EXHIBIT 10.24
PARTNERSHIP PURCHASE AGREEMENT
This Agreement, made and entered into as of this 20th day of November,
2000, by and among Genzyme Corporation, a Massachusetts corporation ("Genzyme'),
Genzyme Development Partners, L.P., a Delaware Limited Partnership (the
"Partnership"), Genzyme Development Corporation II, a Delaware corporation and
the general partner (the "General Partner") of the Partnership, each of the
Class A Limited Partners of the Partnership (individually, a "Class A Limited
Partner" and, collectively, the "Class A Limited Partners") and, if Genzyme
shall have exercised its option to purchase the Class B Interest, the Class B
Limited Partner of the Partnership (the "Class B Limited Partner"),
WITNESSETH THAT:
WHEREAS, the business of the Partnership is to conduct research and
experimentation, including human clinical testing, in order to use its best
efforts to develop Products within the Field of Activity; to obtain appropriate
regulatory approvals; after receipt of such approvals, to obtain revenues from
the sale or other disposition of Products within the Field of Activity; and to
engage in any and all activities incidental to the above activities; and
WHEREAS, the Class A Limited Partners and the Class B Limited Partner
(collectively, the "Limited Partners"), Genzyme, the Partnership and the General
Partner have entered into the Partnership Purchase Option Agreement dated as of
September 13, 1989 (the `Partnership Purchase Option Agreement"), pursuant to
which Genzyme was granted an option to purchase the limited partnership
interests of the Class A Limited Partners and an option to purchase the limited
partnership interest of the Class B Limited Partner;
NOW, THEREFORE, in consideration of the mutual covenants expressed herein
and other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, and intending to be legally bound, the parties hereby agree
as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.01 Unless otherwise provided, each capitalized term used herein
shall have the meaning assigned to it in the Glossary attached as Schedule I to
the Partnership Purchase Option Agreement.
ARTICLE II.
PURCHASE AND SALE OF LIMITED PARTNERSHIP INTERESTS
SECTION 2.01 REPRESENTATIONS AND WARRANTIES OF GENZYME. Genzyme represents
and warrants that:
(a) Genzyme is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts. Genzyme
has full right, power, capacity and authority to execute and deliver this
Agreement and to consummate the transactions
contemplated hereby. This Agreement constitutes the valid and binding obligation
of Genzyme enforceable in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, receivership, moratorium,
insolvency or other similar laws relating to or affecting the rights of
creditors generally and (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability.
(b) The execution and delivery by Genzyme of this Agreement, and
the consummation of the transactions contemplated hereby, have been duly
authorized by all requisite action, require no approval of, filing with or other
action by or in respect of, any governmental body, agency or official and do not
violate, conflict with, or constitute a default under Genzyme' s Articles of
Organization or the terms and provisions of any agreement, license, trust,
indenture or other instrument or restriction to which Genzyme is a party or by
which it is bound or any law (including without limitation any securities law of
the United States or any securities or Blue Sky law of any state thereof),
order, award, judgment or decree to which Genzyme is a party or by which it is
bound.
(c) If Genzyme shall have determined to make the Stock Advance
Payment or the Combination Payment pursuant to Section 3.01(b) or Section
3.01(c) of the Partnership Purchase Option Agreement and such determination
shall not have been revoked pursuant to Section 3.02(a) or Section 3.02(b) of
the Partnership Purchase Option Agreement:
(i) a registration statement covering the shares of Common Stock
to be delivered to the Limited Partners pursuant to Sections 3.01(a)
and 3.02(a) (the "Delivered Shares") has been declared effective by
the Securities and Exchange Commission (the "Commission"). Such
registration statement, including all exhibits thereto, as amended at
the time such registration statement became effective is hereinafter
referred to as the "Registration Statement" and the prospectus
included therein, including the documents, if any, incorporated by
reference therein, in the form in which such prospectus was first
filed with the Commission pursuant to Rule 424(b) under the Securities
Act of 1933, as amended (the Act"), shall be referred to as the
"Prospectus;
(ii) no stop order suspending the use of the Registration
Statement is in effect and no proceedings for such purpose are pending
before or threatened by the Commission;
(iii) the Delivered Shares have been registered or qualified for
sale under the securities or Blue Sky laws of each jurisdiction in
which such registration or qualification is necessary in connection
with the issuance and delivery of the Delivered Shares to the Limited
Partners, in accordance with Sections 3.01(a) or 3.02(a), as the case
way be;
(iv) any document filed with the Commission and incorporated by
reference in the Prospectus, when such documents were filed with the
Commission, conformed in all material respects to the requirements of
the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder, and none of such documents
contained when so filed an untrue statement of a material fact or
omitted to state a material fact required to be stated therein, or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
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(v) the Registration Statement and the prospectus included
therein, when the Registration Statement was declared effective by the
Commission, and as amended or supplemented, if applicable, on the
Class A Purchase Date or on the Class B Purchase Date, as the case may
be, conformed in all material respects to the requirements of the Act,
and the rules and regulations of the Commission thereunder, and did
not contain an 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 the case of the Prospectus, as amended or
supplemented, in the light of the circumstances under which they were
made) not misleading; and
(vi) the Delivered Shares have been duly and validly authorized
and, when issued to the Limited Partners in accordance with Sections
3.01(a) or 3.02(a), as the case may be, will be validly issued, fully
paid, nonassessable and free of any preemptive or similar rights and
will conform to the description thereof in the Prospectus; and, when
the Delivered Shares are so issued and delivered, the certificates
therefor will be in valid and legal form and Genzyme will deliver to
the Limited Partners good and marketable title to the Delivered
Shares, free and clear of all liens, encumbrances, equities or claims.
SECTION 2.02 REPRESENTATIONS AND WARRANTIES OF THE GENERAL PARTNER.
The General Partner represents and warrants that:
(a) The Partnership is the sole and lawful owner of the Technology,
free and clear of all liens, charges, security interests and claims of any kind
in the Technology, except those in favor of Genzyme under the Cross License
Agreement, those in favor of any third parties that have licensed patent or
other rights to the Partnership for use in the development of the Technology and
any sublicenses to third parties granted by the Joint Venture for the
manufacture, use and sale of any Product within the Field of Activity. Any and
all such licenses and sublicenses are listed in Schedule II to this Agreement.
(b) The General Partner has full right, power, capacity and
authority to execute and deliver this Agreement, and to consummate the
transactions contemplated hereby.
(c) The execution and delivery by the General Partner of this
Agreement, and the consummation of the transactions contemplated hereby, have
been duly authorized by all requisite action and do not violate, conflict with,
or constitute a default under, the Limited Partnership Agreement, or the terms
or provisions of any agreement, license, trust, indenture or other instrument or
restriction to which the General Partner is a party or by which it is bound, or
any order, award, judgment or decree to which the General Partner is a party or
by which it is bound.
SECTION 2.03 PURCHASE OF CLASS A INTERESTS. On the Class A Purchase
Date, each Class A Limited Partner shall sell, transfer, assign, convey, set
over, grant and deliver to Genzyme, and Genzyme shall purchase from such Class A
Limited Partner, the Class A Interest of such Class A Limited Partner. At the
request and expense of Genzyme, such Class A Limited Partner shall execute such
further proper assignments and instruments as are requested to accomplish and
record such purchase and sale and establish the sole ownership of Genzyme in and
to the Class A Interest of such Class A Limited Partner.
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SECTION 2.04 RIGHTS AFTER SALE. After the sales referred to in Section 2.03
hereof, each Class A Limited Partner will not make, use or sell the Technology
or any Product, and will not assert possession of any right to prevent the Joint
Venture, Genzyme or any assignee or transferee of Genzyme from making, using,
selling, disclosing or preventing anyone else from making, using, selling or
disclosing any part of the Technology or any Product.
SECTION 2.05 REPRESENTATIONS AND WARRANTIES OF THE CLASS A LIMITED
PARTNERS. Each Class A Limited Partner represents and warrants that:
(a) Such Class A Limited Partner is the sole and lawful owner of
the Class A Interest of such Class A Limited Partner, free and clear of all
liens, charges, claims, security interests and encumbrances of every kind, and
no other Person has any rights, interests or claims whatsoever in such Class A
Interest of such Limited Partner.
(b) Such Class A Limited Partner has full right, power, capacity
and authority to sell to Genzyme its Class A Interest and to consummate the
transactions contemplated hereby. This Agreement constitutes a valid and binding
obligation of such Class A Limited Partner enforceable in accordance with its
terms, except as (i) the enforceability thereof may be limited by bankruptcy,
receivership, moratorium, insolvency or other similar laws relating to or
affecting the rights of creditors generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.
SECTION 2.06 PURCHASE OF CLASS B INTEREST. On the Class B Purchase Date,
the Class B Limited Partner shall sell, transfer, assign, convey, set over,
grant and deliver to Genzyme, and Genzyme shall purchase from such Class B
Limited Partner, the Class B Interest of such Class B Limited Partner. At the
request and expense of Genzyme, such Class B Limited Partner shall execute such
further proper assignments and instruments as are requested to accomplish and
record such purchase and sale and establish the sole ownership of Genzyme in and
to the Class B Interest of such Class B Limited Partner.
SECTION 2.07 RIGHTS AFTER SALE. After the sale referred to in Section 2.06,
the Class B Limited Partner will not make, use or sell the Technology or any
Product, and will not assert possession of any right to prevent Genzyme or any
assignee or transferee of Genzyme from making, using, selling, disclosing or
preventing anyone else from making, using, selling or disclosing any part of the
Technology or any Product.
SECTION 2.08 REPRESENTATIONS AND WARRANTIES OF THE CLASS B LIMITED PARTNER.
The Class B Limited Partner represents and warrants that:
(a) It is the sole and lawful owner of the Class B Interest of such
Class B Limited Partner, free and clear of all liens, charges, claims, security
interests and encumbrances of every kind, and no other Person has any rights,
interests or claims whatsoever in such Class B Interest.
(b) It has full right, power, capacity and authority to sell to
Genzyme its Class B Interest and to consummate the transactions contemplated
hereby. This Agreement constitutes a valid and binding obligation of such Class
B Limited Partner enforceable in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, receivership,
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moratorium, insolvency or other similar laws relating to or affecting the rights
of creditors generally and (ii) the availability of equitable remedies may be
limited by equitable principles of general applicability.
ARTICLE III.
PURCHASE PRICE
SECTION 3.01 PURCHASE PRICE OF CLASS A INTERESTS. As complete and full
consideration for the sale to Genzyme by each Class A Limited Partner of its
Class A Interest, Genzyme shall pay to such Class A Limited Partner the
consideration set forth in subsections (c) and (d) of this Section 3.01 and
either (i) the consideration set forth in subsection (a) of this Section 3.01 if
Genzyme determines to make the Stock Advance Payment pursuant to Section 3.01(b)
of the Partnership Purchase Option Agreement, and Genzyme shall not have revoked
such determination pursuant to Section 3.02(a) of the Partnership Purchase
Option Agreement, (ii) the consideration set forth in subsection (b) of this
Section 3.01, if Genzyme determines to make the Cash Advance Payment pursuant to
Sections 3.01(b) or 3.02(a) of the Partnership Purchase Option Agreement or
(iii) the consideration set forth in subsections (a) and (b) of this Section
3.01 if Genzyme determines to make the Combination Payment pursuant to Section
3.01(b) of the Partnership Purchase Option Agreement.
(a) If Genzyme shall have determined to make the Stock Advance
Payment or the Combination Payment pursuant to Section 3.01(b) of the
Partnership Purchase Option Agreement and shall not have revoked such
determination pursuant to Section 3.02(a) of the Partnership Purchase Option
Agreement, Genzyme shall deliver to each Class A Limited Partner, in the manner
and at the time specified in clause (ii) of this subparagraph 3.01(a), the
number of shares of Common Stock that is equal to the quotient of (A) $35,000
divided by (B) 95% of the average Closing Price per share of the Common Stock on
the fifteen trading days immediately preceding the fifth trading day prior to
the Class A Purchase Option Exercise Date, as such number of shares may be
adjusted in accordance with clause (i) of this subparagraph 3.01(a), for each
Full Partnership Interest of such Class A Limited Partner. If Genzyme shall have
determined to make the Combination Payment pursuant to Section 3.01(b) of the
Partnership Purchase Option Agreement and shall not have revoked such
determination pursuant to Section 3.02(a) thereof, Genzyme shall deliver to each
Class A Limited Partner, the number of shares of Common Stock that would have
been delivered to such Limited Partner if Genzyme had chosen to make the Stock
Advance Payment, multiplied by the Stock Percentage. In the case of any Half
Partnership Interest held by any Class A Limited Partner, the number of shares
to be delivered to such Class A Limited Partner shall be equal to one-half the
number of shares of Common Stock to be delivered in respect of a Full
Partnership Interest. For purposes of determining the amount of any payment
under this Section or under Section 3.03, the Stock Advance Payment and the
Combination Payment shall be valued at $35,000 per Full Partnership Interest and
$17,500 per Half Partnership Interest.
(i) The number of shares of Common Stock to be delivered to each
Class A Limited Partner pursuant to this subparagraph 3.01(a) shall be
adjusted as set forth below:
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(A) STOCK DIVIDENDS. If at any time on or after the Class A Stock
Pricing Date and before the Class A Purchase Date (i) Genzyme shall
fix a record date for the issuance of any stock dividend payable in
shares of Common Stock or (ii) the number of shares of Common Stock
outstanding shall have been increased by a subdivision or split-up of
shares of Common Stock, then, on the record date fixed for the
determination of holders of Common Stock entitled to receive such
stock dividend or immediately after the effective date of such
subdivision or split-up, as the case may be, the number of shares of
Common Stock to be delivered to each Class A Limited Partner pursuant
to this subparagraph 3.01(a) shall be appropriately increased so that
such Class A Limited Partner thereafter shall be entitled to receive,
in the event Genzyme exercises its option to purchase the Class A
Interests, the number of shares of Common Stock that such Class A
Limited Partner would have owned immediately following such action had
the Class A Interest of such Class A Limited Partner been purchased
immediately prior thereto by Genzyme using the Stock Advance Payment
or the Combination Payment, as the case may be.
(B) COMBINATION OF STOCK. If the number of shares of Common Stock
outstanding at any time on or after the Class A Stock Pricing Date and
before the Class A Purchase Date shall have been decreased by a
combination of the outstanding shares of Common Stock, then,
immediately after the effective date of such combination, the number
of shares of Common Stock to be delivered to each Class A Limited
Partner pursuant to this subparagraph 3.01(a) shall be appropriately
decreased so that such Class A Limited Partner shall be entitled to
receive, in the event Genzyme exercises its option to purchase the
Class A Interests, the number of shares of Common Stock that such
Class A Limited Partner would have owned immediately following such
action had the Class A Interests of such Class A Limited Partner been
purchased immediately prior thereto by Genzyme using the Stock Advance
Payment or the Combination Payment, as the case may be.
(C) REORGANIZATION, ETC. If any capital reorganization of
Genzyme, or any reclassification of the Common Stock, or any
consolidation of Genzyme with or merger of Genzyme with or into any
other Person or any sale, lease or other transfer of all or
substantially all of the assets of Genzyme to any other Person, shall
be effected in such a way that the holders of Common Stock shall be
entitled to receive stock, other securities or assets (whether such
stock, other securities or assets are distributed by Genzyme or
another Person) with respect to or in exchange for Common Stock, then
each Class A Limited Partner shall, in the event Genzyme exercises its
option to purchase the Class A Interests, have the right to receive
the kind and amount of stock, other securities or assets receivable
upon such reorganization, reclassification, consolidation, merger or
sale by a holder of the number of shares of Common Stock that such
Class A Limited Partner would have been entitled to receive pursuant
to this subparagraph 3.01(a) had the Class A Interest of such Class A
Limited Partner been purchased by Genzyme, using the Stock Advance
Payment or the Combination Payment, as the case may be, immediately
prior to such reorganization, reclassification,
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consolidation, merger or sale, subject to adjustments that shall be as
nearly equivalent as may be practicable to the adjustments provided
for in this subclause 3.01(a)(i).
(D) STOCK OR RIGHTS OFFERING.
(x) If Genzyme shall, at any time on or
after the Class A Stock Pricing Date and before the Class A
Purchase Date, issue to all holders of its Common Stock or
sell or fix a record date for the issuance to all holders of
its Common Stock of (a) Common Stock or (b) rights, options
(excluding options issued in connection with an employee stock
option or similar plan) or warrants entitling the holders
thereof to subscribe for or purchase Common Stock (or
securities convertible into Common Stock), in any such case,
at a price per share (or having a conversion price per share)
that is less than the Closing Price on the date of such
issuance or sale, or on such record date, then the number of
shares of common Stock to be delivered to each Class A Limited
Partner pursuant to this subparagraph 3.01(a) shall be
appropriately increased so that each Class A Limited Partner
thereafter shall be entitled to receive the number of shares
of Common Stock determined by multiplying the number of shares
such holder would have been entitled to receive immediately
before the date of such issuance or sale, or such record date,
had the Class A Interest of such Class A Limited Partner been
purchased immediately prior thereto by Genzyme using the Stock
Advance Payment or the Combination Payment, as the case may
be, by a fraction, the denominator of which shall be the
number of shares of Common Stock outstanding on such date plus
the number of shares of Common Stock that the aggregate
offering price of the total number of shares so offered for
subscription or purchase (or the aggregate initial conversion
price of the convertible securities so offered) would purchase
at such Closing Price, and the numerator of which shall be the
number of shares of Common Stock outstanding on such date plus
the number of additional shares of Common Stock offered for
subscription or purchase (or into which the convertible
securities so offered are initially convertible).
(y) If Genzyme shall, at any time on or
after the Class A Stock Pricing Date and before the Class A
Purchase Date, distribute to all holders of its Common Stock
any shares of capital stock of Genzyme (other than Common
Stock) or evidences of its indebtedness or assets (excluding
cash dividends or distributions paid from retained earnings of
Genzyme) or rights or warrants to subscribe for or purchase
any of its securities (excluding those referred to in
paragraph (D)(i) above) (any of the foregoing being
hereinafter in this paragraph (D)(ii) called the Securities"),
then in each such case, unless Genzyme elects to reserve
shares or other units of such Securities for distribution to
each Class A Limited Partner upon exercise of the Class A
Purchase Option using the Stock Advance Payment or the
Combination Payment, as the case may be, so that, in addition
to the shares of the Common Stock to which each Class A
Limited Partner is entitled, each Class A Limited Partner will
receive upon such exercise the amount and kind of such
Securities which such Class A Limited Partner
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would have received if Genzyme had, immediately prior to the
record date for the distribution of the Securities,
exercised the Class A Purchase Option using the Stock
Advance Payment or the Combination Payment, as the case may
be, then the number of shares of Common Stock to be
delivered to each Class A Limited Partner pursuant to this
Section 3.01(a) shall be appropriately increased so that
each Class A Limited Partner thereafter shall be entitled to
receive the number of shares of Common Stock determined by
multiplying the number of shares such holder would have been
entitled to receive immediately before such record date, had
the Class A Interest of such Class A Limited Partner been
purchased immediately prior thereto by Genzyme using the
Stock Advance Payment or the Combination Payment, as the
case may be, by a fraction, the denominator of which shall
be the Closing Price on such record date minus the then fair
market value (as determined by the Board of Directors of
Genzyme, whose determination shall, if made in good faith,
be conclusive, and described in a notice to each of the
Class A Limited Partners) of the portion of the capital
stock or assets or evidences of indebtedness so distributed
or of such rights or warrants applicable to one share of
Common Stock, and the numerator of which shall be the
Closing Price of the Common Stock.
(E) FRACTIONAL SHARES. No fractional shares of Common Stock or
scrip shall be issued to any Class A Limited Partner as part of the
Stock Advance Payment or the Combination Payment, as the case may be.
Instead of any fractional shares of Common Stock that would otherwise
be issuable to such Class A Limited Partner, Genzyme shall pay to such
Class A Limited Partner a cash adjustment in respect of such
fractional interest in an amount equal to that fractional interest of
the average Closing Price of the Common Stock used to determine the
number of shares of Common Stock comprising the Stock Advance Payment
or the Combination Payment, as the case may be, pursuant to the first
sentence of this subparagraph 3.01(a).
(F) CARRYOVER. Notwithstanding any other provisions of this
clause (i) of subparagraph 3.01(a), no adjustment shall be made to the
number of shares of Common Stock to be delivered to each Class A
Limited Partner if such adjustment represents less than 1% of the
number of shares to be so delivered, but any lesser adjustment shall
be carried forward and shall be made at the time and together with the
next subsequent adjustment which together with any adjustments so
carried forward shall amount to 1% or more of the number of shares to
be so delivered.
In addition, if any event shall occur during the period of fifteen trading
days immediately preceding the Class A Stock Pricing Date which, had such event
occurred immediately after the Class A Stock Pricing Date, would have required
an adjustment pursuant to subclause (A), (B), (C) or (D) above, an appropriate
adjustment shall be made in the number of shares of Common Stock to be delivered
to each Class A Limited Partner pursuant to this subparagraph 3.01(a).
(ii) The shares of Common Stock to be delivered to each Class A
Limited Partner on the Class A Purchase Date pursuant to this subparagraph
3.01(a) shall be in
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such denominations and registered in such names as such Class A Limited
Partner shall have specified to Genzyme not less than five (5) business
days before the Class A Purchase Date; PROVIDED that the foregoing shall
not entitle any Class A Limited Partner to transfer its Class A Interest
except as provided in the Limited Partnership Agreement. In the absence of
any such specification, each Class A Limited Partner shall receive one (1)
certificate evidencing the shares of Common Stock to be delivered, to such
Class A Limited Partner registered in its name. Such shares of Common Stock
shall be mailed to such Class A Limited Partner by certified mail, return
receipt requested, at the address of such Class A Limited Partner set forth
in the Limited Partner register that shall be maintained by the Partnership
in accordance with Article 13 of the Limited Partnership Agreement. Genzyme
shall pay all documentary, stamp, transfer or other transaction taxes
attributable to the issuance or delivery of the Delivered Shares.
(b) If Genzyme determines to make the Cash Advance Payment or the
Combination Payment pursuant to Section 3.01(b) or 3.02(a) of the Partnership
Purchase Option Agreement, Genzyme shall pay to each Class A Limited Partner (i)
in the case of the Cash Advance Payment, the amount of the Down Payment on the
Class A Purchase Date in respect of such Class A Limited Partner and (ii) in the
case of the Combination Payment, the product of (A) the difference between 100%
and the Stock Percentage and (B) the amount of the Down Payment on the Class A
Purchase Date in respect of such Class A Limited Partner.
(c) Subject to the provisions of Section 3.03 and subparagraph (d)
of this Section 3.01 and beginning with the Initial Class A Calendar Quarter and
for each calendar quarter thereafter until the date on which the Class B
Threshold occurs, Genzyme shall pay to each Class A Limited Partner, in addition
to the Stock Advance Payment, the Cash Advance Payment or the Combination
Payment provided for in subsections (a) and (b) above, an amount equal to the
aggregate amount of all Product Payments in such quarter multiplied by the Class
A Limited Partner's Class A Percentage, such amount to be reduced, if and as
appropriate, to exclude (y) in the Initial Class A Calendar Quarter, any Product
Payments in respect of any period in the Initial Class A Calendar Quarter before
the Class A purchase Date and (z) in the Calendar Quarter in which the Class B
Threshold occurs, any such payment after the Class B Threshold.
(d) Beginning with the date on which the Class B Threshold occurs
and ending with the Cut-Off Date, for each calendar quarter (or portion
thereof), an amount equal to such Class A Limited Partner's Class A Percentage
(calculated assuming that Genzyme did not exercise its option to purchase the
Class B Interest) of 95% of all Product Payments.
(e) Genzyme's obligation to make Product Payments pursuant to this
Section 3.01 shall terminate at the Cut-Off Date.
SECTION 3.02 PURCHASE PRICE OF THE CLASS B INTEREST. As complete and full
consideration for the sale to Genzyme by the Class B Limited Partner of its
Class B Interest, Genzyme shall pay to such Class B Limited Partner the
consideration set forth in subsection (c) below and either (i) the consideration
set forth in subsection (a) of this Section 3.02 if Genzyme determines to make
the Stock Advance Payment pursuant to Section 3.01(c) of the Partnership
Purchase Option Agreement and Genzyme shall not have revoked such determination
pursuant to
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Section 3.02(b) of the Partnership Purchase Option Agreement, (ii) the
consideration set forth in subsection (b) of this Section 3.02 if Genzyme
determines to make the Cash Advance Payment pursuant to Sections 3.01(c) or
3.02(b) of the Partnership Purchase Option Agreement or (iii) the consideration
set forth in subsections (a) and (b) of this Section 3.02, if Genzyme determines
to make the Combination Payment pursuant to Section 3.01(c) of the Partnership
Purchase Option Agreement.
(a) If Genzyme shall have determined to make the Stock Advance
Payment or the Combination Payment pursuant to Section 3.01(c) of the
Partnership Purchase Option Agreement and shall not have revoked such
determination pursuant to Section 3.02(b) of the Partnership Purchase Option
Agreement, Genzyme shall deliver to the Class B Limited Partner, in the manner
and at the time specified in clause (ii) of this subparagraph 3.02(a), the
number of shares of Common Stock that is equal to the quotient of (A) $70,000
divided by (B) 95% of the average Closing Price per share of the Common Stock on
the fifteen trading days immediately preceding the Class B Purchase Option
Exercise Date, as such number of shares may be adjusted in accordance with
clause (i) of this subparagraph 3.02(a), for the Partnership Interest of such
Class B Limited Partner. If Genzyme shall have determined to make the
Combination Payment pursuant to Section 3.01(c) of the Partnership Purchase
Option Agreement and shall not have revoked such determination pursuant to
Section 3.02(b) thereof, Genzyme shall deliver to the Class B Limited Partner
the number of shares of Common Stock that would have been delivered to such
Limited Partner if Genzyme had chosen to make the Stock Payment, multiplied by
the Stock Percentage. For purposes of determining the amount of any payment
under this Section, the Stock Advance Payment or the Combination Payment, as the
case may be, shall be valued at $70,000.
(i) If any event of the type described in Section 3.01(a)(i)
occurs, then the number of shares of Common Stock to be delivered to
the Class B Limited Partner pursuant to this subparagraph 3.02(a)
shall be adjusted in accordance with Section 3.01(a)(i), MUTATIS
MUTANDIS.
(ii) The shares of Common Stock to be delivered to the Class B
Limited Partner on the Class B Purchase Date pursuant to this
subparagraph 3.02(a) shall be in such denominations and registered in
such names as the Class B Limited Partner shall have specified to
Genzyme not less than five (5) business days before the Class B
Purchase Date; PROVIDED that the foregoing shall not entitle the Class
B Limited Partner to transfer its Class B Interest except as provided
in the Limited Partnership Agreement. In the absence of any such
specification, the Class a Limited Partner shall receive one (1)
certificate evidencing the shares of Common Stock to be delivered to
such Class B Limited Partner registered in its name. Such shares of
Common Stock shall be mailed to such Class B Limited Partner by
certified mail, return receipt requested, at the address of such Class
B Limited Partner set forth in the Limited Partner register that shall
be maintained by the Partnership in accordance with Article 13 of the
Limited Partnership Agreement. Genzyme shall pay all documentary,
stamp, transfer or other transaction taxes attributable to the
issuance or delivery of the Delivered Shares.
(b) If Genzyme determines to make the Cash Advance Payment or the
Combination Payment pursuant to Section 3.01(c) or 3.02(b) of the Partnership
Purchase Option
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Agreement, Genzyme shall pay to the Class B Limited Partner (i) in the case of
the Cash Advance Payment, $70,000 on the Class B Purchase Date for the
Partnership interest of such Class B Limited Partner or (ii) in the case of the
Combination Payment, the product of (A) the difference between 100% and the
Stock Percentage and (B) $70,000.
(c) Subject to the provisions of Section 3.03, Genzyme shall pay to
the Class B Limited Partner, in addition to the Stock Advance Payment, the Cash
Advance Payment or the Combination Payment provided for in subsections (a) and
(b) above:
(i) beginning with the Initial Class B Calendar Quarter and
ending with the last business day of the calendar quarter in which the
Class B Threshold occurs, an amount equal to the Class B Percentage of
Product Payments for such quarter, such amount to be reduced, if and
as appropriate, to exclude (y) in the Initial Class B Calendar
Quarter, any Product Payments in respect of any period in the Initial
Class B Calendar Quarter before the Class B Purchase Date and (z) in
the calendar quarter in which the Class B Threshold occurs, any such
payment after the Class B Threshold; and
(ii) beginning with the date on which the Class B Threshold
occurs and ending with the Cut-Off Date, for each calendar quarter (or
portion thereof), an amount equal to 5% of all Product Payments.
(d) Genzyme's obligation to make Product Payments pursuant to this
Section 3.02 shall terminate at the Cut-Off Date.
SECTION 3.03 RECOUPMENT OF ADVANCE PAYMENT. (a) The amount that Genzyme
shall be obligated to pay to each Class A Payment Recipient in each calendar
quarter pursuant to Section 3.01(c), commencing with the twenty-fourth (24th)
calendar quarter after the calendar quarter in which the Class A Purchase Date
falls, shall be reduced by an amount equal to the least of (i) 30% of the amount
which such Class A Payment Recipient otherwise would have been entitled to
receive for such calendar quarter, (ii) 25% of the Down Payment received by such
Class A Payment Recipient and (iii) the amount (if any) by which the Down
Payment received by such Class A Payment Recipient exceeds the aggregate amount
of all reductions theretofore made pursuant to this Section. 3.03(a).
(b) The amount that Genzyme shall be obligated to pay to each Class
B Payment Recipient in each calendar quarter pursuant to Section 3.02(c),
commencing with the twenty-fourth (24th) calendar quarter after the calendar
quarter in which the Class B Purchase Date falls, shall be reduced by an amount
equal to the least of (i) 30% of the amount which such Class B Payment Recipient
otherwise would have been entitled to receive for such calendar quarter, (ii)
$17,500 and (iii) the amount (if any) by which $17,500 exceeds the aggregate
amount of all reductions theretofore made pursuant to this Section 3.03(b).
SECTION 3.04 PREPAYMENT OF OBLIGATIONS. Notwithstanding the foregoing,
Genzyme shall have the right, at any time after the Class A Purchase Date in the
case of the Class A Payment Recipients, and the Class B Purchase Date in the
case of the Class B Payment Recipient, to make an offer or offers to each class
of Payment Recipients to prepay Genzyme's payment obligations under Section 3.01
or Section 3.02, as applicable. Genzyme shall notify
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each Class A Payment Recipient or the Class B Payment Recipient, as the case may
be, in accordance with Section 8.06, of the proposed terms of such offer and
each Payment Recipient shall respond in writing within thirty (30) days to
indicate whether or not it accepts the terms of such offer. Each Payment
Recipient accepting any such offer shall sell its rights to receive payments
pursuant to this Agreement in accordance with the terms of such offer. If, at
any time, at least 66 2/3 in value of the applicable class of Payment Recipients
shall have accepted the terms of any such offer or offers, Genzyme shall have
the right, for a period of sixty (60) days, after the date on which such Payment
Recipients shall have accepted such acceptance, to prepay Genzyme's payment
obligations under Article III, in respect of each Payment Recipient of the same
class who has not accepted the terms of any such offer pursuant to the terms of
the most recent offer accepted.
SECTION 3.05 PAYMENTS. (a) Each Product Payment to a Payment Recipient
pursuant to Section 3.01 or 3.02 shall be made by Genzyme within 60 days of the
last day of each calendar quarter in respect of which Genzyme shall be required
to make any such payment, at which time there shall also be delivered to each
Payment Recipient a financial report of the operations of Genzyme upon which
such Product Payment is based, signed by the Chief Financial Officer, Treasurer
or Controller of Genzyme.
(b) Any cash payment to any Payment Recipient shall be made by
mailing to such Payment Recipient, in accordance with Section 8.06, a check of
Genzyme in the amount of such payment payable to such Payment Recipient.
(c) A portion of each payment payable pursuant to this Article III
to a Payment Recipient, which is made more than six (6) months after the
applicable Purchase Date, shall constitute interest on the remaining portion of
the payment, and shall be computed at the minimum rate in effect, on the Class A
Purchase Date in the case of Class A Payment Recipients and on the Class B
Purchase Date in the case of the Class B Payment Recipient, at which interest
must be stated to avoid the imputation of interest under Section 483 or Section
1274 of the Internal Revenue Code of 1986, as amended, or any applicable
successor provisions.
SECTION 3.06 INTEREST. Any payment pursuant to Sections 3.01 or 3.02 that
is not made on or before the date when due shall accrue interest thereon from
and after such date and until the date of payment at the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York in New York from
time to tine as its Prime Rate or, if such rate is in excess of the rate then
permitted under applicable law, at the highest rate then permitted under
applicable law.
SECTION 3.07 STATEMENTS. Genzyme shall cause to be delivered to each
Payment Recipient within one hundred twenty (120) days of the end of each fiscal
year of Genzyme, a statement setting forth the basis upon which payments were
calculated during the preceding fiscal year and the amount of payments payable
during and with respect to such fiscal year, reported on by Genzyme's certified
public accountants.
SECTION 3.08 RECORDS. Genzyme shall keep accurate records which are
sufficient for the computation of the payments to be made hereunder and shall
make such records
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available, upon reasonable advance notice, to the Payment Recipients at the
place or places where such records are customarily kept, for inspection during
normal business hours.
ARTICLE IV.
COVENANTS OF GENZYME
Genzyme hereby covenants and agrees:
SECTION 4.01 DELIVERY OF PROSPECTUS. (a) If Genzyme makes the Stock Advance
Payment or the Combination Payment, as expeditiously as possible, to furnish to
each Limited Partner such number of copies of the Prospectus as such Limited
Partner shall reasonably request, or as shall be necessary in order to conform
with the requirements of the Act, or the applicable rules and regulations of the
Commission thereunder, in order to facilitate the sale or other disposition by
such Limited Partner of the shares delivered to it pursuant to Sections 3.01(a)
or 3.02(a) of this Agreement.
(b) If, during such period after the delivery of any Prospectus
pursuant to Section 4.01(a) of this Agreement as in the opinion of outside
counsel to Genzyme the Prospectus is required by law to be delivered in
connection with sales by any Limited Partner, any event shall occur as a result
of which it is necessary to amend or supplement the Prospectus in order to make
the statements therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if it is necessary to amend or
supplement the Prospectus to comply with law, forthwith to prepare and furnish,
at its own expense, to any Limited Partner to which any Prospectus or
Prospectuses may have been delivered pursuant to Section 4.01(a) of this
Agreement, either amendments or supplements to the Prospectus, in such numbers
as such Limited Partner shall reasonably request, or as shall be necessary in
order to comply with any law, so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the Prospectus
will comply with law.
SECTION 4.02 EXISTENCE OF PARTNERSHIP. Until the later of (a) one year
following the Class A Purchase Option Termination Date, or (b) 90 days after the
Class A Purchase Date or, if Genzyme purchases the Class B Interest, 90 days
after the Class B Purchase Date, to take all action necessary to maintain the
existence of the Partnership and to prevent the termination or dissolution
thereof, or the winding up of its affairs.
SECTION 4.03 PAYMENT RECIPIENT REGISTER. Until the termination of this
Agreement, to keep a register which, subject to such reasonable regulations as
it may prescribe, shall contain the names and addresses of each Payment
Recipient and until Genzyme shall have received notice of a sale or an
assignment made in accordance with Article VII hereof, Genzyme shall be entitled
to deem and treat each Payment Recipient contained in such register as the
Payment Recipient for the purpose of making payments or giving notices hereunder
and for all other purposes.
SECTION 4.04 CONFORMED COPIES OF AGREEMENT. To cause the General Partner to
deliver a conformed copy of this Agreement to each Class A Limited Partner and,
if Genzyme
13
purchases the Class B Interest, to the Class B Limited Partner promptly after
the execution hereof.
SECTION 4.05 MANUFACTURE AND SALE OF PRODUCTS. To use its best efforts to
manufacture and sell the Products within the Field of Activity and the
Territory; PROVIDED that if Genzyme shall determine that such manufacture or
sale of such Products within the Field of Activity is not commercially
practicable, it shall use its best efforts to license or sell the Technology for
use within the Field of Activity and the Territory to a third party for the
highest consideration that, in Genzyme's reasonable business judgment, is
obtainable.
SECTION 4.06 SALE OR DISPOSITION OF TECHNOLOGY. Notwithstanding any other
provision of this Agreement, Genzyme shall not sell or license or sublicense any
of the Background Technology or Program Technology within the Field of Activity
and the Territory to any person unless such person agrees in writing to be
bound, for the benefit of each Payment Recipient, by provisions substantially
similar to the provisions of Article III hereof (excluding any provisions solely
regarding the Cash Advance Payment, the Stock Advance Payment or the Combination
Payment).
ARTICLE V.
DISCLAIMERS
SECTION 5.01 NO WARRANTY ON PRODUCTS. Neither the General Partner, any
Class A Limited Partner nor the Class B Limited Partner makes any warranty
(except for the representations and warranties made by it pursuant to Article II
hereof), express or implied, and it is expressly agreed that neither the General
Partner, any Class A Limited Partner nor the Class B Limited Partner shall be
liable, or in any way responsible, for the operation, performance,
serviceability, quality of performance, material or commercial success of any
Product within the Field of Activity or any process related to the Technology,
or the use, sale, lease, license or other disposition of any such Product within
the Field of Activity or any process related to the Technology, in whole or in
part.
SECTION 5.02 NO WARRANTY ON TECHNOLOGY. Neither the General Partner, any
Class A Limited Partner nor the Class B Limited Partner makes any
representation, or extends any warranty of any kind, either express or implied,
or assumes any responsibility whatever with respect to the use, sale, or other
disposition by Genzyme or its vendees or transferees of products incorporating
or made by use of the Background Technology or the Program Technology.
ARTICLE VI.
TERM AND TERMINATION
This Agreement shall continue in effect until terminated, in whole or
in part, in accordance with the following provisions. Payments accrued as of the
date of termination of this Agreement shall remain due and payable
notwithstanding termination.
SECTION 6.01 EVENTS OF DEFAULT. (a) The events set forth below shall
constitute "events of default": (i) the institution of a voluntary case by
Genzyme under any applicable
14
bankruptcy, insolvency or other similar law now or hereafter in effect, or the
consent by Genzyme to the entry of an order for relief in any involuntary case
under any such law, the consent by Genzyme to the appointment of or possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator or similar
official of Genzyme or of any substantial part of its property, the general
assignment by Genzyme for the benefit of creditors, or the taking of any
corporate action by Genzyme in furtherance of any of the foregoing; or (ii) the
entry of a decree or order for relief by a court having jurisdiction in the
premises in respect to Genzyme in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
similar official of Genzyme or of any substantial part of its property or
ordering of the winding up or liquidation of its affairs, and any such decree or
order shall remain unstayed or undischarged and in effect for a period of sixty
(60) days; or (iii) the cessation of operations by Genzyme; or (iv) the seizure
or attachment of all or a substantial part of the assets of Genzyme in
conjunction with any action against it by any third party and such seizure or
attachment shall not be terminated, vacated or set aside or stayed within sixty
(60) days from the date of such seizure or attachment; or (v) if Genzyme elects
to make the Stock Advance Payment or the Combination Payment pursuant to Section
3.01 of the Partnership Purchase Option Agreement which is not revoked pursuant
to Section 3.02 of the Partnership Purchase Option Agreement, a failure by
Genzyme to deliver to each Limited Partner the shares of Common Stock to be
delivered to such Limited Partner pursuant to Sections 3.01 or 3.02 of this
Agreement; or (vi) a failure by Genzyme to make any payment required by this
Agreement when due; or (vii) a default in the performance, or breach, of any
covenant or warranty of Genzyme contained in this Agreement and continuance of
such default or breach for a period of ninety (90) days after notice of such
default or breach has been given to Genzyme in accordance with Section 8.06.
Genzyme shall promptly notify each Payment Recipient in writing upon the
occurrence of any event of default of which Genzyme has knowledge. Upon the
occurrence of any event of default and prior to the cure thereof, each Payment
Recipient will have the right to terminate this Agreement as it applies to such
Payment Recipient immediately upon giving notice to such effect to Genzyme and
shall be free to pursue against Genzyme any remedy available at law, in equity
or by statute or otherwise.
SECTION 6.02 TERM AND TERMINATION. If not terminated earlier pursuant to
Section 6.01, this Agreement (except for Sections 2.01, 2.02, 2.04, 2.05, 2.07
and 2.08 and Article V) shall terminate when the shares of Common Stock to be
delivered to the Class A Limited Partners in accordance with Section 3.01, if
any, and, if Genzyme purchases the Class B Interest, to the Class B Limited
Partner in accordance with Section 3.02, if any, shall have been delivered and
all payments called for in Article III have been made by Genzyme to the Class A
Payment Recipients, and, if Genzyme purchases the Class B Interest, the Class B
Payment Recipients and the parties hereto shall thereafter have no further
rights or obligations hereunder. The provisions of Sections 2.01, 2.02, 2.04,
2.05, 2.07 and 2.08 and Article V shall survive the termination of this
Agreement.
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ARTICLE VII.
SALE OR ASSIGNMENT
SECTION 7.01 SALE OR ASSIGNMENT. Genzyme shall not assign, delegate or
transfer this Agreement or sell any or all of its rights hereunder without the
prior written consent of 66 2/3% of the Class A Payment Recipients and the Class
B Payment Recipient, which consents shall not be unreasonably withheld, except
that Genzyme may make such assignment, delegation, transfer or sale without the
prior written consent of any Payment Recipient (i) to any Person to which
Genzyme has assigned, sold, leased, transferred or otherwise disposed of all or
substantially all of Genzyme's assets, (ii) to any successor corporation
resulting from any merger or consolidation of Genzyme with or into another
corporation or (iii) to any wholly-owned subsidiary of Genzyme PROVIDED,
HOWEVER, that Genzyme will not merge or consolidate with any Person or sell,
lease, transfer or otherwise dispose of substantially all of its assets to any
person, unless (a) the Person formed by or surviving such consolidation or
merger or to which Genzyme effects such sale, lease, transfer or other
disposition shall be a solvent corporation organized and existing under the laws
of the United States of America or a state thereof; and (b) such successor or
transferee corporation shall expressly assume in writing by an instrument or
instruments satisfactory in scope, substance, form and legal effect to the
Partnership, the due and punctual payment, performance and observance of all
obligations of Genzyme under this Agreement, with the same effect as if such
corporation had originally been Genzyme hereunder; and PROVIDED, FURTHER, that
in the event of any assignment under this Section 7.01, this Agreement shall
remain binding upon the assignor. No Payment Recipient shall assign or transfer
this Agreement or sell any or all of its rights hereunder except the Common
Stock delivered to it pursuant to this Agreement after such delivery, if any,
without the prior written consent of Genzyme, which consent may be withheld in
its absolute discretion; PROVIDED that the Class B Payment Recipient may make
any such assignment, transfer or sale to any present or former officer or
officers or director or directors of PaineWebber Development Corporation without
the consent of Genzyme. Genzyme and each Payment Recipient shall provide written
notice to each other of any such assignment or sale made in accordance with this
Section 7.01 no later than ten (10) days prior to such assignment or sale
setting forth the identity and address of the assignee or purchaser and
summarizing the terms of the assignment or sale. Subject to the restrictions on
assignment herein set forth, this Agreement shall inure to the benefit of the
successors and assigns of each of the parties.
ARTICLE VIII.
MISCELLANEOUS PROVISIONS
SECTION 8.01 PARTIES INDEPENDENT. In making and performing this Agreement,
the parties act and shall act at all times as independent contractors and
nothing contained in this Agreement shall be construed or implied to create an
agency, partnership or employer and employee relationship among any of the
parties hereto. At no time shall any party make commitments or incur any charges
or expenses for or in the name of any other party.
SECTION 8.02 ENTIRE AGREEMENT; AMENDMENT. This Agreement sets forth and
constitutes the entire agreement among the parties hereto with respect to the
subject matter
16
hereof, and shall supersede any and all prior agreements, understandings,
promises and representations made by any party to any other party concerning the
subject matter hereof and the terms applicable hereto. This Agreement may not be
released, discharged, amended or modified in any manner except by an instrument
in writing signed by each party hereto.
SECTION 8.03 CHOICE OF LAW. This Agreement shall be deemed to have been
entered into and shall be construed and enforced in accordance with the laws of
the Commonwealth of Massachusetts as applied to contracts made and to be
performed entirely within Massachusetts.
SECTION 8.04 SEVERABILITY. If any provision of this Agreement is or becomes
or is deemed invalid, illegal or unenforceable in any jurisdiction, such
provision shall be construed or deemed amended to conform to applicable laws so
as to be valid and enforceable, or if it cannot be so construed or deemed
amended without materially altering the intention of the parties, it shall be
stricken and the remainder of the Agreement shall remain in full force and
effect.
SECTION 8.05 NO WAIVER. No waiver of any right under this Agreement shall
be deemed effective unless contained in a writing signed by the party charged
with such waiver, and no waiver of any right arising from any breach or failure
to perform shall be deemed to be a waiver of any future such right or of any
other right arising under this Agreement.
SECTION 8.06 PAYMENTS AND NOTICES. Payments hereunder shall be sent, and
notices required or permitted hereunder shall be in writing and shall be sent,
to each Payment Recipient at the address given for such Payment Recipient in the
Payment Recipient Register maintained by Genzyme pursuant to Section 4.03 of
this Agreement and shall be sent to each other party as follows:
If to Genzyme: Genzyme Corporation
One Kendall Square
Boston, MA 02139
Telephone: (617) 252-7500
Telefax: (617) 252-7600
Attention: Henri A. Termeer
If to the Partnership: Genzyme Development Partners, L.P.
One Kendall Square
Cambridge, MA 02139
Telephone: (617) 252-7500
Telefax: (617) 252-7600
Attention: Henri A. Termeer
17
If to the General Partner: Genzyme Development Corporation II
One Kendall Square
Cambridge, MA 02139
Telephone: (617) 252-7500
Telefax: (617) 252-7600
Attention: Henri A. Termeer
or to such other address as such other party may hereafter specify in writing,
and shall be deemed given on the earlier of (i) physical delivery to a party and
(ii) three days after mailing by prepaid first class or express mail.
SECTION 8.07 HEADINGS. Article and section headings contained in this
Agreement are included for convenience only and are not to be used in construing
or interpreting this Agreement.
SECTION 8.08 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original and all of which shall
constitute together but one and the same instrument.
SECTION 8.09 BINDING AGREEMENT. When signed by Genzyme, and by the General
Partner, on its own behalf, on behalf of the Partnership and as attorney-in-fact
for each of the Class A Limited Partners, this Agreement shall be a valid and
binding agreement of Genzyme, the Partnership, the General Partner and each of
the Class A Limited Partners whether or not the Class B Limited Partner signs as
a party hereto; but upon the signature of the Class B Limited Partner, after
signature by the other parties hereto, this Agreement shall become a valid and
binding agreement of Genzyme, the Partnership, the General Partner, each of the
Class A Limited Partners and the Class B Limited Partner.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their authorized officers as of the day and year first above
written.
GENZYME CORPORATION
By: /S/ HENRI A. TERMEER
--------------------------------------------------
Title: Chairman of the Board,
President and Chief Executive Officer
GENZYME DEVELOPMENT PARTNERS, L.P.
By GENZYME DEVELOPMENT
CORPORATION II, as General Partner
By: /S/ HENRI A. TERMEER
--------------------------------------------------
Title: President
18
GENZYME DEVELOPMENT CORPORATION II
By: /S/ HENRI A. TERMEER
--------------------------------------------------
Title: President
CLASS A LIMITED PARTNERS
By GENZYME DEVELOPMENT CORPORATION II, as
Attorney-in-Fact for each of the
Class A Limited Partners
By: /S/ HENRI A. TERMEER
--------------------------------------------------
Title: President
PAINEWEBBER DEVELOPMENT CORPORATION,
as Class B Limited Partner
By:
--------------------------------------------------
Title:
19