<PAGE>
As filed with the Securities and Exchange Commission on February 29, 2000
Registration Statement No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 04-3177038
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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)
----------------------
Copies to:
DAVID E. REDLICK, ESQ. JOHN B. DOUGLAS III, ESQ.
JEFFREY A. STEIN, ESQ. MILLENNIUM PHARMACEUTICALS, INC.
HALE AND DORR LLP 75 SIDNEY STREET
60 STATE STREET CAMBRIDGE, MASSACHUSETTS 02139
BOSTON, MASSACHUSETTS 02109 617-679-7000
617-526-6000
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. / /
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. / /_______.
<PAGE>
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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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Title Of Each Class Of Securities To Be Amount To Be Offering Aggregate Amount Of
Registered Registered Price Per Offering Price Registration Fee
Unit
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<S> <C> <C> <C> <C>
5.50% Convertible Subordinated Notes due
January 15, 2007............................ $400,000,000 100% $400,000,000 $105,600
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Common Stock, par value $.001 per share..... 2,376,960(1) (2) (2) (2)
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(1) 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.
(2) No additional consideration will be received for the common stock, and,
therefore, no registration fee is required pursuant to Rule 457(i).
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.
<PAGE>
Subject to completion, Dated February 29, 2000
This information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting offers to buy these
securities in any jurisdiction where the offer or sale is not permitted.
PROSPECTUS
$400,000,000
MILLENNIUM PHARMACEUTICALS, INC.
5.50% Convertible Subordinated Notes Due January 15, 2007
2,376,960 Shares of Common Stock issuable upon conversion of the Notes
--------------------------
This prospectus covers resales by selling holders of:
- our 5.50% Convertible Subordinated Notes due January 15, 2007; and
- our common stock into which the notes are convertible.
Interest on the notes is payable on January 15 and July 15 of each year,
commencing on July 15, 2000. The notes will mature on January 15, 2007.
The notes are convertible by the holders of the notes into our common stock
at any time prior to the close of business on the maturity date of the notes,
unless previously redeemed or repurchased, at a conversion rate of 5.9424 shares
per $1,000 principal amount of notes.
The notes may be redeemed by us after January 15, 2003 at the redemption
prices listed in this prospectus plus accrued interest to the redemption date.
In the event of a change in control described in this prospectus, each
holder of the notes may require us to repurchase its notes for cash, or, at our
option and subject to certain conditions, for common stock, at 100% of the
principal amount of such notes plus accrued interest 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.
The selling holders may sell the notes or our common stock at any time at
market prices or at privately negotiated prices. Such sales may be made directly
to purchasers or through underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts, concessions or commissions. 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 bid price of our common stock on February 28, 2000 was
$253.00.
The notes are currently designated for trading on the PORTAL Market of the
Nasdaq Stock Market.
SEE "RISK FACTORS" BEGINNING ON PAGE 5 TO READ ABOUT FACTORS YOU SHOULD
CONSIDER BEFORE BUYING THE NOTES OR OUR COMMON STOCK.
---------------------
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
<PAGE>
TABLE OF CONTENTS
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION............................1
SUMMARY.......................................................................2
RISK FACTORS..................................................................5
RATIO OF EARNINGS TO FIXED CHARGES...........................................21
USE OF PROCEEDS..............................................................21
DESCRIPTION OF THE NOTES.....................................................22
DESCRIPTION OF CAPITAL STOCK.................................................37
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS.....................40
SELLING HOLDERS..............................................................45
PLAN OF DISTRIBUTION.........................................................46
EXPERTS......................................................................48
LEGAL MATTERS................................................................48
WHERE YOU CAN FIND MORE INFORMATION..........................................48
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................49
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<PAGE>
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, as amended (the "Securities Act") and Section
21E of the Securities Exchange Act of 1934 that involve risks and uncertainties,
such as statements concerning: growth and future operating results; discovery
and development of products; developments in our markets and strategic focus;
new products; potential acquisitions and the integration of acquired businesses,
products and technologies; strategic alliances; intellectual property; our
manufacturing, marketing, sales and distribution capabilities and future
economic, business and regulatory conditions. These forward-looking statements
are generally accompanied by 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. Although we
believe that these forward-looking statements are reasonable, we cannot assure
you that these expectations will prove to be correct. Important factors that
could cause actual results to differ materially from these expectations are
disclosed in this prospectus, including in the "Risk Factors" beginning on page
5. These factors and other cautionary statements made in this prospectus should
be read as being applicable to all related forward-looking statements when ever
they appear in this prospectus. We do not undertake any obligation to update any
forward-looking statements.
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<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION, INCLUDING OUR CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES,
INCLUDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. YOU SHOULD CAREFULLY
CONSIDER THE INFORMATION SET FORTH UNDER "RISK FACTORS." UNLESS THE CONTEXT
OTHERWISE REQUIRES, THE TERMS "MILLENNIUM," "WE," "US" AND "OUR" REFER TO
MILLENNIUM PHARMACEUTICALS, INC. AND ITS SUBSIDIARIES.
MILLENNIUM PHARMACEUTICALS, INC.
OUR BUSINESS
Our goal is to become the biopharmaceutical company of the future by
building on our technology platform to develop breakthrough drugs, or
therapeutics, and predictive medicine products using an integrated approach that
we call "gene to patient." We are implementing a strategy to integrate the
initial discovery of disease-related genes, the development of drugs specific
for these diseases and the management of patients affected by these diseases. To
achieve this objective, we have assembled and continually seek to expand our
comprehensive technology platform which integrates multiple high-throughput
technologies in an effort to increase the speed of drug discovery and
development and improve the resulting drugs.
We have established strategic alliances with major pharmaceutical and
biotechnology companies to discover, develop and commercialize a broad range of
therapeutic and predictive medicine products. These alliances provide us with
the opportunity to receive royalties and profit sharing, if we and our 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. This reference to our Web site does not constitute
incorporation by reference of the information contained at our site.
SUMMARY OF THE NOTES
<TABLE>
<S> <C>
Interest............................ We will pay interest on the notes January 15 and July 15 of each year,
commencing July 15, 2000.
Maturity............................ The notes mature on January 15, 2007
Conversion.......................... The notes will be convertible at the option of the holder 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. The conversion rate will be
adjusted if we take any of the corporate actions specified in the
indenture governing the notes. The notes will be convertible 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 will be entitled to 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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<PAGE>
Subordination....................... The notes are subordinated to our present and future "senior debt," as
that term is defined in this prospectus. The notes are also effectively
subordinated in right of payment to all indebtedness and other
liabilities of our subsidiaries. As of January 31, 2000, the aggregate
amount of our outstanding senior debt was approximately $48.625 million,
and the aggregate amount of indebtedness and other liabilities of our
subsidiaries was approximately $12.608 million. The indenture under
which the notes will be issued will not restrict the incurrence of
senior debt by us or any of our subsidiaries. See "Description of the
Notes--Subordination."
Global note, Book-entry
system.............................. The notes are issued only in fully registered form without interest
coupons and in minimum denominations of $1,000. The notes are evidenced
by one or more global notes deposited with the trustee for the notes, as
custodian for DTC. Beneficial interests in the global note are shown on,
and transfers of those beneficial interest can only be made through,
records maintained by DTC and its participants. 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 that term is defined in this Prospectus,
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. The repurchase price is payable 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, the
common stock will be valued 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:
- if we fail to pay principal of or any premium on any note when
due, whether or not the payment is prohibited by the subordination
provisions of the indenture;
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<PAGE>
- if we fail to pay any interest on any note when due and that
default continues for 30 days, whether or not the payment is
prohibited by the subordination provisions of the indenture;
- 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
notice is prohibited by the subordination provisions of the
indenture;
- 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 the indebtedness is not discharged, or the acceleration
is not annulled, 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 notes are designated for trading on the Private Offerings, Resales
and Trading through Automated Linkages (PORTAL) System of the National
Association of Securities Dealers, Inc.
Governing Law....................... The indenture and the notes are governed by the laws of the State of New
York.
</TABLE>
RISK FACTORS
You should read the "Risk Factors" section, beginning on page 5 of this
Prospectus, so that you understand the risks associated with an investment in
the notes or our common stock.
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<PAGE>
RISK FACTORS
AN INVESTMENT IN THE NOTES OR IN OUR COMMON STOCK INVOLVES A HIGH
DEGREE OF RISK. IN ADDITION TO THE OTHER INFORMATION SET FORTH OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS, THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED
CAREFULLY IN EVALUATING US AND OUR BUSINESS BEFORE INVESTING IN THE NOTES OR IN
OUR COMMON STOCK. THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES, SUCH AS STATEMENTS OF OUR PLANS, OBJECTIVES,
EXPECTATIONS AND INTENTIONS. THE CAUTIONARY STATEMENTS MADE IN THIS PROSPECTUS
SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED FORWARD-LOOKING STATEMENTS
WHEREVER THEY APPEAR IN THIS PROSPECTUS. OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE DISCUSSED IN THIS PROSPECTUS. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED BELOW, AS WELL AS THOSE
DISCUSSED ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS. IF ANY OF THE FOLLOWING EVENTS ACTUALLY OCCURS, OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS WOULD LIKELY SUFFER, POSSIBLY
MATERIALLY.
REGULATORY RISKS
CLINICAL TRIALS OF OUR PRODUCT CANDIDATES MAY NOT BE SUCCESSFUL
In order to obtain regulatory approvals for the commercial sale of any
products, we or our alliance partners will be required to demonstrate through
preclinical testing and clinical trials that the product is safe and
efficacious. Prior to 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.
The results from preclinical testing of a product that is under
development may not be predictive of results that will be obtained in human
clinical trials. In addition, the results of early human clinical trials may not
be predictive of results that will be obtained in larger scale, advanced stage
clinical trials. Furthermore, we, our collaborators or the FDA may suspend
clinical trials at any time if the subjects or patients participating in such
trials are being exposed to unacceptable health risks or for other reasons.
The rate of completion of any clinical trials that we conduct will be
dependent on the rate of patient enrollment. Patient enrollment is a function of
many factors, including the size of the patient population, the nature of the
protocol, the availability of alternative treatments, the proximity of patients
to clinical sites and the eligibility criteria for the study. Delays in planned
patient enrollment may cause us to incur increased costs and program delays.
RELIANCE ON THIRD PARTIES TO CONDUCT TRIALS
To date, all of our clinical trials have been conducted by third
parties under contract to us. Although we acquired certain clinical trial
capabilities in our merger with LeukoSite, for the foreseeable future we expect
to rely primarily on our strategic alliance partners and other third parties to
conduct clinical trials of our products in most circumstances. We will have less
control over such clinical trials than if we were conducting the trials
directly. As a result, these trials may not begin or be completed as planned.
WE MAY NOT OBTAIN REGULATORY APPROVALS; THE APPROVAL PROCESS IS COSTLY AND
LENGTHY
We must obtain regulatory approvals for our ongoing development
activities and before marketing or selling any product or service. We may not
receive regulatory approvals to conduct clinical trials of our products or to
manufacture or market our products and services. In particular, we may not
receive
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<PAGE>
regulatory approval from the FDA or any other regulatory authority to market
CAMPATH-Registered Trademark- monoclonal antibody, our most advanced product
candidate. In addition, regulatory agencies may not grant such approvals on a
timely basis or may revoke previously granted approvals.
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, depending on the complexity and novelty of the product.
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. One example of such
a technology is gene therapy. 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.
Our analysis of data obtained from preclinical and clinical activities
is subject to confirmation and interpretation by regulatory authorities, which
could delay, limit or prevent regulatory approval. Any regulatory approval to
market a product may be subject to limitations on the indicated uses for which
we may market the product. These limitations may limit the size of the market
for the product.
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 services. The approval
procedure varies among countries. The time required to obtain foreign approvals
often differs from that required to obtain 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.
EVEN IF WE OBTAIN MARKETING APPROVAL, OUR PRODUCTS WILL BE SUBJECT TO ONGOING
REGULATORY REVIEW
The manufacturer of products for which we obtain marketing approval and
the manufacturing facilities used to make such products will be subject to
continual review and periodic inspections by the FDA. The subsequent discovery
of previously unknown problems with the product, manufacturer or facility may
result in restrictions on the product or manufacturer, including withdrawal of
the product from the market.
If we fail to comply with applicable regulatory requirements, we may be
subject to fines, suspension or withdrawal of regulatory approvals, product
recalls, seizure of products, operating restrictions and criminal prosecutions.
RISKS RELATING TO OUR INDUSTRY, BUSINESS AND STRATEGY
THE GENOMICS INDUSTRY IS NEW; WE HAVE NOT COMMERCIALIZED ANY PRODUCTS
The genomics industry is new and evolving rapidly. To date, we have not
commercialized any products. 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.
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<PAGE>
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.
WE PLAN TO EXPAND RAPIDLY; IF WE CANNOT MANAGE OUR GROWTH SUCCESSFULLY, OUR
GROWTH MAY SLOW OR STOP
We have rapidly expanded our operations and expect to continue to
expand. Our growth has placed, and will continue to place, a significant strain
on our management, operating and financial systems. If we cannot manage our
expanding operations, we may not be able to continue to grow or we may grow at a
slower pace. Furthermore, our operating costs may escalate faster than planned.
In order to manage our growth successfully, we must:
- Maintain close coordination among our executive, finance,
operations, research and development organizations;
- Improve our operating, financial and accounting systems,
procedures and controls;
- Expand, train and manage our employee base effectively; and
- Acquire and lease significant additional equipment and
facilities.
THE ACQUISITIONS WE MAKE MAY NOT BE SCIENTIFICALLY OR COMMERCIALLY SUCCESSFUL
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.
All acquisitions, including our merger with LeukoSite, involve a number
of operational risks, including:
- Difficulty and expense of assimilating the operations, technology
and personnel of the acquired business;
- Inability to retain the management, key personnel and other
employees of the acquired business;
- Inability to maintain the acquired company's relationships with
key third parties, such as alliance partners;
- Exposure to legal claims for activities of the acquired business
prior to acquisition;
- Diversion of management attention; and
- Amortization of substantial goodwill and write-off of in-process
research and development costs, adversely affecting our reported
results of operations.
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<PAGE>
If we make additional significant acquisitions in which the
consideration paid includes stock or other securities, our common stock,
including common stock issuable upon the conversion of the notes, may be
significantly diluted. If we make one or more significant acquisitions in which
the consideration paid includes cash, we may be required to use a substantial
portion of our available cash.
OUR GROWTH COULD BE LIMITED IF WE ARE UNABLE TO ATTRACT AND RETAIN KEY PERSONNEL
Our success is substantially dependent 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.
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. We will not succeed if we cannot compete effectively in these
fields. 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.
Under the Orphan Drug Act, a sponsor of an application to the FDA may
seek to obtain a seven-year period of marketing exclusivity for a drug intended
to treat a rare disease or condition, which is defined as a disease or condition
that occurs in fewer than 200,000 patients. In the event that a competitor
receives orphan drug designation and obtains the FDA marketing exclusivity for a
drug intended to treat the same rare disease or condition before we obtain such
approval, we would not be permitted by the FDA to market our product in the
United States for the same use during the exclusivity period. If we receive an
orphan drug designation, it may be very expensive to assert our rights under the
Orphan Drug Act. In addition, if we receive seven-year marketing exclusivity,
the FDA may rescind the period of exclusivity for a variety of reasons,
including our failure to assure a sufficient quantity of the drug.
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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.
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 achieve profitability. We cannot be certain whether or when this
will occur because of the significant uncertainties that affect our business.
SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS MAY ADVERSELY AFFECT OUR CASH
FLOW
We have substantial amounts of outstanding indebtedness, primarily
the notes, and 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.
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
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 and manufacture and
market any products and services that are approved for commercial sale. Our
future capital requirements will depend on many factors, including the
following:
- Our ability to establish and maintain strategic alliances
- Continued progress in our discovery and development programs
- The number and scope of our discovery and development programs
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- The progress of the development efforts of our strategic partners
- The scope and results of clinical trials initiated by us
- The time and costs involved in obtaining regulatory approvals
- The cost of acquisitions of businesses, products and technologies
- The cost of manufacturing and commercialization activities
- The cost of continuing to build our infrastructure, including
additional requirements for facilities and costs of recruiting
personnel
- The timing, receipt, and amount of milestones and other payments
from our alliance partners.
- The timing, receipt and amount of sales and royalties from our
potential products and services in the market
- The costs involved in preparing, filing, prosecuting, maintaining
and enforcing patent claims and other patent-related costs,
including litigation costs and the costs of obtaining any
required licenses to technologies
- Competing technological and market developments
We may seek to raise additional financing through public or private
equity offerings, debt financings or additional strategic alliance and licensing
arrangements. Such additional financing may not be available when we need it or
may not be available on terms that are favorable to us.
If we raise additional funds by issuing equity securities, further
dilution to our then existing stockholders will result. In addition, the terms
of the financing may adversely affect the holdings or the rights of such
stockholders. 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 DEVELOPMENT OF GENOMICS AND GENETICS BASED TECHNOLOGY AND
PRODUCTS
IF OUR TECHNOLOGICAL APPROACHES ARE NOT SUCCESSFUL, WE MAY NOT BE ABLE TO
DEVELOP AND COMMERCIALIZE ANY PRODUCTS AND SERVICES
Our genomics research is focused 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 a limited understanding relating to the
role of genes and their products in these diseases. Our technological approaches
to drug target identification and validation may not enable us to successfully
identify and characterize genes and their products that predispose individuals
to diseases. If we do not identify such drug targets, we may not be able to
successfully develop and commercialize any products or services. Even if we do
identify such drug targets, we will have to do substantial additional work to
translate these discoveries into products.
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WE MAY NOT BE ABLE TO OBTAIN BIOLOGICAL MATERIAL, INCLUDING HUMAN AND ANIMAL DNA
SAMPLES REQUIRED FOR OUR GENETIC STUDIES
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; and 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 STRATEGIC ALLIANCE PARTNERS
WE DEPEND ON STRATEGIC ALLIANCE PARTNERS; 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 is heavily dependent on the
efforts and activities of our strategic alliance partners. Our agreements with
our alliance partners allow them 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:
- If any of our alliance partners were to breach or terminate an
agreement with us, reduce its funding or otherwise fail to
conduct its collaborative activities successfully, we could be
required to devote additional internal resources to the program
that is the subject of the alliance, scale back or terminate the
program, seek an alternative partner or license or otherwise
secure intellectual property rights previously associated with
the alliance in order to continue the program.
- All of our strategic alliance agreements are subject to
termination under various circumstances, including in many cases
on short notice without cause. Some of our alliance agreements
provide that if we fail to meet specified performance criteria,
our alliance partner may terminate the agreement while
maintaining rights and licenses to certain of our discoveries. If
an alliance partner terminates its alliance with us, it may
adversely affect the perception of us in the business and
financial communities.
- In our strategic alliance agreements, we generally agree not to
conduct certain 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. Such competing products and services may
result in our alliance partner withdrawing financial and related
support for our product and service candidates.
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- Reductions in marketing or sales efforts or a discontinuation of
marketing or sales efforts of our products or services by our
alliance partners would reduce our revenues, which in many cases
will be based on a percentage of net sales by our alliance
partner. 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
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. 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.
CONFLICTS MAY ARISE BETWEEN US AND OUR MAJORITY-OWNED SUBSIDIARY
We have a subsidiary, Millennium Predictive Medicine, Inc., or MPMx, in
which minority equity interests are held by third parties. In addition, we may
establish additional subsidiaries in the future in which the subsidiary sells
minority equity interests to third parties. Conflicts may arise between us and
such subsidiaries, including with respect to:
- the allocation of business opportunities;
- the sharing of rights, technologies, facilities, personnel and
other resources; and
- the fiduciary duties owed by officers and directors who provide
services to both us and one or more of these subsidiaries.
RISKS RELATING TO INTELLECTUAL PROPERTY
WE MAY NOT BE ABLE TO OBTAIN PATENT PROTECTION FOR OUR DISCOVERIES, THE PATENT
PROTECTION WE HAVE OR MAY OBTAIN MAY BE INADEQUATE AND WE MAY INFRINGE PATENT
RIGHTS OF THIRD PARTIES
The patent positions of pharmaceutical and biotechnology companies,
including us, are generally uncertain and involve complex legal, scientific and
factual questions.
Our success 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
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- Protect trade secrets.
THERE IS SIGNIFICANT UNCERTAINTY ABOUT THE VALIDITY AND PERMISSIBLE SCOPE OF
GENOMICS PATENTS
The validity and permissible scope of patent claims in the
pharmaceutical and biotechnology fields, including the genomics field, involve
important unresolved legal principles. 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.
OUR COLLABORATORS MAY PUBLISH DATA THAT WILL LIMIT OUR ABILITY TO OBTAIN PATENT
PROTECTION
Our collaborators have certain rights to publish data and information
in which we have rights. While we believe that the limitations on publication of
data developed by our collaborators pursuant to our collaboration agreements
will be sufficient to permit us to apply for patent protection, there is
considerable pressure to publish discoveries. Such publication could affect our
ability to obtain patent protection for some inventions in which we may have an
interest.
THE PROTECTION THAT OUR PATENTS AND PATENT APPLICATIONS AFFORD US MAY BE LIMITED
United States and foreign patents may not issue from any patent
applications that we own or license. If patents do issue, the claims granted may
not be sufficiently broad to protect our technology. Any rights we may have
under any issued patents that we own or have licensed may not provide us with
sufficient protection against competitive products or otherwise cover
commercially valuable products or processes. In addition, issued patents that we
own or license may be challenged, infringed upon, invalidated, found to be
unenforceable or circumvented by others. Our patents also may not afford us
protection against competitors with similar technology. Because patent
applications in the United States may be maintained in secrecy until patents
issue, third parties may have issued patents or have filed or maintained patent
applications for technology used by us or covered by our pending patent
applications without our being aware of these patents or patent applications. We
cannot be certain that the applicants or inventors of subject matter covered by
patent applications or patents that we own or have licensed were the first to
invent or the first to file patent applications for such inventions.
DISPUTES REGARDING PATENT RIGHTS MAY BE COSTLY TO RESOLVE AND WE COULD LOSE OUR
RIGHTS
If another party claims the same subject matter or subject matter
overlapping with subject matter that we have claimed in a United States patent
application or patent, we may decide or be required to participate in
interference proceedings in the United States Patent and Trademark Office in
order to determine priority of invention. Loss of such an interference
proceeding would deprive us of patent protection sought or previously obtained.
Participation in such proceedings could result in substantial costs, whether or
not the eventual outcome is favorable. Similarly, patents or applications that
we have licensed could become the subject of interference proceedings in the
United States Patent and Trademark Office, and loss of such an interference
proceeding would deprive us of licensed rights under patent protection sought or
previously obtained.
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OTHERS MAY OWN OR CONTROL PATENTS OR APPLICATIONS AND REQUIRE US TO SEEK
LICENSES
There are patents or applications related to our proposed products,
processes or services under which we may not have any rights. These patents and
patent applications in the United States and abroad may be owned or controlled
by third parties. 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.
OTHERS MAY HAVE PATENT CLAIMS WHICH INTERFERE WITH OURS
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(R) 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.
OUR RIGHT TO USE CERTAIN TECHNOLOGIES IS DEPENDENT ON LICENSES WHICH COULD BE
TERMINATED OR LOST
We are a party to various license agreements that give us rights under
certain intellectual property rights of third parties. We cannot assure you that
we will be able to continue to license these rights on commercially reasonable
terms, if at all. These licenses impose various commercialization, sublicensing,
royalty, insurance and other obligations on us. Our failure to maintain rights
under any license could have a material adverse effect on our business,
financial condition and results of operations.
WE MAY NOT BE ABLE TO KEEP OUR TRADE SECRETS CONFIDENTIAL
We also rely significantly upon unpatented proprietary technology,
information, processes and know-how, including proprietary software and
databases of proprietary gene sequences and biological information. We seek to
protect this information by confidentiality agreements with our respective
employees, consultants and other third party contractors as well as through
other security measures. These confidentiality agreements may be breached, and
we may not have adequate remedies for any such breach. In addition, our trade
secrets may otherwise become known or be independently developed by competitors.
WE MAY BECOME INVOLVED IN EXPENSIVE PATENT LITIGATION OR OTHER PROCEEDINGS WHICH
COULD RESULT IN LIABILITY FOR DAMAGES OR 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
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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. Interference
proceedings before the United States Patent and Trademark Office may be
necessary to establish which party was the first to invent these genes.
Other types of situations in which we may become involved in patent
litigation or other proceedings include:
- We may initiate litigation or other proceedings against third
parties to enforce our patent rights or licensed patent rights.
- We may initiate litigation or other proceedings against third
parties to seek to invalidate the patents they hold or to obtain
a judgment that our products, processes or services do not
infringe their patents.
- If third parties file patent applications that claim inventions
also claimed by us, we may participate in interference or
opposition proceedings to determine the priority of invention or
entitlement to a patent.
- If third parties initiate litigation or other proceedings
claiming that our processes, products or services infringe their
patent or other intellectual property rights, we will need to
defend ourselves against such claims.
There can be no assurance that any of the patents that we own or have
licensed will ultimately be held valid and enforceable or that efforts to assert
or defend any patents or other intellectual property rights would be successful.
Similarly, there can be no assurances that products or processes used by us or
our alliance partners will not be held to infringe patents or other intellectual
property rights of others.
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
THE MARKET MAY NOT BE RECEPTIVE TO OUR 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.
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Other factors that we believe will materially affect market acceptance
of our products and services include:
- The timing of receipt of marketing approvals and the countries in
which such approvals are obtained
- The safety, efficacy and ease of administration of the product
- The success of physician education programs
WE HAVE NO SALES, MARKETING OR DISTRIBUTION EXPERIENCE AND 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(R) monoclonal antibody will rely solely upon Schering AG and
its U.S. affiliate, Berlex Laboratories, for the marketing, distribution and
sale of the CAMPATH(R) product throughout the world other than the Far East.
The terms of the arrangements that we enter into relating to marketing
and sales of our products may not be favorable to us. In addition, we may have
limited or no control over the sales, marketing and distribution activities of
third parties. Our future revenues will be materially dependent upon the success
of the efforts of these third parties with whom we enter into these
arrangements.
If in the future we determine to perform sales, marketing and
distribution functions ourselves, we would face a number of additional risks,
including:
- We may not be able to attract and build a sufficient marketing
staff or sales force.
- The cost of establishing a marketing staff or sales force may not
be justifiable in light of any product or service revenues.
- Our direct sales and marketing efforts may not be successful.
WE HAVE LIMITED MANUFACTURING CAPABILITIES AND WILL BE DEPENDENT ON THIRD PARTY
MANUFACTURERS
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 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(R) 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.
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To the extent that we enter into manufacturing arrangements with third
parties, we will be dependent upon these third parties to perform their
obligations in a timely manner. If such third party suppliers fail to perform
their obligations, we may be adversely affected in a number of ways, including:
- We may not be able to initiate or continue clinical trials of
products that are under development.
- We may be delayed in submitting applications for regulatory
approvals for our products.
- We may not be able to meet commercial demands for our products.
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. We may not be able to successfully develop
our own manufacturing capabilities. Moreover, it may be very costly and time
consuming for us to develop such capabilities.
The manufacture of products by us and our alliance partners and
suppliers is subject to regulation by the FDA and comparable agencies in foreign
countries. Delay in complying or failure to comply with such manufacturing
requirements could materially adversely affect the marketing of our products.
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 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 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, 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. Such discrimination could cause governmental authorities to
prohibit or limit the use of such tests.
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RISKS RELATING TO OUR ONGOING OPERATIONS
WE MAY BE EXPOSED TO PRODUCT LIABILITY CLAIMS AND MAY NOT BE ABLE TO OBTAIN
ADEQUATE PRODUCT LIABILITY INSURANCE
Our business exposes us to potential product liability risks which are
inherent in the testing, manufacturing, marketing and sale of human therapeutic
and diagnostic products. Product liability claims or product recalls, regardless
of the ultimate outcome, could require us to spend significant time and money in
litigation and to pay significant damages. We currently have a limited amount of
product liability insurance coverage. If we decide to increase our coverage, we
may not be able to obtain such additional product liability insurance at a
reasonable cost or in sufficient amounts to protect us against losses due to
liability claims.
WE COULD INCUR LIABILITIES RELATING TO HAZARDOUS MATERIALS THAT WE USE IN
RESEARCH AND DEVELOPMENT ACTIVITIES
Our research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive materials. There is a
risk of accidental contamination or injury from these materials. In the event of
such an accident, we could be held liable for any damages that result. This type
of liability could exceed our resources.
RISKS RELATING TO THE NOTES
THE NOTES RANK BELOW OUR EXISTING AND FUTURE SENIOR DEBT, AND 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
- 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 January
31, 2000, we had approximately $48.625 million of senior debt outstanding, and
our subsidiaries had approximately $12.608 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.
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WE MAY BE UNABLE TO REPURCHASE THE NOTES.
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."
THERE IS NO PUBLIC MARKET FOR THE NOTES BEING OFFERED
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.
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 charter, our bylaws, and Delaware law may have the
effect of deterring hostile takeovers or delaying or preventing changes in
control or our management, including transactions in which our stockholders
might otherwise receive a premium for their shares over then current market
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prices. In addition, these provisions may limit the ability of stockholders to
approve transactions that they may deem to be in their best interest.
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, 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 t 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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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>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------------------------------------
(in thousands) Pro Forma
(unaudited)
-------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998 1999 1999
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
=================================================================================================
Ratio of earnings to fixed charges (2.62) 1.51 (1.97) (16.73) 0.53 (19.55) (3.38)
=================================================================================================
Coverage deficiency ($6,372) - ($8,768) ($84,632) ($3,841) ($353,940) ($82,231)
=================================================================================================
</TABLE>
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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<PAGE>
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 and 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.
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
require us to repurchase your notes as described below under "--Repurchase at
Option of Holders Upon a Change in Control."
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<PAGE>
FORM, DENOMINATION, TRANSFER, EXCHANGE AND BOOK-ENTRY PROCEDURES
The notes have been issued:
- only in fully registered form;
- without interest coupons; and
- in denominations of $1,000 and greater multiples.
We have deposited one or more global notes, representing all of the
notes, with, or on behalf of, 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.
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 will appear and
the only way the transfer of those interests can be made will be on the records
kept by DTC and the records kept by those participants. Participants' ownership
of beneficial interests in the global note will appear on the records kept by
DTC and the ownership of beneficial interests by others will appear on the
records kept by those participants.
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<PAGE>
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.
We have been informed 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:
- 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;
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<PAGE>
- 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. The conversion rate is subject to 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 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
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<PAGE>
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 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.
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<PAGE>
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--United States Holders."
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;
- 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,
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<PAGE>
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 will 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:
- 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
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<PAGE>
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 January 31, 2000, we had approximately $48.625 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:
<TABLE>
<CAPTION>
YEAR REDEMPTION
- ---- PRICE
----------
<S> <C>
2003.................................................. 103.1429%
2004.................................................. 102.3571%
2005.................................................. 101.5714%
2006.................................................. 100.7857%
</TABLE>
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
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<PAGE>
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.
A change in control will be deemed to have occurred at the time after
the notes are originally issued that 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 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 be deemed to have occurred 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;
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<PAGE>
- 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
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.
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<PAGE>
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 payment is prohibited by the
subordination provisions of the indenture;
- if we fail to pay any interest on any note when due and that
default continues for 30 days, whether or not the payment is
prohibited by the subordination provisions of the indenture;
- 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 notice is
prohibited by the subordination provisions of the indenture;
- 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 the indebtedness is not discharged,
or the acceleration is not annulled, 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 will be 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 will 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 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
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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;
- 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
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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 will generally be 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 will
be 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 will be 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, 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.
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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
- 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.
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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
The trustee for the holders of notes issued under the indenture is
State Street Bank and Trust Company. 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 44,965,975 shares were issued and
outstanding on January 31, 2000, and 5,000,000 shares of undesignated preferred
stock, $.001 par value per share, of which no shares are issued and outstanding.
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 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
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 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
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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 25, 2000, there were outstanding warrants to purchase an
aggregate of 326,661 shares of common stock, at exercise prices ranging from
$3.00 per share to $37.76 per share. None of the warrants confer upon the
holders thereof any rights as stockholders.
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
BUSINESS COMBINATIONS. The Company is 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 charter provides for the division of the Board of
Directors into three classes as nearly equal in size as possible with staggered
three-year terms. In addition, the Restated 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 the Restated Certificate of Incorporation, any vacancy
on the Board of Directors, however occurring, including a vacancy resulting from
an enlargement of the Board, 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 the Company.
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 By-Laws,
unless a corporation's Certificate of Incorporation or By-Laws, as the case may
be, requires a greater percentage. The Restated Certificate of Incorporation and
the By-Laws require the affirmative vote of the holders of at least 75% of the
shares of capital stock of the Company issued and outstanding and entitled to
vote to amend or repeal any of the provisions described in the prior paragraph.
INDEMNIFICATION. Our charter 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 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
directors and officers of the Company under federal securities laws.
Furthermore, the Restated Certificate of Incorporation contains provisions to
indemnify the Company's directors and officers to the fullest extent permitted
by the Corporation Law of Delaware. These provisions do not limit or eliminate
the right of the Company or any shareholder 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 the Company. The Company believes that these provisions
will assist the Company in attracting and retaining qualified individuals to
serve as directors.
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TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is Boston
EquiServe L.P., Canton, Massachusetts.
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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, or
other entities created or organized in or under the laws of the U.S. or of
any political subdivision thereof, 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 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
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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.
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, 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
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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,
(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
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(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 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
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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.
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
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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.
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. 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 February 25, 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, no estimate can be given as to 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
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<PAGE>
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.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of
Shares of
Percentage Common Number of Number of Percentage
Notes Notes of the Notes Stock Shares of Shares of of Shares of
Beneficially Beneficially Beneficially Beneficially Common Common Stock Common Stock
Owned Notes Owned Owned Owned Stock Beneficially Beneficially
Selling Prior to Offered After After the Prior to Offered Owned After Owned After
Securityholder Offering Hereby Offering (2) Offering Offering (1) Hereby Offering(1)(2) Offering(1)(2)
(in $1,000) (in $1,000) (in $1,000)
-------------- ------------ ------- ------------ ------------ ------------ --------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bear, Stearns &
Co. Inc. ........... 5,000 5,000 0 0 29,712 29,712 0 0
BBT Fund, L.P. ..... 9,000 9,000 0 0 53,481 53,481 0 0
JMG Capital
Partners, LP ....... 9,525 9,525 0 0 56,601 56,601 0 0
JMG Triton
Offshore Fund,
Ltd. ............... 15,025 15,025 0 0 89,284 89,284 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
Lyxor Master
Fund ............... 5,650 5,650 0 0 33,574 33,574 0 0
Morgan Stanley
Dean Witter
Convertible
Securities Trust ... 2,000 2,000 0 0 11,884 11,884 0 0
TQA Master Plus
Fund ............... 1,000 1,000 0 0 5,942 5,942 0 0
White River
Securities LLC ..... 5,000 5,000 0 0 29,712 29,712 0 0
</TABLE>
(1) The number of securities beneficially owned is determined under the
rules of the SEC and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under those rules,
beneficial ownership includes any securities as to which the individual
has sole or shared voting power or investment power and also any
securities which the individual has the right to acquire within 60 days
after February 25, 2000 through the exercise of any stock option or
other right. The inclusion in the table of securities, however, does
not constitute an admission that the selling securityholders are direct
or indirect beneficial owners of those securities. The selling
securityholders have sole voting power and investment power with
respect to all securities of capital stock listed as owned by the
selling securityholders.
(2) It is unknown 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.
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;
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- 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,
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 listed for trading on The Nasdaq National Market.
The notes are currently eligible for trading on the PORTAL System 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.
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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 $155,600.
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 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 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.
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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 Report on Form 8-K/A filed with the SEC on January
6, 2000; and
(3) All of our filings pursuant to the Exchange Act after the date
of filing the initial registration statement and prior to the effectiveness
of the registration statement.
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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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 .............. $ 105,600
Legal fees and expenses....................................... $ 30,000
Accounting fees and expenses.................................. $ 10,000
Miscellaneous expenses........................................ $ 10,000
-------
Total Expenses....................................... $ 155,600
=======
</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
indemnification, or if the Registrant fails to make an indemnification payment
within 60 days after such
II-1
<PAGE>
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
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
<S> <C>
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 (See page II-5 of this Registration Statement).
25 Form T-1. Statement of Eligibility under the Trust Indenture Act of State Street
Bank and Trust Company
</TABLE>
* 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 February 25, 2000.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
II-2
<PAGE>
(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.
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.
II-3
<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
February 29, 2000.
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ John B. Douglas III
John B. Douglas III
General Counsel and Secretary
SIGNATURES AND POWER OF ATTORNEY
We, the undersigned officers and directors of Millennium
Pharmaceuticals, hereby severally constitute and appoint Mark J. Levin, John B.
Douglas III and David E. Redlick and each of them singly, our true and lawful
attorneys with full power to any of them, and to each of them singly, to sign
for us and in our names in the capacities indicated below the Registration
Statement on Form S-3 filed herewith and any and all pre-effective and
post-effective amendments to said Registration Statement and generally to do all
such things in our name and behalf in our capacities as officers and directors
to enable Millennium Pharmaceuticals to comply with the provisions of the
Securities Act of 1933, as amended, and all requirements of the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorneys, or any of them, to said Registration Statement
and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Mark J. Levin Chairman of the Board of Directors and Chief February 29, 2000
Mark J. Levin Executive Officer (Principal Executive Officer)
/s/ Kevin P. Starr Chief Financial Officer (Principal Financial and February 29, 2000
Kevin P. Starr Accounting Officer)
/s/ Joshua Boger Director February 29, 2000
Joshua Boger, Ph.D.
/s/ Eugene Cordes Director February 29, 2000
Eugene Cordes, Ph.D.
/s/ A. Grant Heidrich III Director February 29, 2000
A. Grant Heidrich III
/s/ Raju S. Kucherlapati Director February 29, 2000
Raju S. Kucherlapati, Ph.D.
/s/ Eric S. Lander Director February 29, 2000
Eric S. Lander, Ph.D.
/s/ Christopher K. Mirabelli Director February 29, 2000
Christopher K. Mirabelli, Ph.D.
/s/ Steven C. Wheelwright Director February 29, 2000
Steven C. Wheelwright, Ph.D.
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
<S> <C>
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 (See page II-5 of this Registration Statement).
25 Form T-1. State of Eligibility under the Trust Indenture Act of State Street Bank
and Trust Company.
</TABLE>
* 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 February 25, 2000.
II-6
<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
February 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") and
(ii) an aggregate of 2,376,960 shares of Common Stock, $0.001 par value per
share, issuable upon conversion of the Notes (the "Conversion Shares"), of
Millennium Pharmaceuticals, Inc., a Delaware corporation (the "Company"), all of
which Notes and Conversion 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 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
<PAGE>
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; and
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.
It is understood that this opinion is to be used only in connection
with the offer and sale of the Notes or the Conversion 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
<PAGE>
EXHIBIT 12
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------------------
1994 1995 1996 1997 1998
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> >
Fixed charges:
Interest expense on indebtedness $231 $824 $887 $1,435 $2,410
Interest expense on portion of rent expense 1,530 1,689 2,066 3,340 5,840
representative of interest
---------------------------------------------------------------------
Total fixed charges $1,761 $2,513 $2,953 $4,775 $8,250
=====================================================================
Earnings (loss):
Net income (loss) before provision for income taxes ($6,372) $1,284 ($8,768) ($84,632) ($3,841)
and minority interest
Fixed charges per above 1,761 2,513 2,953 4,775 8,250
---------------------------------------------------------------------
Total earnings (loss) ($4,611) $3,797 ($5,815) ($79,857) $4,409
=====================================================================
Ratio of earnings to fixed charges (2.62) 1.51 (1.97) (16.73) 0.53
=====================================================================
Coverage deficiency ($6,372) - ($8,768) ($84,632) ($3,841)
=====================================================================
<CAPTION>
Year ended December 31,
-----------------------------------
1999(a) 1999
-----------------------------------
Pro Forma(b)
<S> <C> <C>
Fixed charges:
Interest expense on indebtedness $3,038 $3,185
Interest expense on portion of rent expense 14,184 15,606
representative of interest
-----------------------------------
Total fixed charges $17,222 $18,791
===================================
Earnings (loss):
Net income (loss) before provision for income taxes ($353,940) ($82,231)
and minority interest
Fixed charges per above 17,222 18,791
-----------------------------------
Total earnings (loss) ($336,718) ($63,440)
===================================
Ratio of earnings to fixed charges (19.55) (3.38)
===================================
Coverage deficiency ($353,940) ($82,231)
===================================
</TABLE>
(a) The amounts for the year ended December 31, 1999 include a charge for in
process research and development for $350,503 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.
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated January 27, 2000, in the Registration Statement (Form
S-3) and related Prospectus of Millennium Pharmaceuticals, Inc. for the
registration of $400,000,000 of 5.5% Convertible Subordinated Notes due January
15, 2007 and 2,376,960 shares of its common stock.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
February 25, 2000
<PAGE>
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
February 28, 2000
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 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
February 28, 2000
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
---------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
STATE STREET BANK AND TRUST COMPANY
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
Massachusetts 04-1867445
(JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER
ORGANIZATION IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)
225 Franklin Street, Boston, Massachusetts 02110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel
225 Franklin Street, Boston, Massachusetts 02110
(617) 654-3253
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
MILLENNIUM PHARMACEUTICALS, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 04-3177038
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
75 SIDNEY STREET, CAMBRIDGE, MASSACHUSETTS 02139
(Address of principal executive offices) (Zip Code)
5.5% CONVERTIBLE SUBORDINATED NOTES DUE JANUARY 15, 2007
(TITLE OF INDENTURE SECURITIES)
<PAGE>
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now in
effect, is on file with the Securities and Exchange Commission as
Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated
herein by reference thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee to
commence business was necessary or issued is on file with the
Securities and Exchange Commission as Exhibit 2 to Amendment No. 1 to
the Statement of Eligibility and Qualification of Trustee (Form T-1)
filed with the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise corporate
trust powers is on file with the Securities and Exchange Commission as
Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the Registration
Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated
herein by reference thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4 to the
Statement of Eligibility and Qualification of Trustee (Form T-1) filed
with the Registration Statement of Eastern Edison Company (File No.
33-37823) and is incorporated herein by reference thereto.
1
<PAGE>
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS
IN DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(b) OF THE ACT.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority is annexed hereto as
Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter of the
obligor, the trustee has relied upon the information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer to Item 2. of this statement will be amended, if necessary,
to reflect any facts which differ from those stated and which would have been
required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation duly
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the FEBRUARY 23, 2000.
STATE STREET BANK AND TRUST COMPANY
By: /S/ JILL OLSON
----------------------------------
NAME: JILL OLSON
TITLE: VICE PRESIDENT
2
<PAGE>
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by MILLENNIUM
PHARMACEUTICALS, INC.. of its 5.5% CONVERTIBLE SUBORDINATED NOTES DUE JANUARY
15, 2007, we hereby consent that reports of examination by Federal, State,
Territorial or District authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /S/ JILL OLSON
--------------------------------------------
NAME: JILL OLSON
TITLE: VICE PRESIDENT
DATED: FEBRUARY 23, 2000
3
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company,
Massachusetts and foreign and domestic subsidiaries, a state banking institution
organized and operating under the banking laws of this commonwealth and a member
of the Federal Reserve System, at the close of business SEPTEMBER 30, 1999,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act and in accordance
with a call made by the Commissioner of Banks under General Laws, Chapter 172,
Section 22(a).
<TABLE>
<CAPTION>
Thousands of
ASSETS Dollars
<S> <C> <C> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin .............. 1,510,845
Interest-bearing balances ....................................... 14,076,224
Securities................................................................ 14,318,348
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary ............................. 8,365,790
Loans and lease financing receivables:
Loans and leases, net of unearned income ............ 7,916,057
Allowance for loan and lease losses ................. 92,091
Allocated transfer risk reserve...................... 0
Loans and leases, net of unearned income and allowances ......... 7,823,966
Assets held in trading accounts ..................................... 1, 739,144
Premises and fixed assets ................................................ 531,098
Other real estate owned .................................................. 0
Investments in unconsolidated subsidiaries ............................... 603
Customers' liability to this bank on acceptances outstanding ............. 125,222
Intangible assets ........................................................ 236,931
Other assets.............................................................. 1,468,218
------------
Total assets.............................................................. 50,196,389
============
LIABILITIES
Deposits:
In domestic offices.............................................. 10,235,475
Noninterest-bearing ........................ 7,515,809
Interest-bearing ........................... 2,719,666
In foreign offices and Edge subsidiary .......................... 21,827,096
Noninterest-bearing ........................ 47,540
Interest-bearing ........................... 21,779,556
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary ............................. 11,976,613
Demand notes issued to the U.S. Treasury.................................. 431,057
Trading liabilities...................................... 1,250,459
Other borrowed money ..................................................... 180,568
Subordinated notes and debentures ........................................ 0
Bank's liability on acceptances executed and outstanding ................. 125,222
Other liabilities......................................................... 1,313,563
Total liabilities......................................................... 47,340,053
------------
EQUITY CAPITAL
Perpetual preferred stock and related surplus............................. 0
Common stock.............................................................. 29,931
Surplus................................................................... 492,756
Undivided profits and capital reserves/Net unrealized holding gains
(losses) ....................................................... 2,373,416
Net unrealized holding gains (losses) on available-for-sale
securities..................................................... (35,467)
Cumulative foreign currency translation adjustments....................... (4,300)
Total equity capital...................................................... 2,856,336
------------
Total liabilities and equity capital ..................................... 50,196,389
------------
</TABLE>
4
<PAGE>
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Truman S. Casner
5
<PAGE>
