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As filed with the Securities and Exchange Commission on March 29, 2000
Registration Statement No. 333-31344
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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MILLENNIUM PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE
(State or other jurisdiction of incorporation or organization)-04-3177038
(I.R.S. Employer Identification No.)
75 SIDNEY STREET
CAMBRIDGE, MASSACHUSETTS 02139
617-679-7000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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MARK J. LEVIN
CHIEF EXECUTIVE OFFICER
MILLENNIUM PHARMACEUTICALS, INC.
75 SIDNEY STREET
CAMBRIDGE, MASSACHUSETTS 02139
617-679-7000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
DAVID E. REDLICK, ESQ.
JEFFREY A. STEIN, ESQ.
HALE AND DORR LLP
60 STATE STREET
BOSTON, MASSACHUSETTS 02109
617-526-6000
- -JOHN B. DOUGLAS III, ESQ.
MILLENNIUM PHARMACEUTICALS, INC.
75 SIDNEY STREET
CAMBRIDGE, MASSACHUSETTS 02139
617-679-7000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
<PAGE>
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|_______.
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|__________.
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
Title Of Each Class Of Securities To Be Registered-
Amount To Be Registered-Proposed Maximum Offering Price Per Unit-Proposed
Maximum
Aggregate
Offering Price-
Amount Of Registration Fee
5.50% Convertible Subordinated Notes due January 15, 2007 -
$400,000,000-
100%-
$400,000,000-
$105,600(1)
Common Stock, par value $.001 per share - 2,376,960(2)-(3)-(3)-(3)
Common Stock, par value $.001 per share -105,777(4)-$140.50(5)-$14,861,
668.50-$3,924
(1) Previously Paid.
(2) This number represents the number of shares of common stock that are
initially issuable upon conversion of the 5.50% Convertible Subordinated Notes
due January 15, 2007 registered hereby. Pursuant to Rule 416 under the
Securities Act of 1933, as amended, the amount to be registered also includes an
indeterminate number of shares of common stock issuable as a result of stock
splits, stock dividends and antidilution provisions.
(3) No additional consideration will be received for these shares of common
stock, and, therefore, no registration fee is required pursuant to Rule 457(i).
(4) This number represents the number of shares of common stock that are
initially issuable upon exercise of outstanding warrants to purchase common
stock whose holders have requested registration of such shares. Pursuant to Rule
416 under the Securities Act of 1933, as amended, the amount to be registered
also includes an indeterminate number of shares of common stock issuable as a
result of stock splits, stock dividends and antidilution provisions.
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(5) Calculated as the average of the reported high and low prices on the
Nasdaq National Market on March 27, 2000 pursuant to Rule 457(c).
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THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
SHALL DETERMINE.
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Subject to completion, Dated March 29, 2000
PROSPECTUS
MILLENNIUM PHARMACEUTICALS, INC.
$400,000,000 Principal Amount 5.50% Convertible Subordinated Notes
Due January 15, 2007
2,376,960 Shares of Common Stock issuable upon conversion of the Notes
105,777 Shares of Common Stock issuable upon exercise of
outstanding warrants to purchase common stock
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This prospectus covers resales by selling holders of:
- our 5.50% Convertible Subordinated Notes due January 15, 2007;
- our common stock into which the notes are convertible; and
- our common stock issuable upon exercise of warrants to
purchase our common stock held by GATX Capital Corporation and
MM Ventures
Our 5.50% Convertible Subordinated Notes have the following provisions:
interest Payments:-January 15 and July 15 of each year
Conversion Rate:-Currently 5.9424 shares per $1,000 principal amount
Will become 11.8848 shares per $1,000 principal amount on April 18, 2000 if
the two-for-one stock split that our board of directors approved on February 28,
2000 becomes effective
Redemption Options:-- By us at any time after January 15, 2003
- - By noteholders in the event of a change in control
We will not receive any of the proceeds from the sale of the notes or
shares by the selling holders.
Our common stock is quoted on The Nasdaq National Market under the
symbol "MLNM." The last reported sale price of our common stock on March 28,
2000 was $142.125.
The notes are currently designated for trading on the PORTAL Market of
the Nasdaq Stock Market.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 TO READ ABOUT FACTORS YOU SHOULD
CONSIDER BEFORE BUYING THE NOTES OR OUR COMMON STOCK.
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Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the accuracy
or adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
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Prospectus dated , 2000
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<TABLE>
TABLE OF CONTENTS
<S> <C>
SUMMARY........................................................................................................ 3
RISK FACTORS................................................................................................... 6
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION............................................................. 16
RATIO OF EARNINGS TO FIXED ^ CHARGES........................................................................... 16
USE OF PROCEEDS................................................................................................ 17
DESCRIPTION OF THE NOTES....................................................................................... 18
DESCRIPTION OF CAPITAL STOCK................................................................................... 33
THE WARRANTS................................................................................................... 35
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS....................................................... 36
SELLING HOLDERS................................................................................................ 43
PLAN OF DISTRIBUTION........................................................................................... 55
EXPERTS........................................................................................................ 56
LEGAL MATTERS.................................................................................................. 57
WHERE YOU CAN FIND MORE INFORMATION............................................................................ 57
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................................................................ 57
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SUMMARY
MILLENNIUM PHARMACEUTICALS, INC.
OUR BUSINESS
our goal is to become the biopharmaceutical company of the future by
building on our broad scientific and technological capabilities and methods,
which we call our "technology platform," to develop breakthrough drugs^ and
predictive medicine products and services. Predictive medicine involves
identifying information that enables healthcare professionals to make better
informed decisions about drug treatment and other aspects of patient care.
We use many of the same elements of our technology platform throughout
our business, from the discovery of disease-related genes, to the development of
drugs to specifically address these diseases, to the management of patients
affected by these diseases. As a result, we speak of our technological approach
as being applicable from "gene to patient." we continually seek to expand our
technology platform in an effort to increase the speed of drug discovery and
development and improve the resulting drugs.
We have entered into research, development and commercialization
arrangements, which we call "strategic alliances," with major pharmaceutical and
biotechnology companies relating to a broad range of therapeutic and predictive
medicine products and services. These alliances provide us with the opportunity
to receive royalties and profit sharing, if we and our alliance partners are
successful in developing and commercializing products. In addition, these
alliances provide substantial funding for our research and development and the
continued enhancement of our technology platform.
Our principal executive offices are located at 75 Sidney Street,
Cambridge, MA 02139. Our telephone number is (617) 679-7000, and our Internet
address is www.mlnm.com. We do not intend for this reference to our Web site
to constitute incorporation by reference of the information contained at our
site.
SUMMARY OF THE NOTES
INTEREST -We will pay interest on the notes on January 15 and July 15 of each
year, commencing July 15, 2000. --
MATURITY -The notes mature on January 15, 2007
CONVERSION -You may convert the notes into shares of common stock at a
conversion rate of 5.9424 shares of common stock per $1,000 principal amount of
notes, which is equivalent to a conversion price of approximately $168.28 per
share. Our board of directors approved a two-for-one stock split on February 28,
2000, conditioned upon our stockholders approving an increase in the number of
shares of our common stock authorized. If our stockholders approve that
increase, on April 18, 2000 we will adjust the conversion rate to 11.8848 shares
of common stock per $1,000 principal amount of notes, which is equivalent to a
conversion price of approximately $84.14 per share. We will further adjust the
conversion rate each time we take various corporate actions specified in the
indenture governing the notes. You may convert the notes at any time before the
close of business on the maturity date, unless we have previously redeemed or
repurchased the notes. Holders of notes called for redemption or submitted for
repurchase may convert the notes up to and including, but not after, the
business day before the date fixed for redemption or repurchase. See
"Description of the Notes--Conversion Rights."
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SUBORDINATION -The notes are subordinated to our present and future "senior
debt," as this prospectus defines that term. The notes are also effectively
subordinated in right of payment to all indebtedness and other liabilities of
our subsidiaries. As of February 29, 2000, the aggregate amount of our
outstanding senior debt was approximately $47.874 million, and the aggregate
amount of indebtedness and other liabilities of our subsidiaries was
approximately $13.270 million. The indenture governing the notes ^ DOES not
restrict our ability to incur senior debt or the ability of our subsidiaries TO
incur indebtedness. See "Description of the Notes--Subordination."
GLOBAL NOTE, BOOK-ENTRY SYSTEM -We issued the notes only in fully registered
form without interest coupons and in minimum denominations of $1,000. We have
deposited one global note evidencing the notes with the trustee for the
notes, as custodian for The Depository Trust company. DTC and its
participants maintain records that show beneficial interests in the notes,
and those beneficial interests can be transferred only through those records.
See "Description of the Notes--Form, Denomination, Transfer, Exchange and
Book-Entry Procedures."
OPTIONAL REDEMPTION -We may redeem the notes, at our option, in whole or in
part, on or after January 15, 2003, at the redemption prices set forth in this
prospectus plus accrued and unpaid interest to the redemption date. See
"Description of the Notes--Optional Redemption."
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL -Upon a "change in
control," as this prospectus defines that term, you will have the right to
require us to repurchase your notes, in whole or in part, at 100% of their
principal amount, plus accrued interest to the repurchase date. We will pay
the repurchase price in cash or, at our option, and subject to conditions
specified in the indenture, in shares of our common stock. If we pay the
repurchase price in common stock, we will value the common stock at 95% of
the average closing sales prices of the common stock for the five trading
days preceding and including the third trading day prior to the repurchase
date. This right is not available if the average closing sales price per
share of our common stock is equal to or greater than 105% of the conversion
price of the notes before a merger, consolidation or asset sale or after the
later of an acquisition of capital stock or its announcement. See
"Description of the Notes--Repurchase at Option of Holders Upon a Change in
Control."
USE OF PROCEEDS -We will not receive any of the proceeds from the sale of the
notes or the shares of our common stock by the selling holders.
EVENTS OF DEFAULT -The following will be events of default under the indenture
for the notes:
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- -- if we fail to pay principal of or any premium on any note when due, whether
or not the subordination provisions of the indenture prohibit the payment;
- - if we fail to pay any interest on any note when due and that default
continues for 30 days, whether or not the subordination provisions of
the indenture prohibit the payment;
- - if we fail to provide the notice that we are required to give in the
event of a "change in control," whether or not the subordination
provisions of the indenture prohibit the notice;
- - if we fail to perform any other covenant in the indenture and that
failure continues for 60 days after written notice to us by the trustee
or the holders of at least 25% in aggregate principal amount of
outstanding notes;
- - we fail to pay when due or accelerated any indebtedness for money
borrowed by us or any of our significant subsidiaries in excess of
$10,000,000, and any grace period has expired, if we do not discharge
the indebtedness, or our lender does not annul the acceleration, within
30 days after written notice to us by the trustee or the holders of at
least 25% in aggregate principal amount of the outstanding notes; and
- - events of bankruptcy, insolvency or reorganization with respect to us
or any of our significant subsidiaries specified in the indenture.
PORTAL trading of notes -The National Association of Securities Dealers, Inc.
has designated the notes for trading on their Private Offerings, Resales and
Trading through Automated Linkages (PORTAL) Market.
Governing Law -The laws of the State of New York govern the indenture and the
notes.
PROPOSED STOCK SPLIT
On February 28, 2000, our board of directors approved a two-for-one
split of our common stock in the form of a stock dividend. Stockholders of
record on march 28, 2000 will be entitled to one additional share of common
stock for each share held on that date. The dividend distribution date will be
April 18, 2000. The stock split is subject to the prior approval by our
stockholders of an increase in our authorized common stock to 500,000,000 shares
at our annual meeting of stockholders to be held on April 12, 2000.
RISK FACTORS
You should read the "Risk Factors" section, beginning on page 6 of
this Prospectus, so that you understand the risks associated with an investment
in the notes or our common stock.
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RISK FACTORS
AN INVESTMENT IN THE NOTES OR IN OUR COMMON STOCK INVOLVES A HIGH
DEGREE OF RISK. IF ANY OF THE FOLLOWING EVENTS OCCURS, OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS WOULD LIKELY SUFFER, POSSIBLY
MATERIALLY.
REGULATORY RISKS
IF CLINICAL TRIALS OF OUR PRODUCT CANDIDATES ARE NOT SUCCESSFUL, WE WILL NOT
BE ABLE TO COMPLETE DEVELOPMENT OF OR SELL THESE PRODUCT CANDIDATES
In order to obtain regulatory approvals for the commercial sale of any
products, we or our alliance partners must demonstrate through preclinical
testing and clinical trials that the product is safe and effective. Before our
merger with LeukoSite, Inc. in December 1999, neither we nor any of our alliance
partners had initiated human clinical trials with respect to any product or
service based upon our discoveries or filed an investigational new drug
application with the United States Food and Drug Administration, or FDA, to do
so.
IF WE DO NOT OBTAIN REGULATORY APPROVALS, WE WILL NOT BE ABLE TO INITIATE
CLINICAL TRIALS OR MARKET ANY PRODUCTS
We must obtain regulatory approvals for our ongoing development
activities and before marketing or selling any products. We may not receive
regulatory approvals to conduct clinical trials of our products or to
manufacture or market our products . In particular, we may not receive
regulatory approval from the FDA or any other regulatory authority to market
CAMPATH-Registered Trademark- monoclonal antibody, our most advanced product
candidate.
WE EXPECT TO INCUR SIGNIFICANT COSTS AND TIME DELAYS IN THE REGULATORY PROCESS,
WHICH WILL MATERIALLY AFFECT OUR REVENUES AND CASH REQUIREMENTS
The process of obtaining FDA and other required regulatory approvals,
including approvals in other countries, is lengthy and expensive. The time
required for FDA and other clearances or approvals is uncertain and typically
takes a number of years. Any delay in obtaining or failure to obtain required
clearance or approvals could materially adversely affect our ability to generate
revenues from the affected product or service. We have only limited experience
in filing and prosecuting applications necessary to gain regulatory approvals.
Certain of the products that are likely to result from our research and
development programs may be based on new technologies and new therapeutic
approaches that have not been extensively tested in humans. The regulatory
requirements governing these types of products may be more rigorous than for
conventional products. As a result, we may experience a longer regulatory
process in connection with any products that we develop based on these new
technologies or new therapeutic approaches.
We also are subject to numerous and varying foreign regulatory
requirements governing the design and conduct of clinical trials and the
manufacturing and marketing of our future products and some types of services.
The approval procedure varies among countries. Foreign approvals may take longer
than FDA approval. Approval by the FDA does not ensure approval by regulatory
authorities in other countries.
All of these regulatory risks also are applicable to development,
manufacturing and marketing undertaken by our alliance partners or other
collaborators.
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RISKS RELATING TO OUR INDUSTRY, BUSINESS AND STRATEGY
BECAUSE THE GENOMICS INDUSTRY IS NEW, IT IS POSSIBLE THAT THE DISCOVERIES AND
TECHNOLOGY ON WHICH THIS INDUSTRY IS BASED WILL NOT RESULT IN COMMERCIAL
PRODUCTS OR SERVICES
The genomics industry is new and evolving rapidly. We focus our
genomics research primarily on diseases that may be linked to several or many
genes working in combination. Both we and the general scientific and medical
communities have only a limited understanding relating to the role of genes and
their products in these diseases. To date, we have not commercialized any
products or services, and we may not be successful in doing so in the future. In
addition, relatively few products based on gene discoveries have been developed
and commercialized by others. Rapid technological development by us or others
may result in compounds, products or processes becoming obsolete before we
recover our development expenses.
WE HAVE NOT YET RECEIVED MARKETING APPROVAL FOR ANY PRODUCT OR SERVICE RESULTING
FROM OUR DEVELOPMENT EFFORTS AND MAY NOT BE ABLE TO OBTAIN ANY SUCH APPROVAL
We have completed development of only one product, CAMPATH-Registered
Trademark- monoclonal antibody, and have only recently applied to the FDA for
approval to marKEt this product. All of the other products that we are
developing will require additional research and development, extensive
preclinical studies and clinical trials and regulatory approval prior to any
commercial sales. We may need to successfully address a number of technological
challenges in order to complete development of any of our products. Moreover,
these products may not be effective in treating any disease or may prove to have
undesirable or unintended side effects, toxicities or other characteristics that
may prevent or limit commercial use.
OUR PLAN TO GROW THROUGH ACQUISITIONS OF OTHER COMPANIES WILL NOT BE SUCCESSFUL
IF WE ARE UNABLE TO INTEGRATE ACQUIRED COMPANIES WITH OUR OTHER OPERATIONS OR IF
THE TECHNOLOGY OR PERSONNEL OF ACQUIRED COMPANIES DO NOT MEET OUR EXPECTATIONS
We completed our merger with LeukoSite on December 22, 1999. We may not
be able to successfully integrate or profitably manage LeukoSite's businesses.
In addition, the combination of our business with LeukoSite's may not achieve
revenues, net income or loss levels, efficiencies or synergies that justify the
merger. The combined company may experience slower rates of growth as compared
to the historical rates of growth of Millennium and LeukoSite independently. We
plan to make additional acquisitions in the future, which will entail similar
risks.
COMPETITION FOR SCIENTIFIC AND MANAGERIAL PERSONNEL IN OUR INDUSTRY IS INTENSE;
WE WILL NOT BE ABLE TO SUSTAIN OUR OPERATIONS AND GROW IF WE ARE NOT ABLE TO
ATTRACT AND RETAIN KEY PERSONNEL
Our success substantially depends on the ability, experience and
performance of our senior management and other key personnel. If we lose one or
more of the members of our senior management or other key employees, our
business and operating results could be seriously harmed.
In addition, our future success will depend heavily on our ability to
continue to hire, train, retain and motivate additional skilled managerial and
scientific personnel. The pool of personnel with the skills that we require is
limited. Competition to hire from this limited pool is intense.
The stock options held by LeukoSite employees became fully vested upon
the closing of our acquisition of LeukoSite. This acceleration may adversely
affect our ability to retain former LeukoSite employees.
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WE FACE SUBSTANTIAL COMPETITION, WHICH MAY RESULT IN OTHERS DISCOVERING,
DEVELOPING OR COMMERCIALIZING PRODUCTS AND SERVICES BEFORE OR MORE SUCCESSFULLY
THAN WE DO
The fields of genomics, biotechnology and pharmaceuticals are highly
competitive. Many of our competitors are substantially larger than we are and
have substantially greater capital resources, research and development staffs
and facilities than we have. Furthermore, many of our competitors are more
experienced than we are in drug discovery, development and commercialization,
obtaining regulatory approvals and product manufacturing and marketing. As a
result, our competitors may identify genes associated with diseases or discover,
develop and commercialize products or services based on such genes before we do.
In addition, our competitors may discover, develop and commercialize products or
services which render non-competitive or obsolete the products or services that
we or our strategic alliance partners are seeking to develop and commercialize.
WE MAY NOT BE ABLE TO OBTAIN BIOLOGICAL MATERIAL, INCLUDING HUMAN AND ANIMAL DNA
SAMPLES, REQUIRED FOR OUR GENETIC STUDIES, WHICH COULD DELAY OR IMPEDE OUR DRUG
DISCOVERY EFFORTS
Our gene identification strategy includes genetic studies of families
and populations prone to particular diseases. these studies require the
collection of large numbers of DNA samples from affected individuals, their
families and other suitable populations as well as animal models. The
availability of DNA samples and other biological material is important to our
ability to discover the genes responsible for human diseases through human
genetic approaches and other studies. Competition for these resources is
intense. Access to suitable populations, materials and samples could be limited
by forces beyond our control, including governmental actions. Some of our
competitors may have obtained access to significantly more family and population
resources and biological materials than we have obtained. As a result, we may
not be able to obtain access to DNA samples necessary to support our human gene
discovery programs.
RISKS RELATING TO OUR FINANCIAL RESULTS AND STRUCTURE AND NEED FOR FINANCING
WE HAVE INCURRED SUBSTANTIAL LOSSES, WE EXPECT TO CONTINUE TO INCUR LOSSES AND
WE WILL NOT BE SUCCESSFUL UNLESS WE REVERSE THIS TREND
We have incurred losses in four of the last six years, including the
year ended December 31, 1999. We expect to continue to incur substantial
operating losses in future periods. To date, substantially all of our revenues
have resulted from payments from strategic alliance partners. We have not
received any revenues from the sale of products or clinical or diagnostic
services.
We expect to increase our spending significantly as we continue to
expand our infrastructure, research and development programs and
commercialization activities. As a result, we will need to generate significant
revenues to pay these costs and achieve profitability. We cannot be certain
whether or when we will become profitable because of the significant
uncertainties with respect to our ability to generate revenues from the sale of
products and services and from existing and potential future strategic
alliances.
OUR SUBSTANTIAL INDEBTEDNESS MAY ADVERSELY AFFECT OUR CASH FLOW AND OPERATIONS
AND BE DIFFICULT FOR US TO REPAY, WHICH COULD ADVERSELY AFFECT THE VALUE OF YOUR
INVESTMENT IN US
We have substantial amounts of outstanding indebtedness, primarily the
notes. We also may obtain additional long term debt and working capital lines
of credit. As a result of this indebtedness, our principal and interest payment
obligations are substantial. There is the possibility that we may be unable to
generate cash sufficient to pay the principal of, interest on and other amounts
due in respect of our indebtedness when due. In particular, we may require funds
from external sources, such as new
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borrowings, to repay the notes when their entire principal amount becomes due in
a single payment on their maturity date.
Our substantial leverage could have significant negative consequences,
including:
- increasing our vulnerability to general adverse economic and
industry conditions;
- limiting our ability to obtain additional financing;
- requiring the dedication of a substantial portion of our cash
from operations to service our indebtedness, thereby reducing
the amount of our cash available for other purposes, including
capital expenditures;
- limiting our flexibility in planning for, or reacting to,
changes in our business and the industry in which we compete;
and
- placing us at a possible competitive disadvantage vis-a-vis
less leveraged competitors and competitors that have better
access to capital resources.
WE MAY NEED ADDITIONAL FINANCING, WHICH MAY BE DIFFICULT TO OBTAIN; OUR FAILURE
TO OBTAIN NECESSARY FINANCING OR DOING SO ON UNATTRACTIVE TERMS COULD AVERSELY
AFFECT OUR DISCOVERY AND DEVELOPMENT PROGRAMS AND OTHER OPERATIONS
We will require substantial funds to conduct research and development,
including preclinical testing and clinical trials of our potential products,
meet our obligations to our strategic alliance partners , manufacture and market
any products and services that are approved for commercial sale and meet our
debt service obligations. Additional financing may not be available when we need
it or may not be available on terms that are favorable to us.
If we are unable to obtain adequate funding on a timely basis, we may
be required to significantly curtail one or more of our discovery or development
programs. We could be required to seek funds through arrangements with
collaborative partners or others that may require us to relinquish rights to
certain of our technologies, product candidates or products which we would
otherwise pursue on our own.
RISKS RELATING TO STRATEGIC ALLIANCE PARTNERS
WE DEPEND SIGNIFICANTLY ON OUR STRATEGIC ALLIANCE PARTNERS TO DEVELOP AND
COMMERCIALIZE PRODUCTS AND SERVICES BASED ON OUR WORK; OUR BUSINESS MAY SUFFER
IF ANY OF OUR STRATEGIC ALLIANCE PARTNERS BREACHES THEIR AGREEMENT OR FAILS TO
SUPPORT OR TERMINATES THEIR ALLIANCE WITH US
We conduct most of our discovery and development activities through
strategic alliances. The success of these programs depends heavily on the
efforts and activities of our strategic alliance partners. Each of our alliance
partners has significant discretion in determining the efforts and resources
that they will apply to the alliance. Our existing and any future alliances may
not be scientifically or commercially successful.
The risks that we face in connection with these alliances include:
- All of our strategic alliance agreements are subject to
termination under various circumstances, including in many
cases on short notice without cause.
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- In our strategic alliance agreements, we generally agree not
to conduct specified types of research and development in the
field that is the subject of the alliance. These agreements
may have the effect of limiting the areas of research and
development we may pursue, either alone or in collaboration
with third parties.
- Our alliance partners may develop and commercialize, either
alone or with others, products and services that are similar
to or competitive with the products and services that are the
subject of the alliance with us.
- Our alliance partners may change the focus of their
development and commercialization efforts. Pharmaceutical and
biotechnology companies historically have re-evaluated their
priorities following mergers and consolidations, which have
been common in recent years in these industries.
- We will rely on our alliance partners to manufacture most
products covered by our alliances. For example, Becton
Dickinson has the sole right to manufacture Melastatin-TM-.
WE MAY NOT BE SUCCESSFUL IN ESTABLISHING ADDITIONAL STRATEGIC ALLIANCES, WHICH
COULD ADVERSELY AFFECT OUR ABILITY TO DEVELOP AND COMMERCIALIZE PRODUCTS
An important element of our business strategy is entering into
strategic alliances for the development and commercialization of products and
services based on our discoveries. We face significant competition in seeking
appropriate alliance partners. Moreover, these alliance arrangements are complex
to negotiate and time-consuming to document. We may not be successful in our
efforts to establish additional strategic alliances or other alternative
arrangements. The terms of any additional strategic alliances or other
arrangements that we establish may not be favorable to us. Moreover, such
strategic alliances or other arrangements may not be successful.
RISKS RELATING TO INTELLECTUAL PROPERTY
IF WE ARE UNABLE TO OBTAIN PATENT PROTECTION FOR OUR DISCOVERIES, THE VALUE OF
OUR TECHNOLOGY AND PRODUCTS WILL BE ADVERSELY AFFECTED; IF WE INFRINGE PATENT OR
OTHER INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, WE MAY NOT BE ABLE TO
DEVELOP AND COMMERCIALIZE OUR PRODUCTS AND SERVICES OR THE COST OF DOING SO MAY
INCREASE
Our patent positions, and those of other pharmaceutical and
biotechnology companies, are generally uncertain and involve complex legal,
scientific and factual questions.
Our ability to develop and commercialize products and services depends
in significant part on our ability to:
- Obtain patents;
- Obtain licenses to the proprietary rights of others on
commercially reasonable terms;
- Operate without infringing upon the proprietary rights of
others;
- Prevent others from infringing on our proprietary rights; and
- Protect trade secrets.
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THERE IS SIGNIFICANT UNCERTAINTY ABOUT THE VALIDITY AND PERMISSIBLE SCOPE OF
GENOMICS PATENTS IN OUR INDUSTRY, WHICH MAY MAKE IT DIFFICULT FOR US TO OBTAIN
PATENT PROTECTION FOR OUR DISCOVERIES
The validity and permissible scope of patent claims in the
pharmaceutical and biotechnology fields, including the genomics field, involve
important unresolved legal principles and are the subject of public policy
debate in the united states and abroad. For example, there is significant
uncertainty both in the United States and abroad regarding the patentability of
gene sequences in the absence of functional data and the scope of patent
protection available for full-length genes and partial gene sequences. Moreover,
certain groups have made certain gene sequences available in publicly accessible
databases. These and other disclosures may adversely affect our ability to
obtain patent protection for gene sequences claimed by us in patent applications
that we file subsequent to such disclosures. There is also some uncertainty as
to whether human clinical data will be required for issuance of patents for
human therapeutics. If such data are required, our ability to obtain patent
protection could be delayed or otherwise adversely affected.
THIRD PARTIES MAY OWN OR CONTROL PATENTS OR PATENT APPLICATIONS AND REQUIRE US
TO SEEK LICENSES, WHICH COULD INCREASE OUR DEVELOPMENT AND COMMERCIALIZATION
COSTS, OR PREVENT US FROM DEVELOPING OR MARKETING PRODUCT OR SERVICE CANDIDATES
We may not have rights under some patents or patent applications
related to our proposed products, processes or services. Third parties may own
or control these patents and patent applications in the united States and abroad
. Therefore, in some cases, such as those described below, to develop,
manufacture, sell or import certain of our proposed products, processes or
services, we or our alliance partners may choose to seek, or be required to
seek, licenses under third party patents issued in the United States and abroad
or those which might issue from United States and foreign patent applications.
If licenses are not available to us on acceptable terms, we or our alliance
partners may not be able to develop, manufacture, sell or import these products,
processes or services.
With respect to our product candidate LDP-01, we are aware of third
party patents and patent applications which relate to certain anti-CD18
antibodies and their use in various methods of treatment including methods of
reperfusion therapy and methods of treating focal ischemic stroke. In addition,
our LDP-01, LDP-02, and CAMPATH-Registered Trademark- product candidates are
humanized monoclonal antibodies. We are aware of third party patents and patent
applications which relate to certain humanized or modified antibodies, products
useful for making humanized or modified antibodies, and processes for making and
using humanized or modified antibodies. We are also aware of third party patents
and patent applications relating to certain manufacturing processes, products
thereof and materials useful in such processes.
Our product candidates LDP-977, LDP-341, and LDP-519 are all small
molecule drug candidates. With respect to LDP-341, we are aware of third party
patents or patent applications which relate to either intermediates or synthetic
processes used in the synthesis of these compounds. Additionally, for the use of
LDP-341 and LDP-519 in the treatment of infarctions we are aware of the
existence of a potentially interfering patent application filed by one of our
former consultants.
WE MAY BECOME INVOLVED IN EXPENSIVE PATENT LITIGATION OR OTHER PROCEEDINGS,
WHICH COULD RESULT IN OUR INCURRING SUBSTANTIAL COSTS AND EXPENSES OR
SUBSTANTIAL LIABILITY FOR DAMAGES OR REQUIRE US TO STOP OUR DEVELOPMENT AND
COMMERCIALIZATION EFFORTS
There has been substantial litigation and other proceedings regarding
the patent and other intellectual property rights in the pharmaceutical and
biotechnology industries. We may become a party to patent litigation or other
proceedings regarding intellectual property rights. For example, we believe that
we hold patent applications that cover genes that are also claimed in patent
applications filed by others.
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Interference proceedings before the United States Patent and Trademark Office
may be necessary to establish which party was the first to invent these genes.
The cost to us of any patent litigation or other proceeding, even if
resolved in our favor, could be substantial. Some of our competitors may be able
to sustain the cost of such litigation or proceedings more effectively than we
can because of their substantially greater financial resources. If a patent
litigation or other proceeding is resolved against us, we or our alliance
partners may be enjoined from developing, manufacturing, selling or importing
our products, processes or services without a license from the other party and
we may be held liable for significant damages. We may not be able to obtain any
required license on commercially acceptable terms or at all.
Uncertainties resulting from the initiation and continuation of patent
litigation or other proceedings could have a material adverse effect on our
ability to compete in the marketplace. Patent litigation and other proceedings
may also absorb significant management time.
RISKS RELATING TO PRODUCT MANUFACTURING, MARKETING AND SALES
BECAUSE MANY OF THE PRODUCTS AND SERVICES THAT WE DEVELOP WILL BE BASED ON NEW
TECHNOLOGIES AND THERAPEUTIC APPROACHES, THE MARKET MAY NOT BE RECEPTIVE TO
THESE PRODUCTS AND SERVICES UPON THEIR INTRODUCTION
The commercial success of our products and services that are approved
for marketing will depend upon their acceptance by the medical community and
third party payors as clinically useful, cost effective and safe. Many of the
products and services that we are developing are based upon new technologies or
therapeutic approaches. As a result, it may be more difficult for us to achieve
market acceptance of our products and services, particularly the first products
and services that we introduce to the market based on new technologies and
therapeutic approaches.
BECAUSE WE HAVE NO SALES, MARKETING OR DISTRIBUTION EXPERIENCE AND CAPABILITIES,
WE WILL BE DEPENDENT ON THIRD PARTIES TO SUCCESSFULLY PERFORM THESE FUNCTIONS OR
WILL BE REQUIRED TO INCUR SIGNIFICANT COSTS AND DEVOTE SIGNIFICANT EFFORTS TO
DEVELOP THESE CAPABILITIES
We have no sales, marketing or distribution experience and
capabilities. We plan to rely significantly on sales, marketing and distribution
arrangements with our strategic alliance partners and other third parties for
the products and services that we are developing. For example, our partnership
that holds CAMPATH-Registered Trademark- monoclonal antibody will rely solely
upon Schering AG and its U.S. affiliate, Berlex Laboratories, for the marketing,
distribution and sale of the CAMPATH-Registered Trademark- product throughout
the world other than the Far East. If in the future we determine to perform
sales, marketing and distribution functions ourselves, we would face a number of
Additional risks, including the need to recruit experienced marketing and sales
personnel.
BECAUSE WE HAVE LIMITED MANUFACTURING CAPABILITIES, WE WILL BE DEPENDENT ON
THIRD PARTY MANUFACTURERS TO MANUFACTURE PRODUCTS FOR US OR WILL BE REQUIRED TO
INCUR SIGNIFICANT COSTS AND DEVOTE SIGNIFICANT EFFORTS TO ESTABLISH OUR OWN
MANUFACTURING FACILITIES AND CAPABILITIES
We have limited manufacturing experience and no commercial scale
manufacturing capabilities. In order to continue to develop products and
services, apply for regulatory approvals and, ultimately, commercialize any
products and services, we will need to develop, contract for or otherwise
arrange for the necessary manufacturing capabilities.
We currently rely upon third parties to produce material for
preclinical testing purposes and expect to continue to do so in the future. We
also expect to rely upon other third parties, including our
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strategic alliance partners, to produce materials required for clinical trials
and for the commercial production of certain of our products if we succeed in
obtaining necessary regulatory approvals. Our partnership with ILEX Oncology
relies on Boehringer Ingleheim as the sole source manufacturer of CAMPATH
- -Registered Trademark- monoclonal antibody. There are a limited number of
manufacturers that operate under the FDA's good manufacturing practices
regulations capable of manufacturing for us. If we are unable to arrange for
third party manufacturing of our products, or to do so on commercially
reasonable terms, we may not be able to complete development of our products or
market them.
We may in the future determine to manufacture certain of our products
in our own manufacturing facilities. We will require substantial additional
funds and need to recruit qualified personnel in order to build or lease and
operate any manufacturing facilities.
IF WE FAIL TO OBTAIN AN ADEQUATE LEVEL OF REIMBURSEMENT FOR OUR FUTURE PRODUCTS
OR SERVICES BY THIRD PARTY PAYORS, THERE MAY BE NO COMMERCIALLY VIABLE MARKETS
FOR OUR PRODUCTS OR SERVICES
The availability and levels of reimbursement by governmental and other
third party payors affects the market for any pharmaceutical product or
healthcare service. These third party payors continually attempt to contain or
reduce the costs of healthcare by challenging the prices charged for medical
products and services. In certain foreign countries, particularly the countries
of the European Union, the pricing of prescription pharmaceuticals is subject to
governmental control. We may not be able to sell our products and services
profitably if reimbursement is unavailable or limited in scope or amount.
In both the United States and certain foreign jurisdictions, there have
been a number of legislative and regulatory proposals to change the healthcare
system. Further proposals are likely. The potential for adoption of these
proposals affects or will affect our ability to raise capital, obtain additional
collaborative partners and market our products.
If we or our alliance partners obtain marketing approvals for our
products and services, we expect to experience pricing pressure due to the trend
toward managed health care, the increasing influence of health maintenance
organizations and additional legislative proposals.
ETHICAL, LEGAL AND SOCIAL ISSUES RELATED TO GENETIC TESTING MAY CAUSE OUR
DIAGNOSTIC PRODUCTS TO BE REJECTED BY CUSTOMERS OR PROHIBITED OR CURTAILED BY
GOVERNMENTAL AUTHORITIES
Diagnostic tests that evaluate genetic predisposition to disease raise
issues regarding the use and confidentiality of the information provided by such
tests. Insurance carriers and employers might discriminate on the basis of such
information, resulting in a significant barrier to the acceptance of such tests
by customers. This type of discrimination could cause governmental authorities
to prohibit or limit the use of such tests.
RISKS RELATING TO THE NOTES
BECAUSE THE NOTES RANK BELOW OUR EXISTING AND FUTURE SENIOR DEBT, WE MAY BE
UNABLE TO REPAY OUR OBLIGATIONS UNDER THE NOTES
The notes are unsecured and subordinated in right of payment to all of
our existing and future senior debt. Because the notes are subordinate to our
senior debt, if we experience:
- a bankruptcy, liquidation or reorganization,
- an acceleration of the notes because of an event of default
under the indenture, or
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- other events described in the indenture
we will be permitted to make payments on the notes only after we have satisfied
all of our senior debt obligations. Therefore, we may not have sufficient assets
remaining to pay amounts due on any or all of the notes. In addition, the notes
effectively will be subordinate to all liabilities, including trade payables, of
our subsidiaries and any subsidiaries that we may in the future acquire or
establish. Consequently, our right to receive assets of any subsidiaries upon
their liquidation or reorganization, and the rights of the holders of the notes
to share in those assets, would be subordinate to the claims of the
subsidiaries' creditors.
The notes are our obligations exclusively. The indenture for the
notes does not limit our ability or that of any of our presently existing or
future subsidiaries, to incur senior debt, other indebtedness and other
liabilities. We may have difficulty paying what we owe under the notes if we,
or any of our subsidiaries, incur additional indebtedness or other
liabilities. As of February 29, 2000, we had approximately $47.874 million of
senior debt outstanding, and our subsidiaries had approximately $13.270
million of outstanding indebtedness and other liabilities (excluding
intercompany liabilities). From time to time we and our subsidiaries may
incur additional indebtedness, including senior debt, which could adversely
affect our ability to pay our obligations under the notes.
WE MAY BE UNABLE TO REPAY THE NOTES WHEN DUE OR REPURCHASE THE NOTES WHEN WE ARE
REQUIRED TO DO SO
At maturity, the entire outstanding principal amount of the notes will
become due and payable. In addition, if a change in control occurs, each holder
of the notes may require us to repurchase all or a portion of that holder's
notes. At maturity or if a change in control occurs, we may not have sufficient
funds or may be unable to arrange for additional financing to pay the principal
amount or repurchase price due. Under the terms of the indenture for the notes,
we may elect, if we satisfy conditions specified in the indenture, to pay the
repurchase price with shares of common stock. Our borrowing arrangements or
agreements relating to senior debt to which we become a party may contain
restrictions on, or prohibitions against, our repurchases of the notes. If the
maturity date or change in control occurs at a time when our other arrangements
prohibit us from repurchasing the notes, we could try to obtain the consent of
the lenders under those arrangements to purchase the notes, or we could attempt
to refinance these borrowings that contain the restrictions. If we do not obtain
the necessary consents or refinance these borrowings, we will be unable to
repurchase the notes. In that case, our failure to repurchase any tendered notes
or notes due upon maturity would constitute an event of default under the
indenture. Any such default, in turn, may cause a default under the terms of our
senior debt. As a result, in those circumstances, the subordination provisions
of the indenture would, absent a waiver, prohibit any repurchase of the notes
until we pay the senior debt in full. See "Description of the Notes --
Repurchase at the Option of Holders Upon a Change of Control."
BECAUSE THERE IS NO PUBLIC MARKET FOR THE NOTES BEING OFFERED, YOU MAY NOT BE
ABLE TO RESELL THEM EASILY OR AT A FAVORABLE PRICE
There is no public market for the notes and we are not certain of:
- the liquidity of any market that may develop;
- the ability of the holders to sell their notes; or
- the price at which the holders would be able to sell their
notes.
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If such a market were to develop, the notes could trade at prices that
may be higher or lower than the principal amount or purchase price, depending on
many factors, including prevailing interest rates, the market for similar notes,
and our financial performance. We do not presently intend to apply for the
listing of the notes on any securities exchange or for inclusion of the notes in
the automated quotation system of the National Association of Securities
Dealers, Inc. The notes are eligible for trading on The PORTAL Market.
Goldman, Sachs & Co., FleetBoston Robertson Stephens, Inc., ING Barings
LLC and Credit Suisse First Boston Corporation have advised us that they
presently make a market in the notes. They are not obligated, however, to make a
market in the notes, and any such market-making may be discontinued at any time
at their sole discretion. In addition, such market-making activity will be
subject to the limits imposed by the Securities Act and the Exchange Act.
Accordingly, no assurance can be given as to the development or liquidity of any
market for the notes.
RISKS RELATING TO AN INVESTMENT IN OUR COMMON STOCK
WE HAVE ANTITAKEOVER DEFENSES THAT COULD DELAY OR PREVENT AN ACQUISITION AND
COULD ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK
Provisions of our certificate of incorporation and bylaws and of
Delaware law could have the effect of delaying, deferring or preventing an
acquisition of millennium Pharmaceuticals. For example, we have divided our
board of directors into three classes that serve staggered three-year terms, we
may authorize the issuance of up to 5,000,000 shares of "blank check" preferred
stock, our stockholders may not take actions by written consent and our
stockholders are limited in their ability to introduce proposals at stockholder
meetings.
OUR STOCK PRICE COULD BE VOLATILE, WHICH COULD CAUSE YOU TO LOSE PART OR ALL OF
YOUR INVESTMENT
The market price of our common stock, like that of the common stock of
many other biotechnology companies, may be highly volatile. Factors such as:
- announcements of technological innovations or new commercial
products by us or our competitors;
- disclosure of results of clinical testing or regulatory
proceedings;
- governmental regulation and approvals;
- developments in patent or other proprietary rights, including
as a result of any public policy concerns;
- public concern as to the safety of products developed by us;
- our financial results; and
- general market conditions.
may have a significant effect on the market price of our common stock. In
addition, the stock market has experienced extreme price and volume
fluctuations. This volatility has significantly affected the market prices of
securities of many biotechnology and pharmaceutical companies for reasons
frequently unrelated to or disproportionate ^ to the operating performance of
the specific companies. These broad market fluctuations may adversely affect the
market price of our common stock.
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SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This prospectus and the documents incorporated by reference in this
prospectus contain "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, and section 21E of the Securities Exchange
Act of 1934 that involve risks and uncertainties, such as statements concerning:
- - growth and future operating results;
- - developments in our markets and strategic focus;
- - potential acquisitions and the integration of acquired businesses,
products and technologies;
- - intellectual property;
- - discovery and development of products;
- - new products;
- - strategic alliances;
- - our manufacturing, marketing, sales and distribution capabilities; and
- - future economic business and regulatory conditions.
Words such as "project," "believe," "anticipate," "plan," "expect,"
"estimate," "intend," "should," "would," "could" or "may," or other words that
convey uncertainty of future events or outcome generally accompany these
forward-looking statements. This prospectus discloses important factors that
could cause actual results to differ materially from these expectations,
including the "risk factors" beginning on page 5. You should read these factors
and other cautionary statements made in this prospectus and the documents
incorporated by reference as being applicable to all related forward-looking
statements whenever they appear in this prospectus and the documents
incorporated by reference. We assume no obligation to update them even though
our situation may change in the future.
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RATIO OF EARNINGS TO FIXED CHARGES
We present below the ratio of our earnings to our fixed charges.
Earnings consist of net income (loss) from operations before minority interest
plus fixed charges. Fixed charges consist of interest expense and that portion
of rental expense we believe to be representative of interest. The amounts for
the year ended December 31, 1999 include a charge for in process research and
development for $350,503,000 recorded in connection with the merger with
LeukoSite, Inc.
The pro forma amounts for the year ended December 31, 1999 gives effect
to the merger with LeukoSite as if it had occurred on January 1, 1999. The pro
forma amounts exclude the charge for in process research and development for
$350,503,000.
<TABLE>
Pro Forma
Year ended December 31,
-----------------------------------------------------------
1994 1995 1996 1997 1998 1999
(unaudited)
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings
to fixed charges.......... 1.51
Coverage deficiency......... ($6,372) ($8,768) ($84,632) ($3,841) ($381,884) ($110,175)
</TABLE>
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USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the notes or
of our common stock by the selling holders.
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DESCRIPTION OF THE NOTES
We issued the notes under a document called an "indenture." The
indenture is a contract between us and State Street Bank and Trust Company, who
acts as trustee. The indenture and the notes are governed by New York law. In
this section, references to "Millennium" or "we" or "us" refer solely to
Millennium Pharmaceuticals, Inc. and not its subsidiaries.
The following description of the terms of the indenture is a
summary. It summarizes only those portions of the indenture which we believe
are most important to your decision to invest in the notes. Because this
section is a summary, it does not describe every aspect of the notes. You
should keep in mind, however, that it is the indenture, and not this summary,
which defines your rights as a holder of the notes. There may be other
provisions in the indenture which are also important to you. You should read
the indenture itself for a full description of the terms of the notes. We
will provide a copy, at no charge, if you contact us. The indenture is also
an exhibit to the Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, which is incorporated by reference in this prospectus. For
details on how you can view or copy the exhibits to our registration
statement and information which is incorporated by reference in this
prospectus, see "Where You Can Find More Information" on page 48 of this
prospectus.
GENERAL
The notes:
- Are general, unsecured obligations of Millennium;
- Are subordinated, which means that they rank behind certain of
our indebtedness as, described below
- Are limited to $400,000,000 aggregate principal amount;
- Mature on January 15, 2007; and
- Bear interest at a rate of 5.50% per year, payable twice a
year on January 15 and July 15 to record holders of the notes
as of the preceding January 1 or July 1.
The notes were issued on January 20, 2000. The first interest payment
is due on July 15, 2000. Interest payable per $1,000 principal amount of notes
for the period from January 20, 2000 to July 15, 2000 will be $26.7361.
You may convert the notes into shares of our common stock at any time
before the close of business on January 15, 2007, unless the notes have been
previously redeemed or repurchased. The conversion rate is initially 5.9424
shares per each $1,000 principal amount of notes. The conversion rate may be
adjusted as described below under "--Conversion Rights." Our board of directors
approved a two-for-one stock split on February 28, 2000, conditioned upon our
stockholders approving an increase in the number of shares of our common stock
authorized. If our stockholders approve that increase, on April 18, 2000 we will
adjust the conversion rate to 11.8848 shares of common stock per $1,000
principal amount of notes, which is equivalent to a conversion price of
approximately $84.14 per share.
We may redeem the notes, in whole or part, at our option at any time on
or after January 15, 2003 at the redemption prices set forth below under
"--Optional Redemption," plus accrued and unpaid interest to the redemption
date. If there is a change in control of Millennium, you may have the right to
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require us to repurchase your notes as described below under "--Repurchase at
Option of Holders Upon a Change in Control."
FORM, DENOMINATION, TRANSFER, EXCHANGE AND BOOK-ENTRY PROCEDURES
The notes are not listed on an exchange, but trade over the counter. We
issued the notes:
- in fully registered form;
- without interest coupons; and
- in denominations of $1,000 and greater multiples.
We deposited one global note, representing all of the notes, with the
trustee as custodian for The Depository Trust Company, as the depositary, and
registered the global notes in the name of Cede & Co. as the depositary's
nominee. Except as set forth below, the global notes may be transferred, in
whole or in part, only to another nominee of the depositary or to a successor of
the depositary or its nominee.
The global note will not be registered in the name of any person, or
exchanged for notes that are registered in the name of any person, other than
DTC or its nominee, unless either of the following occurs:
- DTC notifies us that it is unwilling, unable or no longer
qualified to continue acting as the depositary for the global
note; or
- an event of default with respect to the notes represented by
the global note has occurred and is continuing.
In those circumstances, DTC will determine in whose names any
securities issued in exchange for the global note will be registered.
DTC or its nominee will be considered the sole owner and holder of the
global note for all purposes, and as a result:
- you cannot get notes registered in your name if they are
represented by the global note;
- you cannot receive certificated, or physical, notes in
exchange for your beneficial interest in the global notes;
- you will not be considered to be the owner or holder of the
global note or any note it represents for any purpose; and
- all payments on the global note will be made to DTC or its
nominee.
The laws of some jurisdictions require that some kinds of purchasers
can only own securities in definitive, or certificated, form. These laws may
limit your ability to transfer your beneficial interests in the global note to
these types of purchasers.
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Only institutions that have accounts with DTC or its nominee, called
"participants," and persons that may hold beneficial interests through
participants can own a beneficial interest in the global note. The only place
where the ownership of beneficial interests in the global note appears, and
the only way the transfer of those interests can be made, is on the records
kept by DTC and the records kept by those participants. Participants' ownership
of beneficial interests in the global note appears on the records kept by DTC
and the ownership of beneficial interests by others appears on the records
kept by those participants.
Secondary trading in bonds and notes of corporate issuers is generally
settled in clearing-house, or next-day, funds. In contrast, beneficial interests
in a global note usually trade in DTC's same-day funds settlement system, and
settle in immediately available funds. We make no representations as to the
effect that settlement in immediately available funds will have on trading
activity in those beneficial interests.
We are required to make cash payments of interest on and principal of
and the redemption or repurchase price of the global note, as well as any
payment of liquidated damages under the registration rights agreement, described
later in this Section under the caption "-- Registration Rights," to Cede, the
nominee for DTC, as the registered owner of the global note. We are required to
make these payments by wire transfer of immediately available funds on each
payment date.
DTC has informed us that, with respect to any cash payment of
interest on, principal of, or the redemption or repurchase price of, the global
note, as well as any payment of liquidated damages, DTC's practice is to credit
participants' accounts on the payment date with payments in amounts
proportionate to their respective beneficial interests in the notes represented
by the global note as shown on DTC's records, unless DTC has reason to believe
that it will not receive payment on that payment date. Payments by participants
to owners of beneficial interests in notes represented by the global note held
through participants will be the responsibility of those participants, as is now
the case with securities held for the accounts of customers registered in
"street name."
We will send any redemption notices to Cede. We understand that if less
than all the notes are being redeemed, DTC's practice is to determine by lot the
amount of the holdings of each participant to be redeemed.
We also understand that neither DTC nor Cede will consent or vote with
respect to the notes. We have been advised that under its usual procedures, DTC
will mail an "omnibus proxy" to us as soon as possible after the record date.
The omnibus proxy assigns Cede's consenting or voting rights to those
participants to whose accounts the notes are credited on the record date
identified in a listing attached to the omnibus proxy.
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global note to pledge the
interest to persons or entities that do not participate in the DTC book-entry
system, or otherwise take actions in respect of that interest, may be affected
by the lack of a physical certificate evidencing its interest.
DTC has advised us that it will take any action permitted to be taken
by a holder of notes, including the presentation of notes for exchange, only at
the direction of one or more participants to whose account with DTC interests in
the global note are credited and only in respect of such portion of the
principal amount of the notes represented by the global note as to which such
participant has, or participants have, given such direction.
DTC has also advised us as follows:
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- DTC is a limited purpose trust company organized under the
laws of the State of New York, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the
Uniform Commercial Code, as amended, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the
Exchange Act;
- DTC was created to hold securities for its participants and
facilitate the clearance and settlement of securities
transactions between participants through electronic
book-entry changes in accounts of its participants;
- Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and other
organizations;
- DTC is owned by a number of its participants and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc.
and the National Association of Securities Dealers, Inc.;
- Indirect access to the DTC system is available to other
entities such as banks, brokers, dealers and trust companies
that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
The policies and procedures of DTC, which may change periodically, will
apply to payments, transfers, exchanges and other matters relating to beneficial
interests in the global note. We and the Trustee have no responsibility or
liability for any aspect of DTC's or any participants' records relating to
beneficial interests in the global note, including for payments made on the
global note, and we and the trustee are not responsible for maintaining,
supervising or reviewing any of those records.
CONVERSION RIGHTS
You may, at your option, convert any portion, in $1,000 increments, of
the principal amount of a note you hold into shares of our common stock at any
time before the close of business on January 15, 2007, unless the note has been
previously redeemed or repurchased, at a conversion rate equal to 5.9424 shares
per $1,000 principal amount of notes. This conversion rate equals a conversion
price of $168.28 per share. Our board of directors approved a two-for-one stock
split on February 28, 2000, conditioned upon our stockholders approving an
increase in the number of shares of our common stock authorized. If our
stockholders approve that increase, on April 18, 2000 we will adjust the
conversion rate to 11.8848 shares of common stock per $1,000 principal amount of
notes, which is equivalent to a conversion price of approximately $84.14 per
share. The conversion rate is subject to further adjustment as described below.
Your right to convert a note called for redemption or delivered for repurchase
will end at the close of business on the business day immediately before the
redemption date or repurchase date for that note, unless we default in making
the payment due upon redemption or repurchase.
You can convert a note by delivering it at the Corporate Trust Office
of the trustee, with a duly signed and completed notice of conversion, a copy of
which may be obtained from the trustee. In the case of a global note, DTC will
effect the conversion upon notice from the holder of a beneficial interest in
the global note in accordance with DTC's rules and procedures. The conversion
date will be the date on which the note and the duly signed and completed notice
of conversion are delivered to the Corporate Trust Office of the trustee.
As promptly as practicable on or after the conversion date, we will
issue and deliver to the trustee a certificate or certificates for the number of
full shares of common stock issuable upon conversion, together with payment in
place of any fraction of a share. The certificates will be sent by the trustee
to the
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conversion agent for delivery to the holder of the note being converted. The
shares of common stock issuable upon conversion of the notes will be fully paid
and nonassessable and will also rank equally with other outstanding shares of
our common stock.
If you convert a note on a date that is not an interest payment date,
you will not be entitled to receive any interest for the period from the next
preceding interest payment date to the date of conversion, except as described
below. If you are a holder of a note on a regular record date, including a note
that is subsequently surrendered for conversion after the regular record date,
you will receive the interest payable on such note on the next succeeding
interest payment date. To correct for this resulting overpayment of interest,
any note surrendered for conversion during the period from the close of business
on a regular record date to the opening of business on the next succeeding
interest payment date will be required to be accompanied by payment of an amount
equal to the interest payable on such interest payment date on the principal
amount of notes being surrendered for conversion. However, you will not be
required to make that payment if you are converting a note, or a portion of a
note, that we have called for redemption, or that you are entitled to require us
to repurchase from you, if your conversion right would terminate because of the
redemption or repurchase between the regular record date and the close of
business on the next succeeding interest payment date.
No other payment or adjustment for interest, or for any dividends on
our common stock, will be made upon conversion. If you receive common stock upon
conversion of a note, you will not be entitled to receive any dividends payable
to holders of common stock as of any record date before the close of business on
the conversion date. We will not issue fractional shares upon conversion of
notes. Instead, we will pay an amount in cash based on the market price of the
common stock at the close of business on the conversion date.
If you deliver a note for conversion, you will not be required to pay
any taxes or duties in respect of the issue or delivery of common stock on
conversion. However, we are not required to pay any tax or duty that may be
payable in respect of any transfer involved in the issue or delivery of the
common stock in a name other than that of the holder of the note. We will not
issue or deliver certificates representing shares of common stock unless the
person requesting the issuance or delivery has paid to us the amount of any such
tax or duty or has established to our satisfaction that such tax or duty is
payable.
The conversion rate is subject to adjustment if we:
- pay a dividend or other distribution payable in common stock
on shares of our capital stock;
- issue to holders of common stock rights, options or warrants
entitling them to subscribe to or purchase our common stock or
preferred stock at less than the then current market price of
the common stock or preferred stock; however, if those rights,
options or warrants are only exercisable upon the occurrence
of certain triggering events, then the conversion rate will
not be adjusted until the triggering events occur;
- subdivide, reclassify or combine our common stock;
- distribute to holders of our common stock evidences of
indebtedness, shares of capital stock, cash or assets,
including securities, but excluding dividends, rights,
options, warrants and distributions referred to in the first
two bullet points of this list, dividends and distributions
paid exclusively in cash and distributions upon mergers or
consolidations;
- make a distribution consisting exclusively of cash, with some
exceptions set forth in the indenture, to holders of our
common stock if the amount of the distribution, when added
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to any other cash distributions within the preceding 12
months, exceeds 10% of our market capitalization; or
- successfully complete a tender offer for our common stock that
involves consideration that exceeds 10% of our market
capitalization on the expiration of such tender offer when
combined with any other tender offers within 12 months or all
cash distributions, with some exceptions set forth in the
indenture, within the preceding 12 months
We are not required to adjust the conversion rate until the cumulative
adjustments amount to 1.0% of the conversion rate or more. We will compute any
adjustments to the conversion rate and give notice to the holders of any such
adjustments. We also may make such increases in the conversion rate in addition
to those required by the provisions described above as we may consider to be
advisable so that any event treated for United States federal income tax
purposes as a dividend of stock or stock rights will not be taxable to the
recipients.
If we merge or consolidate with another person or sell or transfer all
or substantially all of our assets, each note then outstanding will become
convertible only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by a holder of the
number of shares of common stock into which the note was convertible immediately
prior to the merger, consolidation or sale. This calculation will be made based
on the assumption that the holder of common stock failed to exercise any rights
of election that the holder may have to select a particular type of
consideration. The adjustment will not be made for a merger that does not result
in any reclassification, conversion, exchange or cancellation of our common
stock.
We may, from time to time, increase the conversion rate by any amount
for any period of at least 20 days if our Board of Directors has determined that
such increase would be in our best interests. If our Board of Directors makes
such a determination, it will be conclusive. We will give holders of notes at
least 15 days' notice of such an increase in the Conversion Rate. No such
increase will be taken into account for purposes of determining whether the
closing price of the common stock exceeds the conversion price by 105% in
connection with an event which otherwise would be a "change in control," as
defined below.
If at any time we distribute property to our shareholders that would be
taxable to such shareholders as a dividend for United States federal income tax
purposes, for example, distributions of evidences of indebtedness or assets of
Millennium, but generally not stock dividends on common stock or rights to
subscribe for common stock, and, pursuant to the anti-dilution provisions of the
indenture, the number of shares into which notes are convertible is increased,
that increase may be deemed for United States federal income tax purposes to be
the payment of a taxable dividend to holders of notes. See "Material United
States Federal Income Tax Considerations."
SUBORDINATION
The notes are subordinated and, as a result, the payment of the
principal, any premium and interest on the notes, including amounts payable on
any redemption or repurchase, will be subordinated to the prior payment in full
of all our senior debt. "Senior debt" means all other amounts payable in
connection with, the following, whether outstanding on the date of the indenture
or arising later:
- our indebtedness evidenced by a credit or loan agreement,
note, bond, debenture or other similar instrument;
- all our obligations for money borrowed;
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- our obligations as lessee under leases required to be
capitalized on the balance sheet of the lessee under generally
accepted accounting principles;
- all our obligations under interest rate and currency swaps,
caps, floors, collars, hedge agreements, forward contracts or
similar agreements or arrangements;
- all our obligations with respect to letters of credit,
bankers' acceptances and similar facilities, including related
reimbursement obligations;
- all our obligations issued or assumed as the deferred purchase
price of property or services, but excluding trade accounts
payable and accrued liabilities arising in the ordinary course
of business;
- all our obligations of the type referred to above of another
person and all dividends of another person, the payment of
which, in either case, we have assumed or guaranteed, or for
which we are responsible or liable, directly or indirectly,
jointly or severally, as obligor, guarantor or otherwise, or
which is secured by a lien on our property; and
- renewals, extensions, modifications, replacements,
restatements and refundings of, or any indebtedness or
obligation issued in exchange for any indebtedness or
obligation described above.
Senior debt does not include any indebtedness or obligation if the
terms of the indebtedness or obligation, or the terms of the instrument under
which the indebtedness or obligation is issued, expressly provide that the
indebtedness or obligation is not superior in right of payment to the notes. In
addition, Senior debt does not include any particular indebtedness or
obligation that we may owe to any of our direct or indirect subsidiaries.
We may not make any payment on account of principal, premium or
interest on the notes, or redemption or repurchase of the notes, if either of
the following occurs:
- we default in our obligations to pay principal, premium,
interest or other amounts on our senior debt, including a
default under any redemption or repurchase obligation, and the
default continues beyond any grace period that we may have to
make those payments; or
- an event of default occurs and is continuing on any Designated
Senior Debt, as defined below, and (A) the event of default
permits the holders of the Designated Senior Debt to
accelerate its maturity and (B) the trustee has received a
payment blockage notice of the default from a holder of the
Designated Senior Debt.
If payments of the notes have been blocked by a payment default on
senior debt, payments on the notes may resume when the payment default has been
cured or waived. If payments on the notes have been blocked by a nonpayment
default, payments on the notes may resume on the earlier of (A) the date the
nonpayment default is cured or waived or (B) 179 days after the payment blockage
notice is received unless the Designated Senior Debt has been accelerated.
No nonpayment default that existed on the day a payment blockage notice
was delivered to the trustee can be used as the basis for any subsequent payment
blockage notice. In addition, once a holder of Designated Senior Debt has
blocked payment on the notes by giving a payment blockage notice, no new period
of payment blockage can be commenced until both of the following are satisfied:
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- 365 days have elapsed since the effectiveness of the
immediately prior payment blockage notice; and
- all scheduled payments of principal, any premium and interest
on the notes that have come due have been paid in full in
cash.
"Designated Senior Debt" means our obligations under any particular
senior debt in which the instrument creating or evidencing the debt, or the
assumption or guarantee of the debt, or related agreements or documents to which
we are a party, expressly provides that the indebtedness will be "Designated
Senior Debt" for purposes of the indenture. That instrument, agreement or
other document may place limitations and conditions on the right of that senior
debt to exercise the rights of Designated Senior Debt.
In addition, upon any acceleration of the principal due on the notes as
a result of an event of default or payment or distribution of our assets to
creditors upon any dissolution, winding up, liquidation or reorganization,
whether voluntary or involuntary, marshaling of assets, assignment for the
benefit of credits, or in bankruptcy, insolvency, receivership or other similar
proceedings, all principal, premium, interest and other amounts due or to become
due on all senior debt must be paid in full before you will be entitled to
receive any payment. Because of this subordination, in the event of insolvency,
our creditors who are holders of senior debt may recover more, ratably, than you
would, and this subordination may reduce or eliminate payments to you. As of
February 29, 2000, we had approximately $47.874 million of senior debt
outstanding.
In addition, the notes are "structurally subordinated" to all
indebtedness and other liabilities, including trade payables and lease
obligations, of our subsidiaries. This occurs because any right of Millennium to
receive any assets of our subsidiaries upon their liquidation or reorganization,
and the consequent right of the holders of the notes to receive a portion of
those assets, will be effectively subordinated to the claims of that
subsidiary's creditors, including trade creditors, unless Millennium itself is
recognized as a creditor of the subsidiary. Even if Millennium is recognized as
a creditor of the subsidiary, the claims of Millennium would still be
subordinate to any security interest in the assets of the subsidiary and any
indebtedness of the subsidiary that is senior to that held by Millennium.
The indenture does not limit our ability or the ability of any of our
subsidiaries to incur indebtedness, including senior debt.
OPTIONAL REDEMPTION
On and after January 15, 2003, we may redeem the notes, in whole or in
part, at our option, at the redemption prices specified below. The redemption
price, expressed as a percentage of principal amount, is as follows for the
12-month periods beginning on January 15 of the following years:
PRICE YEAR-REDEMPTION
- -
- -
2003 -103.1429%
2004 -102.3571%
2005 -101.5714%
2006 -100.7857%
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and 100% of the principal amount on or after January 15, 2007. In each case we
will also pay accrued interest to the redemption date. The Indenture requires us
to give notice of redemption not more than 60 and not less than 30 days before
the redemption date.
No "sinking fund" is provided for the notes, which means that the
indenture does not require us to redeem or retire the notes periodically.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL
If a change in control, as defined below, occurs, you will have the
right, at your option, to require us to repurchase all of your notes not called
for redemption, or any portion of the principal amount of your notes that is
equal to $1,000 or any integral multiple of $1,000. The price we are required to
pay is 100% of the principal amount of the notes to be repurchased, together
with interest accrued to the repurchase date.
At our option, instead of paying the repurchase price in cash, we may
pay the repurchase price in common stock valued at 95% of the average of the
closing sales prices of the common stock for the five trading days immediately
preceding and including the third day prior to the repurchase date. We may only
pay the repurchase price in our common stock if we satisfy the conditions
specified in the indenture.
Within 30 days after the occurrence of a change in control, we are
obligated to give you notice of the change in control and of the repurchase
right arising as a result of the change in control. We must also deliver a copy
of this notice to the trustee. To exercise the repurchase right, you must
deliver on or before the 30th day after the date of our notice irrevocable
written notice to the trustee of your exercise of your repurchase right,
together with the notes with respect to which that right is being exercised. We
are required to make the repurchase on the date that is 45 days after the date
of our notice.
For these purposes, a change in control will occur if any of the
following occurs:
- any person except for Millennium, any subsidiary of Millennium
or any employee benefit plan of Millennium, acquires
beneficial ownership, directly or indirectly of 50% or more of
the total voting power of all shares of our capital stock;
- we consolidate with or merge with or into any other person or
another person merges into us, except if the transaction
satisfies any of the following:
- the holders of 50% or more of the total voting power
of all shares of our capital stock before the
transaction have, directly or indirectly, 50% or more
of the total voting power of all shares of capital
stock of the continuing or surviving corporation
after the transaction;
- the transaction is a merger which does not result in
any reclassification, conversion, exchange or
cancellation of outstanding shares of our capital
stock; or
- the transaction is a merger effected only to change
our jurisdiction of incorporation and it results in a
reclassification, conversion or exchange of
outstanding shares of our common stock only into
shares of common stock of us or another corporation;
or
- we convey, transfer, sell, lease or otherwise dispose of all
or substantially all of our assets to another person, unless
the holders of 50% or more of the total voting power of
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all shares of our capital stock before the transaction have,
directly or indirectly, 50% or more of the total voting power
of all shares of capital stock of such person after the
transaction.
However, a change in control will not occur if the closing sales
price per share of our common stock for any five trading days within the period
of 10 consecutive trading days ending immediately after the later of the change
in control or the public announcement of the change in control, in the case of a
change in control relating to an acquisition of capital stock, or the period of
10 consecutive trading days ending immediately before the change in control, in
the case of change in control relating to a merger, consolidation or asset sale,
equals or exceeds 105% of the conversion price of the notes in effect on each of
those trading days.
For purposes of these provisions:
- the conversion price is equal to $1,000 divided by the
conversion rate;
- whether a person is a "beneficial owner" will be determined in
accordance with Rule 13d-3 under the Securities Exchange Act
of 1934, and
- "Person" includes any syndicate or group that would be deemed
to be a "person" under Section 13(d)(3) of the Exchange Act.
Rule 13e-4 under the Exchange Act requires the dissemination of
prescribed information to security holders in the event of an issuer tender
offer and may apply in the event that the repurchase option becomes available to
you. We will comply with this rule to the extent it applies at that time.
We may, to the extent permitted by applicable law, at any time purchase
notes in the open market or by tender at any price or by private agreement. Any
note that we so purchase may, to the extent permitted by applicable law, be
reissued or resold or may, at our option, be surrendered to the trustee for
cancellation. Any notes surrendered may not be reissued or resold and will be
canceled promptly.
The definition of change in control includes a phrase relating to the
conveyance, transfer, sale, lease or disposition of "all or substantially all"
of our assets. There is no precise, established definition of the phrase
"substantially all" under applicable law. Accordingly, your ability to require
us to repurchase your notes as a result of conveyance, transfer, sale, lease or
other disposition of less than all of our assets may be uncertain.
The foregoing provisions would not necessarily provide you with
protection if we are involved in a highly leveraged or other transaction that
may adversely affect you.
Our ability to repurchase notes upon the occurrence of a change in
control is subject to important limitations. Moreover, a change in control could
cause an event of default under, or be prohibited or limited by, or require
consent under, the terms of our senior debt. As a result, unless we were to
obtain a waiver or consent, a repurchase of the notes could be prohibited under
the subordination provisions of the Indenture until the senior debt is paid in
full. Further, we cannot assure you that we would have the financial resources,
or would be able to arrange financing, to pay the repurchase price for all the
notes that might be delivered by holders of notes seeking to exercise the
repurchase right. If we were to fail to repurchase the notes when required
following a change in control, an event of default under the indenture would
occur, whether or not such repurchase is permitted by the subordination
provisions of the Indenture. Any such default may, in turn, cause a default
under our senior debt. See "--Subordination."
MERGERS AND SALES OF ASSETS
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We may not consolidate with or merge into any other person or convey,
transfer, sell or lease our properties and assets substantially as an entirety
to any person, and we may not permit any person to consolidate with or merge
into us or convey, transfer, sell or lease such person's properties and assets
substantially as an entirety to us, unless both of the following requirements is
met:
- Either:
- We are the surviving or purchasing entity; or
- The resulting, surviving or purchasing entity is a
corporation organized under the laws of any state in
the United States or the District of Columbia and
expressly assumes by supplemental indenture all of
our obligations in connection with the notes and the
indenture; and
- No event of default exists immediately before or after the merger,
consolidation or sale.
EVENTS OF DEFAULT
The following are events of default under the indenture:
- if we fail to pay principal of or any premium on any note when
due, whether or not the subordination provisions of the
indenture prohibit the payment;
- if we fail to pay any interest on any note when due and that
default continues for 30 days, whether or not the
subordination provisions of the indenture prohibit the
payment;
- if we fail to give the notice that we are required to give in
the event of a change in control, whether or not the
subordination provisions of the indenture prohibit the notice;
- if we fail to perform any other covenant in the indenture and
that failure continues for 60 days after written notice to us
by the trustee or the holders of at least 25% in aggregate
principal amount of outstanding notes;
- we fail to pay when due or accelerated any indebtedness of
ours or any of our subsidiaries in excess of $10,000,000, and
any grace period has expired, if we do not discharge the
indebtedness, or our lender does not annul the acceleration,
within 30 days after written notice to us by the trustee or
the holders of at least 25% in aggregate principal amount of
the outstanding notes; and
- events of bankruptcy, insolvency or reorganization with
respect to us or any of our significant subsidiaries specified
in the indenture.
Except as required by the indenture, the trustee is under no
obligation to exercise any of its rights or powers under the indenture at the
request or direction of any of the holders, unless such holders shall have
offered to reasonably indemnify the trustee. Subject to such provisions for
indemnifying the trustee, the holders of a majority in aggregate principal
amount of the outstanding notes have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the trustee or
exercising any trust or power conferred on the trustee.
If an event of default, other than an event of default arising from
events of bankruptcy, insolvency or reorganization, occurs and is continuing,
either the trustee or the holders of at least 25% in principal
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amount of the outstanding notes may accelerate the maturity of all notes. After
acceleration, but before a judgment or decree based on acceleration, the holders
of a majority in aggregate principal amount of outstanding notes may, under
circumstances set forth in the indenture, rescind the acceleration if all events
of default, other than the nonpayment of principal of the notes which have
become due solely because of the acceleration, have been cured or waived as
provided in the indenture. If an event of default arising from events of
bankruptcy, insolvency or reorganization occurs and is continuing, then the
principal of, and accrued interest on, all of the notes will automatically
become immediately due and payable without any declaration or other act on the
part of the holders of the notes or the trustee.
Before you may take any action to institute any proceeding relating to
the indenture, or to appoint a receiver or a trustee, or for any other remedy,
each of the following must occur:
- you must have given the trustee written notice of a continuing
event of default;
- the holders of at least 25% of the aggregate principal amount
of all outstanding notes must make a written request of the
trustee to take action because of the default and must have
offered reasonable indemnification to the trustee against the
cost, liabilities and expenses of taking such action; and
- the trustee must not have taken action for 60 days after
receipt of such notice and offer of indemnification.
These limitations do not apply to a suit for the enforcement of payment
of the principal of or any premium or interest on a note, or the repurchase
price payable for a note, on or after the due dates for such payments or of the
right to convert the note in accordance with the Indenture.
We will furnish to the trustee annually a statement as to our
performance of our obligations under the Indenture and as to any default in
performance.
MODIFICATION AND WAIVER
The consent of the holders of a majority in principal amount of the
outstanding notes affected is required to make a modification or amendment to
the Indenture. However, a modification or amendment requires the consent of the
holder of each outstanding note affected if it would:
- change the stated maturity of the principal or interest of a
note;
- reduce the principal amount of, any premium on, or interest
on, any note;
- reduce the amount payable upon a redemption or mandatory
repurchase;
- modify the provisions with respect to the repurchase rights of
holders of notes in a manner adverse to the holders;
- change the place or currency of payment on a note;
- impair the right to institute suit for the enforcement of any
payment on any note;
- modify the subordination provisions in a manner that is
adverse to the holders of the notes;
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- adversely affect the right to convert the notes;
- modify our obligation to deliver information required under
Rule 144A to permit resales of the notes and common stock
issued upon conversion of the notes if we cease to be subject
to the reporting requirements under the Exchange Act;
- reduce the percentage of holders whose consent is needed to
modify or amend the Indenture;
- reduce the percentage of holders whose consent is needed to
waive compliance with certain provisions of the Indenture or
to waive certain defaults; or
- modify the provisions dealing with modification and waiver of
the indenture.
The holders of a majority in principal amount of the outstanding notes
must consent to waive compliance by us with certain restrictive provisions of
the Indenture. The holders of a majority in principal amount of the outstanding
notes may waive any past default, except an uncured default in the payment of
principal, any premium, interest or the repurchase price.
Notes will not be considered outstanding if money for their payment or
redemption has been deposited or set aside in trust for the holders.
We are generally entitled to set any day as a record date for the
purpose of determining the holders of outstanding notes that are entitled to
take any action under the indenture. In limited circumstances, the trustee
is entitled to set a record date for action by holders. If a record date is set
for any action to be taken by holders, such action may be taken only by persons
who are holders of outstanding notes on the record date and must be taken within
180 days following the record date or such other period as we may specify. If
the trustee sets the record date, it may specify the period following the record
date in which the action must be taken. This period may be shortened or
lengthened as long as it is less than 180 days.
REGISTRATION RIGHTS
When we issued the notes, we entered into a registration rights
agreement and agreed to file the shelf registration statement of which this
prospectus is a part. Under the registration rights agreement we also agreed
that we will, at our expense:
- use our reasonable efforts to cause the shelf registration
statement to be declared effective under the Securities Act by
July 18, 2000, subject to our right to postpone having the
shelf registration statement declared effective for an
additional 90 days in limited circumstances; and
- use our reasonable efforts to keep effective the shelf
registration statement until the earlier of:
- two years after the date it is declared effective; or
- the date on which there are no outstanding registrable
securities.
We are permitted to suspend the use of this prospectus in connection
with sales of registrable securities during prescribed periods of time for
reasons relating to pending corporate developments,
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public filings with the SEC and other events. The periods during which we can
suspend the use of the prospectus may not, however, exceed a total of 45 days in
any 90-day period or a total of 90 days in any 365-day period. We will provide
to each holder of registrable securities copies of this prospectus, notify each
holder when the shelf registration statement has become effective and take
certain other actions required to permit public resales of the registrable
securities. We will issue a press release to Reuters Economic Services and
Bloomberg Business News promptly following the effectiveness of the shelf
registration statement and take certain other actions required to permit public
resales of the registrable securities.
We may, upon written notice to all the holders of notes, postpone
having the shelf registration statement declared effective for a reasonable
period not to exceed 90 days if we possess material non-public information the
disclosure of which would have a material adverse effect on us and our
subsidiaries taken as a whole. Notwithstanding any such postponement, additional
interest, referred to as "liquidated damages," will accrue on the notes if the
shelf registration statement is not declared effective by July 18, 2000.
In that case, liquidated damages will accrue (1) in respect of the
notes at the rates set forth below on the principal amount of the notes and (2)
in respect of the common stock issued upon conversion of the notes, at the rates
set forth below applied to the conversion price at that time. Liquidated damages
will accrue on the notes from and including the day following the registration
default to but excluding the day on which the registration default has been
cured. Liquidated damages will be paid semi-annually in arrears, with the first
semi-annual payment due on the first interest payment date following the date on
which the liquidated damages begin to accrue.
The rates at which liquidated damages will accrue will be as follows:
- 0.25% of the principal amount per annum to and including the
90th day after the registration default; and
- 0.5% of the principal amount per annum from and after the 91st
day after the registration default.
In addition, the interest rate on the notes will be increased if:
- the shelf registration statement ceases to be effective, or we
otherwise prevent or restrict holders of registrable
securities from making sales under the shelf registration
statement, for more than 45 days, whether or not consecutive,
during any 90-day period; or
- the shelf registration statement ceases to be effective, or we
otherwise prevent or restrict holders of registrable
securities from making sales under the shelf registration
statement, for more than 90 days, whether or not consecutive,
during any 365-day period.
In either event, the interest rate on the notes will increase by 0.50%
per annum (1) in respect of the notes, on the principal amount of the notes and
(2) in respect of the common stock issued upon conversion of the notes, applied
to the conversion price at that time. Liquidated damages will accrue from the
46th day of the 90-day period or the 91st day of the 365-day period. The
increased rate will continue until the earlier of the following:
- the time the shelf registration statement again becomes
effective or the holders of registrable securities are again
able to make sales under the shelf registration statement,
depending on which event triggered the increase in interest
rate; or
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- the time the shelf registration statement is no longer
required to be kept effective.
We have agreed in the registration rights agreement to use all
reasonable efforts to cause the shares of our common stock issuable upon
conversion of the notes to be quoted on The Nasdaq National Market. However, if
the common stock is not then quoted on The Nasdaq National Market, we will use
all reasonable efforts to cause the shares of common stock upon conversion of
the common stock to be quoted or listed on whichever market or exchange the
common stock is then quoted or listed, upon effectiveness of the shelf
registration statement.
This summary of certain provisions of the registration rights agreement
is not complete and is subject to, and qualified in its entirety by reference
to, all the provisions of the registration rights agreement, a copy of which
will be made available to beneficial owners of the notes upon request to us.
NOTICES
We will give notice to holders of the notes by mail to the addresses of
the holders as they appear in the security register. Notices will be deemed to
have been given on the date of mailing.
REPLACEMENT OF NOTES
We will replace, at the expense of the holders, notes that become
mutilated, destroyed, stolen or lost upon delivery to the trustee of the
mutilated notes or evidence of the loss, theft or destruction thereof
satisfactory to us and the trustee. In the case of a lost, stolen or destroyed
note, indemnity satisfactory to the trustee and us may be required at the
expense of the holder of the note before a replacement note will be issued.
THE TRUSTEE
State Street Bank and Trust Company is the trustee for the holders of
notes issued under the indenture . If an event of default shall occur, and
shall not be cured, the trustee will be required to use the degree of care of a
prudent person in the conduct of his own affairs in the exercise of its powers.
Subject to these provisions, the trustee will be under no obligation to exercise
any of its rights or powers under the indenture at the request of any holders
of notes, unless they shall have offered to the trustee reasonable security or
indemnity.
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DESCRIPTION OF CAPITAL STOCK
THE FOLLOWING DESCRIPTION OF OUR COMMON STOCK AND PREFERRED STOCK
SUMMARIZES THE MATERIAL TERMS AND PROVISIONS OF THESE TYPES OF SECURITIES. FOR
THE COMPLETE TERMS OF OUR COMMON STOCK AND PREFERRED STOCK, PLEASE REFER TO OUR
CHARTER AND BYLAWS THAT ARE INCORPORATED BY REFERENCE INTO THE REGISTRATION
STATEMENT WHICH INCLUDES THIS PROSPECTUS. THE TERMS OF THESE SECURITIES MAY ALSO
BE AFFECTED BY THE DELAWARE GENERAL CORPORATION LAW. WHILE THE TERMS SUMMARIZED
BELOW WILL APPLY GENERALLY TO ANY FUTURE COMMON STOCK OR PREFERRED STOCK THAT WE
MAY OFFER, THE PARTICULAR TERMS OF ANY SERIES OF THESE SECURITIES WILL BE
DESCRIBED IN MORE DETAIL IN THE APPLICABLE PROSPECTUS SUPPLEMENT AND MAY VARY
FROM THE TERMS SUMMARIZED BELOW.
We are authorized by our charter to issue 100,000,000 shares of common
stock, $0.001 par value per share, of which 45,380,321 shares were issued and
outstanding on February 29, 2000, and 5,000,000 shares of undesignated
preferred stock, $.001 par value per share, of which no shares are issued and
outstanding.
On January 31, 2000, our board of directors voted to recommend to our
stockholders that our corporate charter be amended to increase the authorized
number of shares of common stock to 500,000,000 shares. This proposal will be
considered at our annual meeting of stockholders to be held on April 12, 2000.
On February 28, 2000, our board of directors approved a two-for-one
split of our common stock in the form of a stock dividend. Stockholders of
record on March 28, 2000 will be entitled to one additional share of common
stock for each share held on that date. The dividend distribution date will be
April 18, 2000. The stock split is subject to the prior approval by our
stockholders of the increase in our authorized common stock to 500,000,000
shares.
COMMON STOCK
VOTING. Holders of common stock are entitled to one vote for each share
held on all matters submitted to a vote of stockholders and do not have
cumulative voting rights. Accordingly, holders of a majority of the shares of
common stock entitled to vote in any election of directors may elect all of the
directors standing for election.
DIVIDENDS. If our board of directors declares a dividend, holders of
common stock will receive payments on a ratable basis from our funds that are
legally available to pay dividends. However, this dividend right is subject to
any preferential dividend rights we may grant to the persons who hold preferred
stock, if any is outstanding.
LIQUIDATION. If we are dissolved, the holders of our common stock will
be entitled to share ratably in all the assets that remain after we pay our
liabilities and any amounts we may owe to the persons who hold preferred stock,
if any is outstanding.
OTHER. Holders of our common stock do not have preemptive,
subscription, redemption or conversion rights. The outstanding shares of our
common stock are, and the shares issuable by us upon the conversion of the notes
and upon exercise of the warrants will be, when issued, fully paid and
nonassessable.
PREFERRED STOCK
Our board of directors is authorized, subject to any limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to 5,000,000 shares of preferred stock, in one or more
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series. Each such series of preferred stock shall have such number of shares,
designations, preferences, voting powers, qualifications and special or relative
rights or privileges as shall be determined by our board of directors, which may
include, among others, dividend rights, voting rights, redemption and sinking
fund provisions, liquidation preferences, conversion rights and preemptive
rights.
Our stockholders have granted the board of directors authority to issue
the preferred stock and to determine its rights and preferences in order to
eliminate delays associated with a stockholder vote on specific issuances. The
rights of the holders of common stock will be subject to, and may be adversely
affected by, the rights of holders of any preferred stock that may be issued in
the future. The issuance of preferred stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, a majority
of our outstanding voting stock. We have no present plans to issue any shares of
preferred stock.
WARRANTS
As of February 29, 2000, there were outstanding warrants to purchase
an aggregate of 316,885 shares of common stock, at exercise prices ranging
from $3.00 per share to $37.76 per share. None of the warrants confer upon
their holders any rights as stockholders.
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
BUSINESS COMBINATIONS. We are subject to the provisions of Section
203 of the General Corporation Law of Delaware. Section 203 prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. A "business
combination" includes mergers, asset sales and other transactions resulting in a
financial benefit to the interested stockholder. Subject to certain exceptions,
an "interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of the
corporation's voting stock.
STAGGERED BOARD. Our certificate of incorporation provides for the
division of our board of directors into three classes as nearly equal in size
as possible with staggered three-year terms. In addition, our certificate of
incorporation provides that directors may be removed only for cause by the
affirmative vote of the holders of two-thirds of the shares of capital stock of
the corporation entitled to vote. Under our certificate of incorporation, any
vacancy on the board of directors, however occurring, including a vacancy
resulting from an enlargement of the board of directors, may only be filled by
vote of a majority of the directors then in office. The classification of the
board of directors and the limitations on the removal of directors and filling
of vacancies could have the effect of making it more difficult for a third party
to acquire, or of discouraging a third party from acquiring, control of us.
SUPERMAJORITY VOTES REQUIRED. The Corporation Law of Delaware provides
generally that the affirmative vote of a majority of the shares entitled to vote
on any matter is required to amend a corporation's certificate of
incorporation or bylaws, unless a corporation's certificate of incorporation
or bylaws, as the case may be, requires a greater percentage. Our certificate
of incorporation and bylaws require the affirmative vote of the holders of at
least 75% of the shares of our common stock issued and outstanding and
entitled to vote to amend or repeal any of the provisions described in the prior
paragraph.
INDEMNIFICATION. Our certificate of incorporation contains certain
provisions permitted under the Corporation Law of Delaware relating to the
liability of directors. The provisions eliminate a director's liability for
monetary damages for a breach of fiduciary duty, except in certain circumstances
involving
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wrongful acts, such as the breach of a director's duty of loyalty or
acts or omissions which involve intentional misconduct or a knowing violation of
law. The limitation of liability described above does not alter the liability of
our directors and officers under federal securities laws. Furthermore, our
certificate of incorporation contains provisions to indemnify our directors
and officers to the fullest extent permitted by the Corporation Law of Delaware.
These provisions do not limit or eliminate our right or the right of any
stockholder to seek non-monetary relief such as an injunction or rescission in
the event of a breach by a director or an officer of his duty of care to us.
We believe that these provisions will assist us in attracting and retaining
qualified individuals to serve as directors.
STOCKHOLDER ACTION; SPECIAL MEETING OF STOCKHOLDERS. Our certificate of
incorporation provides that stockholders may take action only at a duly called
annual or special meeting of stockholders and may not take action by written
consent. Our certificate of incorporation further provides that special meetings
of our stockholders may be called only by the chairman of the board, by a
majority of the board of directors or by our Chief Executive Officer, and in no
event may the stockholders call a special meeting.
ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. Our bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for election
as directors at an annual meeting of stockholders, must provide timely written
notice. To be timely, a stockholder's notice must be delivered to or mailed and
received at our principal executive offices not less than 60 days nor more than
90 days prior to the meeting, provided, however, that if less than 70 days
notice of the meeting date is provided, the stockholder's notice must be
received within 10 days following such notice of the meeting date. The bylaws
also include a similar requirement for making nominations at special meetings
and specify certain requirements as to the form and content of a stockholder's
notice. These provisions may preclude stockholders from bringing matters before
an annual meeting of stockholders or from making nomination for directors at an
annual or special meeting of stockholders.
AUTHORIZED BUT UNISSUED SHARES. The authorized but unissued shares of
common stock and preferred stock are available for future issuance without
stockholder approval, subject to limitations imposed by the Corporation Law of
Delaware and the Nasdaq National Market. These additional shares may be utilized
for a variety of corporate purposes, including future public offerings to raise
additional capital, corporate acquisitions and employee benefit plans. The
existence of authorized but unissued and unreserved common stock and preferred
stock could render more difficult or discourage an attempt to obtain control of
us by means of a proxy contest, tender offer, merger or otherwise.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is Boston
EquiServe L.P., Canton, Massachusetts.
THE WARRANTS
We issued the warrants to purchase shares of common stock to
predecessors of GATX Capital Corporation and MM Ventures on October 28, 1994 in
connection with an equipment financing transaction. The warrants entitle the
holders to purchase a total of 105,777 shares of our common stock at an exercise
price of $3.00 per share at any time through October 28, 2004.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a description of the material U.S. federal income tax
considerations relating to the purchase, ownership and disposition of the notes
and of common stock into which notes may be converted, but does not purport to
be a complete analysis of all the potential tax considerations relating thereto.
This description is based on laws, regulations, rulings and decisions now in
effect, all of which are subject to change, possibly with retroactive effect.
Except as specifically discussed below with regard to holders who are not U.S.
persons, as that term is defined in the Internal Revenue Code, this summary
applies only to holders (which, for purposes of this section shall mean the
beneficial owners of the notes and the common stock) who will hold notes and
common stock into which notes may have been converted as "capital assets"
(within the meaning of Section 1221 of the Internal Revenue Code) and who, for
U.S. federal income tax purposes, are:
- individual citizens or residents of the U.S.,
- corporations,
- partnerships,
- other entities created or organized in or under the laws of
the U.S. or of any political subdivision thereof, or
- estates, the income of which are subject to U.S. federal
income taxation regardless of the source of such income or
trusts subject to the primary supervision of a U.S. court and
the control of one or more U.S. persons.
Persons that are not U.S. persons are subject to special U.S. federal income tax
considerations, some of which are discussed below.
This discussion does not address tax considerations applicable to an
investor's particular circumstances or to investors that may be subject to
special tax rules, such as:
- banks,
- holders subject to the alternative minimum tax,
- tax-exempt organizations,
- insurance companies,
- foreign persons except to the extent specifically set forth
below,
- dealers in securities or currencies,
- persons that will hold notes as a position in a hedging
transaction, straddle or conversion transaction for tax
purposes,
- traders in securities that elect to use the mark-to-market
method of accounting,
- persons whose functional currency for tax purposes is not the
U.S. dollar, or
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- persons deemed to sell notes or common stock under the
constructive sale provisions of the Internal Revenue Code.
We have not sought any ruling from the Internal Revenue Service or an
opinion of counsel with respect to the statements made and the conclusions
reached in the following summary, and there can be no assurance that the
Internal Revenue Service will agree with such statements and conclusions. This
description does not consider the effect of U.S. federal estate or gift tax
laws, except as set forth below with respect to holders who are not U.S.
persons, or the tax laws of any applicable foreign, state, local or other
jurisdiction.
Investors considering the purchase of notes should consult their own
tax advisors with respect to the application of the United States federal income
tax laws to their particular situations as well as any tax consequences arising
under the U.S. federal estate or gift tax rules or under the laws of any state,
local or foreign taxing jurisdiction or under any applicable tax treaty.
TAXATION OF INTEREST
Interest paid on the notes will be included in the income of a holder
as ordinary income at the time it is received or accrued, in accordance with the
holder's regular method of tax accounting. Under Treasury Regulations, the
possibility of an additional payment under a note may be disregarded for
purposes of determining the amount of interest or original issue discount income
to be recognized by a holder in respect of such note (or the timing of such
recognition) if the likelihood of the payment, as of the date the notes are
issued, is remote. Our failure to file or cause to be declared effective a shelf
registration statement as described under "Description of the
Notes--Registration Rights" may result in the payment of predetermined
liquidated damages in the manner described therein. In addition, a holder may
require us to redeem any and all of his notes in the event of a change in
control. We believe that the likelihood of a liquidated damages payment with
respect to the notes is remote and do not intend to treat such possibility as
affecting the yield to maturity of any note. Similarly, we intend to take the
position that the likelihood of a change in control is remote under the Treasury
Regulations, and likewise do not intend to treat the possibility of a change in
control as affecting the yield to maturity of any note. In the event either
contingency occurs, it would affect the amount and timing of the income that
must be recognized by a holder of notes.
MARKET DISCOUNT
The market discount rules discussed below apply to a note purchased at
a price less that its stated redemption price at maturity.
A holder that purchases a note at a market discount generally will be
required to treat any principal payment on the note and any gain on the
disposition of the note as ordinary income to the extent of the accrued market
discount (not previously included in income) at the time of such payment or
disposition. In general, market discount is the amount by which the note's
stated redemption price at maturity exceeds the holder's basis in the note
immediately after the note is acquired. A note is not treated as purchased at a
discount, however, if the market discount is less than .25 percent of the stated
redemption price at maturity multiplied by the number of complete years to
maturity from the date the holder acquired the note. Market discount on a note
will accrue on a straight-line basis, unless the holder elects to accrue such
discount on a constant yield-to-maturity basis. This election is irrevocable and
applies only to the note for which it is made. The holder may also elect to
include market discount in income currently as it accrues. This election applies
to all market discount obligations acquired on or after the first day of the
first taxable year to which the election applies and may not be revoked without
the consent of the Internal Revenue Service.
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If a holder of a note acquired at a market discount disposes of such
note in any non-taxable transaction (other than a transaction described in
Section 1276(c) of the Internal Revenue Code), accrued market discount will be
includible as ordinary income to the holder as if such holder had sold the note
at its fair market value. Although it is not free from doubt, any accrued market
discount not taken into income prior to the conversion of a note into shares of
common stock should carry over to the common stock received upon the conversion
and be treated as ordinary income upon a subsequent disposition of the common
stock to the extent of any gain recognized on such disposition. A holder may be
required to defer until maturity of the note (or, in certain circumstances, its
earlier disposition) the deduction of all or a portion of the interest expense
attributable to debt incurred or continued to purchase or carry a note with
market discount, unless an election to include the market discount in income on
a current basis is made.
AMORTIZABLE BOND PREMIUM
If a holder purchases a note for an amount that, after being reduced by
an amount equal to the value of the conversion feature, is in excess of the
note's stated redemption price at maturity, such holder will generally be
considered to have purchased a note with "amortizable bond premium." A holder
generally may elect to amortize such premium using the constant
yield-to-maturity method. The amount amortized in any year generally will be
treated as a reduction of the holder's interest income on the note. If the
amortizable bond premium allocable to a year exceeds the amount of interest
allocable to that year, the excess would be allowed as a deduction for that year
but only to the extent of the holder's prior interest inclusions with respect to
the note. The premium on a note held by a holder that does not make such an
election will decrease the gain or increase the loss otherwise recognizable on
the sale, redemption, retirement or other disposition of the note. The election
to amortize the premium on a constant yield-to-maturity method generally applies
to all bonds held or subsequently acquired by the electing holder on or after
the first day of the first taxable year to which the election applies and may
not be revoked without the consent of the Internal Revenue Service. On
conversion of a note into shares of common stock, no additional amortization of
any bond premium would be allowed and any remaining premium would be added to
the holder's basis in the common stock received.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
Upon the sale, exchange (other than a conversion) or redemption of a
note, a holder generally will recognize capital gain or loss equal to the sum of
the amount of cash proceeds and the fair market value of any property received
on the sale, exchange or redemption, minus such holder's adjusted tax basis in
the note. Any amounts attributable to accrued interest, however, will be taxed
as ordinary income to the extent the holder had not previously included such
amounts in the holder's taxable income. A holder's adjusted tax basis in a note
generally will equal the cost of the note to such holder increased by the amount
of any accrued interest previously included in the holder's taxable income. Such
capital gain or loss will be long-term capital gain or loss if the holder's
holding period in the note is more than one year at the time of sale, exchange
or redemption. Long-term capital gains recognized by an individual will
generally be subject to a maximum rate of tax of 20%. The deductibility of
capital losses is subject to limitations.
CONVERSION OF THE NOTES
A holder generally will not recognize any income, gain or loss upon
conversion of a note into common stock except to the extent that any portion of
the common stock is considered to be attributable to accrued interest not
previously included in income and thus taxable as ordinary income, or with
respect to cash received in lieu of a fractional share of common stock. A
holder's tax basis in the common stock received on conversion of a note will be
the same as such holder's adjusted tax basis in the note at the time of
conversion reduced by any basis allocable to a fractional share interest, and
the holding period for the common stock received on conversion will generally
include the holding period of the note converted,
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except that a holder's tax basis in shares of common stock considered
attributable to accrued interest generally will equal the amount of such accrued
interest included in income, and the holding period for such shares shall begin
on the date following the day of conversion.
Cash received in lieu of a fractional share of common stock upon
conversion will be treated as a payment in exchange for the fractional share of
common stock. Accordingly, the receipt of cash in lieu of a fractional share of
common stock generally will result in capital gain or loss (measured by the
difference between the cash received for the fractional share and the holder's
adjusted tax basis in the fractional share).
DIVIDENDS
Dividends, if any, paid on the common stock after a conversion
generally will be included in the income of a holder as ordinary income to the
extent of our current or accumulated earnings and profits. Distributions in
excess of our current and accumulated earnings and profits will be treated as a
return of capital to the extent of the holder's basis in the common stock and
thereafter as capital gain.
Holders of convertible debt instruments such as the notes may, in
certain circumstances, be deemed to have received constructive distributions
where the conversion ratio of such instruments is adjusted. Adjustments to the
conversion price made pursuant to a bona fide reasonable adjustment formula
which has the effect of preventing the dilution of the interest of the holders
of the debt instruments, however, will generally not be considered to result in
a constructive distribution of stock. Certain of the possible adjustments
provided in the notes, including, without limitation, adjustments in respect of
cash distributions to our stockholders, will not qualify as being pursuant to a
bona fide reasonable adjustment formula. If such adjustments are made, the
holders of notes will be deemed to have received constructive distributions in
amounts based upon the value of such holders' increased interests in the equity
of Millennium resulting from such adjustments. The amount of any such
distribution will be treated as a distribution to a stockholder with the tax
consequences specified in the preceding paragraph. Accordingly, noteholders
could be considered to have received distributions taxable as dividends to the
extent of our current and accumulated earnings and profits even though they did
not receive any cash or property as a result of such adjustments. In certain
circumstances the failure of the notes to provide for such an adjustment may
result in a deemed distribution to the holders of common stock.
SALE OF COMMON STOCK
Upon the sale or exchange of common stock, a holder generally will
recognize capital gain or loss equal to the sum of the amount of cash and the
fair market value of any property received upon the sale or exchange minus such
holder's adjusted tax basis in the common stock. Such capital gain or loss will
be long-term capital gain or loss if the holder's holding period in the common
stock is more than one year at the time of the sale or exchange. Long-term
capital gains recognized by an individual will generally be subject to a maximum
rate of tax of 20%. The deductibility of capital losses is subject to
limitations. A holder's basis and holding period in common stock received upon
conversion of a note are generally determined as discussed above under
"--Conversion of the Notes."
SPECIAL TAX RULES APPLICABLE TO NON-U.S. HOLDERS
In general, subject to the discussion below concerning backup
withholding:
(a) Payments of principal or interest on the notes by us or any paying
agent to a beneficial owner of a note that is not a U.S. person will not be
subject to U.S. withholding tax, provided that, in the case of interest,
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(1) such holder does not own, actually or constructively, 10%
or more of the total combined voting power of all classes of our stock entitled
to vote, within the meaning of Section 871(h)(3) of the Internal Revenue Code,
(2) such holder is not a controlled foreign corporation within
the meaning of the Internal Revenue Code that is related, directly or
indirectly, to us through stock ownership,
(3) such holder satisfies the certification requirements under
Section 871(h) or Section 881(c) of the Internal Revenue Code and Treasury
Regulations thereunder,
(b) A holder of a note or common stock who is not a U.S. person will
not be subject to U.S. federal income tax on gains realized from the sale,
exchange or other disposition of such note or common stock unless
(1) such holder is an individual who is present in the U.S.
for 183 days or more in the taxable year of sale, exchange or other disposition,
and certain conditions are met,
(2) such gain is effectively connected with the conduct by the
holder of a trade or business in the U.S. and, if certain tax treaties apply, is
attributable to a U.S. permanent establishment maintained by the holder,
(3) the holder is subject to Internal Revenue Code provisions
applicable to certain U.S. expatriates, or
(4) in the case of common stock held by a person who holds
more than 5% of such stock, we are or have been, at any time within the shorter
of the five-year period preceding such sale or other disposition or the period
such holder held the common stock, a U.S. real property holding corporation for
U.S. federal income tax purposes. We do not believe that we are currently or
ever have been a U.S. real property holding corporation or that we will become
one in the future;
(c) Interest on notes not excluded from U.S. withholding tax as
described in (a) above and dividends on common stock after conversion paid to a
holder of a note or common stock who is not a U.S. person generally will be
subject to U.S. withholding tax at a 30% rate, except where an applicable tax
treaty provides for the reduction or elimination of such withholding tax.
To satisfy the certification requirements referred to in (a) (4) above,
Sections 871(h) and 881(c) of the Internal Revenue Code and currently effective
Treasury Regulations thereunder require that either
(1) the beneficial owner of a note must certify, under
penalties of perjury, to us or our paying agent, as the case may be, that such
owner is not a U.S. person and must provide such owner's name and address, and
U.S. taxpayer identification number ("TIN"), if any, or
(2) a securities clearing organization, bank or other
financial institution that holds customer securities in the ordinary course of
its trade or business and holds the note on behalf of the beneficial owner
thereof must certify, under penalties of perjury, to us or our paying agent, as
the case may be, that such certificate has been received from the beneficial
owner and must furnish the payor with a copy thereof.
Such requirement will be fulfilled if the beneficial owner of a note
certifies on Internal Revenue Service Form W-8BEN or successor form, under
penalties of perjury, that it is not a U.S. person and provides its name and
address or any financial institution of the type described above holding the
note on behalf of the beneficial owner files a statement with the withholding
agent to the effect that it has received
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such a statement from the beneficial owner and furnishes the withholding agent
with a copy thereof. A certificate described in this paragraph is effective only
with respect to payments of interest made to the certifying holder after
delivery of the certificate in the calendar year of its delivery and the two
immediately succeeding calendar years.
Treasury Regulations effective for payments made after December 31,
2000, will provide alternative methods for satisfying the certification
requirements described above, subject to certain grandfathering provisions. The
new Treasury Regulations also will require, in the case of notes held by a
foreign partnership, that the certification be provided by the partners rather
than by the foreign partnership and that the partnership provide certain
information. A look-through rule will apply in the case of tiered partnerships.
If a holder of a note or common stock who is not a U.S. person is
engaged in a trade or business in the U.S. and if interest on the note,
dividends on the common stock, or gain realized on the sale, exchange or other
disposition of the note or common stock, is effectively connected with the
conduct of such trade or business and, if certain tax treaties apply, is
attributable to a U.S. permanent establishment maintained by the holder in the
U.S., the holder, although exempt from U.S. withholding tax provided that the
certification requirements discussed in the next sentence are met, will
generally be subject to U.S. federal income tax on such interest, dividends or
gain on a net income basis in the same manner as if it were a U.S. person. In
lieu of the certificate described above, such a holder will be required, under
currently effective Treasury Regulations, to provide us with a properly executed
Internal Revenue Service Form W-8ECI or successor form in order to claim an
exemption from withholding tax. In addition, if such holder is a foreign
corporation, it may be subject to a branch profits tax equal to 30%, or such
lower rate provided by an applicable treaty, of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments. For
purposes of the branch profits tax, interest on a note, dividends on the common
stock and any gain recognized on the sale, exchange or other disposition of a
note or common stock generally will be included in the earnings and profits of
such holder if any such interest, dividends or gain is effectively connected
with the conduct by the holder of a trade or business in the U.S. The new
Treasury Regulations will change certain of the withholding reporting and
certification requirements described above, effective for payments made after
December 31, 2000, subject to certain grandfathering provisions.
U.S. FEDERAL ESTATE TAX. A note held by an individual who at the time
of death is not a citizen or resident of the U.S. as each term is specially
defined for U.S. federal estate tax purposes, will not be subject to U.S.
federal estate tax if the individual did not actually or constructively own 10%
or more of the total combined voting power of all classes of our stock entitled
to vote and, at the time of the individual's death, payments with respect to
such note would not have been effectively connected with the conduct by such
individual of a trade or business in the U.S. Common stock held by an individual
who at the time of death is not a citizen or resident of the U.S. will be
included in such individual's estate for U.S. federal estate tax purposes unless
an applicable estate tax treaty otherwise applies.
Holders who are not U.S. persons should consult with their tax advisors
regarding U.S. and foreign tax consequences with respect to the notes and common
stock.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding of U.S. federal income tax at a rate of 31% may
apply to payments made in respect of a note or common stock to a holder that is
not an "exempt recipient" and that fails to provide certain identifying
information, such as the holder's TIN, in the manner required. Generally,
individuals are not exempt recipients, whereas corporations and certain other
entities are exempt recipients. Payments made in respect of a note or common
stock generally must be reported to the Internal Revenue Service, unless the
holder is an exempt recipient or otherwise establishes an exemption.
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In the case of payments of interest on a note to a holder who is not a
U.S. person, Treasury Regulations provide that backup withholding and
information reporting will not apply to payments with respect to which either
requisite certification has been received or an exemption has otherwise been
established; provided that neither we nor a paying agent have actual knowledge
that the holder is a U.S. person or that the conditions of any other exemption
are not in fact satisfied.
Dividends on the common stock paid to holders who are not U.S. persons
but who are subject to U.S. withholding tax, as described above, generally will
be exempt from U.S. backup withholding tax but will be subject to certain
information reporting.
Payments of the proceeds of the sale of a note or common stock to or
through a foreign office of a U.S. broker or a foreign office of a broker that
is a controlled foreign corporation within the meaning of the Internal Revenue
Code or a foreign person 50% or more of whose gross income from all sources for
the three-year period ending with the close of its taxable year preceding the
payment was effectively connected with the conduct of a trade or business within
the U.S., are currently subject to certain information reporting requirements,
unless the payee is an exempt recipient or such broker has evidence in its
records that the payee is a holder who is not a U.S. person and has no actual
knowledge that such evidence is false and certain other conditions are met.
Temporary Treasury Regulations indicate that such payments are not currently
subject to backup withholding.
Under current Treasury Regulations, payments of the proceeds of a sale
of a note or common stock to or through the U.S. office of a broker will be
subject to information reporting and backup withholding unless the payee
certifies under penalties of perjury that it is not a U.S. person (and no agent
or broker who is responsible for receiving or reviewing such statement has
actual knowledge that it is incorrect), satisfies certain other qualifications
and provides his or her name and address or the payee otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules from a payment
to a holder of a note or common stock will be allowed as a refund or credit
against such holder's U.S. federal income tax provided that the required
information is furnished to the Internal Revenue Service.
As noted above, the new Treasury Regulations will generally be
applicable to payments made after December 31, 2000. In general, the new
Treasury Regulations do not significantly alter the substantive withholding and
information reporting requirements but unify current certification procedures
and forms and clarify reliance standards. Under the new Treasury Regulations,
United States information requirements will apply to a payment made outside the
U.S. of the proceeds of a sale of a note or common share through an office
outside the United States of a broker that is a foreign partnership, if at any
time during its tax year, one or more of the partnership's partners are U.S.
persons (as defined in U.S. Treasury Regulations) who in the aggregate hold more
than 50% of the income or capital interests in the partnership, or if, at any
time during its tax year, such foreign partnership is engaged in a United States
trade or business, unless the broker has evidence in its records that the payee
is a holder who is not a U.S. person and has no actual knowledge that such
evidence is false and certain other conditions are met.
Under the new Treasury Regulations, special rules apply which permit
the shifting of primary responsibility for withholding to certain financial
intermediaries acting on behalf of beneficial owners. A holder of a note or
common stock should consult with its tax advisor regarding the application of
the backup withholding rules to its particular situation, the availability of an
exemption therefrom, the procedure for obtaining such an exemption, if
available, and the impact of the new Treasury Regulations on payments made with
respect to notes or common stock after December 31, 2000.
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The preceding discussion of material U.S. federal income tax consequences is
for general information only and is not tax advice. Accordingly, each
prospective investor should consult its own tax advisor as to the particular
U.S. federal, state, and local tax consequences of purchasing, holding and
disposing of the notes and common stock. Tax advisors should also be consulted
as to the U.S. estate and gift tax consequences and the foreign tax consequences
of purchasing, holding and disposing of the notes and common stock, as well as
the consequences of any proposed change in applicable laws.
SELLING HOLDERS
The notes were originally issued by us and sold by Goldman, Sachs &
Co., FleetBoston Robertson Stephens, Inc., ING Barings LLC and Credit Suisse
First Boston Corporation as the initial purchasers in transactions exempt from
the registration requirements of the Securities Act to persons reasonably
believed by the initial purchasers to be qualified institutional buyers. The
warrants were originally issued by us to predecessors of GATX Capital
Corporation and of MM Ventures in transactions exempt from the registration
requirements of the Securities Act. Selling holders, including their
transferees, pledgees, or donees or their successors, may from time to time
offer and sell any or all of the notes and the common stock into which the notes
are convertible pursuant to this prospectus.
The following table sets forth information, as of March 28, 2000,
with respect to the selling holders and the principal amounts of notes and
amounts of common stock beneficially owned by each selling holder that may be
offered under this prospectus. The information is based on information provided
by or on behalf of the selling holders. The selling holders may offer all, some
or none of the notes or common stock into which the notes are convertible.
Because the selling holders may offer all or some portion of the notes or the
common stock, we cannot estimate the amount of the notes or our common stock
that will be held by the selling holders upon termination of any sales. In
addition, the selling holders identified below may have sold, transferred or
otherwise disposed of all or a portion of their notes or common stock since the
date on which they provided the information regarding their notes or common
stock in transactions exempt from the registration requirements of the
Securities Act. No selling holder named in the table below beneficially owns one
percent or more of our common stock, assuming conversion of a selling holder's
notes or exercise of a selling holder's warrants.
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Selling Securityholder-
Notes Beneficially Owned Prior to Offering
(in $1,000)-
Notes Offered Hereby
(in $1,000)-
Notes Beneficially Owned After Offering (1)
(in $1,000)
-
Percentage of the Notes Beneficially Owned After the Offering-
Number of Shares of Common Stock Beneficially Owned
Prior to Offering -
Number of Shares of Common Stock Offered Hereby-
Number of Shares of Common Stock Beneficially Owned After Offering(1)-
Percentage of Shares of Common Stock Beneficially Owned After Offering(1)
1976 Distribution Trust fbo Aerin Lauder-Zinterhofer
- -9-9-0-0-53-53-0-0
1976 Distribution Trust fbo Jane A. Lauder
- -9-9-0-0-53-53-0-0
AAM/Zazove Institutional Income Fund, L.P.
- -1,000-1,000-0-0-5,942-5,942-0-0
AIG/National Union Fire Insurance
- -940-940-0-0-5,585-5,585-0-0
AllState Insurance Company
- -2,230-2,230-0-0-52,751-13,251-0-0
Aloha Airlines Non-Pilots Pension Trust
- -130-130-0-0-772-772-0-0
Aloha Airlines Pilots Retirement Trust
- -75-75-0-0-445-445-0-0
Alscott Investments, LLC
- -3,000-3,000-0-0-17,827-17,827-0-0
Argent Classic Convertible Arbitrage Fund (Bermuda) L.P.
- -25,000-25,000-0-0-148,560-148,560-0-0
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Argent Convertible Arbitrage Fund LTD.
- -3,000-3,000-0-0-17,827-17,827-0-0
Arkansas Public Employees Retirement System
-1,440-1,440-0-0-8,557-8,557-0-0
Arkansas Teachers Retirement System
-3,865-3,865-0-0-22,967-22,967-0-0
Bancroft Convertible Fund, Inc.
-500-500-0-0-2,971-2,971-0-0
Bank Austria Cayman Island, Ltd.
-2,500-2,500-0-0-14,856-14,856-0-0
Bankers Trust Equities Strategies
-1,000-1,000-0-0-5,942-5,942-0-0
Baptist Health of South Florida
-183-183-0-0-1,087-1,087-0-0
BBT Fund, L.P.
-9,000-9,000-0-0-53,481-53,481-0-0
Bear, Stearns & Co. Inc.
-5,000-5,000-0-0-29,712-29,712-0-0
BNP Arbitrage SNC
-10,800-10,800-0-0-64,177-64,177-0-0
Boston Museum Of Fine Arts
-171-171-0-0-1,016-1,016-0-0
Boston Museum of Fine Arts
-50-50-0-0-297-297-0-0
Boulder Capital Inc.
-850-850-0-0-5,051-5,051-0-0
Boulder II Limited
-3,350-3,350-0-0-19,907-19,907-0-0
BVI Social Security Board
-18-18-0-0-106-106-0-0
C&H Sugar Company, Inc.
-200-200-0-0-1,188-1,188-0-0
Chrysler Corporation Master Retirement Trust
-3,410-3,410-0-0-20,263-20,263-0-0
CIBC World Markets
-10,500-10,500-0-0-62,395-62,395-0-0
City University of New York
-47-47-0-0-279-279-0-0
Cova Bond Debenture Fund
-700-700-0-0-4,159-4,159-0-0
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Credit Suisse First Boston Corporation
-7,500-7,500-0-0-44,568-44,568-0-0
David Lipscomb University General Endowment
-75-75-0-0-445-445-0-0
Deephaven Domestic Convertible Trading Ltd
-8,700-8,700-0-0-51,698-51,698-0-0
Delaware Public Employees Retirement System
-1,335-1,335-0-0-7,933-7,933-0-0
Delphi Foundation
-20-20-0-0-118-118-0-0
Delta Air Lines Master Trust
-1,460-1,460-0-0-8,675-8,675-0-0
Deutsche Bank Securities Inc.
-30,300-30,300-0-0-180,054-180,054-0-0
ELF Aquitane Pension
-250-250-0-0-1,485-1,485-0-0
Ellsworth Convertible Growth and Income Fund, Inc.
-500-500-0-0-2,971-2,971-0-0
Engineers Joint Pension Fund
-525-525-0-0-3,119-3,119-0-0
EQAT Alliance Balanced Account
-1,365-1,365-0-0-8,111-8,111-0-0
EQAT Alliance Growth & Income
-2,055-2,055-0-0-12,211-12,211-0-0
EQAT Alliance Growth Investors
-1,140-1,140-0-0-6,774-6,774-0-0
Equitable Life Assurance Separate Account - Balanced
-90-90-0-0-534-534-0-0
Equitable Life Assurance Separate Account - Convertibles
-1,405-1,405-0-0-8,349-8,349-0-0
Family Service Life Insurance Co.
-300-300-0-0-1,782-1,782-0-0
Fuji U.S. Income Open
-500-500-0-0-2,971-2,971-0-0
GATX Capital Corporation(2)
-0-0-0-0-56,000-56,000-0-0
General Motors Employees Global Group Pension Trust
-3,770-3,770-0-0-29,202-22,402-0-0
General Motors Foundation
-205-205-0-0-1,218-1,218-0-0
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GLG Global Convertible Fund
-2,000-2,000-0-0-11,884-11,884-0-0
GLG Global Convertible UCITS Fund
-500-500-0-0-2,971-2,971-0-0
GLG Market Neutral Fund
-10,000-10,000-0-0-59,424-59,424-0-0
Global Bermuda Limited Partnership
-1,500-1,500-0-0-17,113-8,913-0-0
Goldman Sachs and Company
-3,815-3,815-0-0-22,670-22,670-0-0
Grable Foundation
-67-67-0-0-398-398-0-0
Grace Brothers, LTD.
-1,500-1,500-0-0-8,913-8,913-0-0
Grady Hospital
-70-70-0-0-415-415-0-0
Granville Capital Corporation
-7,500-7,500-0-0-44,568-44,568-0-0
Guardian Life Insurance Co.
-11,400-11,400-0-0-104,843-67,743-0-0
Guardian Pension Trust
-300-300-0-0-1,782-1,782-0-0
Hawaiian Airlines Employees Pension Plan - IAM
-115-115-0-0-683-683-0-0
Hawaiian Airlines Pension Plan for Salaried Employees
-30-30-0-0-178-178-0-0
Hawaiian Airlines Pilots Retirement Plan
-175-175-0-0-1,039-1,039-0-0
Highbridge International LLC
-32,500-32,500-0-0-193,128-193,128-0-0
ICI American Holdings Trust
-645-645-0-0-3,832-3,832-0-0
ING Barings LLC
-550-550-0-0-3,268-3,268-0-0
Island Holdings
-50-50-0-0-297-297-0-0
J.P. Morgan Securities Inc.
-1,000-1,000-0-0-5,942-5,942-0-0
JMG Capital Partners, L.P.
-10,213-10,213-0-0-60,689-60,689-0-0
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JMG Triton Offshore Fund, Ltd.
-15,712-15,712-0-0-93,366-93,366-0-0
John M. Olin Foundation
-1,000-1,000-0-0-5,942-5,942-0-0
Lakeshore International Ltd.
-3,000-3,000-0-0-34,127-17,827-0-0
Lipper Convertibles L.P.
-8,500-8,500-0-0-50,510-50,510-0-0
Lipper Offshore Convertibles L.P. #2
-500-500-0-0-2,971-2,971-0-0
Local Initiatives Support Corporation
-28-28-0-0-166-166-0-0
Lord Abbett Bond Debenture Fund
-6,600-6,600-0-0-39,219-39,219-0-0
Lord, Abbett & Co. Oxford Fund
-1,350-1,350-0-0-8,022-8,022-0-0
Lyxor Master Fund
-5,650-5,650-0-0-33,574-33,574-0-0
Marisco Growth & Income Fund
-9,496-9,496-0-0-56,429-56,429-0-0
Maryland Retirement System
-1,004-1,004-0-0-5,966-5,966-0-0
Memphis Light Gas & Water Retirement Fund
-1,020-1,020-0-0-6,061-6,061-0-0
Merrill Lynch Insurance Group
-163-163-0-0-968-968-0-0
MM Ventures (3)
-0-0-0-0-49,777-49,777-0-0
Morgan Stanley & Co.
-6,670-6,670-0-0-39,635-39,635-0-0
Morgan Stanley Dean Witter Convertible Securities Trust
-2,000-2,000-0-0-11,884-11,884-0-0
Motion Picture Industry Health Plan - Active Member Fund
-410-410-0-0-2,436-2,436-0-0
Motion Picture Industry Health Plan - Retiree Member Fund
-200-200-0-0-1,188-1,188-0-0
Motors Insurance Corporation
-1,005-1,005-0-0-5,972-5,972-0-0
Mount Sinai School of Medicine
-1,000-1,000-0-0-5,942-5,942-0-0
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<PAGE>
Nalco Chemical Company
-355-355-0-0-2,109-2,109-0-0
Nations Marisco Annuity Growth & Income Fund
-560-560-0-0-3,327-3,327-0-0
Nations Marisco Growth & Income Fund
-4,444-4,444-0-0-26,408-26,408-0-0
New Hampshire Retirement System
-320-320-0-0-1,901-1,901-0-0
New Orleans Firefighters Pension Trust
-73-73-0-0-433-433-0-0
New York Life Insurance & Annuity Corporation
-750-750-0-0-4,456-4,456-0-0
New York Life Insurance Company
-4,500-4,500-0-0-26,740-26,740-0-0
Nicholas-Applegate Convertible Fund
-1,185-1,185-0-0-7,041-7,041-0-0
Occidental Petroleum
-124-124-0-0-736-736-0-0
OCM Convertible Trust
-1,920-1,920-0-0-11,409-11,409-0-0
Ohio Bureau of Workers Compensation
-84-84-0-0-499-499-0-0
Onex Industrial Partners Limited
-1,800-1,800-0-0-10,696-10,696-0-0
Oppenheimer Convertible Securities Fund
-3,500-3,500-0-0-20,798-20,798-0-0
Pacific Life Insurance Company
-500-500-0-0-2,971-2,971-0-0
Parker-Hannifin Corporation
-60-60-0-0-356-356-0-0
Partner Reinsurance Company Ltd.
-700-700-0-0-4,159-4,159-0-0
Pebble Capital Inc.
-500-500-0-0-2,971-2,971-0-0
Physicians Life
-416-416-0-0-2,472-2,472-0-0
Pilgrim Convertible Fund
-4,690-4,690-0-0-27,869-27,869-0-0
ProMutual-200-200-0-0-1,188-1,188-0-0
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<PAGE>
Putnam Asset Allocation Funds-Balanced Portfolio
-450-450-0-0-2,674-2,674-0-0
Putnam Asset Allocation Funds-Conservative Portfolio
-300-300-0-0-1,782-1,782-0-0
Putnam Balanced Retirement Fund
-110-110-0-0-653-653-0-0
Putnam Convertible Income-Growth Trust
-5,837-5,837-0-0-34,685-34,685-0-0
Putnam Convertible Opportunities and Income Trust
-140-140-0-0-831-831-0-0
Queen's Health Plan
-45-45-0-0-267-267-0-0
Ramius Capital Holdings, Ltd.
-500-500-0-0-2,971-2,971-0-0
Rhone-Poulenc Rorer Pension Plan
-70-70-0-0-415-415-0-0
S G Cowen Securities Corp.
-6,000-6,000-0-0-35,654-35,654-0-0
Sage Capital Limited Partnership
-3,000-3,000-0-0-17,827-17,827-0-0
Sagemore Hill Hub Fund Ltd.
-5,000-5,000-0-0-29,712-29,712-0-0
San Diego City Retirement
-1,052-1,052-0-0-6,251-6,251-0-0
San Diego County Convertible
-2,531-2,531-0-0-15,040-15,040-0-0
San Diego County Employees Retirement Assoc.
-2,030-2,030-0-0-12,063-12,063-0-0
Scudder Dividend and Growth Fund
-283-283-0-0-1,681-1,681-0-0
Starvest Combined Portfolio
-1,290-1,290-0-0-7,665-7,665-0-0
State Employees' Retirement Fund of the State of Delaware
-1,770-1,770-0-0-10,518-10,518-0-0
State of Connecticut Combined Investment Fund
-4,180-4,180-0-0-24,839-24,839-0-0
State of Oregon Equity
-5,100-5,100-0-0-30,306-30,306-0-0
State of Oregon/SAIF Corporation
-6,150-6,150-0-0-36,545-36,545-0-0
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The Frist Foundation
-200-200-0-0-1,188-1,188-0-0
TQA Master Fund
-1,000-1,000-0-0-5,942-5,942-0-0
TQA Master Plus Fund
-1,000-1,000-0-0-5,942-5,942-0-0
U.S. Olympic Foundation
-1,000-1,000-0-0-5,942-5,942-0-0
University of Rochester
-50-50-0-0-297-297-0-0
Value Line Convertible Fund, Inc.
-600-600-0-0-3,565-3,565-0-0
Van Kampen Convertible Securities Fund
-632-632-0-0-3,755-3,755-0-0
Van Kampen Harbor Fund
-3,368-3,368-0-0-20,014-20,014-0-0
Vanguard Convertible Securities Fund, Inc.
-3,700-3,700-0-0-21,986-21,986-0-0
Wake Forest University
-1,271-1,271-0-0-7,552-7,552-0-0
White River Securities LLC
-5,000-5,000-0-0-29,712-29,712-0-0
Winchester Convertible Plus Ltd.
-250-250-0-0-1,485-1,485-0-0
Writers Guild - Industry Health Fund
-326-326-0-0-1,937-1,937-0-0
Zeneca Holdings Trust
-620-620-0-0-3,684-3,684-0-0
Zurich HFR Master Hedge Fund Index, Ltd.
-70-70-0-0-415-415-0-0
Other Selling Security Holders(4)(5)-8,684-8,684-0-0-51,603-51,603-0-0
(1) We do not know if, when or in what amounts a selling securityholder may
offer securities for sale and we do not know that the selling
securityholders will sell any or all of the securities offered hereby.
Because the selling securityholders may offer all or some of the
securities pursuant to this prospectus, and because there are currently
no other agreements, arrangements or understandings with respect to the
sale of any of the securities that will be held by the selling
securityholders, no estimate can be given as to the amount of the
securities that will be held by the selling securityholders after
completion of the offering made by this prospectus. However, for
purposes of this table, we have assumed that, after completion of the
offering, no securities will be held by the selling securityholders.
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(2) GATX Capital Corporation holds warrants to purchase 56,000 shares of
common stock, all of which are currently exercisable.
(3) MM Ventures holds warrants to purchase 49,777 shares of common stock,
all of which are currently exercisable.
(4) Information concerning other selling holders of notes or future
transferees will be listed in prospectus supplements from time to
time, if required.
(5) Assumes that any other holders of notes or any future transferee from
any holder does not beneficially own any common stock other than
common stock into which the notes are convertible.
PLAN OF DISTRIBUTION
The selling holders and their successors, including their transferees,
pledgees or donees or their successors, may sell the notes and our common stock
into which the notes are convertible directly to purchasers or through
underwriters, broker-dealers or agents, who may receive compensation in the form
of discounts, concessions or commissions from the selling holders or the
purchasers. These discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved.
The notes and common stock may be sold in one or more transactions at
fixed prices, at prevailing market prices at the time of sale, at prices related
to the prevailing market prices, at varying prices determined at the time of
sale, or at negotiated prices. These sales may be effected in transactions,
which may involve crosses or block transactions:
- on any national securities exchange or U.S. inter-dealer system
of a registered national securities association on which the
notes or our common stock may be listed or quoted at the time of
sale;
- in the over-the-counter market;
- in transactions otherwise than on these exchanges or systems or
in the over-the-counter market;
- through the writing of options, whether the options are listed on
an options exchange or otherwise; or
- through the settlement of short sales.
In connection with the sale of the notes and common stock, the selling
holders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the notes or
common stock in the course of hedging the positions they assume. The selling
holders may also sell the notes or common stock short and deliver these
securities to close out their short positions, or loan or pledge the notes or
common stock to broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling holders from the sale of the
notes or common stock offered by them will be the purchase price of the notes or
common stock less discounts and commissions, if any. Each of the selling holders
reserves the right to accept and, together with their agents from time to time,
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<PAGE>
to reject, in whole or in part, any proposed purchase of notes or common stock
to be made directly or through agents. We will not receive any of the proceeds
from this offering.
Our common stock is quoted on The Nasdaq National Market. The notes
are currently designated for trading on the PORTAL Market of the NASD.
In order to comply with the securities laws of some states, if
applicable, the notes and common stock may be sold in these jurisdictions only
through registered or licensed brokers or dealers. In addition, in some states
the notes and common stock may not be sold unless they have been registered or
qualified for sale or an exemption from registration or qualification
requirements is available and is complied with.
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock may be "underwriters"
within the meaning of Section 2(11) of the Securities Act. Any discounts,
commissions, concessions or profit they earn on any resale of the shares may be
underwriting discounts and commissions under the Securities Act. Selling holders
who are "underwriters" within the meaning of Section 2(11) of the Securities Act
will be subject to the prospectus delivery requirements of the Securities Act.
The selling holders have acknowledged that they understand their obligations to
comply with the provisions of the Exchange Act and the rules thereunder relating
to stock manipulation, particularly Regulation M.
In addition, any securities covered by this prospectus which qualify
for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold
under Rule 144 or Rule 144A rather than pursuant to this prospectus.
To the extent required, the specific notes or shares of our common
stock to be sold, the names of the selling holders, the respective purchase
prices and public offering prices, the names of any agent, dealer or
underwriter, and any applicable commissions or discounts with respect to a
particular offer will be set forth in an accompanying prospectus supplement or,
if appropriate, a post-effective amendment to the registration statement of
which this prospectus is a part.
We entered into a registration rights agreement for the benefit of
holders of the notes to register their notes and our common stock under
applicable federal and state securities laws under specific circumstances and at
specific times. The registration rights agreement provides for
cross-indemnification of the selling holders and us and our respective
directors, officers and controlling persons against specific liabilities in
connection with the offer and sale of the notes and our common stock, including
liabilities under the Securities Act. We will pay substantially all of the
expenses incurred by the selling holders of incident to the offering and sale of
the notes and our common stock. We estimate that our total expenses of the
offering of the notes and common stock will be approximately $159,524.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual report on form 10-K for the year
ended December 31, 1999, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
The consolidated financial statements of LeukoSite, Inc. as of December
31, 1997 and 1998 and for each of the three years in the period ended December
31, 1998 and the financial statements of L&I Partners, L.P. as of December 31,
1997 and 1998 and for the period from inception through December 31, 1997, the
year ended December 31, 1998 and the period from inception through December 31,
1998
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incorporated by reference in this prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
The financial statements of CytoMed, Inc. as of December 31, 1998 and
1997 and for each of the three years in the period ended December 31, 1998
incorporated in this Prospectus by reference to the Millennium Pharmaceuticals
Form 8-K/A dated January 6, 2000, have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the notes and our common stock issuable upon conversion
of the notes and issuable upon exercise of the warrants has been passed upon by
Hale and Dorr LLP.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other documents with the
Securities and Exchange Commission. You may read and copy any document we file
at the SEC's public reference room at Judiciary Plaza Building, 450 Fifth
Street, N.W., Washington, D.C. 20549. You should call 1-800-SEC-0330 for more
information on the public reference room. The SEC maintains an Internet site
that contains reports, proxy and information statements and other information
about issuers that file electronically with the SEC. The address of the SEC's
Internet site is http://www.sec.gov.
This prospectus is part of a registration statement that we filed with
the SEC. The registration statement contains more information than this
prospectus regarding us, the notes and our common stock, including certain
exhibits and schedules. You can obtain a copy of the registration statement from
the SEC at the address listed above or from the SEC's Internet site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate" into this prospectus information
that we file with the SEC in other documents. This means that we can disclose
important information to you by referring to other documents that contain that
information. The information incorporated by reference is considered to be part
of this prospectus. Information contained in this prospectus and information
that we file with the SEC in the future and incorporate by reference in this
prospectus automatically updates and supersedes previously filed information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, prior to the sale of all the notes and shares of our
common stock covered by this prospectus.
(1) Our Annual Report on Form 10-K for the year ended December
31, 1999;
(2) Our current reports on Form 8-K filed with the SEC on
January 6, 2000, January 11, 2000, January 19, 2000 and February 9,
2000 and our amendments to current reports on Form 8-K/A filed with the
SEC on January 6, 2000 and January 27, 2000;
(3) All of our filings pursuant to the Exchange Act after
the date of filing the initial registration statement and prior to
effectiveness of the registration statement; and
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<PAGE>
(4) The description of our common stock contained in our
registration statement on Form 8-A filed with the SEC on April 26,
1996, including any amendments or reports filed for the purpose of
updating that description.
You may request, orally or in writing, a copy of these documents, which
will be provided to you at no cost, by contacting:
Investor Relations
Millennium Pharmaceuticals, Inc.
75 Sidney Street
Cambridge, MA 02139
Telephone: (617) 679-7000
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses to be incurred in
connection with the registration of the securities being registered hereby, all
of which will be borne by Millennium Pharmaceuticals, Inc. (except any
underwriting discounts and commissions and expenses incurred by the selling
stockholders for brokerage, accounting, tax or legal services or any other
expenses incurred by the selling stockholders in disposing of the shares). All
amounts shown are estimates except the Securities and Exchange Commission
registration fee.
<TABLE>
<S> <C>
Filing Fee - Securities and Exchange Commission .......... -$- 109,524
Legal fees and expenses .................................. -$- 30,000
Accounting fees and expenses ............................. -$- 10,000
Miscellaneous expenses ................................... -$- 10,000
-----------
Total Expenses .................................. -$- 159,524
-----------
-----------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Nine of the Registrant's Amended and Restated Certificate of
Incorporation (the "Restated Certificate of Incorporation") provides that no
director of the Registrant shall be personally liable for any monetary damages
for any breach of fiduciary duty as a director, except to the extent that the
Delaware General Corporation Law prohibits the elimination or limitation of
liability of directors for breach of fiduciary duty.
Article Nine of the Restated Certificate of Incorporation provides that
a director or officer of the Registrant (a) shall be indemnified by the
Registrant against all expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement incurred in connection with any litigation or
other legal proceeding (other than an action by or in the right of the
Registrant) brought against him by virtue of his position as a director or
officer of the Registrant if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Registrant, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful and (b) shall be
indemnified by the Registrant against all expenses (including attorneys' fees)
and amounts paid in settlement incurred in connection with any action by or in
the right of the Registrant brought against him by virtue of his position as a
director or officer of the Registrant if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Registrant, except that no indemnification shall be made with respect to any
matter as to which such person shall have been adjudged to be liable to the
Registrant, unless a court determines that, despite such adjudication but in
view of all of the circumstances, he is entitled to indemnification of such
expenses. Notwithstanding the foregoing, to the extent that a director or
officer has been successful, on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, he is required to be
indemnified by the Registrant against all expenses (including attorneys' fees)
incurred in connection therewith. Expenses shall be advanced to a Director or
officer at his request, provided that he undertakes to repay the amount advanced
if it is ultimately determined that he is not entitled to indemnification for
such expenses.
Indemnification is required to be made unless the Registrant determines
that the applicable standard of conduct required for indemnification has not
been met. In the event of a determination by the Registrant that the director or
officer did not meet the applicable standard of conduct required for
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<PAGE>
indemnification, or if the Registrant fails to make an indemnification payment
within 60 days after such payment is claimed by such person, such person is
permitted to petition the court to make an independent determination as to
whether such person is entitled to indemnification. As a condition precedent to
the right of indemnification, the director or officer must give the Registrant
notice of the action for which indemnity is sought and the Registrant has the
right to participate in such action or assume the defense thereof.
Section 145 of the General Corporation Law of Delaware provides that a
corporation has the power to indemnify a director, officer, employee or agent of
the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he is or is threatened to be
made a party by reason of such position, if such person shall have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if such person
had no reasonable cause to believe his conduct was unlawful; provided that, in
the case of actions brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the adjudicating court determines that such indemnification is
proper under the circumstances.
Millennium Pharmaceuticals, Inc. has purchased directors' and officers'
liability insurance which would indemnify its directors and officers against
damages arising out of certain kinds of claims which might be made against them
based on their negligent acts or omissions while acting in their capacity as
such.
ITEM 16. EXHIBITS
EXHIBIT NUMBER
DESCRIPTION
- -
4.1*--Indenture dated as of January 20, 2000 between the Registrant and State
Street Bank and Trust Company, including therein the forms of the notes--
4.2*--Registration Rights Agreement dated as of January 20, 2000 among the
Registrant and Goldman, Sachs & Co., ING Barings LLC, FleetBoston Robertson
Stephens Inc. and Credit Suisse First Boston Corporation--
5.1--Opinion of Hale and Dorr LLP.--
12--Computation of Ratio of Earnings to Fixed Charges--
23.1--Consent of Ernst & Young LLP--
23.2--Consent of Arthur Andersen LLP--
23.3--Consent of PricewaterhouseCoopers LLP--
23.4--Consent of Hale and Dorr LLP, included in Exhibit 5.1 filed herewith.--
24.1**--Power of Attorney --
25**--Form T-1. Statement of Eligibility under the Trust Indenture Act of State
Street Bank and Trust Company --
- ----------
* Incorporated by reference to Exhibits to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999 and filed with the SEC on
25, 2000.
** Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
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<PAGE>
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in the volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included is a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), that are incorporated by reference in this Registration
Statement.
(2) That, for the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at the time shall be deemed
to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at the time shall be deemed to be the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the indemnification provisions described herein, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
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<PAGE>
The undersigned registrant hereby undertakes to file an application for
the purpose of determining the eligibility of the trustee to act under
Subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Trust Indenture Act.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Cambridge, Commonwealth of Massachusetts, on
March 29, 2000.
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ John B. Douglas III
John B. Douglas III
General Counsel and Secretary
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<PAGE>
Signature-Title-Date
- --
/s/ Mark J. Levin*
Mark J. Levin-Chairman of the Board of Directors and Chief Executive Officer
(Principal Executive Officer)- March 29, 2000
- --
/s/ Kevin P. Starr*
Kevin P. Starr-Chief Financial Officer (Principal Financial and Accounting
Officer)- March 29, 2000
- --
/s/ Joshua Boger*
Joshua Boger, Ph.D.-Director- March 29, 2000
- --
/s/ Eugene Cordes*
Eugene Cordes, Ph.D.-Director- March 29, 2000
- --
/s/ A. Grant Heidrich III*
A. Grant Heidrich III-Director- March 29, 2000
- --
/s/ Raju S. Kucherlapati*
Raju S. Kucherlapati, Ph.D.-Director- March 29, 2000
- --
/s/ Eric S. Lander*
Eric S. Lander, Ph.D.-Director- March 29, 2000
- --
/s/ Christopher K. Mirabelli*
Christopher K. Mirabelli, Ph.D.-Director- March 29, 2000
- --
/s/ Steven C. Wheelwright*
Steven C. Wheelwright, Ph.D.-Director- March 29, 2000
- --
*By: /s/ John B. Douglas III
---------------------------
John B. Douglas III
---------------------------
Attorney-in-fact--
----------------------------
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<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER
---DESCRIPTION
- -
4.1*--Indenture dated as of January 20, 2000 between the Registrant and State
Street Bank and Trust Company, including therein the forms of the notes--
4.2*--Registration Rights Agreement dated as of January 20, 2000 among the
Registrant and Goldman, Sachs & Co., ING Barings LLC, FleetBoston Robertson
Stephens Inc. and Credit Suisse First Boston Corporation--
5.1--Opinion of Hale and Dorr LLP.--
12--Computation of Ratio of Earnings to Fixed Charges--
23.1--Consent of Ernst & Young LLP--
23.2--Consent of Arthur Andersen LLP--
23.3--Consent of PricewaterhouseCoopers LLP--
23.4--Consent of Hale and Dorr LLP, included in Exhibit 5.1 filed herewith.--
24.1**--Power of Attorney --
25**--Form T-1. State of Eligibility under the Trust Indenture Act of State
Street Bank and Trust Company.--
* Incorporated by reference to Exhibits to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1999 and filed with
the SEC on 25, 2000.
** Previously filed.
II-7
<PAGE>
EXHIBIT 5.1
HALE AND DORR LLP
Counsellors at Law
60 State Street, Boston, Massachusetts 02109
617-526-6000 or fax 617-526-5000
March 29, 2000
Millennium Pharmaceuticals, Inc.
75 Sidney Street
Cambridge, MA 02139
Ladies and Gentlemen:
This opinion is furnished to you in connection with a Registration
Statement on Form S-3 (the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the registration
of (i) $400,000,000 principal amount of 5.50% Convertible Subordinated Notes
due 2007 ("Notes"), (ii) an aggregate of 2,376,960 shares of Common Stock,
$0.001 par value per share ("Common Stock"), of Millennium Pharmaceuticals,
Inc., a Delaware corporation (the "Company"), Issuable upon conversion of the
Notes (the "Conversion Shares") and (iii) an additional 105,777 shares of
Common Stock issuable upon exercise of certain outstanding warrants to
purchase Common Stock (the "Warrant Shares"), all of which Notes, Conversion
Shares and Warrant Shares, if and when sold, will be sold by certain
securityholders of the Company (the "Selling Securityholders").
We have examined signed copies of the Registration Statement and all
Exhibits thereto, all as filed with the Commission. We have also examined and
relied upon the original or copies of minutes of meetings of the stockholders
and Board of Directors of the Company, a copy of the By-Laws of the Company, as
amended, and a copy of the Amended and Restated Certificate of Incorporation of
the Company.
In our examination of the foregoing documents, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals, the conformity to original documents of all documents submitted to
us as certified, facsimile or photostatic copies, the authenticity of the
originals of such latter documents and the legal competence of all signatories
to such documents.
We express no opinion herein as to the laws of any state or
jurisdiction other than the Delaware General Corporation Law, the state laws of
the Commonwealth of Massachusetts and the federal laws of the United States of
America. To the extent that any other laws govern the matters as to which we are
opining herein, we have assumed that such laws are identical to the state laws
of the Commonwealth of Massachusetts, and we are expressing no opinion herein as
to whether such assumption is reasonable or correct. We note in this regard that
the Notes state that they are to be governed by the laws of the State of New
York.
Our opinion in paragraph 1 below is qualified to the extent that it may
be subject to or affected by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, usury, fraudulent conveyance or similar laws
affecting the rights of creditors generally and (ii) duties and standards
imposed on creditors and parties to contracts, including, without limitation,
requirements of good faith, reasonableness and fair dealing. We express no
opinion as to the enforceability of any provision of any of the Notes that
purports
II-8
<PAGE>
to select the laws by which it or any other agreement or instrument is
to be governed. Furthermore, we express no opinion as to the availability of any
equitable or specific remedy, or as to the successful assertion of any equitable
defense, upon any breach of any agreements or documents or obligations referred
to therein, or any other matters, inasmuch as the availability of such remedies
or defenses may be subject to the discretion of a court.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Notes have been duly and validly authorized and issued and are
binding obligations of the Company;
2. The Conversion Shares have been duly and validly authorized and,
when issued upon conversion of the Notes in accordance with the terms of such
Notes, will be validly issued, fully paid and non-assessable; and
3. The Warrant Shares have been duly and validly authorized and, when
issued upon exercise of warrants to purchase Common Stock in accordance with the
terms of such warrants, will be validly issued, fully paid and non-assessable.
It is understood that this opinion is to be used only in connection
with the offer and sale of the Notes, the Conversion Shares or the Warrant
Shares while the Registration Statement is in effect.
Please note that we are opining only as to the matters expressly set
forth herein, and no opinion should be inferred as to any other matters. This
opinion is based upon currently existing statutes, rules, regulations and
judicial decisions, and we disclaim any obligation to advise you of any change
in any of these sources of law or subsequent legal or factual developments which
might affect any matters or opinions set forth herein.
We hereby consent to the filing of this opinion with the Commission as
an exhibit to the Registration Statement in accordance with the requirements of
Item 601(b)(5) of Regulation S-K under the Securities Act and to the use of our
name therein and in the related Prospectus under the caption "Legal Matters." In
giving such consent, we do not hereby admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act or the
rules and regulations of the Commission.
Very truly yours,
/s/ Hale and Dorr LLP
Hale and Dorr LLP
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<PAGE>
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(dollars in thousands)
(unaudited)
- -Year ended December 31,-Pro Forma(b)
- -1994-1995-1996-1997-1998-1999(a)-1999
- --------------------------------------------------------------------------------
Fixed charges:-------
Interest expense on indebtedness-$231 -$824 -$887 -$1,435 -$2,410 -$3,038
- -$3,185
Interest expense on portion of rent expense representative of interest-1,530
- -1,689 -2,066 -3,340 -5,840 -14,184 -15,606
Preferred stock dividends----------------27,944-27,944
- -------
Total fixed charges-$1,761 -$2,513 -$2,953 -$4,775 -$8,250 - $45,166 -$46,735
- -------
Earnings (loss):-------
Net income (loss) before provision for income taxes and minority
interest-($6,372)-$1,284 -($8,768)-($84,632)-($3,841)-($381,884)-($110,175)
Fixed charges per above-1,761 -2,513 -2,953 -4,775 -8,250 - 45,166 -46,735
- -------
Total earnings (loss)-($4,611)-$3,797 -($5,815)-($79,857)-$4,409
- -($336,718)-($63,440)
- -------
Ratio of earnings to fixed charges-(2.62)-1.51 -(1.97)-(16.73)-0.53
- -(7.46)-(1.36)
- -------
Coverage deficiency-($6,372)- - -($8,768)-($84,632)-($3,841)-
($381,884)-($110,175)
(a)-
The amounts for the year ended December 31, 1999 include a charge for in process
research and development for $350,503,000 recorded in connection with the merger
with LeukoSite, Inc.
(b)-The pro forma amounts for the year ended December 31, 1999 gives effect to
the merger with LeukoSite, Inc. as if it had occurred on January 1, 1999. The
pro forma amounts exclude a charge for in process research and development for
$350,503.
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<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-3 No. 333-31344) and
related Prospectus of Millennium Pharmaceuticals, Inc. And to the
incorporation by reference therein of our report dated January 27, 2000, with
respect to the consolidated financial statements of Millennium Pharmaceuticals,
Inc. included in its Annual Report (Form 10-K) for the year ended December 31,
1999, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
March 23, 2000
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EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated January 29, 1999
for LeukoSite, Inc. financial statements as of December 31, 1997 and 1998 and
for the three years in the period ended December 31, 1998 and to all references
to our Firm included in or made part of this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 22, 2000
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Amendment No. 1
to the Registration Statement on Form S-3 (File No. 333-31344) of Millennium
Pharmaceuticals, Inc. of our report dated February 12, 1999 relating to the
financial statements of CytoMed, Inc., which appears in the Current Report on
Form 8-K/A of Millennium Pharmaceuticals, Inc. dated January 6, 2000. We also
consent to the reference to us under the heading "Experts" in such
Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
Boston, Massachusetts
March 22, 2000
