EXHIBIT 10.4
AMENDED AND RESTATED CONVERTIBLE
DEBT AGREEMENT
THIS AMENDED AND RESTATED CONVERTIBLE DEBT AGREEMENT dated as of
September 4, 1997 (this "Agreement") is between Genzyme Transgenics Corporation,
a Massachusetts corporation ("GTC"), and Genzyme Corporation, a Massachusetts
corporation ("Genzyme").
RECITALS:
A. Genzyme and GTC entered into a Convertible Debt and Development
Funding Agreement dated as of March 29, 1996, as amended by a First Amendment
dated as of May 3, 1996, by Amendment No. 2 dated March 31, 1997 and by
Amendment No. 3 dated June 30, 1997 (as amended, the "Prior Agreement") whereby
Genzyme provided (i) a revolving line of credit and (ii) certain funding for the
continued development of antithrombin III ("AT-III"), to GTC in exchange for
securities of GTC and certain co-marketing rights to AT-III.
B. Genzyme and GTC intend to enter into a separate Collaboration
Agreement relating to the further development and commercialization of AT-III
and funding therefor in satisfaction of Section 2.4 of the Prior Agreement.
C. Genzyme and GTC desire to amend certain terms and conditions relating
to the revolving credit facility provided by Genzyme to GTC, including, among
other terms, a reduction in the amount of credit available to GTC, an option for
GTC to convert the revolving credit facility into a term loan upon maturity and
the establishment of mandatory prepayment obligations for GTC.
D. Article 1 of the Prior Agreement (except Sections 1.10 and 1.11) shall
be superseded and replaced by the terms of this Agreement and the remainder of
the Prior Agreement shall remain in full force and effect.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, GTC and Genzyme agree as follows:
ARTICLE 1. REVOLVING CREDIT
1.1. Line of Credit. Subject to the terms and conditions set forth herein,
Genzyme shall make loans to GTC (the "Revolving Credit Loans") from time to time
during the Revolving Credit Availability Period (but not more often than twice
in any month) in immediately available funds in the aggregate principal amount
not exceeding the Revolving Credit Commitment. Within the foregoing limits and
subject to the terms and conditions set forth herein, GTC may borrow, prepay and
reborrow the Revolving Credit Loans.
1.2. The Note.
(a) The Revolving Credit Loans shall be evidenced by a promissory note
(the "Revolving Credit Note") made by GTC and payable to the order of Genzyme,
substantially in the form of Exhibit A annexed hereto, in the principal amount
equal to the initial Revolving Credit Commitment with a final maturity of the
Revolving Credit Maturity Date. The Revolving Credit Note shall be dated on or
before the date of the first Revolving Credit Loan and shall have the blanks
therein appropriately completed.
(b) Genzyme shall maintain records in which it shall record (i) the amount
of each Loan made hereunder, (ii) the amount of any principal or interest due
and payable or to become due and payable from GTC hereunder and (iii) the amount
of any sum received by Genzyme hereunder.
(c) The entries made in the records maintained pursuant to paragraph (b)
of this Section 1.2 shall be prima facie evidence of the existence and amounts
of the obligations recorded therein; provided that the failure of Genzyme to
maintain such account or any error therein shall not in any manner affect the
obligation of GTC to repay the Loans in accordance with the terms of this
Agreement.
1.3. Use of Proceeds. GTC shall use all proceeds of the Revolving Credit
Loans to fund its current operations.
1.4. Requests for Revolving Credit Loans.
(a) To request a Revolving Credit Loan, GTC shall notify Genzyme of such
request by a written loan request signed by GTC and received by Genzyme not
later than 11:00 a.m., Boston, Massachusetts time, two (2) Business Days before
the date of the proposed Borrowing.
(b) Each such written loan request shall specify the following
information:
(i) the aggregate amount requested, which shall not be less than
$100,000;
(ii) the requested date of such Revolving Credit Loan, which shall be
a Business Day; and
(iii) the location and number of GTC's account to which funds are
to be disbursed.
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Each loan request shall constitute a certification that the representations and
warranties contained herein were true and correct when made and are true and
correct as of the date of such Revolving Credit Loan and that no Default or
Event of Default has occurred and is continuing.
1.5. Termination and Reduction of Commitment.
(a) Unless previously terminated, the Revolving Credit Commitment shall
terminate at the close of business on the Revolving Credit Maturity Date.
(b) GTC may, at its option, at any time terminate, or from time to time
reduce, the Revolving Credit Commitment.
(c) Any conversion of the outstanding principal amount of any Revolving
Credit Loans pursuant to Section 1.7 shall reduce the Revolving Credit
Commitment to the extent of such converted principal amount.
(d) GTC shall notify Genzyme of any election to terminate or reduce the
Revolving Credit Commitment under paragraph (b) of this Section 1.5 at least
three (3) Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof. Each notice
delivered by GTC pursuant to this Section 1.5 shall be irrevocable; provided
that a notice of termination of Revolving Credit Commitment delivered by GTC may
state that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by GTC (by notice to
Genzyme on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of Revolving Credit Commitment shall be
permanent.
1.6. Repayment of Loans.
(a) GTC hereby unconditionally promises to pay to Genzyme the then unpaid
principal amount of the Revolving Credit Loans on the Revolving Credit Maturity
Date. In addition, if following any reduction in the Revolving Credit
Commitment the aggregate principal amount of the Revolving Credit Loans shall
exceed the aggregate Revolving Credit Commitment, GTC shall immediately pay the
Revolving Credit Loans in an aggregate amount equal to such excess; provided
that any prepayments on account of reductions in the Revolving Credit Commitment
pursuant to Section 1.11 shall be made in accordance with Section 1.11(b)(iii).
(b) Conversions pursuant to Section 1.7 of outstanding principal amounts
shall be deemed to be repayments as of the date of such conversion.
1.7. Conversion to GTC Common Stock.
(a) Genzyme's Option. All or part of any outstanding Loans and accrued
interest thereon, or any portion thereof, may, at Genzyme's option, be converted
at any time into shares of GTC's common stock, par value $.01 per share (the
"GTC Common Stock"), at a conversion price equal to the average closing price of
GTC Common Stock over the 20 Trading Day period ending two (2) Trading Days
prior to the date of conversion (the "Conversion Price").
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(b) GTC's Option. Outstanding Loans and accrued interest thereon, or any
portion thereof, may, at the option of GTC, be converted at the Conversion Price
once each fiscal quarter into GTC Common Stock; provided, however, such GTC
conversion right may be exercised only to the extent necessary, in the
reasonable judgment of GTC, to maintain GTC's tangible net worth as determined
at the end of such fiscal quarter at the minimum amount required for continued
listing on the Nasdaq National Market.
(c) Registration Rights. The shares of GTC Common Stock issuable upon
conversion shall be entitled to same registration rights as are applicable to
the other shares of Common Stock held by Genzyme, which rights are set forth in
Section 8 of the Series A Convertible Preferred Stock Purchase Agreement dated
May 1, 1993 between GTC and Genzyme.
1.8. Term Loan.
(a) Making the Term Loan. Subject to Section 1.8(c), Genzyme agrees that,
subject to the terms and conditions of this Agreement, and in reliance upon the
representations, warranties and covenants contained herein and provided no
Default or Event of Default has occurred, at GTC's option, Genzyme shall make a
term loan (the "Term Loan" and with the Revolving Credit Loans, collectively the
"Loans") to GTC for the purpose of repaying all outstanding principal of the
Revolving Credit Loans, on the Revolving Credit Maturity Date which Term Loan
shall be in a principal amount equal to the outstanding balance of the Revolving
Credit Loans on the Revolving Credit Maturity Date, or in such lesser amount as
is specified in writing by GTC to Genzyme at least two (2) Business Days prior
to the Revolving Credit Maturity Date. Any portion of the Revolving Credit
Loans not repaid by the making of the Term Loan shall be due and payable in
full, along with all accrued interest thereon, on the Revolving Credit Maturity
Date. Genzyme shall make the Term Loan hereunder on the Revolving Credit
Maturity Date by crediting the amount thereof to the payment of the Revolving
Credit Note.
(b) Term Note: Repayment Terms. The Term Loan shall be evidenced by a
note (the "Term Note"), substantially in the form of Exhibit B annexed hereto,
payable to the order of Genzyme, duly executed on behalf of GTC, dated the
Revolving Credit Maturity Date. The Term Loan shall be payable in 12
installments consisting of 11 equal consecutive installments of principal, each
installment in an amount sufficient to fully amortize the original principal
amount of the Term Loan assuming quarterly principal payments over a seven-year
period, payable on each Payment Date together with interest payable in
accordance with Section 1.9(c) plus one final installment on the Term Loan
Maturity Date which shall include all unpaid principal, accrued interest and any
and all other amounts due and payable under the Term Note or hereunder.
(c) Conditions Include Additional Covenants. The commitment of Genzyme to
provide the Term Loan is subject to the agreement of GTC to certain additional
covenants in form and substance satisfactory to both Genzyme and GTC, regarding
the financial performance of GTC which covenants shall include covenants
establishing the minimum liquidity of GTC and its Subsidiaries.
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1.9. Interest Rate.
(a) Unless and until converted to GTC Common Stock pursuant to Section
1.7, each Loan shall bear interest at a rate per annum equal to the Interest
Rate.
(b) Notwithstanding the foregoing, (i) in the event that an Event of
Default shall have occurred under Section 4.1(a), all amounts which are not paid
when due shall bear interest beginning on the date such amounts were originally
due until paid in full at the Post-Default Rate and (ii) during the period when
any other Event of Default shall have occurred the principal of all Loans
hereunder shall bear interest, after as well as before judgment, at the
Post-Default Rate beginning on the date such Event of Default occurred until
such Event of Default is cured, in each case to the extent permitted by law.
(c) Accrued interest on each Loan shall be payable in arrears on each
Payment Date; provided that (i) interest accrued at the Post-Default Rate shall
be payable on demand, (ii) in the event of any repayment or prepayment in full
of any Term Loan, accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and (iii) all
accrued interest on Revolving Credit Loans shall be payable upon the Revolving
Credit Maturity Date or the earlier termination of the Revolving Credit
Commitment.
(d) All interest hereunder shall be computed on the basis of a year of 360
days, and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
1.10. Payments Generally.
(a) GTC shall make each payment required to be made by it hereunder
(whether of principal, interest or fees, or otherwise) prior to 12:00 noon,
Boston, Massachusetts time, on the date when due, in immediately available
funds, without set-off or counterclaim. Any amounts received after such time on
any date may, in Genzyme's discretion be deemed to have been received on the
next succeeding Business Day for purposes of calculating interest thereon. All
such payments shall be made to Genzyme at its principal offices or at such of
its other offices in Cambridge, Massachusetts as shall be notified to the
relevant parties from time to time. If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All
payments hereunder shall be made in U.S. dollars.
(b) If at any time insufficient funds are received by and available to
Genzyme to pay fully all amounts of principal, interest and fees then due
hereunder, such funds shall be applied (i) first, to pay interest and fees then
due hereunder and (ii) second, to pay principal and then due hereunder.
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1.11. Prepayment of Loans.
(a) Optional Prepayments. GTC shall have the right at any time and from
time to time to prepay the Loans in whole or in part. Each prepayment of a Term
Loan shall be applied in inverse order of maturity.
(b) Mandatory Prepayments. GTC shall make prepayments of the Loans
hereunder (and reduce the Revolving Credit Commitment hereunder) as follows:
(i) Offering of Equity. GTC agrees, on or prior to the closing of
any sale of equity securities by GTC or any of its Subsidiaries, to deliver
to Genzyme a statement certified by the chief financial officer of GTC, in
form and detail reasonably satisfactory to Genzyme, of the estimated amount
of the Net Cash Payments of such sale of securities that will (on the date
of such sale of securities) be received by GTC or any of its Subsidiaries
in cash. The Revolving Credit Commitment hereunder shall be reduced on the
date of such receipt, or the Term Loan shall be prepaid, in an aggregate
amount equal to
(1) 10% of the amount of the first $40,000,000 of all Net Cash
Payments received by GTC or any of its Subsidiaries from the sale of
securities from and after the date hereof plus
(2) when the aggregate Net Cash Payments received by GTC from
the sale of securities from and after the date hereof exceeds
$40,000,000, 20% of the amount of such Net Cash Payments received by
GTC or any of its Subsidiaries from the sale of securities from and
after the date hereof in excess of $40,000,000, and
GTC shall make prepayments of Revolving Credit Loans to the extent required
by Section 1.6(a). Prepayments of Loans and reductions of the Revolving
Credit Commitment shall be effected in each case in the manner and to the
extent specified in paragraph (iii) of this Section 1.11(b).
(ii) Sale of Assets. GTC agrees, on or prior to the occurrence of any
Disposition by GTC or any of its Subsidiaries, to deliver to Genzyme a
statement certified by the chief financial officer of GTC, in form and
detail reasonably satisfactory to Genzyme, of the estimated amount of the
Net Cash Payments of such Disposition that will be received by GTC or any
of its Subsidiaries in cash on the date of such Disposition plus the
amount, if any expected to be received thereafter. The Revolving Credit
Commitment hereunder shall be reduced on the date of the receipt of such
Net Cash Payments relating to any Disposition or the Term Loan shall be
prepaid, as follows:
(1) until the aggregate Net Cash Payments of all Dispositions
from and after the date hereof equal or exceed $20,000,000, no
reduction of the Revolving Credit Commitment or prepayment of the Term
Loan is required from the proceeds of Dispositions;
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(2) when the aggregate Net Cash Payments of all Dispositions
from and after the date hereof are cumulatively equal to or greater
than $20,000,000 but less than $40,000,000, the Revolving Credit
Commitment shall be reduced by, or the Term Loan shall be prepaid in
an amount equal to, $4,000,000; and
(3) when the aggregate Net Cash Payments of all Dispositions
from and after the date hereof are cumulatively greater than
$40,000,000, all Loans shall be repaid in full and the Revolving
Credit Commitment shall terminate, and
GTC shall make prepayments of Revolving Credit Loans to the extent required
by Section 1.6(a). Prepayments of Loans and reductions of the Revolving
Credit Commitment shall be effected in each case in the manner and to the
extent specified in paragraph (iii) of this Section 1.11(b).
(iii) Application. Upon the occurrence of any of the events
described in paragraphs (i) or (ii) of this Section 1.11(b), (1) the
Revolving Credit Commitment shall be reduced as provided in such paragraphs
and (2) GTC shall prepay (A) the Revolving Credit Loans to the extent that
the aggregate principal amount of such Revolving Credit Loans exceeds the
Revolving Credit Commitment as adjusted or in full if required paragraph
(ii)(3) above or (B) the Term Loan as provided in such paragraphs and, in
each case, the amount of the required prepayment shall be applied to the
prepayment of the Loans on the ninetieth day after the date on which such
Net Cash Proceeds are received by GTC satisfying such conditions. Each
prepayment of any Term Loan shall be applied to the installments thereof in
the inverse order of maturity.
(iv) Prepayments Accompanied by Interest. Prepayments shall be
accompanied by accrued interest to the extent required by Section 1.9.
1.12. Fees.
(a) GTC agrees to pay to Genzyme a commitment fee, which shall accrue at a
rate equal to 0.125% on the daily average unused amount of the respective
Revolving Credit Commitment during the period from and including the date hereof
to but excluding the date on which such Revolving Credit Commitment terminates.
Accrued commitment fees shall be payable in arrears on each Payment Date and, in
respect of any Revolving Credit Commitment, on the date such Revolving Credit
Commitment terminate, commencing on the first such date to occur after the date
hereof. All commitment fees shall be computed on the basis of a year of 360
days and shall be payable for the actual number of days elapsed (including the
first day but excluding the last day).
(b) The fee payable under Section 1.12(a) may be paid by GTC in cash or by
issuance to Genzyme of warrants with a term of five (5) years for the purchase
of GTC Common Stock. The exercise price of each such warrant shall be equal to
the closing price of GTC Common Stock on the Trading Day immediately preceding
the date on which such warrant is issued as reported by the Nasdaq National
Market or such other principal securities exchange or market on which GTC Common
Stock is then traded. The number of shares of GTC Common Stock subject to each
such warrant shall be determined using the Black-Scholes valuation method and
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using the per share exercise price of the warrant as the value per share of GTC
Common Stock for purposes of such calculation, and Coopers & ▇▇▇▇▇▇▇ L.L.P. (or
such other independent accounting firm mutually agreeable to Genzyme and GTC)
shall perform such calculation.
1.13. Subordination. Genzyme has executed a Subordination Agreement in
favor of GTC's senior lender, BankBoston, N.A., formerly The First National Bank
of Boston (the "Bank"), whereby the obligations of GTC to repay amounts accrued
hereunder to Genzyme are subordinated to GTC's obligations to the Bank and shall
confirm such subordination at the reasonable request of the Bank.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES
2.1. Representations, Warranties and Covenants of GTC. GTC represents,
warrants and covenants to Genzyme as follows:
(a) GTC is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts with corporate
powers adequate for executing, delivering and performing its obligations under
this Agreement and the Notes.
(b) The execution, delivery and performance of this Agreement, the Notes
and any other documents delivered or to be delivered to Genzyme have been duly
authorized by all necessary corporate action on the part of GTC and this
Agreement, the Notes and all other necessary documents have been duly executed
and delivered and, as executed, constitute the valid and binding obligations of
GTC, enforceable against GTC in accordance with their respective terms.
(c) The execution, delivery and performance of this Agreement, the Notes
and any other documents delivered or to be delivered to Genzyme do not and will
not conflict with or contravene any provision of the charter documents or
by-laws of GTC or any agreement, document, instrument, indenture or other
obligation of GTC, nor does it or will it result in a violation of or default
under any law, rule, regulation, order, writ, judgment, injunction, decree,
determination, award, indenture, agreement, lease or instrument now in effect
having applicability to GTC, or to any of its properties, nor does it or will it
result in any encumbrance on GTC or any of its properties, nor does it or will
it require any governmental or third party consents. As of the date hereof, GTC
is not in default under any provision under the Prior Agreement.
(d) The financial statements of GTC as at December 31, 1996 and for the
period then ended included in its filings under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), fairly present the financial condition of
GTC as of the dates thereof and its results of operations for the periods then
ended and have been prepared in accordance with generally accepted accounting
principles consistently applied.
(e) There is no litigation or proceeding pending before any court or
governmental or administrative agency or, to the knowledge of GTC, threatened,
or any basis therefor, that is
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required to be disclosed in GTC's periodic filings under the Exchange Act and
that has not been so disclosed.
(f) Since December 31, 1996, there has been no material adverse change in
the business, prospects, financial condition or operations of the GTC.
(g) The issuance and delivery to Genzyme of the shares of GTC Common Stock
issuable upon conversion of any amounts payable to Genzyme hereunder in
accordance with this Agreement have been duly authorized by all necessary
corporate action on the part of GTC. Said shares when so issued and delivered
in accordance with the provisions of this Agreement will be duly and validly
issued, fully paid and non-assessable.
2.2. Representations, Warranties and Covenants of Genzyme. Genzyme
represents, warrants and covenants to GTC as follows:
(a) Genzyme is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts with corporate
powers adequate for executing, delivering and performing its obligations under
this Agreement.
(b) This Agreement has been executed in the name and on behalf of Genzyme
by a duly elected officer of Genzyme, and the execution, delivery and
performance of this Agreement by Genzyme are subject to the ratification and
confirmation of this Agreement by Genzyme's Board of Directors. Genzyme shall
use its reasonable best efforts to obtain the aforementioned ratification and
confirmation as soon as practicable after the date hereof.
(c) The execution, delivery and performance of this Agreement do not and
will not conflict with or contravene any provision of the charter documents or
by-laws of Genzyme or any agreement, document, instrument or other obligation of
Genzyme.
(d) Genzyme is acquiring the Notes and the GTC Common Stock issuable upon
conversion thereof (the "Conversion Shares") for its own account for investment
and not with a view to, or for sale in connection with, any distribution
thereof, nor with any present intention of distributing or selling the same; and
Genzyme has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for the disposition thereof.
(e) As the holder of approximately 43% of the outstanding GTC Common
Stock, Genzyme is familiar with GTC, its business and its personnel. The
officers of GTC have made available to Genzyme any and all information which it
has requested and have answered to Genzyme's satisfaction all inquiries made by
Genzyme. Genzyme has such knowledge and experience as is necessary to properly
evaluate the risks and merits of an investment in GTC.
(f) Genzyme acknowledges that the Notes and the Conversion Shares shall
not be sold or transferred unless either (i) they first shall have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or (ii) GTC first shall have been furnished with an opinion of legal counsel,
reasonably satisfactory to GTC, to the effect that such sale or transfer is
exempt from the registration requirements of the Securities Act, and that the
Revolving Credit
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Note and the certificates representing the Conversion Shares shall bear an
appropriate legend to that effect.
ARTICLE 3. COVENANTS
3.1. Covenants of GTC. On and after the date hereof and so long as the
Revolving Credit Commitment is outstanding and until all of the Loans and all
other amounts due hereunder from GTC to Genzyme shall have been paid in full,
GTC shall comply with the covenants set forth in Section 3.2 as well as the
affirmative and negative covenants set forth in Section 8 of the Revolving
Credit Agreement dated as of July 3, 1995 among GTC, its subsidiaries and the
Bank, as amended (the "Credit Agreement"), which covenants are hereby
incorporated by reference as if set forth herein in full, as such covenants may
from time to time be amended by the parties to the Credit Agreement or waived by
the Bank; provided that for purposes of this Section 3.1 and the covenants so
incorporated, "Borrower" shall mean GTC, "Bank" shall mean Genzyme and
"Agreement" shall mean this Agreement; provided further that the certificate
required to be delivered to Genzyme by GTC pursuant to this Section 3.1 as
required by Section 8.1(a)(iii) of the Credit Agreement shall include a
computation demonstrating the amount of Unfunded R&D and compliance with the
covenants set forth in Section 3.2. All other terms incorporated and not
otherwise defined in this Section 3.1 shall have the meanings set forth in the
Credit Agreement. Such covenants shall be deemed to survive with respect to the
parties hereto notwithstanding the earlier termination of the Credit Agreement.
3.2. Additional Financial Covenants of GTC. GTC agrees that, so long as
the Revolving Credit Commitment and until all of the Loans and all other amounts
due hereunder from GTC to Genzyme shall have been paid in full:
(a) for the period commencing on April 1, 1998, and ending at the end of
each fiscal quarter through the fiscal quarter ending March 31, 1999, GTC will
not permit its Consolidated EBITDA for any such period as at the last day of
such period to be less than zero; and
(b) commencing with the fiscal quarter ending on June 30, 1999, GTC will
not, as at the last day of each fiscal quarter, permit its Consolidated EBITDA
for the period of four (4) consecutive fiscal quarters ending or most recently
ended prior to such date to be less than zero.
ARTICLE 4. EVENTS OF DEFAULT
4.1. Events of Default. Each of the events set forth below shall
constitute an "Event of Default":
(a) A payment of principal and/or interest on any Loan is not made within
five (5) days after the date due;
(b) A representation or warranty of GTC in this Agreement shall prove to
have been incorrect when made or deemed made in any material respect;
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(c) GTC shall be in default under any provision of this Agreement and
shall fail to remedy such default within 20 days of receiving written notice
thereof from Genzyme;
(d) Any bankruptcy, receivership, insolvency or reorganization proceedings
shall be instituted by GTC or any such proceedings shall be instituted against
GTC and not dismissed within 60 days or GTC shall make an assignment for the
benefit of creditors or consent to the appointment of a receiver; or
(e) GTC shall fail to make any payment in excess of $10,000 in respect of
Indebtedness for money borrowed by GTC when such payment is due (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) or
shall fail to perform or observe any provision of any agreement or instrument
relating to such Indebtedness, which failure has resulted in the acceleration of
such Indebtedness by the holder thereof.
4.2. Remedies. Following the occurrence and during the continuance of any
Event of Default, Genzyme may (i) decline to make any or all further Loans
(including conversion to the Term Loan in accordance with Section 1.8) and (ii)
by written notice to GTC, declare the entire unpaid principal of the Loans,
accrued interest and other amounts payable hereunder to be due and payable
without further demand, presentment, protest or further notice of any kind, all
of which are hereby waived by GTC; provided, however, that upon the occurrence
of an Event of Default described in paragraph (d) of Section 4.1, the Revolving
Credit Commitment and Genzyme's commitment to make the Term Loan shall
immediately terminate and all Loans, accrued interest and other amounts payable
hereunder shall be immediately due and payable, all without any demand or
notices of any kind. Thereafter, Genzyme may proceed to protect and enforce its
rights by suit in equity, action at law and/or other appropriate proceeding; and
Genzyme may offset and apply toward the payment of such amounts or part thereof
any Indebtedness of it to GTC.
ARTICLE 5. DEFINITIONS
5.1. Certain Defined Terms. As used herein, the following terms shall have
the following meanings (all terms defined in this Section 5.1 or in other
provisions of this Agreement in the singular to have the same meanings when used
in the plural and visa versa.
"Agreement" has the meaning assigned to such term in the introductory
paragraph of this Agreement.
"AT-III" has the meaning assigned to such term in Recital A of this
Agreement.
"Bank" has the meaning assigned to such term in Section 1.13.
"Business Day" means any day that is not a Saturday, Sunday or other day on
which commercial banks in Boston, Massachusetts are authorized or required by
law to remain closed.
"Consolidated EBITDA" shall mean, for any period, the sum, for GTC, of the
following: (a) Consolidated Operating Income for such period (excluding any
amounts deducted for
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Unfunded R&D and reported by GTC to Genzyme on the certificate required to be
delivered by Section 3.1) plus (b) depreciation and amortization, but only to
the extent deducted in determining Consolidated Operating Income for such
period.
"Consolidated Net Income" shall mean, for any period, net income (or loss)
for GTC and its Subsidiaries (determined in accordance with GAAP); provided,
however, that Consolidated Net Income shall not include amounts included in
computing net income (or loss) in respect of (a) the write-up of assets (other
than marketable investments) after December 31, 1996 and (b) extraordinary and
non-recurring gains or losses.
"Consolidated Operating Income" shall mean, for any period, the
Consolidated Net Income of GTC for such period; provided, however, that, to the
extent the following items have been included in determining Consolidated Net
Income, they shall NOT be considered in computing Consolidated Operating Income:
provision for income taxes, interest expense, equity in the operating results of
unconsolidated Subsidiaries and other affiliates and non-operating, non-cash
items including, but not limited to, write-off of acquired technology or
acquired, in-process research and development which, in accordance with GAAP,
must be charged to income.
"Conversion Price" has the meaning assigned to such term in Section 1.7(a).
"Conversion Shares" has the meaning assigned to such term in
Section 2.2(d).
"Credit Agreement" has the meaning assigned to such term in Section 3.1.
"Default" means an event or act which with the giving of notice or the
passage of time, or both, would become an Event of Default.
"Disposition" means any sale, assignment, transfer or other disposition of
any property (whether now owned or hereafter acquired) by GTC or any of its
Subsidiaries to any other Person excluding (a) the granting of Liens to Genzyme
and (b) any sale, assignment, transfer or other disposition of (i) any property
sold or disposed of in the ordinary course of business and on ordinary business
terms and (ii) any property no longer used or useful in the business of GTC.
"Disposition Investment" means, with respect to any Disposition, any
promissory notes or other evidences of indebtedness or investments received by
GTC or any of its Subsidiaries in connection with such Disposition.
"Exchange Act" has the meaning assigned to such term in Section 2.1(e).
"Event of Default" has the meaning assigned to such term in Section 4.1.
"Force Majeure" has the meaning assigned to such term in Section 6.11.
12
"GAAP" means generally accepted accounting principles applied on a basis
consistent with those that, in accordance with the last sentence of
Section 5.2(a), are to be used in making the calculations for purposes of
determining compliance with this Agreement.
"Genzyme" has the meaning assigned to such term in the introductory
paragraph of this Agreement.
"GTC" has the meaning assigned to such term in the introductory paragraph
of this Agreement.
"GTC Common Stock" has the meaning assigned to such term in Section 1.7(a).
"Indebtedness" means, in respect of any Person, all obligations, contingent
and otherwise, that in accordance with GAAP should be classified as liabilities,
including without limitation (i) all debt obligations, (ii) all liabilities
secured by Liens, (iii) all guarantees and (iv) all liabilities in respect of
bankers' acceptances or letters of credit.
"Interest Rate" means, for all Loans outstanding, the lesser (where
applicable) of respective interest rates indicated below for the periods set
forth below:
Period Interest Rates
From the date hereof to
and including April 1, 1998 7.0%
From April 2, 1998 to
and including April 1, 1999 8.0% or Prime Rate
From April 2, 1999 to
and including April 1, 2000 8.5% or Prime Rate plus 0.5%
From April 2, 2000 to
and including April 1, 2001 9.0% or Prime Rate plus 1.0%
From April 2, 2001 to
and including April 1, 2002 9.5% or Prime Rate plus 1.5%
From April 2, 2002 to and
including the Term Loan Maturity Date 10.0% or Prime Rate plus 2.0%,
but, in any event, not in excess of the maximum amount permitted by law.
"Liens" means any encumbrance, mortgage, pledge, hypothecation, charge
restriction or other security interest of any kind securing any obligation of
any Person.
"Loans" has the meaning assigned to such term in Section 1.8.
13
"Net Cash Payments" means,
(a) with respect to all offerings of equity securities, the aggregate
amount of all cash proceeds received by GTC or any of its Subsidiaries
therefrom less all legal, accounting, underwriting and similar fees and
expenses incurred in connection therewith.
(b) with respect to any Disposition, the aggregate amount of all cash
payments received by GTC or any of its Subsidiaries directly or indirectly
in connection with such Disposition, whether at the time of such
Disposition or after such Disposition under deferred payment arrangements
or investments entered into or received in connection with such Disposition
(including, without limitation, Disposition Investments); provided that
(i) Net Cash Payments shall be net of (I) the amount of any
legal, accounting, title, transfer and recording tax expenses,
commissions and other fees and expenses payable by GTC or any of its
Subsidiaries in connection with such Disposition and (II) any Federal,
state and local income or other taxes estimated to be payable by GTC
or any of its Subsidiaries as a result of such Disposition net of any
available tax credits and carryforwards, but only to the extent that
such estimated taxes are in fact paid to the relevant Federal, state
or local governmental authority within 12 months of the date of
receipt of cash payments relating to such Disposition; and
(ii) Net Cash Payments shall be net of any repayments by GTC or
any its of Subsidiaries of Indebtedness to the extent that (I) the
holder of such Indebtedness requires repayment of such Indebtedness or
(II) the transferee of (or holder of a Lien on) such property requires
that such Indebtedness be repaid as a condition to the purchase of
such property.
"Notes" means the Revolving Credit Note and the Term Note.
"Payment Dates" means the last Business Day of March, June, September and
December in each year, the first of which shall be the first such day after the
date of this Agreement.
"Person" means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, governmental authority
or other entity.
"Post-Default Rate" means, a rate per annum equal to the applicable
Interest Rate plus 4%
"Prime Rate" means for any day the rate from time to time equal to the
highest rate of interest reported in The Wall Street Journal as the prime rate
or in the event that such publication is not available such other or similar
rate selected by Genzyme representing the prime rate charged by major banking
institutions.
"Prior Agreement" has the meaning assigned to such term in Recital A of
this Agreement.
14
"Revolving Credit Availability Period" means the period from and including
the date hereof to the Revolving Credit Maturity Date.
"Revolving Credit Commitment" means $8,327,000 as such commitment may be
reduced from time to time pursuant to Sections 1.5 and 1.11.
"Revolving Credit Loans" has the meaning assigned to such term in Section
1.1.
"Revolving Credit Maturity Date" means the last Business Day in March 2000.
"Revolving Credit Note" has the meaning assigned to such term in Section
1.2.
"Subsidiary" means, with respect to any Person (the "parent") at any date,
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the ordinary voting power or, in the case of a partnership, more than 50% of
the general partnership interests are, as of such date, owned, controlled or
held, or (b) that is, as of such date, otherwise Controlled, by the parent or
one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent. References herein to "Subsidiaries" shall, unless
the context requires otherwise, be deemed to be references to Subsidiaries of
the Borrower.
"Securities Act" has the meaning assigned to such term in Section 2.2(f).
"Trading Day" means any day on which GTC Common Stock is traded for any
period on the Nasdaq National Market or on the principal securities exchange or
market on which the GTC Common Stock is then traded.
"Term Loan" has the meaning assigned to such term in Section 1.8(a).
"Term Loan Maturity Date" means the last Business Day in March 2003.
"Term Note" has the meaning assigned to such term in Section 1.8(b).
"Unfunded R&D" means, for any period, (a) the amount of expenses for
research and development costs for such period minus (b) revenues earned for
such period attributable to contracts for the performance of research and
development.
5.2. Accounting Terms and Determinations.
(a) Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to Genzyme
hereunder shall (unless otherwise disclosed to Genzyme in writing at the time of
delivery thereof in the manner described in subsection (b) below) be prepared,
in accordance with GAAP applied on a basis consistent with those used in
15
the preparation of the latest annual or quarterly financial statements furnished
to the Lender hereunder (which, prior to the delivery of the first annual or
quarterly financial statements under Section 3.1 hereof, shall mean the audited
financial statements as at December 31, 1996).
(b) To enable the ready and consistent determination of compliance with
the covenants set forth in Article 5, GTC will not change its fiscal year.
5.3. Section References. References to particular sections are references
to sections of this Agreement unless otherwise indicated.
ARTICLE 6. MISCELLANEOUS
6.1. Replacement of Prior Agreement. Upon the execution and delivery of
this Agreement, Article 1 (except Sections 1.10 and 1.11) of the Prior Agreement
shall be superseded and replaced by the terms of this Agreement and the
remainder of the Prior Agreement shall remain in full force and effect.
6.2. Expenses. GTC shall pay all costs and expenses incurred by Genzyme in
connection with the preparation, execution, administration and enforcement of
this Agreement and the Notes, including reasonable attorneys' fees.
6.3. Notices. All notices, requests and other communications to GTC or
Genzyme hereunder shall be in writing (including telecopy or similar electronic
transmissions), shall refer specifically to this Agreement and shall be
personally delivered or sent by telecopy or other electronic facsimile
transmission (with conformation of receipt and a hard copy sent by mail), by the
next business day service of a nationally recognized overnight courier or by
registered mail or certified mail, return receipt requested, postage prepaid, in
each case to the respective address specified below (or to such address as may
be specified in writing to the other party hereto in accordance with this
Section 6.3):
To GTC:
Genzyme Transgenics Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
To Genzyme:
Genzyme Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
16
Any notice or communication given in conformity with this Section 6.3 shall
be deemed to be effective when received by the addressee, if delivered by hand
or facsimile, the next Business Day after mailing, if mailed via an overnight
courier, and seven (7) days after mailing, if sent by registered or certified
mail.
6.4. Entire Agreement. This Agreement, together with any agreements
referenced herein, constitutes, on and as of the date hereof, the entire
agreement of GTC and Genzyme with respect to the subject matter hereof, and all
prior or contemporaneous understandings or agreements, whether written or oral,
between GTC and Genzyme with respect to such subject matter are hereby
superseded in their entirety.
6.5. No Implied Waivers; Rights Cumulative. No failure on the part of GTC
or Genzyme to exercise and no delay in exercising any right, power, remedy or
privilege under this Agreement, or provided by statute or at law or in equity or
otherwise, including, without limitation, the right or power to terminate this
Agreement, shall impair, prejudice or constitute a waiver of any such right,
power, remedy or privilege or be construed as a waiver of any breach of this
Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.
6.6. Amendments. No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent to any departure by
GTC or Genzyme therefrom, shall in any event be effective unless the same shall
be in writing specifically identifying this Agreement and the provision intended
to be amended, modified, waived, terminated or discharged and signed by the
party against whom enforcement of such amendment is sought, and each such
amendment, modification, waiver, termination or discharge shall be effective
only in the specific instance and for the specific purpose for which given. No
provision of this Agreement shall be varied, contradicted or explained by any
oral agreement, course of dealing or performance or any other matter not set
forth in an agreement in writing and signed by the party against whom
enforcement of such variation, contradiction or explanation is sought.
6.7. Successors and Assigns. The terms and provisions of this Agreement
shall inure to the benefit of, and be binding upon, GTC, Genzyme and their
respective successors and assigns. Neither GTC nor Genzyme may assign or
transfer any of the respective rights or interests, nor delegate any of their
respective obligations, hereunder, without prior written consent from the other
party, except that either party may fully assign its rights and interests and
delegate its obligations hereunder (a) to an affiliate if such affiliate assumes
all of the obligations of such party hereunder in writing and this Agreement
remains binding upon the assigning party or (b) to any entity which acquires all
or substantially all of the assets of the assigning party or which is the
surviving entity in a merger or consolidation with such party, if such entity
assumes all of the obligations of such party hereunder in writing.
6.8. Survival. All covenants, agreements, representations and warranties
made by GTC herein, and in any certificates or other instruments delivered in
connection with or pursuant to this Agreement, shall be considered to have been
relied upon by Genzyme and shall survive the execution and delivery of this
Agreement and the making of any Loans, regardless of any
17
investigation made by any such other party or on its behalf and notwithstanding
that Genzyme may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect so long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and so long as the Revolving Credit Commitment has not
expired or terminated.
6.9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
6.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.10.
6.11. Force Majeure. GTC and Genzyme shall each be excused for any
failure or delay in performing any of its respective obligations under this
Agreement, if such failure or delay is caused by Force Majeure. For purposes of
this Agreement, "Force Majeure" shall mean any act of God, accident, explosion,
fire, storm, earthquake, flood, drought, peril of the sea, riot, embargo, war or
foreign, federal, state or municipal order of general application, seizure,
requisition or allocation, any failure or delay of transportation, shortage of
or inability to obtain supplies, equipment, fuel or labor or any other
circumstances or events beyond the reasonable control of the party relying upon
such circumstances or events.
6.12. Further Assurances. Each of GTC and Genzyme agrees to duly
execute and deliver, or cause to be duly executed and delivered, such further
instruments and do and cause to be done such further acts and things, including,
without limitation, the execution of such additional assignments, agreements,
documents and instruments, that may be necessary or as the other party hereto
may at any time and from time to time reasonably request in connection with this
Agreement or to carry out more effectually the provisions and purposes of, or to
better assure and confirm unto such other party its rights and remedies under,
this Agreement.
6.13. Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, then, to the
fullest extent permitted by law, (a) all other provisions hereof shall remain in
full force and effect in such jurisdiction and shall be liberally construed in
order to carry out the intentions of the parties hereto as nearly as may be
possible and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. To the extent permitted by
18
applicable law, GTC and Genzyme hereby waive any provision of law that would
render any provision hereof prohibited or unenforceable in any respect.
6.14. Headings. Headings used herein are for convenience only and
shall not in any way affect the construction of, or be taken into consideration
in interpreting, this Agreement.
6.15. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original, and all of which counterparts,
taken together, shall constitute one and the same instrument.
19
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as an instrument under seal in their respective corporate names by
their respective authorized representatives as of the date first set forth
above.
GENZYME TRANSGENICS CORPORATION
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and Chief Financial Officer
GENZYME CORPORATION
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President, Finance, and
Chief Financial Officer
20
EXHIBIT A
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE ACT
AND SUCH LAWS OR (1) REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE BORROWER IS FURNISHED
TO THE BORROWER TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
CONVERTIBLE REVOLVING CREDIT NOTE
$8,327,000 September 4, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, Genzyme Transgenics Corporation, a Massachusetts
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of Genzyme Corporation (the "Lender"), at the place and times provided in
that certain Amended and Restated Convertible Debt Agreement dated of even date
herewith (as amended from time to time, the "Agreement") between the Borrower
and the Lender, the principal sum of
EIGHT MILLION THREE HUNDRED TWENTY-SEVEN THOUSAND DOLLARS
($8,327,000)
or such lesser amount as may be then outstanding hereunder, in lawful money of
the United States of America, as provided in the Agreement, and in immediately
available funds, and to pay interest on the unpaid principal balance hereof from
time to time outstanding, in like money, for the period commencing on the date
hereof until paid in full, at the Interest Rate on the dates provided in the
Agreement. Each change in the Interest Rate based upon the Prime Rate shall
take effect simultaneously with the corresponding change in such Prime Rate.
All amounts outstanding which are not paid when due and during the period when
any Event of Default shall have occurred and be continuing for a period of 30 or
more days, the principal of all Loans hereunder shall bear interest, after as
well as before judgment, at the Post-Default Rate.
This Convertible Revolving Credit Note is subordinated to certain
indebtedness of the Borrower to BankBoston, N.A., formerly The First National
Bank of Boston (the "Bank") as set forth in a Subordination Agreement between
the Lender and the Bank dated as of March 29, 1996.
This Convertible Revolving Credit Note is the "Revolving Credit Note"
referred to in the Agreement, and is entitled to the benefits of and its subject
to the provisions of the Agreement but neither this reference to the Agreement
nor any provision thereof shall affect or impair the absolute and unconditional
obligation of the undersigned maker of this Convertible Revolving Credit Note to
pay the principal of and interest on this Convertible Revolving Credit Note as
herein provided. All capitalized terms used herein and not specifically
defined shall have the meanings given to them in the Agreement.
Each Loan made by the Lender pursuant to the Agreement and all payments
made on account of principal and interest shall be recorded by the Lender in its
records and prior to any transfer hereof, endorsed on the grid schedule attached
hereto. The Borrower acknowledges that, notwithstanding the state of the grid
schedule hereto, the Lender's records with respect to Loans and payments made
hereunder shall constitute, in the absence of manifest error, presumptive
evidence of the Borrower's indebtedness from time to time under the Agreement
and hereunder.
Subject to the terms of the Agreement, the outstanding principal and
interest payable hereunder shall be convertible into shares of Common Stock,
$.01 par value per share, of the Borrower at the Conversion Price set forth in
Section 1.7 thereof.
This Convertible Revolving Credit Note may be prepaid at any time without
penalty or fee as provided in the Agreement.
Upon the occurrence of an Event of Default specified in Section 4.1 of the
Agreement, the holder hereof may declare the entire outstanding indebtedness
evidenced by this Convertible Revolving Credit Note, with interest accrued
thereon, to be immediately due and payable as provided in the Agreement.
PRESENTMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR AND NON-PAYMENT ARE
HEREBY WAIVED BY THE UNDERSIGNED.
This Convertible Revolving Credit Note shall be governed by the laws of the
Commonwealth of Massachusetts and shall have the effect of an instrument under
seal.
GENZYME TRANSGENICS CORPORATION
By
-------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and
Chief Financial Officer
GRID SCHEDULE
TO CONVERTIBLE REVOLVING CREDIT NOTE
Dated: September __, 1997
-------------------------------------------------------------------------------
Date of Amount Amount of Amount of Outstanding Notation
Advance/Payment of Advance Principal Paid Interest Paid Credit Made By
-------------------------------------------------------------------------------
EXHIBIT B
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE ACT
AND SUCH LAWS OR (1) REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE BORROWER IS FURNISHED
TO THE BORROWER TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.
CONVERTIBLE TERM NOTE
$[__________] March 31, ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
FOR VALUE RECEIVED, Genzyme Transgenics Corporation, a Massachusetts
corporation (the "Borrower"), hereby unconditionally promises to pay to the
order of Genzyme Corporation (the "Lender") at the place and times provided in
that certain Amended and Restated Convertible Debt Agreement dated as of
September 4, 1997 (as amended from time to time, the "Agreement"), between the
Borrower and the Lender, the principal sum of
[________________________________________________] DOLLARS ($__________)
or, if less, the aggregate unpaid principal amount of the Term Loan made by the
Lender to the Borrower pursuant to the Agreement, in lawful money of the United
States of America, as provided in the Agreement, and in immediately available
funds, and to pay interest on the unpaid principal balance hereof from time to
time outstanding, in like money, for the period commencing on the date hereof
until paid in full, at the Interest Rate on the dates provided in the Agreement.
Each change in the Interest Rate based upon the Prime Rate shall take effect
simultaneously with the corresponding change in such Prime Rate. Principal on
this Convertible Term Note shall be payable quarterly in arrears in 12
consecutive quarterly installments consisting of 11 equal consecutive quarterly
installments of principal in an amount sufficient to fully amortize the original
principal amount of the Term Loan in quarterly payments over a seven-year
period, beginning on June 30, 2000, and payable on each Payment Date thereafter,
plus one final installment on March 31, 2003 which shall include all unpaid
principal, unpaid and accrued interest and any and all other amounts due and
payable hereunder and under the Agreement, and together with interest thereon
from the date hereof payable at the Interest Rate in arrears on each Payment
Date. All amounts outstanding which are not paid when due and during the period
when any Event of Default shall have occurred and be continuing for a period of
30 or more days, the principal of all Loans hereunder shall bear interest, after
as well as before judgment, at the Post-Default Rate.
This Convertible Term Note is subordinated to certain indebtedness of the
Borrower to BankBoston, N.A., formerly The First National Bank of Boston (the
"Bank") as set forth in a Subordination Agreement between the Lender and the
Bank dated as of March 29, 1996.
This Convertible Term Note is the "Term Note" referred to in the Agreement,
and is entitled to the benefits of and its subject to the provisions of the
Agreement but neither this reference to the Agreement nor any provision thereof
shall affect or impair the absolute and unconditional obligation of the
undersigned maker of this Convertible Term Note to pay the principal of and
interest on this Convertible Term Note as herein provided. All capitalized
terms used herein and not specifically defined shall have the meanings given to
them in the Agreement.
All payments made on account of principal and interest shall be recorded by
the Lender in its records. The Borrower acknowledges that the Lender's records
with respect to payments made hereunder shall constitute, in the absence of
manifest error, presumptive evidence of the Borrower's indebtedness from time to
time under the Agreement and hereunder.
Subject to the terms of the Agreement, the outstanding principal and
interest payable hereunder shall be convertible into shares of Common Stock,
$.01 par value per share, of the Borrower at the Conversion Price set forth in
Section 1.7 thereof.
This Convertible Term Note may be prepaid at any time without penalty or
fee as provided in the Agreement.
Upon the occurrence of an Event of Default specified in Section 4.1 of the
Agreement, the holder hereof may declare the entire outstanding indebtedness
evidenced by this Convertible Term Note, with interest accrued thereon, to be
immediately due and payable as provided in the Agreement.
PRESENTMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR AND NON-PAYMENT ARE
HEREBY WAIVED BY THE UNDERSIGNED.
This Convertible Term Note shall be governed by the laws of the
Commonwealth of Massachusetts and shall have the effect of an instrument under
seal.
GENZYME TRANSGENICS CORPORATION
By
-------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
Vice President and Chief Financial Officer