practices;
(iii) PROTECT INTELLECTUAL PROPERTY RIGHTS. Use
reasonable commercial efforts consistent with past practices to preserve and
protect the Genzyme Proprietary Rights;
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(iv) RETAIN EMPLOYEES. Use reasonable commercial
efforts consistent with past practices to preserve intact and keep available
the services of present employees of Genzyme and the Genzyme Subsidiaries; and
(v) MAINTAIN INSURANCE. Use reasonable commercial
efforts to keep in effect casualty, public liability, product liability,
worker's compensation and other insurance policies in coverage amounts
customary for similar businesses.
(vi) NOTIFY ON FDA MATTERS. Subject to the terms of
applicable contracts, notify with Biomatrix promptly after receipt of any
material communication from the FDA regarding a Serious Adverse Event or
Serious Adverse Device Event (as defined under applicable FDA regulations),
except where it relates to a product for which Biomatrix has or is developing
a competing product.
(b) NEGATIVE COVENANTS PENDING CLOSING. Genzyme shall not:
(i) DISPOSE OF ASSETS. Insofar as it relates to the
Combining Genzyme Businesses, sell or transfer, or mortgage, pledge, lease or
otherwise encumber any of its assets, including its Genzyme Proprietary
Rights, other than sales or transfers in the ordinary course of business, in
connection with the Allocated Borrowings or in amounts not exceeding $500,000;
(ii) INCUR LIABILITIES. Allocate any indebtedness for
borrowed money to the Combining Genzyme Businesses, other than the Allocated
Borrowings and for working capital, or issue or incur any indebtedness that
is convertible into equity securities relating to or that has voting rights
with respect to the Combining Genzyme Businesses;
(iii) PAY COMPENSATION. Insofar as it relates to or
affects the Combining Genzyme Businesses and except in the ordinary course
consistent with past practice, increase the compensation payable to any
officer, director, employee, agent or consultant; or adopt, or increase the
benefits under, any employee benefit plan, except as required by law;
(iv) ISSUE GBS DIVISION COMMON STOCK. Except pursuant
to this Agreement or the Reorganization, issue any shares of GBS Division
Common Stock or options, warrants or other rights to acquire GBS Division
Common Stock;
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(v) CHANGE CAPITAL STOCK. Except pursuant to the
Reorganization, make any change in the number of shares of GSP Division
Common Stock or GTR Division Common Stock authorized, issued or outstanding
or grant or accelerate the exercisability of, any option, warrant or other
right to purchase, or convert any obligation into, shares of GSP Division
Common Stock or GTR Division Common Stock, or declare or pay any dividend or
other distribution with respect to any shares of its GSP Division Common
Stock or GTR Division Common Stock, or redeem or otherwise repurchase any
shares of GSP Division Common Stock or GTR Division Common Stock, except (1)
issuances upon the exercise or conversion of options, warrants and
convertible securities outstanding on the date of this Agreement and
disclosed herein, (2) issuances in the ordinary course of business consistent
with past practice, not to exceed 900,000 shares in the aggregate, in
connection with research, development and product commercialization
activities or the grant of non-employee options therefor and (3) repurchases
from employees and consultants pursuant to the terms of agreements in
existence on the date of this Agreement;
(vi) AMEND CHARTER AND BY-LAWS. Other than as
contemplated by this Agreement, cause, permit or propose any amendments to
the Articles of Organization or By-laws of Genzyme or cause permit or propose
any amendments to the Divisional Policies which would require the approval of
holders of GBS Division Common Stock as a class if the shares of GBS Division
Common Stock issuable in the Merger were outstanding;
(vii) MAKE ACQUISITIONS. Insofar as it relates to or
affects the Combining Genzyme Businesses, make, or permit to be made, any
material acquisition of property or assets outside the ordinary course of
business;
(viii) CHANGE ACCOUNTING POLICIES. Insofar as it relates
to or affects the Combining Genzyme Businesses, except as may be required as
a result of a change in law or in generally accepted accounting principles,
change any of the accounting practices or principles used by it or restate,
or become obligated to restate, the financial statements included in the
Genzyme 10-K or Genzyme 10-Q;
(ix) ENTER INTO EXTRAORDINARY TRANSACTIONS. Insofar as
it relates to or affects the Combining Genzyme Businesses, adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of Genzyme or any of
the Genzyme Subsidiaries (other than the Merger and the Reorganization) which
would require the approval of holders of GBS Division Common Stock
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as a class if the shares of GBS Division Common Stock issuable in the Merger
were outstanding;
(x) TRIGGER WARN ACT OBLIGATIONS. Insofar as it
relates to or affects the Combining Genzyme Businesses, effectuate a "plant
closing" or "mass layoff," as those terms are defined in the Worker
Adjustment and Retraining Notification Act of 1988;
(xi) ASSUME OBLIGATIONS. Insofar as it relates to or
affects the Combining Genzyme Businesses, agree or obligate itself to do any
of the foregoing.
Nothing contained in this Agreement shall give Biomatrix, directly or
indirectly, the right to control or direct Genzyme's operations prior to the
Effective Time. Prior to the Effective Time, Genzyme shall exercise, consistent
with the terms and conditions of this Agreement, complete control and
supervision over its operations. In the event Biomatrix's consent is required
under this Section 6.2, such consent shall not be unreasonably withheld or
delayed.
6.3 TAX-FREE REORGANIZATION TREATMENT. No party will knowingly take
or cause or permit to be taken any action, whether before or after the
Effective Time, that would disqualify the Merger as a "reorganization" within
the meaning of Section 368(a) of the Code.
6.4 CORPORATE EXAMINATIONS AND INVESTIGATIONS. (a) Subject to the
terms and conditions set forth in the confidentiality agreement, dated
December 2, 1999, between Genzyme and Xxxxxx Brothers Inc., as financial
advisor to and on behalf of, Biomatrix (the "GENZYME CONFIDENTIALITY
AGREEMENT"), prior to the Effective Time, Genzyme shall be entitled, through
its employees and representatives, to have such access to the assets,
properties, business and operations of Biomatrix, as is reasonably necessary
or appropriate in connection with Genzyme's investigation of Biomatrix with
respect to the transactions contemplated hereby. Any such investigation and
examination shall be conducted at reasonable times and under reasonable
circumstances so as to minimize any disruption to or impairment of Biomatrix's
business and Biomatrix shall cooperate fully therein. No investigation by
Genzyme shall diminish or obviate any of the representations, warranties,
covenants or agreements of Biomatrix contained in this Agreement. In order
that Genzyme may have full opportunity to make such investigation, Biomatrix
shall furnish the representatives of Genzyme during such period with all such
information and copies of such documents concerning the affairs of Biomatrix
as such representatives may reasonably request and cause its officers,
employees, consultants, agents,
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accountants and attorneys to cooperate fully with such representatives in
connection with such investigation.
(b) Subject to the terms and conditions set forth in the
confidentiality agreement, dated February 15, 2000, between Genzyme and
Biomatrix (the "BIOMATRIX CONFIDENTIALITY AGREEMENT" and together, with the
Genzyme Confidentiality Agreement, the "CONFIDENTIALITY AGREEMENTS"), prior to
the Effective Time, Biomatrix shall be entitled, through its employees and
representatives, to have such access to the assets, properties, business and
operations of Genzyme, as is reasonably necessary or appropriate in connection
with Biomatrix's investigation of Genzyme with respect to the transactions
contemplated hereby. Any such investigation and examination shall be conducted
at reasonable times and under reasonable circumstances so as to minimize any
disruption to or impairment of Genzyme's business and Genzyme shall cooperate
fully therein. No investigation by Biomatrix shall diminish or obviate any of
the representations, warranties, covenants or agreements of Genzyme contained in
this Agreement. In order that Biomatrix may have full opportunity to make such
investigation, Genzyme shall furnish the representatives of Biomatrix during
such period with all such information and copies of such documents concerning
the affairs of Genzyme as such representatives may reasonably request and cause
its officers, employees, consultants, agents, accountants and attorneys to
cooperate fully with such representatives in connection with such investigation.
6.5 EXPENSES. Prior to the Effective Time, Biomatrix and Genzyme
shall bear their respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, including without limitation, all fees and expenses of
agents, representatives, counsel and accountants.
6.6 THIRD-PARTY CONSENTS. Prior to the Closing Date, the parties
shall use their reasonable commercial efforts to obtain all authorizations,
consents and Permits of others, necessary or desirable in connection with the
consummation of the Merger.
6.7 FURTHER ASSURANCES. Each of the parties shall execute such
documents, further instruments of transfer and assignment and other papers
and take such further actions as may be reasonably required or desirable to
carry out the provisions hereof and the transactions contemplated hereby.
Each party shall use its respective reasonable commercial efforts to take
other such actions to ensure that, to the extent within its control or
capable of influence by it, the transactions contemplated by this Agreement
shall be fully carried out in a timely fashion.
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Nothing in this Agreement shall require Biomatrix or any Biomatrix
subsidiary (prior to or following the Merger) to license, sell, hold separate or
otherwise dispose of or conduct their business in a specified manner, or agree
to license, sell, hold separate or otherwise dispose of or conduct their
business in a specified manner, or permit the license, sale, holding separate or
other disposition of, any assets of Biomatrix or any Biomatrix Subsidiary,
whether as a condition to obtaining any approval from a governmental entity or
any other person or for any other reason.
6.8 PREPARATION OF DISCLOSURE DOCUMENTS.
(a) As soon as practicable following the date of this
Agreement, Biomatrix and Genzyme shall prepare the Proxy Statement/Prospectus.
Biomatrix and Genzyme shall, in cooperation with the other, file the Proxy
Statement/Prospectus with the SEC as its preliminary proxy statement and Genzyme
shall, in cooperation with Biomatrix, prepare and file with the SEC the
Registration Statement, in which the Proxy Statement/Prospectus will be
included. Each of Biomatrix and Genzyme shall use reasonable commercial efforts
to have the Registration Statement declared effective under the Securities Act
as promptly as practicable after such filing and to keep the Registration
Statement effective as long as is necessary to consummate the Merger. Biomatrix
shall mail the Proxy Statement/Prospectus to its stockholders as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act and, if necessary, after the Proxy Statement/Prospectus shall
have been so mailed, promptly circulate supplemental or amended proxy material,
and, if required in connection therewith, resolicit proxies. Genzyme shall mail
the Proxy Statement/Prospectus to its holders of Common Stock as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act and, if necessary, after the Proxy Statement/Prospectus shall
have been so mailed, promptly circulate supplemental or amended proxy material,
and, if required in connection therewith, resolicit proxies.
(b) (i) Biomatrix shall, as soon as practicable following the
date of this Agreement and the effectiveness of the Registration Statement, duly
call, give notice of, convene and hold a meeting of its stockholders (the
"BIOMATRIX STOCKHOLDERS MEETING") for the purpose of obtaining the required
stockholder votes with respect to this Agreement, (ii) the Board of Directors of
Biomatrix, unless otherwise required pursuant to the applicable fiduciary duties
of the Board of Directors of Biomatrix to the stockholders of Biomatrix (as
determined in good faith by the Board of Directors of Biomatrix based upon the
advice of outside counsel), shall recommend adoption of this
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Agreement by its stockholders and (iii) Biomatrix shall take all lawful
action to solicit such adoption.
(c) (i) Genzyme shall, as soon as practicable following the
date of this Agreement and the effectiveness of the Registration Statement, duly
call, give notice of, convene and hold a meeting of its holders of Common Stock
(the "GENZYME STOCKHOLDERS MEETING") for the purpose of obtaining the required
stockholder votes with respect to the Reorganization and the issuance of the
shares of GBS Division Common Stock pursuant to this Agreement, (ii) the Board
of Directors of Genzyme, unless otherwise required pursuant to the applicable
fiduciary duties of the Board of Directors of Genzyme to the stockholders of
Genzyme (as determined in good faith by the Board of Directors of Genzyme based
upon the advice of outside counsel), shall recommend approval by its
stockholders of the Reorganization and the issuance of the shares of GBS
Division Common Stock pursuant to this Agreement and (iii) Genzyme shall take
all lawful action to solicit such approval.
(d) Except as required by law, no amendment or supplement to
the Proxy Statement/Prospectus or the Registration Statement shall be made by
Genzyme or Biomatrix without the approval of the other party (which shall not be
unreasonably withheld). Each party shall advise the other party, promptly after
it receives notice thereof, of the time when the Registration Statement has
become effective or any supplement or amendment has been filed, of the issuance
of any stop order by the SEC, or of any request by the SEC for amendment of the
Proxy Statement/Prospectus or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
(e) Biomatrix shall use reasonable efforts to cause to be
delivered to Genzyme a letter from Biomatrix's independent public accountants,
dated the date on which the Registration Statement shall become effective,
addressed to Biomatrix, Genzyme and their boards of directors, in form and
substance reasonably satisfactory to Genzyme and customary in scope and
substance for comfort letters delivered by independent public accountants in
connection with registration statements similar to the Registration Statement.
6.9 PUBLIC ANNOUNCEMENTS. Genzyme and Biomatrix will consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Merger or this Agreement and will not issue
any such press release or make any such public statement without the prior
consent of the other party, which will not be unreasonably withheld or
delayed; provided, however, that a party may, without the prior consent of
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the other party, issue such press release or make such public statement as
may upon the advice of counsel be required by law or the rules and
regulations of the New York Stock Exchange or Nasdaq if such party has first
used reasonable efforts to consult with the other party.
6.10 NASDAQ MATTERS. Prior to the Closing Date, Genzyme shall use its
reasonable commercial efforts to list for trading with Nasdaq the shares of GBS
Division Common Stock to be issued in the Merger. Prior to the Closing Date,
Biomatrix shall take such actions as are necessary so that trading of Biomatrix
Common Stock on the New York Stock Exchange ceases prior to the Effective Time.
6.11 NO SOLICITATION. Biomatrix will not, and will not permit any of
its directors, officers, employees, agents or other representatives (including
any financial advisors or attorneys) or those of any Biomatrix Subsidiary to:
(a) solicit, initiate, facilitate or encourage discussions
with any person, other than Genzyme, relating to the possible
acquisition of Biomatrix or any Biomatrix Subsidiary or of all or a
material portion of the assets or capital stock of Biomatrix or any
Biomatrix Subsidiary or any merger, reorganization, consolidation,
business combination, share exchange, recapitalization, dissolution,
liquidation or similar transaction involving Biomatrix or any Biomatrix
Subsidiary (an "ALTERNATIVE TRANSACTION");
(b) participate in any negotiations regarding, or furnish to
any other person non-public information with respect to, any effort or
attempt by any person to do or to seek any Alternative Transaction; or
(c) grant any waiver or release under any standstill or
similar agreement.
Notwithstanding the foregoing, Biomatrix and the Board of Directors of
Biomatrix shall be permitted:
(i) to the extent applicable, to comply with Rule 14e-2(a)
under the Exchange Act with regard to an Alternative Transaction; and
(ii) to engage in any discussions or negotiations with, or to
provide any information to, a person who makes an unsolicited bona fide
written proposal for an Alternative Transaction with terms which the
Board of Directors of Biomatrix determines in its good faith judgment
(after consultation with its financial advisor) to be more favorable to
Biomatrix's stockholders than the Merger, if and only to
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the extent that, in the case of the actions referred to in this
clause (ii), (A) Biomatrix is not in breach of its obligations under
this Section 6.11, (B) the Board of Directors of Biomatrix concludes
in good faith, after receipt of the advice of its outside legal
counsel, that the provision of such information or the engaging in
such negotiations or discussions is required by the directors'
fiduciary duties in accordance with Delaware law and (C) prior to
providing any information or data to any person in connection with
an Alternative Transaction, the Board of Directors of Biomatrix
receives from such person an executed confidentiality agreement with
terms substantially similar to those contained in the Confidentiality
Agreement (except as to standstill or non-solicitation provisions,
provided that if Biomatrix enters into a confidentiality agreement
without standstill or non-solicitation provisions or without
standstill or non-solicitation provisions that are substantially
similar to those in the Confidentiality Agreement, then Genzyme
shall be relieved of the standstill or non-solicitation provisions,
as applicable, in the Confidentiality Agreement).
Biomatrix shall notify Genzyme promptly (and, in any case, within one
business day) of any written inquiries, proposals or offers received by, any
information requested from, or any discussions or negotiations sought to be
initiated or continued with, any of its representatives concerning an
Alternative Transaction, indicating, in connection with such notice, the name of
such person and the material terms and conditions of any proposals or offers
and, in the case of written materials, providing copies of such material.
Biomatrix agrees that it will keep Genzyme informed, on a prompt basis (and, in
any case, within one business day), of the status and terms of any such
proposals or offers and the status of any such discussions or negotiations.
Biomatrix agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any proposed Alternative Transaction or similar
transaction or arrangement and will not waive any rights under any
confidentiality agreements entered into with such parties. Biomatrix agrees that
it will take the necessary steps to promptly inform the individuals or entities
referred to in the first sentence of this 6.11 of the obligations undertaken in
this Section 6.11. Biomatrix agrees that a breach of this Section 6.11 by any of
its directors, officers, employees, agents or other representatives shall be
deemed a breach by Biomatrix.
6.12 REGULATORY FILINGS. As soon as is reasonably practicable, Genzyme
and Biomatrix shall file, and Biomatrix shall endeavor to cause such
stockholders of Biomatrix as are required to file, with the United States
Federal Trade Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice ("DOJ") any Notification and Report
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Forms relating to the Merger required by the HSR Act, as well as comparable
pre-merger notification forms required by the merger notification and control
laws and regulations of any other applicable jurisdiction, as agreed to by the
parties. Biomatrix and Genzyme each shall promptly (a) supply the other with
any information which may be required in order to make such filings and (b)
supply any additional information which may be requested by the FTC, the DOJ
or the competition or merger control authorities of any other jurisdiction and
which the parties reasonably deem appropriate.
6.13 NOTIFICATION OF CERTAIN MATTERS. Between the date hereof and the
Closing Date, Biomatrix shall give prompt notice to Genzyme, and Genzyme shall
give prompt notice to Biomatrix, of (a) the occurrence or non-occurrence of
any event or circumstance the occurrence or non-occurrence of which would be
likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect and (b) any failure of
Biomatrix or Genzyme, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
6.14 REGISTRATION OF OPTION SHARES. Promptly after the Effective Time,
Genzyme shall file one or more registration statements on Form S-8 (or any
successor or other appropriate form), with respect to the shares of GBS
Division Common Stock subject to Biomatrix Stock Options, and shall use
commercially reasonable efforts to maintain the effectiveness of such
registration statement for so long as such options or purchase rights remain
outstanding.
6.15 EMPLOYEE MATTERS.
(a) Genzyme will give individuals who are employed by Biomatrix
and the Biomatrix Subsidiaries immediately prior to the Effective Time and
remain as employees of Genzyme or a Genzyme Subsidiary ("AFFECTED EMPLOYEES")
full credit for purposes of eligibility, vesting, benefit accrual (excluding
however, benefit accrual under any defined benefit plans) and determination of
the level of benefits under any employee benefit plans or arrangements
maintained by Genzyme or any subsidiary of Genzyme for such Affected
Employees' service with Biomatrix or any subsidiary of Biomatrix to the same
extent as though the Affected Employee had been employed by Genzyme.
(b) Genzyme will waive all limitations as to preexisting
conditions exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Affected Employees under any welfare
benefit plans that such employees may be eligible to participate in
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after the Effective Time, other than limitations or waiting periods that are
already in effect with respect to such employees and that have not been
satisfied as of the Effective Time under any welfare plan maintained for the
Affected Employees immediately prior to the Effective Time.
(c) As of the Effective Time, Genzyme shall assume and honor in
accordance with their terms all written employment, severance and other
compensation agreements and arrangements existing prior to the execution of
this Agreement which are between Biomatrix or any subsidiary and any director,
officer, employee or consultant thereof, including those described in Section
6.15(c) of the Biomatrix Disclosure Schedule, except as otherwise expressly
agreed in writing between Genzyme and such person.
(d) Except with the prior written consent of Genzyme, during the
period from the date hereof to the Closing Date, Biomatrix shall not and shall
not permit any Biomatrix Subsidiary (i) to make any discretionary contribution
to the Biomatrix 401(k) plan (the "PLAN") or (ii) to make any required
contribution to the Plan in Biomatrix Shares. Prior to the Closing Date,
Biomatrix shall terminate the Plan.
6.16 INDEMNIFICATION.
(a) From and after the Effective Time, Genzyme will cause the
Surviving Corporation to fulfill and honor in all respects the obligations, to
the extent legally permissible, of Biomatrix pursuant to any indemnification
provisions under Biomatrix's Certificate of Incorporation or By-laws as in
effect on the date hereof (the persons entitled to indemnification thereunder
being referred to herein as the "INDEMNIFIED PARTIES").
(b) In the event the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges with any other person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers substantially all of its assets to
any person in a single transaction or a series of transactions, then, and in
each such case, Genzyme will either guarantee the indemnification obligations
referred to in this Section 6.16 or will make or cause to be made proper
provision so that the successors and assigns of the Surviving Corporation
assumes the indemnification obligations described herein for the benefit of
the Indemnified Parties.
(c) The provisions of this Section 6.16 are (i) intended to be for
the benefit of, and will be enforceable by, each of the Indemnified Parties
and (ii) in addition to, and not in substitution for, any other rights to
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indemnification or contribution that any such person may have by contract or
otherwise.
(d) For a period of six years after the Effective Time, Genzyme
shall use its best efforts to maintain in effect the current level and scope
of directors' and officers' liability insurance policy (a copy of which has
previously been delivered to Genzyme) from comparable insurers; PROVIDED,
HOWEVER, that in no event shall Genzyme be required to expend in any one year
in excess of 150% of the annual premium currently paid by Biomatrix for such
coverage.
6.17 AFFILIATES LETTERS. Biomatrix will use its commercially reasonable
efforts to cause each person whom Biomatrix believes may be deemed to be an
"affiliate" of Biomatrix, as that term is defined for purposes of paragraphs
(c) and (d) of Rule 145 under the Securities Act, to execute and deliver to it
as promptly as practicable an executed copy of an affiliate letter
substantially in the form of Exhibit B attached hereto. Biomatrix acknowledges
that the shares of GBS Division Common Stock issued to these persons will
contain an appropriate legend referring to the restrictions contained in Rule
145 and may be subject to stop order instructions with respect thereto.
ARTICLE VII - CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF EACH PARTY TO CONSUMMATE THE MERGER
The respective obligations of each party to consummate the Merger shall
be subject to the satisfaction or waiver by mutual consent of the other party,
at or before the Effective Time, of each of the following conditions:
7.1 STOCKHOLDER APPROVAL. Biomatrix shall have obtained the required
vote of holders of Biomatrix Common Stock necessary to adopt this Agreement.
Genzyme shall have obtained the Genzyme Stockholder Approvals.
7.2 REGISTRATION STATEMENT. The Registration Statement shall have been
declared effective and shall remain effective and shall not be subject to a
stop order at the Effective Time.
7.3 ABSENCE OF ORDER. No temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other governmental
entity of competent jurisdiction shall be in effect and have the effect of
making the Merger illegal or otherwise prohibiting consummation of the Merger.
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7.4 REGULATORY APPROVALS. All approvals from governmental entities shall
have been obtained; PROVIDED, HOWEVER, that the conditions of this Section 7.4
shall not apply to any party whose failure to fulfill its obligations under
this Agreement shall have been the cause of, or shall have resulted in, such
failure to obtain such approval.
7.5 HSR ACT. The waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have been terminated or shall have
expired.
7.6. NASDAQ. The shares of GBS Division Common Stock issuable in the
Merger shall have been listed on Nasdaq.
ARTICLE VIII - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
MERGER SUB TO CONSUMMATE THE MERGER
The obligations of Genzyme and Merger Sub to consummate the Merger are
subject, to the fulfillment of the following conditions, any one or more of
which may be waived by Genzyme:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. Other than changes
contemplated by the Agreement, the representations and warranties made by
Biomatrix in this Agreement (without regard to knowledge or materiality
qualifiers) (a) shall have been accurate as of the date of this Agreement and
(b) shall be accurate as of the Closing Date as if made on and as of the
Closing Date, except (i) to the extent such representations and warranties
speak as of a specific date, in which case such representations and warranties
shall be accurate in all material respects as of such date and (ii) where the
failure to be accurate, considered in the aggregate, would not reasonably be
expected to have a Biomatrix Material Adverse Effect. Biomatrix shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by it
on or prior to the Effective Time. Biomatrix shall have delivered to Genzyme a
certificate from its chief executive officer, dated the Closing Date, to the
foregoing effect.
8.2 DELAWARE CERTIFICATES. Biomatrix shall have delivered a copy of the
Certificate of Incorporation of Biomatrix, as in effect immediately prior to
the Closing Date, certified by the Delaware Secretary of State and a
certificate, as of the most recent practicable date, of the Delaware Secretary
of State as to Biomatrix's corporate good standing.
8.3 SECRETARY'S CERTIFICATE. Biomatrix shall have delivered a
certificate of the Secretary of Biomatrix, dated as of the Closing Date,
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certifying as to (a) the incumbency of officers of Biomatrix executing
documents executed and delivered in connection herewith, (b) a copy of the
By-Laws of Biomatrix, as in effect from the date this Agreement was approved
by the Board of Directors of Biomatrix until the Closing Date and (c) a copy
of the resolutions of the Board of Directors of Biomatrix authorizing and
approving the applicable matters contemplated hereunder.
8.4 TAX OPINION. Genzyme shall have received the opinion of Xxxxxx &
Dodge LLP, counsel to Genzyme, to the effect that, on the basis of the facts,
representations and assumptions set forth in such opinion (a) the Merger will
be treated for U.S. Federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code and (b) each of Biomatrix and Genzyme
will be a party to that reorganization within the meaning of Section 368(b) of
the Code. The issuance of such opinion shall be conditioned on receipt of
representation letters from each of Biomatrix and Genzyme. The specific
provisions of each such representation letter shall be in form and substance
satisfactory to Xxxxxx & Dodge LLP and Xxxxxxx Xxxx LLP, and each such
representation letter shall be dated on or before the date of such opinion and
shall not have been withdrawn or modified in any material respect as of the
Closing Date.
8.5 MERGER FILINGS. Biomatrix shall have executed and delivered the
Merger Filings referred to in Section 1.3.
ARTICLE IX - CONDITIONS PRECEDENT TO THE OBLIGATION OF
BIOMATRIX TO CONSUMMATE THE MERGER
The obligation of Biomatrix to consummate the Merger is subject to the
fulfillment of the following conditions, any one or more of which may be
waived by it:
9.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. Other than changes
contemplated by this Agreement, the representations and warranties made by
each of Genzyme and Merger Sub in this Agreement (without regard to knowledge
or materiality qualifiers) (a) shall have been accurate as of the date of this
Agreement and (b) shall be accurate as of the Closing Date as if made on and
as of the Closing Date, except (i) to the extent such representations and
warranties speak as of a specific date, in which case such representations and
warranties shall be accurate in all material respects as of such date and (ii)
where the failure to be accurate, considered in the aggregate, would not
reasonably be expected to have a Genzyme Material Adverse Effect. Each of
Genzyme and Merger Sub shall have performed and complied in all material
respects with all covenants and agreements required
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by this Agreement to be performed or complied with by it on or prior to the
Effective Time. Each of Genzyme and Merger Sub shall have delivered to
Biomatrix a certificate from its chief executive officer, dated the Closing
Date, to the foregoing effect.
9.2 MASSACHUSETTS CERTIFICATES. Each of Genzyme and Merger Sub shall
have delivered (i) a copy of its Articles of Organization, as in effect
immediately prior to the Closing Date, certified by the Massachusetts
Secretary of State and (ii) a certificate, as of the most recent practicable
date, of the Massachusetts Secretary of State as to its corporate good
standing.
9.3 CLERK'S CERTIFICATES. Each of Genzyme and Merger Sub shall have
delivered a certificate of its Clerk, dated as of the Closing Date, certifying
as to (a) the incumbency of its officers executing documents executed and
delivered in connection herewith, (b) a copy of its By-Laws, as in effect from
the date this Agreement was approved by its Board of Directors until the
Closing Date and (c) a copy of the resolutions of its Board of Directors
authorizing and approving the applicable matters contemplated hereunder.
9.4 TAX OPINION. Biomatrix shall have received the opinion of Xxxxxxx
Xxxx LLP, counsel to Biomatrix, to the effect that, on the basis of the facts,
representations and assumptions set forth in such opinion (a) the Merger will
be treated for United States Federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code and (b) each of Biomatrix and
Genzyme will be a party to that reorganization within the meaning of Section
368(b) of the Code. The issuance of such opinion shall be conditioned on
receipt of representation letters from each of Biomatrix and Genzyme. The
specific provisions of each such representation letter shall be in form and
substance satisfactory to Xxxxxxx Xxxx LLP and Xxxxxx & Dodge LLP, and each
such representation letter shall be dated on or before the date of such
opinion and shall not have been withdrawn or modified in any material respect
as of the Closing Date.
9.5. REORGANIZATION. Biomatrix shall have received evidence reasonably
satisfactory to it that the Reorganization shall occur on or before the
Closing Date.
9.6 MERGER FILINGS. Genzyme shall have executed and delivered the
Merger Filings referred to in Section 1.3.
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ARTICLE X - TERMINATION, AMENDMENT AND WAIVER
10.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether prior to or after adoption by holders of Biomatrix
Common Stock:
(a) by either Biomatrix or Genzyme, by written notice to the
other, if the Effective Time shall not have occurred on or before September
30, 2000; provided, however, that the right to terminate this Agreement under
this Section 10.1(a) shall not be available to any party whose breach of a
representation or warranty or failure to fulfill any covenant or agreement
under this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date;
(b) by Biomatrix (provided that Biomatrix is not then in breach of
any representation, warranty, covenant or other agreement contained herein,
where all of such breaches in the aggregate would reasonably be expected to
result in a Biomatrix Material Adverse Effect), by written notice to Genzyme,
if there shall have been a breach of any of the covenants or agreements or any
of the representations or warranties contained in this Agreement on the part
of Genzyme, and (i) such breach and each other such breach in the aggregate
would reasonably be expected to result in a Genzyme Material Adverse Effect,
and (ii) such breach is either not cured within twenty (20) days following
written notice to Genzyme or by its nature cannot be cured;
(c) by Genzyme (provided that Genzyme is not then in material
breach of any representation, warranty, covenant or other agreement contained
herein, where all of such breaches in the aggregate would reasonably be
expected to result in a Genzyme Material Adverse Effect), by written notice to
Biomatrix, if there shall have been a material breach of any of the covenants
or agreements or any of the representations or warranties contained in this
Agreement on the part of Biomatrix, and (i) such breach and each other such
breach in the aggregate would reasonably be expected to result in a Biomatrix
Material Adverse Effect, and (ii) such breach is either not cured within
twenty (20) days following written notice to Biomatrix or by its nature cannot
be cured;
(d) by either Genzyme or Biomatrix, by written notice to the
other, if any governmental entity shall have issued any injunction or taken
any other action permanently restraining, enjoining or otherwise prohibiting
the consummation of the Merger and such injunction or other action shall have
become final and non-appealable;
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(e) by either Genzyme or Biomatrix, by written notice to the
other, if the stockholders of Biomatrix shall not have adopted this Agreement
(a "BIOMATRIX STOCKHOLDER FAILURE EVENT") or Genzyme has not obtained the
Genzyme Stockholder Approvals (a "GENZYME STOCKHOLDER FAILURE EVENT") within
ninety (90) days after the later of (i) the date the Registration Statement
has been declared effective by the SEC or (ii) the date of the most recent
supplemental proxy materials the SEC requires Biomatrix or Genzyme to
distribute to its stockholders; PROVIDED, HOWEVER, that the right to terminate
this Agreement under this Section 10.1(e) shall not be available to any party
whose breach of a representation or warranty or failure to fulfill any
covenant or agreement under this Agreement has been the cause of or resulted
in the failure of stockholder adoption of this Agreement on or before such
date;
(f) by Genzyme, by written notice to Biomatrix, if Biomatrix's
Board of Directors (i) fails to include in the Proxy Statement/Prospectus its
recommendation that Biomatrix's stockholders vote to adopt this Agreement,
(ii) withdraws, modifies or qualifies in a manner materially adverse to
Genzyme its approval of or its recommendation that its stockholders vote for
the adoption of this Agreement, (iii) adopts resolutions approving or
otherwise authorizes or recommends an Alternative Transaction or (iv) fails to
recommend against a tender or exchange offer in any position taken pursuant to
Rules 14d-9 and 14e-2(a) under the Exchange Act;
(g) by Biomatrix, if as a result of a proposal for an Alternative
Transaction, the Board of Directors of Biomatrix shall have determined in good
faith, after receipt of the advice of outside legal counsel, that the
directors are obligated by their fiduciary duties in accordance with Delaware
law to terminate this Agreement; PROVIDED, HOWEVER, that it shall be a
condition precedent to the termination of this Agreement by Biomatrix pursuant
to this Section 10.1(g) that Biomatrix shall have provided Genzyme at least
five (5) days notice of its intention to exercise its right to terminate
pursuant to this Section 10.1(g);
(h) by Biomatrix, by written notice to Genzyme, if Genzyme's Board
of Directors (i) fails to include in the Proxy Statement/Prospectus its
recommendation that Genzyme's stockholders vote to approve the Reorganization
and the issuance of the GBS Division Common Stock pursuant to this Agreement
or (ii) withdraws, modifies or qualifies in a manner materially adverse to
Biomatrix its approval of or its recommendation that its stockholders vote for
the approval of the Reorganization and the issuance of the GBS Division Common
Stock pursuant to this Agreement; and
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(i) at any time with the written consent of Genzyme and Biomatrix.
10.2 EFFECT OF TERMINATION. If this Agreement is terminated as provided
in Section 10.1, this Agreement shall forthwith become void and have no
effect, without liability on the part of Genzyme and Biomatrix and their
respective directors, officers or stockholders, except that (a) the provisions
of this Article X, Article XI, Section 6.5 relating to expenses, Section 6.9
relating to publicity, and the Confidentiality Agreements shall survive, and
(b) no such termination shall relieve any party from liability by reason of
any willful breach by such party of any of its representations, warranties,
covenants or agreements contained in this Agreement.
10.3 EXPENSE REIMBURSEMENT.
(a) Biomatrix shall pay to Genzyme an amount equal to all
out-of-pocket expenses and fees incurred by Genzyme, including without
limitation fees and expenses payable to all legal, accounting, financial and
professional advisers, relating to the Merger or the transactions contemplated
by this Agreement not exceeding $2,000,000 in the aggregate, upon the
termination of this Agreement by Genzyme pursuant to Section 10.1(f).
(b) Genzyme shall pay to Biomatrix an amount equal to all
out-of-pocket expenses and fees incurred by Biomatrix, including without
limitation fees and expenses payable to all legal, accounting, financial and
professional advisers, relating to the Merger or the transactions contemplated
by this Agreement not exceeding $2,000,000 in the aggregate, upon the
termination of this Agreement by Biomatrix pursuant to Section 10.1(h).
(c) Any payments required by this Section 10.3 will be payable by
wire transfer of immediately available funds to an account designated by the
receiving party. Notwithstanding Section 6.5, Biomatrix and Genzyme agree that
if either party fails to promptly make any payment required under this Section
10.3 and the receiving party commences a suit against the paying party to
collect such payment, the losing party shall indemnify the prevailing party
for its costs and expenses (including attorney's fees and expenses) incurred
in connection with such suit and if the receiving party is the prevailing
party then the paying party shall pay the receiving party interest on the
amount of the payment at the prime rate of Fleet National Bank (or its
successors or assigns) in effect on the date the payment was payable pursuant
to this Section 10.3.
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10.4 BREAK-UP FEES.
(a) Biomatrix shall pay Genzyme a termination fee of $22,000,000
(less any amount paid pursuant to Section 10.3(a) if applicable) (the
"BREAK-UP FEE") upon the earliest to occur of the following events:
(i) the termination of this Agreement by Biomatrix pursuant
to Section 10.1(g), in which case the Break-Up Fee shall
be paid at the time of, and as a condition to, such
termination; or
(ii) the termination of this Agreement pursuant to Section
10.1(e) in connection with a Biomatrix Stockholder
Failure Event if at the time of the Biomatrix Failure
Event,
(A) there shall have been announced or commenced an
Alternative Transaction with a Third Party (as
defined below) and Biomatrix shall have executed
or consummated an agreement to engage in the same,
in which case the Break-Up Fee shall be paid at
the time of and, in the case of a termination by
Biomatrix as a condition to, such termination, or
(B) there shall have been announced or commenced an
Alternative Transaction with a Third Party and (x)
Biomatrix shall have engaged in, or entered into
an agreement to engage in, an Alternative
Transaction with such Third Party or any Affiliate
(as defined below) thereof or with a Competing
Party (as defined below) within twelve months
after the date of the Biomatrix Stockholder
Failure Event or (y) Biomatrix's Board of
Directors shall have recommended an Alternative
Transaction with the Third Party proposing such
Alternative Transaction or any Affiliate thereof
or with a Competing Party within twelve months
after the date of the Biomatrix Stockholder
Failure Event, in which case the Break-Up Fee will
be payable upon the occurrence of the event
referred to in (x) or (y) above; or
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(iii) the termination of this Agreement by Genzyme pursuant
to Section 10.1(f) if at the time of such termination,
(A) there shall have been announced or commenced, or
Biomatrix shall have received a proposal for, an
Alternative Transaction with a Third Party and
Biomatrix shall have executed or consummated an
agreement to engage in the same, in which case the
Break-Up Fee shall be paid at the time of such
termination, or
(B) there shall have been announced or commenced, or
Biomatrix shall have received a proposal for, an
Alternative Transaction with a Third Party and (x)
Biomatrix shall have engaged in, or entered into
an agreement to engage in, an Alternative
Transaction with such Third Party or any Affiliate
thereof or with a Competing Party within twelve
months after the date of such termination or (y)
Biomatrix's Board of Directors shall have
recommended an Alternative Transaction with the
Third Party proposing such Alternative Transaction
or any Affiliate thereof or with a Competing Party
within twelve months after the date of such
termination, in which case the Break-Up Fee will
be payable upon the occurrence of the event
referred to in (x) or (y) above.
(b) Genzyme shall pay Biomatrix a termination fee of
$22,000,000 (less any amount paid pursuant to Section 10.3(b) if applicable)
(the "GENZYME BREAK-UP FEE") upon the earlier to occur of the following events:
(i) the termination of this Agreement pursuant to Section
10.1(e) in connection with a Genzyme Stockholder Failure
Event if at the time of the Genzyme Stockholder Failure
Event,
(A) there shall have been announced or commenced a
Genzyme Alternative Transaction (as defined below)
with a Third Party and Genzyme shall have executed
or consummated an agreement to engage in the same,
in which case the Genzyme Break-Up Fee shall be
paid at the time of, and in the case of a
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termination by Genzyme as a condition to, such
termination, or
(B) there shall have been announced or commenced a
Genzyme Alternative Transaction with a Third Party
and (x) Genzyme shall have engaged in, or entered
into an agreement to engage in, a Genzyme Alternative
Transaction with such Third Party or any Affiliate
thereof or with a Competing Party within twelve
months after the date of such Genzyme Stockholder
Failure Event or (y) Genzyme's Board of Directors
shall have recommended an Alternative Transaction
with the Third Party proposing such Alternative
Transaction or any Affiliate thereof or with a
Competing Party within twelve months after the date
of such Genzyme Stockholder Failure Event, in which
case the Genzyme Break-Up Fee will be payable upon
the occurrence of the event referred to in (x) or (y)
above.
(ii) the termination of this Agreement pursuant to Section
10.1(h) by Biomatrix if at the time of such termination,
(A) there shall have been announced or commenced, or
Genzyme shall have received a proposal for, a
Genzyme Alternative Transaction with a Third Party
and Genzyme shall have executed or consummated an
agreement to engage in the same, in which case the
Genzyme Break-Up Fee shall be paid at the time of
such termination, or
(B) there shall have been announced or commenced, or
Genzyme shall have received a proposal for, a
Genzyme Alternative Transaction with a Third Party
and (x) Genzyme shall have engaged in, or entered
into an agreement to engage in, a Genzyme Alternative
Transaction with such Third Party or any Affiliate
thereof or with a Competing Party within twelve
months after the date of such termination or (y)
Genzyme's Board of Directors shall have
recommended an Alternative Transaction with the
Third Party proposing such Alternative Transaction
or any Affiliate thereof or
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with a Competing Party within twelve months after
the date of such termination, in which case the
Genzyme Break-Up Fee will be payable upon the
occurrence of the event referred to in (x) or (y)
above.
(c) As used in this Agreement, (A) "Genzyme Alternative
Transaction" means either (i) a transaction pursuant to which any Third Party
acquires 30% or more of the outstanding shares of GTR Division Common Stock
or GSP Division Common Stock, pursuant to a tender offer or exchange offer of
otherwise, (ii) a merger, consolidation or other combination with any Third
Party involving Genzyme or any Genzyme Subsidiary in which the holders of GTR
Division Common Stock or GSP Division Common Stock do not own at least a
majority of the equity of the entity that controls the GTR Division's
business or the GSP Division's business after completion of such transaction,
(iii) any other transaction pursuant to which any Third Party acquires
control of assets (including for this purpose the outstanding equity
securities of Subsidiaries of Genzyme) having a fair market value (as
determined by the Board of Directors of Genzyme in good faith) equal to more
than 30% of the fair market value of all the assets of the Combining Genzyme
Businesses immediately prior to such transaction; (B) "Third Party" means any
person (or group of persons) other than Genzyme or Biomatrix or their
Affiliates; (C) "Competing Party" shall mean, in the context of an
Alternative Transaction, any person other than Genzyme or its Affiliates who
announces or commences an Alternative Transaction, or with whom an
Alternative Transaction occurs, while an Alternative Transaction with a Third
Party is pending and, in the context of a Genzyme Alternative Transaction,
any person other than Biomatrix or its Affiliates who announces or commences
a Genzyme Alternative Transaction, or with whom a Genzyme Alternative
Transaction occurs while a Genzyme Alternative Transaction with a Third Party
is pending; and (D) "Affiliate" means, with respect to any person or entity,
any other person or entity that controls, is controlled by, or is under
common control with, such person or entity.
(d) Any payments required by this Section 10.4 will be payable
by the paying party by wire transfer of immediately available funds to an
account designated by the receiving party. Notwithstanding Section 6.5, Genzyme
and Biomatrix agree that if the paying party fails to promptly make any payment
required under this Section 10.4 and the receiving party commences a suit
against the paying party to collect such payment, the losing party shall
indemnify the prevailing party for its costs and expenses (including attorneys
fees and expenses) incurred in connection with such suit and if the receiving
party is the prevailing party then the paying party shall pay the receiving
party interest on the amount of the payment at the prime
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rate of Fleet National Bank (or its successors or assigns) in effect on the
date the payment was payable pursuant to this Section 10.4.
(e) The maximum amount payable by Biomatrix pursuant to
Section 10.3 and this Section 10.4 is subject to the limitations of Section
10 of the Stock Option Agreement.
10.5 AMENDMENT. This Agreement may not be amended except by an
instrument signed by each of the parties hereto by action taken by or on behalf
of their respective Boards of Directors; PROVIDED, HOWEVER, that after adoption
of this Agreement by the stockholders of Biomatrix, without the further approval
of the stockholders of Biomatrix, no amendment may be made that (a) alters or
changes the amount or kind of consideration to be received as provided in
Section 2.1, (b) alters or changes any term of the certificate of incorporation
of the Surviving Corporation to be effected by the Merger, if any, or (c) alters
or changes any of the terms and conditions of this Agreement if such alteration
or change would adversely affect the stockholders of Biomatrix.
10.6 WAIVER. At any time prior to the Effective Time, either party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto or (b) waive compliance with any of the
agreements of the other party or any conditions to its own obligations, in each
case only to the extent such obligations, agreements and conditions are intended
for its benefit; PROVIDED THAT any such extension or waiver shall be binding
upon a party only if such extension or waiver is set forth in a writing executed
by such party.
ARTICLE XI - MISCELLANEOUS
11.1 NO SURVIVAL. None of the representations and warranties of
Biomatrix or Genzyme contained herein shall survive the Effective Time, and only
those covenants and agreements contained herein that by their terms are to be
performed after the Effective Time shall survive the Effective Time.
11.2 NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed given when so delivered in
person, by overnight courier, by facsimile transmission (with receipt confirmed
by telephone or by automatic transmission report) or two business days after
being sent by registered or certified mail (postage prepaid, return receipt
requested), as follows:
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(a) if to Genzyme or Merger Sub, to:
Genzyme Corporation
Xxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attn: Xxxx X. Xxxxxxx, Xx., Executive Vice President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx & Dodge LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to Biomatrix, to:
Biomatrix, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Xx. Xxxxx X. Xxxxxx, Chairman and
Chief Executive Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy to:
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may by notice given in accordance with this Section 10.2 to the other
parties designate another address or person for receipt of notices hereunder.
11.3 ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the Merger and related
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transactions, and supersede all prior agreements, written or oral, between
the parties with respect thereto, other than the Confidentiality Agreements,
which shall survive execution of this Agreement, as they may be modified by
Section 6.11 hereof. Each party confirms that in entering into this
Agreement, such party has not relied on any representation, warranty or other
statement of any kind other than such representations, warranties and other
statements as are contained in this Agreement (including the schedules
hereto).
11.4 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of The Commonwealth of Massachusetts without regard
to its conflict of law provisions, except to the extent that the laws of the
State of Delaware apply to the Merger and the rights of Biomatrix stockholders
relative to the Merger.
11.5 BINDING EFFECT; NO ASSIGNMENT; NO THIRD-PARTY BENEFICIARIES.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted assigns.
This Agreement is not assignable without the prior written consent of the other
party hereto.
(b) Other than Section 6.16, nothing in this Agreement,
express or implied, is intended to or shall confer upon any person other than
Genzyme and Biomatrix and their respective successors and permitted assigns and
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
11.6 SECTION HEADINGS, CONSTRUCTION. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "SECTION" or "SECTIONS" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
11.7 COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, and both of which together shall
constitute one and the same instrument.
11.8 SEVERABILITY. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement shall remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
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full force and effect to the extent not held invalid or unenforceable. The
parties further agree to replace such invalid or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of such invalid or
unenforceable provision.
11.9 SUBMISSION TO JURISDICTION; WAIVER. Each of Biomatrix and
Genzyme irrevocably agrees that any legal action or proceeding with respect
to this Agreement or for recognition and enforcement of any judgment in
respect hereof brought by the other party hereto or its successors or assigns
may be brought and determined in the courts of The Commonwealth of
Massachusetts and each of Biomatrix and Genzyme hereby irrevocably submits
with regard to any action or proceeding for itself and in respect to its
property, generally and unconditionally, to the nonexclusive jurisdiction of
the aforesaid courts. Each of Biomatrix and Genzyme hereby irrevocably
waives, and agrees not to assert, by way of motion, as a defense,
counterclaim or otherwise, in any action or proceeding with respect to this
Agreement, (a) any claim that it is not personally subject to the
jurisdiction of the above-named courts for any reason other than the failure
to lawfully serve process, (b) that it or its property is exempt or immune
from jurisdiction of any such court or from any legal process commenced in
such courts (whether through service of notice, attachment prior to judgment,
attachment in aid of execution of judgment, execution of judgment or
otherwise), and (c) to the fullest extent permitted by applicable law, that
(i) the suit, action or proceeding in any such court is brought in an
inconvenient forum, (ii) the venue of such suit, action or proceeding is
improper and (iii) this Agreement, or the subject matter hereof, may not be
enforced in or by such courts.
11.10 WAIVER OF JURY TRIAL. Each party hereto waives its right to a
jury trial with respect to any action or claim arising out of any dispute in
connection with this Agreement, any agreement, contract or other document or
instrument executed in connection herewith, or any of the transactions
contemplated hereby.
11.11 ENFORCEMENT. The parties recognize and agree that if for any
reason any of the provisions of this Agreement are not performed in accordance
with their specific terms or are otherwise breached, immediate and irreparable
harm or injury would be caused for which money damages would not be an adequate
remedy. Accordingly, each party agrees that in addition to other remedies the
other party shall be entitled to an injunction restraining any violation or
threatened violation of the provisions of this Agreement. In the event that any
action shall be brought in equity to enforce the provisions of the Agreement,
neither party will allege, and each party hereby waives the defense, that there
is an adequate remedy at law.
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11.12 RULES OF CONSTRUCTION. (a) The parties hereto agree that they
have been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or ruling of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
(b) For purposes of this Agreement, with respect to any matter
that is clearly disclosed in any portion of the Biomatrix Disclosure Schedule or
Genzyme Disclosure Schedule in such a way as to make its relevance to the
information called for by another Section of this Agreement readily apparent,
such matter shall be deemed to have been included in the Biomatrix Disclosure
Schedule or Genzyme Disclosure Schedule in response to such other Section,
notwithstanding the omission of any appropriate cross-reference thereto.
(c) The phrase "to the best of Biomatrix's knowledge", to
Biomatrix's knowledge" and similar qualifiers shall mean and be limited to the
actual knowledge after reasonable inquiry of the persons identified in Section
11.12 of the Biomatrix Disclosure Schedule.
(d) The phrase "to the best of Genzyme's knowledge", to
Genzyme's knowledge" and similar qualifiers shall mean and be limited to the
actual knowledge after reasonably inquiry of the persons identified in Section
11.12 of the Genzyme Disclosure Schedule.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement and Plan
of Merger under seal as of the date first stated above.
GENZYME CORPORATION
By /s/ Xxxx X. Xxxxxxx, Xx.
--------------------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Executive Vice President
SEAGULL MERGER
CORPORATION
By /s/ Xxxx X. Xxxxxxx, Xx.
--------------------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: President
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Treasurer
BIOMATRIX, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman and Chief Executive
Officer, and Chief Scientific
Officer
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Name: Xxxx X. Xxxxx
Title: President
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Vice President, Finance, Chief
Financial Officer and Treasurer
EXHIBIT A-1
MANAGEMENT AND ACCOUNTING POLICIES GOVERNING
THE RELATIONSHIP OF GENZYME DIVISIONS
THE BOARD OF DIRECTORS OF GENZYME CORPORATION (THE "GENZYME BOARD") HAS
ADOPTED THE FOLLOWING POLICIES TO GOVERN THE MANAGEMENT OF GENZYME BIOSURGERY,
GENZYME GENERAL AND GENZYME MOLECULAR ONCOLOGY, AND THE RELATIONSHIPS BETWEEN
EACH DIVISION. EXCEPT AS OTHERWISE PROVIDED IN THE POLICIES, THE GENZYME BOARD
MAY MODIFY OR RESCIND THE POLICIES, OR ADOPT ADDITIONAL POLICIES, IN ITS SOLE
DISCRETION WITHOUT APPROVAL OF THE STOCKHOLDERS, SUBJECT ONLY TO THE GENZYME
BOARD'S FIDUCIARY DUTY TO THE STOCKHOLDERS OF GENZYME CORPORATION.
1. PURPOSE OF GENZYME BIOSURGERY, GENZYME GENERAL AND GENZYME
MOLECULAR ONCOLOGY. The purpose of Genzyme Biosurgery is to create a business
with a comprehensive approach to the field of biosurgery by developing and
commercializing a portfolio of products for the treatment and prevention of
serious tissue injury (excluding products developed on behalf of GDP) and a
portfolio of devices, biomaterials, biotherapeutics and other products for the
field of biosurgery; these products and services include (i) the products and
services offered or under development by Biomatrix, Inc. as of ________, 2000,
and included in the Descriptive Memorandum furnished by it to Genzyme
Corporation, and (ii) products and services offered or under development by
Genzyme Corporation's former Genzyme Tissue Repair Division and Genzyme
Corporation's former Genzyme Surgical Products Division as of ________, 2000.
The purpose of Genzyme General is to develop and market therapeutic products
and diagnostic services and products. The purpose of Genzyme Molecular
Oncology is to create a focused, integrated oncology business that will
develop and commercialize novel therapeutic and diagnostic products and
services based upon molecular tools and genomic information. In addition to
the programs initially assigned to each of Genzyme Biosurgery and Genzyme
Molecular Oncology, it is expected that the product and service portfolio of
each division will expand through the addition of complementary programs,
products and services developed either within or outside of the division,
including acquiring or in-licensing programs, products and services from
outside of Genzyme Corporation. Each of Genzyme Biosurgery and Genzyme
Molecular Oncology will be operated and managed similarly to Genzyme General
except as provided herein.
2. REVENUE ALLOCATION. Revenues from the sale or licensing of a
division's products and services to entities external to Genzyme Corporation
shall be credited to that division. Products and services normally sold by a
division to entities external to Genzyme Corporation that are used by other
divisions within Genzyme Corporation shall be recorded as interdivisional
revenues and interdivisional purchases subject to the policy regarding Other
Interdivisional Transactions.
3. EXPENSE ALLOCATION. Direct Expenses shall be charged to the
division for whose benefit the Direct Expenses have been incurred. Expenses
other than Direct Expenses shall be subject to the policy regarding Other
Interdivisional Transactions.
4. ASSET ALLOCATION. Assets that are exclusively dedicated to the
production of goods and services of a division shall be allocated to that
division. Production assets that are utilized by more than one division shall
be subject to the policy regarding Other Interdivisional Transactions.
5. TAX ALLOCATIONS. Income taxes shall be allocated to each division
based upon the financial statement income, taxable income, credits and other
amounts properly allocable to such division under generally accepted
accounting principles as if each division were a separate taxpayer; provided,
however, that as of the end of any fiscal quarter of Genzyme Corporation, any
projected annual tax benefit attributable to any division that cannot be
utilized by such division to offset or reduce its current or deferred income
tax expense may be allocated to the other divisions in proportion to their
taxable income without any compensating payment or allocation.
6. ACQUISITIONS OF PROGRAMS, PRODUCTS OR ASSETS. Upon the acquisition
by Genzyme Corporation from a third party of any programs, products or assets
(whether by acquisitions of assets or stock, merger, consolidation or
otherwise), the aggregate cost of the acquisition and the programs, products
or assets acquired shall be allocated among the divisions of Genzyme
Corporation. In the case of material acquisitions, such allocation shall be
made in a manner determined by the Genzyme Board to be fair and reasonable to
each division and to the holders of the common stock representing each
division, taking into account such matters as the Genzyme Board and its
financial advisors, if any, deem relevant. Any such determination will be
final and binding on the holders of common stock.
7. DISPOSITION OF PROGRAMS, PRODUCTS OR ASSETS. Upon the sale,
transfer, assignment or other disposition by Genzyme Corporation of any
program, product or asset not consisting of all or substantially all of the
assets of the division, all proceeds from such disposition shall be allocated
to the division to which the program, product or asset had been allocated
among such divisions based on their respective interests in such program,
product or asset. Such allocations shall be made in a manner determined by the
Genzyme Board to be fair and reasonable to such divisions and to holders of
the common stock representing such divisions, taking into account such matters
as the Genzyme Board and its financial advisors, if any, deem relevant. Any
such determination by the Genzyme Board will be final and binding on the
holders of common stock.
8. INTERDIVISIONAL ASSET TRANSFERS. The Genzyme Board may at any time
and from time to time reallocate any program, product or other asset from one
division to any other division. All such reallocations shall be done at fair
market value, determined by the Genzyme Board, taking into account, in the
case of a program under development, the commercial potential of such program,
the phase of clinical development of such program, the expenses associated
with realizing any income from such program, the likelihood and timing of any
such realization and other matters that the Genzyme Board and its financial
advisors, if any, deem relevant. The consideration for such reallocation may
be paid by one division to another in cash or other consideration with a value
equal to the fair market value of the assets being reallocated or, in the case
of a reallocation of assets from Genzyme General to Genzyme Biosurgery or
Genzyme Molecular Oncology, the Genzyme Board may elect to account for such
reallocation as
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an increase in the Designated Shares representing the division to which such
assets are reallocated in accordance with the provisions of Genzyme
Corporation's articles of organization.
Notwithstanding the foregoing, no Key GMO Program, as defined below, may be
transferred out of Genzyme Molecular Oncology without a class vote of the
holders of the common stock representing Genzyme Molecular Oncology (the "GZMO
Stock") unless the Genzyme Board determines that such Key GMO Program has
application outside of the field of oncology, in which case it may be
transferred out only for the non-oncology applications; provided, however that
the SAGE Service (as herein defined) may not be transferred out of Genzyme
Molecular Oncology for any application without the approval of the holders of
the GZMO Stock voting as a separate class.
A "Key GMO Program" is any of the following: (i) use of the Serial Analysis of
Gene Expression ("SAGE-TM-") technology licensed from The Xxxxx Xxxxxxx
University School of Medicine for third parties ("SAGE Service"); (ii) the
clinical program developing adenovirus vectors containing the tumor antigens
Ad-MART 1 or Ad-gp100 for the treatment of melanoma; (iii) the "suicide" gene
therapy research program developing adenovirus and lipid vectors containing
genes to enhance chemotherapy for oncology indications; (iv) the research
program developing adenovirus and lipid vectors containing tumor suppressor
genes for oncology indications; (v) the research program developing adenovirus
and lipid vectors containing genes to regulate the immune system for oncology
indications, including heat shock proteins; (vi) the research program
developing antibody-based gene therapy for the treatment of tumors; and (vii)
any additional program, product or service being developed from time to time
in Genzyme Molecular Oncology which (a) constituted 20% or more of the
research and development budget of Genzyme Molecular Oncology in any one of
the three most recently completed fiscal years or (b) has had a cumulative
investment of $8 million or more in research and development expenses by
Genzyme Molecular Oncology.
The foregoing policies regarding transfers of assets between divisions will
not be changed by the Genzyme Board without the approval of the holders of the
common stock representing Genzyme Biosurgery (the "GZBS Stock") and the GZMO
Stock, each voting as a separate class; provided, however, that if a policy
change affects one, but not both of, Genzyme Biosurgery and Genzyme Molecular
Oncology, only holders of shares representing the affected division will be
entitled to vote on such matter.
9. OTHER INTERDIVISIONAL TRANSACTIONS. This policy shall cover
interdivisional transactions other than asset transfers, which shall be
subject to the policy regarding Interdivisional Asset Transfers. From time to
time, a division may engage in transactions directly with one or more other
divisions or jointly with one or more other divisions and one or more third
parties. Such transactions may include agreements by one division to provide
products and services for use by another division and joint venture or other
collaborative arrangements involving more than one division to develop new
products and services jointly and with third parties. Such transactions shall
be subject to the following conditions:
(a) Research and development (including clinical and
regulatory support), distribution, sales, marketing, and general and
administrative services (including allocated space) performed by one division
for the benefit of another division will be charged to the division for
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which work is performed on a cost basis. Direct costs shall be allocated in a
manner described above under "Expense Allocation" and such division performing
the work will not recognize revenue as a result of performing such work.
Direct labor and indirect costs shall be allocated in a reasonable and
consistent manner based on the utilization by the division of the services to
which such costs relate. The division performing such work will not recognize
revenue as a result of performing such work.
(b) Manufacturing of goods and services by one division
exclusively for the benefit of another division and not for external sale
shall be charged to the division for which the work is performed on a cost
basis. Manufacturing costs shall include an interest charge on the gross fixed
assets employed in such manufacturing process. Gross fixed assets in this case
shall be determined at the beginning of each fiscal year for the facility
used. The interest rate in this case shall be the short term borrowing rate of
Genzyme Corporation at the beginning of each fiscal year. Direct labor and
indirect costs shall be allocated in a reasonable and consistent manner based
on the receipt of benefit by the division of the goods and services to which
such costs relate. The division performing such work will not recognize
revenue as a result of performing such work.
(c) Other than Research and development (including clinical
and regulatory support) distribution, sales, marketing, general and
administrative services (including allocated space), interdivisional
transactions shall be on terms and conditions that would be obtainable in
transactions negotiated at arm's length with unaffiliated third parties. The
division performing such work will not recognize revenue as a result of
performing such work.
(d) Any interdivisional transaction (i) to be performed on
terms and conditions that deviate from the policies set forth in subparagraphs
(a), (b) or (c) above and (ii) that is material to one or more of the
participating divisions will require approval by the Genzyme Board, which
approval shall include a determination by the Genzyme Board that the
transaction is fair and reasonable to each participating division and to the
holders of the common stock representing each such division.
(e) Loans may be made from time to time between divisions.
Any such loan of $1 million or less will mature within 18 months and interest
will accrue at the best borrowing rate available to Genzyme Corporation for a
loan of like type and duration. Amounts borrowed in excess of $1 million will
require approval of the Genzyme Board, which approval shall include a
determination by the Genzyme Board that the material terms of such loan,
including the interest rate and maturity date, are fair and reasonable to each
participating division and to holders of the common stock representing such
division.
(f) All material interdivisional transactions shall be
reduced to service contracts and signed by an authorized member of the
management team of affected divisions.
10. ACCESS TO TECHNOLOGY AND KNOW-HOW. Each division of Genzyme
Corporation shall have unrestricted access to all technology and know-how of
the Corporation that may be made useful to such division's business, subject
to any obligations or limitations applicable to Genzyme Corporation and its
divisions.
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11. DISPOSITION OF GZBS AND GZMO DESIGNATED SHARES.
(a) The GZBS Designated Shares and the GZMO Designated
Shares may be (i) issued upon the exercise or conversion of outstanding stock
options, warrants or convertible securities allocated to Genzyme General, (ii)
subject to the restrictions set forth in Paragraph 13, sold for any valid
business purpose, or (iii) distributed as a dividend to the holders of shares
of the common stock representing Genzyme General (the "GENZ Stock"), all as
determined from time to time by the Genzyme Board in its sole discretion.
(b) If, as of ____________ __ of each year starting on
__________ __, 2000, the number of GZBS Designated Shares on such date exceeds
the sum of (i) ten percent (10%) of the number of shares of GZBS Stock then
issued and outstanding and (ii) the number of shares of GZBS Stock issuable on
such date with respect to stock options, stock purchase rights, warrants or
other securities convertible into or exercisable for shares of GZBS Stock
outstanding on such date, substantially all GZBS Designated Shares will be
distributed to holders of record of GENZ Stock, subject to reservation of a
number of such shares equal to the sum of (x) the number of GZBS Designated
Shares reserved for issuance with respect to stock options, stock purchase
rights, warrants or other securities convertible into or exercisable for
shares of GENZ Stock outstanding on such date ("GENZ Convertible Securities")
as a result of anti-dilution adjustments required by the terms of such
instruments or approved by the Genzyme Board and (y) the number of GZBS
Designated Shares reserved by the Genzyme Board as of such date for sale not
later than six months after such date, the proceeds of which sale will be
allocated to Genzyme General.
(c) If, as of November 30 of each year, the number of GZMO
Designated Shares on such date exceeds the sum of (i) ten percent (10%) of the
number of shares of GZMO Stock then issued and outstanding and (ii) the number
of shares of GZMO Stock issuable on such date with respect to stock options,
stock purchase rights, warrants or other securities convertible into or
exercisable for shares of GZMO Stock outstanding on such date, substantially
all GZMO Designated Shares will be distributed to holders of record of GENZ
Stock, subject to reservation of a number of such shares equal to the sum of
(x) the number of GZMO Designated Shares reserved for issuance upon the
exercise or conversion of GENZ Convertible Securities as a result of
anti-dilution adjustments required by the terms of such instruments or
approved by the Genzyme Board and (y) the number of GZMO Designated Shares
reserved by the Genzyme Board as of such date for sale not later than six
months after such date, the proceeds of which sale will be allocated to
Genzyme General.
12. ISSUANCE AND SALE OF ADDITIONAL SHARES OF COMMON STOCK. When
additional shares of common stock are issued and sold by Genzyme Corporation,
Genzyme Corporation will identify (i) the number of such shares issued and
sold for the account of the division to which they relate, the proceeds of
which will be allocated to and reflected in the financial statements of such
division and (ii) the number of such shares issued and sold that shall reduce
the number of Designated Shares of such division. Notwithstanding the
foregoing, Genzyme will not sell any GZBS Designated Shares or GZMO Designated
Shares (except upon exercise or conversion of options, warrants or convertible
securities issued by Genzyme General that were adjusted as a result of a
dividend of GZBS or GZMO Stock paid to holders of GENZ Stock) unless (i) the
Genzyme Board determines that Genzyme Biosurgery or Genzyme Molecular
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Oncology, as the case may be, has cash sufficient to fund its operations for
at least the next 12 months or (ii) shares of GZBS Stock or GZMO Stock, as the
case may be, are concurrently being sold for the account of Genzyme Biosurgery
or Genzyme Molecular Oncology, respectively, in an amount that will produce
proceeds sufficient to fund such division's cash needs for the next 12 months.
13. OPEN MARKET PURCHASES OF SHARES OF COMMON STOCK. Genzyme
Corporation may make open market purchases of its common stock in accordance
with applicable securities law requirements; provided, however, that in no
event shall any such purchases be made if as an immediate result thereof the
number of Designated Shares representing a division will exceed 60% of the
number of shares of such division outstanding plus such number of Designated
Shares. Notwithstanding the foregoing, within 90 days of any open market
purchase of the common stock representing any division, Genzyme Corporation
may not exercise the right provided under its articles of organization to
exchange shares representing such division for cash and/or shares of GENZ
Stock.
14. CLASS VOTING. In addition to any stockholder approval required by
Massachusetts law, whenever the approval of the holders of the common stock
representing a division is required to take any action pursuant to these
policies or Genzyme Corporation's articles of organization, such requirement
shall be satisfied if a meeting of the holders of the common stock
representing such division is held at which a quorum is present and the votes
cast in favor of the proposed action exceed the votes cast against.
15. NON-COMPETE. Genzyme Biosurgery, Genzyme General and Genzyme
Molecular Oncology shall not engage to any material extent in each other's
principal businesses other than through joint ventures or other collaborative
arrangements involving more than one division to develop new products and
services jointly and with third parties, which transactions shall be subject
to the conditions set forth in Paragraph 9. The divisions may compete in a
business which is not a principal business of another division. The Genzyme
Board may determine in its good faith business judgment whether any particular
activities of one division involve a material engagement in the principle
businesses of another division.
16. CORPORATE OPPORTUNITIES. The Genzyme Board will review any matter
which involves the allocation of a corporate opportunity to any of the
divisions, or in part to one division and in part to another division. In
accordance with Massachusetts law, the Genzyme Board will make its
determination with regard to the allocation of any such opportunity and the
benefit of any such opportunity in accordance with its good faith business
judgment of the best interests of Genzyme and all of its stockholders as a
whole. Among the factors that the Genzyme Board may consider in making this
allocation are (i) whether a particular corporate opportunity is principally
related to the business of Genzyme Biosurgery, Genzyme General or Genzyme
Molecular Oncology; (ii) whether one division, because of its managerial or
operational expertise, will be better positioned to undertake the corporate
opportunity; (iii) whether one division, because of its financial resources,
will be better positioned to undertake the corporate opportunity; and (iv)
existing contractual agreements and restrictions.
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EXHIBIT A-2
TERMS OF THE GENZYME BIOSURGERY DIVISION COMMON STOCK
E. GENZYME BIOSURGERY DIVISION COMMON STOCK
1. AUTHORIZED AMOUNTS AND DESIGNATIONS. __________ million
(______,000,000) shares of Common Stock are designated as a series of Common
Stock with the following designation: Genzyme Biosurgery Division Common Stock
(the "GBS Stock"). To the extent legally permitted, such number of shares may
be increased or decreased by vote of the Board of Directors, PROVIDED that no
decrease shall reduce the number of shares of GBS Stock to a number less than
the number of shares of such series then outstanding plus the number of shares
of such series reserved for issuance upon the exercise of outstanding options,
rights or warrants or upon the conversion of any outstanding securities issued
by the Corporation convertible into GBS Stock.
2. DIVIDENDS AND DISTRIBUTIONS. Subject to the express terms of any
outstanding series of Preferred Stock, dividends may be declared and paid upon
the GBS Stock, in such amounts and at such times as the Board of Directors may
determine, only out of the lesser of (a) funds of the Corporation legally
available therefor and (b) the Available GBS Dividend Amount.
3. VOTING RIGHTS. The holders of GBS Stock, voting together with the
holders of shares of all other series of Common Stock as a single class of
stock, shall have the exclusive right to vote for the election of directors
and on all other matters requiring action by the stockholders or submitted to
the stockholders for action, except as may be determined by the Board of
Directors in establishing any series of Common or Preferred Stock or as may
otherwise be required by law. Each share of GBS Stock shall entitle the holder
thereof to .50 votes through December 31, 2000. On January 1, 2001 and on each
January 1 every two years thereafter, the number of votes to which the holder
of each share of GBS Stock shall be entitled shall be adjusted and fixed for
two-year periods to equal the quotient (expressed as a decimal and rounded to
the nearest two decimal places) obtained by dividing (i) the Fair Market Value
of one share of GBS Stock by (ii) the Fair Market Value of one share of GGD
Stock as of such date. If no shares of GGD Stock are outstanding on such date,
then all other series of voting Common Stock outstanding on such date shall
have a number of votes such that each share of the series of outstanding
Common Stock that has the highest Fair Market Value per share on such date
(the "Base Series") shall have one vote and each share of each other series of
outstanding Common Stock shall have the number of votes determined according
to the immediately preceding sentence, treating, for such purpose, the Base
Series as the GGD Stock in such sentence. If shares of GBS Stock are entitled
to vote separately as a class, each share of GBS Stock shall have one vote.
4. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, the
rights of the holders of GBS Stock shall be as follows:
(a) After the Corporation has satisfied or made provision for
its debts and obligations and for the payment to the holders of shares of any
class or series of capital stock having preferential rights to receive
distributions of the net assets of the Corporation (including
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any accumulated and unpaid dividends), the holders of GBS Stock shall be
entitled to receive the net assets of the Corporation remaining for
distribution, on a per share basis in proportion to the respective liquidation
units per share of all series of Common Stock. Each share of GBS Stock shall,
subject to this Section IV.E.4(a), have 50 liquidation units.
(b) For the purposes of Section IV.E.4(a), any merger or
business combination involving the Corporation or any sale of all or
substantially all of the assets of the Corporation shall not be treated as a
liquidation.
5. SPECIAL VOTING RIGHTS. The Corporation shall not, without approval
by the holders of the GBS Stock at a meeting at which a quorum is present and
the votes cast in favor of the proposal exceed those cast against:
(a) allow any proceeds from the Disposition of the properties or
assets allocated to Genzyme Biosurgery Division to be used in the business of
any other Division without fair compensation being allocated to Genzyme
Biosurgery Division as determined by the Board of Directors;
(b) allow any properties or assets allocated to Genzyme
Biosurgery Division to be used in the business of any other Division or for
the declaration or payment of any dividend or distribution on any series of
Common Stock other than the GBS Stock without fair compensation being
allocated to Genzyme Biosurgery Division as determined by the Board of
Directors;
(c) issue, sell or otherwise distribute shares of GBS Stock
without allocating the proceeds or other benefits of such issuance, sale or
distribution to Genzyme Biosurgery Division; PROVIDED, HOWEVER, that the
Corporation may without such approval issue GBS Designated Shares;
(d) change the rights or preferences of the GBS Stock so as to
affect the GBS Stock adversely; or
(e) effect any merger or business combination involving the
Corporation as a result of which (i) the holders of all series of Common Stock
of the Corporation shall no longer own, directly or indirectly, at least fifty
percent (50%) of the voting power of the surviving corporation and (ii) the
holders of all series of Common Stock of the Corporation do not receive the
same form of consideration, distributed among such holders in proportion to
the Market Capitalization of each series of Common Stock as of the date of the
first public announcement of such merger or business combination.
Notwithstanding the foregoing, if the Corporation receives an opinion
of Qualified Tax Counsel that, by reason of any Tax Law Change, the special
voting rights of the GBS Stock set forth in this subsection 5 would cause a
Tax Event absent the termination of such rights, then the Corporation may, by
vote of a majority of the stock outstanding and entitled to vote thereon,
voting together as a single class, authorize an amendment to these Articles of
Organization to effect the termination of such rights in order to avoid the
occurrence of such Tax Event. Any such amendment shall not be deemed to change
the rights or preferences of the GBS Stock so as to affect the GBS Stock
adversely as contemplated by either Section IV.E.5(d) or Section 77 of the
Massachusetts Business Corporation Law.
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6. EXCHANGE OR REDEMPTION OF GBS STOCK. Shares of GBS Stock are
subject to exchange or redemption upon the terms and conditions set forth
below:
(a) OPTIONAL EXCHANGE OF GBS STOCK.
(1) The Board of Directors may at any time, including
without limitation in the event of the reallocation, in one transaction or a
series of related transactions, by the Corporation and/or its subsidiaries of
all or substantially all of the properties and assets allocated to Genzyme
Biosurgery Division to any other Division of Genzyme (a "GBS Reallocation"),
declare that each of the outstanding shares of GBS Stock shall be exchanged,
on an Exchange Date, as determined by the Board of Directors, for (a) a number
of fully paid and nonassessable shares of GGD Stock (calculated to the nearest
five decimal places) equal to (1) 130% of the Fair Market Value of one share
of the GBS Stock (the "GBS Optional Exchange Amount") as of the date of the
first public announcement by the Corporation (the "GBS Optional Exchange
Announcement Date") of such exchange divided by (2) the Fair Market Value of
one share of GGD Stock as of such GBS Optional Exchange Announcement Date or
(b) cash equal to the GBS Optional Exchange Amount, or (c) any combination of
GGD Stock and cash equal to the Optional Exchange Amount as determined by the
Board of Directors.
(2) If the Corporation receives an opinion of Qualified
Tax Counsel that a Tax Event has occurred by reason of any Tax Law Change,
then the Board of Directors may at any time declare that each of the
outstanding shares of GBS Stock shall be exchanged, on an Exchange Date, as
determined by the Board of Directors, hereof, for a number of fully paid and
nonassessable shares of GGD Stock (calculated to the nearest five decimal
places) equal to (1) the Fair Market Value of one share of the GBS Stock as of
the date of the first public announcement by the Corporation of such exchange
divided by (2) the Fair Market Value of one share of GGD Stock as of such date.
(3) At any time at which all of the assets and liabilities
attributed to Genzyme Biosurgery Division (and no other assets or liabilities
of the Corporation or any subsidiary thereof) are held directly or indirectly
by one or more wholly-owned subsidiaries of the Corporation (each, a "GBS
Subsidiary"), the Board of Directors may, provided that there are funds of the
Corporation legally available therefor, exchange on an Exchange Date, as
determined by the Board of Directors, all of the outstanding shares of GBS
Stock for all of the shares of common stock of each GBS Subsidiary outstanding
immediately prior to such exchange of shares, such shares of common stock of
each GBS Subsidiary to be delivered to the holders of shares of GBS Stock on
the Exchange Date either directly or indirectly through the delivery of shares
of another GBS Subsidiary that owns directly or indirectly all such shares,
and to be divided among the holders of GBS Stock on a pro rata basis in
accordance with the number of shares of GBS Stock held by each such holder on
such Exchange Date, each of which shares of common stock of such GBS
Subsidiary shall be, upon such delivery, fully paid and nonassessable.
(b) MANDATORY EXCHANGE OR REDEMPTION OF OR PAYMENT OF DIVIDEND
ON GBS STOCK.
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(1) GBS MANDATORY PAYMENT. In the event of the
Disposition, in one transaction or a series of related transactions, by the
Corporation and/or its subsidiaries of all or substantially all of the
properties and assets allocated to Genzyme Biosurgery Division to any person,
entity or group (other than a Disposition of a type set forth in subsection
(2) of this subsection (b)), on or prior to the 60th Business Day, or such
earlier date required under this Section IV.E.6, following the date of the GBS
Mandatory Payment Announcement (as defined in Section IV.E.6(d)(2)), the
Corporation shall, as determined in its discretion by the Board of Directors
which must select one of the following such alternatives:
(a) provided that there are funds of the Corporation
legally available therefor, pay to the holders of the shares of GBS Stock a
dividend on a pro rata basis in accordance with the number of shares of GBS
Stock held by each such holder in cash and/or in securities (other than shares
of a series of Common Stock) or other property having a Fair Market Value as
of the date of the Disposition in the aggregate equal to the Fair Market Value
as of the date of the Disposition of the GBS Net Proceeds of such Disposition;
or
(b) provided that there are funds of the Corporation
legally available therefor,
(i) if such Disposition involves all (not
merely substantially all) of the properties and assets attributed to Genzyme
Biosurgery Division, redeem or exchange as of a Redemption Date determined by
the Board of Directors, all outstanding shares of GBS Stock in exchange for,
on a pro rata basis, cash and/or securities (other than shares of a series of
Common Stock) or other property having a Fair Market Value as of the date of
the Disposition in the aggregate equal to the Fair Market Value as of the date
of the Disposition of the GBS Net Proceeds of such Disposition; or
(ii) if such Disposition involves substantially
all (but not all) of the properties and assets attributed to Genzyme
Biosurgery Division, redeem or exchange as of a Redemption Date as determined
by the Board of Directors such number of whole shares of GBS Stock (which may
be all, but not more than all, of such shares outstanding) as have in the
aggregate an average Closing Price during the period of ten (10) consecutive
Trading Days beginning on the first Trading Day immediately following the date
of the Estimated GBS Net Proceeds Announcement (as defined in Section
IV.E.6(d)(2)) closest to the Fair Market Value as of the date of the
Disposition of the GBS Net Proceeds of such Disposition in consideration for,
on a pro rata basis, cash and/or securities (other than shares of a series of
Common Stock) or other property having a Fair Market Value as of the date of
the Disposition in the aggregate equal to such Fair Market Value of the GBS
Net Proceeds; or
(c) declare that each outstanding share of GBS Stock
shall be exchanged as of an Exchange Date as determined by the Board of
Directors into a number of fully paid and nonassessable shares of GGD Stock
equal to 110% of the ratio (calculated to the nearest five decimal places) of
the average Closing Price of one share of GBS Stock over the period of ten
(10) consecutive Trading Days beginning on the first Trading Day immediately
following the date of the Estimated GBS Net Proceeds Announcement (as defined
in Section IV.E.6(d)(2)) to the average Closing Price of one share of GGD
Stock over the same ten Trading Day period.
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Any redemption or exchange of or dividend payment on GBS Stock made pursuant
to this Section IV.E.6(b)(1) or Section IV.E.6(c)(3) is hereinafter referred
to as a "GBS Mandatory Payment." Notwithstanding the foregoing provisions of
this Section IV.E.6(b), the Corporation shall redeem GBS Stock as provided by
Section IV.E.6(b)(1)(b) only if the amount to be paid pursuant to such
redemption is less than or equal to the GBS Available Dividend Amount as of
the Redemption Date.
(2) EXCEPTIONS TO MANDATORY PAYMENT. Notwithstanding the
foregoing Section IV.E.6(b)(1) or Section IV.E.6(c)(3), a GBS Mandatory
Payment shall not be required by the occurrence of a Disposition:
(a) by the Corporation of all or substantially all of
the Corporation's properties and assets in one transaction or a series of
related transactions, including such Disposition in connection with the
dissolution, liquidation or winding up of the Corporation and the distribution
of assets to stockholders as referred to in Section IV.E.4;
(b) of the properties and assets attributed to
Genzyme Biosurgery Division as contemplated by Section IV.E.6(a)(3) or
otherwise to all holders of GBS Stock divided among such holders on a pro rata
basis in accordance with the number of shares GBS Stock outstanding;
(c) to any person or entity controlled (as determined
by the Board of Directors) by the Corporation;
(d) in connection with a Related Business Transaction
in respect of Genzyme Biosurgery Division; or
(e) that is conditioned upon the affirmative vote of
the holders of GBS Stock, voting as a separate class.
(c) TERMINATION OF CASH EXCHANGE RIGHT. If the Corporation
receives an opinion of Qualified Tax Counsel that, by reason of any Tax Law
Change, the right or obligation of the Corporation to exchange GBS Stock for
cash, securities or other property pursuant to Section IV.E.6(a)(1) or (3) or
IV.E.6(b) (each, a "GBS Cash Exchange Right") would cause a Tax Event if not
terminated, then the Board of Directors may at any time, by a vote of a
majority of the directors then in office, elect to terminate any or all such
GBS Cash Exchange Rights, with the result that the Corporation shall
thereafter have, depending on which GBS Cash Exchange Right(s) is (are) so
terminated:
(1) under Section IV.E.6(a)(1) only the right to cause the
exchange of GBS Stock for GGD Stock and not for cash, securities or other
property other than capital stock of the Corporation,
(2) no right to effect an exchange under Section
IV.E.6(a)(3), and/or
(3) no right or obligation to effect a GBS Mandatory
Payment under Section IV.E.6(b), provided that if the Board shall no longer
have the right or obligation to effect a GBS Mandatory Payment under Section
IV.E.6(b), then if a GBS Mandatory Payment
-5-
thereunder shall otherwise be or have been required, the Corporation instead
shall have the obligation to effect on or prior to the first Business Day
after the 90th day following the consummation of such Disposition, a GBS
Mandatory Payment pursuant to which it shall exchange each outstanding share
of GBS Stock for a number of fully paid and nonassessable shares of GGD Stock
(calculated to the nearest five decimal places) equal to (i) the Fair Market
Value of one share of the GBS Stock as of the date of the first public
announcement of such Disposition by the Corporation by press release divided
by (ii) the Fair Market Value of one share of GGD Stock as of such date.
Notwithstanding the foregoing, the Board of Directors may not terminate any
GBS Cash Exchange Right during the period commencing on the date of a
Disposition requiring a GBS Mandatory Payment until the date upon which the
related GBS Mandatory Payment is effected by the Corporation.
(d) EXCHANGE AND REDEMPTION PROCEDURES.
(1) If the Corporation determines to exchange shares of
GBS Stock pursuant to Section IV.E.6(a), the Corporation shall cause notice to
be sent not less than 30 nor more than 60 days prior to the Exchange Date in
the form and manner set forth in Section IV.F.1, and the procedures governing
such exchange shall be those set forth in Section IV.F.1.
(2) Not later than the 20th Business Day following the
consummation of a Disposition described in Section IV.E.6(b)(1) with respect
to Genzyme Biosurgery Division, the Corporation shall announce publicly by
press release (1) the estimated GBS Net Proceeds, (2) the number of
outstanding shares of GBS Stock and (3) the number of shares of GBS Stock into
or for which Convertible Securities are then convertible, exchangeable or
exercisable and the conversion, exchange or exercise price thereof (the
"Estimated GBS Net Proceeds Announcement"). Not earlier than the day
immediately following the 10th Trading Day, nor later than the 15th Trading
Day, following the date of the Estimated GBS Net Proceeds Announcement, the
Corporation shall announce publicly by press release which of the actions
specified in Section IV.E.6(b)(1) that it has irrevocably determined to make
in respect of such Disposition (the "GBS Payment Method Announcement").
(3) If the Corporation determines to pay a dividend
pursuant to Section IV.E.6(b)(1)(a), the Corporation shall, not later than the
15th Trading Day following the date of the Estimated GBS Net Proceeds
Announcement, cause notice to be sent to the holders of shares of GBS Stock
and to each holder of Convertible Securities that are convertible into or
exchangeable or exercisable for shares of GBS Stock (unless alternate
provision for such notice to the holders of such Convertible Securities is
made pursuant to the terms of such Convertible Securities), setting forth (1)
the record date for determining holders entitled to receive such dividend,
which shall be not earlier than the 10th Trading Day and not later than the
20th Trading Day following the date of such notice, (2) the anticipated
payment date of such dividend (which shall not be more than 60 Business Days
following the date of the GBS Payment Method Announcement), (3) the type and
amount of property to be paid as such dividend in respect of the outstanding
shares of GBS Stock, (4) the GBS Net Proceeds, (5) the number of outstanding
shares of GBS Stock and the number of shares of GBS Stock into or for which
outstanding Convertible Securities are then convertible, exchangeable or
exercisable and the conversion,
-6-
exchange or exercise price thereof and (6) in the case of notice to be given
to holders of Convertible Securities, a statement to the effect that a holder
of such Convertible Securities shall be entitled to receive such dividend only
if such holder properly converts, exchanges or exercises such Convertible
Securities (unless the terms of a Convertible Security provide otherwise) on
or prior to the record date referred to in clause (1) of this sentence. Except
as provided in the preceding sentence, such notice shall conform with the
provisions governing notice at Section IV.F.1 and the provisions governing the
payment of such dividend shall be those set for in such Section IV.F.1 to the
extent such provisions are applicable to the payment of a dividend.
(4) If the Corporation determines to redeem shares of GBS
Stock pursuant to Section IV.E.6(b)(1)(b)(i), the Corporation shall, not later
than the 15th Trading Day following the date of the Estimated GBS Net Proceeds
Announcement, cause notice to be sent in the form and manner set forth in
Section IV.F.1, and the procedures governing such redemption shall be those
set forth in Section IV.F.1; PROVIDED, however, the Redemption Date shall not
be more than 60 Business Days following the date of the GBS Payment Method
Announcement. Such notice shall also state the GBS Net Proceeds.
(5) If the Corporation determines to redeem shares of GBS
Stock pursuant to Section IV.E.6(b)(1)(b)(ii), the Corporation shall, not
later than the 15th Trading Day following the date of the GBS Estimated Net
Proceeds Announcement, cause notice to be sent in the form and manner set
forth in Section IV.F.1, and the procedures governing such redemption shall be
those set forth in Section IV.F.1; PROVIDED, however, the Redemption Date
shall not be more than 60 Business Days following the date of the Estimated
GBS Net Proceeds Announcement. The notice delivered hereunder shall also state
(a) the GBS Net Proceeds and (b) a date (the "selection date") not earlier
than the 10th Trading Day and not later than the 20th Trading Day following
the date of such notice on which shares of GBS Stock shall be selected for
redemption and that the Corporation will not be required to register a
transfer of any shares of GBS Stock for a period of ten (10) Trading Days next
preceding the Selection Date.
(6) If the Corporation determines to exchange GBS Stock
for GGD Stock pursuant to Section IV.E.6(b)(1)(c), the Corporation shall cause
notice to be sent in the form and manner set forth in Section IV.F.1, and the
procedures governing such exchange shall be those set forth in Section IV.F.1;
PROVIDED, however, the Exchange Date shall not be more than 60 Business Days
following the date of the GBS Payment Method Announcement. Such notice shall
also state the GBS Net Proceeds.
(7) If the Corporation determines to exchange GBS Stock
for GGD Stock pursuant to Section IV.E.6(c)(3), the Corporation shall cause
notice to be sent not less than 30 nor more than 60 days in the form and
manner set forth in Section IV.F.1, and the procedures governing such exchange
shall be those set forth in Section IV.F.1.
(e) SPECIAL MANDATORY PAYMENT PROVISIONS. For purposes of this
Section IV.E.6:
(1) "substantially all of the properties and assets
allocated to Genzyme Biosurgery Division" shall mean a portion of the
properties and assets allocated to Genzyme Biosurgery Division (A) that
represents at least 80% of the then-current fair value (as determined by the
Board of Directors) of, or (B) to which is attributable at least 80% of the
aggregate
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revenues for the immediately preceding twelve fiscal quarterly periods of the
Corporation derived from, the properties and assets allocated to Genzyme
Biosurgery Division;
(2) in the case of a Disposition of properties and assets
in a series of related transactions, such Disposition shall not be deemed to
have been consummated until the consummation of the last of such transactions;
(3) in the event that at the time of any Disposition there
are outstanding any Convertible Securities convertible into or exercisable for
shares of GBS Stock that would give the holders rights to receive any dividend
related to the Disposition upon exercise, conversion or otherwise, or would
adjust as a result of such dividend to give the holder equivalent economic
rights, then the shares of GBS Stock underlying such Convertible Securities
will be taken into account for purposes of computing the GBS Allocation Ratio
and determining the terms of any dividend payment on such shares;
(4) in the event that as a result of or in connection with
a dividend payment pursuant to Section IV.E.6(b)(1)(a) there ceases to be any
properties or assets attributed to Genzyme Biosurgery Division, then each
outstanding share of GBS Stock shall immediately following such dividend
payment be cancelled and all rights of a holder of a share of GBS Stock shall
cease except for the right to such dividend payment; and
(5) there shall be added to any cash portion of a GBS
Mandatory Payment paid to holders of GBS Stock, which cash comprised a portion
of the GBS Net Proceeds, any interest earned by Genzyme Biosurgery Division or
the Corporation on such cash from the date of the Disposition up to the record
date of such GBS Mandatory Payment.
7. DEFINITIONS. As used in this Section IV.E., the following terms
shall have the following meanings (with terms defined in the singular having
comparable meaning when used in the plural and vice versa), unless another
definition is provided or the context otherwise requires. Capitalized terms
used but not defined in this Section IV.E.7 shall have the meanings given them
in Section IV.F.7.
(a) "Available GBS Dividend Amount," on any date, shall mean the
greater of:
(1) the excess of
(a) the greater of (x) the fair value on such date of
the net assets of Genzyme Biosurgery Division and (y) an amount equal to
$_________________ (division equity allocated to Genzyme Biosurgery Division
at ____________, 2000), such dollar amount to be increased or decreased, as
appropriate, to reflect, after ____________, 2000, (A) the Earnings
Attributable to Genzyme Biosurgery Division, (B) any dividends or other
distributions (including by reclassification or exchange) declared or paid
with respect to, or repurchases or issuances of, any shares of GBS Stock or
any other class of capital stock attributed to Genzyme Biosurgery Division,
but excluding dividends or other distributions paid in shares of GBS Stock to
the holders thereof or in shares of any other class of capital stock
attributed to Genzyme Biosurgery Division to the holders thereof, and (C) any
other adjustments to the stockholders' equity of Genzyme Biosurgery Division
made in accordance with generally accepted accounting principles, over
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(b) the sum of (x) the aggregate par value of all
outstanding shares of GBS Stock and any other class of capital stock
attributed to Genzyme Biosurgery Division and (y) unless these Articles of
Organization permit otherwise, the aggregate amount that would be needed to
satisfy any preferential rights to which holders of all outstanding Preferred
Stock attributed to Genzyme Biosurgery Division are entitled upon dissolution
of the Corporation in excess of the aggregate par value of such Preferred
Stock, PROVIDED that such excess shall be reduced by any amount necessary to
enable Genzyme Biosurgery Division to pay its debts as they become due, and
(2) the amount legally available for the payment of
dividends determined in accordance with Massachusetts law applied as if
Genzyme Biosurgery Division were a separate corporation.
(b) "Earnings Attributable" to Genzyme Biosurgery Division for
any period shall mean the net income or loss of Genzyme Biosurgery Division
for such period (or for the fiscal periods of the Corporation commencing prior
to the GBS Effective Date and after _________, 2000, pro forma net income or
loss of Genzyme Biosurgery Division as if the GBS Effective Date were
___________, 2000) determined in accordance with generally accepted accounting
principles, with all income and expenses of the Corporation being allocated
between Divisions in a reasonable and consistent manner in accordance with
policies adopted by the Board of Directors; PROVIDED, HOWEVER, that as of the
end of any fiscal quarter of the Corporation, any projected annual tax benefit
attributable to any Division that cannot be utilized by such Division to
offset or reduce its allocated tax liability may be allocated to any other
Division without any compensating payment or allocation.
(c) "GBS Allocation Ratio," as of any date, shall mean the
fraction computed by dividing the GBS Shares Outstanding by the sum of the GBS
Shares Outstanding plus the GBS Designated Shares.
(d) "GBS Designated Shares" as of any date shall mean a number
of shares of GBS Stock that, as of the GBS Effective Date, shall be
________________, which number shall be subject to adjustment as provided in
the next sentence. The number of Genzyme Biosurgery Designated Shares shall
from time to time be
(1) adjusted as appropriate to reflect subdivisions (by
stock split or otherwise) and combinations (by reverse stock split or
otherwise) of the GBS Stock and dividends or distributions of shares of GBS
Stock to holders of GBS Stock and other reclassifications of GBS Stock,
(2) decreased by (A) the number of any shares of GBS Stock
issued by the Corporation, the proceeds of which are allocated to Genzyme
General Division, (B) the number of any shares of GBS Stock issued upon the
exercise or conversion of Convertible Securities attributed to Genzyme General
Division, and (C) the number of any shares of GBS Stock issued by the
Corporation as a dividend or distribution or by reclassification, exchange or
otherwise to holders of GGD Stock, and
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(3) increased by (A) the number of any outstanding shares
of GBS Stock repurchased by the Corporation, the consideration for which was
allocated to Genzyme General Division, (B) the number equal to the fair value
(as determined by the Board of Directors) of assets or properties allocated to
Genzyme General Division that are reallocated to Genzyme Biosurgery Division
(other than GBS Reallocations that represent sales at fair value between such
Divisions) divided by the Fair Market Value of one share of GBS Stock as of
the date of such GBS Reallocation, (C) the number equal to (i) the aggregate
Fair Market Value of any shares of GGD Stock issued to the limited partners of
Genzyme Development Partners L.P. ("GDP") in connection with the Corporation's
exercise on behalf of Genzyme Biosurgery Division of its purchase option to
reacquire all of the limited partnership interests of GDP divided by (ii) the
Fair Market Value of one share of GBS Stock as of the date of such exercise,
and (D) the number equal to Fair Market Value of any shares of GBS Stock
issued to Genzyme General Division in satisfaction of its refunding
obligations under the Confirmation and Acknowledgement of Programmer
Allocation, dated as of June 21, 1999, in connection with the transfer by the
Genzyme Tissue Repair Division of its ownership interest in the
Diacrin/Genzyme LLC to the Genzyme General Division.
PROVIDED, that the Corporation shall take no action which would have the
effect of reducing the GBS Designated Shares to a number which is less than
zero. Within 45 days after the end of each fiscal quarter of the Corporation,
the Corporation shall prepare and file a statement of such change with the
transfer agent for the GBS Stock and with the Clerk of the Corporation.
(e) "GBS Effective Date" shall mean _________, 2000.
(f) "GBS Net Proceeds" shall mean, as of any date, with respect to a
Disposition of any of the properties and assets of Genzyme Biosurgery
Division, a fraction of the proceeds from such disposition determined by
multiplying the GBS Allocation Ratio by the gross proceeds of such Disposition
after any adjustment to such gross proceeds resulting from payment of, or
reasonable provision for, (a) any taxes payable by the Corporation in respect
of either such Disposition or any mandatory exchange, redemption or dividend
payment resulting from such Disposition (or that would have been payable but
for the utilization of tax benefits attributable to any division or group of
the Corporation other than Genzyme Biosurgery Division (a "Non-GBS
Division")), (b) any transaction costs borne by a Non-GBS Division in
connection with such Disposition, including, without limitation, any legal,
investment banking and accounting fees and expenses borne by a Non-GBS
Division in connection with such Disposition, (c) any liabilities and other
obligations (contingent or otherwise) of Genzyme Biosurgery Division borne by
a Non-GBS Division in connection with such Disposition, including, without
limitation, any indemnity or guarantee obligations incurred by a Non-GBS
Division in connection with the Disposition or any liabilities assumed by a
Non-GBS Division for future purchase price adjustments, and (d) any
preferential amounts, accumulated and unpaid dividends and other obligations
in respect of any Preferred Stock attributed to Genzyme Biosurgery Division.
(g) "GBS Shares Outstanding" as of any date shall mean the number of
shares of GBS Stock then issued and outstanding.
(h) "Genzyme Biosurgery Division" shall mean, at any time, the
Corporation's interest in [(i) businesses, products, or development or research
programs relating to (A) the
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prevention or treatment of tissue damage and (B) surgical devices, closures,
instruments, biomaterials and biotherapeutics directed toward the
cardiovascular, general and plastic surgery markets, which exist as of the GBS
Effective Date (other than such businesses, products, or development or
research programs allocated to Genzyme Development Partners, L.P. or that were
allocated to the Genzyme Molecular Oncology or Genzyme General divisions
immediately prior to the GBS Effective Date);] (ii) all assets and liabilities
of the Corporation to the extent allocated to any such businesses, products,
or development or research programs in accordance with generally accepted
accounting principles consistently applied for all of the Corporation's
business units; and (iii) such businesses, products, or development or
research programs developed in, or acquired by the Corporation for, Genzyme
Biosurgery Division on or after the GBS Effective Date, in each case as
determined by the Board of Directors; PROVIDED, HOWEVER, that, from and after
any Disposition or transfer to another Division of any business, product,
development program, research project, assets or properties, Genzyme
Biosurgery Division shall no longer include the business, product, development
program, research project, assets or properties so disposed of or transferred.
Genzyme Biosurgery Division shall be represented by the GBS Stock.
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TERMS THAT WILL DEAL GENERALLY WITH GENZYME'S COMMON STOCK,
INCLUDING GENZYME BIOSURGERY DIVISION COMMON STOCK
F. GENERAL PROVISIONS REGARDING THE COMMON STOCK
8. General Exchange and Redemption Provisions. In the event of any
exchange or mandatory redemption or dividend pursuant to the provisions of
these Articles of Organization, the following provisions shall apply:
(a) Any notice delivered hereunder shall be sent by the
Corporation to each record holder of shares of the Common Stock to be
exchanged or redeemed or upon which will be made a dividend payment (the
"Exchange Stock") and to the holders of Convertible Securities that are
convertible into or exchangeable or exercisable for shares of such Exchange
Stock (unless alternate provision for such notice is made pursuant to the
terms of such Convertible Securities).
(b) With respect to an exchange or redemption, such notice shall
state, to the extent and in the manner applicable, (1) the number of shares of
Exchange Stock outstanding on the record date for such exchange or redemption
and the number of such shares to be redeemed or exchanged, (2) the aggregate
amount and form of consideration, including shares of Common Stock, other
securities, cash or other property, that will be paid on the Exchange Date or
Redemption Date upon the exchange or redemption of the shares of Exchange
Stock, (3) the amount and form of such consideration to be received by such
holder with respect to each share of the Exchange Stock held by such holder,
including details as to the calculation thereof, (4) the Exchange Date or
Redemption Date, (5) the place or places where certificates for shares of
Exchange Stock, properly endorsed or assigned for transfer are to be
surrendered for delivery of such consideration (unless the Corporation shall
waive such requirement), (6), if applicable, a statement to the effect that,
subject to Section IV.F.1(e) dividends on shares of Exchange Stock shall cease
to be paid as of such Exchange Date or Redemption Date, (7) the number of
shares of Exchange Stock into or for which outstanding Convertible Securities
are convertible, exchangeable or exercisable as of the record date for such
exchange or redemption and the conversion, exchange or exercise price thereof
and (8) in the case of notice to holders of Convertible Securities, a
statement to the effect that a holder of Convertible Securities shall be
entitled to receive its pro rata portion of the consideration, as applicable,
upon redemption or exchange only if such holder properly converts, exchanges
or exercises such Convertible Securities (unless the terms of a Convertible
Security provide otherwise) on or prior to the Exchange Date or Redemption
Date and a statement as to what, if anything, such holder will be entitled to
receive pursuant to the terms of such Convertible Securities if such holder
thereafter converts, exchanges or exercises such Convertible Securities.
(c) Any notice delivered under this Section IV.F.1 shall be sent
by first-class mail, postage prepaid at such holder's address as the same
appears on the stock transfer books of the Corporation. Neither the failure to
mail such notice to any particular holder of shares of Exchange Stock nor any
defect therein shall affect the sufficiency thereof with respect to any other
holder of shares of Exchange Stock or the validity of any such exchange,
redemption or dividend payment.
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(d) The Corporation shall not be required to issue or deliver
fractional shares of any series of Common Stock, capital stock, securities or
other property to any holder of shares of Exchange Stock upon any such
exchange, redemption or dividend payment. If more than one share of Exchange
Stock shall be held by the same holder of record, the Corporation shall
aggregate the number of shares of any security that shall be issuable or any
other property that shall be distributable to such holder upon any such
exchange, redemption or dividend payment. If fractional shares of any security
would be required to be issued or distributed to the holder of Exchange , the
Corporation shall, if such fractional shares are not issued or distributed to
such holder, either arrange for the disposition of such fraction by or on
behalf of such holder or pay the Fair Market Value (without interest) of such
fractional shares.
(e) No adjustments in respect of dividends shall be made upon
the exchange or redemption of any shares of Exchange Stock; provided, however,
that if the Exchange Date shall be subsequent to the record date for
determining holders of Exchange Stock entitled to the payment of a dividend or
other distribution thereon or with respect thereto, the holders of shares of
Exchange Stock at the close of business on such record date shall be entitled
to receive the dividend or other distribution payable on or with respect to
such shares on the date set for payment of such dividend or other
distribution, notwithstanding the exchange or redemption of such shares.
(f) With respect to an exchange or redemption, before any holder
of shares of Exchange Stock shall be entitled to receive the consideration to
be received by such holder with respect to the exchange or redemption of such
shares of Exchange Stock, such holder shall surrender at such place as the
Corporation shall specify certificates for such shares of Exchange Stock,
properly endorsed or assigned for transfer (unless the Corporation shall waive
such requirement). The Corporation will as soon as practicable after such
surrender of certificates representing such shares of Exchange Stock deliver
to the person for whose account such shares of Exchange Stock were so
surrendered, or to the nominee or nominees of such person, the consideration
to which such person shall be entitled as aforesaid, together with any
fractional share payment contemplated by Section IV.F.1(d).
(g) With respect to an exchange or redemption, from and after
the Exchange Date, all rights of a holder of shares of Exchange Stock shall
cease except for the right, upon surrender of the certificates representing
such shares of Exchange Stock, to receive the consideration for which such
shares were exchanged are redeemed, together with any fractional share payment
contemplated by Section IV.F.1(d), and rights to dividends as provided in
Section IV.F.1(e). No holder of a certificate that immediately prior to the
Exchange Date represented shares of Exchange Stock shall be entitled to
receive any dividend or interest payment or other distribution with respect to
the shares of any security or instrument for which the Exchange Stock was
exchanged or redeemed until surrender of such holder's certificate for a
certificate or certificates or instrument or instruments representing such
security (unless the Corporation shall waive such requirement). Subject to
applicable escheat and similar laws, upon such surrender, there shall be paid
to the holder the amount of any dividend or interest payments or other
distributions (without interest) which theretofore became payable with respect
to a record date after the Exchange Date, but that were not paid by reason of
the foregoing, with respect to the number of shares of the kind of securities
represented by the certificate or certificates issued upon such surrender.
From and after the Exchange Date, the Corporation shall, however, be entitled
to treat
-13-
the certificates for Exchange Stock that have not yet been surrendered for
exchange or redemption as evidencing the ownership of the number of shares of
the kind of securities for which the shares of Exchange Stock represented by
such certificates shall have been exchanged or redeemed, notwithstanding the
failure to surrender such certificates.
(h) The Corporation will pay any and all documentary, stamp or
similar issue or transfer taxes that may be payable in respect of the issue or
delivery of any securities in exchange for or upon redemption of or dividend
payment on shares of Exchange Stock pursuant hereto. The Corporation shall
not, however, be required to pay any tax that may be payable in respect of any
transfer involved in the issue and delivery of any such securities issued in
exchange or upon redemption or as a dividend in a name other than that in
which the shares of Exchange Stock so exchanged or redeemed or paid as a
dividend upon were registered and no such issue or delivery shall be made
unless and until the person requesting such issue has paid to the Corporation
the amount of any such tax, or has established to the satisfaction of the
Corporation that such tax has been paid or that no such tax is due.
(i) After the Exchange Date, any share of Exchange Stock issued
upon conversion or exercise of any Convertible Security shall, immediately
upon issuance pursuant to such conversion or exercise and without any notice
or any other action on the part of the Corporation or its Board of Directors
or the holder of such share of Exchange Stock, be exchanged for the amount of
cash, securities and/or other property thereof (together with any payments in
lieu of fractional shares or dividends, if any) that a holder of such
Convertible Security would have been entitled to receive pursuant to the terms
of such Convertible Security had such terms provided that the conversion
privilege in effect immediately prior to any exchange by the Corporation of
any shares of Exchange Stock would be adjusted so that the holder of any such
Convertible Security thereafter surrendered for conversion would be entitled
to receive the amount of cash, securities and/or other property he or she
would have owned immediately following such action had such Convertible
Security been converted immediately prior to such exchange. The foregoing
provisions shall not apply to the extent that equivalent adjustments are
otherwise made pursuant to the provisions of such Convertible Security.
9. Voting of Controlled Shares Shares of any series of Common Stock
held by a corporation or other entity controlled by the Corporation (other
than an employee benefit plan) shall be voted on any proposal requiring a vote
of the holders of such series in the same proportion as votes are cast for or
against such proposal by all other holders of such series.
10. Discrimination Between Classes of Common Stock. Subject to the
provisions of each series of Common Stock regarding the payment of dividends
on such series of Common Stock, the Board of Directors may, in its sole
discretion, declare and pay dividends exclusively on any series of Common
Stock, or all series, in equal or unequal amounts, notwithstanding the amounts
available for the payment of dividends on any series, the respective voting
and liquidation rights of each series, the amounts of prior dividends declared
on each series or any other factor.
11. Adjustments Relative to Voting Rights and Liquidation. If at any
time the Corporation shall in any manner subdivide (by stock split,
reclassification or otherwise) or combine (by reverse stock split,
reclassification or otherwise) the outstanding shares of any series of Common
Stock, or pay a dividend or make a distribution in shares of any series of
-14-
Common Stock to holders of such series, the per share voting rights and the
liquidation units of each series of Common Stock other than the GGD Stock
shall be appropriately adjusted so as to avoid dilution in the aggregate
voting and liquidation rights of any series. The issuance by the Corporation
of shares of any series of Common Stock (whether by a dividend or otherwise)
to the holders of any other series of Common Stock shall not require
adjustment pursuant to this paragraph.
12. Rank. All series of Common Stock shall rank junior with respect
to the payment of dividends and the distribution of assets to all series of
the Corporation's Preferred Stock that specifically provide that they shall
rank prior to the Common Stock. Nothing herein shall preclude the Board from
creating any series of Preferred Stock ranking on a parity with or prior to
the Common Stock as to the payment of dividends or the distribution of assets.
13. Fractional Shares. Any series of Common Stock may be issued in
fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of such series of Common Stock.
14. Definitions. As used in these Articles of Organization, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meaning when used in the plural and vice versa),
unless another definition is provided or the context otherwise requires:
(a) "Business Day" shall mean each weekday other than any day on
which any relevant series of common stock is not traded on any national
securities exchange or the Nasdaq National Market or in the over-the-counter
market.
(b) The "Closing Price," with respect to any security, as of any
given day, shall be (x) if such security is listed or admitted to trading on a
national securities exchange, the closing price on the New York Stock Exchange
Composite Tape (or any successor composite tape reporting transactions on
national securities exchanges) or, if such composite tape shall not be in use
or shall not report transactions in such shares, the last reported sales price
regular way on the principal national securities exchange on which such shares
are listed or admitted to trading (which shall be the national securities
exchange on which the greatest number of shares of such series of stock has
been traded during such consecutive trading days), or, if there is no such
sale on any such day, the mean of the bid and asked prices on such day, or (y)
if such shares are not listed or admitted to trading on any such exchange, the
closing price, if reported, or, if the closing price is not reported, the mean
of the closing bid and asked prices as reported by the Nasdaq National Market
or a similar source selected from time to time by the Corporation for the
purpose.
(c) "Convertible Securities" shall mean any securities
(including employee stock options) of the Corporation that are convertible
into or evidence the right to purchase any shares of any series of Common
Stock.
(d) "Disposition" shall mean the sale, transfer, assignment or
other disposition (whether by merger, consolidation, sale or contribution of
assets or stock or otherwise) of any
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properties or assets, other than by pledge, hypothecation or grant of any
security interest in such properties or assets.
(e) "Exchange Date" shall mean, in respect of any exchange of
any share of a series of Common Stock effected pursuant to these Articles of
Organization, the date upon which such exchange becomes effective.
(f) ("Fair Market Value" shall mean
(1) as to shares of any series of stock of the Corporation
as of any date, the average of the daily Closing Prices for the 20
consecutive Trading Days commencing on the 30th Trading Day prior to such
date, except that in the event such Closing Prices are unavailable, Fair
Market Value shall be determined by the Board of Directors;
(2) in the case of securities other than securities of the
Corporation, if such security of a class that has previously been publicly
traded for a period of at least three months, the Market Value thereof or, in
the case of a security that has not been publicly traded for at least such
period, the fair value per share of stock or per other unit of such security,
on a fully distributed basis, as determined by an independent investment
banking firm experienced in the valuation of securities selected in good faith
by the Board of Directors;
(3) in the case of property other than securities, the
"Fair Market Value" as determined in good faith by the Board of Directors
based upon such appraisals or valuation reports of such independent experts as
the Board of Directors shall in good faith determine to be appropriate in
accordance with good business practice.
(4) Any determination of Fair Market Value made under
clauses 2 or 3 above shall be described in a statement filed with the records
of the actions of the Board of Directors.
(g) "Market Capitalization" of any series of Common stock on any
date shall mean the product of (i) the Fair Market Value of one share of such
series of Common Stock on such date and (ii) the number of shares of such
series of Common Stock outstanding on such date.
(h) "Market Value" as of any day of any security shall mean the
average of the high and low reported sales prices regular way of a share of
such class or series on such day (if such day is a trading day, and, if such
day is not a trading day, on the trading day immediately preceding such day);
or, in case no such reported sale takes place on such trading day, the average
of the reported closing bid and asked prices regular way of a share of such
class or series on such trading day, in either case, on the New York Stock
Exchange; or, if the shares of such class or series are not quoted on the New
York Stock Exchange on such trading day, on the Nasdaq National Market; or, if
the shares of such class or series are not quoted on the Nasdaq National
Market on such trading day, the average of the closing bid and asked prices of
a share of such class or series in the over-the-counter market on such trading
day as furnished by any New York Stock Exchange member firm selected from time
to time by the corporation; or, if such closing bid and asked prices are not
made available by any such New York Stock Exchange member firm on such trading
day (including, without limitation, because such securities are not
-16-
publicly held), the market value as determined by an independent investment
banking firm experienced in the valuation of securities selected in good faith
by the Board of Directors. Any determination of Fair Market Value made under
the final clause of the preceding sentence shall be described in a statement
filed with the records of the actions of the Board of Directors.
(i) "Qualified Tax Counsel" shall mean tax counsel who may be
regular outside counsel to the Corporation but shall not be an officer or
employee of the Corporation or any of its affiliates.
(j) "Redemption Date" shall mean, in respect of any redemption
of any share of a series of Common Stock effected pursuant to these Articles
of Organization, the date upon which such redemption becomes effective.
(k) "Related Business Transaction" shall mean, with respect to
the Disposition of all or substantially all the properties and assets
attributed to a particular series of Common Stock, such Disposition in a
transaction or series of related transactions that result in the Corporation
receiving in consideration of such properties and assets primarily equity
securities (including, without limitation, capital stock, debt securities
convertible into or exchangeable for equity securities or interests in a
general or limited partnership or limited liability company, without regard to
the voting power or other management or governance rights associated
therewith) of any entity which (i) acquires such properties or assets or
succeeds (by merger, formation of a joint venture or otherwise) to the
business conducted with such properties or assets or controls such acquiror or
successor and (ii) is engaged primarily or proposes to engage primarily in one
or more businesses similar or complementary to the businesses conducted by the
division or group of the Corporation to which were attributed such properties
and assets prior to such Disposition, as determined by the Board of Directors.
(l) "Tax Event" shall mean, with respect to any series of Common
Stock that it has become (or will become, as the context may require) more
likely than not that for United States Federal income tax purposes (i) the
Corporation or the holders of its stock are, or at any time in the future will
be, subject to tax or other adverse tax consequences upon the issuance or
receipt of shares of such series of Common Stock or by reason of the existence
of such series of Common Stock or (ii) either such series of Common Stock or
the GGD Stock is not, or at any time in the future will not be, treated solely
as stock of the Corporation.
(m) "Tax Law Change" shall mean (i) any enactment of, amendment
to, or change in the laws of the United States or any political subdivision
thereof (including any announced proposed change by an applicable legislative
committee or the chair in such laws), (ii) any promulgation of, amendment to,
or change in the regulations under the laws of the United States or any
political subdivision or taxing authority thereof or therein (including any
announced proposed change in or promulgation of regulations by an
administrative agency) or (iii) any official or administrative pronouncement
or action or judicial decision interpreting or applying such laws or
regulations. For purposes of rendering an opinion as to a Tax Law Change, tax
counsel shall assume that any legislative or administrative proposals will be
adopted or enacted as proposed.
-17-
(n) "Trading Day" shall mean each weekday other than any day on
which the relevant series of Common Stock is not traded on any national
securities exchange or listed on The Nasdaq Stock Market or in the
over-the-counter market.
-18-
EXHIBIT B
AFFILIATE LETTER
Xxxxx 0, 0000
Xxxxxxx Corporation
Xxx Xxxxxxx Xxxxxx, 0000 Xxxxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
Pursuant to the Agreement and Plan of Merger dated as of March 6,
2000 (the "Merger Agreement") among Genzyme Corporation ("Genzyme"), a
Massachusetts corporation, Seagull Merger Corporation ("Merger Sub"), a
Massachusetts corporation and wholly-owned subsidiary of Genzyme, and
Biomatrix, Inc. (the "Company"), a Delaware corporation, providing for the
merger of the Company with and into Merger Sub (the "Merger"), the undersigned
will receive shares of Genzyme Biosurgery Division Common Stock, $0.01 par
value per share (the "GBS Shares") in exchange for the shares of common stock
of the Company (the "Company Shares") owned by the undersigned. In connection
with receipt of the GBS Shares pursuant to the Merger, the undersigned
represents, warrants and agrees as follows:
1. The undersigned has been advised that if the undersigned is an
"affiliate" of the Company at the time the Merger Agreement was submitted for
approval of the shareholders of the Company and a distribution by the
undersigned of the GBS Shares has not been registered under the Securities Act
of 1933, as amended (the "Act"), Rule 145 under the Act will restrict the
undersigned's sales of GBS Shares received in the Merger. The undersigned will
not sell or otherwise dispose of any GBS Shares, except pursuant to Rule
145(d) under the Act, an effective registration statement under the Act or an
exemption from the registration requirements under the Act, provided that the
undersigned may make bona fide gifts or distributions (including, if the
undersigned is a partnership, to its partners) without consideration or
transfers by operation of law, so long as any donee or transferee agrees not
to sell, transfer or otherwise dispose of GBS Shares except as provided herein.
2. Genzyme is under no obligation to register the sale, transfer or
other disposition by the undersigned of the GBS Shares, or to take any action
necessary in order to make an exemption from registration available.
The undersigned understands that the certificates representing the
GBS Shares will be placed on the "stop-transfer list" maintained by Genzyme's
transfer agent; will remain so listed so long as the restrictions imposed on
the GBS Shares under Paragraph number 1 above remain in effect; and there will
be placed on the certificates representing such shares and any certificates
delivered in substitution or exchange therefor, a legend stating in substance:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER CONTAINED IN AN AGREEMENT WITH THE ISSUER DATED MARCH
6, INCLUDING WITHOUT LIMITATION A RESTRICTION THAT THESE SHARES MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH RULE 145(D) UNDER THE SECURITIES ACT OF 1933
(THE "ACT") OR AN EFFECTIVE REGISTRATION STATEMENT OR EXEMPTION FROM
REGISTRATION UNDER THE ACT. THE ISSUER
Genzyme Corporation
Page 2
WILL FURNISH A COPY OF SUCH AGREEMENT TO THE HOLDER UPON WRITTEN REQUEST AND
WITHOUT CHARGE.
The undersigned has carefully read this letter, including the
limitations upon the disposition of the GBS Shares received by the undersigned
contained herein, and has obtained such advice regarding execution of this
letter as the undersigned deemed necessary.
This letter agreement is governed by the laws of the Commonwealth of
Massachusetts without regard to its conflict of laws principles.
Very truly yours,
--------------------------
Name:
Address:
Accepted:
GENZYME CORPORATION
By:
---------------------
Name:
Title:
Dated: March 6, 2000
