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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
<TABLE>
<C> <S>
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1999
OR
<TABLE>
<C> <S>
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
</TABLE>
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NO.: 0-28494
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MILLENNIUM PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 04-3177038
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
</TABLE>
75 SIDNEY STREET, CAMBRIDGE, MASSACHUSETTS 02139
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (617) 679-7000
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.001
PAR VALUE
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes /X/
The aggregate market value of voting Common Stock held by non-affiliates of
the registrant was $7,223,598,521 based on the last reported sale price of the
Common Stock on the Nasdaq Stock Market on January 31, 2000.
Number of shares outstanding of the registrant's class of Common Stock as of
January 31, 2000: 44,965,975.
DOCUMENTS INCORPORATED BY REFERENCE:
Definitive Proxy Statement for the 2000 Annual Meeting of
Stockholders--Part III
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PART I
ITEM 1. BUSINESS
OVERVIEW
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 programs
and the continued enhancement of our technology platform.
KEY TRANSACTIONS AND RECENT DEVELOPMENTS IN 1999
STRATEGIC ALLIANCES. On February 22, 1999, Millennium Predictive
Medicine, Inc., or MPMx, our majority-owned subsidiary, entered into an alliance
with Becton, Dickinson and Company in several areas of cancer pharmacogenomics
and Diagnomics-TM- products. "Diagnomics" is a term we use to describe
gene-based diagnostic tests to determine a patient's medical status and
facilitate cost-effective treatment. Pursuant to the alliance, MPMx is
conducting a research program to identify genetic markers and related assays
that may be used to develop diagnostic products for several types of cancers.
Becton Dickinson has agreed to manufacture and market any products that result
from the alliance.
On November 11, 1999, MPMx entered into an alliance with Bristol-Myers
Squibb in the field of cancer pharmacogenomics. The alliance will coordinate the
development of therapeutic products and pharmacogenomic tests. Bristol-Myers
Squibb has agreed to commercialize any therapeutic products resulting from the
alliance. Any pharmacogenomic tests resulting from the alliance will be
commercialized by one or more leading diagnostic companies selected by MPMx and
Bristol-Myers Squibb.
In December 1999, a partnership of LeukoSite, Inc., which we acquired in
December 1999 as described below, and ILEX Oncology, Inc., submitted a Biologics
License Application, or BLA, to the United States Food and Drug Administration
seeking marketing approval of CAMPATH-Registered Trademark- (alemtuzamab), an
investigational humanized monoclonal antibody for the treatment of chronic
lymphocytic leukemia. In February 2000, the FDA informed the partnership that
the BLA was accepted for filing and has received "fast track" designation.
In January 2000, we signed an agreement with Taisho Pharmaceutical
Company, Ltd. regarding the licensing of LDP-977, a small molecule drug
candidate, for the treatment of chronic asthma. Under the arrangement, Taisho
will hold an exclusive license to LDP-977 in Japan, Asia and Europe while we
will retain rights for the rest of the world, including North America. Taisho
has agreed to fund all of the research and development expenses of the compound
in Japan and Asia, and two-thirds of the expenses in the United States and
Europe. Taisho has the right of first negotiation for commercialization in the
U.S. should we seek to sublicense in that territory.
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SHARE EXCHANGE WITH ELI LILLY. On October 14, 1999, we entered into a Share
Exchange Agreement with Eli Lilly and Company. Pursuant to this agreement, Lilly
was issued 375,000 shares of our common stock in exchange for all of Lilly's
shares of Series B Convertible Preferred Stock of Millennium
BioTherapeutics, Inc., or MBio, our then majority-owned subsidiary.
AMENDMENT TO MBIO STRATEGIC ALLIANCE WITH LILLY. Also on October 14, 1999,
MBio amended the terms of its strategic alliance with Lilly. Under the
amendment, the research program was refocused from the discovery of new
therapeutic proteins to the further development of the therapeutic proteins
which had been identified in the course of the research program. The research
program will now end in May 2000, and Lilly's funding obligations under the
refocused research program were waived. As amended, each party's non-exclusive
license to use the genes and proteins from the jointly-funded program in its
small molecule drug discovery program is a non-royalty bearing license.
As part of the amendment and in accordance with the original terms of this
alliance, Lilly received royalty-bearing worldwide exclusive rights to develop
and commercialize 25% of the therapeutic proteins discovered under the research
program. MBio received non-royalty bearing, worldwide exclusive rights to
develop and commercialize 75% of the therapeutic proteins discovered under the
research program. In the event that Lilly achieves product development and
regulatory milestones in its development of the therapeutic proteins exclusively
licensed to it from the alliance, Lilly will be obligated to make milestone
payments.
REACQUISITION OF MINORITY INTEREST IN MBIO. On December 21, 1999, we
reacquired the remaining minority equity interest in MBio through a merger of
MBio into us. We issued an aggregate of approximately 267,462 shares of our
common stock to the former MBio shareholders in the merger. In addition, we
assumed MBio's outstanding employee stock options, which represented an
aggregate of 67,756 shares of our common stock. As a result of the merger, we
integrated MBio's research and development programs with our pharmaceutical
division.
ACQUISITION OF LEUKOSITE. On December 22, 1999, we acquired
LeukoSite, Inc. in a stock-for-stock merger. We issued an aggregate of
approximately 6,676,933 shares of our common stock to the former LeukoSite
shareholders in the merger. In addition, we assumed LeukoSite's outstanding
employee stock options, rights and warrants which are exercisable for an
aggregate of 884,087 shares of our common stock. The acquisition of LeukoSite
has enabled us to broaden our pipeline of small molecule and biotherapeutic drug
candidates in the areas of oncology and inflammation. We also obtained
significant expertise in drug discovery, chemistry, the development of
monoclonal antibody products and clinical and regulatory affairs.
CONVERTIBLE NOTE OFFERING. On January 14, 2000, we completed a Rule 144A
offering to qualified institutional buyers of $400 million of 5.5% Convertible
Subordinated Notes due January 15, 2007. The notes are convertible into our
common stock at a price equal to $168.28 per share, subject to adjustment, and
can be redeemed by us at any time after January 15, 2003. The holders of the
notes can, under specified circumstances, require us to repurchase the Notes if
a change of control occurs.
INDUSTRY BACKGROUND
The discovery and development of new drugs typically involves several steps
and many years of work. The first step is the identification of a drug "target"
for therapeutic intervention--a molecule or structure somewhere in the body,
inside or on the surface of cells, which is either directly related to the
disease or lies in a biochemical pathway involved in the disease. The next step
is to identify compounds which interact with this drug target and modulate the
drug target's activity in a manner that might help reverse, inhibit or prevent
the disease process. This step is normally accomplished by screening large
collections, referred to as libraries, of synthetic chemicals and natural
products in a trial-and-error process designed to identify those compounds that
can interact with the drug target.
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The most promising compounds to emerge from this process are advanced to the
next stage, in which synthetic derivatives of these compounds are generated and
tested to arrive at one or a few so-called lead compounds. Positive interactions
of these lead compounds with the drug target and the subsequent activity in
animal or cellular models of the disease may suggest that these compounds can be
developed successfully into new drugs. The best of these lead compounds are then
subjected to rigorous testing, first in animals and then in humans, to establish
their safety and efficacy as drugs.
The selection of new targets for drug discovery historically has been an
inefficient process because of the lack of knowledge of the underlying disease
causes. Drug targets have often been selected based on speculation that they
might be involved in disease processes, rather than because of any clear,
well-documented association with specific diseases. As a result, many drug
candidates fail during clinical trials because they turn out to be ineffective
or unsafe. Moreover, many drugs that do reach the market treat only the symptoms
of diseases rather than their underlying causes.
In recent years, however, the drug discovery process has changed, beginning
with the process for discovering drug targets. Fueled by a broad interest in
determining the entire DNA sequence of the human genome, scientists have made
major improvements in the technologies available for identifying and cataloguing
genes in complex organisms. These technologies include high-throughput methods
for sequencing genes, for monitoring and comparing the expression of genes in
different situations and for following the inheritance of genes in families
prone to particular diseases. The integration of molecular biology with
robotics, information technology and analytical instrumentation is crucial to
these technologies. The integration of these disciplines provides powerful
capabilities for generating, capturing and analyzing large volumes of data
concerning genes and their expression, making it possible for the first time to
mount a systematic search to discover and characterize the genes and biochemical
pathways which underlie human diseases.
Major advances have also recently been made in the technologies available
for screening synthetic chemical and natural-product libraries to identify
compounds active against specific drug targets and for the subsequent generation
of lead compounds optimized for their activity against these drug targets. As
with the advances in target discovery, the advances in drug discovery depend
heavily on robotics, information technology and analytical instrumentation,
coupled with novel combinatorial approaches to the synthesis of chemical
libraries.
Another important recent development in biotechnology has been the emergence
of monoclonal antibody-based drugs as successful therapeutics. Monoclonal
antibodies, which are specially produced proteins that play a role in the immune
system, have long held great potential as drugs because, by their nature, they
recognize and interact with target molecules in a highly specific way. However,
early therapeutic monoclonal antibodies were generated in non-human animals and,
therefore, were recognized by the body as foreign and neutralized by the immune
system. Recently, it has become possible to produce humanized monoclonal
antibodies that appear less foreign to the body, and even to produce completely
human monoclonal antibodies in quantity. As a result, monoclonal antibodies are
now realizing their potential as drugs, with several successfully on the market,
and many more in advanced clinical development.
We believe that the combined effect of these developments has reduced and
will continue to reduce the risk, time and expense associated with the
development of new drugs. These developments have created an opportunity for
biopharmaceutical companies with cutting edge technologies to deliver new
classes of drugs which are safe and effective for treating a broad range of
important diseases in diverse individuals.
OUR STRATEGY
We combine a variety of proprietary and non-proprietary technologies and
know-how to systematically study genes in the context of disease and to discover
and develop proprietary therapeutic
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and diagnostic human healthcare products and services. We believe that our
platform is unique in the breadth and diversity of the technologies that it
encompasses, and the degree to which we have integrated these technologies. We
use advanced capabilities in information technology, robotics, genetics,
genomics, molecular biology, cell biology, immunology, biochemistry, chemistry
and analytical instrumentation. By combining these capabilities, we have created
a series of high-throughput processes that we believe have the potential to
improve the efficiency of the discovery and development of therapeutic and
diagnostic products, as well as the quality of these products. We believe that
these products will change the practice of medicine.
Our business is built on three principal components:
TECHNOLOGY. We use many technologies in each step of the therapeutic and
diagnostic product discovery and development processes. We seek the most
advanced methods available to integrate into our technology platform, whether
developed internally or licensed from third parties in order to increase the
efficiency and productivity of these processes. We believe that our platform
will enable us to:
- identify commercially important genes;
- elucidate their functions;
- validate targets for product development; and
- identify and develop drug and diagnostic candidates for clinical
development.
THERAPEUTICS. We have three fields of major emphasis: cancer, metabolic
diseases (including obesity) and inflammation. We also have significant programs
in infectious diseases, cardiovascular diseases and diseases of the central
nervous system. We seek to discover disease-related genes, produce validated
drug targets and drug leads, and develop new, proprietary drugs to treat major
human illnesses. We focus on developing small-molecule drugs, which are
typically formulated into pills for oral consumption, as well as proteins and
monoclonal antibodies, which are typically only available in injectable form.
PREDICTIVE MEDICINE. Through MPMx, we seek to develop products and services
that will provide clinicians and pharmaceutical researchers with information
that enables them to make better informed decisions about drug treatment and
other aspects of patient management. Our core areas of focus include
Diagnomics-TM- products and pharmacogenomics. A Diagnomics-TM- product is a
gene-based diagnostic test to determine the patient's medical status and
facilitate cost-effective treatment. Pharmacogenomics is the identification of
genes, or their activity, associated with responsiveness to particular drugs. We
believe that the products and services being developed by MPMx will enable
physicians to customize medical treatment by providing them with the ability to
identify the genetic basis for a patient's disease and select the most
appropriate drugs for the particular patient.
The key initiatives to implement our strategy are:
ESTABLISH AND EXPAND STRATEGIC ALLIANCES. Based on the strength of our
technology platform and product pipeline, we have established a series of
strategic alliances with major pharmaceutical and biotechnology companies. These
alliances provide us with substantial revenues and other financing, furnish us
with access to important technology, broaden our product development pipeline
and reduce our product development risks. These alliances also enhance our
ability to bring products to market because of our partners' substantial
resources and expertise in research, preclinical and clinical development,
regulatory issues, manufacturing and marketing.
EXPAND DOWNSTREAM PIPELINE AND OTHER SKILLS THROUGH ACQUISITIONS. We
continually consider joint development, merger and other acquisition
opportunities that may provide us with access to products currently on the
market or which are in later stages of commercial development or may bring us
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scientific or other skills that enhance our existing capabilities. For example,
through our merger with LeukoSite, we obtained six drug candidates in clinical
development and more than 12 pre-clinical development programs. In addition, as
a result of the LeukoSite merger, we augmented our capabilities in the areas of
immunology, preclinical and clinical development and regulatory affairs. We
believe that integrating these capabilities will facilitate bringing our
internally developed products to market quickly and efficiently.
ENHANCE PROPRIETARY TECHNOLOGY PLATFORM. We are committed to constantly
enhancing our technology platform by incorporating the latest technological
advances. Our technology enhancement efforts are based on our own internal
development efforts and our program to identify, evaluate and integrate
technologies licensed from third parties. The quality of our technology platform
has been central to our ability to attract a broad range of strategic alliances
with major pharmaceutical and biotechnology companies. The platform also has
enabled us to create a technology transfer alliance in the area of agriculture
with the Monsanto Company.
TECHNOLOGY
Our broad technology platform is based on multiple parallel approaches to
high-throughput product discovery and development which are integrated through
the latest advances in enabling technologies and informatics. The enabling
technologies include robotics, fluidics, miniaturization and analytical
instrumentation. Informatics consists of the tracking, synthesizing and
interpretation of the enormous volumes of data generated in high-throughput
discovery of genes, drug targets and drugs.
The following chart illustrates how we apply various processes of our
technology platform to the principal steps in the discovery and development of
drugs, spanning from gene to patient.
[Graphic depiction of a chart which summarizes the application of various
processes of our technology platform (described on page 7) to the principal
steps in the drug discovery process]
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- HUMAN, MOUSE AND MICROBIAL GENETICS involve the identification of genes
associated with diseases or with the ability of microbes to survive.
- HIGH-THROUGHPUT SEQUENCING enables the rapid determination of DNA sequence
information from large numbers of genes.
- EXPRESSION CLONING means the isolation and identification of genes
according to the biological properties of the proteins they encode.
- TRANSCRIPTIONAL PROFILING is the rapid identification of genes whose
activity in the body changes under disease conditions.
- FUNCTIONAL GENOMICS are the assignment of biochemical functions and
disease roles to genes and the selection of the relatively small number of
genes that will be appropriate targets for therapeutic intervention.
- PROTEOMICS constitutes the identification of proteins, or changes to
proteins, associated with particular diseases.
- COMPUTATIONAL BIOLOGY is the rapid analysis of the DNA sequences of genes
to identify those which encode potential targets for drugs.
- BENCH BIOLOGY, using cellular and animal models, is utilized for the
experimental confirmation of hypotheses that particular genes or proteins
could be good targets for drugs.
- PATHWAY PROFILING identifies multiple genes that may be involved in the
initiation, progression or maintenance of a disease.
- PHARMACOGENOMICS constitutes the identification of genes, or their
activity, associated with responsiveness to particular drugs.
- CHEMISTRY is utilized for the identification and optimization of
small-molecule compounds active against particular drug targets.
- COMPUTATIONAL CHEMISTRY is employed to enable the modeling and analysis of
chemical structures and their interactions with drug targets.
- PREDICTIVE PHARMACOLOGY enables the prediction of likely behaviors of drug
candidates when they are administered to humans.
- CLINICAL RESEARCH is conducted to assess the safety and efficacy of drugs
in humans.
- REGULATORY AFFAIRS is the process of gaining necessary approvals from the
appropriate governmental agencies that control the testing and marketing
of drugs.
ALLIANCES
A fundamental component of our business strategy is to form alliances with
major pharmaceutical and biotechnology companies. In general, our alliances fall
into three categories:
- Alliances focused on particular diseases, in which we perform drug
discovery research funded by our partners. Our largest disease-focused
alliance is with Bayer AG. This is a five-year alliance formed in
September 1998, under which we are eligible to receive up to $465 million
from Bayer, including a $96.6 million equity investment. This equity
investment and a portion of the other funding has already been received.
In September 1999, we announced that we had successfully identified 18
novel drug targets in this alliance and moved four of these targets into
high-throughput screening in less than eight months. The targets
identified have relevance across multiple disease areas.
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- Alliances focused on drug discovery for specific targets or the
development of a specific product candidate. One of our key
target-specific discovery alliances is with Warner-Lambert, focused on
CCR5 and CXCR3 chemokine receptors as potential targets for anti-HIV
drugs. One of our key product development alliances is with ILEX Oncology,
Inc., focused on the clinical development of the
CAMPATH-Registered Trademark- monoclonal antibody.
- Alliances based on the transfer of our technology platform. Our major
technology transfer alliance is with Monsanto Company in the area of
agriculture. This is a five-year alliance formed in October 1997, under
which we are eligible to receive up to $218 million from Monsanto. A
portion of this funding has already been received.
Our alliance agreements generally provide for the funding by our alliance
partner of a research program to be conducted by us in conjunction with the
partner and the grant of exclusive license rights by us to our partner to
develop and commercialize specified products and services resulting from
discoveries made in the research program. In many cases, we have retained
development and commercialization rights for ourselves to certain therapeutic
and diagnostic applications of discoveries made in the research program. If
specified research, product development or regulatory milestones are achieved,
our alliance partners are obligated to make milestones payments to us. In
addition, our alliance agreements generally entitle us to royalties or a share
of profits on product sales, which are payable for the life of the applicable
patents or a specified period of time.
The agreements governing our alliances are subject to various contingencies,
including in some cases, early termination rights. We have generally agreed with
our alliance partners that, for a specified period of time while the alliance is
in place, we will not conduct certain research, independently or with third
parties, in the fields covered by the alliance agreement.
Substantially all of our revenues are derived from our strategic alliances.
For the twelve-month period ended December 31, 1999, revenues from our strategic
alliances with Bayer, Monsanto and American Home Products accounted for
approximately 45%, 20% and 10%, respectively, of our total revenues.
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The following table sets forth certain information about our principal
current alliances:
<TABLE>
<CAPTION>
YEAR
ESTABLISHED ALLIANCE PARTNER ALLIANCE TYPE SUBJECT
- --------------------- ---------------------- ------------------------- ---------------------------------
<C> <S> <C> <C>
2000 Taisho Pharmaceutical Product development LDP-977--asthma
1999 Schering AG/Berlex Product distribution CAMPATH-Registered Trademark-
Laboratories monoclonal antibody-- chronic
lymphocytic leukemia
1999 Bristol-Myers Squibb Disease-focused Cancer pharmacogenomics
1999 Becton Dickinson Disease-focused Cancer diagnostics
1998 Warner-Lambert Target-specific discovery a4b7 and aEb7 integrins--
inflammation
1998 Bayer Disease-focused Cardiovascular diseases, cancer,
pain, osteoporosis, liver
diseases, blood diseases and
viral infections
1997 Kyowa Hakko Target-specific discovery CCR1 and CXCR3 chemokine
receptors--inflammation
1997 Monsanto Technology transfer Agriculture
1997 Genentech Product development LDP-02--inflammation
1997 Warner-Lambert Target-specific discovery CCR5 and CXCR4 chemokine
receptors--HIV
1996 American Home Products Disease-focused Bacterial diseases
1996 ILEX Oncology Product development CAMPATH-Registered Trademark-
monoclonal antibody
1996 Roche Bioscience Target-specific discovery CCR3 chemokine receptor--
inflammation
1996 American Home Products Disease-focused and Central nervous system diseases
technology transfer
1996 Eli Lilly Disease-focused Cancer
1995 Aventis Target-specific discovery NF-KB--inflammation
1995 Pfizer Disease-focused Fungal diseases
1995 Eli Lilly Disease-focused and Cardiovascular diseases
technology transfer
1995 Warner-Lambert Target-specific discovery CXCR1,2 chemokine receptor--
inflammation
1994 Warner-Lambert Target-specific discovery CCR2 chemokine receptor--
inflammation
</TABLE>
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CLINICAL PROGRAMS
We have six drug candidates in clinical development. These clinical drug
candidates, our alliance partners for these clinical programs and the current
status of the clinical programs are summarized below:
<TABLE>
<CAPTION>
DISEASE
PRODUCT INDICATION PARTNER CLINICAL PHASE
- ------- ---------------------- ------------------------- ------------------------------
<S> <C> <C> <C>
CAMPATH-Registered Trademark- Cancer (Chronic 50/50 partnership between Biologics License Application
monoclonal lymphocytic leukemia) Millennium and ILEX submitted December 1999
antibody Oncology; distribution
agreement with Schering
AG/ Berlex Laboratories
CAMPATH-Registered Trademark- Multiple Sclerosis Same as above Phase II
monoclonal
antibody
CAMPATH-Registered Trademark- Transplantation Same as above Phase II
monoclonal
antibody
LDP-02 Inflammatory Bowel Genentech Phase IIa
Disease
LDP-977 Asthma Marketing agreement with Phase Ila
Taisho in Asia and Europe
LDP-01 Stroke Not partnered Phase Ila
LDP-341 Cancer Not partnered Phase I
LDP-519 Stroke Not partnered Phase I
</TABLE>
Human clinical trials typically are conducted in three sequential phases,
although phases may overlap. Phase I trials consist of testing the product in a
small number of patients or healthy volunteers, primarily for safety, in one or
more dosages, as well as characterization of a drug's pharmacokinetic or
pharmacodynamic profile. In Phase II, in addition to safety, the efficacy of the
product is evaluated in a patient population. Phase III trials typically involve
additional testing for safety and clinical efficacy in an expanded population at
multiple geographically dispersed sites.
RESEARCH AND DEVELOPMENT PROGRAMS
Using our advanced technology platform, we seek to discover and develop
proprietary therapeutic and diagnostic human healthcare products and services to
detect, treat and manage a broad array of illnesses. We have three therapeutic
fields of major emphasis: oncology, metabolic diseases (including obesity) and
inflammation. We also have significant programs in infectious diseases,
cardiovascular diseases and diseases of the central nervous system. The
following is a summary of our principal research and development programs:
CANCER
In the field of cancer, or oncology, we are engaged in the discovery and
development of both therapeutic and predictive medicine products. In
therapeutics, we are engaged in clinical development of two compounds and in
target and drug discovery, primarily through strategic alliances. In predictive
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medicine, we are developing diagnostic and pharmacogenomics products, primarily
through strategic alliances. Our programs address a variety of cancers,
including leukemia, prostate, breast, lung, colorectal cancer and melanoma.
The following two cancer product candidates are in clinical trials:
THE CAMPATH-REGISTERED TRADEMARK- PRODUCT is a humanized monoclonal antibody
being evaluated for the treatment of patients with chronic lymphocytic leukemia,
which is the most prevalent form of adult leukemia. This product is owned by an
equal partnership between us and ILEX Oncology. The partnership completed the
submission to the FDA in December 1999 of a biologics license application for
the CAMPATH-Registered Trademark- product for patients who are not responsive to
traditional therapy. The FDA has granted fast track status to its review of this
application. The partnership has entered into a worldwide (other than the Far
East) distribution agreement with Schering AG and its affiliate, Berlex
Laboratories. CAMPATH-Registered Trademark- monoclonal antibody has received an
orphan drug designation from the FDA, which may entitle it to a seven-year
exclusivity period in the United States if it is the first drug approved for the
treatment of patients with chronic lymphocytic leukemia.
LDP-341 is a small-molecule drug candidate for the treatment of diverse
cancers, including prostate cancer. We initiated Phase I clinical trials of
LDP-341 in August 1999. LDP-341 has a unique mechanism of action, inhibition of
the proteasome, which is the cellular component responsible for protein
degradation.
We have entered into two strategic alliances for target and drug discovery
and two strategic alliances for predictive medicine in cancer:
LILLY. We have an alliance with Lilly focused on finding small-molecule
drug targets in select areas of cancer, including prostate cancer and mechanisms
of drug resistance. We received three milestone payments from Lilly during 1999
under this alliance for the delivery of two cancer drug candidate genes in
August 1999 and the acceptance of a validated target for prostate cancer drugs
in December 1999.
BAYER. Our multi-disease alliance with Bayer includes discovery of
small-molecule drug targets for areas of cancer outside of our Lilly
collaboration.
BRISTOL-MYERS SQUIBB. Through MPMx, we have an alliance with Bristol-Myers
Squibb in the area of pharmacogenomics for cancer treatment. We and
Bristol-Myers Squibb are seeking to use genetic and related information to
develop new anti-cancer therapies to treat specific patient populations and
tumor types, as well as to tailor existing therapies to individual patients.
BECTON DICKINSON. MPMx has an alliance with Becton Dickinson to develop
tests designed to provide individualized cancer diagnostic and prognostic
information, assist in treatment selection for patients with cancer and improve
the prediction of cancer patient healthcare outcomes. We plan to provide
clinically validated diagnostic markers to Becton Dickinson for skin, cervical,
breast, ovarian, uterine, prostate and colon cancers. A diagnostic marker is a
molecule or substance whose presence or concentration can be measured in a
biological sample taken from a patient, providing useful information about the
patient's status or future prospects with respect to a particular disease or
diseases.
METABOLIC DISEASES
In the field of metabolic diseases, we are engaged in target and drug
discovery, both independently and in a strategic alliance with Bayer.
- OBESITY; TYPE 2 DIABETES. From March 1994 until March 1999, we were
engaged in a strategic alliance with Hoffmann-La Roche in the fields of
obesity and type 2 diabetes. This alliance provided Roche with several
novel targets for obesity drugs, which Roche continues to pursue.
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We will be entitled to milestone payments and royalties in connection with
any drugs Roche succeeds in developing against these targets. Independent
of the Roche alliance, we have identified and validated several additional
targets and lead compounds for the treatment of obesity. Roche does not
have rights to these additional targets or compounds.
- BAYER. Our multi-disease alliance with Bayer includes discovery of
small-molecule drug targets for osteoporosis.
INFLAMMATION
In the field of inflammation, we are engaged in clinical development of four
products, target-specific drug discovery and development programs, primarily in
strategic alliances, and in independent target and drug discovery programs.
Inflammation encompasses a broad spectrum of human diseases and
conditions--including diseases such as asthma, stroke, inflammatory bowel
diseases and rheumatoid arthritis.
The following inflammation products are in clinical trials:
- LDP-977 is a small-molecule drug candidate for the treatment of asthma.
LDP-977 is designed to selectively inhibit the production of leukotrienes,
a class of molecules that plays an important role in bronchial asthma. A
Phase IIa trial of LDP-977 commenced during the fourth quarter of 1999. In
January 2000, we entered into an agreement with Taisho Pharmaceutical
relating to the development, marketing and sale of LDP-977 in Europe and
Asia.
- LDP-519 is a small-molecule drug candidate for the treatment of
post-ischemic reperfusion injury, which is inflammatory damage that occurs
when blood supply to a tissue is restored after an interruption such as
that resulting from organ transplantation, stroke or myocardial
infarction. We initiated a Phase I clinical trial of LDP-519 in
November 1999. As with LDP-341, LDP-519 acts through the inhibition of the
proteasome.
- LDP-02 is a humanized monoclonal antibody for the treatment and management
of patients with inflammatory bowel disease, including ulcerative colitis
and Crohn's disease. We have a collaboration agreement with Genentech for
the development and commercialization of LDP-02. A Phase lla study of
LDP-02 for the treatment of ulcerative colitis was recently completed. We
have not yet received the data from this trial. We expect to initiate a
Phase II trial of LDP-02 for the treatment of Crohn's disease in the first
quarter of 2000.
- LDP-01 is a humanized monoclonal antibody for prevention of post-ischemic
reperfusion injury. We initiated a Phase IIa clinical trial of LDP-01 in
1998. We are aware of third party patents and patent applications that
relate to certain antibodies and their use in the treatment of reperfusion
injury. See "Risk Factors That May Affect Results--Risks Relating to
Intellectual Property--Others may own or control patents or patent
applications and require us to seek licenses or block our
commercialization efforts."
We are also engaged in two strategic alliances and one independent program
for target-specific drug discovery and development in the field of inflammation:
- ROCHE BIOSCIENCE. We have an alliance with Roche Bioscience to develop a
small molecule antagonist of a chemokine receptor known as CCR3 to block
the recruitment of inflammatory cells for the treatment of patients with
asthma and allergies.
- WARNER-LAMBERT AND KYOWA HAKKO. We have related collaboration agreements
with Warner-Lambert and Kyowa Hakko for the discovery and development of
small molecule antagonists to certain chemokine receptors for the
treatment of inflammatory and autoimmune diseases. We also have a
collaboration agreement with Warner-Lambert to discover and optimize small
molecule lead candidates using receptors, related to inflammatory bowel
disease and asthma.
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- TARGET DISCOVERY. From 1995 until 1999, we were engaged in a strategic
alliance with AstraZeneca to discover novel drug targets in the field of
inflammatory respiratory disease. This alliance provided AstraZeneca with
novel targets for respiratory inflammation drugs which AstraZeneca
continues to pursue. We are entitled to receive milestone payments and
royalties in connection with any drugs AstraZeneca succeeds in developing
against these targets and commercialization. Independent of the alliance,
we are undertaking several target and drug discovery projects in the field
of inflammation. AstraZeneca does not have any rights to these targets or
drugs.
INFECTIOUS DISEASES
BACTERIAL INFECTIONS. We are engaged in identifying and validating new
targets for antibacterial drugs and in high-throughput screening to identify
potential lead compounds. We are conducting these activities in collaboration
with American Home Products. During the three years of this alliance we have
delivered nine antibacterial targets to American Home Products, and have
received multiple milestone and bonus payments for doing so.
VIRAL INFECTIONS. We have a strategic alliance with Warner-Lambert for the
discovery and development of a small molecule antagonist to the chemokine
receptors known as CCR5 and CXCR4. Such drugs may be useful in the treatment of
patients infected with HIV and as a therapy for certain inflammatory and
autoimmune diseases.
Our multi-disease collaboration with Bayer includes the discovery of drug
targets that may enable the development of novel small-molecule compounds for
the treatment of patients with certain viral diseases.
FUNGAL INFECTIONS. We are engaged in the identification and validation of
new targets for antifungal drugs and in high-throughput screening to identify
potential lead compounds. We are conducting these activities in a collaboration
with Pfizer.
CARDIOVASCULAR DISEASES
In the field of cardiovascular diseases, we are engaged in the
identification and validation of new drug targets. We are conducting this
activity in collaboration with Eli Lilly in connection with atherosclerosis and
congestive heart failure and with Bayer in connection with other cardiovascular
diseases. In December 1998 we announced that we had delivered a total of five
cardiovascular drug targets to Lilly and had received various milestone payments
in return.
CENTRAL NERVOUS SYSTEM DISEASES
In the field of central nervous system diseases, we are engaged in the
identification and validation of new drug targets for the treatment of affective
disorders, schizophrenia, generalized depression, epilepsy and neurodegenerative
disorders, such as Alzheimer's disease. We have a strategic alliance with
American Home Products in the area of central nervous system diseases. The area
of pain is included in our multi-disease alliance with Bayer. We had previously
delivered two novel genes to American Home Products under this alliance,
receiving milestone payments in return.
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MILLENNIUM PREDICTIVE MEDICINE, INC.
Our majority-owned subsidiary, Millennium Predictive Medicine, Inc., is
applying our technology platform to develop products and services that will
provide clinicians and pharmaceutical researchers with information that enables
them to make better informed decisions about drug treatment and other aspects of
patient management. MPMx initially is focusing its efforts on diagnostics and
pharmacogenomic services. We have generally agreed to transfer to MPMx all
product development opportunities and technology rights in MPMx's core area of
interest, which includes Diagnomics-TM- products, pharmacogenomics and the
provision of patient management services to the healthcare industry.
Reciprocally, MPMx has generally agreed to transfer to us all product
development opportunities and technology rights outside MPMx's core area of
interest.
DIAGNOMICS-TM- PRODUCTS
Many current diagnostic tests are directed towards the symptoms, rather than
the causes, of the diseases that they are used to diagnose or monitor. As a
result, these tests generally provide information only about a patient's current
condition. In contrast, we are developing gene-based diagnostic tests, which we
call Diagnomics-TM- tests, to assess the underlying causes of diseases. We
believe that Diagnomics-TM- products and services will provide information with
inherent prognostic, therapeutic and economic implications, facilitating a shift
in medical care towards planned and cost-effective treatment of the underlying
causes of disease.
The initial focus for MPMx's Diagnomics-TM- program is cancer. In
February 1999, MPMx entered into a strategic alliance with Becton Dickinson
focused primarily on Diagnomics-TM- products for cancer. In conjunction with
Becton Dickinson, MPMx has developed the Melastatin-TM- product, a clinical
marker used to diagnose melanoma. Becton Dickinson plans to introduce the
Melastatin-TM- product to the market by the end of 2000. Although the potential
market for the Melastatin-TM- product is small, we believe that the introduction
of this product will provide initial validation of our Diagnomics-TM- approach.
PHARMACOGENOMICS
Different people often respond in different ways to the same drug. A drug
that is safe and effective in one patient may be toxic or ineffective in
another. We believe that these differences in response reflect underlying
genetic differences between the individuals concerned. Pharmacogenomic studies
seek to establish correlations between specific genetic variations and specific
responses to drugs. By establishing such correlations, pharmacogenomics may
permit both new and existing drugs to be targeted to those patients in whom they
are most likely to be both effective and safe. In November 1999, MPMx entered
into a strategic alliance with Bristol-Myers Squibb focused primarily on the
application of pharmacogenomics to cancer treatments.
TECHNOLOGY ALLIANCES
We are engaged in, and will continue to seek, alliances involving the
transfer of our technology platform.
MONSANTO. We have a broad collaboration with Monsanto relating to the
application of genomics technologies in Monsanto's life-science-based
businesses. In connection with this collaboration, Monsanto has established a
wholly-owned subsidiary, Cereon Genomics, based in Cambridge, Massachusetts. We
have granted Cereon and Monsanto an exclusive license to use our genomics
technologies in plant agriculture and certain aspects of dairy agriculture. We
also granted a non-exclusive license to Monsanto to apply our genomics
technologies outside of these fields.
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OTHER TECHNOLOGY ALLIANCES. Two of our disease-focused alliances with Eli
Lilly and American Home Products also include the transfer of rights in certain
aspects of our technology platform.
THERAPEUTIC PROTEIN ALLIANCE
In May 1997, through MBio, we entered into an alliance with Eli Lilly for
the discovery and development of therapeutic proteins, which are proteins that
can be used directly as drugs. Recently, we reconfigured the collaboration with
Lilly to focus on later-stage therapeutic protein candidates that had already
been identified in the alliance. We waived Lilly's remaining research funding
obligations. We will be entitled to receive milestone payments and royalties on
any drugs developed by Lilly from the pool of protein candidates discovered in
the alliance. We merged MBio into us in December 1999.
RESEARCH AND DEVELOPMENT
Our total research and development expenses were $74.8 million in 1997,
$114.2 million in 1998 and $159.6 million in 1999, not including expenditures by
LeukoSite. LeukoSite's total research and development expenses were
$12.0 million in 1997, $21.1 million in 1998 and $31.7 in 1999. Sponsored
research and development revenues totaled $89.9 million in 1997, $133.7 million
in 1998 and $128.6 million in 1999 for Millennium, and $5.7 million in 1997,
$12.1 million in 1998 and $14.5 million in 1999 for LeukoSite. Sponsored
research and development expenditures totaled $7.6 million in 1997,
$16.8 million in 1998 and $23.1 million in 1999 for Millennium, and
$0.3 million in 1997, $0.4 million in 1998 and $0.9 million in 1999 for
LeukoSite. In 2000 we expect research and development expenditures to increase
significantly over 1999 as personnel are added and research and development
activities are expanded to accommodate existing and any additional strategic
alliances and development efforts, and as a result of the addition, through the
LeukoSite acquisition, of several preclinical product candidates and six product
candidates in clinical trials.
PATENTS AND PROPRIETARY RIGHTS
We generally seek United States and foreign patent protection for the genes,
proteins, antibodies and small molecule drug leads that we discover, as well as
therapeutic, diagnostic and pharmacogenomic products and processes, drug
screening methodologies and other inventions based on such genes, proteins,
antibodies and small molecules. We also seek patent protection or rely upon
trade secret rights to protect certain other technologies which may be used to
discover and characterize genes, proteins, antibodies and small molecules and
which may be used to develop novel therapeutic, diagnostic and pharmacogenomic
products and processes. As of December 31, 1999, we and our subsidiaries owned,
or were the exclusive licensee under, 86 U.S. patents expiring on various dates
through 2018, and more than 750 pending U.S. patent applications. As of
December 31, 1999 we and our subsidiaries owned, or were the exclusive licensee
under, 24 foreign patents and more than 250 pending foreign patent applications,
most of which are counterparts to U.S. patents or patent applications.
We own two issued U.S. patents and several pending U.S. and foreign patent
applications related to the Melastatin-TM- product. We are an exclusive licensee
under two issued U.S. patents and pending U.S. and foreign patent applications
related to LDP-01 and we also own pending U.S. and foreign patent applications
related to LDP-02. We also own issued U.S. patents, granted foreign patents and
pending U.S. and foreign applications related to LDP-977 and an issued U.S.
patent and granted foreign patents and pending U.S. and foreign applications
related to LDP-341. We also are the exclusive licensee of an issued U.S. patent
and pending U.S. and foreign applications and we own pending U.S. and foreign
applications related to LDP-519 and related compounds.
We have entered into several license agreements under which we have acquired
certain rights to use proprietary technologies and compounds. In particular, as
a result of our acquisition of LeukoSite,
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we have exclusive and non-exclusive licenses as set forth in an agreement with
British Technology Group Limited (now BTG International Ltd.) to make, use and
sell products containing the CAMPATH-Registered Trademark- monoclonal antibody.
The agreement requires the payment of royalties to British Technology Group. In
addition, British Technology Group may terminate the license agreement under
certain circumstances, including in the event of a breach of the agreement or if
there is a failure to meet certain commercialization requirements.
In the event our in-licensed rights were terminated or modified, our ability
to manufacture and sell products using the covered technologies would be
materially adversely affected.
GOVERNMENT REGULATION
OVERVIEW OF FDA REGULATIONS
Biological and non-biological drugs, including our products under
development, are subject to extensive and rigorous regulation by the federal
government, principally the FDA, and by state and local governments. Federal and
state statutes and regulations govern, among other things, the research,
development, testing, manufacture, storage, recordkeeping, reporting, labeling,
distribution, promotion and marketing of pharmaceutical and diagnostic device
products. If these products are marketed abroad, they also are subject to export
requirements and to regulation by foreign governments. Failure to comply with
applicable regulatory requirements may subject a company to administrative or
judicially imposed sanctions, such as warning letters, product recalls, product
seizure, injunctions, civil penalties, criminal prosecution, suspension of
production, license revocation, or FDA refusal to approve pending marketing
applications.
The applicable regulatory clearance process, which must be completed prior
to the commercialization of a product, is lengthy and expensive. FDA
requirements for our products under development vary depending upon whether the
product is a non-biological drug or biological drug. We believe that our
monoclonal antibody products currently in human clinical or late preclinical
development (I.E., CAMPATH-Registered Trademark-, LDP-01 and LDP-02 products)
will be regulated by the FDA as biological drugs. Because of the early research
and development stages, we are uncertain as to whether products under
development in our small molecule antagonist program will be regulated as
non-biological drugs or biological drugs.
REGULATION OF NON-BIOLOGICAL DRUGS AND BIOLOGICAL DRUGS
Non-biological drugs and biological drugs are subject to some of the same
laws and regulations. Ultimately, however, they are approved under somewhat
different regulatory frameworks. Product development and approval within either
regulatory framework takes a number of years, involves the expenditure of
substantial resources and is uncertain. Many non-biological drugs and biological
drugs that initially appear promising ultimately do not reach the market because
they are not found to be safe or effective under the standards applied by FDA,
or cannot meet the FDA's other regulatory requirements for product manufacture
and sale. In addition, the current regulatory framework may change or additional
regulations may arise at any stage of our product development that may affect
approval, delay the submission or review of an application or require additional
expenditures by us.
The activities required before a new non-biological drug or biological drug
can be marketed in the United States begin primarily with preclinical testing.
Preclinical tests include laboratory evaluation of product chemistry, toxicology
and other characteristics. Animal studies are used to assess the potential
safety and efficacy of the product as formulated. Many preclinical studies are
regulated by the FDA under the current Good Laboratory Practice, or GLP,
regulations. Violations of these regulations can, in some cases, lead to
invalidation of the studies, requiring such studies to be replicated if the data
are to be submitted to the FDA in support of a marketing application.
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The entire body of preclinical development work necessary to administer
investigational non-biological drugs and biological drugs to human volunteers or
patients is summarized in an investigational new drug application, or IND,
submitted to the FDA. FDA regulations provide that human clinical trials may
begin 30 days following submission of an IND application, unless the FDA advises
otherwise or requests additional information, clarification or additional time
to review the application. Once trials have commenced, investigators must
promptly report all unanticipated risks and adverse events that occur to human
subjects to the Institutional Review Board, or IRB, and the drug sponsor during
clinical trials. The sponsor must promptly report an adverse event that is
unexpected, serious, and possibly drug-related to FDA. The FDA may stop the
trials by placing a "clinical hold" on such trials because of concerns about,
for example, the safety of the product being tested. Such holds can cause
substantial delay and in some cases may require abandonment of a product.
Clinical testing in humans involves the administration of the
investigational non-biological drug or biological drug to healthy volunteers or
to patients under the supervision of a qualified principal investigator, usually
a physician, pursuant to an FDA reviewed protocol. Each clinical study is
conducted under the auspices of an IRB at each academic center, hospital or
other research facility at which the study will be conducted. The IRB must
approve the protocol and informed consent documents before a clinical trial can
proceed. An IRB will consider, among other things, ethical factors, the safety
of human subjects, whether informed consent was properly obtained, and the
possible liability of the institution.
Human clinical trials typically are conducted in three sequential phases,
but the phases may overlap. Phase I clinical trials consist of testing the
product in a small number of patients or normal volunteers, primarily for
safety, in one or more dosages, as well as characterization of a drug's
pharmacokinetic and/or pharmacodynamic profile. In Phase II clinical trials, in
addition to safety, the efficacy of the product is evaluated in a patient
population. Phase III clinical trials typically involve additional testing for
safety and clinical efficacy in an expanded population at multiple
geographically dispersed sites. A clinical plan, or "protocol," accompanied by
the approval of an IRB, is submitted to the FDA prior to commencement of each
clinical trial. The FDA may order the temporary or permanent discontinuation of
a clinical trial at any time for a variety of reasons, particularly if safety
concerns exist.
Upon completion of clinical trials, a company seeking FDA approval to market
a new non-biological drug must file a new drug application, or NDA, with the
FDA. In addition to reports of the preclinical and clinical trials conducted
under the FDA-approved IND application, the NDA includes information pertaining
to the preparation of the drug substance, analytical methods, drug product
formulation, detail on the manufacture of finished products and proposed product
packaging and labeling. In addition to reports of the preclinical and clinical
trials conducted under the FDA-authorized IND application, the marketing
application also includes other data and information relating to the product's
safety and efficacy. The manufacturing facility must also pass an FDA good
manufacturing practices (GMP) inspection before the marketing application can be
approved.
A company seeking FDA approval to market a biological drug is required to
prepare and submit additional information for inclusion in a single biologics
license application, or BLA, which is similar in content to the NDA. To approve
a BLA, the FDA must determine that the product is effective and that the
manufacturing establishment and product meet applicable requirements to ensure
the safety, purity, and potency of the product.
Submission of a standard NDA or BLA does not assure FDA approval for
marketing. After the application is submitted, the FDA initially determines
whether all pertinent data and information have been submitted before accepting
the application for filing. After the application is considered filed, the FDA
begins its substantive review. The FDA also typically will request a review and
recommendation by an advisory committee consisting of outside experts. The
application review process generally takes
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one to three years to complete, although reviews of non-biological drugs and
biological drugs that meet a medical need for serious or life-threatening
diseases may be accelerated or prioritized for a six month review. However, the
process may take substantially longer if, among other things, the information is
not complete, or the FDA has questions or concerns about the safety or efficacy
of a product. Expedited or accelerated approvals may require additional larger
clinical studies to be conducted following approval or a post-marketing study of
existing databases.
In addition, the FDA may, in some circumstances, impose restrictions on the
use of the non-biological drug or biological product that may be difficult and
expensive to administer. Product approval may be withdrawn if compliance with
regulatory requirements is not maintained or if adverse events are reported
after the product reaches the market. The FDA requires reporting of certain
safety and other information that becomes known to a manufacturer of an approved
non-biological drug or biological product. These reports may be voluntarily
provided to the FDA by physicians and other healthcare professionals.
Manufacturing and sale may also be disrupted, or delayed, in the event of
failure to comply with all required current Good Manufacturing Practices, or
cGMP, as determined by FDA investigators in periodic inspections of
manufacturing facilities. In addition, changes in the product or the
manufacturing facility may require the submission of a supplemental NDA or BLA.
Upon approval, a prescription non-biological drug or biological product may
only be marketed for the approved indications in the approved dosage forms and
at the approved dosage. In addition, the nature of marketing claims that we will
be permitted to make in the labeling and advertising of our products will be
limited to those specified in an FDA clearance or approval. Claims exceeding
those that are cleared or approved will constitute violation of the Food, Drug
and Cosmetic Act.
ORPHAN DRUG ACT
Under the Orphan Drug Act, a sponsor of a marketing application may seek to
obtain a seven-year period of marketing exclusivity for a non-biological or
biological 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. Orphan
drugs provide significant tax advantages to a sponsor. Before a product can
receive marketing exclusivity associated with orphan product status, it must
receive orphan product designation. If a product is designated as an orphan drug
or biologic by the FDA and it is the first FDA approved application of the
specified indication, the sponsor receives seven years of marketing exclusivity,
subject to certain limitations.
We have obtained orphan product designation for
CAMPATH-Registered Trademark- monoclonal antibody for the treatment of patients
with chronic lymphocytic leukemia. We may seek such designation for other
products as well. However, other companies may also receive orphan designation
and obtain the FDA marketing approval before we obtain such approval. If another
company obtains marketing approval first and receives seven-year marketing
exclusivity, we would not be permitted by the FDA to market our product in the
United States for the same use during the exclusivity period. In addition, we
could incur substantial costs in asserting any rights to prevent such uses we
may have under the Orphan Drug Act. If we receive seven-year marketing
exclusivity, FDA may rescind the period of exclusivity under certain
circumstances, including our failure to assure a sufficient quantity of the
drug.
The Orphan Drug Act is subject to amendment by Congress, which has
periodically considered amendments that would change the substantive provisions
of the law, including the market exclusivity provisions. There can be no
assurance that the market exclusivity provisions under this Act will still be
the same when the CAMPATH-Registered Trademark- product or other products are
approved.
FOREIGN REGULATIONS
We will also be subject to a variety of foreign regulations governing
clinical trials and sales of our products. Whether or not FDA approval has been
obtained, approval of a product by the comparable
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regulatory authorities of foreign countries must be obtained prior to the
commencement of marketing of the product in those countries. The approval
process varies from country to country and the time may be longer or shorter
than that required for FDA approval.
OTHER REGULATIONS
In addition to regulations enforced by the FDA, we also are subject to
regulation under the Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substances Control Act, the Resource Conservation and
Recovery Act and other present and potential future federal, state or local
regulations. Millennium's research and development involves the controlled use
of hazardous materials, chemicals and various radioactive compounds. Although we
believe that our safety procedures for storing, handling, using and disposing of
such materials comply with the standards prescribed by applicable regulations,
the risk of accidental contaminations or injury from these materials cannot be
completely eliminated. In the event of such an accident, we could be held liable
for any damages that result and any such liability could have a material adverse
effect.
REGULATION OF DIAGNOSTICS
The FDA regulates the development, manufacture, and marketing of medical
devices including diagnostic products and reagents. The FDA has regulations that
set varying requirements for medical devices according to potential risk class.
Class I devices represent the lowest potential risk devices and are therefore
subject only to the general controls that include establishment registration,
product listing, the prohibition of mislabeling or adulteration, and a
requirement to comply with federal Good Manufacturing Practices regulations.
Premarket notification is required for some Class I clinical diagnostic devices.
Class II devices present greater risk than Class I devices and are subject to
special controls, such as guidelines or performance standards, as well as the
same general controls that are applicable to Class I devices. Class II devices
require premarket clearance to demonstrate that the FDA accepts the
manufacturer's claims that the device is substantially equivalent to other
legally marketed devices, and meets generally accepted performance criteria that
may be required to demonstrate that the device is safe and effective. Class III
devices present a higher level of risk and are additionally subject to rigorous
demonstration of safety and effectiveness through the premarket approval
process.
For some Class I and most Class II devices, a premarket notification must be
submitted to the FDA. Usually within 90 days of the receipt of this
notification, the FDA makes the determination whether the device submitted is
substantially equivalent to a legally marketed device. A legally marketed device
is one which was marketed prior to the passage of the Medical Device Amendments
of 1976, or a post 1976 device that has been determined by the FDA to be
substantially equivalent to the previously cleared devices. A determination of
substantial equivalence requires several FDA findings: First, that the device
has the same intended use as the legally marketed device; and second, either
that the device has the same technological characteristics as the legally
marketed device, or, if it does not, that the device is as safe and effective as
the legally marketed device and does not present different questions about
safety and effectiveness. Class III devices require extensive clinical testing
to prove safety and effectiveness, and submission of the resulting data to the
FDA as a premarket approval application (PMA). The FDA ordinarily will refer a
new device premarket approval application to an advisory panel of outside
experts for a recommendation on whether to approve the application or to request
additional testing.
Where a premarket approval application is required, FDA regulations require
the demonstration of safety and effectiveness, typically based upon extensive
clinical trials. Fulfilling the requirements of the premarket approval
application are costly and both the preparation and review are time consuming,
commonly taking from one to several years. Before granting premarket approval,
the FDA must inspect and find acceptable the proposed manufacturing procedures
and facilities. The premarket approval regulations also require FDA approval of
most changes made after the tests have been approved.
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Analyte specific reagents (ASRs) that are used by clinical laboratories to
conduct in-house assays or "home brew" tests are regulated by FDA under this
device classification scheme, and their sale, distribution, and use are
restricted under FDA regulations. The majority of ASRs are Class I and exempt
from premarket notification requirements, although they remain subject to other
FDA requirements such as good manufacturing practices, labeling, and reporting.
Some ASRs are Class II (e.g., for blood bank tests) or Class III (e.g., for HIV
and tuberculosis tests) and are subject to FDA premarket review. ASRs for
genetic testing or predictive genetic testing currently are Class I and exempt
from premarket review, although FDA has announced that the agency may propose
additional regulation of genetic tests if determined appropriate following its
ongoing evaluation of pertinent reports and recommendations.
MANUFACTURING REGULATION
The manufacture of diagnostic products and reagents must be in accordance
with quality system regulations and current federal Good Manufacturing Practices
regulations. Diagnostic products and reagents are also subject to various
postmarketing requirements, such as complaint handling and reporting of adverse
events. Premarket approval products are also subject to annual reports. The FDA
typically inspects manufacturing facilities every two years.
CLINICAL LABORATORY IMPROVEMENT AMENDMENTS OF 1988
All medical testing in the United States is regulated by the Health Care
Financing Administration according to the complexity of the testing as specified
under the Clinical Laboratory Improvement Amendments of 1988. CLIA regulations
establish three categories of laboratory tests, for which regulatory
requirements become increasingly stringent as the complexity of the test rises:
(1) tests that require little or no operator skill, which allows for a
certificate waiver of the regulations; (2) tests of moderate complexity; and
(3) high complexity tests which require significant operator skill or training.
Complexity categorization of diagnostic tests has been the responsibility of the
Centers for Disease Control and Prevention although that responsibility has
recently been transferred to the FDA. CLIA regulatory requirements apply to
facilities such as clinical laboratories, hospitals, and physician offices which
perform laboratory tests. All laboratories are subject to periodic inspection.
In addition, all laboratories performing tests of moderate or high complexity
must register with HCFA or an organization to whom HCFA has delegated such
authority. They also must meet requirements relating to personnel
qualifications, proficiency testing, quality assurance, and quality control. We
expect all genetic tests to be categorized as having moderate to high
complexity. "Home brew" tests using analyte specific reagents must be conducted
in a clinical laboratory meeting the requirements for high-complexity tests. In
practical terms, performing a test of high complexity means that the individual
supervising the test, i.e., the physician, pathologist or laboratory director,
must be appropriately educated and trained, and the laboratory must be certified
for high complexity testing under CLIA.
STATE REGULATION
In additional to federal regulation, certain diagnostic tests will be
subject to a variety of state laws and regulations in those states where our
products may be marketed, sold or used. States also impose requirements on
clinical laboratories and regulate the ordering of laboratory tests, reporting
of test results and confidentiality of medical records.
MANUFACTURING
We have limited manufacturing capabilities and ourselves produce only
certain compounds for research and development and preclinical testing. We rely
on third parties to manufacture most of our compounds for research and
development, and preclinical and clinical trials. We generally expect to rely on
our strategic partners or other third parties to maintain cGMP and to
manufacture the products for which we obtain regulatory approval to market and
sell. Our partnership with ILEX Oncology has
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entered into a supply agreement with Boehringer Ingleheim for the production of
CAMPATH-Registered Trademark- monoclonal antibody. Under most of our
collaboration agreements, our alliance partners have the exclusive right to
manufacture products that result from their programs.
SALES AND MARKETING
We do not currently have any sales and marketing capabilities. We generally
expect to rely on our strategic partners or on other third parties to market any
products that we may develop. Our partnership for the
CAMPATH-Registered Trademark- product has entered into a distribution agreement
with Schering AG and its affiliate, Berlex Laboratories, to distribute the
CAMPATH-Registered Trademark- product on a worldwide basis (other than the Far
East). At some time in the future, we may co-promote or ourselves market one or
more of our products. If we decide to market products ourselves, we will be
required to incur significant additional expenditures and commit significant
additional management resources to develop an external sales force and implement
our sales and marketing strategy.
COMPETITION
We face intense competition from a wide range of pharmaceutical,
biotechnology and diagnostic companies, as well as academic and research
institutions and government agencies. Our competitors include organizations that
are pursuing the same or similar technologies as those which constitute our
technology platform and from organizations that are pursuing pharmaceutical or
diagnostic products that are competitive with our potential products. Many of
our competitors compete against us for strategic alliance partners for their
research and development and commercialization programs. Many of the
organizations competing against us have greater capital resources, research and
development staffs and facilities, experience in drug discovery and development
and in obtaining regulatory approval and pharmaceutical product manufacturing
and marketing capabilities than we have.
Principal competitive factors in our industry include:
- the quality and breadth of an organization's technology;
- the skill of an organization's employees and its ability to recruit and
retain skilled employees;
- an organization's intellectual property estate; and
- the range of capabilities from target identification and validation to
drug discovery and development to manufacturing and marketing.
We believe that the quality and breadth of our technology platform, the
skill of our employees and our ability to recruit and retain skilled employees,
our aggressive program of seeking patent protection for gene discoveries and our
capabilities for early stage research and drug discovery are competitive
strengths. Many large pharmaceutical and biotechnology companies have
significantly larger intellectual property estates than we do and greater
capabilities than we do in preclinical and clinical development, sales,
marketing manufacturing and regulatory affairs.
EMPLOYEES
As of December 31, 1999, we had approximately 952 full-time employees, of
whom approximately 284 hold Ph.D. or M.D. degrees and approximately 219 hold
other advanced degrees. Approximately 763 of our employees are engaged in
research and development activities and approximately 189 are engaged in
business development, finance, operations support and administration. None of
our employees is represented by a collective bargaining agreement, nor have we
experienced work stoppages. We believe that relations with our employees are
good.
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RISK FACTORS THAT MAY AFFECT RESULTS
This Annual Report on Form 10-K, together with the accompanying letter to
shareholders, contains forward-looking statements. For this purpose, any
statements contained herein that are not statements of historical fact may be
considered to be forward-looking statements. Although not a complete list of
words that might identify forward-looking statements, we use the words
"believes," "anticipates," "plans," "expects," "intends" and similar expressions
to identify forward-looking statements. There are a number of important factors
that could cause Millennium's actual results to differ materially from those
indicated by forward-looking statements. Factors that could cause or contribute
to such differences include those discussed below, as well as those discussd
elsewhere in this Form 10-K.
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 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 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
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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.
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.
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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 businesses 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.
If we make additional significant acquisitions in which the consideration
paid includes stock or other securities, our outstanding common stock 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.
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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 under certain circumstances,
including our failure to assure a sufficient quantity of the drug.
RISKS RELATING TO OUR FINANCIAL RESULTS 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 losses in
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.
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
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- The number and scope of our discovery and development programs
- 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.
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
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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.
- 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-.
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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
- 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.
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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.
OTHERS MAY OWN OR CONTROL PATENTS OR PATENT APPLICATIONS AND REQUIRE US TO SEEK
LICENSES OR BLOCK OUR COMMERCIALIZATION EFFORTS
We may not have rights under certain patents or applications related to our
proposed products, processes or services. 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 detailed below, to develop, manufacture,
sell or import certain of our proposed products, processes or services, we or
our alliance partners may choose to seek or be required to seek licenses under
third party patents issued in the United States and abroad or those which might
issue from United States and foreign patent applications. If licenses are not
available to us on acceptable terms, we or our alliance partners may not be able
to develop, manufacture, sell or import these products, processes or services.
With respect to our product candidate LDP-01, we are aware of third party
patents and patent applications which relate to certain anti-CD18 antibodies and
their use in various methods of treatment including methods of reperfusion
therapy and methods of treating focal ischemic stroke. In addition, our LDP-01,
LDP-02, and CAMPATH-Registered Trademark- product candidates are humanized
monoclonal antibodies. We are aware of third party patents and patent
applications which relate to certain humanized or modified
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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 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.
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- 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.
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-Registered Trademark- monoclonal antibody will rely solely upon Schering
AG and its U.S. affiliate, Berlex Laboratories, for the marketing, distribution
and sale of the CAMPATH-Registered Trademark- product throughout the world other
than the Far East. 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.
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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-Registered Trademark- monoclonal
antibody. There are a limited number of manufacturers that operate under the
FDA's good manufacturing practices regulations capable of manufacturing for us.
If we are unable to arrange for third party manufacturing of our products, or to
do so on commercially reasonable terms, we may not be able to complete
development of our products or market them.
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.
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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.
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 OUR CONVERTIBLE SUBORDINATED NOTES
SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS MAY ADVERSELY AFFECT OUR CASH
FLOW
We have substantial amounts of outstanding indebtedness, primarily our 5.50%
Convertible Subordinated Notes due January 15, 2007. 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;
33
<PAGE>
- 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 BE UNABLE TO REPURCHASE OUR OUTSTANDING NOTES AS REQUIRED BY THEIR TERMS
At maturity, the entire outstanding principal amount of our 5.5% convertible
subordinated notes will become due and payable. In addition, if a change in
control, as defined in the indenture relating to the notes, 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 certain 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.
ITEM 2. PROPERTIES
We lease a total of approximately 600,000 square feet of laboratory and
office space in several buildings located in Cambridge, Massachusetts, with the
majority of this space subject to long term leases expiring in 2003, 2013 and
2014. We are in the process of seeking additional space to support our
anticipated growth and expect to enter into additional long term leases during
2000.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders of the Company,
through solicitation of proxies or otherwise, during the last quarter of the
year ended December 31, 1999.
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<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names, ages and positions of the
executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITIONS HELD
- ---- -------- --------------
<S> <C> <C>
Mark J. Levin............................. 49 Chairman of the Board of Directors,
President and Chief Executive Officer
Kenneth J. Conway......................... 51 President of MPMx
John B. Douglas III....................... 46 General Counsel
Steven H. Holtzman........................ 46 Chief Business Officer
John Maraganore, Ph.D..................... 37 Vice President, Strategic Planning and M&A
Christopher K. Mirabelli, Ph.D............ 45 President of Pharmaceutical Research and
Development and Director
Linda K. Pine............................. 48 Senior Vice President, Human Resources
Kevin P. Starr............................ 37 Chief Financial Officer
Robert Tepper, M.D........................ 44 Chief Scientific Officer
</TABLE>
MR. LEVIN has served as our Chairman of the Board of Directors since
March 1996, as our Chief Executive Officer since November 1994 and as a director
of the Company since its inception. From 1987 to 1994, Mr. Levin was a partner
at Mayfield Fund, a venture capital firm, and co-director of its Life Science
Group. While employed with Mayfield, Mr. Levin was the founding Chief Executive
Officer of several biotechnology and biomedical companies, including Cell
Genesys Inc., CytoTherapeutics Inc., Tularik Inc. and Focal, Inc. Mr. Levin
holds an M.S. in Chemical and Biomedical Engineering from Washington University.
Mr. Levin also serves on the Board of Directors of CytoTherapeutics and Tularik.
MR. CONWAY has served as president of Millennium Predictive Medicine, Inc.,
a majority-owned subsidiary of the Company, since its founding in
September 1997, after more than 26 years with Chiron Diagnostics Corporation
(formerly Ciba Corning), a medical diagnostics company, most recently as Senior
Vice President and General Manager of Immuno Diagnostics from 1996 to 1997.
Previously, Mr. Conway was a Member of the Office of the President while
President of the U.S. group of Chiron from 1991 to 1996. Other positions he held
at Chiron include Vice President of several business units, as well as Vice
President of manufacturing at the former Corning Medical.
MR. DOUGLAS has served as our General Counsel since May 1999. Prior to
joining us, Mr. Douglas was engaged in the private practice of law as a sole
practitioner and as a partner at the Boston law firm of Hutchins, Wheeler &
Dittmar from October 1997 until May 1999. Mr. Douglas was previously Senior Vice
President and General Counsel of Apple Computer, Inc., a computer hardware
company, from January to October 1997. Mr. Douglas was Senior or Executive Vice
President and General Counsel of Reebok International Ltd., a sports and fitness
products company, from 1994 to January 1997, and was responsible for several
other corporate staff functions for most of this period, including Real Estate,
Tax, Human Resources and Public Affairs, and he was Vice President and General
Counsel of Reebok from 1986 to 1994. Mr. Douglas received his J.D. from Harvard
Law School and his A.B. from Colgate University.
MR. HOLTZMAN has served as Chief Business Officer of the Company since
May 1994. From 1986 to 1993, Mr. Holtzman was with DNX Corporation, a biomedical
company, and its subsidiaries. He was founder and first employee of DNX, where
he served as a member of the Board of Directors and Executive Vice President.
Mr. Holtzman received his graduate B.Phil. degree in Philosophy from Oxford
University, which he attended as a Rhodes Scholar. Mr. Holtzman currently serves
as the sole biotechnology and pharmaceutical industry representative appointed
to President Clinton's National Bioethics Advisory Commission and is a member of
the Board of Trustees of the Hastings Center.
35
<PAGE>
DR. MARAGANORE was appointed our Vice President, Strategic Planning and M&A
on December 21, 1999. From July 1997 to December 21, 1999, he served as a
director and from May 1997 to December 21, 1999, he served as Vice President and
General Manager, of Millennium BioTherapeutics Inc., a majority-owned subsidiary
of the Company which merged into the Company on December 21, 1999.
Dr. Maraganore served from 1987 to 1997 at Biogen, Inc., a biopharmaceutical
company, serving from 1995 to 1997 as Director of Marketing and Business
Development and from 1992 to 1995 as Director of Biological Research.
Dr. Maraganore received his Ph.D. from the University of Chicago.
DR. MIRABELLI has served as President, Pharmaceutical Research and
Development and a director since December 22, 1999, the date of the LeukoSite
merger. Previously, he was Chairman of the Board of Directors, President and
Chief Executive Officer of LeukoSite, positions he had held since July 1993.
Dr. Mirabelli was a founder of Isis Pharmaceuticals, Inc., a biotechnology
company, where he served as Executive Vice President from 1992 to 1993, Senior
Vice President of Research and Preclinical Development from 1991 to 1992, and
Vice President of Research from 1989 to 1991. Dr. Mirabelli received his B.S. in
Biology from the State University of New York at Fredonia and his Ph.D. in
pharmacology from Baylor College of Medicine.
MS. PINE has served as Senior Vice President, Human Resources of the Company
since October 1994. From 1990 to 1994, Ms. Pine served as Vice President of
Consulting Services for The Survey Group, a regional human resources survey and
consulting firm. From 1982 to 1990, she was Vice President of Human Resources
and Corporate Relations with Collaborative Research, Inc. (now Genome
Therapeutics Corporation). She earned her B.A. from Brandeis University and her
M.P.A. from Northeastern University.
MR. STARR has served as Chief Financial Officer of the Company since
December 1998. From March 1998 to December 1998, he served as the Vice
President, Finance of Millennium BioTherapeutics, Inc., while it was a
majority-owned subsidiary of Millennium. Prior to joining Millennium
Biotheraputics, Mr. Starr held the positions of Corporate Controller and Manager
of Financial Analysis at Biogen from 1991 to 1998. Mr. Starr holds a B.A. degree
in mathematics and business from Colby College and an M.S. degree in corporate
finance from Boston College.
DR. TEPPER has served as Chief Scientific Officer of the Company since
March 1999. He joined us in August 1994 as Director, Biology and then was Vice
President, Biology from January 1996 to November 1997 and Chief Scientific
Officer, Pharmaceuticals from November 1997 to March 1999. From 1990 to 1994,
Dr. Tepper served as Director of the Laboratory of Tumor Biology at
Massachusetts General Hospital Cancer Center where he was the recipient of a
Lucille P. Markey Biomedical Scholar award. Dr. Tepper is also a founder and
member of the Scientific Advisory Board of Cell Genesys Inc. Dr. Tepper received
his M.D. from Harvard Medical School and did his residency in medicine at
Massachusetts General Hospital where he was Chief Resident.
36
<PAGE>
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(A) MARKET PRICE OF AND DIVIDENDS ON MILLENNIUM'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Common Stock of Millennium has been traded on the Nasdaq National Market
under the symbol MLNM since May 6, 1996. Prior to May 6, 1996, Millennium's
Common Stock was not publicly traded. The following table sets forth for the
periods indicated the high and low closing prices per share of our Common Stock
as reported by the Nasdaq National Market.
Our common stock is traded on the Nasdaq National Market under the symbol
"MLNM". The following table reflects the range of the reported high and low last
sale prices on the Nasdaq National Market for the periods indicated.
<TABLE>
<CAPTION>
1999 1998
------------------- -------------------
HIGH LOW HIGH LOW
-------- -------- -------- --------
<S> <C> <C> <C> <C>
First quarter.............................................. $ 38.13 $25.44 $22.38 $17.75
Second quarter............................................. 40.38 30.00 19.00 14.13
Third quarter.............................................. 77.41 36.75 18.69 10.57
Fourth quarter............................................. 141.69 62.25 25.88 14.75
</TABLE>
On February 15, 2000, the closing price per share of our common stock was
$217.75, as reported on The Nasdaq National Market and we had approximately 540
stockholders of record.
We have never declared or paid any cash dividends on our common stock and we
anticipate that we will continue to retain any earnings for the foreseeable
future for use in the operation of our business and that we will not pay any
cash dividends in the foreseeable future.
37
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
MILLENNIUM PHARMACEUTICALS, INC.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 1996 1997 1998 1999
- ----------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
(in thousands, except per share
amounts)
Revenue under strategic alliances..... $ 22,880 $ 31,764 $ 89,933 $ 133,682 $ 183,679
Costs and expenses:
Research and development............ 17,838 34,803 74,828 114,190 159,877
General and administrative.......... 3,292 7,973 16,517 24,419 32,896
Acquired in-process R&D............. -- -- 83,800 -- 350,503
Amortization of intangible assets... -- -- 2,397 2,702 3,816
--------- --------- --------- --------- ---------
21,130 42,776 177,542 141,311 547,092
--------- --------- --------- --------- ---------
Income (loss) from operations......... 1,750 (11,012) (87,609) (7,629) (363,413)
Interest income (expense), net........ (466) 2,244 2,977 3,788 9,473
Minority interest..................... -- -- 3,410 14,179 1,980
--------- --------- --------- --------- ---------
Net income (loss)..................... $ 1,284 $ (8,768) $ (81,222) $ 10,338 $(351,960)
========= ========= ========= ========= =========
Basic net income (loss) per share (pro
forma in 1995 and 1996)............. $ 0.09 $ (0.40) $ (2.87) $ 0.34 $ (10.45)
Shares used in computing basic net
income (loss) per share............. 13,852 21,697 28,323 30,319 36,353
Diluted net income (loss) per share
(pro forma in 1995 and 1996)........ $ 0.07 $ (0.40) $ (2.87) $ 0.33 $ (10.45)
Shares used in computing diluted net
income (loss) per share............. 17,854 21,697 28,323 31,508 36,353
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995 1996 1997 1998 1999
- ----------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Consolidated Balance Sheet Data:
(in thousands)
Cash, cash equivalents and marketable
securities.......................... $ 17,847 $ 63,848 $ 96,557 $ 190,964 $ 261,716
Working capital....................... 10,498 60,273 85,571 178,395 227,347
Total assets.......................... 25,105 87,744 144,513 257,954 541,625
Long-term debt, net of current
portion............................. 1,467 -- -- -- --
Capital lease obligations, net of
current portion..................... 2,499 9,308 19,809 24,827 27,488
Stockholders' equity.................. 13,096 66,639 91,755 206,362 439,406
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Millennium was founded in 1993. We incorporate large-scale genetics,
genomics, high throughput screening, and informatics in an integrated science
and technology platform which we apply primarily in discovering and developing
proprietary therapeutic and diagnostic human healthcare products and services.
We currently derive substantially all of our revenue from strategic alliances
with major pharmaceutical and biotechnology companies.
During 1999, we expanded our operations through internal growth, additional
strategic alliances and acquisitions. We also hired additional staff in research
and drug discovery, informatics, biotherapeutics and diagnostics/prognostics, as
well as in other support areas. In December 1999, we acquired LeukoSite in a
stock-for-stock merger. LeukoSite is a leader in the discovery and development
of therapeutics based upon the biology of leukocytes. Therapeutics developed
using LeukoSite technology may be used to treat cancer and inflammatory,
autoimmune and viral diseases. Through the LeukoSite acquisition, we extended
our pipeline of small molecule and biotherapeutic drug candidates, principally
in the areas of oncology and inflammation, and added several preclinical product
candidates and six product candidates in clinical trials.
To date, all of our revenues have resulted from payments from strategic
partners and United States government research grants. We have not received any
revenue from the sale of products. Our current strategic alliances include the
following: two agreements with the Wyeth-Ayerst Division of American Home
Products in certain disorders of the central nervous system and in bacterial
diseases; an agreement with Bayer in cardiovascular disease, and certain areas
of oncology osteoporosis, pain, liver fibrosis, hematology and viral infections;
and an agreement with Monsanto in plant agriculture. In addition through our
acquisition of LeukoSite we gained the following strategic alliances: a
partnership with ILEX Oncology for product development of
CAMPATH-Registered Trademark-, a monoclonal antibody product for use in the
treatment of chronic lymphocytic leukemia, for which we are currently seeking
FDA regulatory approval; and an agreement, through our joint venture partnership
with ILEX Oncology, with Schering AG/Berlex Laboratories for product
distribution of the CAMPATH-Registered Trademark- product. In addition, we have
a number of other strategic alliances. Our strategic alliance agreements have
provided us with various combinations of equity investments, license fees and
research funding, and may provide certain additional payments contingent upon
the attainment of research and regulatory milestones and royalty and/or profit
sharing payments based on sales of any products resulting from the
collaborations.
During 2000, we expect to continue to pursue additional alliances and to
consider joint development, merger, or acquisition opportunities that may
provide us with access to products on the market or in later stages of
commercial development than those represented within our current programs. We
expect that we will incur increasing expenses and may incur increasing operating
losses for at least the next several years, primarily due to expansion of
facilities and research and development programs, and as a result of efforts to
advance acquired products or our own development programs to commercialization.
Our revenues under strategic alliance and licensing arrangements may fluctuate
from period to period or year to year; these fluctuations, as well as
fluctuations in spending, may result in periods of profitability and periods of
losses. Therefore, our results of operations for any period may not be
indicative of future results of operations.
RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998
For the year ended December 31, 1999 (the "1999 Period"), we reported a net
loss of $352.0 million or $10.45 per basic and diluted share as compared to net
income of $10.3 million or
39
<PAGE>
$0.34 per basic share and $0.33 per diluted share for the year ended
December 31, 1998 (the "1998 Period").
Revenue under strategic alliances increased to $183.7 million for the 1999
Period from $133.7 million for the 1998 Period. During 1999, we recognized
revenue from all nine of our partners in twelve alliances. The 1999 Period
included $82.5 million from Bayer representing a combination of additional
license and research program fees. In addition, during 1999, Monsanto provided
$36.4 million in a combination of program and technology transfer fees,
performance payments for achievement of research objectives, and payments for
administrative and facilities services. During the 1998 Period, we recognized
revenue from all seven of our partners in ten alliances. The 1998 Period
included a $33.4 million one-time payment from Bayer for licenses granted. In
addition, during 1998, Monsanto provided $38.2 million in a combination of
program and technology transfer fees, performance payments for achievement of
research objectives, and payments for administrative and facilities services.
The 1998 Period included a full year of research funding under our eight other
alliances as well. Revenues may fluctuate from period to period and there can be
no assurance that strategic alliance agreements will continue for their initial
term or beyond.
Research and development expenses increased to $159.9 million for the 1999
Period from $114.2 million for the 1998 Period. The increase was primarily
attributable to increased personnel and facilities expenses, increased purchases
of laboratory supplies, costs of external collaborations and increased equipment
depreciation. We expect research and development expenses to continue to
increase as personnel are added and as research and development activities are
expanded to accommodate our existing strategic alliances and development
efforts. As a result of the LeukoSite merger, we expect to incur significant
increases in research and development expense resulting from the addition of
several preclinical product candidates and six product candidates in clinical
trials.
General and administrative expenses increased to $32.9 million for the 1999
Period from $24.4 million for the 1998 Period. The increase was primarily
attributable to increased expenses for additional management and administrative
personnel, as well as to increases in facilities expenses, consulting, and other
professional fees associated with the expansion and increased complexity of our
operations and business development efforts. We expect that general and
administrative expenses will continue to increase as we add capabilities to
support the further advancement of our development efforts.
On December 22, 1999, we acquired LeukoSite for an aggregate purchase price
of $550.4 million primarily consisting of 6,676,933 shares of Common Stock and
884,087 shares of Common Stock issuable upon the exercise of LeukoSite options
and warrants. The transaction has been recorded as a purchase for accounting
purposes and the consolidated financial statements include LeukoSite's operating
results from the date of the acquisition. The purchase price has been allocated,
based upon an independent valuation, to the assets purchased and liabilities
assumed based upon their respective fair values, with the excess of the purchase
price over the estimated fair market value of net tangible assets allocated to
in-process research and development, assembled workforce, core technology, and
goodwill.
Amounts allocated to goodwill, assembled workforce, and core technology are
being amortized on a straight-line basis over a period of four years. The 1999
amortization expense related to these intangibles was $1.1 million. We incurred
a nonrecurring charge to operations of $350.5 million for acquired in-process
research and development. The valuation of acquired in-process research and
development represents the estimated fair value related to incomplete projects
that, at the time of the acquisition, had no alternative future use and for
which technological feasibility had not been established.
The cost approach was used to value assembled workforce. This approach
establishes the fair value of an asset by calculating the recruiting and loss of
productivity costs avoided by obtaining a pre-
40
<PAGE>
existent, trained, and fully efficient team. The income approach was used to
establish the fair values of core technology and in-process research and
development. This approach establishes the fair value of an asset by estimating
the after-tax cash flows attributable to the asset over its useful life and then
discounting these after-tax cash flows back to a present value.
With respect to the value of purchased research and development, we
considered, among other factors, the research and development project's stage of
completion, the complexity of the work completed to date, the costs already
incurred, the projected costs to complete, the contribution of core technologies
and other acquired assets, the projected date to market and the estimated useful
life. The respective after-tax cash flows were then discounted back to present
value using a risk-adjusted discount rate. The discount rates used in the
analysis ranged from 19% to 23 1/4% depending upon the risk profile of the
asset.
We believe that the assumptions used to value the acquired intangibles were
reasonable at the time of the acquisition. No assurance can be given, however,
that the underlying assumptions used to estimate expected project revenues,
development costs or profitability, or the events associated with such projects,
will transpire as estimated. For these reasons, among others, actual results may
vary from the projected results.
The in-process technology acquired from LeukoSite consisted of five
significant research and development projects with values assigned of
$14.8 million to $136.3 million for each project. These included humanized
monoclonal antibodies for the treatment of refractory chronic lymphocytic
leukemia, inflammatory bowel disease and the prevention of post-ischemic
reperfusion, small molecule chemotherapeutic agents, and a small molecule
compound for treatment of bronchial asthma. Acquired in-process technologies
related to preclinical projects consisted of treatments primarily for
inflammatory and autoimmune conditions and diseases, as well as treatments for
asthma and allergies and were assigned values of $85.8 million. Through the
acquisition date, LeukoSite had spent approximately $150 million on in-process
research and development projects. We expect to incur approximately $10 million
to $25 million for each of the four remaining significant projects and
approximately $45 million for all of the projects in preclinical development, to
develop the in-process technology into commercially viable projects.
The estimated stage of completion for acquired research and development
projects ranged from 45% to 95%. Of the five projects acquired, one project
reached completion in late 1999 with the filing of the BLA, while the others,
which are in various stages of Phase I and II clinical trials, are expected to
reach completion in 2003 through 2006. The first of the molecules comprising the
preclinical development portfolio is expected to reach completion in 2006. To
successfully complete the aforementioned projects we will be required to
undertake and complete a number of significant activities, including product
validation, the successful completion of clinical trials, and governmental
regulatory approvals.
Our ability to successfully complete the research and development projects
will be dependent upon numerous factors over which we may have limited or no
control. For a discussion of certain factors which may affect our actual
results, see "Risk Factors That May Affect Results" beginning on page 22 of this
Annual Report on Form 10-K. If these projects are not successfully developed, we
may not realize the value assigned to the in-process technology. Additionally,
the value of the other intangible assets acquired may also become impaired.
Interest income increased to $12.5 million for the 1999 Period from
$6.2 million for the 1998 Period. The increase resulted from an increase in our
average balance of cash, cash equivalents and marketable securities. Interest
expense increased to $3.0 million for the 1999 Period from $2.4 million for the
1998 Period due to increased capital lease obligations.
The minority interest of $2.0 million in 1999 includes the minority
shareholder interest of Lilly in the net loss for the 1999 Period of our
subsidiary, Millennium BioThereapeutics, Inc.("MBio"), as well
41
<PAGE>
as the minority shareholder interest of Becton Dickinson in the net income for
the 1999 Period of our majority owned subsidiary, Millennium Predictive
Medicine Inc.("MPMx"). As of October 14, 1999, Lilly no longer owned a minority
interest in MBio. On December 22, 1999, we merged MBio into us. The minority
interest of $14.2 million in 1998 represents the entire net loss of MBio. This
loss is attributed completely to the minority stockholder because the minority
stockholder provided all equity funding for MBio during 1998.
YEARS ENDED DECEMBER 31, 1998 AND DECEMBER 31, 1997
For the 1998 Period, we reported net income of $10.3 million or $0.34 per
basic share and $0.33 per diluted share as compared to a net loss of
$81.2 million or $2.87 per basic and diluted share for the year ended
December 31, 1997 (the "1997 Period").
Revenue under strategic alliances increased to $133.7 million for the 1998
Period from $89.9 million for the 1997 Period. During the 1998 Period, we
recognized revenue from all seven of our partners in ten alliances. During the
1997 Period, we recognized revenue from six partners, AHP, Astra, Lilly,
Monsanto, Roche and Pfizer in nine alliances. The 1998 Period included a
$33.4 million one-time payment from Bayer. In addition, during 1998, Monsanto
provided $38.2 million in a combination of program and technology transfer fees,
performance payments for achievement of research objectives, and payments for
administrative and facilities services. The 1998 Period included a full year of
research funding under our eight other alliances as well. The 1997 Period
included a one-time license fee of $38 million from Monsanto.
Research and development expenses increased to $114.2 million for the 1998
Period from $74.8 million for the 1997 Period. The increase was primarily
attributable to increased personnel and facilities expenses, increased purchases
of laboratory supplies, external collaborations and increased equipment
depreciation.
General and administrative expenses increased to $24.4 million for the 1998
Period from $16.5 million for the 1997 Period. The increase was primarily
attributable to increased expenses for additional management and administrative
personnel, as well as to increases in facilities expenses, consulting, and other
professional fees associated with the expansion and increased complexity of our
operations and business development efforts.
During 1997, we acquired ChemGenics Pharmaceuticals Inc. ("ChemGenics") for
approximately 4.8 million shares of our common stock at $21.50 per share. In
connection with the ChemGenics acquisition, we incurred a nonrecurring charge of
$83.8 million for acquired in-process research and development in 1997, and
amortization expense of $2.7 million in 1998 and $2.4 million in 1997. The
in-process research and development was charged to operations because, in
management's opinion, technological feasibility for the acquired research and
development had not been established and would require a significant amount of
additional expenditures over a number of years.
Interest income increased to $6.2 million for the 1998 Period from
$4.4 million for the 1997 Period. The increase resulted from an increase in our
average balance of cash, cash equivalents and marketable securities. Interest
expense increased to $2.4 million for the 1998 Period from $1.4 million for the
1997 Period due to increased capital lease obligations.
The minority interest of $14.2 million in 1998 and $3.4 million in 1997
represents the entire net loss of MBio. This loss is attributed completely to
the minority stockholder because the minority stockholder provided all equity
funding for MBio during these periods.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1999, we had approximately $261.7 million in cash, cash
equivalents and marketable securities, an increase of $70.8 million from
December 31, 1998. This excludes $11.2 million of interest-bearing marketable
securities classified as restricted cash and other assets on the balance
42
<PAGE>
sheet which serve as security deposits for certain of our facilities leases. The
increase in cash, cash equivalents and marketable securities is primarily due to
cash provided by operations of $22.0 million, the sale of MPMx capital stock of
$15.0 million to Becton Dickinson and proceeds from exercises of stock options
of $34.1 million. Significant cash outflows included the purchase of
$21.3 million of property and equipment and $9.6 million to pay capital lease
obligations.
In February 1999, the Company's subsidiary, MPMx formed a strategic alliance
in the diagnostics field with Becton Dickinson. On March 31, 1999, Becton
Dickinson made an equity investment in MPMx of $15.0 million, representing
approximately an 11% voting interest in MPMx, and paid a $3.0 million licensing
fee to MPMx.
In January 2000, we completed a sale, pursuant to Rule 144A of the
Securities Act of 1933, of $400 million of 5.5% Convertible Subordinated Notes
due January 15, 2007. The Notes are convertible into shares of our common stock
at any time prior to maturity at a price equal to $168.28 per share, subject to
adjustment, unless previously repurchased or redeemed by us under certain
circumstances. Under the terms of the Notes, we will be required to make
semi-annual interest payments on the outstanding principal balance of the Notes
on January 15th and July 15th of each year.
During 1999, we acquired assets under capital leases totaling
$12.8 million. At December 31, 1999, the aggregate outstanding commitment under
capital lease obligations was $38.5 million. Over the next several years, we
expect capital expenditures to continue at a level at least as significant as
expenditures in 1999 as we expand facilities and acquire equipment to support
increased research and development and other efforts.
As of December 31, 1999, we had net operating loss carryforwards of
approximately $178 million to offset future federal taxable income and
$142.3 million to offset future state taxable income through 2013. Due to the
degree of uncertainty related to the ultimate realization of such prior losses,
no benefit has been recognized as of December 31, 1999. Moreover, our ability to
utilize these losses in future years may be limited under the change of stock
ownership rules of the Internal Revenue Service.
We believe that existing cash, including the proceeds from our January 2000
convertible note offering, our investment securities, and the anticipated cash
flow from our current strategic alliances will be sufficient to support our
existing operations for the near term. Our actual future cash requirements,
however, will depend on many factors, including the progress of our disease
research programs, the number and breadth of these programs, achievement of
milestones under strategic alliance arrangements, acquisitions, our ability to
establish and maintain additional strategic alliance and licensing arrangements,
and the progress of our development efforts and the development efforts of our
strategic partners.
We expect that we will require significant additional financing in the
future, which we may seek to raise through public or private equity offerings,
debt financings, additional strategic alliances or other financing vehicles.
However, we can make no assurance that additional financing, strategic alliances
or licensing arrangements will be available when needed or that, if available,
such financing will be obtained on terms favorable to us or our stockholders.
Our forecast of the period of time through which our financial resources will be
adequate to support our operations is forward-looking information, and, as such,
actual results may vary.
IMPACT OF YEAR 2000
In prior years, we discussed the nature and progress of our plans to prepare
for any system or processing failures which could result from computer programs
recognizing the dates represented as "00" as the year 1900 rather than the year
2000. In late 1999, we completed our remediation and testing of our software and
hardware systems. As a result of our planning and implementation efforts, we
experienced no significant disruptions in mission critical information
technology and non-information technology systems and we believe those systems
successfully responded to the Year 2000
43
<PAGE>
date change. Our costs to date concerning the Year 2000 problem have not been
material. We are not aware of any material problems resulting from Year 2000
issues, either with our product candidates, our internal systems, or the
products and services of third parties. We will continue to monitor our mission
critical computer applications and those of our suppliers and vendors throughout
the year 2000 to ensure that any latent Year 2000 matters that may arise are
addressed promptly.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We maintain an investment portfolio in accordance with our Investment
Policy. The primary objectives of our Investment Policy are to preserve
principal, maintain proper liquidity to meet operating needs and maximize
yields. Although our investments are subject to credit risk, our Investment
Policy specifies credit quality standards for our investments and limits the
amount of credit exposure from any single issue, issuer or type of investment.
Our investments are also subject to interest rate risk. However, due to the
conservative nature of our investments and relatively short duration, interest
rate risk is mitigated. We do not own derivative financial instruments in our
investment portfolio.
The interest rates on our capital lease obligations are fixed and therefore
not subject to interest rate risk.
Accordingly, we do not believe that there is any material market risk
exposure with respect to derivative or other financial instruments which would
require disclosure under this item.
44
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
MILLENNIUM PHARMACEUTICALS, INC.
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Millennium Pharmaceuticals, Inc.
We have audited the accompanying consolidated balance sheets of Millennium
Pharmaceuticals, Inc. as of December 31, 1999 and 1998, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Millennium Pharmaceuticals, Inc. at December 31, 1999 and 1998, and the
consolidated results of operations, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
Ernst & Young LLP
January 27, 2000
Boston, Massachusetts
45
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, 1999 1998
- ------------ --------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................... $ 56,775 $138,284
Marketable securities....................................... 204,941 52,680
Due from strategic partners................................. 11,579 6,660
Prepaid expenses and other current assets................... 13,215 5,033
--------- --------
Total current assets........................................ 286,510 202,657
Property and equipment, net................................. 59,543 38,170
Restricted cash and other assets............................ 12,965 11,416
Intangible assets, net...................................... 182,607 5,711
--------- --------
Total assets................................................ $ 541,625 $257,954
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................ $ 22,953 $ 6,918
Accrued expenses............................................ 17,306 6,186
Deferred revenue............................................ 7,936 2,501
Current portion of capital lease obligations................ 10,968 8,657
--------- --------
Total current liabilities................................... 59,163 24,262
Capital lease obligations, net of current portion........... 27,488 24,827
Minority interest........................................... 15,568 2,503
Commitments and contingencies...............................
STOCKHOLDERS' EQUITY:
Preferred Stock, $0.001 par value; 5,000 shares authorized,
none issued............................................... -- --
Common Stock, $0.001 par value; 100,000 shares authorized;
44,650 shares in 1999 and 34,923 shares in 1998 issued
outstanding............................................... 45 35
Additional paid-in capital.................................. 883,169 296,370
Deferred compensation....................................... (1,055) (957)
Notes receivable from officers.............................. (1,026) (87)
Accumulated other comprehensive income (loss)............... (739) 29
Accumulated deficit......................................... (440,988) (89,028)
--------- --------
Total stockholders' equity.................................. 439,406 206,362
--------- --------
Total liabilities and stockholders' equity.................. $ 541,625 $257,954
========= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
46
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ----------------------- 1999 1998 1997
(IN THOUSANDS, --------- -------- --------
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenue under strategic alliances........................... $ 183,679 $133,682 $ 89,933
Costs and expenses:
Research and development.................................. 159,877 114,190 74,828
General and administrative................................ 32,896 24,419 16,517
Acquired in-process R&D................................... 350,503 -- 83,800
Amortization of intangible assets......................... 3,816 2,702 2,397
--------- -------- --------
547,092 141,311 177,542
--------- -------- --------
Loss from operations........................................ (363,413) (7,629) (87,609)
Interest income............................................. 12,511 6,198 4,412
Interest expense............................................ (3,038) (2,410) (1,435)
Minority interest........................................... 1,980 14,179 3,410
--------- -------- --------
Net income (loss)........................................... $(351,960) $ 10,338 $(81,222)
========= ======== ========
Basic net income (loss) per share........................... $ (10.45) $ 0.34 $ (2.87)
Shares used in computing basic net income (loss) per
share..................................................... 36,353 30,319 28,323
Diluted net income (loss) per share......................... $ (10.45) $ 0.33 $ (2.87)
Shares used in computing diluted net income (loss) per
share..................................................... 36,353 31,508 28,323
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
47
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1999 1998 1997
--------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................... $(351,960) $ 10,338 $(81,222)
Adjustments to reconcile net income (loss) to cash provided
by operating activities:
Acquired in-process R&D..................................... 350,503 -- 83,800
Depreciation and amortization............................... 20,951 16,284 12,168
Minority interest........................................... (1,980) (14,179) (3,410)
Net loss on asset disposal.................................. -- 97 433
Stock compensation.......................................... 4,041 2,029 1,693
Changes in operating assets and liabilities:
Prepaid expenses and other current assets................. (6,166) (438) (1,706)
Due from strategic partners............................... (4,919) (5,882) 4,932
Restricted cash and other assets.......................... (1,126) (6,276) (4,465)
Accounts payable and accrued expenses..................... 9,993 5,645 2,962
Deferred revenue.......................................... 2,654 (552) (1,480)
--------- -------- --------
Net cash provided by operating activities................... 21,991 7,066 13,705
INVESTING ACTIVITIES
Purchase of property and equipment.......................... (21,311) (7,590) (4,256)
Sale of marketable securities............................... 84,950 59,606 58,728
Investment in Transform Pharmaceuticals..................... (107) -- --
Cash acquired through acquisition of ChemGenics............. -- -- 7,087
Cash acquired through acquisition of LeukoSite.............. 11,234 -- --
Purchase of marketable securities........................... (217,805) (84,932) (30,778)
--------- -------- --------
Net cash provided by (used in) investing activities......... (143,039) (32,916) 30,781
FINANCING ACTIVITIES
Proceeds from sale of Common Stock and warrants............. -- 96,600 --
Proceeds from sale of subsidiary stock...................... 15,000 -- 20,000
Net proceeds from employee stock purchases.................. 34,105 5,699 2,039
Payments on long-term debt.................................. -- -- (1,467)
Payments of capital lease obligations....................... (9,566) (7,401) (5,910)
--------- -------- --------
Net cash provided by financing activities................... 39,539 94,898 14,662
--------- -------- --------
Increase (decrease) in cash and cash equivalents............ (81,509) 69,048 59,148
Cash and cash equivalents at beginning of year.............. 138,284 69,236 10,088
--------- -------- --------
Cash and cash equivalents at end of year.................... $ 56,775 $138,284 $ 69,236
========= ======== ========
NONCASH INVESTING AND FINANCING ACTIVITIES:
Equipment acquired under capital leases..................... $ 12,818 $ 15,229 $ 17,426
Deferred compensations relating to issuance of stock
options................................................... 1,059 -- --
Acquisition of LeukoSite, including direct transaction costs
of $2,700................................................. 550,371 -- --
MPI buyout of Lilly interest in MBio........................ 27,944 -- --
Cash paid for interest...................................... 3,038 2,410 1,435
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
48
<PAGE>
MILLENIUMM PHARMACEUTICALS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
NOTES ACCUMULATED
COMMON STOCK ADDITIONAL RECEIVABLE OTHER
--------------------- PAID-IN DEFERRED FROM COMPREHENSIVE ACCUMULATED
(IN THOUSANDS, EXCEPT SHARES) SHARES AMOUNT CAPITAL COMPENSATION OFFICERS INCOME (LOSS) DEFICIT
- ----------------------------- ---------- -------- ---------- ------------ ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996........ 23,914,151 $24 $ 87,790 $(2,768) $ (245) $ (18) $ (18,144)
Issuance of Common Stock............ 4,783,688 5 102,844 (247)
Repurchase of Common Stock.......... (87,130) (23)
Exercise of stock warrants.......... 123,589
Employee stock purchases............ 415,312 2,062
Forgiveness of notes from
officers.......................... 79
Stock compensation expense.......... 370
Write off deferred stock
compensation...................... (119) 119
Stock compensation earned........... 904
408K stock match.................... 19,788 330
Net loss............................ (81,222)
Other comprehensive income.......... 14
Comprehensive loss..................
---------- --- -------- ------- ------- ----- ---------
Balance at December 31, 1997........ 29,169,398 29 193,254 (1,992) (166) (4) (99,366)
Issuance of Common Stock............ 4,957,660 5 96,595
Repurchase of Common Stock.......... (55,200) (23)
Exercise of stock warrants.......... 23,090
Employee stock purchases............ 796,938 1 5,629
Forgiveness of notes from
officers.......................... 79
Stock compensation expense.......... 565
Write off deferred stock
compensation...................... (182) 182
Stock compensation earned........... 853
401K stock match.................... 31,318 532
Net income.......................... 10,338
Other comprehensive income.......... 33
Comprehensive income................
---------- --- -------- ------- ------- ----- ---------
Balance at December 31, 1998........ 34,923,204 $35 $296,370 $ (957) $ (87) $ 29 $ (89,028)
Issuance of Common Stock............ 9,452,999 10 580,523
Repurchase of Common Stock.......... (2,707) (1)
Exercise of stock warrants.......... 126,114
Employee stock purchases............ 122,881 2,226
Issuance of Common Stock in exchange
for note from officer............. (1,026)
Forgiveness of notes from
officers.......................... 87
Deferred stock compensation......... 1,059 (1,059)
Stock compensation expense.......... 1,815
Write off deferred stock
compensation...................... (33) 33
Stock compensation earned........... 928
401K stock match.................... 28,126 1,210
Net income.......................... (351,960)
Other comprehensive loss............ (768)
Comprehensive income................
---------- --- -------- ------- ------- ----- ---------
Balance at December 31, 1999........ 44,650,617 $45 $883,169 $(1,055) $(1,026) $(739) $(440,988)
========== === ======== ======= ======= ===== =========
<CAPTION>
TOTAL
STOCKHOLDERS'
(IN THOUSANDS, EXCEPT SHARES) EQUITY
- ----------------------------- -------------
<S> <C>
Balance at December 31, 1996........ $ 66,639
Issuance of Common Stock............ 102,602
Repurchase of Common Stock.......... (23)
Exercise of stock warrants..........
Employee stock purchases............ 2,062
Forgiveness of notes from
officers.......................... 79
Stock compensation expense.......... 370
Write off deferred stock
compensation......................
Stock compensation earned........... 904
408K stock match.................... 330
Net loss............................ (81,222)
Other comprehensive income.......... 14
---------
Comprehensive loss.................. (81,208)
---------
Balance at December 31, 1997........ 91,755
Issuance of Common Stock............ 96,600
Repurchase of Common Stock.......... (23)
Exercise of stock warrants..........
Employee stock purchases............ 5,630
Forgiveness of notes from
officers.......................... 79
Stock compensation expense.......... 565
Write off deferred stock
compensation......................
Stock compensation earned........... 853
401K stock match.................... 532
Net income.......................... 10,338
Other comprehensive income.......... 33
---------
Comprehensive income................ 10,371
---------
Balance at December 31, 1998........ $ 206,362
Issuance of Common Stock............ 580,533
Repurchase of Common Stock.......... (1)
Exercise of stock warrants..........
Employee stock purchases............ 2,226
Issuance of Common Stock in exchange
for note from officer............. (1,026)
Forgiveness of notes from
officers.......................... 87
Deferred stock compensation.........
Stock compensation expense.......... 1,815
Write off deferred stock
compensation......................
Stock compensation earned........... 928
401K stock match.................... 1,210
Net income.......................... (351,960)
Other comprehensive loss............ (768)
---------
Comprehensive income................ (352,728)
---------
Balance at December 31, 1999........ $ 439,406
=========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
49
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
[1] BASIS OF PRESENTATION
THE COMPANY
Millennium Pharmaceuticals, Inc. incorporates large-scale genetics,
genomics, high throughput screening, and informatics in an integrated science
and technology platform. Millennium applies this technology platform primarily
in discovering and developing proprietary therapeutic and diagnostic human
healthcare products and services. The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiary, Millennium
BioTherapeutics, Inc. ("MBio"), and its 89%-owned subsidiary, Millennium
Predictive Medicine, Inc. ("MPMx"). As more fully described in Note 3, in
December 1999, MBio was merged into the Company. As more fully described in
Note 4, the consolidated financial statements also include the accounts of
LeukoSite, Inc. subsequent to December 22, 1999. All intercompany transactions
have been eliminated in consolidation.
RISKS AND UNCERTAINTIES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
[2] SIGNIFICANT ACCOUNTING POLICIES
CASH EQUIVALENTS AND MARKETABLE SECURITIES
Cash equivalents consist principally of money market funds and corporate
bonds with original maturities of three months or less at the date of purchase.
Cash equivalents and marketable securities at December 31, 1999 and 1998 are
classified as available-for-sale.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of cash equivalents and marketable
securities. The Company's cash equivalents and marketable securities are held by
high-credit-quality financial institutions. By policy, the Company limits the
credit exposure to any one financial institution. At December 31, 1999, the
Company had no significant concentrations of credit risk.
PROPERTY AND EQUIPMENT
Equipment consists principally of assets held under capitalized leases and
is stated at the present value of future minimum lease obligations. Depreciation
is recorded over the shorter of the estimated useful life or the term of the
lease using the straight-line method. Leasehold improvements are stated at cost
and are amortized over the remaining life of the building lease.
INTANGIBLE ASSETS
Intangible assets as of December 31, 1999 consist of goodwill and other
intangibles. Goodwill and other intangible assets recorded in connection with
the 1999 acquisition of LeukoSite, Inc. (See Note 4) are being amortized over a
period of four years. Goodwill recorded in connection with the 1997 acquisition
of ChemGenics Pharmaceuticals, Inc. is also being amortized over a period of
four years. Amortization expense for all intangible assets was $3.8 million,
$2.7 million, and $2.4 million in 1999,
50
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[2] SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
1998 and 1997, respectively. Accumulated amortization for all intangible assets
was $8.9 million, $5.1 million and $2.4 million at December 31, 1999, 1998 and
1997, respectively. On a periodic basis, the Company estimates the future
undiscounted cash flows of the businesses to which the intangible assets relate
in order to ensure that the carrying value of such intangible assets has not
been impaired.
REVENUE RECOGNITION
The Company recognizes revenue under strategic alliances as research
services are performed, reimbursable expenses are incurred, certain milestones
are achieved or license fees are earned.
STOCK-BASED COMPENSATION
The Company has elected to follow Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25), in accounting for
its stock-based compensation plans, rather than the alternative fair value
accounting method provided for under Financial Accounting Standards Board
("FASB") Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation," as this alternative requires the use
of option valuation models that were not developed for use in valuing employee
stock options. Under APB 25, when the exercise price of options granted under
these plans equals the market price of the underlying stock on the date of
grant, no compensation expense is required.
ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1998, the Company adopted SFAS No. 131, "Disclosures
about Segments of an Enterprise and Related Information." SFAS No. 131
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and interim
financial reports. SFAS No. 131 also established standards for related
disclosures about products and services, geographic areas and major customers.
The adoption of SFAS No. 131 did not affect results of operations or financial
position. The Company has identified three operating segments which, under the
applicable provision of SFAS No. 131, have been aggregated into one reportable
segment. The Company conducts business exclusively in the United States.
In June 1998, the FASB issued SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities." The effective date of this statement was
deferred to fiscal years beginning after June 15, 2000 by SFAS 137 "Accounting
for Derivative Instruments and Hedging Activities--Deferral of the Effective
Date of SFAS 133." The Company believes the adoption of this new accounting
standard will not have a significant effect to its financial statements as the
Company's investment policies prohibit the use of derivatives.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements"
(SAB 101) which provides guidance related to revenue recognition based on
interpretations and practices followed by the SEC. SAB 101 is effective the
first fiscal quarter of fiscal years beginning after December 15, 1999 and
requires companies to report any changes in revenue recognition as a cumulative
change in accounting principle at the time of implementation in accordance with
APB Opinion No. 20, "Accounting Changes." The Company is currently in the
process of evaluating what impact, if any, SAB 101 will have on the financial
position or results of operations of the Company.
51
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[2] SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
The liability method is used to account for income taxes. Deferred tax
assets and liabilities are determined based on differences between financial
reporting and income tax bases of assets and liabilities, as well as net
operating loss carryforwards, and are measured using the enacted tax rates and
laws that will be in effect when the differences reverse. Deferred tax assets
may be reduced by a valuation allowance to reflect the uncertainty associated
with their ultimate realization.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts reported in the Company's balance sheets for other
current assets and long-term debt approximate their fair value. The fair values
of the Company's long-term debt are estimated using discounted cash flow
analyses based on the Company's current incremental borrowing rates for similar
types of borrowing arrangements.
[3] SUBSIDIARIES
MILLENNIUM BIOTHERAPEUTICS, INC.
In May 1997, the Company established Millennium BioTherapeutics, Inc.
("MBio") as a subsidiary and, pursuant to a Technology Transfer and License
Agreement, transferred and/or licensed certain technology to MBio in exchange
for 9,000,000 shares of the subsidiary's Series A Convertible Preferred Stock.
At that time, MBio entered into a strategic alliance with Lilly for the
discovery and development of novel therapeutic proteins. Under the terms of a
related stock purchase agreement, Lilly purchased $20 million of Series B
Convertible Preferred Stock of MBio for an approximate 18% equity interest in
MBio. The accompanying consolidated financial statements include the accounts of
MBio since inception. The minority interest in the accompanying consolidated
balance sheets reflects the equity interest of Lilly in MBio as of December 31,
1998 and the minority interest in the accompanying consolidated statements of
operations includes the minority stockholder's interest in the net loss of MBio
for the years ended December 31, 1999, 1998 and 1997.
In October 1999, Lilly was issued approximately 375,000 shares of Millennium
Common Stock in exchange for all shares of MBio Series B Convertible Preferred
Stock owned by it. Also in October 1999, MBio amended the terms of its strategic
alliance with Lilly. Under the amendment, the research program was refocused
from the discovery of new therapeutic proteins to further development of the
therapeutic proteins which had been identified in the course of the research
program. In December 1999, MBio was merged with and into the Company. Each share
of Class B Common Stock of MBio was converted into Millennium Common Stock.
The Company had entered into certain agreements with this subsidiary to
provide specific services and facilities at negotiated fees. Such fees amounted
to $10.5 million and $12.5 million in 1999 and 1998, respectively. The Company
had subleased approximately $0.6 million of equipment to MBio under an existing
capital lease agreement. All such intercompany transactions have been eliminated
in consolidation.
MILLENNIUM PREDICTIVE MEDICINE, INC.
In September 1997, the Company established a wholly-owned subsidiary,
Millennium Predictive Medicine, Inc. ("MPMx"), to develop products and services
to optimize the prevention, diagnosis,
52
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[3] SUBSIDIARIES (CONTINUED)
treatment and management of disease. In February 1999, MPMx announced the
formation of a strategic alliance in the diagnostic field with Becton, Dickinson
and Company ("Becton Dickinson"). In March 1999, Becton Dickinson made an equity
investment in MPMx of $15 million, representing approximately an 11% voting
interest in MPMx, and paid a $3.0 million licensing fee to MPMx. The minority
interest in the accompanying consolidated balance sheets represents the equity
interest of Becton Dickinson in MPMx as of December 31, 1999 and the minority
interest in the accompanying consolidated statements of operations includes the
minority stockholder's interest in the net profit of MPMx for the year ended
December 31, 1999. All intercompany transactions with this subsidiary have been
eliminated in consolidation.
[4] LEUKOSITE MERGER
On December 22, 1999, the Company acquired LeukoSite, Inc. ("LeukoSite") for
an aggregate purchase price of $550.4 million primarily consisting of
6,676,933 shares of Common Stock and 884,087 shares of Common Stock issuable
upon the exercise of LeukoSite options and warrants. The value of the common
stock issued in connection with this merger was calculated using a fair value of
$74.52 per share. This per share fair value represents the average closing price
of the Company's common stock on the date the merger was announced. Common stock
issuable upon exercise of LeukoSite options and warrants was assigned a fair
value using the Black-Scholes method. The transaction has been recorded as a
purchase for accounting purposes and the consolidated financial statements
include LeukoSite's operating results from the date of the acquisition. The
purchase price has been allocated to the assets purchased and liabilities
assumed based upon their respective fair values, with the excess of the purchase
price over the estimated fair market value of net tangible assets allocated to
specific intangible assets and goodwill as follows:
<TABLE>
<CAPTION>
<S> <C>
(In Thousands)
Goodwill.................................................... $159,080
Assembled workforce......................................... 2,920
Core technology............................................. 18,712
In-process research and development......................... 350,503
--------
Total Allocated to Intangibles.......................... $531,215
========
</TABLE>
Amounts allocated to goodwill, assembled workforce, and core technology are
being amortized on a straight-line basis over a period of four years. The 1999
amortization expense related to these items was $1.1 million. The Company
incurred a nonrecurring charge to operations of $350.5 million for acquired
in-process research and development. The valuation of acquired in-process
research and development represents the estimated fair value related to
incomplete projects that, at the time of the acquisition, had no alternative
future use and for which technological feasibility had not been established.
The cost approach was used to value assembled workforce. This approach
establishes the fair value of an asset by calculating the recruiting and loss of
productivity costs avoided by obtaining a pre-existent, trained, and fully
efficient team. To calculate avoided recruiting costs, a unit cost for hiring an
employee equivalent to each of those transferred to the Company was calculated
and applied to each
53
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[4] LEUKOSITE MERGER (CONTINUED)
employee acquired. The avoided loss in productivity was calculated by
quantifying the time required for an employee to reach full productivity and
applying that amount to each employee's total average cost.
The income approach was used to establish the fair values of core technology
and in-process research and development. This approach establishes the fair
value of an asset by estimating the after-tax cash flows attributable to the
asset over its useful life and then discounting these after-tax cash flows back
to a present value. The discounting process uses a rate of return commensurate
with the time value of money and investment risk factors. Accordingly, for the
purpose of establishing the fair value of core technology and in-process
research and development, revenues for each future period were estimated, along
with costs, expenses, taxes and other charges. Revenue estimates were based on
estimates of relevant market sizes and growth factors, expected trends in
technology and the nature and expected timing of new product introductions by
the Company and its competitors.
With respect to the value of purchased research and development, the Company
considered, among other factors, the research and development project's stage of
completion, the complexity of the work completed to date, the costs already
incurred, the projected costs to complete, the contribution of core technologies
and other acquired assets, the projected date to market and the estimated useful
life. The respective after-tax cash flows were then discounted back to present
value using a risk-adjusted discount rate. The discount rates used in the
LeukoSite analysis ranged from 19% to 23 1/4%, depending upon the risk profile
of the asset.
The most significant purchased research and development projects that were
in-process at the date of the acquisition consisted of a chemotherapeutic agent,
a humanized monoclonal antibody for oncology and non-oncology indications, and
10 molecules in preclinical development. In aggregate these projects represent
approximately 83% of the in-process value. The chemotherapeutic agent represents
approximately 39% of the in-process research and development value. Key
assumptions used in the analysis of the chemotherapeutic agent included gross
margins of 95% and a discount rate of 22%. The chemotherapeutic agent is a new
class of small molecules that acts by inhibiting the proteasome, the complex of
a cell which regulates the breakdown of proteins that are critical for cell
proliferation. As of the date of the acquisition, the project was expected to be
completed and commercially available in the U.S. in 2006, with an estimated cost
to complete of approximately $15 to $20 million.
The humanized monoclonal antibody represents approximately 20% of the
in-process research and development value. Key assumptions used in the analysis
of this project included gross margins of 100%, as revenue is royalty based, and
a discount rate of 19%. The primary indication for this humanized monoclonal
antibody relates to the treatment of refractory chronic lymphocytic leukemia.
The antibody works by binding to an antigen found on leukemia cells, thus
triggering their destruction. As of the date of the acquisition, the BLA for the
treatment of refractory chronic lymphocytic leukemia was expected to be
completed by the end of 1999 and the product commercially available in the U.S.
in 2000. The clinical trials for the other indications for the humanized
monoclonal antibody are expected to be completed and products commercially
available in the U.S. between 2003 and 2004. As the BLA was near completion as
of the acquisition date and the clinical trials for the other indications build
substantially on work already performed, the estimated cost to complete these
projects is not considered significant.
The portfolio of molecules in preclinical development represents
approximately 24% of the in-process research and development value. As these
products are expected to be partnered, revenue will
54
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[4] LEUKOSITE MERGER (CONTINUED)
be royalty based. Therefore, gross margins of 100% were used in the analysis.
The discount rate used in valuing the portfolio of preclinical molecules was
23 1/4%. Molecules in preclinical development relate primarily to treatments for
inflammatory and autoimmune conditions and diseases, as well as treatments for
asthma and allergies. Of the ten molecules in the preclinical portfolio, the
first molecules are expected to be completed and commercially available in the
U.S. in 2005 with the remaining molecules expected to be completed and
commercially available in the U.S. between 2006 and 2008. The estimated cost to
complete all projects in preclinical development is approximately $40 to
$45 million.
The major risk associated with the timely completion and commercialization
of these products is the ability to confirm the safety and efficacy of the
technology based on the data of long-term clinical trials. If these projects are
not successfully developed, future results of operations of the Company may be
adversely affected. Additionally, the value of the other intangible assets
acquired may become impaired.
The Company believes that the assumptions used to value the acquired
intangibles were reasonable at the time of the acquisition. No assurance can be
given, however, that the underlying assumptions used to estimate expected
project revenues, development costs or profitability, or the events associated
with such projects, will transpire as estimated. For these reasons, among
others, actual results may vary from the projected results.
The following unaudited pro forma consolidated results of operations have
been prepared as if the acquisition of LeukoSite had occurred as of January 1,
1998:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998
- ----------------------- -------- --------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Pro Forma:
Revenues under strategic alliances.......................... $198,150 $147,266
Cost and expenses........................................... 278,401 203,532
-------- --------
Net loss.................................................... $(80,251) $(56,266)
======== ========
Net loss per share.......................................... $ (1.87) $ (1.52)
Shares used in calculating net loss per share............... 42,866 36,896
</TABLE>
The pro forma net loss and net loss per share amounts for each period above
exclude the acquired in-process research and development charge. The pro forma
consolidated results do not purport to be indicative of results that would have
occurred had the acquisition been in effect for the periods presented, nor do
they purport to be indicative of the results that will be obtained in the
future.
[5] REVENUES--STRATEGIC ALLIANCES
The Company has formed strategic alliances with major participants in
marketplaces where its discovery expertise and technology platform are
applicable. These agreements include alliances based on the transfer of the
Company's technology platform, alliances which combine technology transfer with
a focus on a specific disease or therapeutic approach, and disease-focused
programs under which the Company conducts research funded by its partners. The
Company's disease-based alliances and alliances which combine
technology-transfer with a disease focus are generally structured as research
55
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[5] REVENUES--STRATEGIC ALLIANCES (CONTINUED)
collaborations. Under these arrangements, the Company performs research in a
specific disease area aimed at discoveries leading to novel pharmaceutical
(small molecule) products. These alliances generally provide research funding
over an initial period, with renewal provisions, which vary by agreement. Under
these agreements, the Company's partners are required to make additional
payments upon the achievement of specific research and product development
milestones, and will pay royalties or in some cases profit-sharing payments to
the Company based upon any product sales resulting from the collaboration.
SIGNIFICANT ALLIANCES BEGINNING IN 1999
On February 22, 1999, MPMx and Becton, Dickinson and Company ("Becton
Dickinson") formed a strategic alliance in the diagnostic field. The five-year,
genomics-based research collaboration focuses on several areas of oncology.
Under the alliance, MPMx has agreed to undertake a research program to identify
genetic markers and related assays that may be used to develop diagnostic
products for several types of cancer. Becton Dickinson has agreed to manufacture
and market any products that result from the research of MPMx, and MPMx will
receive a royalty based upon gross profits from any related product sales. On
March 31, 1999, Becton Dickinson made an equity investment in MPMx of
$15.0 million, representing approximately an 11% voting interest in MPMx, and
paid a $3.0 million licensing fee to MPMx. Becton Dickinson has agreed to pay
MPMx up to $51.5 million in research funding and additional annual license fees,
provided the alliance continues for the full five-year term. Becton Dickinson
has agreed to pay milestones and royalties to MPMx in connection with the
commercialization and sale of any products developed through the alliance.
Through its merger with LeukoSite, the Company became a party to a joint
venture agreement with ILEX Oncology, Inc. (ILEX), to form L&I Partners, L.P.
(L&I), for the purpose of developing and commercializing the
CAMPATH-Registered Trademark- monoclonal antibody product. In August 1999, L&I,
the joint venture, and Schering AG entered into a distribution and development
agreement which grants Schering AG exclusive marketing and distribution rights
to the CAMPATH-Registered Trademark- product in the U.S., Europe and the rest of
the world except Japan and East Asia, where L&I has retained rights. In the
United States, Berlex Laboratories, Inc., Schering's U.S. affiliate, and L&I
will share in the profits from the sale of the CAMPATH-Registered Trademark-
product. On sales made in the rest of the territory, Schering AG has agreed to
pay royalties equivalent to the rate of profit sharing expected in the U.S.
Under the terms of the agreement, Schering has agreed to make payments of up to
$30 million for rights to the CAMPATH-Registered Trademark- product upon the
achievement of certain regulatory milestones. The joint venture currently
intends to use these funds to pay for ongoing development activity. In
December 1999, the Company and ILEX submitted a Biologics License Application
(BLA) to the United States Food and Drug Administration seeking marketing
approval of the CAMPATH-Registered Trademark- product. The Company accounts for
its investment in the joint venture under the equity method of accounting and
records its share of the income or loss in other income (expense). The Company
is reimbursed by the joint venture for certain costs incurred on behalf of the
joint venture; these amounts have been recorded as revenue by the Company.
SIGNIFICANT ALLIANCES BEGINNING IN 1998
In September 1998, the Company entered into a strategic alliance with Bayer
AG ("Bayer"). In November 1998, Bayer made an equity investment of
$96.6 million for approximately 4.96 million
56
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[5] REVENUES--STRATEGIC ALLIANCES (CONTINUED)
shares of Millennium common stock. The primary goal of the alliance is for the
Company to supply 225 drug targets to Bayer over a period of five years. These
targets will be identified as relevant for cardiovascular disease, areas of
oncology not covered by Millennium's alliance with Lilly, osteoporosis, pain,
liver fibrosis, hematology and viral infections. Future anticipated payments
over the full alliance term include $219 million of ongoing license and research
program funding, as well as a potential of up to $116 million of performance
payments for delivery of targets. Bayer has the right to cancel the agreement
after two and three years if certain minimum target delivery objectives are not
met. Millennium realized $82.5 million in revenues associated with license fees
and research program funding in 1999, and $33.4 million in revenues in the form
of an upfront payment in 1998.
SIGNIFICANT ALLIANCES BEGINNING IN 1997 AND EARLIER
In October 1997, the Company entered into a technology transfer alliance
through a collaborative agreement with Monsanto Company ("Monsanto"). Under this
agreement, the Company granted to Monsanto exclusive rights to its technologies
in the field of plant agriculture, as well as a nonexclusive license to its
technologies outside the plant agriculture field. The Company has agreed to
collaborate exclusively with Monsanto in the application of those technologies
through the establishment of a subsidiary wholly owned by Monsanto. Monsanto
agreed to pay $118 million in licensing and technology transfer fees over the
five-year term of the agreement. Monsanto may also pay the Company up to
$100 million over five years, contingent upon the achievement of mutually
agreed-upon research objectives. Millennium may also receive royalty payments
from the sale of products, if any, originating from the research conducted by
the Monsanto subsidiary. Millennium realized $36.4 million and $38.2 million in
revenues associated with technology transfer and license fees, achievement of
mutually agreed-upon research objectives, and administrative services under the
agreement in 1999 and 1998, respectively, and $38.0 million in revenues in the
form of an up-front payment in 1997.
In July 1996, the Company entered into a strategic alliance with AHP to
discover and develop targets and assays to identify and develop small molecule
drugs and vaccines for treatment and prevention of disorders of the central
nervous system. In addition, this agreement provides for the license and
transfer of certain technology to AHP. If certain specified research objectives
are not met, AHP may terminate the agreement in September of 2000 or 2001. In
August 1999, the Company extended its collaboration in the area of central
nervous system disorders for at least an additional two years.
57
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[6] MARKETABLE SECURITIES
Marketable securities consist of high-grade corporate bonds, which are
carried at fair value, with the unrealized gains and losses reported in a
separate component of stockholders' equity. There have been no realized gains or
losses on sales of any securities in 1999, 1998 or 1997.
The amortized cost and estimated fair value of debt securities at
December 31, by contractual maturity, are shown below ($ in thousands):
<TABLE>
<CAPTION>
1999 1998
--------------------- ---------------------
ESTIMATED ESTIMATED
COST FAIR VALUE COST FAIR VALUE
-------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Due in one year or less.............................. $ 64,918 $ 64,910 $37,406 $37,435
Due in one year to two years......................... 140,762 140,031 15,245 15,245
-------- -------- ------- -------
$205,680 $204,941 $52,651 $52,680
======== ======== ======= =======
</TABLE>
[7] PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31 ($ in
thousands):
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Equipment................................................. $77,094 $52,921
Leasehold improvements and construction in progress....... 24,116 9,779
------- -------
101,210 62,700
Less accumulated depreciation and amortization............ 41,667 24,530
------- -------
$59,543 $38,170
======= =======
</TABLE>
58
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[8] COMMITMENTS
LEASE COMMITMENTS
The Company conducts the majority of its operations in leased facilities
with leased equipment. At December 31, 1999 and 1998, respectively, the Company
has capitalized leased equipment totaling $59.2 million and $46.4 million, with
related accumulated amortization of $29.2 million and $21.2 million.
Amortization expense related to capitalized leased equipment is included in
depreciation expense.
The Company leases its laboratory and office space under operating lease
agreements with various terms and renewal options, including major facilities
with lease expirations in 2003, 2013 and 2014. In addition to minimum lease
commitments, these lease agreements require the Company to pay its pro rata
share of property taxes and building operating expenses. At December 31, 1999,
the Company has pledged $3.1 million of marketable securities as security for
one letter of credit for the same amount with the purpose of securing one of the
leased facilities. In addition, approximately $8.0 million is being held as a
security deposit on another one of the leased facilities.
At December 31, 1999, future minimum commitments under leases with
noncancelable terms of more than one year are as follows ($ in thousands):
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
-------- ---------
<S> <C> <C>
Year:
2000................................................... $13,325 $ 17,991
2001................................................... 13,389 17,122
2002................................................... 11,444 15,627
2003................................................... 5,777 14,358
2004................................................... 1,873 10,719
Thereafter............................................. -- 86,905
------- --------
Total.................................................... 45,808 $162,722
========
Less amount representing interest........................ 7,352
-------
Present value of minimum lease payments.................. 38,456
Less current portion of capital lease obligations........ 10,968
-------
Capital lease obligations................................ $27,488
=======
</TABLE>
Total rent expense was $15.1 million in 1999, $8.5 million in 1998, and
$4.2 million in 1997. Sublease rental income in the amount of $0.5 million was
recorded in 1999. Interest paid under all financing and leasing arrangements
during 1999, 1998, and 1997 approximated interest expense.
EXTERNAL COLLABORATIONS
The Company funds research efforts of various academic collaborators in
connection with its research and development programs. Total future fixed
commitments under these agreements are approximately $5.7 million in 2000,
$4.3 million in 2001 and $1.3 million in 2002.
59
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[9] STOCKHOLDERS' EQUITY
PREFERRED STOCK
The Company has 5,000,000 authorized shares of Preferred Stock, $0.001 par
value, issuable in one or more series, each of such series to have such rights
and preferences, including voting rights, dividend rights, conversion rights,
redemption privileges and liquidation preferences, as shall be determined by the
Board of Directors.
COMMON STOCK WARRANTS
At December 31, 1999, the Company has outstanding exercisable warrants to
purchase 351,550 shares of Common Stock with a weighted-average exercise price
of $14.39 per share, which expire through 2007.
STOCK OPTION PLANS
The 1993 Incentive Stock Plan (the 1993 Plan) allows for the granting of
incentive and nonstatutory options to purchase up to 5,400,000 shares of Common
Stock. Incentive options granted to employees generally vest over a four-year
period. Nonstatutory options granted to consultants and other nonemployees
generally vest over the period of service to the Company. In December 1995, the
Company amended the terms of outstanding option agreements to allow option
holders the right to immediately exercise outstanding options, with the
subsequent share issuances being subject to a repurchase option by the Company
under certain conditions according to the original option vesting schedule and
exercise price. At December 31, 1999, 19,881 shares issued under the 1993 Plan
are subject to the Company's repurchase option.
The 1996 Equity Incentive Plan (the 1996 Plan) is substantially consistent
with the terms of the 1993 Plan and, as amended, provides for the granting of
options to purchase 5,600,000 shares of Common Stock.
The 1996 Director Option Plan (the Director Plan) provides that, upon
adoption, each then-eligible nonemployee director be granted a nonstatutory
option to purchase 20,000 shares of Common Stock. Thereafter, each new
nonemployee director will be granted a nonstatutory option to purchase 30,000
shares of Common Stock upon election to the Board of Directors. Upon completion
of the vesting of each option grant under the Director Plan, each nonemployee
director will be granted a new nonstatutory option to purchase 20,000 shares of
Common Stock. All options will be issued at the then fair market value of the
Common Stock, vest ratably over four years and expire ten years after date of
grant. A total of 250,000 shares of Common Stock have been reserved for issuance
under the Director Plan.
Under the Employee Stock Purchase Plan (the Stock Purchase Plan), eligible
employees may purchase Common Stock at a price per share equal to 85% of the
lower of the fair market value of the Common Stock at the beginning or end of
each offering period. Participation in the offering is limited to 10% of the
employee's compensation or $25,000 in any calendar year. The first offering
period began on October 1, 1996. A total of 650,000 shares of Common Stock have
been reserved for issuance under the Purchase Plan as amended. At December 31,
1999, subscriptions were outstanding for an estimated 14,000 shares at $56.68
per share.
60
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[9] STOCKHOLDERS' EQUITY (CONTINUED)
The 1997 Equity Incentive Plan (the 1997 Plan), as amended, provides for the
granting of options to purchase 4,000,000 shares of Common Stock. The terms and
conditions of the 1997 Plan are substantially consistent with those of the 1993
Plan and the 1996 Plan.
In connection with the merger of MBio into the Company, MBio's 1997 Equity
Incentive Plan (the MBio 1997 Plan) was assumed by Millennium. The MBio 1997
Plan, as assumed, allows for the granting of incentive and nonstatutory options
to purchase up to 320,608 shares of common stock of MPI.
In December 1999, in connection with the merger of LeukoSite and the
Company, Millennium assumed the LeukoSite 1993 Stock Option Plan. As assumed,
the plan allows for the granting of incentive and nonstatutory options to
purchase up to 891,826 shares of Common Stock of Millennium
Options granted to employees generally vest over a four-year period. Options
granted to consultants and other nonemployees generally vest over the period of
service.
In 1994, the Company granted its chief executive officer an option to
purchase 533,364 shares of Common Stock for $0.30 per share. In connection with
the grant, the Company agreed to provide a loan of up to $267,000 at 7% per
annum upon option exercise. In November 1995, the officer exercised this option.
The Company made the loan and issued the Common Stock, subject to a repurchase
option that lapsed over four years. The loan and related interest, secured by a
pledge of the shares issued, were forgiven ratably over 48 months and has now
been forgiven in full.
During 1995 and 1996, the Company granted options to purchase 1,580,682
shares of Common Stock at exercise prices below the deemed fair value for
accounting purposes of the stock options at the date of grant. The Company
recorded an increase to additional paid-in capital and a corresponding charge to
deferred compensation in the amount of approximately $3.5 million to recognize
the aggregate difference between such deemed fair value and the exercise price.
The deferred compensation is being amortized over the option vesting period of
four years.
During 1999, MBio granted options to purchase 76,180 shares of MBio Common
Stock at exercise prices below the deemed fair value for accounting purposes of
the stock options at the date of the grant. These options were converted to
14,947 options to purchase common stock of Millennium in connection with the
merger of MBio and the Company. The Company recorded an increase to additional
paid-in capital and a corresponding charge to deferred compensation in the
amount of approximately $1.1 million to recognize the aggregate difference
between such deemed fair value and the exercise price. The deferred compensation
is being amortized over the option vesting period of four years.
61
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[9] STOCKHOLDERS' EQUITY (CONTINUED)
The following table presents the combined activity of the 1993 Plan, 1996
Plan, 1997 Plan, the LeukoSite Plan, the MBio 1997 Plan and the Director Plan
for the years ended December 31, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
1999 1998 1997
---------------------- --------------------- ---------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1............... 6,113,195 $15.13 5,463,635 $12.92 2,762,156 $9.19
Granted................................ 3,297,156 43.72 1,897,365 18.77 3,436,163 14.79
Exercised.............................. (2,138,464) 15.15 (693,618) 5.85 (338,903) 3.46
Canceled............................... (404,728) 16.56 (554,187) 17.35 (395,781) 11.49
---------- --------- ---------
Outstanding at December 31............. 6,867,159 28.78 6,113,195 15.13 5,463,635 12.92
========== ========= =========
Options exercisable at December 31..... 2,574,440 $16.46 2,435,654 11.51 1,821,654 $5.91
========== ========= =========
</TABLE>
The weighted-average per share fair value of options granted during 1999,
1998, and 1997 was $36.40, $10.96 and $14.79, respectively
The following table presents weighted-average price and life information
about significant option groups outstanding at December 31, 1999 for the above
plans:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------- ---------------------
WEIGHTED-
AVERAGE WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
CONTRACTUAL EXERCISE EXERCISE
RANGE OF EXERCISE PRICES NUMBER LIFE (YRS.) PRICE NUMBER PRICE
- ------------------------ --------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 0.10--$ 13.62................... 829,847 6.10 $ 4.91 643,527 $ 3.66
13.87-- 16.50................... 1,028,441 7.46 15.54 515,540 15.44
16.58-- 18.00................... 720,396 7.73 17.23 334,131 17.07
18.04-- 19.62................... 985,223 7.91 19.04 407,811 19.04
19.64-- 25.89................... 790,621 8.25 21.57 367,744 22.25
26.18-- 31.25................... 391,218 9.23 29.70 121,621 28.22
32.50-- 32.50................... 736,879 9.23 32.50 116,147 32.50
34.50-- 62.50................... 727,192 9.51 46.16 55,034 40.22
65.00-- 121.59................... 562,277 9.86 86.43 12,382 75.33
$122.00--$122.00................... 95,065 10.00 $122.00 503 $122.00
--------- ---------
6,867,159 2,574,440
========= =========
</TABLE>
At December 31, 1999, 7,208,903 shares of Common Stock were reserved for
issuance upon exercise of stock options and warrants.
The MPMx 1997 Equity Incentive Plan (the MPMx Plan), as amended, allows for
the granting of incentive and nonstatutory options to purchase up to 1,917,800
shares of common stock of MPMx.
62
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[9] STOCKHOLDERS' EQUITY (CONTINUED)
The following table presents the activity of the MPMx 1997 Plan for the
years ended December 31, 1999 and 1998. Activity for 1997, consisting entirely
of stock option grants, is reflected in the outstanding balance at January 1,
1998:
<TABLE>
<CAPTION>
1999 1998
-------------------- --------------------
WEIGHTED- WEIGHTED-
AVERAGE AVERAGE
EXERCISE EXERCISE
SHARES PRICE SHARES PRICE
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Outstanding at January 1.............................. 136,640 $0.05 773,000 $0.05
Granted............................................... 898,380 0.44 255,750 0.05
Exercised............................................. (549,497) 0.25 (873,459) 0.05
Canceled.............................................. (45,905) 0.23 (18,651) 0.05
-------- --------
Outstanding at December 31............................ 439,618 0.57 136,640 0.05
======== ========
Options exercisable at December 31.................... 439,618 $0.57 136,640 $0.05
======== ========
</TABLE>
The following table presents weighted-average price and life information
about significant option groups outstanding at December 31, 1999 for the MPMx
plan:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING AND EXERCISABLE
-------------------------------------
WEIGHTED-
AVERAGE WEIGHTED-
REMAINING AVERAGE
CONTRACTUAL EXERCISE
EXERCISE PRICES NUMBER LIFE (YRS.) PRICE
- --------------- ---------- ----------- ----------
<S> <C> <C> <C>
$0.05--$0.05...................................... 227,160 8.78 $.05
.90-- 0.90...................................... 187,858 9.38 .90
2.00-- 2.00...................................... 20,950 9.91 2.00
$8.00--$8.00...................................... 3,650 9.96 8.00
------- ---- ----
439,618 9.10 $.57
======= ==== ====
</TABLE>
At December 31, 1999, 559,601 shares of Common Stock in MPMx were reserved
for issuance upon exercise of stock options.
SFAS No. 123 Disclosures
Pursuant to the requirements of SFAS No. 123, the following are the pro
forma consolidated net income (loss) and consolidated net income (loss) per
share for 1999, 1998 and 1997 as if the
63
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[9] STOCKHOLDERS' EQUITY (CONTINUED)
compensation cost for the stock option and stock purchase plans had been
determined based on the fair value at the grant date for grants in 1999, 1998
and 1997 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
1999 1998 1997
--------------------- ------------------- -------------------
AS PRO AS PRO AS PRO
REPORTED FORMA REPORTED FORMA REPORTED FORMA
--------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net income (loss)................ $(351,960) $(400,972) $10,338 $(6,782) $(81,222) $(94,668)
Basic net income (loss) per
share.......................... (10.45) (11.03) 0.34 (0.22) (2.87) (3.34)
Diluted net income (loss) per
share.......................... (10.45) (11.03) 0.33 (0.22) (2.87) (3.34)
</TABLE>
The fair value of stock options and common shares issued pursuant to the
Stock Option and Stock Purchase Plans at the date of grant were estimated using
the Black-Scholes model with the following weighted-average assumptions:
<TABLE>
<CAPTION>
STOCK OPTIONS STOCK PURCHASE PLAN
------------------------------------ ------------------------------------
1999 1998 1997 1999 1998 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Expected life (years)........................ 4.4 4.4 4.5 0.5 0.5 0.5
Interest rate................................ 5.59% 5.36% 6.12% 4.83% 5.15% 6.14%
Volatility................................... .67 .70 .70 .67 .70 .70
</TABLE>
The Company has never declared dividends on any of its capital stock and
does not expect to do so in the foreseeable future.
The effects on 1997, 1998 and 1999 pro forma net income (loss) and net
income (loss) per share of expensing the estimated fair value of stock options
and common shares issued pursuant to the Stock Option and Stock Purchase Plans
are not necessarily representative of the effects on reported results of
operations for future years as the periods presented include only two, three and
four years, respectively, of option grants and share purchases under the
Company's plans.
[10] NET INCOME (LOSS) PER SHARE
Basic net loss per share for 1999 and 1997 is computed using the
weighted-average number of common shares outstanding. Net income per share for
1998 is computed using the weighted-average number of common shares and
dilutive-equivalent shares from stock options and warrants using the treasury
stock method. At December 31, 1999 and 1997, diluted net loss per share is the
same as basic net loss per share, as the inclusion of outstanding common stock
options and warrants would be antidilutive. At December 31, 1998, the difference
between basic and diluted shares used in the computation of earnings per share
is 1,189,133 weighted-average common equivalent shares resulting from
outstanding common stock options and warrants. The 1999 net loss attributable to
common stockholders is calculated by including the deduction of a deemed
preferred stock dividend relating to
64
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[10] NET INCOME (LOSS) PER SHARE (CONTINUED)
the excess of the fair value of the common stock over the carrying value of the
MBio preferred stock acquired from Lilly.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 1998 1997
- ----------------------- --------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net income (loss)........................................... $(351,960) $10,338 $(81,222)
Deemed preferred stock dividend............................. (27,944) -- --
--------- ------- --------
Net loss attributable to common stockholders................ $(379,904) $10,338 $(81,222)
========= ======= ========
Basic net income (loss) per share........................... $ (10.45) $ 0.34 $ (2.87)
Shares used in computing basic Net Income (loss) per
share..................................................... 36,353 30,319 28,323
Diluted net income (loss) per share......................... $ (10.45) $ 0.33 $ (2.87)
Shares used in computing Diluted net income (loss) per
share..................................................... 36,353 31,508 28,323
</TABLE>
[11] INCOME TAXES
The difference between the Company's "expected" tax provision (benefit), as
computed by applying the U.S. federal corporate tax rate of 34% to income (loss)
before minority interest and provision for income taxes, and actual tax is
reconciled in the following chart ($ in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
--------- -------- --------
<S> <C> <C> <C>
Loss before minority interest............................... $(353,940) $(3,841) $(84,632)
--------- ------- --------
Expected tax benefit at 34%................................. $(120,340) $(1,306) $(28,774)
State tax benefit net of federal benefit.................... 11 (231) (5,078)
Write off of purchased research and development............. 119,171 -- 33,520
Amortization of goodwill.................................... 1,298 1,081 958
Change in valuation allowance for deferred tax assets
allocated to tax expense.................................. (543) (458) (1,019)
Stock compensation expense.................................. 285 788 361
Other....................................................... 118 126 32
--------- ------- --------
Income tax provision........................................ $ -- $ -- $ --
</TABLE>
At December 31, 1999, the Company has unused net operating loss
carryforwards of approximately $178 million available to reduce federal taxable
income and $142.3 million available to reduce state taxable income. The federal
net operating loss will expire beginning in 2004 and the state operating loss
will begin to expire in 2000. The Company also has federal and state research
tax credits of approximately $22.2 million available to offset federal and state
income taxes, both of which expire beginning 2005. Due to the degree of
uncertainty related to the ultimate use of the loss carryforwards and tax
credits, the Company has fully reserved these tax benefits. No income tax
payments were made in 1999 or 1998.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax
65
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[11] INCOME TAXES (CONTINUED)
purposes. Significant components of the Company's deferred tax assets as of
December 31 are as follows ($ in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Net operating loss carryforwards............................ $ 70,747 $ 6,556 $ 5,758
Research and development tax credit carryforwards........... 22,202 12,720 6,422
Capitalized research costs.................................. 21,101 5,875 7,640
Property and other intangible assets........................ 5,929 3,310 1,315
Other....................................................... 2,570 1,739 1,255
-------- ------- -------
Total deferred tax assets................................... 122,549 30,200 22,390
Valuation allowance......................................... (122,549) (30,200) (22,390)
-------- ------- -------
Net deferred tax assets..................................... $ -- $ -- $ --
</TABLE>
The valuation allowance increased by $92.3 million during 1999 due primarily
to the increase in research and development tax credits, net operating loss
carryforwards and the addition of various deferred tax assets related to the
LeukoSite merger offset by the utilization of net operating loss carryforwards.
The valuation allowance increased by $7.8 million during 1998 due primarily to
the increase in research and development tax credits and net operating loss
carryforwards. The deferred tax assets acquired from LeukoSite and ChemGenics
are subject to review and possible adjustments by the Internal Revenue Service
and may be limited due to the change in ownership provisions of the Internal
Revenue Code.
Any subsequently recognized tax benefits relating to the valuation allowance
for deferred tax assets as of December 31, 1999 would be allocated as follows ($
in thousands):
<TABLE>
<S> <C>
Reported in the statement of operations..................... $ 26,638
Reported as a decrease to goodwill.......................... 58,777
Reported in additional paid-in capital...................... 37,134
--------
$122,549
</TABLE>
[12] SUBSEQUENT EVENT
In January 2000, the Company completed a sale, pursuant to Rule 144A of the
Securities Act of 1933, of $400 million of 5.5% Convertible Subordinated Notes
due January 15, 2007. The Notes are convertible into Millennium common stock at
any time prior to maturity at a price equal to $168.28 per share, subject to
adjustment, unless previously repurchased or redeemed by us under certain
circumstances. Under the terms of the Notes, the Company will be required to
make semi-annual interest payments on the outstanding principal balance of Notes
on January 15th and July 15th of each year.
66
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
[13] QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
4Q99 3Q99 2Q99 1Q99 4Q98 3Q98 2Q98 1Q98
--------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
(in thousands, except per share
amounts)
Revenue under strategic alliances.... $ 55,098 $40,316 $47,273 $40,992 $57,963 $26,440 $28,236 $21,043
Costs and expenses:
Research and development............. 46,601 38,359 39,484 35,433 33,711 30,014 28,036 22,429
General and administrative........... 8,989 8,279 8,502 7,126 6,491 6,090 5,927 5,911
Acquired in-process R&D.............. 350,503 -- -- -- -- -- -- --
Amortization of intangible assets.... 1,789 676 675 676 675 676 676 675
--------- ------- ------- ------- ------- ------- ------- -------
407,882 47,314 48,661 43,235 40,877 36,780 34,639 29,015
--------- ------- ------- ------- ------- ------- ------- -------
Income (loss) from operations........ (352,784) (6,998) (1,388) (2,243) 17,086 (10,340) (6,403) (7,972)
Interest income (expense), net....... 2,441 2,612 2,358 2,062 1,417 709 860 802
Minority interest.................... (224) (83) 34 2,253 4,675 3,418 3,342 2,744
--------- ------- ------- ------- ------- ------- ------- -------
Net income (loss).................... $(350,567) $(4,469) $ 1,004 $ 2,072 $23,178 $(6,213) $(2,201) $(4,426)
========= ======= ======= ======= ======= ======= ======= =======
Basic net income (loss) per share.... $ (9.99) $ (0.12) $ 0.03 $ 0.06 $ 0.70 $ (0.21) $ (0.07) $ (0.15)
Shares used in computing basic net
income (loss) per share............ 37,883 36,370 35,819 35,315 32,900 29,552 29,501 29,262
Diluted net income (loss) per
share.............................. $ (9.99) $ (0.12) $ 0.03 $ 0.05 $ 0.68 $ (0.21) $ (0.07) $ (0.15)
Shares used in computing diluted net
income (loss) per share............ 37,883 36,370 38,491 38,193 34,216 29,552 29,501 29,262
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
During the Company's two most recent fiscal years there have been no
disagreements with our independent accountants on accounting and financial
disclosure matters.
67
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Except as set forth below, the information required by this item is
incorporated by reference from the information under the captions "Election of
Directors" and "Section 16(a) Beneficial Ownership Reporting Compliance"
contained in our Proxy Statement to be filed with the Securities and Exchange
Commission in connection with the solicitation of proxies for the Company's 2000
Annual Meeting of Stockholders to be held on April 12, 2000 (the "Proxy
Statement").
Certain required information about Executive Officers of the Company is
contained in Part I of this Annual Report on Form 10-K under the heading
"Executive Officers of the Company."
ITEM 11. EXECUTIVE COMPENSATION
The information required regarding executive compensation is incorporated by
reference from the information under the captions "Election of
Directors--Director Compensation," "Compensation of Executive Officers,"
"Compensation Committee Report on Executive Compensation" and "Compensation
Committee Interlocks and Insider Participation" contained in the Proxy
Statement.
ITEM 12. STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated by reference from the
information under the caption "Stock Ownership Information" contained in the
Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated by reference from the
information contained under the caption "Certain Relationships and Related
Transactions" contained in the Proxy Statement.
68
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are included as part of this Annual Report on
Form 10-K.
1. Financial Statements:
<TABLE>
<CAPTION>
PAGE NUMBER
IN THIS REPORT
--------------
<S> <C>
Report of Independent Auditors on Financial Statements...... 45
Consolidated Balance Sheets at December 31, 1999 and 1998... 46
Consolidated Statements of Operations for the years ended
December 31, 1999, 1998, and 1997......................... 47
Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998, and 1997......................... 48
Statements of Stockholders' Equity for the years ended
December 31, 1999, 1998 and 1997.......................... 49
Notes to Financial Statements............................... 50
</TABLE>
2. All schedules are omitted as the information required is inapplicable or
the information is presented in the consolidated financial statements or
the related notes.
3. The Exhibits listed in the Exhibit Index immediately preceding the
Exhibits are filed as a part of this Annual Report on Form 10-K.
(b) The following Current Reports on Form 8-K were filed by the Company since
October 1, 1999:
1. A Current Report on Form 8-K was filed with the Securities and Exchange
Commission on October 21, 1999 to report, pursuant to Item 5, that (i) the
Company entered into an Agreement and Plan of Merger with its subsidiary,
Millennium BioTherapeutics, Inc., (ii) the Company entered into a Share Exchange
Agreement with Eli Lilly and Company and (iii) the Company signed an Agreement
and Plan of Merger with LeukoSite, Inc. and ANM, Inc. a wholly-owned subsidiary
of the Company. An amendment to this Current Report was filed on October 29,
1999.
2. A Current Report on Form 8-K was filed with the Securities and Exchange
Commission on January 6, 2000 to report, pursuant to Item 5, the completion of
the acquisition of LeukoSite, Inc. Amendments to this Current Report were filed
on January 6, 2000 and January 27, 2000.
3. A Current Report on Form 8-K was filed with the Securities and Exchange
Commission on January 11, 2000 to report, pursuant to Item 5, the Company's
intent to offer Convertible Subordinated Notes due January 15, 2007.
4. A Current Report on Form 8-K was filed with the Securities and Exchange
Commission on January 19, 2000 to report, pursuant to Item 5, the sale of
Convertible Subordinated Notes.
5. A Current Report on Form 8-K was filed with the Securities and Exchange
Commission on February 9, 2000 to report, pursuant to Item 5, that the date of
the Annual Meeting of Stockholders is April 12, 2000 and that the close of
business on February 20, 2000 is the date by which a stockholder wishing to
present a proposal before the meeting must give notice to the Company.
THE FOLLOWING TRADEMARKS OF THE COMPANY ARE MENTIONED IN THIS ANNUAL REPORT
ON FORM 10-K: MILLENNIUM, MILLENNIUM PHARMACEUTICALS, MILLENNIUM PREDICTIVE
MEDICINE, MILLENNIUM BIOTHERAPEUTICS, MBIO, MPMX, LEUKOSITE, CAMPATH, DIAGNOMICS
AND MELASTATIN. OTHER TRADEMARKS USED IN THIS ANNUAL REPORT ON FORM 10-K ARE THE
PROPERTY OF THEIR RESPECTIVE OWNERS.
69
<PAGE>
SIGNATURES
In accordance with the requirements of the Section 13 or 15(d) of the
Securities Exchange Act of 1934, the undersigned, duly authorized officers of
Millennium have signed this report on Millennium's behalf.
<TABLE>
<S> <C> <C>
MILLENNIUM PHARMACEUTICALS, INC.
Date: February 25, 2000 By: /s/ MARK J. LEVIN
-----------------------------------------
Mark J. Levin
Chief Executive Officer
</TABLE>
In accordance with the requirements of the Securities Exchange Act of 1934,
the following persons have signed this report below, on behalf of the Company,
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MARK J. LEVIN Chief Executive Officer and
------------------------------------ Director (Principal Executive February 25, 2000
Mark J. Levin Officer)
/s/ KEVIN STARR Chief Financial Officer (Principal
------------------------------------ Financial and Accounting February 25, 2000
Kevin Starr Officer)
/s/ JOSHUA BOGER
------------------------------------ Director February 25, 2000
Joshua Boger
/s/ EUGENE CORDES
------------------------------------ Director February 25, 2000
Eugene Cordes
/s/ A. GRANT HEIDRICH, III
------------------------------------ Director February 25, 2000
A. Grant Heidrich, III
/s/ RAJU KUCHERLAPATI
------------------------------------ Director February 25, 2000
Raju Kucherlapati
/s/ ERIC S. LANDER
------------------------------------ Director February 25, 2000
Eric S. Lander
/s/ CHRISTOPHER K. MIRABELLI
------------------------------------ Director February 25, 2000
Christopher K. Mirabelli
/s/ STEVEN C. WHEELWRIGHT
------------------------------------ Director February 25, 2000
Steven C. Wheelwright
</TABLE>
70
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this Annual Report on
Form 10-K.
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C> <C>
ARTICLES OF INCORPORATION AND BY-LAWS
3.1 (2) Amended and Restated Certificate of Incorporation of the
Company
3.2 (2) Amended and Restated Bylaws of the Company
INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
4.1 (1) Specimen Certificate for shares of Common Stock, $.001 par
value, of the Company
4.2 * Indenture, dated as of January 20, 2000, between the Company
and State Street Bank and Trust Company, as Trustee
(including the form of debenture).
MATERIAL CONTRACTS
10.1 (4) Form of Master Equipment Lease Financing Agreement, as
amended, dated September 19, 1996 by and between the Company
and GE Capital Corporation.
10.2 (5) Amendment to Master Equipment Lease Financing Agreement
dated June 16, 1997 by and between the Company and GE
Capital Corporation.
10.3 * Letter Agreement dated August 5, 1999 relating to Master
Equipment Lease Financing Agreement dated September 19, 1996
by and between the Company and GE Capital Corporation.
10.4 * Addendum to Master Equipment Lease Financing Agreement dated
January 13, 2000 between the Company and GE Capital
Corporation.
10.5 (1) Lease Agreement dated August 26, 1993, as amended, by and
between the Company and the Massachusetts Institute of
Technology.
10.6 * Amendments (Third, Fourth, Fifth, Seventh and Eighth) to
Lease Agreement dated August 26, 1993, as amended, by and
between the Company and the Massachusetts Institute of
Technology.
10.7 (10) Sixth Amendment dated January 29, 1999 to Lease Agreement
dated August 26, 1993 by and between the Company and
Massachusetts Institute of Technology.
10.8 (7) Lease dated November 17, 1997 by and between the Company and
FC 45/75 Sidney, Inc.
10.9 * Amendments (First, Second and Third) to Lease dated November
17, 1997 by and between the Company and FC 45/75 Sidney,
Inc.
10.10 (8) Lease dated June 12, 1998 by and between the Company and 270
Albany Street Realty Trust.
10.11 (14) Lease Agreement for portion of 215 First Street, Cambridge,
MA dated June 8, 1994 between LeukoSite, Inc. and Robert A.
Jones and K. George Najarian, as trustees for Athenaeum
Realty Nominee Trust.
10.12 (8) Lease dated June 17, 1998 by and between the Company and
TransAmerica Business Credit Corporation.
</TABLE>
71
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C> <C>
10.13 +(3) CNS Research, Collaboration and License Agreement effective
as of August 1, 1996 by and between American Home Products
Corporation and the Company.
10.14 +(5) Sponsored Research Agreement by and among Whitehead
Institute for Biomedical Research, Affymetrix, Inc.,
Bristol-Myers Squibb Company and the Company dated April 28,
1997.
10.15 +(5) Consortium Member Agreement by and among Affymetrix, Inc.,
Bristol-Myers Squibb Company and the Company dated April 28,
1997.
10.16 +(6) Agreement dated October 27, 1997 by and among the Company,
Monsanto Company and Cereon Genomics Inc. (formerly Monsanto
Agricultural Genomics II LLC).
10.17 +(9) Agreement dated September 22, 1998 by and between the
Company and Bayer AG.
10.18 +(9) Investment Agreement dated September 22, 1998 by and between
Bayer AG and the Company.
10.19 +(9) Registration Rights Agreement dated November 10, 1998, by
and between Bayer AG and the Company.
10.20 +(13) Agreement dated February 21, 1999 by and between Millennium
Predictive Medicine, Inc. and Becton, Dickinson and Company.
10.21 (13) Amended and Restated Rights Exchange Agreement dated
February 1, 1999 between the Company and Millennium
Predictive Medicine, Inc.
10.22 (13) Technology Transfer and License Agreement dated February 1,
1999 between the Company and Millennium Predictive Medicine,
Inc.
10.23 (11) Agreement and Plan of Merger by and between the Company and
Millennium BioTherapeutics, Inc. dated as of October 14,
1999.
10.24 (12) Agreement and Plan of Merger among the Company, ANM, Inc.
and LeukoSite, Inc. dated as of October 14, 1999.
10.25 +* Supply Agreement dated as of June 4, 1999 between L&I
Partners, L.P. and Boehringer Ingelheim Pharma KG.
10.26 +(14) (a) Agreement of Limited Partnership of L&I Partners, L.P.
(b) License Agreement, dated May 2, 1997, between L&I
Partners, L.P. and LeukoSite, Inc.
10.27 +(15) Development Collaboration and License Agreement, dated as of
December 18, 1997, between LeukoSite, Inc. and Genentech,
Inc.
10.28 +(16) Distribution and Development Agreement dated August 24, 1999
between L&I Partners, L.P. and Schering AG.
10.29 * Registration Rights Agreement dated January 20, 2000 between
the Company and Goldman, Sachs & Co., ING Barings LLC,
FleetBoston Robertson Stephens Inc., and Credit Suisse First
Boston Corporation.
MATERIAL CONTRACTS--MANAGEMENT CONTRACTS AND COMPENSATORY PLANS
10.30 (1)# 1996 Director Option Plan
10.31 (1)# Agreement dated as of April 21, 1993, by and between the
Company and Raju Kucherlapati
</TABLE>
72
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C> <C>
10.32 (1)# Letter Agreement dated April 14, 1994 by and between the
Company and Steven H. Holtzman.
10.33 (1)# Promissory Note dated March 15, 1996 made in favor of the
Company by Steven H. Holtzman.
10.34 *# Form of Employment Offer Letter entered into with certain
executive officers of the Company, together with a schedule
of parties thereto.
10.35 *# Executive Employment Agreement with Christopher Mirabelli
dated October 14, 1999 and amendment thereto dated December
21, 1999.
21 * Subsidiaries of the Company.
23.1 * Consent of Ernst & Young LLP, Independent Auditors.
27 * Financial Data Schedule.
</TABLE>
- ------------------------
(1) Incorporated herein by reference to the Company's Registration Statement on
Form S-1, as amended (File No. 333-2490).
(2) Incorporated herein by reference to the Company's 10-Q for the quarter
ending March 31, 1996.
(3) Incorporated herein by reference to the Company's 10-Q for the quarter
ending June 30, 1996.
(4) Incorporated herein by reference to the Company's 10-Q for the quarter
ending September 30, 1996.
(5) Incorporated herein by reference to the Company's 10-Q for the quarter
ending June 30, 1997.
(6) Incorporated hereby by reference to the Company's Amendment No. 1 to Current
Report on Form 8-K, filed with the SEC on January 30, 1998.
(7) Incorporated herein by reference to the Company's 10-K for the fiscal year
ending December 31, 1997.
(8) Incorporated herein by reference to the Company's 10-Q for the quarter
ending June 30, 1998.
(9) Incorporated herein by reference to the Company's 10-Q for the quarter
ending September 30, 1998.
(10) Incorporated herein by reference to the Company's 10-K for the fiscal year
ending December 31, 1998
(11) Incorporated herein by reference to the Company's Registration Statement on
Form S-4, as amended (File No. 333-90401)
(12) Incorporated herein by reference to the Company's Registration Statement on
Form S-4, as amended (File No. 333-90403)
(13) Incorporated herein by reference to the Company's 10-Q for the quarter
ending June 30, 1999.
(14) Incorporated by reference to LeukoSite's Registration Statement on
Form S-1 (No. 333-30213).
(15) Incorporated by reference to LeukoSite's Current Report on Form 8-K dated
January 26, 1998.
(16) Incorporated by reference to LeukoSite's Current Report on Form 8-K dated
August 24, 1999.
# Management contract or compensatory plan or arrangement filed as an exhibit
to this Form pursuant to Items 14(a) and 14(c) of Form 10-K.
* Filed herewith.
+ Confidential treatment requested as to certain portions.
73
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Exhibit 4.2
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MILLENNIUM PHARMACEUTICALS, INC.,
ISSUER,
TO
STATE STREET BANK AND TRUST COMPANY,
TRUSTEE
-------------------
INDENTURE
DATED AS OF JANUARY 20, 2000
-------------------
U.S.$400,000,000
5.50% CONVERTIBLE SUBORDINATED NOTES DUE JANUARY 15, 2007
-----------------------------------------------------------
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TABLE OF CONTENTS
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RECITALS OF THE COMPANY......................................................................................1
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION..........................................1
SECTION 1.1 Definitions............................................................................1
SECTION 1.2 Compliance Certificates and Opinions..................................................11
SECTION 1.3 Form of Documents Delivered to the Trustee............................................12
SECTION 1.4 Acts of Holders of Securities.........................................................12
SECTION 1.5 Notices, Etc., to Trustee and Company.................................................14
SECTION 1.6 Notice to Holders of Securities; Waiver...............................................15
SECTION 1.7 Effect of Headings and Table of Contents..............................................15
SECTION 1.8 Successors and Assigns................................................................15
SECTION 1.9 Separability Clause...................................................................16
SECTION 1.10 Benefits of Indenture.................................................................16
SECTION 1.11 Governing Law.........................................................................16
SECTION 1.12 Legal Holidays........................................................................16
SECTION 1.13 Conflict with Trust Indenture Act.....................................................16
ARTICLE II SECURITY FORMS..................................................................................17
SECTION 2.1 Form Generally........................................................................17
SECTION 2.2 Form of Security......................................................................18
SECTION 2.3 Form of Certificate of Authentication.................................................30
SECTION 2.4 Form of Conversion Notice.............................................................30
SECTION 2.5 Form of Election of Holder to Require Repurchase......................................32
ARTICLE III THE SECURITIES..................................................................................34
SECTION 3.1 Title and Terms.......................................................................34
SECTION 3.2 Denominations.........................................................................35
SECTION 3.3 Execution, Authentication, Delivery and Dating........................................35
SECTION 3.4 Global Securities; Non-Global Securities..............................................35
SECTION 3.5 Registration, Registration of Transfer and Exchange; Restrictions on
Transfer..............................................................................37
SECTION 3.6 Mutilated, Destroyed, Lost or Stolen Securities.......................................42
SECTION 3.7 Payment of Interest; Interest Rights Preserved........................................43
SECTION 3.8 Persons Deemed Owners.................................................................45
SECTION 3.9 Cancellation..........................................................................45
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SECTION 3.10 Computation of Interest...............................................................45
SECTION 3.11 CUSIP Numbers.........................................................................45
ARTICLE IV SATISFACTION AND DISCHARGE.....................................................................46
SECTION 4.1 Satisfaction and Discharge of Indenture...............................................46
SECTION 4.2 Application of Trust Money............................................................47
ARTICLE V REMEDIES.......................................................................................47
SECTION 5.1 Events of Default.....................................................................47
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment....................................49
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.......................50
SECTION 5.4 Trustee May File Proofs of Claim......................................................51
SECTION 5.5 Trustee May Enforce Claims Without Possession of Securities...........................52
SECTION 5.6 Application of Money Collected........................................................52
SECTION 5.7 Limitation on Suits...................................................................52
SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium and
Interest and to Convert...............................................................53
SECTION 5.9 Restoration of Rights and Remedies....................................................53
SECTION 5.10 Rights and Remedies Cumulative........................................................54
SECTION 5.11 Delay or Omission Not Waiver..........................................................54
SECTION 5.12 Control by Holders of Securities......................................................54
SECTION 5.13 Waiver of Past Defaults...............................................................54
SECTION 5.14 Undertaking for Costs.................................................................55
ARTICLE VI THE TRUSTEE....................................................................................55
SECTION 6.1 Certain Duties and Responsibilities...................................................55
SECTION 6.2 Notice of Defaults....................................................................57
SECTION 6.3 Certain Rights of Trustee.............................................................57
SECTION 6.4 Not Responsible for Recitals or Issuance of Securities................................58
SECTION 6.5 May Hold Securities, Act as Trustee Under Other Indentures............................58
SECTION 6.6 Money Held in Trust...................................................................59
SECTION 6.7 Compensation and Reimbursement........................................................59
SECTION 6.8 Corporate Trustee Required; Eligibility...............................................60
SECTION 6.9 Resignation and Removal; Appointment of Successor.....................................60
SECTION 6.10 Acceptance of Appointment by Successor................................................61
SECTION 6.11 Merger, Conversion, Consolidation or Succession to Business...........................62
SECTION 6.12 Authenticating Agents.................................................................62
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SECTION 6.13 Disqualification; Conflicting Interests...............................................64
SECTION 6.14 Preferential Collection of Claims Against Company.....................................64
ARTICLE VII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE...........................................64
SECTION 7.1 Company May Consolidate, Etc., Only on Certain Terms..................................64
SECTION 7.2 Successor Substituted.................................................................65
ARTICLE VIII SUPPLEMENTAL INDENTURES........................................................................65
SECTION 8.1 Supplemental Indentures Without Consent of Holders of Securities......................65
SECTION 8.2 Supplemental Indentures with Consent of Holders of Securities.........................66
SECTION 8.3 Execution of Supplemental Indentures..................................................67
SECTION 8.4 Effect of Supplemental Indentures.....................................................68
SECTION 8.5 Reference in Securities to Supplemental Indentures....................................68
SECTION 8.6 Notice of Supplemental Indentures.....................................................68
ARTICLE IX COVENANTS......................................................................................68
SECTION 9.1 Payment of Principal, Premium and Interest............................................68
SECTION 9.2 Maintenance of Offices or Agencies....................................................69
SECTION 9.3 Money for Security Payments To Be Held in Trust.......................................69
SECTION 9.4 Existence.............................................................................71
SECTION 9.5 Maintenance of Properties.............................................................71
SECTION 9.6 Payment of Taxes and Other Claims.....................................................71
SECTION 9.7 Statement by Officers as to Default...................................................71
SECTION 9.8 Delivery of Certain Information.......................................................72
SECTION 9.9 Resale of Certain Securities; Reporting Issuer........................................72
SECTION 9.10 Waiver of Certain Covenants...........................................................73
ARTICLE X REDEMPTION OF SECURITIES.......................................................................73
SECTION 10.1 Right of Redemption...................................................................73
SECTION 10.2 Applicability of Article..............................................................73
SECTION 10.3 Election to Redeem; Notice to Trustee.................................................73
SECTION 10.4 Selection by Trustee of Securities To Be Redeemed.....................................73
SECTION 10.5 Notice of Redemption..................................................................74
SECTION 10.6 Deposit of Redemption Price...........................................................75
SECTION 10.7 Securities Payable on Redemption Date.................................................75
SECTION 10.8 Securities Redeemed in Part...........................................................76
SECTION 10.9 Conversion Arrangement on Call for Redemption.........................................76
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ARTICLE XI CONVERSION OF SECURITIES......................................................................77
SECTION 11.1 Conversion Privilege and Conversion Rate..............................................77
SECTION 11.2 Exercise of Conversion Privilege......................................................77
SECTION 11.3 Fractions of Shares...................................................................79
SECTION 11.4 Adjustment of Conversion Rate.........................................................79
SECTION 11.5 Notice of Adjustments of Conversion Rate..............................................84
SECTION 11.6 Notice of Certain Corporate Action....................................................85
SECTION 11.7 Company to Reserve Common Stock.......................................................86
SECTION 11.8 Taxes on Conversions..................................................................86
SECTION 11.9 Covenant as to Common Stock...........................................................86
SECTION 11.10 Cancellation of Converted Securities..................................................86
SECTION 11.11 Provision in Case of Consolidation, Merger or Sale of Assets..........................87
SECTION 11.12 Responsibility of Trustee for Conversion Provisions...................................88
ARTICLE XII SUBORDINATION OF SECURITIES...................................................................88
SECTION 12.1 Securities Subordinate to Senior Debt.................................................88
SECTION 12.2 No Payments in Certain Circumstances; Payment Over of Proceeds
Upon Dissolution, Etc.................................................................89
SECTION 12.3 Trustee to Effectuate Subordination...................................................91
SECTION 12.4 No Waiver of Subordination Provisions.................................................91
SECTION 12.5 Notice to Trustee.....................................................................91
SECTION 12.6 Reliance on Judicial Order or Certificate of Liquidating Agent........................92
SECTION 12.7 Trustee Not Fiduciary for Holders of Senior Debt......................................92
SECTION 12.8 Reliance by Holders of Senior Debt on Subordination Provisions........................93
SECTION 12.9 Rights of Trustee as Holder of Senior Debt; Preservation of Trustee's
Rights................................................................................93
SECTION 12.10 Article Applicable to Paying Agents...................................................93
SECTION 12.11 Certain Conversions and Repurchases Deemed Payment....................................93
ARTICLE XIII REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER UPON A
CHANGE IN CONTROL.............................................................................94
SECTION 13.1 Right to Require Repurchase...........................................................94
SECTION 13.2 Conditions to the Company's Election to Pay the Repurchase Price in
Common Stock..........................................................................95
SECTION 13.3 Notices; Method of Exercising Repurchase Right, Etc...................................95
SECTION 13.4 Certain Definitions...................................................................98
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ARTICLE XIV HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY;
NON-RECOURSE..................................................................................100
SECTION 14.1 Company to Furnish Trustee Names and Addresses of Holders............................100
SECTION 14.2 Preservation of Information..........................................................100
SECTION 14.3 No Recourse Against Others...........................................................101
SECTION 14.4 Reports by Trustee...................................................................101
SECTION 14.5 Reports by Company...................................................................101
SIGNATURES
EXHIBIT A Form of Transfer Certificate for Transfer from Global Security or Definitive Security to
Definitive Security
EXHIBIT B Form of Accredited Investor Transferee Certificate
EXHIBIT C Form of Unrestricted Securities Certificate
EXHIBIT D Registration Rights Agreement
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INDENTURE, dated as of January 20, 2000, between Millennium
Pharmaceuticals, Inc., a corporation duly organized and existing under the laws
of the State of Delaware, having its principal office at 75 Sidney Street,
Cambridge, Massachusetts 02139 (herein called the "Company"), and State Street
Bank and Trust Company, as Trustee hereunder (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of its 5.50%
Convertible Subordinated Notes due January 15, 2007 (herein called the
"Securities") of substantially the tenor and amount hereinafter set forth, and
to provide therefor the Company has duly authorized the execution and delivery
of this Indenture.
All things necessary to make the Securities, when the Securities are
executed by the Company and authenticated and delivered hereunder, the valid
obligations of the Company, and to make this Indenture a valid agreement of the
Company, in accordance with their and its terms, have been done. Further, all
things necessary to duly authorize the issuance of the Common Stock of the
Company issuable upon the conversion of the Securities, and to duly reserve for
issuance the number of shares of Common Stock issuable upon such conversion,
have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
<PAGE>
(2) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
the United States, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation; and
(3) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act," when used with respect to any Holder of a Security, has the
meaning specified in SECTION 1.4.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, to the extent
applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized pursuant to SECTION
6.12 to act on behalf of the Trustee to authenticate Securities.
"Authorized Newspaper" means a newspaper in the English language,
customarily published on each Monday, Tuesday, Wednesday, Thursday and Friday,
whether or not published on Saturdays, Sundays or holidays, and of general
circulation in a Place of Payment.
"Board of Directors" means either the board of directors of the Company
or any duly authorized committee of that board.
"Board Resolution" means a resolution duly adopted by the Board of
Directors, a copy of which, certified by the Secretary or an Assistant Secretary
of the Company to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification, shall have been
delivered to the Trustee.
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"Business Day," when used with respect to any Place of Payment, Place
of Conversion, Boston, Massachusetts or any other place, as the case may be,
means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in such Place of Payment, Place of Conversion or
other place, as the case may be, are authorized or obligated by law or executive
order to close; PROVIDED, HOWEVER, that a day on which banking institutions in
New York, New York or Boston, Massachusetts are authorized or obligated by law
or executive order to close shall not be a Business Day for purposes of SECTION
10.6.
"Change in Control" has the meaning specified in SECTION 13.4(B).
"Closing Price Per Share" means, with respect to the Common Stock, for
any day, (i) the last reported sale price regular way on The Nasdaq National
Market, or if no sale occurred on such date, the average of the reported closing
bid and asked prices regular way, or, (ii) if the Common Stock is not quoted on
The Nasdaq National Market, the last reported sale price regular way per share
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices regular way, in either case, on the
principal national securities exchange on which the Common Stock is listed or
admitted to trading, or (iii) if the Common Stock is not quoted on the Nasdaq
National Market or listed or admitted to trading on any national securities
exchange, the average of the closing bid prices in the over-the-counter market
as furnished by any New York Stock Exchange member firm selected from time to
time by the Company for that purpose.
"Code" has the meaning specified in SECTION 2.1.
"Commission" means the United States Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act,
or, if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Common Stock" means the common stock, par value $0.001 per share, of
the Company authorized at the date of this instrument as originally executed or
as such stock may be constituted from time to time. Subject to the provisions of
SECTION 11.11, shares issuable on conversion or repurchase of Securities shall
include only shares of Common Stock or shares of any class or classes of common
stock resulting from any reclassification or reclassifications thereof;
PROVIDED, HOWEVER, that if at any time there shall be more than one such
resulting class, the shares so issuable on conversion of Securities shall
include shares of all such classes, and the shares of each such class then so
issuable shall be substantially in the proportion which the total number of
shares of each such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
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"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Notice" has the meaning specified in SECTION 13.3.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its Chief Executive Officer, its President, its Chief
Financial Officer or a Vice President, and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the
Trustee.
"Constituent Person" has the meaning specified in SECTION 11.11.
"Conversion Agent" means any Person authorized by the Company to
convert Securities in accordance with ARTICLE ELEVEN. The Company has initially
appointed the Trustee as its Conversion Agent.
"Conversion Price" has the meaning specified in SECTION 11.4(10).
"Conversion Rate" has the meaning specified in SECTION 11.1.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered (which at the date of this Indenture is located at 2 Avenue de
Lafayette, Boston, Massachusetts 02111, Attention: (Millennium Pharmaceuticals,
Inc. - 5.50% Convertible Subordinated Notes due January 15, 2007).
"Corporation" means a corporation, company, association, joint-stock
company or business trust.
"Defaulted Interest" has the meaning specified in SECTION 3.7.
"Depositary" means, with respect to any Securities, a clearing agency
that is registered as such under the Exchange Act and is designated by the
Company to act as Depositary for such Securities (or any successor securities
clearing agency so registered).
"Designated Senior Debt" means any Senior Debt in which the instrument
creating or evidencing the same or the assumption or guarantee thereof (or
related agreements or documents to which the Company is a party) expressly
provides that such indebtedness shall be "Designated Senior Debt" for purposes
of this Indenture (provided that such instrument, agreement or other document
may
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place limitations and conditions on the right of such Senior Debt to exercise
the rights of Designated Senior Debt).
"Dollar" or "U.S.$" means a dollar or other equivalent unit in such
coin or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"DTC" means The Depository Trust Company, a New York corporation.
"Event of Default" has the meaning specified in SECTION 5.1.
"Exchange Act" means the United States Securities Exchange Act of 1934
(or any successor statute), as amended from time to time.
"Global Security" means a Security that is registered in the Security
Register in the name of a Depositary or a nominee thereof.
"Holder" means the Person in whose name the Security is registered in
the Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Initial Purchasers" means Goldman, Sachs & Co., FleetBoston Robertson
Stephens Inc., ING Barings LLC and Credit Suisse First Boston Corporation,
collectively.
"Interest Payment Date" means the Stated Maturity for any installment
of interest on the Securities thereof.
"Liquidated Damages" has the meaning specified in SECTION 2.2.
"Maturity," when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption, exercise of the repurchase right set forth in
ARTICLE THIRTEEN or otherwise.
"Non-electing Share" has the meaning specified in SECTION 11.11.
"Notice of Default" has the meaning specified in SECTION 5.1.
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"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman of the Board, the Chief Executive Officer, the
President or a Vice President and by the principal financial officer, the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company and who shall be acceptable to the Trustee.
"Outstanding," when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, EXCEPT:
(i) Securities theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Securities for the payment or redemption of which money in
the necessary amount has been theretofore deposited with the Trustee
or any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities, PROVIDED that if
such Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or irrevocable instructions have
been given to the Trustee to give such notice; and
(iii) Securities which have been paid pursuant to SECTION 3.6 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by
a bona fide purchaser in whose hands such Securities are valid
obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
aggregate principal amount of Outstanding Securities are present at a meeting of
Holders of Securities for quorum purposes or have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such determination as to the presence of a quorum or upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Securities which a Responsible Officer of the Trustee actually knows to be
so owned shall be so disregarded. Securities so owned which have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Securities and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor.
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"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company and, except
as otherwise specifically set forth herein, such term shall include the Company
if it shall act as its own Paying Agent. The Company has initially appointed the
Trustee as its Paying Agent.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, trust, estate, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Conversion" has the meaning specified in SECTION 3.1.
"Place of Payment" has the meaning specified in SECTION 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under SECTION 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Press Release" shall mean any press release issued by the Company and
disseminated through Reuters Business News Services and Bloomberg Business News.
"Purchase Agreement" means the Purchase Agreement, dated as of January
13, 2000 among the Company and the Initial Purchasers, as such agreement may be
amended from time to time.
"Record Date" means any Regular Record Date or Special Record Date.
"Record Date Period" means the period from the close of business of any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registration Rights Agreement" shall mean that Registration Rights
Agreement dated as of the date hereof among the Company and the Initial
Purchasers, substantially in the form of Registration Rights Agreement attached
to this Indenture as Exhibit D.
"Registered Securities" has the meaning specified in SECTION 2.1.
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"Registrable Securities" has the meaning set forth in the Registration
Rights Agreement.
"Regular Record Date" for interest payable in respect of any Security
on any Interest Payment Date means the January 1 or July 1 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
"Repurchase Date" has the meaning specified in SECTION 13.1.
"Repurchase Price" has the meaning specified in SECTION 13.1.
"Responsible Officer," when used with respect to the Trustee, means any
Officer within the Corporate Trust Office of the Trustee, including, without
limitation, any vice president, assistant vice president, assistant treasurer,
corporate trust officer or other employee of the Trustee customarily performing
functions similar to those performed by any of the above designated officers,
and also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of his knowledge and familiarity
with the particular subject.
"Restricted Global Security" has the meaning specified in SECTION 2.1.
"Restricted Securities Legend" means, collectively, the legends
substantially in the forms of the legends required in the form of Security set
forth in SECTION 2.2 to be placed upon each Security.
"Rule 144" means Rule 144 under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Rule 144A Information" has the meaning specified in SECTION 9.8.
"Securities" has the meaning ascribed to it in the first paragraph
hereof under the caption "Recitals of the Company."
"Securities Act" means the United States Securities Act of 1933 (or any
successor statute), as amended from time to time.
"Securities Act Legend" means a Restricted Securities Legend.
"Security Register" and "Security Registrar" have the respective
meanings specified in SECTION 3.5.
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"Senior Debt" means the principal of (and premium, if any) and interest
(including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) on, and all fees and
other amounts payable in connection with, the following, whether absolute or
contingent, secured or unsecured, due or to become due, outstanding on the date
of this Indenture or thereafter created, incurred or assumed: (a) indebtedness
of the Company evidenced by credit or loan agreements, notes, bonds, debentures,
or other similar instrument, (b) all obligations of the Company for money
borrowed, (c) obligations of the Company as lessee under leases required to be
capitalized on the balance sheet of the lessee under generally accepted
accounting principles, (d) obligations of the Company under interest rate and
currency swaps, caps, floors, collars, hedge agreements, forward contracts, or
similar agreements or arrangements intended to protect the Company against
fluctuations in interest or currency exchange rates or commodity prices, (e) all
obligations with respect to letters of credit, bank guarantees, bankers'
acceptances and similar facilities issued for the account of the Company and all
reimbursement obligations of the Company with respect to the foregoing, (f) all
obligations of the Company issued or assumed as the deferred purchase price of
any business, property, assets (including intangibles) or services (but
excluding trade accounts payable that constitute liabilities arising in the
ordinary course of business), (g) all obligations of the type referred to in
clauses (a) through (f) above of another Person and all dividends of another
Person, the payment of which, in either case, the Company has assumed or
guaranteed, or for which the Company is responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor or otherwise, or which
is secured by a lien on property of the Company, and (h) renewals, extensions,
modifications, replacements, restatements and refundings of, or any indebtedness
or obligation issued in exchange for, any such indebtedness or obligation
described in clauses (a) through (g) of this paragraph; PROVIDED, HOWEVER, that
Senior Debt shall not include the Securities or any such indebtedness or
obligation if the terms of such indebtedness or obligation (or the terms of the
instrument under which, or pursuant to which it is issued) expressly provides
that such indebtedness or obligation is not superior in right of payment to the
Securities; and PROVIDED, FURTHER, that Senior Debt shall not include any
indebtedness or obligation owed by the Company to any direct or indirect
Subsidiary.
"Significant Subsidiary" means, with respect to any Person, a
Subsidiary of such Person that would constitute a "significant subsidiary" as
such term is defined under Rule 1-02 of Regulation S-X of the Commission.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Company pursuant to SECTION 3.7.
"Stated Maturity," when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest is due and payable.
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"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by one
or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock or
other similar interests in the corporation which ordinarily has or have voting
power for the election of directors, or persons performing similar functions,
whether at all times or only so long as no senior class of stock or other
interests has or have such voting power by reason of any contingency.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under SECTION 3.6 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Time of Delivery" means 9:30 a.m. New York City time on January 20,
2000.
"Trading Days" means (i) if the Common Stock is listed or admitted for
trading on any national securities exchange, days on which such national
securities exchange is open for business; (ii) if the Common Stock is quoted on
The Nasdaq National Market or any other system of automated dissemination of
quotations of securities prices, days on which trades may be effected through
such system; or (iii) if the Common Stock is not listed or admitted for trading
on any national securities exchange or quoted on The Nasdaq National Market or
any other system of automated dissemination of quotation of securities prices,
days on which the Common Stock is traded regular way in the over-the-counter
market and for which a closing bid and a closing asked price for the Common
Stock are available.
"Trigger Event" shall have the meaning set forth in Section 11.4(7).
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; PROVIDED, HOWEVER, that in
the event the Trust Indenture Act of 1939 is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"United States" means the United States of America (including the
States and the District of Columbia), its territories, its possessions and other
areas subject to its jurisdiction (its "possessions" including Puerto Rico, the
U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands).
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"Unrestricted Securities Certificate" means a certificate substantially
in the form set forth in Exhibit C.
"Vice President," when used with respect to the Company, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "vice president."
SECTION 1.2 COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with and, upon the Trustee's request, an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent, if any, have
been complied with, except that in the case of any such application or request
as to which the furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular application or request,
no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (including certificates
provided for in SECTION 9.7) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.3 FORM OF DOCUMENTS DELIVERED TO THE TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such
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Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which such certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company or any other Person
stating that the information with respect to such factual matters is in the
possession of the Company or such other Person, unless such counsel knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4 ACTS OF HOLDERS OF SECURITIES.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Indenture to be given or
taken by Holders of Securities may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent or proxy duly appointed in writing by such Holders. Such action
shall become effective when such instrument or instruments is delivered to the
Trustee and, where it is hereby expressly required, to the Company. The Trustee
shall promptly deliver to the Company copies of all such instruments delivered
to the Trustee. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Holders of Securities signing such instrument or instruments. Proof of execution
of any such instrument or of a writing appointing any such agent or proxy, or of
the holding by any Person of a Security, shall be sufficient for any purpose of
this Indenture and (subject to SECTION 6.1) conclusive in favor of the Trustee
and the Company if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority.
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(c) The principal amount and serial number of any Security held by any
Person, the date of his holding the same, and the ownership of Securities
generally shall be proved by the Security Register.
(d) The fact and date of execution of any such instrument or writing
and the authority of the Person executing the same may also be proved in any
other manner which the Trustee deems sufficient; and the Trustee may in any
instance require further proof with respect to any of the matters referred to in
this SECTION 1.4.
(e) The Company may set any day as the record date for the purpose of
determining the Holders entitled to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action, or to vote on
any action, authorized or permitted by this Indenture to be given or taken by
Holders. Promptly and in any case not later than ten days after setting a record
date, the Company shall notify the Trustee and the Holders of such record date.
If not set by the Company prior to the first solicitation of a Holder made by
any Person in respect of any such action, or, in the case of any such vote,
prior to such vote, the record date for any such action or vote shall be the
30th day (or, if later, the date of the most recent list of Holders required to
be provided pursuant to SECTION 14.1) prior to such first solicitation or vote,
as the case may be. With regard to any record date, the Holders on such date (or
their duly appointed agents or proxies), and only such Persons, shall be
entitled to give or take, or vote on, the relevant action, whether or not such
Holders remain Holders after such record date. Notwithstanding the foregoing,
the Company shall not set a record date for, and the provisions of this
paragraph shall not apply with respect to, any notice, declaration or direction
referred to in the next paragraph.
Upon receipt by the Trustee from any Holder of (i) any notice of
default or breach referred to in SECTION 5.1(4), if such default or breach has
occurred and is continuing and the Trustee shall not have given such a notice to
the Company, (ii) any declaration of acceleration referred to in SECTION 5.2, if
an Event of Default has occurred and is continuing and the Trustee shall not
have given such a declaration to the Company, or (iii) any direction referred to
in SECTION 5.12, if the Trustee shall not have taken the action specified in
such direction, then, with respect to clauses (ii) and (iii), a record date
shall automatically and without any action by the Company or the Trustee be set
for determining the Holders entitled to join in such declaration or direction,
which record date shall be the close of business on the tenth day (or, if such
day is not a Business Day, the first Business Day thereafter) following the day
on which the Trustee receives such declaration or direction, and, with respect
to clause (i) the Trustee may set any day as a record date for the purpose of
determining the Holders entitled to join in such notice of default. Promptly
after such receipt by the Trustee of any such declaration or direction referred
to in clause (ii) or (iii), and promptly after setting any record date with
respect to clause (i), and as soon as practicable thereafter, the Trustee shall
notify the Company and the Holders of any such record date so fixed. The Holders
on such record date (or their duly appointed agents or proxies), and only such
Persons, shall be entitled to join in such notice, declaration or direction,
whether or not such Holders remain Holders after such record date; PROVIDED
that, unless such notice, declaration or direction shall
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have become effective by virtue of Holders of the requisite principal amount of
Securities on such record date (or their duly appointed agents or proxies)
having joined therein on or prior to the 90th day after such record date, such
notice, declaration or direction shall automatically and without any action by
any Person be cancelled and of no further effect. Nothing in this paragraph
shall be construed to prevent a Holder (or a duly appointed agent or proxy
thereof) from giving, before or after the expiration of such 90-day period, a
notice, declaration or direction contrary to or different from, or, after the
expiration of such period, identical to, the notice, declaration or direction to
which such record date relates, in which event a new record date in respect
thereof shall be set pursuant to this paragraph. In addition, nothing in this
paragraph shall be construed to render ineffective any notice, declaration or
direction of the type referred to in this paragraph given at any time to the
Trustee and the Company by Holders (or their duly appointed agents or proxies)
of the requisite principal amount of Securities on the date such notice,
declaration or direction is so given.
(f) Except as provided in SECTIONS 5.12 and 5.13, any request, demand,
authorization, direction, notice, consent, election, waiver or other Act of the
Holder of any Security shall bind every future Holder of the same Security and
the Holder of every Security issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance thereon, whether
or not notation of such action is made upon such Security.
SECTION 1.5 NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent,
election, waiver or other Act of Holders of Securities or other document
provided or permitted by this Indenture to be made upon, given or furnished to,
or filed with,
(1) the Trustee by any Holder of Securities or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with the Trustee and received at its Corporate Trust Office,
Attention: Millennium Pharmaceuticals, Inc. - 5.50% Convertible Subordinated
Notes due January 15, 2007, and shall be deemed given when received.
(2) the Company by the Trustee or by any Holder of Securities shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing, mailed, first-class postage prepaid, or telecopied and
confirmed by mail, first-class postage prepaid, or delivered by hand or
overnight courier, addressed to the Company at 75 Sidney Street, Cambridge,
Massachusetts 02139, Attention: Chief Financial Officer, or at any other address
previously furnished in writing to the Trustee by the Company, and shall be
deemed given when received.
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Any request, demand, authorization, direction, notice, consent,
election or waiver required or permitted under this Indenture shall be in the
English language, except that any published notice may be in an official
language of the country of publication.
SECTION 1.6 NOTICE TO HOLDERS OF SECURITIES; WAIVER.
Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Securities of any event, such notice shall be
sufficiently given to Holders if in writing and mailed, first-class postage
prepaid, to each Holder of a Security affected by such event, at the address of
such Holder as it appears in the Security Register, not earlier than the
earliest date and not later than the latest date prescribed for the giving of
such notice.
Neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder of a Security shall affect the sufficiency
of such notice with respect to other Holders of Securities. In case by reason of
the suspension of regular mail service or by reason of any other cause it shall
be impracticable to give such notice by mail, then such notification to Holders
of Securities as shall be made with the approval of the Trustee, which approval
shall not be unreasonably withheld, shall constitute a sufficient notification
to such Holders for every purpose hereunder.
Such notice shall be deemed to have been given when such notice is
mailed.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders of Securities shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver.
SECTION 1.7 EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.8 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
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SECTION 1.9 SEPARABILITY CLAUSE.
In case any provision in this Indenture or the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.10 BENEFITS OF INDENTURE.
Except as provided in the next sentence, nothing in this Indenture or
in the Securities, express or implied, shall give to any Person, other than the
parties hereto and their successors and assigns hereunder and the Holders of
Securities, any benefit or legal or equitable right, remedy or claim under this
Indenture. The provisions of ARTICLE TWELVE are intended to be for the benefit
of, and shall be enforceable directly by, the holders of Senior Debt, except as
otherwise provided in Section 12.3.
SECTION 1.11 GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, THE
UNITED STATES OF AMERICA.
SECTION 1.12 LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date,
Repurchase Date or Stated Maturity of any Security or the last day on which a
Holder of a Security has a right to convert his Security shall not be a Business
Day, then (notwithstanding any other provision of this Indenture or of the
Securities) payment of principal of, premium, if any, or interest on, or the
payment of the Repurchase Price (whether the same is payable in cash or in
shares of Common Stock) with respect to, or delivery for conversion of, such
Security need not be made on or by such day, but may be made on or by the next
succeeding Business Day with the same force and effect as if made on the
Interest Payment Date, Redemption Date or Repurchase Date, or at the Stated
Maturity or by such last day for conversion; PROVIDED, HOWEVER, that in the case
that payment is made on such succeeding Business Day, no interest shall accrue
on the amount so payable for the period from and after such Interest Payment
Date, Redemption Date, Repurchase Date, Stated Maturity or last day for
conversion, as the case may be.
SECTION 1.13 CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with a provision
of the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
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that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or to be excluded, as the case may be.
Until such time as this Indenture shall be qualified under the Trust Indenture
Act, this Indenture, the Company and the Trustee shall be deemed for all
purposes hereof to be subject to and governed by the Trust Indenture Act to the
same extent as would be the case if this Indenture were so qualified on the date
hereof.
ARTICLE II
SECURITY FORMS
SECTION 2.1 FORM GENERALLY.
The Securities shall be in substantially the form set forth in this
Article, with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or the Internal Revenue Code of 1986, as amended, and
regulations thereunder (the "Code"), or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution thereof. All Securities shall be issued in registered form, as opposed
to bearer form, and shall sometimes be referred to as "Registered Securities".
The Trustee's certificates of authentication shall be in substantially
the form set forth in SECTION 2.3.
Conversion notices shall be in substantially the form set forth in
SECTION 2.4.
Repurchase notices shall be substantially in the form set forth in
SECTION 2.5.
The Securities shall be printed, lithographed, typewritten or engraved
or produced by any combination of these methods on steel engraved borders if so
required by any securities exchange upon which the Securities may be listed, or
may be produced in any other manner permitted by the rules of any such
securities exchange, or, if the Securities are not listed on a securities
exchange, in any other manner approved by the Company, all as determined by the
officers executing such Securities, as evidenced by their execution thereof.
Upon their original issuance, Securities shall be issued in the form of
one or more Global Securities without interest coupons and shall be registered
in the name of DTC, as Depositary, or its nominee and deposited with the
Trustee, as custodian for DTC, for credit by DTC to the respective accounts of
beneficial owners of the Securities represented thereby (or such other accounts
as they may
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direct). Such Global Security, together with its Successor Securities which are
Global Securities, are collectively herein called the "Restricted Global
Security."
SECTION 2.2 FORM OF SECURITY.
[FORM OF FACE]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH
RESTRICTED SECURITY OTHER THAN ANY RESTRICTED GLOBAL SECURITY:
THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.
THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A
PERSON WHOM THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS
OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR
WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF
THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
THIS NOTE, ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND
ANY RELATED DOCUMENTATION MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO
MODIFY THE RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS NOTE AND ANY SUCH
SHARES TO
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REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION
THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED
SECURITIES GENERALLY. THE HOLDER OF THIS NOTE AND SUCH SHARES SHALL BE DEEMED BY
THE ACCEPTANCE OF THIS NOTE AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH
AMENDMENT OR SUPPLEMENT.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH
RESTRICTED GLOBAL SECURITY:
THE SECURITIES EVIDENCED BY THIS GLOBAL SECURITY AND ANY COMMON STOCK
ISSUABLE UPON THE CONVERSION OF THE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF ANY BENEFICIAL INTEREST IN THE SECURITIES
IS HEREBY NOTIFIED THAT THE SELLER OF SUCH BENEFICIAL INTEREST IN THE SECURITIES
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED
BY THIS GLOBAL SECURITY (INCLUDING ANY PARTICIPANT IN THE DEPOSITARY HOLDING THE
GLOBAL SECURITY THAT IS SHOWN AS HOLDING SUCH AN INTEREST ON THE RECORDS OF SUCH
DEPOSITARY AND EACH BENEFICIAL OWNER THAT HOLDS THROUGH ANY SUCH PARTICIPANT)
AGREES FOR THE BENEFIT OF MILLENIUM PHARMACEUTICALS, INC. (THE "COMPANY") THAT
ANY BENEFICIAL INTEREST IN THE SECURITIES AND ANY SHARES OF COMMON STOCK
ISSUABLE UPON THEIR CONVERSION MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE TRANSFEROR REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ACQUIRING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR THAT IS AN
ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) OF
REGULATION D UNDER THE SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT (IF AVAILABLE) OR
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(4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND OTHER JURISDICTIONS.
THIS SECURITY, ANY SHARES OF COMMON STOCK ISSUABLE UPON THE CONVERSION
OF THE SECURITIES EVIDENCED HEREBY AND ANY RELATED DOCUMENTATION MAY BE AMENDED
OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE RESTRICTIONS ON RESALES AND
OTHER TRANSFERS OF THIS SECURITY, ANY BENEFICIAL INTERESTS HEREIN AND ANY SUCH
SHARES TO REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE
INTERPRETATION THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF
RESTRICTED SECURITIES GENERALLY. THE HOLDER AND BENEFICIAL OWNERS OF AN INTEREST
IN ANY SUCH SECURITIES OR SHARES SHALL BE DEEMED BY THE ACCEPTANCE OF THIS
SECURITY AND THE BENEFICIAL INTERESTS HEREIN AND ANY SUCH SHARES TO HAVE AGREED
TO ANY SUCH AMENDMENT OR SUPPLEMENT.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A
NOMINEE OF THE DEPOSITARY, WHICH MAY BE TREATED BY THE COMPANY, THE TRUSTEE AND
ANY AGENT THEREOF AS OWNER AND HOLDER OF THIS SECURITY FOR ALL PURPOSES.]
[THE FOLLOWING LEGEND SHALL APPEAR ON THE FACE OF EACH GLOBAL SECURITY
FOR WHICH THE DEPOSITORY TRUST COMPANY IS TO BE THE DEPOSITARY:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY
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PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]
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MILLENNIUM PHARMACEUTICALS, INC.
5.50 % Convertible Subordinated Note
Due January 15, 2007
No. _______________ U.S.$ _______
CUSIP No. 599902AA1
Millennium Pharmaceuticals, Inc., a corporation duly organized and
existing under the laws of the State of Delaware (herein called the "Company,"
which term includes any successor Person to the Company under the Indenture
referred to on the reverse hereof), for value received, hereby promises to pay
to _______________, or registered assigns, the principal sum of _______________
United States Dollars (U.S.$ ______) [IF THIS SECURITY IS A GLOBAL SECURITY,
THEN INSERT -- (which principal amount may from time to time be increased or
decreased to such other principal amounts (which, taken together with the
principal amounts of all other Outstanding Securities, shall not exceed
$400,000,000 in the aggregate at any time) by adjustments made on the records of
the Trustee hereinafter referred to in accordance with the Indenture)] on
January 15, 2007 and to pay interest thereon, from January 20, 2000, or from the
most recent Interest Payment Date (as defined below) to which interest has been
paid or duly provided for, semi-annually in arrears on January 15 and July 15 in
each year (each, an "Interest Payment Date"), commencing July 15, 2000, at the
rate of 5.50% per annum, until the principal hereof is due, and at the rate of
5.50% per annum on any overdue principal and premium, if any, and, to the extent
permitted by law, on any overdue interest. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest, which shall be the January 1 or July
1 (whether or not a Business Day), as the case may be, next preceding such
Interest Payment Date. Except as otherwise provided in the Indenture, any such
interest not so punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Company, notice whereof shall be
given to Holders of Securities not less than 10 days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture. Payments of principal shall be made upon the
surrender of this Security at the option of the Holder at the Corporate Trust
Office of the Trustee, in such coin or currency of the United States of America
as at the time of payment shall be legal tender for the payment of public and
private debts, or at such other offices or agencies as the Company may
designate, by United States Dollar check drawn on, or wire
-22-
<PAGE>
transfer to, a United States Dollar account (such a wire transfer to be made
only to a Holder of an aggregate principal amount of Securities in excess of
U.S.$2,000,000, and only if such Holder shall have furnished wire instructions
in writing to the Trustee no later than 15 days prior to the relevant payment
date) maintained by the payee with a bank in the Borough of Manhattan, The City
of New York or Boston, Massachusetts. Payment of interest on this Security may
be made by United States Dollar check drawn on a bank in the Borough of
Manhattan, The City of New York or Boston, Massachusetts mailed to the address
of the Person entitled thereto as such address shall appear in the Security
Register, or, upon written application by the Holder to the Security Registrar
setting forth wire instructions not later than the relevant Record Date, by wire
transfer to a United States Dollar account (such a wire transfer to be made only
to a Holder of an aggregate principal amount of Securities in excess of
U.S.$2,000,000 and only if such Holder shall have furnished wire instructions in
writing to the Trustee no later than 15 days prior to the relevant payment date)
maintained by the payee with a bank in the Borough of Manhattan, The City of New
York or Boston, Massachusetts.
Except as specifically provided herein and in the Indenture, the
Company shall not be required to make any payment with respect to any tax,
assessment or other governmental charge imposed by any government or any
political subdivision or taxing authority thereof or therein.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof or an Authenticating Agent by the
manual signature of one of their respective authorized signatories, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this Security to be
duly executed.
MILLENNIUM PHARMACEUTICALS, INC.
By: __________________________________
Name:
Title:
-23-
<PAGE>
[FORM OF REVERSE]
This Security is one of a duly authorized issue of securities of the
Company designated as its 5.50% Convertible Subordinated Notes due January 15,
2007" (herein called the "Securities"), limited in aggregate principal amount
not to exceed U.S.$400,000,000 to be issued under an Indenture, dated as of
January 20, 2000 (herein called the "Indenture"), between the Company and State
Street Bank and Trust Company, as Trustee (herein called the "Trustee," which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee, the holders of Senior Debt and the Holders of the
Securities and of the terms upon which the Securities are, and are to be,
authenticated and delivered. As provided in the Indenture and subject to certain
limitations therein set forth, Securities are exchangeable for a like aggregate
principal amount of Securities of any authorized denominations as requested by
the Holder surrendering the same upon surrender of the Security or Securities to
be exchanged, at the Corporate Trust Office of the Trustee. The Trustee upon
such surrender by the Holder will issue the new Securities in the requested
denominations.
No sinking fund is provided for the Securities.
The Securities are subject to redemption at the option of the Company
at any time on or after January 15, 2003, in whole or in part, upon not less
than 30 nor more than 60 days' notice to the Holders prior to the Redemption
Date at the following Redemption Prices (expressed as percentages of the
principal amount) for the twelve-month period 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 at a Redemption Price equal to 100% of the principal amount on and after
January 15, 2007, together, in each case, with accrued interest to the
Redemption Date; PROVIDED, HOWEVER, that interest installments on Securities
whose Stated Maturity is on or prior to such Redemption Date will be payable to
the Holders of such Securities, or one or more Predecessor Securities, of record
at the close of business on the relevant Record Dates referred to on the face
hereof, all as provided in the Indenture.
In the event of a redemption of the Securities, the Company will not be
required (a) to register the transfer or exchange of Securities for a period of
15 days immediately preceding the date notice is
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<PAGE>
given identifying the serial numbers of the Securities called for such
redemption or (b) to register the transfer or exchange of any Security, or
portion thereof, called for redemption.
Notice to the Holders will be given not less than 30 nor more than 60
days prior to the Redemption Date as provided in the Indenture.
In any case where the due date for the payment of the principal of,
premium, if any, interest, or Liquidated Damages on any Security or the last day
on which a Holder of a Security has a right to convert his Security shall be a
day on which banking institutions at such Place of Payment or Place of
Conversion are authorized or obligated by law or executive order to close, then
payment of principal, premium, if any, interest, or Liquidated Damages, or
delivery for conversion of such Security need not be made on or by such date but
may be made on or by the next succeeding day at such place which is not a day on
which such banking institutions are authorized or obligated by law or executive
order to close, with the same force and effect as if made on the date for such
payment or the date fixed for redemption or repurchase, or by such last day for
conversion, and no interest shall accrue on the amount so payable for the period
after such date.
Subject to and upon compliance with the provisions of the Indenture,
the Holder of this Security is entitled, at his option, at any time following
the original issue date of the Securities and on or before the close of business
on January 15, 2007, or in case this Security or a portion hereof is called for
redemption or the Holder hereof has exercised his right to require the Company
to repurchase this Security or such portion hereof, then in respect of this
Security until and including, but (unless the Company defaults in making the
payment due upon redemption or repurchase, as the case may be) not after, the
close of business on the Business Day immediately preceding the Redemption Date
or the Repurchase Date, as the case may be, to convert this Security (or any
portion of the principal amount hereof that is an integral multiple of
U.S.$1,000, PROVIDED that the unconverted portion of such principal amount is
U.S.$1,000 or any integral multiple of U.S.$1,000 in excess thereof) into fully
paid and nonassessable shares of Common Stock of the Company at an initial
Conversion Rate of 5.9424 shares of Common Stock for each U.S.$1,000 principal
amount of Securities (or at the current adjusted Conversion Rate if an
adjustment has been made as provided in the Indenture) by surrender of this
Security, duly endorsed or assigned to the Company or in blank and, in case such
surrender shall be made during the period from the close of business on any
Regular Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date (except if this Security has been called
for redemption on a Redemption Date or is repurchasable on a Repurchase Date
occurring, in either case, during such period and is surrendered for such
conversion during such period), also accompanied by payment in New York Clearing
House or other funds acceptable to the Company of an amount equal to the
interest otherwise payable on such Interest Payment Date on the principal amount
of this Security then being converted, and also the conversion notice hereon
duly executed, to the Company at the Corporate Trust Office of the Trustee, or
at such other office or agency of the Company, subject to any laws or
regulations applicable thereto and subject to the right of the Company
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<PAGE>
to terminate the appointment of any Conversion Agent (as defined below) as may
be designated by it for such purpose in the Borough of Manhattan, The City of
New York, or at such other offices or agencies as the Company may designate
(each a "Conversion Agent"), PROVIDED, FURTHER, that if this Security or portion
hereof has been called for redemption on a Redemption Date or is repurchasable
on a Repurchase Date occurring, in either case, during the period from the close
of business on any Regular Record Date next preceding any Interest Payment Date
to the opening of business on such succeeding Interest Payment Date and is
surrendered for conversion during such period, then the Holder of this Security
shall not be required to pay such interest upon surrender of this Security for
conversion. Subject to the provisions of the preceding sentence and, in the case
of a conversion after the close of business on the Regular Record Date next
preceding any Interest Payment Date and on or before the close of business on
such Interest Payment Date, to the right of the Holder of this Security (or any
Predecessor Security) of record as of such Regular Record Date to receive the
related installment of interest to the extent and under the circumstances
provided in the Indenture, no cash payment or adjustment is to be made on
conversion for interest accrued hereon from the Interest Payment Date next
preceding the day of conversion, or for dividends on the Common Stock issued on
conversion hereof. The Company shall thereafter deliver to the Holder the fixed
number of shares of Common Stock (together with any cash adjustment, as provided
in the Indenture) into which this Security is convertible and such delivery will
be deemed to satisfy the Company's obligation to pay the principal amount of
this Security. No fractions of shares or scrip representing fractions of shares
will be issued on conversion, but instead of any fractional interest (calculated
to the nearest 1/100th of a share) the Company shall pay a cash adjustment as
provided in the Indenture. The Conversion Rate is subject to adjustment as
provided in the Indenture. In addition, the Indenture provides that in case of
certain consolidations or mergers to which the Company is a party or the
conveyance, transfer, sale or lease of all or substantially all of the property
and assets of the Company, the Indenture shall be amended, without the consent
of any Holders of Securities, so that this Security, if then Outstanding, will
be convertible thereafter, during the period this Security shall be convertible
as specified above, only into the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance, transfer, sale
or lease by a holder of the number of shares of Common Stock of the Company into
which this Security could have been converted immediately prior to such
consolidation, merger, conveyance, transfer, sale or lease (assuming such holder
of Common Stock is not a Constituent Person, failed to exercise any rights of
election and received per share the kind and amount received per share by a
plurality of Non-electing Shares. No adjustment in the Conversion Rate will be
made until such adjustment would require an increase or decrease of at least one
percent of such rate, PROVIDED that any adjustment that would otherwise be made
will be carried forward and taken into account in the computation of any
subsequent adjustment.
Subject to certain limitations in the Indenture, at any time when the
Company is not subject to Section 13 or 15(d) of the United States Securities
Exchange Act of 1934, as amended, upon the request of a Holder of a Security or
the holder of shares of Common Stock issued upon conversion thereof, the Company
will promptly furnish or cause to be furnished Rule 144A Information (as defined
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<PAGE>
below) to such Holder of Securities or such holder of shares of Common Stock
issued upon conversion of Securities, or to a prospective purchaser of any such
security designated by any such Holder or holder, as the case may be, to the
extent required to permit compliance by such Holder or holder with Rule 144A
under the Securities Act of 1933, as amended (the "Securities Act"), in
connection with the resale of any such security. "Rule 144A information" shall
be such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto).
The Holder of this Security [IF THIS SECURITY IS A GLOBAL SECURITY,
THEN INSERT -- (including any Person that has a beneficial interest in this
Security)] and the Common Stock issuable upon conversion hereof is entitled to
the benefits of a Registration Rights Agreement, dated as of January 20, 2000
(the "Registration Rights Agreement"), executed by the Company, a form of which
is attached to the Indenture as Exhibit D.
Whenever in this Security there is a reference, in any context, to the
payment of the principal of, premium, if any, or interest on, or in respect of,
any Security such mention shall be deemed to include mention of the payment of
Liquidated Damages payable as described in the Registration Rights Agreement to
the extent that, in such context, Liquidated Damages are, were or would be
payable in respect of this Security pursuant to such paragraph, and an express
mention of the payment of Liquidated Damages (if applicable) in any provisions
of this Security shall not be construed as excluding Liquidated Damages in those
provisions of this Security where such express mention is not made.
If the Holder of this Security [IF THIS SECURITY IS A GLOBAL SECURITY,
THEN INSERT -- (including any Person that has a beneficial interest in this
Security)] elects to sell this Security pursuant to the Shelf Registration
Statement then, by its acceptance hereof, such Holder of this Security agrees to
be bound by the terms of the Registration Rights Agreement relating to the
Registrable Securities which are the subject of such election.
If a Change in Control occurs, the Holder of this Security, at the
Holder's option, shall have the right, in accordance with the provisions of the
Indenture, to require the Company to repurchase this Security (or any portion of
the principal amount hereof that is equal to U.S.$1,000 or any integral multiple
of U.S.$1,000) for cash at a Repurchase Price equal to 100% of the principal
amount thereof plus interest accrued to the Repurchase Date. At the option of
the Company, the Repurchase Price may be paid in cash or, subject to the
conditions provided in the Indenture, by delivery of shares of Common Stock
having a fair market value equal to the Repurchase Price. For purposes of this
paragraph, the fair market value of shares of Common Stock shall be determined
by the Company and shall be equal to 95% of the average of the Closing Price Per
Share for the five consecutive Trading Days immediately preceding and including
the third Trading Day prior to the Repurchase Date. Whenever in this Security
there is a reference, in any context, to the principal of any Security as of any
time, such reference shall be deemed to include reference to the Repurchase
Price payable in respect of such Security to the extent that such Repurchase
Price is, was or would be so payable at such time, and
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<PAGE>
express mention of the Repurchase Price in any provision of this Security shall
not be construed as excluding the Repurchase Price so payable in those
provisions of this Security when such express mention is not made; PROVIDED,
HOWEVER, that, for the purposes of the second succeeding paragraph, such
reference shall be deemed to include reference to the Repurchase Price only to
the extent the Repurchase Price is payable in cash.
[THE FOLLOWING PARAGRAPH SHALL APPEAR IN EACH SECURITY THAT IS NOT A
GLOBAL SECURITY:
In the event of redemption, repurchase or conversion of this Security
in part only, a new Security or Securities for the unredeemed, unrepurchased or
unconverted portion hereof will be issued in the name of the Holder hereof.]
[THE FOLLOWING PARAGRAPH SHALL APPEAR IN EACH GLOBAL SECURITY:
In the event of a deposit or withdrawal of an interest in this
Security, including an exchange, transfer, redemption, repurchase or conversion
of this Security in part only, the Trustee, as custodian of the Depositary,
shall make an adjustment on its records to reflect such deposit or withdrawal in
accordance with the Applicable Procedures.]
The indebtedness evidenced by this Security is, to the extent and in
the manner provided in the Indenture, subordinate and subject in right of
payment to the prior payment in full of all Senior Debt of the Company, and this
Security is issued subject to such provisions of the Indenture with respect
thereto. Each Holder of this Security, by accepting the same, (a) agrees to and
shall be bound by such provisions, (b) authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes.
If an Event of Default shall occur and be continuing, the principal of
all the Securities, together with accrued interest to the date of declaration,
may be declared due and payable in the manner and with the effect provided in
the Indenture. Upon payment (i) of the amount of principal so declared due and
payable, together with accrued interest to the date of declaration, and (ii) of
interest on any overdue principal and, to the extent permitted by applicable
law, overdue interest, all of the Company's obligations in respect of the
payment of the principal of and interest on the Securities shall terminate.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities under the Indenture at
any time by the Company and the Trustee with the written consent of the Holders
of a majority in aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
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<PAGE>
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security or such other Security.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default, the Holders of not
less than 25% in aggregate principal amount of the Outstanding Securities shall
have made written request to the Trustee to institute proceedings in respect of
such Event of Default as Trustee and furnished the Trustee reasonable indemnity,
and shall have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and furnishing of indemnity. The foregoing shall
not apply to any suit instituted by the Holder of this Security for the
enforcement of any payment of principal hereof, premium, if any, or interest
hereon (including Liquidated Damages) on or after the respective due dates
expressed herein or for the enforcement of the right to convert this Security as
provided in the Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall, as between the Company and any Holder, alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, premium, if any, and interest on (including Liquidated
Damages) this Security at the times, places and rate, and in the coin or
currency, herein prescribed or to convert this Security as provided in the
Indenture.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of Securities is registrable on the Security Register
upon surrender of a Security for registration of transfer at the Corporate Trust
Office of the Trustee or at such other office or agency of the Company as may be
designated by it for such purpose in the Borough of Manhattan, The City of New
York, or at such other offices or agencies as the Company may designate, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder thereof or his attorney duly authorized in writing, and thereupon one or
more new Securities, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees by
the Security Registrar. No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to recover any tax or other governmental charge payable in
connection therewith.
Prior to due presentation of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner thereof for
all purposes, whether or not such Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
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<PAGE>
Interest on the Securities (including any Liquidated Damages) shall be
computed on the basis of a 360-day year of twelve 30-day months.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, UNITED STATES OF AMERICA.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
SECTION 2.3 FORM OF CERTIFICATE OF AUTHENTICATION.
The Trustee's certificates of authentication shall be in substantially
the following form:
Dated: [Date of Authentication]
This is one of the Securities referred to in the within-mentioned
Indenture.
State Street Bank and Trust Company, as Trustee
By: _________________________________
Authorized Signatory
SECTION 2.4 FORM OF CONVERSION NOTICE.
CONVERSION NOTICE
The undersigned Holder of this Security hereby irrevocably exercises
the option to convert this Security, or any portion of the principal amount
hereof (which is an integral multiple of U.S.$1,000) below designated, into
shares of Common Stock in accordance with the terms of the Indenture referred to
in this Security, and directs that such shares, together with a check in payment
for any fractional share and any Securities representing any unconverted
principal amount hereof, be delivered to and be registered in the name of the
undersigned unless a different name has been indicated below. If shares of
Common Stock or Securities are to be registered in the name of a Person other
than the undersigned,
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<PAGE>
the undersigned will pay all transfer taxes payable with respect thereto. Any
amount required to be paid by the undersigned on account of interest accompanies
this Security.
Dated: ___________________________
______________________________
Signature
NOTICE: THE SIGNATURE TO THE FOREGOING NOTICE MUST CORRESPOND TO THE NAME AS
WRITTEN UPON THE FACE OF THIS SECURITY IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ANY CHANGE WHATSOEVER.
<TABLE>
<CAPTION>
If shares or Securities are to be registered in the If only a portion of the Securities is to be
name of a Person other than the Holder, please converted, please indicate:
print such Person's name and address:
<S> <C>
1. Principal amount to be converted:
____________________________________________________
Name U.S.$_______
____________________________________________________ 2. Principal amount and denomination of
Address Securities representing unconverted principal
amount to be issued:
____________________________________________________
Social Security or other Taxpayer Identification Amount: U.S.$_______
Number, if any
Denominations:
____________________________________________________ U.S.$_______
(any integral multiple of U.S.$1,000)
__________________________________________________
Signature
Signature(s) must be guaranteed by an Eligible
Guarantor Institution with membership in an
approved signature guarantee program pursuant
to Rule 17Ad - 15 under the Securities Exchange
Act of 1934.
__________________________________________________
Signature Guaranteed
</TABLE>
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<PAGE>
SECTION 2.5 FORM OF ELECTION OF HOLDER TO REQUIRE REPURCHASE.
ELECTION OF HOLDER TO REQUIRE REPURCHASE
1. Pursuant to SECTION 13.1 of the Indenture, the undersigned hereby
elects to have this Security repurchased by the Company.
2. The undersigned hereby directs the Trustee or the Company to pay it
or _______________ an amount in cash or, at the Company's election, Common Stock
valued as set forth in the Indenture, equal to 100% of the principal amount to
be repurchased (as set forth below), plus interest accrued to the Repurchase
Date, as provided in the Indenture.
Dated: ___________________________
Signature(s) must be
guaranteed by an Eligible
Guarantor Institution with
membership in an approved
signature guarantee program
pursuant to Rule 17Ad - 15
under the Securities
Exchange Act of 1934.
___________________________
Signature
Signature(s) must be
guaranteed by an Eligible
Guarantor Institution with
membership in an approved
signature guarantee program
pursuant to Rule 17Ad - 15
under the Securities
Exchange Act of 1934.
___________________________
Signature
Principal amount to be repurchased
(an amount of U.S. $1,000 or an integral
multiple of U.S.$1,000):
Remaining principal amount following such repurchase:
___________________________
Signature
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<PAGE>
NOTICE: The Signature to the foregoing Election must correspond to the Name as
written upon the face of this Security in every particular, without alteration
or any change whatsoever.
-33-
<PAGE>
ARTICLE III
THE SECURITIES
SECTION 3.1 TITLE AND TERMS.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is limited to U.S.$400,000,000, except for
Securities authenticated and delivered in exchange for, or in lieu of, other
Securities pursuant to SECTION 3.4, 3.5, 3.6, 8.5, 10.8, 11.2 or 13.3(E).
The Securities shall be known and designated as the "5.50% Convertible
Subordinated Notes due January 15, 2007" of the Company. Their Stated Maturity
shall be January 15, 2007 and they shall bear interest on their principal amount
from the date of the Time of Delivery, payable semi-annually in arrears on
January 15 and July 15 in each year, commencing July 15, 2000, at the rate of
5.50% per annum until the principal thereof is due and at the rate of 5.50% per
annum on any overdue principal and, to the extent permitted by law, on any
overdue interest; PROVIDED, HOWEVER, that payments shall only be made on
Business Days as provided in SECTION 1.12.
The principal of, premium, if any, and interest on the Securities shall
be payable as provided in the form of Securities set forth in SECTION 2.2, and
the Repurchase Price, whether payable in cash or in shares of Common Stock,
shall be payable at such places as are identified in the Company Notice given
pursuant to SECTION 13.3 (any city in which any Paying Agent is located being
herein called a "Place of Payment").
The Registrable Securities are entitled to the benefits of the
Registration Rights Agreement, including the payment of Liquidated Damages and
additional interest as provided by the Registration Rights Agreement.
The Securities shall be redeemable at the option of the Company, as
provided in ARTICLE TEN and shall be issued in the form of Securities set forth
in SECTION 2.2.
The Securities shall be convertible as provided in ARTICLE ELEVEN (any
city in which any Conversion Agent is located being herein called a "Place of
Conversion").
The Securities shall be subordinated in right of payment to Senior Debt
of the Company as provided in ARTICLE TWELVE.
The Securities shall be subject to repurchase by the Company at the
option of the Holders as provided in ARTICLE THIRTEEN.
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<PAGE>
SECTION 3.2 DENOMINATIONS.
The Securities shall be issuable only in registered form, without
coupons, in denominations of U.S.$1,000 and integral multiples thereof.
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its Chief Executive
Officer, its President, its Chief Financial Officer or one of its Vice
Presidents, under a facsimile of its corporate seal reproduced thereon attested
by its Secretary or one of its Assistant Secretaries. Any such signature may be
manual or facsimile.
Securities bearing the manual or facsimile signature of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee or to its order for authentication, together with a Company Order
for the authentication and delivery of such Securities, and the Trustee in
accordance with such Company Order shall authenticate and make available for
delivery such Securities as in this Indenture provided and not otherwise.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature of an authorized signatory, and such
certificate upon any Security shall be conclusive evidence, and the only
evidence, that such Security has been duly authenticated and delivered
hereunder.
SECTION 3.4 GLOBAL SECURITIES; NON-GLOBAL SECURITIES.
(A) Global Securities
(a) Each Global Security authenticated under this Indenture shall be
registered in the name of the Depositary designated by the Company for such
Global Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security shall
constitute a single Security for all purposes of this Indenture.
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(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the name
of any Person other than the Depositary for such Global Security or a nominee
thereof unless (i) such Depositary (A) has notified the Company that it is
unwilling or unable to continue as Depositary for such Global Security or (B)
has ceased to be a clearing agency registered as such under the Exchange Act or
announces an intention permanently to cease business or does in fact do so or
(ii) there shall have occurred and be continuing an Event of Default with
respect to such Global Security.
(c) If any Global Security is to be exchanged for other Securities or
canceled in whole, it shall be surrendered by or on behalf of the Depositary or
its nominee to the Trustee, as Security Registrar, for exchange or cancellation,
as provided in this ARTICLE THREE. If any Global Security is to be exchanged for
other Securities or cancelled in part, or if another Security is to be exchanged
in whole or in part for a beneficial interest in any Global Security, in each
case, as provided in SECTION 3.5, then either (i) such Global Security shall be
so surrendered for exchange or cancellation, as provided in this ARTICLE THREE,
or (ii) the principal amount thereof shall be reduced or increased by an amount
equal to the portion thereof to be so exchanged or cancelled, or equal to the
principal amount of such other Security to be so exchanged for a beneficial
interest therein, as the case may be, by means of an appropriate adjustment made
on the records of the Trustee, as Security Registrar, whereupon the Trustee, in
accordance with the Applicable Procedures, shall instruct the Depositary or its
authorized representative to make a corresponding adjustment to its records.
Upon any such surrender or adjustment of a Global Security, the Trustee shall,
subject to SECTION 3.5(C) and as otherwise provided in this ARTICLE THREE,
authenticate and make available for delivery any Securities issuable in exchange
for such Global Security (or any portion thereof) to or upon the written order
of, and registered in such names as may be directed in writing by, the
Depositary or its authorized representative. Upon the request of the Trustee in
connection with the occurrence of any of the events specified in the preceding
paragraph, the Company shall promptly make available to the Trustee a reasonable
supply of Securities that are not in the form of Global Securities. The Trustee
shall be entitled to rely upon any order, direction or request of the Depositary
or its authorized representative which is given or made pursuant to this ARTICLE
THREE if such order, direction or request is given or made in accordance with
the Applicable Procedures.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this ARTICLE THREE or otherwise, shall be
authenticated and delivered in the form of, and shall be a registered Global
Security, unless such Security is registered in the name of a Person other than
the Depositary for such Global Security or a nominee thereof, in which case such
Security shall be authenticated and delivered in definitive, fully registered
form, without interest coupons.
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(e) The Depositary or its nominee, as registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under the
Indenture and the Securities, and owners of beneficial interests in a Global
Security shall hold such interests pursuant to the Applicable Procedures.
Accordingly, any such owner's beneficial interest in a Global Security will be
shown only on, and the transfer of such interest shall be effected only through,
records maintained by the Depositary or its nominee or its Agent Members and
such owners of beneficial interests in a Global Security will not be considered
the owners or holders thereof.
(B) NON-GLOBAL SECURITIES
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to SECTION 9.2, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Company shall execute and the Trustee shall authenticate and make
available for delivery in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 3.5 REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE;
RESTRICTIONS ON TRANSFER.
(a) The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company designated pursuant to SECTION 9.2 being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as it may prescribe and provide to the Trustee in
writing, the Company shall provide for the registration of Securities and of
transfers of Securities. The Trustee is hereby appointed "Security Registrar"
for the purpose of registering Securities and transfers and exchanges of
Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to SECTION 9.2 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or
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more new Securities of any authorized denominations and of a like aggregate
principal amount and bearing such restrictive legends as may be required by this
Indenture.
At the option of the Holder, and subject to the other provisions of
this SECTION 3.5, Securities may be exchanged for other Securities of any
authorized denomination and of a like aggregate principal amount, upon surrender
of the Securities to be exchanged at any such office or agency. Whenever any
Securities are so surrendered for exchange, and subject to the other provisions
of this SECTION 3.5, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, the Securities which the Holder
making the exchange is entitled to receive. Every Security presented or
surrendered for registration of transfer or for exchange shall (if so required
by the Company or the Security Registrar) be duly endorsed, or be accompanied by
a written instrument of transfer in form satisfactory to the Security Registrar
duly executed, by the Holder thereof or his attorney duly authorized in writing.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and subject to the other provisions of this SECTION 3.5, entitled to the
same benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange.
No service charge shall be made for any registration of transfer or
exchange of Securities except as provided in SECTION 3.6, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Securities, other than exchanges pursuant to SECTION 3.4, 10.8, 11.2
or 13.3 (other than where the shares of Common Stock are to be issued or
delivered in a name other than that of the Holder of the Security) not involving
any transfer and other than any stamp and other duties, if any, which may be
imposed in connection with any such transfer or exchange by the United States or
any political subdivision thereof or therein, which shall be paid by the
Company.
In the event of a redemption of the Securities, the Company will not be
required (a) to register the transfer of or exchange Securities for a period of
15 days immediately preceding the date notice is given identifying the serial
numbers of the Securities called for such redemption or (b) to register the
transfer of or exchange any Security, or portion thereof, called for redemption.
(b) SECURITIES ACT LEGENDS. All Securities shall bear the applicable
Restricted Securities Legend and shall be subject to the restrictions on
transfer specified therein, subject to the following:
(i) subject to the following clauses of this SECTION 3.5(b), a
Security or any portion thereof which is exchanged, upon transfer or otherwise,
for a beneficial interest in a Global Security or any portion thereof shall be
deemed to bear and be subject to the Securities Act Legend borne by such Global
Security while represented thereby;
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(ii) subject to the following clauses of this SECTION 3.5(b),
a new Security which is not a Global Security and is issued in exchange for
another Security (including a beneficial interest in a Global Security) or any
portion thereof, upon transfer or otherwise shall bear the Securities Act Legend
borne by such other Security;
(iii) any Securities which are sold or otherwise disposed of
pursuant to an effective registration statement under the Securities Act
(including the Shelf Registration Statement), together with their Successor
Securities shall not bear a Securities Act Legend; the Company shall inform the
Trustee in writing of the effective date of any such registration statement
registering the Securities under the Securities Act and shall notify the Trustee
at any time when prospectuses may not be delivered with respect to Securities to
be sold pursuant to such registration statement. The Trustee may rely on such
written notice, and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with such notice or the aforementioned
registration statement;
(iv) at any time after the Securities may be freely
transferred without registration under the Securities Act or without being
subject to transfer restrictions pursuant to the Securities Act, a new Security
which does not bear a Securities Act Legend may be issued in exchange for or in
lieu of a Security (other than a Global Security) or any portion thereof which
bears such a legend if the Trustee has received an Unrestricted Securities
Certificate, satisfactory to the Trustee and duly executed by the Holder of such
legended Security or his attorney duly authorized in writing, and after such
date and receipt of such certificate, the Trustee shall authenticate and make
available for delivery such a new Security in exchange for or in lieu of such
other Security as provided in this ARTICLE THREE;
(v) a new Security which does not bear a Securities Act Legend
may be issued in exchange for or in lieu of a Security (other than a Global
Security) or any portion thereof which bears such a legend if, in the Company's
judgment, placing such a legend upon such new Security is not necessary to
ensure compliance with the registration requirements of the Securities Act, and
the Trustee, at the written direction of the Company, shall authenticate and
make available for delivery such a new Security as provided in this ARTICLE
THREE; and
(vi) notwithstanding the foregoing provisions of this SECTION
3.5(B), a Successor Security of a Security that does not bear a Securities Act
Legend shall not bear such form of legend unless the Company has reasonable
cause to believe that such Successor Security is a "restricted security" within
the meaning of Rule 144, in which case the Trustee, at the direction of the
Company, shall authenticate and make available for delivery a new Security
bearing a Restricted Securities Legend in exchange for such Successor Security
as provided in this ARTICLE THREE.
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(c) TRANSFER PROCEDURES.
(i) If an owner of a beneficial interest in a Global Security
deposited with the Depositary or with the Trustee as custodian for the
Depositary wishes at any time to transfer its interest in such Global Security
to a Person who is required to take delivery thereof in the form of a Security
in definitive form, such owner may, subject to the Applicable Procedures, cause
the exchange of such interest for one or more Securities in definitive form of
any authorized denomination or denominations and of the same aggregate principal
amount. Upon receipt by the Trustee, as Security Registrar, of (1) written
instructions from the Depositary directing the Trustee to authenticate and
deliver one or more Securities in definitive form of the same aggregate
principal amount as the beneficial interest in the Global Security to be
exchanged, such instructions to contain the name or names of the designated
transferee or transferees, the authorized denomination or denominations of the
Securities in definitive form to be issued and appropriate delivery
instructions, (2) if the Security acquired is required to bear a Restricted
Securities Legend, a certificate substantially in the form of Exhibit A attached
hereto given by the owner of such beneficial interest, (3) if the Security
acquired is required to bear a Restricted Securities Legend, a certificate
substantially in the form of Exhibit B attached hereto given by the person
acquiring the Securities in definitive form for which such interest is being
exchanged, to the effect set forth therein, and (4) such other certifications or
other information and, in the case of transfers other than pursuant to Rule 144A
or pursuant to an effective registration statement under the Securities Act,
legal opinions as the Company may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act, then upon
Company Order, the delivery of which shall evidence the Company's satisfaction
with such compliance with paragraph (4) above, the Trustee, as Security
Registrar, will instruct the Depositary to reduce or cause to be reduced such
Global Security by the aggregate principal amount of the beneficial interest
therein to be exchanged and to debit or cause to be debited from the account of
the Person making such transfer the beneficial interest in the Global Security
that is being transferred as provided in Section 3.4(A)(c), and concurrently
with such reduction and debit the Company shall execute, and the Trustee shall
authenticate and deliver, one or more Securities in definitive form of the same
aggregate principal amount in accordance with the instructions referred to
above.
(ii) If a Holder of a Security in definitive form wishes at
any time to transfer such Security (or portion thereof) to a person who is
required to take delivery thereof in the form of a Security in definitive form
bearing a Restricted Securities Legend, such Holder may, subject to the
restrictions on transfer set forth herein and in such Security in definitive
form, cause the transfer of such Security (or any portion thereof in a principal
amount equal to an authorized denomination) to such transferee. Upon receipt by
the Trustee, as Security Registrar, of (1) such Security in definitive form,
duly endorsed as provided herein, (2) written instructions from such Holder
directing the Trustee to authenticate and deliver one or more Securities in
definitive form of the same aggregate principal amount as the Security in
definitive form (or portion thereof) to be transferred, such instructions to
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contain the name or names of the designated transferee or transferees, the
authorized denomination or denominations of the Securities in definitive form to
be so issued and appropriate delivery instructions, (3) if the Security acquired
is required to bear a Restricted Securities Legend, a certificate from the
holder of the Security in definitive form to be transferred in substantially the
form of Exhibit A attached hereto, (4) if the Security acquired is required to
bear a Restricted Securities Legend, a certificate substantially in the form of
Exhibit B attached hereto given by the Person acquiring the Securities in
definitive form (or portion thereof), to the effect set forth therein, and (5)
such other certifications or other information and, in the case of transfers
other than pursuant to Rule 144A or pursuant to an effective registration
statement under the Securities Act, legal opinions as the Company may reasonably
require to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act, then upon Company Order, the delivery of which shall evidence
the Company's satisfaction with such compliance with paragraph (5) above, the
Trustee, as Security Registrar, shall cancel or cause to be canceled such
Security in definitive form and concurrently therewith, the Company shall
execute, and the Trustee shall authenticate and deliver, one or more Securities
in definitive form in the appropriate aggregate principal amount, in accordance
with the instructions referred to above and, if only a portion of a Security in
definitive form is transferred as aforesaid, concurrently therewith the Company
shall execute and the Trustee shall execute and deliver to the transferor a
Security in definitive form in a principal amount equal to the principal amount
which has not been transferred.
(iii) If a Holder of a Security in definitive form wishes at
any time to transfer such Security (or portion thereof) to a Person who is not
required to take delivery thereof in the form of a Security in definitive form,
such Holder shall, subject to the restrictions on transfer set forth herein and
in such Security in definitive form and the Applicable Procedures cause the
exchange of such Security in definitive form for a beneficial interest in a
Global Security. Upon receipt by the Trustee, as Security Registrar, of (1) such
Security in definitive form, duly endorsed as provided herein, (2) written
instructions from such Holder directing the Trustee to increase the aggregate
principal amount of the applicable Global Security deposited with the Depository
or with the Trustee as custodian for the Depository by the same aggregate
principal amount at maturity as the Security in definitive form to be exchanged,
such instructions to contain the name or names of a member of, or participant
in, the Depository that is designated as the transferee, the account of such
member or participant and other appropriate delivery instructions, (3) a
certificate from the transferor satisfactory to the Trustee to the effect that
such transfer complies with Rule 144A or Regulation D, if the applicable Global
Security bears a Restricted Securities Legend, under the Securities Act and is
otherwise being made to a Person who is not required to take a delivery of such
Security in the form of a Security in definitive form and (4) such other
certifications or other information and, in the case of transfers other than
pursuant to Rule 144A or pursuant to an effective registration statement under
the Securities Act, legal opinions as the Company may reasonably require to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act,
then, upon Company Order, the delivery of which shall evidence the Company's
satisfaction with such compliance
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with paragraph (4) above, cancel or cause to be cancelled such Security in
definitive form and concurrently therewith shall increase the aggregate
principal amount of the applicable Global Security by the same aggregate
principal amount as the Security in definitive form cancelled as provided in
Section 3.4(A)(c) and, if only a portion of a Security in definitive form is
transferred as aforesaid, concurrently therewith the Company shall execute and
the Trustee shall execute and deliver to the transferor a Security in definitive
form in a principal amount equal to the principal amount which has not been
transferred.
(iv) In the event that a Global Security is exchanged for
Securities in definitive form pursuant to Section 3.4(A)(b), prior to the
effectiveness of a Shelf Registration Statement with respect to such Securities,
such Securities may be exchanged only in accordance with such procedures as are
substantially consistent with the provisions of clauses (i) and (ii) above
(including the certification requirements intended to ensure that such transfers
comply with Rule 144A or Regulation D under the Securities Act, as the case may
be) and such other procedures as may from time to time be adopted by the Company
and delivered to the Trustee in writing.
(d) Neither the Trustee, the Paying Agent nor any of their agents shall
(1) have any duty to monitor compliance with or with respect to any federal or
state or other securities or tax laws or (2) have any duty to obtain
documentation on any transfers or exchanges other than as specifically required
hereunder.
(e) Notwithstanding any term herein to the contrary, neither the
Trustee nor the Security Registrar shall be responsible for ensuring that or
ascertaining whether any transfer or exchange complies with the registration
requirements of or exemption from the Securities Act or other federal or state
securities laws that may be applicable; provided, however, that if a
certification is specifically required by the express terms of this SECTION
3.5(c) to be delivered to the Trustee by a purchaser or transferee of a
Security, the Trustee shall be under a duty to receive and examine the same and
determine whether it conforms on its face to the requirements hereof, and shall
promptly notify the party delivering the same if such certificate does not so
conform.
(f) Neither the Trustee nor the Security Registrar (nor any Paying
Agent) shall be responsible for the accuracy of the books and records of, and
shall have no liability for any actions or omissions of the Depository or any
agent member.
SECTION 3.6 MUTILATED, DESTROYED, LOST OR STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and make available for delivery
in exchange therefor a new Security of like tenor and principal amount and
bearing a number not contemporaneously outstanding.
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If there be delivered to the Company and to the Trustee:
(1) evidence to their satisfaction of the destruction, loss or theft of
any Security, and
(2) such security or indemnity as may be satisfactory to the Company
and the Trustee to save each of them and any agent of either of them harmless,
then, in the absence of actual notice to the Company or the Trustee that such
Security has been acquired by a bona fide purchaser, the Company shall execute
and the Trustee shall authenticate and make available for delivery, in lieu of
any such destroyed, lost or stolen Security, a new Security of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion, but
subject to any conversion rights, may, instead of issuing a new Security, pay
such Security, upon satisfaction of the conditions set forth in the preceding
paragraph.
Upon the issuance of any new Security under this SECTION 3.6, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto (other than any
stamp and other duties, if any, which may be imposed in connection therewith by
the United States or any political subdivision thereof or therein, which shall
be paid by the Company) and any other expenses (including the fees and expenses
of the Trustee) connected therewith.
Every new Security issued pursuant to this SECTION 3.6 in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and such new Security shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.
The provisions of this SECTION 3.6 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies of any Holder with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Subject to the last paragraph of this Section, interest on any Security
which is payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest.
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Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security, the date of the
proposed payment and the Special Record Date, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this Clause
provided. The Special Record Date for the payment of such Defaulted Interest
shall be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 12 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee, in the name and at the
expense of the Company, shall cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at such Holder's address as it
appears in the Security Register, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been so mailed, such Defaulted Interest
shall be paid to the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities may be listed, and upon such notice as may be required
by such exchange, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this Clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing and following provisions of this Section and
SECTION 3.5, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by such
other Security.
Interest on any Security which is converted in accordance with SECTION
11.2 during a Record Date Period shall be payable in accordance with the
provisions of SECTION 11.2.
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SECTION 3.8 PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of, premium, if any,
and (subject to SECTION 3.7) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 3.9 CANCELLATION.
All Securities surrendered for payment, redemption, repurchase,
registration of transfer or exchange or conversion shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee. All Securities so
delivered to the Trustee shall be canceled promptly by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for any Securities
canceled as provided in this SECTION 3.9. The Trustee shall destroy all canceled
Securities in accordance with its customary practices in effect from time to
time and shall deliver a certificate of such destruction to the Company.
SECTION 3.10 COMPUTATION OF INTEREST.
Interest on the Securities (including any Liquidated Damages) shall be
computed on the basis of a 360-day year of twelve 30-day months.
SECTION 3.11 CUSIP NUMBERS.
The Company in issuing Securities may use "CUSIP" numbers (if then
generally in use) in addition to serial numbers; the Trustee shall use such
CUSIP numbers in addition to serial numbers in notices of redemption and
repurchase as a convenience to Holders; PROVIDED that any such notice may state
that no representation is made as to the correctness of such CUSIP numbers
either as printed on the Securities or as contained in any notice of a
redemption or repurchase and that reliance may be placed only on the serial or
other identification numbers printed on the Securities, and any such redemption
or repurchase shall not be affected by any defect in or omission of such CUSIP
numbers. The Company shall promptly notify the Trustee in writing of any change
in any such CUSIP number.
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ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE.
---------------------------------------
This Indenture shall upon Company Request cease to be of further effect
(except as to any surviving rights of conversion, or registration of transfer or
exchange, or replacement of Securities herein expressly provided for and any
right to receive Liquidated Damages as provided in the form of Securities set
forth in SECTION 2.2 and the Company's obligations to the Trustee pursuant to
SECTION 6.7), and the Trustee, at the expense of the Company, shall execute
proper instruments in form and substance satisfactory to the Trustee
acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in SECTION 3.6 and (ii) Securities for
whose payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in SECTION 9.3) have been delivered to the Trustee
for cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee or its agent for cancellation (other than Securities referred to in
clauses (i) and (ii) of clause (1)(A) above)
(i) have become due and payable, or
(ii) will have become due and payable at their
Stated Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of clause (i), (ii) or (iii) of this Clause 1(B),
has deposited or caused to be deposited with the Trustee as trust funds
(immediately available to the Holders in the case of clause (i)) in trust for
the purpose an amount sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for cancellation, for
principal, premium, if any, and interest (including any Liquidated Damages) to
the date of such deposit (in the case of Securities
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which have become due and payable) or to the Stated Maturity or Redemption Date,
as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under SECTION 6.7, the obligations of
the Company to any Authenticating Agent under SECTION 6.12, the obligations of
the Trustee under SECTION 4.2 and the last paragraph of SECTION 9.3 and the
obligations of the Company and the Trustee under SECTION 3.5 and ARTICLE ELEVEN
shall survive. Funds held in trust pursuant to this Section are not subject to
the provisions of ARTICLE TWELVE.
SECTION 4.2 APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of SECTION 9.3, all
money deposited with the Trustee pursuant to SECTION 4.1 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent), to the Persons entitled
thereto, of the principal, premium, if any, and interest for whose payment such
money has been deposited with the Trustee.
All moneys deposited with the Trustee pursuant to SECTION 4.1 (and held
by it or any Paying Agent) for the payment of Securities subsequently converted
shall be returned to the Company upon Company Request.
ARTICLE V
REMEDIES
SECTION 5.1 EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be occasioned by the provisions of ARTICLE TWELVE or be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
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(1) default in the payment of the principal of or premium, if any, on
any Security at its Maturity, whether or not the such payment is prohibited by
the subordination provisions of this Indenture; or
(2) default in the payment of any interest (including any Liquidated
Damages) upon any Security when it becomes due and payable, and continuance of
such default for a period of 30 days, whether or not the such payment is
prohibited by the subordination provisions of this Indenture; or
(3) failure by the Company to give the Company Notice, if required, in
accordance with SECTION 13.3; or
(4) default in the performance, or breach, of any covenant or warranty
of the Company in this Indenture (other than a covenant or warranty a default in
the performance or breach of which is specifically dealt with elsewhere in this
Section), and continuance of such default or breach for a period of 60 days
after there has been given, by registered or certified mail, to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities a written notice specifying such
default or breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" hereunder; or
(5) a default in the payment when due (after expiration of any
applicable grace period) under any bond, debenture, note or other evidence of
any indebtedness for money borrowed by the Company or any Significant Subsidiary
of the Company or under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any indebtedness for
money borrowed by the Company or any Significant Subsidiary of the Company of a
principal amount in excess of U.S. $10 million, whether such indebtedness now
exists or shall hereafter be created, or a default under any bond, debenture,
note or other evidence of indebtedness for money borrowed by the Company or any
Significant Subsidiary of the Company or under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured or
evidenced any indebtedness for money borrowed by the Company or any Significant
Subsidiary of the Company resulting in the acceleration of such indebtedness in
excess of U.S. $10 million, if the indebtedness is not discharged, or the
acceleration is not annulled, within 30 days after written notice to the Company
by the Trustee or the holders of at least 25% in aggregate principal amount of
the outstanding notes; or
(6) the entry by a court having jurisdiction in the premises of (A) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or (B) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Company or of any substantial part of its property, or
ordering the winding up or
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liquidation of its affairs, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for a period of
90 consecutive days; or
(7) the commencement by the Company of a voluntary case or proceeding
under any applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by it to the entry of a decree or order
for relief in respect of the Company in an involuntary case or proceeding under
any applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or answer or consent
seeking reorganization or similar relief under any applicable Federal or State
law, or the consent by it to the filing of such petition or to the appointment
of or taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or of any substantial part
of its property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the Company
in furtherance of any such action.
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in
Section 5.1(6) or 5.1(7)) occurs and is continuing, then in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal of all the Securities to be due
and payable immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders), and upon any such declaration such principal
and all accrued interest thereon shall become immediately due and payable. If an
Event of Default specified in SECTION 5.1(6) or 5.1(7) occurs, the principal of,
and accrued interest on, all the Securities shall IPSO FACTO become immediately
due and payable without any declaration or other Act of the Holder or any act on
the part of the Trustee.
At any time after such declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as hereinafter in this ARTICLE FIVE provided, the Holders of a
majority in aggregate principal amount of the Outstanding Securities, by written
notice to the Company and the Trustee, may rescind and annul such declaration
and its consequences if
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay
(A) all overdue interest (including any Liquidated
Damages) on all Securities,
(B) the principal of and premium, if any, on any Securities
which have become due otherwise than by such declaration of acceleration and any
interest (including any Liquidated Damages) thereon at the rate borne by the
Securities,
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(C) to the extent permitted by applicable law, interest upon
overdue interest at a rate of 5.50% per annum, and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel;
and
(2) all Events of Default, other than the nonpayment of the principal
of, and any premium and interest on, Securities which have become due solely by
such declaration of acceleration, have been cured or waived as provided in
SECTION 5.13.
No rescission or annulment referred to above shall affect any
subsequent default or impair any right consequent thereon.
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE.
The Company covenants that if
(1) default is made in the payment of any interest (including any
Liquidated Damages) on any Security when it becomes due and payable and such
default continues for a period of 30 days, or
(2) default is made in the payment of the principal of or premium, if
any, on any Security at the Maturity thereof,
the Company will upon demand of the Trustee pay to it, for the benefit of the
Holders of such Securities the whole amount then due and payable on such
Securities for principal and interest (including any Liquidated Damages) and
interest on any overdue principal and premium, if any, and, to the extent
permitted by applicable law, on any overdue interest (including any Liquidated
Damages), at a rate of 5.50% per annum, and in addition thereto, such further
amount as shall be sufficient to cover the reasonable costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
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If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy.
SECTION 5.4 TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or the
creditors of either, the Trustee (irrespective of whether the principal of, and
any interest on, the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand on the Company for the payment of overdue principal
or interest) shall be entitled and empowered, by intervention in such proceeding
or otherwise,
(1) to file and prove a claim for the whole amount of principal,
premium, if any, and interest (including any Liquidated Damages) owing and
unpaid in respect of the Securities and take such other actions, including
participating as a member, voting or otherwise, of any official committee of
creditors appointed in such matter, and to file such other papers or documents,
in each of the foregoing cases, as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and of the Holders of Securities allowed in such judicial
proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claim and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders of Securities, to pay to the Trustee any amount due to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel and any other amounts due the Trustee under SECTION 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder of a Security
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder of a Security in any such proceeding;
PROVIDED,
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HOWEVER, that the Trustee may, on behalf of such Holders, vote for the election
of a trustee in bankruptcy or similar official.
SECTION 5.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which judgment
has been recovered.
SECTION 5.6 APPLICATION OF MONEY COLLECTED.
Subject to ARTICLE TWELVE, any money collected by the Trustee pursuant
to this ARTICLE FIVE shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money on
account of principal, premium, if any, or interest, upon presentation of the
Securities and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under SECTION 6.7;
SECOND: To the payment of the amounts then due and unpaid for principal
of, premium, if any, or interest (including any Liquidated Damages) on, the
Securities in respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal, premium, if any, and
interest (including any Liquidated Damages), respectively; and
THIRD: Any remaining amounts shall be repaid to the Company.
SECTION 5.7 LIMITATION ON SUITS.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of
an Event of Default that is continuing at the time of such institution;
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(2) the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have furnished to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request; and
(4) the Trustee for 60 days after its receipt of such notice, request
and furnishing of indemnity has failed to institute any such proceeding;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
SECTION 5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST AND TO CONVERT.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of, premium, if any, and (subject to SECTION
3.7) interest (including any Liquidated Damages) on such Security on the
respective Stated Maturities expressed in such Security (or, in the case of
redemption or repurchase, on the Redemption Date or Repurchase Date, as the case
may be), and to convert such Security in accordance with ARTICLE ELEVEN, and to
institute suit for the enforcement of any such payment and right to convert, and
such rights shall not be impaired without the consent of such Holder.
SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder of a Security has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, the Trustee
and the Holders of Securities shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and such Holders shall continue as though no such proceeding had been
instituted.
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SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
SECTION 3.6, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders of Securities is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 5.11 DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Security to
exercise any right or remedy accruing upon any Event of Default shall impair any
such right or remedy or constitute a waiver of any such Event of Default or any
acquiescence therein. Every right and remedy given by this ARTICLE FIVE or by
law to the Trustee or to the Holders of Securities may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or (subject to the
limitations contained in this Indenture) by the Holders of Securities as the
case may be.
SECTION 5.12 CONTROL BY HOLDERS OF SECURITIES.
The Holders of a majority in principal amount of the Outstanding
Securities shall 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, PROVIDED that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture, and
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
In the event of such direction, the Trustee shall have no duty to ascertain
whether such actions or forbearances are unduly prejudicial to any Holders.
SECTION 5.13 WAIVER OF PAST DEFAULTS.
The Holders, either (a) through the written consent of not less than a
majority in principal amount of the Outstanding Securities, or (b) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of at least a majority in principal
amount of the Outstanding Securities represented at such meeting, may on behalf
of the
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Holders of all the Securities waive any past default hereunder and its
consequences, except a default (1) in the payment of the principal of, premium,
if any, or interest (including any Liquidated Damages) on any Security, or (2)
in respect of a covenant or provision hereof which under ARTICLE EIGHT cannot be
modified or amended without the consent of the Holder of each Outstanding
Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 5.14 UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees and
expenses, against any party litigant in such suit, having due regard to the
merits and good faith of the claims or defenses made by such party litigant; but
the provisions of this SECTION 5.14 shall not apply to any suit instituted by
the Company, to any suit instituted by the Trustee, to any suit instituted by
any Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Securities, or to any suit instituted by any
Holder of any Security for the enforcement of the payment of the principal of,
premium, if any, or interest (including any Liquidated Damages) on any Security
on or after the respective Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption or repurchase, on or after the
Redemption Date or Repurchase Date, as the case may be) or for the enforcement
of the right to convert any Security in accordance with ARTICLE ELEVEN.
ARTICLE VI
THE TRUSTEE
SECTION 6.1 CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the Trustee;
and
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(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in the case of
any such certificates or opinions which by any provision hereof are specifically
required to be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform on their face to the
requirements of this Indenture, but not to verify the contents thereof.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, EXCEPT that
(1) this paragraph (c) shall not be construed to limit
the effect of paragraph (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in aggregate principal amount of the
Outstanding Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
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SECTION 6.2 NOTICE OF DEFAULTS.
Within 90 days after a Responsible Officer becomes aware of the
occurrence of any default hereunder as to which the Trustee has actually
received written notice, the Trustee shall give to all Holders of Securities, in
the manner provided in SECTION 1.6, notice of such default, unless such default
shall have been cured or waived; PROVIDED, HOWEVER, that, except in the case of
a default in the payment of the principal of, premium, if any, or interest on
any Security the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors or Responsible Officers of the Trustee in good faith determine that
the withholding of such notice is in the interest of the Holders; and PROVIDED,
FURTHER, that in the case of any default of the character specified in SECTION
5.1(4), no such notice to Holders of Securities shall be given until at least 60
days after the occurrence thereof. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default.
SECTION 6.3 CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of SECTION 6.1:
(1) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, Officers' Certificate, other certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, coupon, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors shall be sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an Officers' Certificate;
(4) the Trustee may consult with counsel of its selection (at the
expense of the Company) and the advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance
thereon;
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(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders of Securities pursuant to this Indenture, unless such Holders
shall have furnished to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, coupon, other evidence of indebtedness or other paper or document, but the
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(8) any permissive right of the Trustee hereunder shall not be
construed to be a duty; and
(9) the Trustee shall not be charged with knowledge of any Event of
Default, other than as described in SECTION 5.1(1) or (2), unless and except to
the extent actually known to a Responsible Officer or written notice thereof is
received by the Trustee at its Corporate Trust Office.
SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities (except the
Trustee's certificates of authentication) shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture, of the Securities or of the Common Stock issuable upon the conversion
of the Securities. The Trustee shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 6.5 MAY HOLD SECURITIES, ACT AS TRUSTEE UNDER OTHER INDENTURES.
The Trustee, any Authenticating Agent, any Paying Agent, any Conversion
Agent or any other agent of the Company or the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Securities and may otherwise
deal with the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, Paying Agent, Conversion Agent or such other agent.
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The Trustee may become and act as trustee under other indentures under
which other securities, or certificates of interest or participation in other
securities, of the Company are outstanding in the same manner as if it were not
Trustee hereunder.
SECTION 6.6 MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Company.
SECTION 6.7 COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee (and its directors, officers, employees
and agents) for, and to hold it harmless against, any and all loss, damage,
claim, liability or expense, including taxes (other than taxes based on the
income of the Trustee), incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of this
trust, including the reasonable costs, expenses and reasonable attorneys' fees
of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in SECTION 5.1(6) or SECTION 5.1(7), the expenses
(including the reasonable charges of its counsel) and the compensation for the
services are intended to constitute expenses of the administration under any
applicable Federal or State bankruptcy, insolvency or other similar law.
The Trustee is hereby granted a security interest in and a lien prior
to the Securities as to all property and funds held by it hereunder for any
amount owing it or any predecessor Trustee pursuant
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to this SECTION 6.7, except with respect to funds held in trust for the benefit
of the Holders of particular Securities.
The provisions of this Section shall survive the termination of this
Indenture or the earlier resignation or removal of the Trustee.
SECTION 6.8 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be a Person
that is eligible pursuant to the Trust Indenture Act to act as such, having a
combined capital and surplus of at least U.S.$500,000,000, subject to
supervision or examination by Federal or State authority, in good standing and
having an established place of business in the Borough of Manhattan, The City of
New York, or Boston, Massachusetts. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article and a
successor shall be appointed pursuant to SECTION 6.9.
SECTION 6.9 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of SECTION 6.10.
(b) The Trustee may resign at any time by giving written notice thereof
to the Company. If the instrument of acceptance by a successor Trustee required
by SECTION 6.10 shall not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in aggregate principal amount of the Outstanding Securities, delivered
to the Trustee and the Company. If the instrument of acceptance by a successor
Trustee required by SECTION 6.10 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of removal, the removed Trustee
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(d) If at any time:
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(1) the Trustee shall cease to be eligible under SECTION 6.8
and shall fail to resign after written request therefor by the Company or by any
Holder of a Security who has been a bona fide Holder of a Security for at least
six months, or
(2) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case (i) the Company by a Board Resolution may remove the
Trustee, or (ii) subject to SECTION 5.14, any Holder of a Security who has been
a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee and
shall comply with the applicable requirements of this Section and SECTION 6.10.
If, within one year after such resignation, removal or incapability, or
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of SECTION 6.10 become the successor
Trustee and supersede the successor Trustee appointed by the Company. If no
successor Trustee shall have been so appointed by the Company or the Holders of
Securities and accepted appointment in the manner required by this Section and
SECTION 6.10, any Holder of a Security who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders of
Securities in the manner provided in SECTION 1.6. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 6.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; but, on the request of the Company or the
successor Trustee, such retiring
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Trustee shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder. Upon
request of any such successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be eligible under this Article.
SECTION 6.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
PROVIDED such corporation shall be otherwise eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 6.12 AUTHENTICATING AGENTS.
The Trustee may, with the consent of the Company, appoint an
Authenticating Agent or Agents acceptable to the Company with respect to the
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities issued upon exchange or substitution pursuant to this
Indenture.
Securities authenticated by an Authenticating Agent shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder, and every reference in
this Indenture to the authentication and delivery of Securities by the Trustee
or the Trustee's certificate of authentication shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be subject to acceptance
by the Company and shall at all times be a corporation organized and doing
business under the laws of the United States of America, any State thereof or
the District of Columbia, authorized under such laws to act as Authenticating
Agent and subject to supervision or examination by government or other fiscal
authority. If at any time an Authenticating Agent shall cease to be eligible in
accordance with the provisions of this SECTION 6.12 such Authenticating Agent
shall resign immediately in the manner and with the effect specified in this
SECTION 6.12.
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Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, PROVIDED such corporation shall be otherwise eligible
under this SECTION 6.12, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this SECTION 6.12, the Trustee may appoint a successor
Authenticating Agent which shall be subject to acceptance by the Company. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this SECTION 6.12.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this SECTION 6.12.
If an Authenticating Agent is appointed with respect to the Securities
pursuant to this SECTION 6.12, the Securities may have endorsed thereon, in
addition to or in lieu of the Trustee's certification of authentication, an
alternative certificate of authentication in the following form:
This is one of the Securities referred to in the within-mentioned
Indenture.
State Street Bank and Trust Company,
as Trustee
By [Authenticating Agent],
as Authenticating Agent
By _______________________________
Authorized Signature
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SECTION 6.13 DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 6.14 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
ARTICLE VII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 7.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other Person
or convey, transfer or lease all its properties and assets substantially as an
entirety to any Person, and the Company shall not permit any Person to
consolidate with or merge into the Company or convey, transfer or lease all or
substantially all of its properties and assets substantially as an entirety to
the Company, unless:
(1) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially as
an entirety to any Person, the Person formed by such consolidation or into which
the Company is merged, or the Person which acquires by conveyance or transfer,
or which leases the properties and assets of the Company substantially as an
entirety, shall be a corporation, limited liability company, partnership or
trust, shall be organized and validly existing under the laws of the United
States of America, any State thereof or the District of Columbia and shall
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of, premium, if any, and interest (including Liquidated
Damages, if any, payable pursuant to the Registration Rights Agreement) on all
of the Securities as applicable, and the performance or observance of every
covenant of this Indenture on the part of the Company to be performed or
observed and shall have provided for conversion rights substantially in
accordance with ARTICLE ELEVEN;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event that after notice or lapse of time or both, would become
an Event of Default, shall have happened and be continuing; and
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(3) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with this
Article and that all conditions precedent provided for in this Article relating
to such transaction have been complied with, together with any documents
required under SECTION 8.3.
SECTION 7.2 SUCCESSOR SUBSTITUTED.
Upon any consolidation of the Company with, or merger of the Company
into any other Person or any conveyance, transfer or lease of the properties and
assets of the Company substantially as an entirety in accordance with SECTION
7.1, the successor Person formed by such consolidation or into or with which the
Company is merged or to which such conveyance, transfer or lease is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
Person had been named as the Company herein, and thereafter, except in the case
of a lease, the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE VIII
SUPPLEMENTAL INDENTURES
SECTION 8.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS
OF SECURITIES.
Without the consent of any Holders of Securities, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto for any of the
following purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants and obligations of the Company
herein and in the Securities as permitted by this Indenture; or
(2) to add to the covenants of the Company for the benefit of the
Holders of Securities or to surrender any right or power herein conferred upon
the Company; or
(3) to secure the Securities; or
(4) to make provision with respect to the conversion rights of Holders
of Securities pursuant to SECTION 11.11; or
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(5) to make any changes or modifications to this Indenture necessary in
connection with the registration of any Registrable Securities under the
Securities Act as contemplated by the Registration Rights Agreement, PROVIDED,
such action pursuant to this clause (5) shall not adversely affect the interests
of the Holders of Securities; or
(6) to comply with the requirements of the Trust Indenture Act or the
rules and regulations of the Commission thereunder in order to effect or
maintain the qualification of this Indenture under the Trust Indenture Act, as
contemplated by this Indenture or otherwise; or
(7) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee; or
(8) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or which is
otherwise defective, or to make any other provisions with respect to matters or
questions arising under this Indenture as the Company and the Trustee may deem
necessary or desirable, PROVIDED such action pursuant to this clause (8) shall
not adversely affect the interests of the Holders of Securities in any material
respect.
Upon Company Request, accompanied by a Board Resolution authorizing the
execution of any such supplemental indenture, and subject to and upon receipt by
the Trustee of the documents described in SECTION 8.3 hereof, the Trustee shall
join with the Company in the execution of any supplemental indenture authorized
or permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained.
SECTION 8.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS OF
SECURITIES.
With either (a) the written consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities, by the Act of said
Holders delivered to the Company and the Trustee, or (b) the adoption of a
resolution, at a meeting of Holders of the Outstanding Securities at which a
quorum is present, by the Holders of a majority in principal amount of the
Outstanding Securities represented at such meeting, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities under this
Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall, without
the consent or affirmative vote of the Holder of each Outstanding Security
affected thereby,
(1) change the Stated Maturity of the principal of, or any installment
of interest on, any Security, or reduce the principal amount or the rate of
interest payable thereon or any amount payable upon redemption or repurchase
pursuant to ARTICLE THIRTEEN thereof, or change the obligation of the
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Company to pay Liquidated Damages pursuant to the Registration Rights Agreement
in a manner adverse to the Holders, or change the coin or currency in which any
Security or the interest or any premium thereon or any other amount in respect
thereof is payable, or impair the right to institute suit for the enforcement of
any payment in respect of any Security on or after the Stated Maturity thereof
(or, in the case of redemption or any repurchase, on or after the Redemption
Date or Repurchase Date, as the case may be) or, except as permitted by SECTION
11.11, adversely affect the right to convert any Security as provided in ARTICLE
ELEVEN, or modify the provisions of this Indenture with respect to the
subordination of the Securities in a manner adverse to the Holders of
Securities; or
(2) reduce the percentage in principal amount of the Outstanding
Securities the consent of whose Holders is required for any such supplemental
indenture or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture; or
(3) modify any of the provisions of this Section and SECTION 5.13
except to increase any percentage contained herein or therein or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Security affected thereby; or
(4) modify the provisions of ARTICLE THIRTEEN in a manner adverse to
the Holders; or
(5) modify any of the provisions of SECTION 9.8 or 9.9.
It shall not be necessary for any Act of Holders of Securities under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
SECTION 8.3 EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to SECTIONS 6.1 AND 6.3) shall be fully protected in relying upon,
an Opinion of Counsel stating that the execution of such supplemental indenture
is authorized or permitted by this Indenture, and that such supplemental
indenture has been duly authorized, executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms. The Trustee may, but shall not
be obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 8.4 EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
appertaining thereto shall be bound thereby.
SECTION 8.5 REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Company and the
Trustee, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
SECTION 8.6 NOTICE OF SUPPLEMENTAL INDENTURES.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of SECTION 8.2, the Company
shall give notice to all Holders of Securities of such fact, setting forth in
general terms the substance of such supplemental indenture in the manner
provided in SECTION 1.6. Any failure of the Company to give such notice, or any
defect therein, shall not in any way impair or affect the validity of any such
supplemental indenture.
ARTICLE IX
COVENANTS
SECTION 9.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company covenants and agrees that it will duly and punctually pay
the principal of and premium, if any, and interest (including any Liquidated
Damages) on the Securities in accordance with the terms of the Securities and
this Indenture. The Company will deposit or cause to be deposited with the
Trustee, no later than the opening of business on the date of the Stated
Maturity of any Security or no later than the opening of business on the due
date for any installment of interest (including any Liquidated Damages), all
payments so due, which payments shall be in immediately available funds on the
date of such Stated Maturity or due date, as the case may be.
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SECTION 9.2 MAINTENANCE OF OFFICES OR AGENCIES.
The Company hereby appoints the Corporate Trust Office of the Trustee
as its agent in Boston, Massachusetts and at State Street Bank and Trust
Company, N.A., 61 Broadway in the Borough of Manhattan, The City of New York,
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange, where Securities
may be surrendered for conversion, and where notices and demands to or upon the
Company in respect of the Securities and this Indenture may be served.
The Company may at any time and from time to time vary or terminate the
appointment of any such agent or appoint any additional agents for any or all of
such purposes; PROVIDED, HOWEVER, that until all of the Securities have been
delivered to the Trustee for cancellation, or moneys sufficient to pay the
principal of, premium, if any, and interest on the Securities have been made
available for payment and either paid or returned to the Company pursuant to the
provisions of SECTION 9.3, the Company will maintain in the Borough of
Manhattan, The City of New York, or Boston, Massachusetts an office or agency
where Securities may be presented or surrendered for payment and conversion,
where Securities may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Company in respect of the Securities
and this Indenture may be served. The Company will give prompt written notice to
the Trustee, and notice to the Holders in accordance with SECTION 1.6, of the
appointment or termination of any such agents and of the location and any change
in the location of any such office or agency.
If at any time the Company shall fail to maintain any such required
office or agency, or shall fail to furnish the Trustee with the address thereof,
presentations and surrenders may be made and notices and demands may be served
on the Corporate Trust Office of the Trustee.
SECTION 9.3 MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company shall act as its own Paying Agent, it will, on or before
each due date of the principal of, premium, if any, or interest (including any
Liquidated Damages) on any of the Securities, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum sufficient to pay the
principal, premium, if any, or interest so becoming due until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and the Company
will promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, no
later than the opening of business on each due date of the principal of,
premium, if any, or interest on any Securities, deposit with the Trustee a sum
sufficient to pay the principal, premium, if any, or interest so becoming due,
such sum to be held for the benefit of the Persons entitled to such principal,
premium, if any, or interest, and
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(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of any failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of,
premium, if any, or interest on Securities for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Securities) in the making of any payment of principal, premium,
if any, or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held by
such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest on any Security and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on Company Request, or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Security shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in an Authorized Newspaper in each Place of Payment, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
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SECTION 9.4 EXISTENCE.
Subject to ARTICLE SEVEN, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its existence,
rights (charter and statutory) and franchises; PROVIDED, HOWEVER, that the
Company shall not be required to preserve any such right or franchise if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 9.5 MAINTENANCE OF PROPERTIES.
The Company will cause all properties used or useful in the conduct of
its business or the business of any Significant Subsidiary to be maintained and
in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business of the Company or such
Significant Subsidiary may be properly and advantageously conducted at all
times; provided, however, that nothing in this Section shall prevent the Company
from discontinuing the operation or maintenance of any of such properties if
such discontinuance is, in the judgment of the Company, desirable in the conduct
of its business or the business of any significant subsidiary and not
disadvantageous in any material respects to the Holders..
SECTION 9.6 PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge, or cause to be paid or discharged,
before the same may become delinquent, (1) all taxes, assessments and
governmental charges levied or imposed upon the Company or any Subsidiary or
upon the income, profits or property of the Company or any Subsidiary, and (2)
subject to SECTIONS 11.8 and 13.3(h), all stamps and other duties, if any, which
may be imposed by the United States or any political subdivision thereof or
therein in connection with the issuance, transfer, exchange or conversion of any
Securities or with respect to this Indenture; PROVIDED, HOWEVER, that, in the
case of clause (1), the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim (a) if
the failure to do so will not, in the aggregate, have a material adverse impact
on the Company, or (b) if the amount, applicability or validity is being
contested in good faith by appropriate proceedings.
SECTION 9.7 STATEMENT BY OFFICERS AS TO DEFAULT.
The Company shall deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate (one of the signers of which shall be the Company's principal
executive, principal financial or principal accounting officer), stating whether
or not to the best knowledge of the signers thereof the Company is in default in
the performance and
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observance of any of the terms, provisions and conditions of this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder) and, if the Company shall be in default, specifying all such defaults
and the nature and status thereof of which they may have knowledge.
The Company will deliver to the Trustee, forthwith upon becoming aware
of any default in the performance or observance of any covenant, agreement or
condition contained in this Indenture, or any Event of Default, an Officers'
Certificate specifying with particularity such default or Event of Default and
further stating what action the Company has taken, is taking or proposes to take
with respect thereto.
Any notice required to be given under this SECTION 9.7 shall be
delivered to the Trustee at its Corporate Trust Office.
SECTION 9.8 DELIVERY OF CERTAIN INFORMATION.
At any time when the Company is not subject to Section 13 or 15(d) of
the Exchange Act, upon the request of a Holder of a Security or the holder of
shares of Common Stock issued upon conversion thereof, the Company will promptly
furnish or cause to be furnished Rule 144A Information (as defined below) to
such Holder of Securities or such holder of shares of Common Stock issued upon
conversion of Securities, or to a prospective purchaser of any such security
designated by any such Holder or holder, as the case may be, to the extent
required to permit compliance by such Holder or holder with Rule 144A under the
Securities Act (or any successor provision thereto) in connection with the
resale of any such security; PROVIDED, HOWEVER, that the Company shall not be
required to furnish such information in connection with any request made on or
after the date which is two years from the later of (i) the date such a security
(or any such predecessor security) was last acquired from the Company or (ii)
the date such a security (or any such predecessor security) was last acquired
from an "affiliate" of the Company within the meaning of Rule 144 under the
Securities Act (or any successor provision thereto). "Rule 144A Information"
shall be such information as is specified pursuant to Rule 144A(d)(4) under the
Securities Act (or any successor provision thereto).
SECTION 9.9 RESALE OF CERTAIN SECURITIES; REPORTING ISSUER.
During the period beginning on the last date of original issuance of
the Securities and ending on the date that is two years from such date, the
Company will not, and will not permit any of its subsidiaries or other
"affiliates" (as defined under Rule 144 under the Securities Act or any
successor provision thereto) controlled by it to, resell (x) any Securities
which constitute "restricted securities" under Rule 144 or (y) any securities
into which the Securities have been converted under this Indenture which
constitute "restricted securities" under Rule 144, that in either case have been
reacquired by any of them. The Trustee shall have no responsibility in respect
of the Company's performance of its agreement in the preceding sentence.
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SECTION 9.10 WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
covenant or conditions set forth in this ARTICLE NINE or otherwise in this
Indenture (other than a covenant or condition which under ARTICLE EIGHT cannot
be modified or amended without the consent of the Holder of each Outstanding
Security affected), if before the time for such compliance the Holders shall,
through the written consent of, not less than a majority in principal amount of
the Outstanding Securities, either waive such compliance in such instance or
generally waive compliance with such covenant or condition, but no such waiver
shall extend to or affect such covenant or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the obligations
of the Company and the duties of the Trustee or any Paying or Conversion Agent
in respect of any such covenant or condition shall remain in full force and
effect.
ARTICLE X
REDEMPTION OF SECURITIES
SECTION 10.1 RIGHT OF REDEMPTION.
The Securities may be redeemed in accordance with the provisions of the
form of Securities set forth in SECTION 2.2.
SECTION 10.2 APPLICABILITY OF ARTICLE.
Redemption of Securities at the election of the Company or otherwise,
as permitted or required by any provision of the Securities or this Indenture,
shall be made in accordance with such provisions and this ARTICLE TEN.
SECTION 10.3 ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of any of the Securities, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such Redemption
Date.
SECTION 10.4 SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities are to be redeemed, the particular
Securities to be redeemed shall be selected by the Trustee within three Business
Days after it receives the notice described in
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SECTION 10.3, from the Outstanding Securities not previously called for
redemption, by such method as the Trustee may deem fair and appropriate.
If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as may be) to be the portion selected for redemption. Securities which have
been converted during a selection of Securities to be redeemed may be treated by
the Trustee as Outstanding for the purpose of such selection.
The Trustee shall promptly notify the Company and each Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount and
certificate numbers thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 10.5 NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided in SECTION
1.6 to the Holders of Securities to be redeemed not less than 30 nor more than
60 days prior to the Redemption Date, and such notice shall be irrevocable.
Concurrently with giving such notice, the Company shall issue a Press Release
including all relevant information set forth in such notice.
All notices of redemption shall identify the Securities to be redeemed
(including CUSIP numbers) and shall state:
(1) the Redemption Date,
(2) the Redemption Price, and accrued interest, if any,
(3) if less than all Outstanding Securities are to be redeemed, the
aggregate principal amount of Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price, and accrued
interest, if any, will become due and payable upon each such Security to be
redeemed, and that interest thereon shall cease to accrue on and after said
date,
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(5) the Conversion Rate, the date on which the right to convert the
Securities to be redeemed will terminate and the places where such Securities
may be surrendered for conversion, and
(6) the place or places where such Securities are to be surrendered for
payment of the Redemption Price and accrued interest, if any.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's written request,
by the Trustee in the name of and at the expense of the Company. Notice of
redemption of Securities to be redeemed at the election of the Company received
by the Trustee shall be given by the Trustee to each Paying Agent in the name of
and at the expense of the Company.
SECTION 10.6 DEPOSIT OF REDEMPTION PRICE.
Not less than one Business Day prior to any Redemption Date, the
Company shall deposit with the Trustee (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in SECTION 9.3) an amount
of money (which shall be in immediately available funds on such Redemption Date)
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date other than any Securities called for redemption
on that date which have been converted prior to the date of such deposit.
If any Security called for redemption is converted, any money deposited
with the Trustee or so segregated and held in trust for the redemption of such
Security shall (subject to any right of the Holder of such Security or any
Predecessor Security to receive interest as provided in the last paragraph of
SECTION 3.7) be paid to the Company on Company Request or, if then held by the
Company, shall be discharged from such trust.
SECTION 10.7 SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price, including accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
Security for redemption in accordance with said notice such Security shall be
paid by the Company at the Redemption Price together with any accrued and unpaid
interest to the Redemption Date; PROVIDED, HOWEVER, that installments of
interest on Securities whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Record Date according
to their terms and the provisions of SECTION 3.7.
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If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal amount of, premium, if any, and,
to the extent permitted by applicable law, any accrued interest on such Security
shall, until paid, bear interest from the Redemption Date at a rate of 5.50% per
annum and such Security shall remain convertible until the principal of such
Security (or portion thereof, as the case may be) shall have been paid or duly
provided for.
SECTION 10.8 SECURITIES REDEEMED IN PART.
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company designated for that purpose pursuant to
SECTION 9.2 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing), and
the Company shall execute, and the Trustee shall authenticate and make available
for delivery to the Holder of such Security without service charge, a new
Security or Securities, of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
SECTION 10.9 CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION.
In connection with any redemption of the Securities, the Company may
arrange for the purchase and conversion of any Securities by an agreement with
one or more investment bankers or other purchasers (the "Purchasers") to
purchase such Securities by paying to the Trustee in trust for the Holders, on
or before the Redemption Date, an amount not less than the applicable Redemption
Price, together with any interest accrued and unpaid to the Redemption Date, of
such Securities. Notwithstanding anything to the contrary contained in this
ARTICLE TEN, the obligation of the Company to pay the Redemption Price, together
with any interest accrued and unpaid to the Redemption Date, shall be deemed to
be satisfied and discharged to the extent such amount is so paid by such
Purchasers. If such an agreement is entered into (a copy of which shall be filed
with the Trustee prior to the close of business on the second Business Day
immediately prior to the Redemption Date), any Securities called for redemption
that are not duly surrendered for conversion by the Holders thereof may, at the
option of the Company, be deemed, to the fullest extent permitted by law, and
consistent with any agreement or agreements with such Purchasers, to be acquired
by such Purchasers from such Holders and (notwithstanding anything to the
contrary contained in this ARTICLE TEN) surrendered by such Purchasers for
conversion, all as of immediately prior to the close of business on the
Redemption Date (and the right to convert any such Securities shall be extended
through such time), subject to payment of the above amount as aforesaid. At the
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it by the Purchasers to the Holders in the same manner as it would
monies deposited with it by the Company for the redemption of Securities.
Without the Trustee's prior written consent, no arrangement between the Company
and such Purchasers for the purchase and conversion of any Securities shall
increase or otherwise affect any of the powers, duties, responsibilities or
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obligations of the Trustee as set forth in this Indenture, and the Company
agrees to indemnify the Trustee from, and hold it harmless against, any loss,
liability or expense arising out of or in connection with any such arrangement
for the purchase and conversion of any Securities between the Company and such
Purchasers, including the costs and expenses, including reasonable legal fees,
incurred by the Trustee in the defense of any claim or liability arising out of
or in connection with the exercise or performance of any of its powers, duties,
responsibilities or obligations under this Indenture.
ARTICLE XI
CONVERSION OF SECURITIES
SECTION 11.1 CONVERSION PRIVILEGE AND CONVERSION RATE.
Subject to and upon compliance with the provisions of this Article, at
the option of the Holder thereof, any Security or any portion of the principal
amount thereof that is U.S.$1,000 or an integral multiple of U.S.$1,000 may be
converted into fully paid and nonassessable shares (calculated as to each
conversion to the nearest 1/100th of a share) of Common Stock of the Company at
the Conversion Rate, determined as hereinafter provided, in effect at the time
of conversion. Such conversion right shall commence upon the original issuance
of the Securities and expire at the close of business on January 15, 2007,
subject, in the case of conversion of any Global Security, to any Applicable
Procedures. In case a Security or portion thereof is called for redemption at
the election of the Company or the Holder thereof exercises his right to require
the Company to repurchase the Security, such conversion right in respect of the
Security, or portion thereof so called, shall expire at the close of business on
the Business Day immediately preceding the Redemption Date or the Repurchase
Date, as the case may be, unless the Company defaults in making the payment due
upon redemption or repurchase, as the case may be (in each case subject as
aforesaid to any Applicable Procedures with respect to any Global Security).
The rate at which shares of Common Stock shall be delivered upon
conversion (herein called the "Conversion Rate") shall be initially 5.9424
shares of Common Stock for each U.S.$1,000 principal amount of Securities. The
Conversion Rate shall be adjusted in certain instances as provided in this
ARTICLE ELEVEN.
SECTION 11.2 EXERCISE OF CONVERSION PRIVILEGE.
In order to exercise the conversion privilege, the Holder of any
Security to be converted shall surrender such Security, duly endorsed or
assigned to the Company or in blank, at any office or agency of the Company
maintained for that purpose pursuant to SECTION 9.2, accompanied by a duly
signed conversion notice substantially in the form set forth in SECTION 2.4
stating that the Holder elects to convert such Security or, if less than the
entire principal amount thereof is to be converted, the portion
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thereof to be converted. Each Security surrendered for conversion (in whole or
in part) during a Record Date Period shall (except in the case of any Security
or portion thereof which has been called for redemption or repurchase if the
Holder's conversion right would terminate because of the redemption or
repurchase during the Record Date Period) be accompanied by payment in New York
Clearing House funds or other funds acceptable to the Company of an amount equal
to the interest payable on such Interest Payment Date on the principal amount of
such Security (or part thereof, as the case may be) being surrendered for
conversion. The interest payable on an Interest Payment Date with respect to any
Security (or portion thereof, if applicable) which is surrendered for conversion
during the Record Date Period corresponding to such Interest Payment Date, shall
be paid to the Holder of such Security as of the Regular Record Date for such
Interest Payment Date in an amount equal to the interest that would have been
payable on such Security if such Security (or a portion thereof) had not been
converted. Interest payable in respect of any Security surrendered for
conversion on an Interest Payment Date shall be paid to the Holder of such
Security as of the next preceding Regular Record Date, notwithstanding the
exercise of the right of conversion. Except as provided in this paragraph and
subject to the last paragraph of SECTION 3.7, no cash payment or adjustment
shall be made upon any conversion on account of any interest accrued from the
Interest Payment Date next preceding the conversion date, in respect of any
Security (or part thereof, as the case may be) surrendered for conversion, or on
account of any dividends on the Common Stock issued upon conversion. The
Company's delivery to the Holder of the number of shares of Common Stock (and
cash in lieu of fractions thereof, as provided in this Indenture) into which a
Security is convertible will be deemed to satisfy the Company's obligation to
pay the principal amount of the Security.
Securities shall be deemed to have been converted on the day of
surrender of such Securities for conversion in accordance with the foregoing
provisions, and at such time the rights of the Holders of such Securities as
Holders shall cease, and the Person or Persons entitled to receive the Common
Stock issuable upon conversion shall be treated for all purposes as the record
holder or holders of such Common Stock at such time. As promptly as practicable
on or after the conversion date, the Company shall issue and deliver to the
Trustee, for delivery to the Holder (unless a different Person is indicated on
the Conversion Notice), a certificate or certificates for the number of full
shares of Common Stock issuable upon conversion, together with payment in lieu
of any fraction of a share, as provided in SECTION 11.3.
To the extent applicable, all shares of Common Stock delivered upon
such conversion of Securities shall bear restrictive legends substantially in
the form of the legends required to be set forth on the Securities pursuant to
SECTION 3.5 and shall be subject to the restrictions on transfer provided in
such legends. Neither the Trustee nor any agent maintained for the purpose of
such conversion shall have any responsibility for the inclusion or content of
any such restrictive legends on such Common Stock; PROVIDED, HOWEVER, that the
Trustee or any agent maintained for the purpose of such conversion shall have
provided to the Company or to the Company's transfer agent for such Common
Stock, prior
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to or concurrently with a request to the Company to deliver such Common Stock,
written notice that the Securities delivered for conversion are Securities
subject to a Restricted Securities Legend.
In the case of any Security which is converted in part only, upon such
conversion the Company shall execute and the Trustee shall authenticate and make
available for delivery to the Holder thereof, at the expense of the Company, a
new Security or Securities of authorized denominations in an aggregate principal
amount equal to the unconverted portion of the principal amount of such
Security. A Security may be converted in part, but only if the principal amount
of such Security to be converted is any integral multiple of U.S.$1,000 and the
principal amount of such security to remain Outstanding after such conversion is
equal to U.S.$1,000 or any integral multiple of U.S.$1,000 in excess thereof.
SECTION 11.3 FRACTIONS OF SHARES.
No fractional shares of Common Stock shall be issued upon conversion of
any Security or Securities. If more than one Security shall be surrendered for
conversion at one time by the same Holder, the number of full shares which shall
be issuable upon conversion thereof shall be computed on the basis of the
aggregate principal amount of the Securities (or specified portions thereof) so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be issuable upon conversion of any Security or Securities (or
specified portions thereof), the Company shall calculate and pay a cash
adjustment in respect of such fraction (calculated to the nearest 1/100th of a
share) in an amount equal to the same fraction of the Closing Price Per Share at
the close of business on the day of conversion.
SECTION 11.4 ADJUSTMENT OF CONVERSION RATE.
The Conversion Rate shall be subject to adjustments from time to time
as follows:
(1) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company payable in shares of
Common Stock, the Conversion Rate in effect at the opening of business on the
day following the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution shall be increased by dividing such
Conversion Rate by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such increase to become effective immediately after the opening of
business on the day following the date fixed for such determination. If, after
any such date fixed for determination, any dividend or distribution is not in
fact paid, the Conversion Rate shall be immediately readjusted, effective as of
the date the Board of Directors determines not to pay such dividend or
distribution, to the Conversion Rate that would have been in effect if such
determination date had not been fixed. For the purposes of this paragraph (1),
the number of shares of Common Stock at any time outstanding shall not include
shares
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held in the treasury of the Company but shall include shares issuable in respect
of scrip certificates issued in lieu of fractions of shares of Common Stock. The
Company will not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company.
(2) Subject to the last sentence of paragraph (7), in case the Company
shall issue rights, options or warrants to all holders of its Common Stock
entitling them to subscribe for or purchase shares of Common Stock at a price
per share less than the current market price per share (determined as provided
in paragraph (8) of this SECTION 11.4) of the Common Stock on the date fixed for
the determination of stockholders entitled to receive such rights, options or
warrants (other than any rights, options or warrants that by their terms will
also be issued to any Holder upon conversion of a Security into shares of Common
Stock without any action required by the Company or any other Person), the
Conversion Rate in effect at the opening of business on the day following the
date fixed for such determination shall be increased by dividing such Conversion
Rate by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the aggregate of
the offering price of the total number of shares of Common Stock so offered for
subscription or purchase would purchase at such current market price and the
denominator shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination plus the number of
shares of Common Stock so offered for subscription or purchase, such increase to
become effective immediately after the opening of business on the day following
the date fixed for such determination. If, after any such date fixed for
determination, any such rights, options or warrants are not in fact issued, the
Conversion Rate shall be immediately readjusted, effective as of the date the
Board of Directors determines not to issue such rights, options or warrants, to
the Conversion Rate that would have been in effect if such determination date
had not been fixed. For the purposes of this paragraph (2), the number of shares
of Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not issue any rights, options or warrants in respect of shares of Common
Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Conversion Rate in effect at the
opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately increased, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a smaller number
of shares of Common Stock, the Conversion Rate in effect at the opening of
business on the day following the day upon which such combination becomes
effective shall be proportionately reduced, such increase or reduction, as the
case may be, to become effective immediately after the opening of business on
the day following the day upon which such subdivision or combination becomes
effective.
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(4) Subject to the last sentence of paragraph (7), in case the Company
shall, by dividend or otherwise, distribute to all holders of its Common Stock
evidences of its indebtedness, shares of any class of capital stock, or rights,
options or warrants to subscribe for or purchase shares of any class of capital
stock (other than any rights, options or warrants that by their terms will also
be issued to any Holder upon conversion of a Security into shares of Common
Stock without any action required by the Company or any other Person) or other
property (including cash or assets or securities, but excluding (i) any rights,
options or warrants referred to in paragraph (2) of this Section, (ii) any
dividend or distribution paid exclusively in cash, (iii) any dividend or
distribution referred to in paragraph (1) of this Section and (iv) any
consideration distributed in any merger or consolidation to which SECTION 11.11
applies), the Conversion Rate shall be adjusted so that the same shall equal the
rate determined by dividing the Conversion Rate in effect immediately prior to
the close of business on the date fixed for the determination of stockholders
entitled to receive such distribution by a fraction of which the numerator shall
be the current market price per share (determined as provided in paragraph (8)
of this SECTION 11.4) of the Common Stock on the date fixed for such
determination less the then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution filed with the Trustee) of the portion of the assets, shares or
evidences of indebtedness so distributed applicable to one share of Common Stock
and the denominator shall be such current market price per share of the Common
Stock, such adjustment to become effective immediately prior to the opening of
business on the day following the date fixed for the determination of
stockholders entitled to receive such distribution. If, after any such date
fixed for determination, any such distribution is not in fact made, the
Conversion Rate shall be immediately readjusted, effective as of the date the
Board of Directors determines not to make such distribution, to the Conversion
Rate that would have been in effect if such determination date had not been
fixed.
(5) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding any cash that is distributed
upon a merger or consolidation to which SECTION 11.11 applies or as part of a
distribution referred to in paragraph (4) of this Section) in an aggregate
amount that, combined together with (I) the aggregate amount of any other cash
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution and in respect
of which no adjustment pursuant to this paragraph (5) has been made and (II) the
aggregate of any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution) of other consideration payable in respect of any tender offer by the
Company or any of its subsidiaries for all or any portion of the Common Stock
concluded within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to paragraph (6) of
this SECTION 11.4 has been made (the "combined cash and tender amount") exceeds
10% of the product of the current market price per share (determined as provided
in paragraph (8) of this SECTION 11.4) of the Common Stock on the date for the
determination of holders of shares of Common Stock entitled to receive such
distribution times the number of shares of Common Stock outstanding on such date
(the "threshold amount"), then, and in each such case, immediately after the
close of business on such date for
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determination, the Conversion Rate shall be adjusted so that the same shall
equal the rate determined by dividing the Conversion Rate in effect immediately
prior to the close of business on the date fixed for determination of the
stockholders entitled to receive such distribution by a fraction (i) the
numerator of which shall be equal to the current market price per share
(determined as provided in paragraph (8) of this Section) of the Common Stock on
the date fixed for such determination less an amount equal to the quotient of
(x) the excess of such combined cash and tender amount over such threshold
amount divided by (y) the number of shares of Common Stock outstanding on such
date for determination and (ii) the denominator of which shall be equal to the
current market price per share (determined as provided in paragraph (8) of this
SECTION 11.4) of the Common Stock on such date for determination.
(6) In case a tender offer made by the Company or any Subsidiary for
all or any portion of the Common Stock shall expire and such tender offer (as
amended upon the expiration thereof) shall require the payment to stockholders
(based on the acceptance (up to any maximum specified in the terms of the tender
offer) of Purchased Shares (as defined below)) of an aggregate consideration
having a fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) that
combined together with (I) the aggregate of the cash plus the fair market value
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution), as of the expiration of such
tender offer, of consideration payable in respect of any other tender offer by
the Company or any Subsidiary for all or any portion of the Common Stock
expiring within the 12 months preceding the expiration of such tender offer and
in respect of which no adjustment pursuant to this paragraph (6) has been made
and (II) the aggregate amount of any cash distributions to all holders of the
Company's Common Stock within 12 months preceding the expiration of such tender
offer and in respect of which no adjustment pursuant to paragraph (5) of this
Section has been made (the "combined tender and cash amount") exceeds 10% of the
product of the current market price per share of the Common Stock (determined as
provided in paragraph (8) of this SECTION 11.4) as of the last time (the
"Expiration Time") tenders could have been made pursuant to such tender offer
(as it may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) as of the Expiration Time, then, and in each
such case, immediately prior to the opening of business on the day after the
date of the Expiration Time, the Conversion Rate shall be adjusted so that the
same shall equal the rate determined by dividing the Conversion Rate immediately
prior to close of business on the date of the Expiration Time by a fraction (i)
the numerator of which shall be equal to (A) the product of (I) the current
market price per share of the Common Stock (determined as provided in paragraph
(8) of this SECTION 11.4) on the date of the Expiration Time multiplied by (II)
the number of shares of Common Stock outstanding (including any tendered shares)
on the Expiration Time less (B) the combined tender and cash amount, and (ii)
the denominator of which shall be equal to the product of (A) the current market
price per share of the Common Stock (determined as provided in paragraph (8) of
this SECTION 11.4) as of the Expiration Time multiplied by (B) the number of
shares of Common Stock outstanding (including any tendered shares) as of the
Expiration Time less the number of all shares validly tendered and not withdrawn
as of
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the Expiration Time (the shares deemed so accepted up to any such maximum, being
referred to as the "Purchased Shares").
(7) The reclassification of Common Stock into securities other than
Common Stock (other than any reclassification upon a consolidation or merger to
which SECTION 11.11 applies) shall be deemed to involve (a) a distribution of
such securities other than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be "the date fixed
for the determination of stockholders entitled to receive such distribution" and
"the date fixed for such determination" within the meaning of paragraph (4) of
this Section), and (b) a subdivision or combination, as the case may be, of the
number of shares of Common Stock outstanding immediately prior to such
reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such reclassification shall be
deemed to be "the day upon which such subdivision becomes effective" or "the day
upon which such combination becomes effective," as the case may be, and "the day
upon which such subdivision or combination becomes effective" within the meaning
of paragraph (3) of this SECTION 11.4). Rights, options or warrants issued by
the Company to all holders of its Common Stock entitling the holders thereof to
subscribe for or purchase shares of capital stock of the Company, which rights,
options or warrants (i) are deemed to be transferred with such shares of Common
Stock, (ii) are not exercisable and (iii) are also issued in respect of future
issuances of shares of capital stock, in each case in clauses (i) through (iii)
until the occurrence of a specified event or events ("Trigger Event"), shall for
purposes of this SECTION 11.4 not be deemed issued or distributed until the
occurrence of the earliest Trigger Event.
(8) For the purpose of any computation under paragraphs (2), (4), (5)
or (6) of this SECTION 11.4, the current market price per share of Common Stock
on any date shall be calculated by the Company and be deemed to be the average
of the daily Closing Prices Per Share for the five consecutive Trading Days
selected by the Company commencing not more than 10 Trading Days before, and
ending not later than, the earlier of the day in question and the day before the
"ex date" with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "ex date," when used with
respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way in the applicable securities market or on the
applicable securities exchange without the right to receive such issuance or
distribution.
(9) No adjustment in the Conversion Rate shall be required unless such
adjustment (plus any adjustments not previously made by reason of this paragraph
(9)) would require an increase or decrease of at least one percent in such rate;
PROVIDED, HOWEVER, that any adjustments which by reason of this paragraph (9)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Article shall be made to
the nearest cent or to the nearest one-hundredth of a share, as the case may be.
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(10) The Company may make such increases in the Conversion Rate, for
the remaining term of the Securities or any shorter term, in addition to those
required by paragraphs (1), (2), (3), (4), (5) and (6) of this SECTION 11.4, as
it considers to be advisable in order to avoid or diminish any income tax
liability to any holders of shares of Common Stock resulting from any dividend
or distribution of Common Stock or issuance of rights or warrants to purchase or
subscribe for Common Stock or from any event treated as such for income tax
purposes.
To the extent permitted by applicable law, the Company from time to
time may increase the Conversion Rate by any amount for any period of time if
the period is at least twenty (20) days and the Board of Directors shall have
made a determination that such increase would be in the best interests of the
Company, which determination shall be conclusive; PROVIDED, HOWEVER, that such
increase shall not be taken into account for purposes of determining whether the
Closing Price Per Share of the Common Stock exceeds the Conversion Price by 105%
in connection with an event which would otherwise be a Change in Control.
Whenever the Conversion Rate is increased pursuant to the preceding sentence,
the Company shall give notice of the increase to the Holders of Securities in
the manner provided in Section 1.6 at least fifteen (15) days prior to the date
the increased Conversion Rate takes effect, and such notice shall state the
increased Conversion Rate and the period during which it will be in effect. The
"Conversion Price" shall equal U.S.$1,000 divided by the Conversion Rate
(rounded to the nearest cent).
(11) Notwithstanding the foregoing provisions of this Section, no
adjustment of the Conversion Rate shall be required to be made (a) upon the
issuance of shares of Common Stock pursuant to any present or future plan for
the reinvestment of dividends or (b) because of a tender or exchange offer of
the character described in Rule 13e-4(h)(5) under the Exchange Act or any
successor rule thereto.
SECTION 11.5 NOTICE OF ADJUSTMENTS OF CONVERSION RATE.
Whenever the Conversion Rate is adjusted as herein provided:
(1) the Company shall compute the adjusted Conversion Rate in
accordance with SECTION 11.4 and shall prepare a certificate signed by the Chief
Financial Officer of the Company setting forth the adjusted Conversion Rate and
showing in reasonable detail the facts upon which such adjustment is based, and
such certificate shall promptly be filed with the Trustee and with each
Conversion Agent; and
(2) upon each such adjustment, a notice stating that the Conversion
Rate has been adjusted and setting forth the adjusted Conversion Rate shall be
required, and as soon as practicable after it is required, such notice shall be
provided by the Company to all Holders in accordance with SECTION 1.6.
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Neither the Trustee nor any Conversion Agent shall be under any duty or
responsibility with respect to any such certificate or the information and
calculations contained therein, except to exhibit the same to any Holder of
Securities desiring inspection thereof at its office during normal business
hours.
SECTION 11.6 NOTICE OF CERTAIN CORPORATE ACTION.
In case:
(a) the Company shall declare a dividend (or any other distribution) on
its Common Stock payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require any adjustment pursuant to
SECTION 11.4; or
(b) the Company shall authorize the granting to the holders of its
Common Stock of rights, options or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other rights (other than rights,
options or warrants described in the last sentence of SECTION 11.4(7); or
(c) of any reclassification of the Common Stock of the Company, or of
any consolidation, merger or share exchange to which the Company is a party and
for which approval of any stockholders of the Company is required, or of the
conveyance, sale, transfer or lease of all or substantially all of the assets of
the Company; or
(d) of the voluntary or involuntary dissolution, liquidation or winding
up of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of conversion of Securities pursuant to SECTION 9.2, and shall cause
to be provided to all Holders in accordance with SECTION 1.6, at least 20 days
(or 10 days in any case specified in clause (a) or (b) above) prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, rights, options or warrants, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, rights, options or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, conveyance,
transfer, sale, lease, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up. Neither the failure to give such notice or the notice
referred to in the following paragraph nor any defect therein shall affect the
legality or validity of the proceedings described in clauses (a) through (d) of
this SECTION 11.6. If at the time the Trustee shall not be the Conversion Agent,
a copy of such notice shall also forthwith be filed by the Company with the
Trustee.
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The Company shall cause to be filed at each office or agency maintained
for the purpose of conversion of Securities pursuant to SECTION 9.2, and shall
cause to be provided to all Holders in accordance with SECTION 1.6, notice of
any tender offer by the Company or any Subsidiary for all or any portion of the
Common Stock at or about the time that such notice of tender offer is provided
to the public generally.
SECTION 11.7 COMPANY TO RESERVE COMMON STOCK.
The Company shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock, for the
purpose of effecting the conversion of Securities, the full number of shares of
Common Stock then issuable upon the conversion of all Outstanding Securities.
SECTION 11.8 TAXES ON CONVERSIONS.
Except as provided in the next sentence, the Company will pay any and
all taxes and duties that may be payable in respect of the issue or delivery of
shares of Common Stock on conversion of Securities pursuant hereto. The Company
shall not, however, be required to pay any tax or duty which may be payable in
respect of (i) income of the Holder or (ii) any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that of the Holder
of the Security or Securities to be converted, and no such issue or delivery
shall be made unless and until the Person requesting such issue has paid to the
Company the amount of any such tax or duty, or has established to the
satisfaction of the Company that such tax or duty has been paid.
SECTION 11.9 COVENANT AS TO COMMON STOCK.
The Company agrees that all shares of Common Stock which may be
delivered upon conversion of Securities, upon such delivery, will have been duly
authorized and validly issued and will be fully paid and nonassessable and,
except as provided in SECTION 11.8, the Company will pay all taxes, liens and
charges with respect to the issue thereof.
SECTION 11.10 CANCELLATION OF CONVERTED SECURITIES.
All Securities delivered for conversion shall be delivered to the
Trustee or its agent to be canceled by or at the direction of the Trustee, which
shall dispose of the same as provided in SECTION 3.9.
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SECTION 11.11 PROVISION IN CASE OF CONSOLIDATION, MERGER OR SALE
OF ASSETS.
In case of any consolidation or merger of the Company with or into any
other Person, any merger of another Person with or into the Company (other than
a merger which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company) or any
conveyance, sale, transfer or lease of all or substantially all of the assets of
the Company, the Person formed by such consolidation or resulting from such
merger or which acquires such assets, as the case may be, shall execute and
deliver to the Trustee a supplemental indenture providing that the Holder of
each Security then Outstanding shall have the right thereafter, during the
period such Security shall be convertible as specified in SECTION 11.1, to
convert such Security only into the kind and amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance, sale,
transfer or lease by a holder of the number of shares of Common Stock of the
Company into which such Security might have been converted immediately prior to
such consolidation, merger, conveyance, sale, transfer or lease, assuming such
holder of Common Stock of the Company (i) is not a Person with which the Company
consolidated or merged with or into or which merged into or with the Company or
to which such conveyance, sale, transfer or lease was made, as the case may be
("Constituent Person"), or an Affiliate of a Constituent Person and (ii) failed
to exercise his rights of election, if any, as to the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer or lease (PROVIDED that if the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
conveyance, sale, transfer, or lease is not the same for each share of Common
Stock of the Company held immediately prior to such consolidation, merger,
conveyance, sale, transfer or lease by others than a Constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not have
been exercised ("Non-electing Share"), then for the purpose of this SECTION
11.11 the kind and amount of securities, cash and other property receivable upon
such consolidation, merger, conveyance, sale, transfer or lease by the holders
of each Non-electing Share shall be deemed to be the kind and amount so
receivable per share by a plurality of the Non-electing Shares). Such
supplemental indenture shall provide for adjustments which, for events
subsequent to the effective date of such supplemental indenture, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Article. The above provisions of this SECTION 11.11 shall similarly apply to
successive consolidations, mergers, conveyances, sales, transfers or leases.
Notice of the execution of such a supplemental indenture shall be given by the
Company to the Holder of each Security as provided in SECTION 1.6 promptly upon
such execution.
Neither the Trustee nor any Conversion Agent shall be under any
responsibility to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount of shares of
stock or other securities or property or cash receivable by Holders of
Securities upon the conversion of their Securities after any such consolidation,
merger, conveyance, transfer, sale or lease or to any such adjustment, but may
accept as conclusive evidence of the correctness of any
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such provisions, and shall be protected in relying upon, an Opinion of Counsel
with respect thereto, which the Company shall cause to be furnished to the
Trustee upon request.
SECTION 11.12 RESPONSIBILITY OF TRUSTEE FOR CONVERSION PROVISIONS.
The Trustee, subject to the provisions of SECTION 6.1 and any
Conversion Agent shall not at any time be under any duty or responsibility to
any Holder of Securities to determine whether any facts exist which may require
any adjustment of the Conversion Rate, or with respect to the nature or extent
of any such adjustment when made, or with respect to the method employed, or
herein or in any supplemental indenture provided to be employed, in making the
same, or whether a supplemental indenture need be entered into or to recalculate
or verify the content of any certificate filed with it by the Company pursuant
to the terms of this Article Eleven. Neither the Trustee, subject to the
provisions of SECTION 6.1, nor any Conversion Agent shall be accountable with
respect to the validity or value (or the kind or amount) of any Common Stock, or
of any other securities or property or cash, which may at any time be issued or
delivered upon the conversion of any Security; and it or they do not make any
representation with respect thereto. Neither the Trustee, subject to the
provisions of SECTION 6.1, nor any Conversion Agent shall be responsible for any
failure of the Company to make or calculate any cash payment or to issue,
transfer or deliver any shares of Common Stock or share certificates or other
securities or property or cash upon the surrender of any Security for the
purpose of conversion; and the Trustee, subject to the provisions of SECTION
6.1, and any Conversion Agent shall not be responsible for any failure of the
Company to comply with any of the covenants of the Company contained in this
Article.
ARTICLE XII
SUBORDINATION OF SECURITIES
SECTION 12.1 SECURITIES SUBORDINATE TO SENIOR DEBT.
The Company covenants and agrees, and each Holder of a Security, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article (subject to the provisions of
ARTICLE FOUR), the indebtedness represented by the Securities and the payment of
the principal of (and premium, if any) and interest and Liquidated Damages, if
any, on, and any payment of the Repurchase Price with respect to, each and all
of the Securities are hereby expressly made subordinate and subject in right of
payment to the prior payment in full of all Senior Debt.
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SECTION 12.2 NO PAYMENTS IN CERTAIN CIRCUMSTANCES; PAYMENT OVER OF
PROCEEDS UPON DISSOLUTION, ETC.
No payment on account of principal of, premium, if any, or interest on,
or redemption or repurchase of, the Securities shall be made if either of the
following occurs: (i) the Company defaults in its obligation to pay principal,
premium, if any, or interest or other amounts on its Senior Debt, including
default under any redemption or repurchase obligation, and the default continues
beyond any grace period that the Company may have to make those payments or (ii)
any other default occurs and is continuing on any Designated Senior Debt and (1)
the default permits the holders of the Designated Senior Debt to accelerate its
maturity and (2) the Trustee has received a notice of the default (a "Payment
Blockage Notice") from the Company or any other Person permitted to give such
notice pursuant to SECTIONS 12.5 and 12.6 hereof.
Notwithstanding the foregoing, the Company may make, and the Trustee
may receive and shall apply, any payment in respect of the Securities (for
principal, premium, if any, interest or Liquidated Damages, if any, or
repurchase) if such payment was made prior to the occurrence of any of the
contingencies specified in clauses (i) and (ii) above.
If the Trustee receives any Payment Blockage Notice pursuant to clause
(ii) above, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section unless and until (A) at least 365 days shall have
elapsed since the effectiveness of the immediately prior Payment Blockage
Notice, and (B) all scheduled payments of principal, premium, if any, and
interest and Liquidated Damages, if any, on the Securities that have come due
have been paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the Trustee
shall be, or be made, the basis for a subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in
respect of the Securities upon the earlier of: (i) the date upon which the
default is cured or waived, or (ii) in the case of a default referred to in
clause (ii) of the third preceding paragraph, 179 days pass after notice is
received if the maturity of such Designated Senior Debt has not been
accelerated, unless this Article otherwise prohibits the payment or distribution
at the time of such payment or distribution.
Upon (i) any acceleration of the principal amount due on the Securities
or (ii) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any
dissolution, winding up or total or partial liquidation or reorganization of the
Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all principal of, premium, if any, sinking
fund and interest or other amounts due or to become due upon all Senior Debt
shall first be paid in full, or payment thereof provided for in money or money's
worth in accordance with its terms, before any payment is made on account of the
principal of, premium, if any, or interest or Liquidated Damages on, or
repurchase of, the indebtedness evidenced
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by the Securities or any coupon appertaining thereto, and upon any such
dissolution or winding up or liquidation or reorganization any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Securities or any coupons
appertaining thereto or the Trustee under this Indenture would be entitled,
except for the provisions hereof, shall be paid by the Company or by any
receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Holders of the Securities or any
coupons appertaining thereto or by the Trustee under this Indenture if received
by them or it, as the case may be, directly to the holders of Senior Debt or
their representatives, to the extent necessary to pay all Senior Debt in full,
in money or money's worth, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt, before any payment or
distribution is made to the Holders of the Securities or any coupons
appertaining thereto or to the Trustee under this Indenture.
In the event that, contrary to the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, shall be received by the Trustee or the Holders of the
Securities before all Senior Debt is paid in full or provision made for such
payment, in accordance with its terms, such payment or distribution shall be
paid over or delivered to, the holders of such Senior Debt or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior Debt
have been issued, as their respective interests may appear, for application to
the payment of all Senior Debt remaining unpaid to the extent necessary to pay
all such Senior Debt in full in accordance with its terms, after giving effect
to any concurrent payment or distribution to or for the holders of such Senior
Debt.
Subject to the payment in full of all Senior Debt, the Holders of the
Securities and any coupons (together with the holders of any other indebtedness
of the Company which is subordinated in right of payment to the payment in full
of all Senior Debt, but which is not subordinated in right of payment to the
Securities and which by its terms grants such right of subrogation to the
holders thereof) shall be subrogated to the rights of the holders of Senior Debt
to receive payments or distribution of assets of the Company made on the Senior
Debt until the principal of, premium, if any, and interest on, or amounts
payable upon repurchase of, the Securities shall be paid in full; and, for the
purposes of such subrogation, no payments or distributions to the holders of
Senior Debt of any cash, property or securities to which the Holders of the
Securities and any coupons appertaining thereto or the Trustee would be entitled
except for the provisions of this Article, and no payment over pursuant to the
provisions of this Article to the holders of Senior Debt by the Holders of the
Securities or any coupon or the Trustee, shall, as between the Company, its
creditors other than the holders of Senior Debt, and the Holders of Securities
and coupons, be deemed to be a payment by the Company to the holders of or on
account of Senior Debt, it being understood that the provisions of this Article
are and are intended solely for the purpose of defining the relative rights of
the Holders of the Securities and coupons, on the one hand, and the holders of
Senior Debt, on the other hand.
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SECTION 12.3 TRUSTEE TO EFFECTUATE SUBORDINATION.
Each holder of a Security by his acceptance thereof authorizes and
directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes.
SECTION 12.4 NO WAIVER OF SUBORDINATION PROVISIONS.
No right of any present or future holder of any Senior Debt to enforce
subordination as herein provided shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such holder of any Senior Debt, or by
any non-compliance by the Company with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Debt may, at any time and from time to time, without the
consent of or notice to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without impairing
or releasing the subordination provided in this Article or the obligations
hereunder of the Holders of the Securities to the holders of Senior Debt, do any
one or more of the following: (i) change the manner, place or terms of payment
or extend the time of payment of, or renew or alter, Senior Debt, or otherwise
amend or supplement in any manner Senior Debt or any instrument evidencing the
same or any agreement under which Senior Debt is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing Senior Debt; (iii) release any Person liable in any manner
for the collection of Senior Debt; and (iv) exercise or refrain from exercising
any rights against the Company and any other Person.
SECTION 12.5 NOTICE TO TRUSTEE.
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article or any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would prohibit the
making of any payment to or by the Trustee in respect of the Securities, unless
and until the Trustee shall have received written notice thereof from the
Company or a holder of Senior Debt or from any trustee, agent or representative
therefor; and, prior to the receipt of any such written notice, the Trustee,
subject to the provisions of SECTION 6.1, shall be entitled in all respects to
assume that no such facts exist; PROVIDED, HOWEVER, that if the Trustee shall
not have received the notice provided for in this SECTION 12.5 prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (and premium, if
any) or interest on any Security), then, anything herein contained to the
contrary notwithstanding the Trustee shall have
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full power and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be affected by any
notice to the contrary which may be received by it within two Business Days
prior to such date or after such date.
Subject to the provisions of SECTION 6.1, the Trustee shall be entitled
to rely on the delivery to it of a written notice by a Person representing
himself to be a holder of Senior Debt (or a trustee, agent or representative
therefor) to establish that such notice has been given by a holder of Senior
Debt (or a trustee, agent or representative therefor). In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Debt to participate in any
payment or distribution pursuant to this Article, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Debt held by such Person, the extent to which such Person
is entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if such evidence
is not furnished, the Trustee may defer any payment to such Person pending
judicial determination as to the right of such Person to receive such payment,
and during such deferral to also defer application of said payment for which
such money was received pursuant to this Indenture.
SECTION 12.6 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of SECTION 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Debt and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article.
SECTION 12.7 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt and shall not be liable to any such holders if it shall
in good faith mistakenly pay over or distribute to Holders of Securities or to
the Company or to any other Person cash, property or securities to which any
holders of Senior Debt shall be entitled by virtue of this Article or otherwise.
With respect to the holders of Senior Debt, the Trustee undertakes to perform or
to observe only such of its covenants or obligations as are specifically set
forth in this ARTICLE TWELVE, and no implied covenants or obligations with
respect to holders of Senior Debt shall be read into this Indenture against the
Trustee.
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SECTION 12.8 RELIANCE BY HOLDERS OF SENIOR DEBT ON SUBORDINATION
PROVISIONS.
Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Debt, whether such Senior Debt
was created or acquired before or after the issuance of the Securities, to
acquire and continue to hold, or to continue to hold, such Senior Debt and such
holder of Senior Debt shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Debt.
SECTION 12.9 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT;
PRESERVATION OF TRUSTEE'S RIGHTS.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Debt which may at
any time be held by it, to the same extent as any other holder of Senior Debt,
and nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to SECTION 6.7.
SECTION 12.10 ARTICLE APPLICABLE TO PAYING AGENTS.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; PROVIDED,
HOWEVER, that SECTION 12.9 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
SECTION 12.11 CERTAIN CONVERSIONS AND REPURCHASES DEEMED PAYMENT.
For the purposes of this Article only, (1) the issuance and delivery of
junior securities upon conversion of Securities in accordance with ARTICLE
ELEVEN or upon the repurchase of Securities in accordance with ARTICLE THIRTEEN
shall not be deemed to constitute a payment or distribution on account of the
principal of or premium or interest or Liquidated Damages on Securities or on
account of the purchase or other acquisition of Securities, and (2) the payment,
issuance or delivery of cash, property or securities (other than junior
securities) upon conversion of a Security shall be deemed to constitute payment
on account of the principal of such Security. For the purposes of this Section,
the term "junior securities" means (a) shares of any stock of any class of the
Company and any cash, property or securities into which the Securities are
convertible pursuant to ARTICLE ELEVEN and (b) securities of the Company which
are subordinated in right of payment to all Senior Debt which may be outstanding
at the time of issuance or delivery of such securities to substantially the same
extent as, or to a greater
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extent than, the Securities are so subordinated as provided in this Article.
Nothing contained in this Article or elsewhere in this Indenture or in the
Securities is intended to or shall impair, as among the Company, its creditors
other than holders of Senior Debt and the Holders of the Securities, the right,
which is absolute and unconditional, of the Holder of any Security to convert
such Security in accordance with ARTICLE ELEVEN or to exchange such Security for
Common Stock in accordance with ARTICLE THIRTEEN if the Company elects to
satisfy the obligations under ARTICLE THIRTEEN by the delivery of Common Stock.
ARTICLE XIII
REPURCHASE OF SECURITIES AT THE OPTION OF THE
HOLDER UPON A CHANGE IN CONTROL
SECTION 13.1 RIGHT TO REQUIRE REPURCHASE.
In the event that a Change in Control (as hereinafter defined) shall
occur, then each Holder shall have the right, at the Holder's option, but
subject to the provisions of SECTION 13.2, to require the Company to repurchase,
and upon the exercise of such right the Company shall repurchase, all of such
Holder's Securities not theretofore called for redemption, or any portion of the
principal amount thereof that is equal to U.S.$1,000 or any integral multiple of
U.S.$1,000, on the date (the "Repurchase Date") that is 45 days after the date
of the Company Notice (as defined in SECTION 13.3) at a purchase price equal to
100% of the principal amount of the Securities to be repurchased plus interest
accrued to the Repurchase Date (the "Repurchase Price"); PROVIDED, HOWEVER, that
installments of interest on Securities whose Stated Maturity is on or prior to
the Repurchase Date shall be payable to the Holders of such Securities, or one
or more Predecessor Securities, registered as such on the relevant Record Date
according to their terms and the provisions of SECTION 3.7. Such right to
require the repurchase of the Securities shall not continue after a discharge of
the Company from its obligations with respect to the Securities in accordance
with ARTICLE FOUR, unless a Change in Control shall have occurred prior to such
discharge. At the option of the Company, the Repurchase Price may be paid in
cash or, subject to the fulfillment by the Company of the conditions set forth
SECTION 13.2, by delivery of shares of Common Stock having a fair market value
equal to the Repurchase Price. Whenever in this Indenture (including SECTIONS
2.2, 3.1, 5.1(1) and 5.8) there is a reference, in any context, to the principal
of any Security as of any time, such reference shall be deemed to include
reference to the Repurchase Price payable in respect of such Security to the
extent that such Repurchase Price is, was or would be so payable at such time,
and express mention of the Repurchase Price in any provision of this Indenture
shall not be construed as excluding the Repurchase Price in those provisions of
this Indenture when such express mention is not made; PROVIDED, HOWEVER, that
for the purposes of ARTICLE THIRTEEN such reference shall be deemed to include
reference to the Repurchase Price only to the extent the Repurchase Price is
payable in cash.
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SECTION 13.2 CONDITIONS TO THE COMPANY'S ELECTION TO PAY THE
REPURCHASE PRICE IN COMMON STOCK.
The Company may elect to pay the Repurchase Price by delivery of shares
of Common Stock pursuant to SECTION 13.1 if and only if the following conditions
shall have been satisfied:
(a) The shares of Common Stock deliverable in payment of the Repurchase
Price shall have a fair market value as of the Repurchase Date of not less than
the Repurchase Price. For purposes of SECTION 13.1 and this SECTION 13.2, the
fair market value of shares of Common Stock shall be determined by the Company
and shall be equal to 95% of the average of the Closing Price Per Share for the
five consecutive Trading Days immediately preceding and including the third
Trading Day prior to the Repurchase Date;
(b) The Repurchase Price shall be paid only in cash in the event any
shares of Common Stock to be issued upon repurchase of Securities hereunder (i)
require registration under any federal securities law before such shares may be
freely transferable without being subject to any transfer restrictions under the
Securities Act upon repurchase and if such registration is not completed or does
not become effective prior to the Repurchase Date, and/or (ii) require
registration with or approval of any governmental authority under any state law
or any other federal law before such shares may be validly issued or delivered
upon repurchase and if such registration is not completed or does not become
effective or such approval is not obtained prior to the Repurchase Date;
(c) Payment of the Repurchase Price may not be made in Common Stock
unless such stock is, or shall have been, approved for quotation on the Nasdaq
National Market or listing or quotation on a national securities exchange or
quotation system, in either case, prior to the Repurchase Date; and
(d) All shares of Common Stock which may be issued upon repurchase of
Securities will be issued out of the Company's authorized but unissued Common
Stock and, will upon issue, be duly and validly issued and fully paid and
non-assessable and free of any preemptive rights.
If all of the conditions set forth in this SECTION 13.2 are not
satisfied in accordance with the terms thereof, the Company shall so certify to
the Trustee in an Officer's Certificate and the Repurchase Price shall be paid
by the Company only in cash.
SECTION 13.3 NOTICES; METHOD OF EXERCISING REPURCHASE RIGHT, ETC.
(a) Unless the Company shall have theretofore called for redemption all
of the Outstanding Securities, on or before the 30th day after the occurrence of
a Change in Control, the Company or, at the request and expense of the Company
on or before the 30th day after such occurrence, the Trustee,
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shall give to all Holders of Securities, in the manner provided in SECTION 1.6,
notice (the "Company Notice") of the occurrence of the Change of Control and of
the repurchase right set forth herein arising as a result thereof and the
Company shall issue a Press Release including all relevant information required
to be included in such Company Notice. The Company shall also deliver a copy of
such notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(1) the Repurchase Date,
(2) the date by which the repurchase right must be
exercised,
(3) the Repurchase Price, and whether the Repurchase Price
shall be paid by the Company in cash or by delivery of shares of Common Stock.
(4) a description of the procedure which a Holder must follow
to exercise a repurchase right, and the place or places where such Securities
are to be surrendered for payment of the Repurchase Price and accrued interest,
if any,
(5) that on the Repurchase Date the Repurchase Price, and
accrued interest, if any, will become due and payable upon each such Security
designated by the Holder to be repurchased, and that interest thereon shall
cease to accrue on and after said date,
(6) the Conversion Rate then in effect, the date on which the
right to convert the principal amount of the Securities to be repurchased will
terminate and the place or places where such Securities may be surrendered for
conversion,
(7) the place or places that the certificate required by
Section 2.2 shall be delivered, and
(8) the CUSIP number or numbers of such Securities.
No failure of the Company to give the foregoing notices or defect
therein shall limit any Holder's right to exercise a repurchase right or affect
the validity of the proceedings for the repurchase of Securities.
If any of the foregoing provisions or other provisions of this ARTICLE
THIRTEEN are inconsistent with applicable law, such law shall govern.
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(b) To exercise a repurchase right, a Holder shall deliver to the
Trustee on or before the 30th day after the date of the Company Notice (i)
written notice of the Holder's exercise of such right, which notice shall set
forth the name of the Holder, the principal amount of the Securities to be
repurchased (and, if any Security is to repurchased in part, the serial number
thereof, the portion of the principal amount thereof to be repurchased and the
name of the Person in which the portion thereof to remain Outstanding after such
repurchase is to be registered) and a statement that an election to exercise the
repurchase right is being made thereby, and, in the event that the Repurchase
Price shall be paid in shares of Common Stock, the name or names (with
addresses) in which the certificate or certificates for shares of Common Stock
shall be issued, and (ii) the Securities with respect to which the repurchase
right is being exercised. Such written notice shall be irrevocable, except that
the right of the Holder to convert the Securities with respect to which the
repurchase right is being exercised shall continue until the close of business
on the Repurchase Date.
(c) In the event a repurchase right shall be exercised in accordance
with the terms hereof, the Company shall pay or cause to be paid to the Trustee
the Repurchase Price in cash or shares of Common Stock, as provided above, for
payment to the Holder on the Repurchase Date or, if shares of Common Stock are
to be paid, as promptly after the Repurchase Date as practicable; PROVIDED,
HOWEVER, that installments of interest on the Securities whose Stated Maturity
is on or prior to the Repurchase Date shall be payable in cash to the Holders of
such Securities, or one or more Predecessor Securities, registered as such at
the close of business on the relevant Record Date.
(d) If any Security (or portion thereof) surrendered for repurchase
shall not be so paid on the Repurchase Date, the principal amount of such
Security (or portion thereof, as the case may be) shall, until paid, bear
interest to the extent permitted by applicable law from the Repurchase Date at
the rate of 5.50% per annum, and each Security shall remain convertible into
Common Stock until the principal of such Security (or portion thereof, as the
case may be) shall have been paid or duly provided for.
(e) Any Security which is to be repurchased only in part shall be
surrendered to the Trustee (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Security without service charge, a new Security or Securities, containing
identical terms and conditions, each in an authorized denomination in aggregate
principal amount equal to and in exchange for the unrepurchased portion of the
principal of the Security so surrendered.
(f) Any issuance of shares of Common Stock in respect of the Repurchase
Price shall be deemed to have been effected immediately prior to the close of
business on the Repurchase Date and the Person or Persons in whose name or names
any certificate or certificates for shares of Common
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Stock shall be issuable upon such repurchase shall be deemed to have become on
the Repurchase Date the holder or holders of record of the shares represented
thereby; PROVIDED, HOWEVER, that any surrender for repurchase on a date when the
stock transfer books of the Company shall be closed shall constitute the Person
or Persons in whose name or names the certificate or certificates for such
shares are to be issued as the record holder or holders thereof for all purposes
at the opening of business on the next succeeding day on which such stock
transfer books are open. No payment or adjustment shall be made for dividends or
distributions on any Common Stock issued upon repurchase of any Security
declared prior to the Repurchase Date.
(g) No fractions of shares shall be issued upon repurchase of
Securities. If more than one Security shall be repurchased from the same Holder
and the Repurchase Price shall be payable in shares of Common Stock, the number
of full shares which shall be issuable upon such repurchase shall be computed on
the basis of the aggregate principal amount of the Securities so repurchased.
Instead of any fractional share of Common Stock which would otherwise be
issuable on the repurchase of any Security or Securities, the Company will
deliver to the applicable Holder its check for the current market value of such
fractional share. The current market value of a fraction of a share is
determined by multiplying the current market price of a full share by the
fraction, and rounding the result to the nearest cent. For purposes of this
Section, the current market price of a share of Common Stock is the Closing
Price Per Share of the Common Stock on the Trading Day immediately preceding the
Repurchase Date.
(h) Any issuance and delivery of certificates for shares of Common
Stock on repurchase of Securities shall be made without charge to the Holder of
Securities being repurchased for such certificates or for any tax or duty in
respect of the issuance or delivery of such certificates or the securities
represented thereby; PROVIDED, HOWEVER, that the Company shall not be required
to pay any tax or duty which may be payable in respect of (i) income of the
Holder or (ii) any transfer involved in the issuance or delivery of certificates
for shares of Common Stock in a name other than that of the Holder of the
Securities being repurchased, and no such issuance or delivery shall be made
unless and until the Person requesting such issuance or delivery has paid to the
Company the amount of any such tax or duty or has established, to the
satisfaction of the Company, that such tax or duty has been paid.
(i) All Securities delivered for repurchase shall be delivered to the
Trustee to be canceled by the Trustee and disposed of as provided in SECTION
3.9.
SECTION 13.4 CERTAIN DEFINITIONS.
For purposes of this ARTICLE THIRTEEN,
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(a) the term "beneficial owner" shall be determined in accordance with
Rule 13d-3, as in effect on the date of the original execution of this
Indenture, promulgated by the Commission pursuant to the Exchange Act;
(b) a "Change in Control" will be deemed to have occurred at the time
after the Securities are originally issued that any of the following occurs:
(i) any Person, including any syndicate or group deemed to be
a "person" under Section 13(d)(3) of the Exchange Act, acquires beneficial
ownership, directly or indirectly, through a purchase, merger or other
acquisition transaction or series of transactions, of shares of the Company's
capital stock entitling that Person to exercise 50% or more of the total voting
power of all shares of the Company's capital stock entitled to vote generally in
elections of directors; however, any acquisition by the Company, any Subsidiary
of the Company or any employee benefit plan of the Company and any merger or
consolidation that is not a Change in Control under clause (ii) below will not
trigger this provision;
(ii) the Company consolidates with or merges with or into any
other Person or another Person merges into the Company, except if the
transaction satisfies any of the following: (x) the holders of 50% or more of
the total voting power of all shares of the Company's capital stock entitled to
vote generally in elections of directors immediately prior to 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 entitled to
vote generally in elections of directors of the continuing or surviving
corporation immediately after the transaction; (y) the transaction is a merger
which does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of the Company's capital stock; or (z) the
transaction is a merger effected only to change the Company's jurisdiction of
incorporation and it results in a reclassification, conversion or exchange of
outstanding shares of the Company's common stock only into other shares of
Common Stock or shares of common stock of another corporation; or
(iii) the Company conveys, transfers, sells, leases or
otherwise disposes of all or substantially all of its assets to another Person,
unless the holders of 50% or more of the total voting power of all shares of
capital stock of the Company entitled to vote generally in elections of
directors immediately prior to the consummation of such transaction have,
directly or indirectly, 50% or more of the total voting power of all shares of
capital stock of such Person entitled to vote generally in elections of
directors immediately after the consummation of such transaction.
However, a Change in Control shall not be deemed to have occurred if
the Closing Price Per Share on any five Trading Days within the period of 10
consecutive Trading Days ending immediately after the later of the date of the
Change in Control or the date of the public announcement of the Change in
Control (in the case of a Change in Control under Clause (i) above), or within
the period of
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10 consecutive Trading Days ending immediately prior to the date the Change in
Control (in the case of a Change in Control under Clause (ii) or (iii) above),
shall in the case of each of such five Trading Days equal or exceed 105% of the
Conversion Price of the Securities in effect on such Trading Day.
(c) the term "Conversion Price" shall equal U.S.$1,000 divided by the
Conversion Rate; and
(d) for purposes of SECTION 13.4(b)(i), the term "Person" shall include
any syndicate or group which would be deemed to be a "Person" under Section
13(d)(3) of the Exchange Act, as in effect on the date of the original execution
of this Indenture.
ARTICLE XIV
HOLDERS LISTS AND REPORTS
BY TRUSTEE AND COMPANY; NON-RECOURSE
SECTION 14.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
HOLDERS.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after the Regular Record Date,
a list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders of Securities as of such Regular Record Date, and
(b) at such other times as the Trustee may reasonably request in
writing, within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days prior to the
time such list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 14.2 PRESERVATION OF INFORMATION.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in SECTION 14.1 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
SECTION 14.1 upon receipt of a new list so furnished.
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(b) After this Indenture has been qualified under the Trust Indenture
Act, the rights of Holders to communicate with other Holders with respect to
their rights under this Indenture or under the Securities, and the corresponding
rights and duties of the Trustee, shall be as provided by the Trust Indenture
Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 14.3 NO RECOURSE AGAINST OTHERS.
An incorporator or any past, present or future director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Holder shall waive and release all such
liability. Such waiver and release shall be part of the consideration for the
issue of the Securities.
SECTION 14.4 REPORTS BY TRUSTEE.
(a) After this Indenture has been qualified under the Trust Indenture
Act, the Trustee shall transmit to Holders such reports concerning the Trustee
and its actions under this Indenture as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto. If
required by Section 313(a) of the Trust Indenture Act, the Trustee shall, within
sixty days after each September 15 following the date of this Indenture, deliver
to Holders a brief report, dated as of such September 15, which complies with
the provisions of such SECTION 313(a).
(b) After this Indenture has been qualified under the Trust Indenture
Act, a copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with the Company. The Company
will promptly notify the Trustee when the Securities are listed on any stock
exchange.
SECTION 14.5 REPORTS BY COMPANY.
After this Indenture has been qualified under the Trust Indenture Act,
the Company shall so notify the Trustee in an Officer's Certificate, and the
Company shall file with the Trustee and the Commission, and transmit to Holders,
such information, documents and other reports, and such summaries thereof, as
may be required pursuant to the Trust Indenture Act at the times and in the
manner provided pursuant thereto; PROVIDED that any such information, documents
or reports required
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to be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act shall be filed with the Trustee within 15 days after the same is so required
to be filed with the Commission.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt thereof shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
---------------------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ John B. Douglas III
----------------------------------------
Name: John B. Douglas III
Title: General Counsel
State Street Bank and Trust Company, as Trustee
By: /s/ Jill Olson
----------------------------------------
Name: Jill Olson
Title: Vice President
<PAGE>
EXHIBIT A
FORM OF TRANSFER CERTIFICATE FOR TRANSFER
FROM GLOBAL SECURITY OR DEFINITIVE SECURITY
TO DEFINITIVE SECURITY
(Transfers pursuant to Section 3.5(c)(i) or 3.5(c)(ii) of the Indenture)
State Street Bank and Trust Company, as Security Registrar
Attn: Corporate Trust Department
Re: Millennium Pharmaceuticals, Inc. 5.50% Convertible
Subordinated Notes
DUE JANUARY 15, 2007 (THE "SECURITIES")
Reference is hereby made to the Indenture dated as of January 20, 2000
(the "Indenture") between Millennium Pharmaceuticals, Inc. and State Street Bank
and Trust Company, as Trustee. Capitalized terms used but not defined herein
shall have the meanings given them in the Indenture.
This letter relates to U.S. $__________ aggregate principal amount of
Securities which are held in the form of a [registered Security in definitive
form] [a beneficial interest in Global Security (CUSIP No. ____________ )]* in
the name of [name of transferor] (the "Transferor"), to request the transfer of
the Securities.
In connection with such request, and in respect of such Securities, the
Transferor does hereby certify that such Securities are being transferred (i) in
accordance with the transfer restrictions set forth in the Securities and the
Indenture and (ii) to a transferee that the Transferor reasonably believes is an
institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the U.S. Securities Act of 1933, as amended) (an
"Institutional Accredited Investor") which is acquiring such Securities for its
own account or for one or more accounts, each of which is an Institutional
Accredited Investor, over which it exercises sole investment discretion and
(iii) in accordance with applicable securities laws of any state of the United
States.
[Name of Transferor],
By ___________________________________
Name:
Title:
<PAGE>
Dated:
cc: Millennium Pharmaceuticals, Inc.
Attn: Chief Financial Officer
75 Sidney Street
Cambridge, MA 02139
- ----------------------------
* Insert if appropriate.
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<PAGE>
EXHIBIT B
FORM OF ACCREDITED INVESTOR TRANSFEREE CERTIFICATE
(Transfers pursuant to Section 3.5(c)(i) or 3.5(c)(ii) of the Indenture
State Street Bank and Trust Company, as Security Registrar
Attn: Corporate Trust Department
Re: Millennium Pharmaceuticals, Inc. 5.50% Convertible Subordinated Notes
DUE JANUARY 15, 2007 (THE "SECURITIES")
Reference is hereby made to the Indenture dated as of January 20, 2000
(the "Indenture") between Millennium Pharmaceuticals, Inc. a Delaware
corporation (the "Company"), and State Street Bank and Trust Company, as Trustee
(the "Trustee"). Capitalized terms used but not defined herein shall have the
meanings given them in the Indenture.
In connection with our proposed purchase of $__________ aggregate
principal amount of the Securities, which are convertible into shares of common
stock ("Common Stock") of the Company, we confirm that:
1. We understand that the Securities and the Common Stock issuable upon
conversion thereof have not been registered under the U.S. Securities Act of
1933, as amended (the "Securities Act") and may not be sold or otherwise
transferred other than in accordance with the legends set forth thereon, and we
will notify any purchaser of the Securities or Common Stock issuable upon
conversion thereof from us of the above resale restrictions, if then applicable.
We further understand that in connection with any transfer of the Securities of
the Common Stock issuable upon conversion thereof (other than a transfer
pursuant to an effective registration statement under the Securities Act ) by us
that the Company and the Trustee (or the transfer agent in the case of Common
Stock issuable upon conversion thereof) may request, and if so requested we will
furnish, such certificates and other information and, in the case of a transfer
other than pursuant to an effective registration statement or under Rule 144A
under the Act, a legal opinion as they may reasonably require to confirm that
any such transfer complies with the foregoing restrictions.
2. We are able to fend for ourselves in connection with our purchase of
the Securities, we have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our investment in
the Securities, and we and any accounts for which we are acting are each able to
bear the economic risk of our or its investment and can afford the complete loss
of such investment.
<PAGE>
3. We understand that the Company and others will rely upon the truth
and accuracy of the foregoing acknowledgments, representations, agreements and
warranties and we agree that if any of the acknowledgments, representations,
agreements or warranties made or deemed to have been made by us by our purchase
of the Securities, for our own account or for one or more accounts as to each of
which we exercise sole investment discretion, are no longer accurate, we shall
promptly notify the Company.
4. With respect to the certificates representing Securities we are
purchasing, we understand that such certificates will be in definitive
registered form and that the notification requirement referred to in (1) above
requires that, until the expiration of the holding period with respect to sales
of the Securities under clause (k) of Rule 144 under the Securities Act, that
such Securities will bear a legend substantially to the following effect:
THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON THE CONVERSION OF THIS
NOTE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE
"SECURITIES ACT"), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF
THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY
RULE 144A THEREUNDER.
THIS NOTE AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) TO A
PERSON WHOM THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT ACQUIRING FOR ITS
OWN ACCOUNT OR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (2) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (3) TO AN INSTITUTIONAL INVESTOR THAT IS AN ACCREDITED INVESTOR
WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF
THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS. THIS NOTE, ANY SHARES
OF COMMON STOCK ISSUABLE UPON ITS CONVERSION AND ANY RELATED DOCUMENTATION MAY
BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME TO MODIFY THE
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RESTRICTIONS ON RESALES AND OTHER TRANSFERS OF THIS NOTE AND ANY SUCH SHARES TO
REFLECT ANY CHANGE IN APPLICABLE LAW OR REGULATION (OR THE INTERPRETATION
THEREOF) OR IN PRACTICES RELATING TO THE RESALE OR TRANSFER OF RESTRICTED
SECURITIES GENERALLY. THE HOLDER OF THIS NOTE AND SUCH SHARES SHALL BE DEEMED BY
THE ACCEPTANCE OF THIS NOTE AND ANY SUCH SHARES TO HAVE AGREED TO ANY SUCH
AMENDMENT OR SUPPLEMENT.
5. With respect to certificates representing shares of Common Stock
issuable upon conversion of the Securities, we understand that the notification
requirement referred to in (1) above requires that, until the expiration of the
holding period with respect to sales of such Common Stock under clause (k) of
Rule 144 under the Securities Act, such certificates will bear a Restricted
Securities Legend substantially to the effect set forth as Section 2.2 of the
Indenture and that a copy of such legend may be obtained from the Trustee.
6. We are acquiring the Securities purchased by us for investment
purposes, and not for distribution, for our own account or for one or more
accounts as to each of which we exercise sole investment discretion and we are
and each such account is an Institutional Accredited Investor.
7. You and the Company are entitled to rely on this letter and you and
the Company are irrevocably authorized to produce this letter or a copy hereof
to any interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Very truly yours,
_____________________________________
(Name of Purchaser)
By:
_________________________________
Dated: _____________________________
cc: Millennium Pharmaceuticals, Inc.
Attn: Chief Financial Officer
75 Sidney Street
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<PAGE>
Cambridge, MA 02139
-4-
NY12534: 45974.5
<PAGE>
EXHIBIT C
FORM OF UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Restricted Securities Legend pursuant to Section 3.5(b)(ix))
State Street Bank and Trust Company, as Security Registrar
RE: 5.50% CONVERTIBLE SUBORDINATED NOTES DUE JANUARY 15,
2007 OF MILLENNIUM PHARMACEUTICALS, INC. (THE
"SECURITIES")
Reference is made to the Indenture, dated as of January 20, 2000 (the
"Indenture"), from Millennium Pharmaceuticals, Inc. (the "Company") to State
Street Bank and Trust Company, as Trustee. Terms used herein and defined in the
Indenture or in Rule 144 under the U.S. Securities Act of 1933 (the "Securities
Act") are used herein as so defined.
This certificate relates to $_______ principal amount of Securities,
which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No. __________
CERTIFICATE No(s).
The Person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Securities or (ii) it is acting on behalf of all the beneficial
owners of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be exchanged for
Securities bearing no Restricted Securities Legend pursuant to Section
3.5(b)(iv) of the Indenture. In connection with such exchange, the Owner hereby
certifies that the exchange is occurring after a period of at least two years
has elapsed since the date the Specified Securities were acquired from the
Company or from an "affiliate" (as such term is defined in Rule 144) of the
Company, whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company. The Owner also
-5-
<PAGE>
acknowledges that any future transfers of the Specified Securities must comply
with all applicable securities laws of the states of the United States and other
jurisdictions.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers.
Dated:
(Print the name of the Undersigned, as such term is defined in the
third paragraph of this certificate.)
By: ________________________________
Name: ________________________________
Title: ________________________________
(If the Undersigned is a corporation, partnership or fiduciary, the
title of the Person signing on behalf of the Undersigned must be stated.)
-6-
<PAGE>
EXHIBIT 10.3
[LETTERHEAD]
August 5, 1999
Mr. Kevin Starr
Chief Financial Officer
Millennium Pharmaceuticals, Inc.
75 Sidney Street
Cambridge, MA 02139
Dear Kevin:
We are pleased to advise you that our Senior Management Committee has approved a
firm commitment for a lease line to Millennium Pharmaceuticals, Inc., (the
"Lessee"), to be funded by us or our nominee, on the following terms and
conditions.
1. TRANSACTION: The transaction is structured as a true lease in which the
Lessor will be entitled to claim and retain all of the tax benefits
associated with ownership of the equipment. The lease will be a net
lease in which the Lessee will be responsible for all the expenses
relating to the equipment and the transaction; including equipment
maintenance, insurance coverage, payment of personal property taxes,
recording and appraisal fees and other expenses. Information provided
to GE Capital may be used by GE Capital or it potential nominees in
evaluating the transaction.
2. LESSEE: Millennium Pharmaceuticals, Inc.
2a. LESSOR: GE Capital or its nominee.
3. ORIGINATOR: Meier Mitchell & Company
4. EQUIPMENT: Various new laboratory, test, office and other non-computer
equipment, all of which must be acceptable to Lessor. Transportation
and other soft costs cannot exceed ten percent (10%) of the Acquisition
Cost.
5. DELIVERY: All Equipment must be delivered, accepted and scheduled on or
before June 30, 2000.
6. ACQUISITION COST: $15,000,000 (Lessor will use its best efforts to
syndicate an additional $5 million)
7. TERM: Five (5) years from the Base Lease Commencement Date.
8. BASE LEASE COMMENCEMENT DATE: The first day of the month following
scheduling.
<PAGE>
9. BASE LEASE RENTAL PAYMENT: Lessee will be required to make sixty (60)
monthly rental payments, each payable in advance, and equal to the
following percentage of the Acquisition Cost depending upon the Date of
Scheduling.
DATE OF SCHEDULING RENTAL FACTOR
Q3 1999 30 @ 1.6680%, then 30 @ 2.0386%
Q4 1999 30 @ 1.6602%, then 30 @ 2.0291%
Q1 2000 30 @ 1.6862%, then 30 @ 2.0610%
Q2 2000 30 @ 1.6768%, then 30 @ 2.0494%
The Base Lease Rental Payment was calculated using current money market
rates; however, money market conditions at the Date of Scheduling will
control the final Base Lease Rental Payment that is fixed for the Term.
See "Adjustments to the Base Lease Rental Payment" below.
10. INTERIM RENTAL PAYMENT: From the Date of Scheduling to the Base Lease
Commencement Date, the Lessee will be required to make Interim Rental
Payments at an interest rate equal to the commercial paper rate at the
Date of Scheduling plus 225 basis points.
11. TAX BENEFITS: Lessee will represent and warrant that the depreciation
deductions arising our of the ownership of all of the Equipment will be
for the account of Lessor and will be recognized over a five (5) year
period on a 200% declining balance switching to straight-line (DDB/SL)
formula using the half-year convention. A Federal corporate tax rate of
35% for 1999 and thereafter was assumed in calculating the Base Lease
Rental Payment. Lessee will indemnify Lessor for any loss of any Tax
Benefits caused by an act, omission or misrepresentation of Lessee.
12. ADMINISTRATIVE FEE: An Administrative Fee equal to $100,000 has been
paid to GE Capital. Of that amount $75,000 is considered earned but
will be applied pro rata to the first monthly rental payment under each
schedule. The remaining $25,000 will be treated in a similar fashion
upon GE Capital's successful syndication of the additional $5 million.
13. LESSEE OPTIONS AT LEASE EXPIRATION: At the expiration of Term, Lessee
will have the following options:
A. Renew all the Equipment under the lease for ten (10) months
at 1.2% of Acquisition Cost per month, in advance, after
which time the Lessee may:
1. Return all the Equipment to the Lessor;
2. Renew all the Equipment under lease at a term and
rate to be negotiated by the parties based upon the
then remaining useful life and fair market value of
the Equipment; or
3. Purchase all the Equipment at its then fair market
value; OR
B. Purchase all the Equipment for the greater of ten percent
(10%) of original Acquisition Cost or its then fair market
value. The Lessee may select the qualified appraiser.
14. ADJUSTMENTS TO THE BASE LEASE RENTAL PAYMENT: The Base Lease Rental
Payment stated above reflects current money market rates as indicated
by the yield to maturity of 5.36% for three-year Treasury Notes (the
Reference Yield).
<PAGE>
The Table below sets forth the U.S. Treasury Notes with similar then remaining
lives to maturity which will be used to establish the final Base Lease Rental
Payment, depending upon the date of scheduling
DATE OF SCHEDULING APPLICABLE TREASURY NOTE
COUPON MATURITY
July 1 to September 30, 1999 6.25% August 2002
October 1 to December 31, 1999 5.75% November 2002
January 1 to March 31, 2000 6.25% February 2003
April 1 to June 30, 2000 5.50% May 2003
The Base Lease Rental Payment actually used will be that stated above, increased
or decreased .00198% for the first 30 payments and .00242% for the last 30
payments for each 5 basis point change in the yield to maturity of the
Applicable Treasury Note from the Reference Yield. The yield to maturity of the
Applicable Treasury Note used to calculate the adjustment to the Base Lease
Rental Payment will be the yield quoted in the most recently published issue of
THE WALL STREET JOURNAL on the Date of Scheduling.
15. ELECTRONIC PAYMENT SYSTEM: All payments to GE Capital shall be made
under an electronic payment system at no cost to the Lessee.
16. FINANCIAL COVENANTS: Lessee agrees that its (a) unrestricted cash,
cash equivalents and marketable securities shall always total at least
$30,000,000; (b) tangible net worth shall always be at least
$30,000,000; (c) current ratio shall always be at least 2.0:1 and (d)
total liabilities/tangible net worth ratio shall never exceed 1.0:1.
Unrestricted cash and cash equivalents and marketable securities will
be defined as being net of any non-GE Capital contingent liability
associated with other cash triggers or pledge agreements. If for any
reason Lessee does not meet these covenants, Lessee will provide
Lessor with an irrevocable letter of credit in a form acceptable to
Lessor and from a bank acceptable to Lessor equal to Lessor's then
stipulated loss value on all schedules. Lessee's Chief Financial
Officer or other senior officer will provide Lessor with a monthly
compliance statement in a form acceptable to Lessor. The requirement
for these covenants shall be dropped upon the expiry of all schedules
previously funded under the lease agreement between Lessor and Lessee
if no event of default exists at that time and Lessee has paid as
agreed.
17. YEAR 2000 COMPLIANCE: ALL OF THE TERMS AND CONDITIONS OF THIS PROPOSAL
HAVE BEEN MADE ON THE ASSUMPTION THAT THE ASSETS RELATED HERETO ARE
YEAR 2000 COMPLIANT. THE TERM "YEAR 2000 COMPLIANT" SHALL MEAN THAT THE
ASSETS HAVE BEEN DESIGNED AND/OR ENGINEERED SUCH THAT THEY WILL, ON OR
AFTER THE DATE DECEMBER 31, 1999, CONTINUE TO FULLY FUNCTION IN THE
MATTER INTENDED, AND PERFORM ALL OF THE DUTIES THAT THEY ARE INTENDED
TO FULFILL, BY THE USER THEREOF ON THE COMMENCEMENT OF THE TRANSACTION
CONTEMPLATED BY THIS LETTER.
18. ECONOMIC OBSOLESCENCE: Anytime after the first anniversary of the Base
Lease Commencement Date of any schedule funded hereunder, Lessee may
terminate the lease with respect to any Equipment which has become
obsolete or surplus to Lessee's needs. Lessee will be responsible for
selling this equipment and shall pay Lessor the attendant termination
value for that Equipment.
This firm commitment has been rendered in express reliance on the financial or
other statements respecting the conditions, operation, and affairs of the
Lessee, or respecting the equipment to be leased, which Lessee has previously
provided to us, and is based on the understanding that Lessee has committed
<PAGE>
to complete the transaction with us or our nominee. The Lessor's commitment
is subject to the condition that there shall be no material adverse change in
either (i) the business or financial condition of the Lessee or (ii) proposed
Federal tax law, prior to any funding under the loan.
An express condition of the commitment is that all documentation be satisfactory
to our counsel.
This firm commitment will expire on August 13, 1999 unless you acknowledge your
receipt hereof and acceptance by executing the enclosed copy of this letter and
returning it to us by that date. If accepted by you, this commitment will expire
on June 30, 2000.
GE Capital
By: /s/ JAMES F. SIEGAL
-----------------------
Richard L. Dauphinais
Senior Transaction Manager
Third Party Originations
ACCEPTED BY THE LESSEE:
By: /s/ MICHAEL FALVEY
Date: 8/9/99
<PAGE>
EXHIBIT 10.4
Addendum No. 3 to Master Lease Agreement
Dated as of September 19, 1996
This Addendum amends and supplements the above-referenced Master Lease
Agreement ("the Lease") by and between General Electric Capital Corporation as
Lessor and Millennium Pharmaceuticals, Inc. as Lessee and is hereby incorporated
into the Lease as though fully set forth therein. All terms not otherwise
defined herein shall have the meanings ascribed to them in the Lease.
The parties hereto agree that Section XXI(a)(iv) of the Lease requires
Lessee to maintain a total liabilities to tangible net worth ratio of 1.0:1 or
less. The parties hereto agree that from and after the date hereof, any
convertible subordinated notes due in 2007 or thereafter shall not be considered
part of Lessee's liabilities or tangible net worth and therefore not part of the
calculation of the ratio set forth in Section XXI(a)(iv).
Except as expressly modified hereby, all terms and provisions of the
Lease shall remain in full force and effect. This Addendum is not binding or
effective with respect to the Lease or the Schedules, or the Equipment until
executed on behalf of each of Lessor and Lessee by authorized representatives of
Lessor and Lessee.
This Addendum is binding upon and inures to the benefit of the parties
hereto and their respective successors and assigns.
IN WITNESS WHEREOF, Lessor and Lessee have caused this Addendum to be
executed by their duly authorized representatives as of this 13th day of
January, 2000.
LESSOR: LESSEE:
General Electric Capital Corporation Millennium Pharmaceuticals, Inc.
By: /s/ RICHARD DAUPHINAIS By: /s/ MICHAEL FALVEY
Name: Richard Dauphinais Name: Michael Falvey
Title: VP & Sr. Transaction Mgr. Title: VP Finance
Date: 1/13/2000 Date: 1/11/2000
<PAGE>
Exhibit 10.6
THIRD AMENDMENT TO LEASE
THIS THIRD AMENDMENT TO LEASE ("Amendment") is made as of the 12th day
of June, 1996 by and between MASSACHUSETTS INSTITUTE OF TECHNOLOGY, a
Massachusetts educational corporation with an address of 238 Main Street,
Cambridge, Massachusetts 02142 ("Lessor"), and MILLENNIUM PHARMACEUTICALS, INC.,
a Delaware corporation with an address of 640 Memorial Drive, Cambridge,
Massachusetts 02139 ("Lessee").
Reference is made to a lease dated August 26, 1993 by and between
Lessor and Lessee, as amended by a First Amendment to Lease dated as of May 18,
1994, and as further amended by a Second Amendment to Lease dated as of January
9, 1996 (collectively, the "Lease"), concerning certain premises located at 640
Memorial Drive, Cambridge, Massachusetts, as more particularly described in the
Lease. A Notice of Lease was filed with the Middlesex Southern Registry District
of the Land Court on March 2, 1994 as Document No. 939638, and noted on
Certificate of Title No. 89497, and a Notice of Amendment of lease was filed
with said Registry District on June 3, 1994 and noted on said Certificate of
Title as Document No. 949035. Capitalized terms used in this Amendment which are
defined in the Lease and not otherwise defined herein shall have the same
meaning in this Amendment as in the Lease.
Lessee desires to expand the Premises into a portion of the third floor
of the Building containing approximately 20,423 square feet of rentable area and
shown on EXHIBIT I attached hereto and incorporated herein by reference (the
"Expansion Premises"), which is currently leased to, and occupied by, Endogen,
Incorporated ("Endogen") pursuant to a written lease between Lessor and Endogen
(as so amended, the "Endogen Lease"). Lessor is willing to agree to such
expansion of the Premises on the terms hereinafter set forth.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and legal sufficiency
of which are hereby acknowledged, Lessor and Lessee hereby agree to amend the
Lease as follows:
1. PREMISES.
(a) Endogen has informed Lessor that it intends to vacate the Expansion
Premises on a phased basis, commencing on or about June 14, 1996 and ending not
later than August 14, 1996. On or about June 14, 1996, Lessee shall construct,
at Lessee's sole cost and expense, temporary demising partitions within the
Expansion Premises dividing it into two areas, one of which shall consist of
approximately 10,000 square feet of rentable area (the "First Expansion Area"),
and the other of which shall comprise the balance of the Expansion Premises (the
"Second Expansion Area").
<PAGE>
(b) Promptly upon the acceptance by Lessor of the surrender by Endogen
of the First Expansion Area to Lessor in accordance with the terms of the
Endogen Lease, Lessor shall give written notice to Lessee of the availability of
the First Expansion Area. From and after the date of such notice to Lessee (the
"First Expansion Area Commencement Date") , the First Expansion Area shall be
deemed to part of the Premises for all purposes of the Lease, and as of the
First Expansion Area Commencement Date Lessee's Share shall be adjusted to
include the area of the First Expansion Area in the Premises.
(c) Promptly upon the acceptance by Lessor of the surrender by Endogen
of the Second Expansion Area to Lessor accordance with the terms of the Endogen
Lease, Lessor shall give written notice to Lessee of the availability of the
Second Expansion Area. From and after the date of such notice to Lessee (the
"Second Expansion Area Commencement Date"), the Second Expansion Area shall be
deemed to part of the Premises for all purposes of the Lease, and as of the
Second Expansion Area Commencement Date Lessee's Share shall be adjusted to
include the area of the Second Expansion Area in the Premises.
2. TERM.
(a) The Term of the Lease with respect to the First Expansion Area
shall commence on the First Expansion Area Commencement Date and shall expire on
the last day of the Term as provided in the Lease, unless the Term is sooner
terminated as provided in the Lease.
(b) The Term of the Lease with respect to the Second Expansion Area
shall commence on the Second Expansion Area Commencement Date and shall expire
on the last day of the Term as provided in the Lease, unless the Term is sooner
terminated as provided in the Lease.
(c) If Lessee exercises an Extension option in accordance with the
provisions of the Lease, the Term shall be extended with respect to the
Expansion Premises on the same terms and conditions as are provided in the Lease
with respect to the Premises EXCEPT that the Basic Rent due and payable on
account of the Expansion Premises for each Lease Year in an Extension Term shall
be ninety-five (95%) percent of the Fair Market Rent of the Expansion Premises
as of the first day of the applicable Extension Term. Notwithstanding the
foregoing, Lessee shall not be entitled to exercise an Extension Option with
respect to the Expansion Premises unless Lessee itself is actually occupying the
entire Expansion Premises as of both the date on which Lessee purports to
exercise an Extension option and the first day of the corresponding Extension
Term. In no event shall Lessee be entitled to exercise an Extension Option with
respect to the Expansion Premises unless Lessee simultaneously exercises, in
accordance with the provisions of the Lease, an Extension option
2
<PAGE>
with respect the portion of the Premises located on the fifth floor of the
Building.
3. RENT.
(a) From and after the First Expansion Area Commencement Date
(regardless of the date on which Lessee actually takes occupancy of all or any
portion of the First Expansion Area), Lessee shall pay on account of the First
Expansion Area Basic Rent at the rate of $23.50 per square foot of rentable area
thereof per Lease Year for each Lease Year in the Initial Term. Basic Rent shall
be due and payable at the time and in the manner provided in the Lease. Basic
Rent for the First Expansion Area for each Lease Year in an Extension Term shall
be an amount equal to ninety-five (95%) percent of the Fair Market Rent of the
First Expansion Area as of the first day of the applicable Extension Term. In
addition to Basic Rent, from and after the First Expansion Area Commencement
Date, Lessee shall pay all Additional Rent attributable to or related to the
First Expansion Area, including without limitation, Taxes and Operating
Expenses.
(b) From and after the Second Expansion Area Commencement Date
(regardless of the date on which Lessee actually takes occupancy of all or any
portion of the Second Expansion Area), Lessee shall pay on account of the Second
Expansion Area Basic Rent at the rate of $23.50 per square foot of rentable area
thereof per Lease Year for each Lease Year in the Initial Term. Basic Rent shall
be due and payable at the time and in the manner provided in the Lease. Basic
Rent for the Second Expansion Area for each Lease Year in an Extension Term
shall be an amount equal to ninety-five (95%) percent of the Fair Market Rent of
the Second Expansion Area as of the first day of the applicable Extension Term.
In addition to Basic Rent, from and after the Second Expansion Area Commencement
Date, Lessee shall pay all Additional Rent attributable to or related to the
Second Expansion Area, including without limitation, Taxes and Operating
Expenses.
4. ELECTRIC SERVICE. During the time between the First Expansion Area
Commencement Date and the Second Expansion Area Commencement Date, Lessee shall
reimburse Endogen (on a pro-rated basis) for the electricity consumed by Lessee
in the First Expansion Area based on the meter readings for the entire Expansion
Premises. From and after the Second Expansion Area Commencement Date the
provisions of Section 6.0 of the Lease shall apply with respect to the entire
Expansion Premises.
5. PARKING. From and after the First Expansion Area Commencement Date,
Lessee shall have the right to lease up to an additional sixteen (16) On-Site
Parking spaces, subject to the provisions of Section 9.0 of the Lease, by giving
written notice to Lessor within thirty (30) days after the First Expansion Area
Commencement Date. From and after second Expansion Area Commencement Date,
Lessee shall have the right to lease up to an
3
<PAGE>
additional fifteen (15) On-Site Parking Spaces, subject to the provisions of
Section 9.0 of the Lease, by giving written notice to Lessor within thirty (30)
days after the Second Expansion Area Commencement Date. Lessee shall pay for
each On-Site Parking Space so leased, as Additional Rent, in advance on the
first calendar day of each month, (i) $75.00 per month for the remainder of the
Initial Term, and (ii) during each Extension Term, an amount equal to the Fair
Market Rent of such space, as determined in the manner provided in the Lease.
6. TRANSPORTATION OF ANIMALS AND RELATED MATERIALS. The provisions of
the Lease relating to the transportation by or on behalf of Lessee between the
Additional Basement Space and the Premises of animals, animal waste, food or
supplies relating to the animals maintained from time to time in the Additional
Basement Space shall apply equally to the transportation of such animals and
materials between the Additional Basement Space and the Expansion Premises.
7. NO LIABILITY. Lessor shall not be liable in any manner whatsoever
for any failure or delay on the part of Endogen in vacating all or any portion
of the Expansion Premises and redelivering the same to Lessor in accordance with
the terms of the Endogen Lease, nor shall any such failure or delay give rise to
any right of setoff, claim for damages, or any other claim of any kind
whatsoever by Lessee against Lessor.
8. CONSTRUCTION. Lessor shall have no obligation to perform any
demolition or construction in the Expansion Premises in preparation of Lessee's
use and occupancy thereof, nor shall Lessor be required to make any payments to
or on account of Lessee in connection with such demolition or construction. All
such demolition and construction shall be performed by Lessee, at its sole cost
and expense, in accordance with the provisions of the Lease applicable to
Alterations.
9. NOTICE OF AMENDMENT TO LEASE. Either party shall, at the request of
the other, execute and acknowledge a Notice of Amendment to Lease in mutually
satisfactory form.
10. CONDITIONS TO EFFECTIVENESS. Notwithstanding anything contained
herein to the contrary, this Amendment shall not be effective unless and until
all of the following occur:
(a) Lessor unconditionally delivers to Lessee an executed counterpart
of this Amendment;
(b) Lessor receives a written waiver from Lifeline Systems, Inc. of its
right of offer with respect to the proposed lease of the Expansion Premises to
Lessee as herein contemplated;
(c) Lessor receives a written waiver from Pathology Services, Inc. of
its right of offer with respect to the proposed lease of the Expansion Premises
to Lessee as herein contemplated;
4
<PAGE>
(d) Lessor unconditionally delivers to Endogen a written agreement
executed by Lessor terminating the Endogen Lease.
Lessee acknowledges that Lessor's willingness to enter into this Amendment is
based, in part, on Lessor's expectation that third parties over whom Lessor has
no control will take the actions described above in this Paragraph. Lessor makes
no representation or warranty concerning whether or not such third parties will
take such actions so that the foregoing conditions to the effectiveness of this
Amendment are satisfied in full.
11. AUTHORITY. Contemporaneously with its execution of this Amendment,
Lessee shall furnish to Lessor a certified copy of the resolution of the Board
of Directors of Lessee authorizing Lessee to enter into this Amendment and to
execute and acknowledge the aforementioned Notice of Amendment to Lease.
12. GENERAL. This Agreement constitutes the entire agreement of the
parties with respect to its subject matter, and no oral statement or prior
written matter shall have any force or effect. This Agreement shall not be
modified or canceled except by writing subscribed to by all parties. This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts. The captions of the several paragraphs in this
Amendment are for convenience only and shall not be considered in construing
this Amendment.
In all other respects, the terms and provisions of the Lease are hereby
ratified and confirmed and remain in full force and effect and unamended.
EXECUTED UNDER SEAL as of the date set forth above.
LESSOR: MASSACHUSETTS INSTITUTE OF
TECHNOLOGY
By /s/ Philip A. Trussell
----------------------
Philip A. Trussell,
Director of Real Estate and
Associate Treasurer
Hereunto duly authorized
LESSEE: MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ Peter Courossi
------------------
Name: Peter Courossi
Title: Director of Finance
Hereunto duly authorized
5
<PAGE>
EXHIBIT I
FLOOR PLAN OF THIRD FLOOR OF THE BUILDING
SHOWING EXPANSION PREMISES
(To be provided)
6
<PAGE>
FOURTH AMENDMENT TO LEASE
THIS FOURTH AMENDMENT TO LEASE is made as of the ___ day of ____________, 199__
by and between MASSACHUSETTS INSTITUTE OF TECHNOLOGY, a Massachusetts
educational corporation with an address of 238 Main Street, Suite 200,
Cambridge, Massachusetts 02142, ("Lessor") and Millennium Pharmaceuticals, Inc.,
with an address of 640 Memorial Drive, Cambridge, Massachusetts 02139,
("Lessee").
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and legal sufficiency of which
are hereby acknowledged, Lessor and Lessee hereby agree to amend the Lease as
follows:
1. PREMISES. The definition of the Premises is hereby amended to
include, in addition to the Premises as described in the
Lease, that portion of the basement floor of the Building
shown as the hatched area on Exhibit I attached hereto,
containing 2,068 square feet ("Additional Basement Space"). It
is the mutual intention of Lessor and Lessee that the
Additional Basement Space shall be deemed part of the Premises
for all purposes of the Lease except otherwise expressly
provided in this Amendment. Notwithstanding the foregoing, (I)
the area of the Additional Basement Space shall not be
included (a) in the rentable area of the Premises for below,
or (b) in determining the number of parking spaces to which
Lessee is entitled under Section 9.0 below; and (II) the
Basement Space shall not be included in the Premises for the
purposes of Section 13.0 below; and (III) the Basement Space
shall not be included in the Premises for the purposes of the
"Work Letter" or "Supplemental Work Letter" attached hereto as
Exhibit C, and (IV) the agreement to lease the "Additional
Basement Space" may be cancelled by either party upon thirty
(30) days written notice.
2. TERM. Notwithstanding anything to the contrary contained in
the Lease, the Term of the Lease with respect to the
Additional Basement Space shall commence on November 1, 1996
and expire on the last day of the Term as provided in: the
Lease, unless the term is sooner terminated as provided in the
Lease.
3. RENT. Lessee shall pay on account of the Additional Basement
Space, Basement Rent in the amount of $8.00 per square foot
per lease year, such amount to be paid in advance in equal
monthly installments in the same manner and at the same times
as Basic Rent.
4. PERMITTED USE. The Basement Space shall be used solely as a
storage facility and for no other use. No storage of animal
related products shall be allowed. Lessee hereby agrees to
comply with all the Legal Requirements applicable to Lessee's
use
<PAGE>
of the Basement Space and not to permit the emission of any
noise or odors from the Basement Space.
5. NO BROKERS. Lessor and Lessee each represents to the other
that it has dealt with no brokers in connection with this
Amendment, and each agrees to indemnify and hold the other
party harmless from and against any claims for commissions or
fees by any person by reason of any act of the indemnifying
party or its representatives.
6. NO SERVICES. Notwithstanding anything to the contrary
contained in the Lease, Lessor is not providing any services
to the Basement Space except lighting.
7. CONDITION OF ADDITIONAL SPACE. Lessee accepts the Additional
Basement Space in its current "as is" condition.
8. NOTICE OF AMENDMENT TO LEASE. Either party shall, at the
request of the other, execute and acknowledge a Notice of
Amendment to Lease in mutually satisfactory form.
In all other respects, the terms and provisions of the Lease are hereby ratified
and confirmed and remain in full force and effect and unamended.
EXECUTED UNDER SEAL as of the date set forth above.
Date:______________________ MASSACHUSETTS INSTITUTE OF TECHNOLOGY
LESSOR:
By:-------------------------
Philip A. Trussell
Director of Real Estate
Hereunto duly authorized
Date:______________________ MILLENNIUM PHARMACEUTICALS, INC.
LESSEE:
By:-------------------------
Mark Levin
Chief Executive Officer
Hereunto duly authorized
<PAGE>
FIFTH AMENDMENT TO LEASE
THIS FIFTH AMENDMENT TO LEASE is made as of the 19th day of June, 1997
by and between MASSACHUSETTS INSTITUTE OF TECHNOLOGY, a Massachusetts
educational corporation with an address of 238 Main Street, Cambridge,
Massachusetts 02142 ("Lessor"), and MILLENNIUM PHARMACEUTICALS, INC., a Delaware
corporation with an address of 640 Memorial Drive, Cambridge, Massachusetts
02139 ("Lessee").
Reference is made to a lease dated August 26, 1993 by and between
Lessor and Lessee, as.amended by a First Amendment to Lease dated as of May 18,
1994, and by a Second Amendment to Lease dated as of January 9, 1996, and by a
Third Amendment to Lease dated as of June 12, 1996, and by a Fourth Amendment to
Lease dated as of March 1, 1997 (collectively, the "Lease"), concerning certain
Premises located at 640 Memorial Drive, Cambridge, Massachusetts, as more
particularly described in the Lease. Capitalized terms used in this Amendment
which are defined in the Lease and not otherwise defined herein shall have the
same meaning in this Amendment as in the Lease.
Lessor has constructed a conference center for the use of tenants of
the Building in the area on the first floor of the Building previously
identified as the site of a possible expansion of the Building cafeteria. Since
such conference center will be available for use by tenants of the Building as a
Building amenity, and therefore should become part of the Common Areas, the area
of such conference center should be included in the rentable area of the
Building and allocated among the rentable area of each tenant's premises in the
Building. Accordingly, Lessor and Lessee desire to amend the Lease to reflect
the re-calculated rentable area of the Premises.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and legal sufficiency
of which are hereby acknowledged, Lessor and Lessee hereby agree to amend the
Lease as follows:
1. PREMISES. Effective as of March 1, 1997, the rentable area of
the Premises shall be 69,758 rentable square feet, consisting
of 48,830'rentable square feet on the fourth and fifth floors
of the Building and 20,928 rentable square feet on the third
floor of the Building.
2. LESSEE'S SHARE. Effective as of March 1, 1997, "Lessee's
Share" (as defined in Section 5.1 of the Lease) shall be
38.5%.
<PAGE>
3. CONFERENCE CENTER. Effective as of March 1, 1997, the area
shown cross-hatched on the plan attached hereto as EXHIBIT I
(the "Conference Center") shall be deemed to part of the
Common Areas for all purposes of this Lease. Use of the
Conference Center by Tenant and by other tenants of the
Building shall be governed by rules and regulations therefor
adopted from time to time by Landlord.
4. CAFETERIA EXPANSION. Effective as of March 1, 1997, all
references in the Lease to the possible expansion of the
cafeteria in the Building (including, without limitation,
Section 1.4 of the Lease) are hereby deleted.
In all other respects, the terms and provisions of the Lease are hereby
ratified and confirmed and remain in full force and effect and unamended.
EXECUTED UNDER SEAL as of the date set forth above.
LESSOR: MASSACHUSETTS INSTITUTE OF
TECHNOLOGY
By:/s/ Philip A. Trussell
----------------------
Philip A. Trussell,
Director of Real Estate and
Associate Treasurer
Hereunto duly authorized
LESSEE: MILLENNIUM PHARMACEUTICALS, INC.
By:/s/ Mark Levin
--------------
Name: Mark Levin
Title: CEO
Hereunto duly authorized
2
<PAGE>
EXHIBIT I
[graphic]
<PAGE>
SEVENTH AMENDMENT TO LEASE
THIS SEVENTH AMENDMENT TO LEASE ("Amendment") is made as of the Fifth
day of February, 1999 by and between MASSACHUSETTS INSTITUTE OF TECHNOLOGY, a
Massachusetts educational corporation with an address of 238 Main Street,
Cambridge, Massachusetts 02142 ("Lessor"), and MILLENNIUM PHARMACEUTICALS, INC.,
a Delaware corporation with an address of 640 Memorial Drive, Cambridge,
Massachusetts 02139 ("Lessee").
Reference is made to a lease dated August 26, 1993 by and between
Lessor and Lessee, as amended by amendments dated as of May 18, 1994, January 9,
1996, June 12, 1996, March 1, 1997, June 19, 1997, and of even date herewith
(collectively, the "Lease"), concerning certain premises located at 640 Memorial
Drive, Cambridge, Massachusetts, as more particularly described in the Lease. A
Notice of Lease was filed with the Middlesex Southern Registry District of the
Land Court on March 2, 1994 as Document No. 939638, and noted on Certificate of
Title No. 89497, as amended. Capitalized terms used in this Amendment which are
defined in the Lease and not otherwise defined herein shall have the same
meaning in this Amendment as in the Lease.
Lessee desires to lease approximately 7,866 square feet of rentable
area on the west side of the third floor of the Building as shown on the plan
attached hereto as EXHIBIT I (the "Third Floor Expansion Premises"). Lessor is
willing so to lease to Lessee the Third Floor Expansion Premises on the terms
and conditions set forth in this Amendment.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and legal sufficiency
of which are hereby acknowledged, Lessor and Lessee hereby agree to amend the
Lease as follows:
1. PREMISES. (a) Effective February 15, 1999 (the "Effective Date"):
(i) the definition of the term "Premises" shall be amended to include, in
addition to the Premises as described in the Lease, the Third Floor Expansion
Premises, (ii) the Third Floor Expansion Premises shall be deemed to be part of
the Premises for all purposes of the Lease, and (iii) Lessee's Share shall be
adjusted to include the Third Floor Expansion Premises in the Premises.
(b) The Third Floor Expansion Premises will be delivered broom clean,
but otherwise in the condition in which the same are redelivered to Lessor by
the previous tenant thereof, and Lessee hereby agrees to accept said Premises in
their "as is" condition on the Effective Date. Lessor shall have no obligation
to perform any demolition or construction in the Expansion Premises in
preparation for Lessee's use and occupancy thereof, nor shall Lessor be required
to make any payments to or on account of Lessee in connection with such
demolition or construction. All such demolition and construction shall be
performed by Lessee, at its sole cost and expense, in accordance with the
provisions of the Lease applicable to Alterations.
<PAGE>
2. TERM. (a) The Term of the Lease with respect to the Third Floor
Expansion Premises shall commence on the Effective Date, and shall expire on the
last days, of the Term as provided in the Lease, unless the Term is sooner
terminated as provided in the Lease.
(b) If Lessee exercises an Extension Option in accordance with the
provisions of the Lease, the Term shall be extended with respect to the Third
Floor Expansion Premises on the same terms and conditions as are provided in the
Lease with respect to the Premises EXCEPT that the Basic Rent due and payable on
account of the Third Floor Expansion Premises for each Lease Year in an
Extension Term shall be as set forth in Section 3 below. Notwithstanding the
foregoing, Lessee shall not be entitled to exercise an Extension Option with
respect to the Third Floor Expansion Premises unless Lessee (or a perm sublessee
assign the type described in Section 8(j) of the Lease) is actually occupying
the entire Third Floor Expansion Premises as of both the date on which Lessee
purports to exercise an Extension Option and the first day of the corresponding
Extension Term. In no event shall Lessee be entitled to exercise an Extension
Option with respect to the Third Floor Expansion Premises unless Lessee
simultaneously exercises, in accordance with the provisions of the Lease, an
Extension Option with respect to the portion of the Premises located on the
fifth floor of the Building.
3. RENT. (a) From and after the Effective Date, Lessee shall pay on
account of the Third Floor Expansion Premises Basic Rent at the rate of $24.00
per square foot of rentable area thereof per Lease Year for each Lease Year in
the Initial Term.
(b) Lessee shall pay as Basic Rent on account of the Third Floor
Expansion Premises for each Lease Year in an Extension Term (if Lessee exercises
an Extension Option in accordance with the requirements of the Lease), an amount
equal to one hundred percent (100%) of the Fair Market Rent thereof, but in no
event will Basic Rent be less than the amount payable on account of the Third
Floor Expansion Premises during the immediately preceding Lease Year.
(c) Basic Rent on account of the Third Floor Expansion Premises shall
be paid in equal monthly installments in the manner and at the times provided in
the Lease for the payment of Basic Rent. In addition to the Basic Rent, from and
after the Effective Date, Lessee shall pay all Additional Rent attributable to
or related to the Third Floor Expansion Premises, including, without limitation,
Taxes and Operating Expenses.
4. ELECTRIC SERVICE. From and after the Effective Date, the provisions
of Section 6.0 of the Lease shall apply with respect to the Third Floor
Expansion Premises.
5. PARKING. Effective as of the Effective Date, Lessor shall lease to
Lessee, and Lessee shall lease from Lessor, an additional twelve (12) On-Site
Parking Spaces, subject to the provisions of Section 9.0 of the Lease, except
that Lessee shall pay for each On-Site Parking Space so leased, as Additional
Rent, in advance on the first calendar day of each month, $100.00 per month for
the remainder of the Term.
6. PERMITTED USES. The Third Floor Expansion Premises shall be used
2
<PAGE>
only for the Permitted Uses applicable to the portions of the Premises other
than the Basement Space as set forth in the Lease.
7. SECURITY DEPOSIT. Not later than the Effective Date, Lessee shall
deliver to Lessor the sum of $15,732.00 as an additional security deposit, which
shall be deemed to be part of the Security Deposit and which shall be held and
disbursed subject to the provisions of Section 24.0 of the Lease.
8. BROKERS. Lessor and Lessee each represents to the other that it has
agrees dealt with no broker in connection with this Amendment. Each of the
parties hereby agrees to indemnify and hold the other party harmless from and
against any claims for commissions or fees by any person or firm alleged to have
been retained by the indemnifying party.
9. NOTICE OF AMENDMENT TO LEASE. Either party shall, at the request of
the other, execute and acknowledge a Notice of Amendment to Lease in mutually
satisfactory form.
10. CONDITIONS OF EFFECTIVENESS. Notwithstanding anything contained
herein to the contrary, this Amendment shall not be effective unless and until
all of the following occur:
(a) Lessor unconditionally delivers to Lessee an executed counterpart
of this Amendment; and
(b) Lessor receives a written waiver from Pathology Services, Inc. of
its right of offer with respect to the proposed lease of the Third Floor
Expansion Premises to Lessee as herein contemplated.
Lessee acknowledes that Lessor's willingness to enter into this
Amendment is based, in part on Lessor's expectation that third parties over whom
Lessor has no control will take the actions described above in this Paragraph.
Lessor makes no representation or warranty concerning whether or not such third
parties will take such actions so that the foregoing conditions to the
effectiveness of this Amendment are satisfied in full.
11. AUTHORITY. Contemporaneously with its execution of this Amendment,
Lessee shall furnish to Lessor a certified copy of the resolution of the Board
of Directors of Lessee authorizing Lessee to enter into this Amendment and to
execute and acknowledge the aforementioned Notice of Amendment to Lease.
12. GENERAL. This Amendment constitutes the entire aareement of the
parties with respect to its subject matter, and no oral statement or prior
written matter shall have any force or effect. This Amendment shall not be
modified or canceled except by writing subscribed to by all parties. This
Amendment shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts. The captions of the several paragraphs in this
Amendment are for convenience only and shall
3
<PAGE>
not be considered in construing this Amendment.
In all other respects, the terms and provisions of the Lease are
herebyfatified and confirmed and remain in full force and effect and unamended.
EXECUTED UNDER SEAL as of the date set forth above.
LESSOR: MASSACHUSETTS INSTITUTE OF
TECHNOLOGY
By: /s/ Philip A. Trussell
----------------------
Name:
Title:
LESSEE: MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ Janet Bush
--------------
Name: Janet Bush
Title: VP Finance
4
<PAGE>
EXHIBIT I
[graphic]
<PAGE>
Date: February 3, 2000
Re:MEM640
EIGHTH AMENDMENT TO LEASE
THIS EIGHTH AMENDMENT TO LEASE ("Amendment") is made as of the 7th day
of February, 2000 by and between MASSACHUSETTS INSTITUTE OF TECHNOLOGY, a
Massachusetts educational corporation with an address of 238 Main Street, Suite
200, Cambridge, Massachusetts 02142, ("Lessor") and MILLENNIUM PHARMACEUTICALS,
INC., A Delaware corporation with an address of 640 Memorial Drive, Cambridge,
Massachusetts 02139, ("Lessee").
Reference is made to a lease dated August 26, 1993 by and between
Lessor and Lessee, as amended by amendments dated as of May 18, 1994, January 9,
1996, June 12, 1996, March 1, 1997, June 19, 1997, January 29, 1999, February 5,
1999, (collectively, the "Lease"), concerning certain premises located at 640
Memorial Drive, Cambridge, Massachusetts, as more particularly described in the
Lease. A notice of Lease was filed with the Middlesex Southern Registry District
of the Land Court on March 2, 1994 as Document No. 939638, and noted on
Certificate of Title No. 89497, as amended. Capitalized terms used in this
Amendment which are defined in the Lease and not otherwise defined herein shall
have the same meaning in this Amendment as in the Lease.
Lessee desires to lease approximately 6,921 square feet of rentable
area on the west side of the third floor of the Building as shown on the plan
attached hereto as EXHIBIT A (the "Additional Third Floor Expansion Premises").
Lessor is willing to lease to Lessee the Additional Third Floor Expansion
Premises on the terms and conditions set forth in this Amendment.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and legal sufficiency
of which are hereby acknowledged, Lessor and Lessee hereby agree to amend the
Lease as follows:
1. PREMISES. (a) Effective February 7, 2000 (the "Effective
Date"): (i) the definition of the term "Premises" shall be
amended to include, in addition to the Premises as described
in the Lease, the Additional Third Floor Expansion Premises,
(ii) the Additional Third Floor Expansion Premises shall be
deemed to be part of the Premises for all purposes of the
Lease, and (iii) Lessee's Share shall be adjusted to include
the Additional Third Floor Expansion Premises in the Premises.
(b) The Additional Third Floor Expansion Premises will be
delivered broom clean, but otherwise in the condition in which
the same are redelivered to Lessor by the previous tenant
thereof, and Lessee hereby agrees to accept said Premises in
their "as is" condition on the Effective Date. Lessor shall
have no obligation to perform any demolition or construction
in the Additional Third Floor Expansion Premises in
preparation for Lessee's use and occupancy thereof. All such
demolition and
<PAGE>
construction shall be performed by Lessee, at its sole cost
and expense, in accordance with the provisions of the Lease
applicable to Alterations except that, Lessor will provide
Lessee a Tenant Improvement Allowance of ten ($10) dollars per
square foot or $68,060. Said amount to be paid after such time
that Lessee has provided documentation of expenditures
totaling said amount.
2. TERM. (a) The Term of the Lease with respect to the Additional
Third Floor Expansion Premises shall commence on the Effective
Date, and shall expire on the last day of the Term as provided
in the Lease, unless the Term is sooner terminated as provided
in the Lease.
(b) If Lessee exercises an Extension Option in accordance with the
provisions of the Lease, the Term shall be extended with
respect to the Additional Third Floor Expansion Premises on
the same terms and conditions as are provided in the Lease
with respect to the Premises except that the Basic Rent due
and payable on account of the Additional Third Floor Expansion
Premises for each Lease Year in an Extension Term shall be as
set forth in Section 3 below. Notwithstanding the foregoing,
Lessee shall not be entitled to exercise an Extension Option
with respect to the Additional Third Floor Expansion Premises
unless Lessee or a permitted sublessee or assignee of the type
described in Section 8(J) of the Lease is actually occupying
the entire Third Floor Premises as of both the date on which
Lessee purports to exercise an Extension Option and the first
day of the corresponding Extension Term.
3. RENT: (a) From and after the Effective Date, Lessee shall pay
on account of the Additional Third Floor Expansion Premises
Basic Rent at the rate of $32.00 per square foot of rentable
area thereof per Lease Year for each Lease Year in the Initial
Term.
(b) Lessee shall pay as Basic Rent on account of the Additional
Third Floor Expansion Premises for each Lease Year in an
Extension Term (if Lessee exercises an Extension Option in
accordance with the requirements of the Lease), an amount
equal to ninety percent (90%) of the Fair Market Rent thereof,
but in no event will Basic Rent be less than the amount
payable on account of the Additional Third Floor Expansion
Premises during the immediately preceding Lease Year.
(c) Basic Rent on account of the Additional Third Floor Expansion
Premises shall be paid in equal monthly installments in the
manner and at the times provided in the Lease for the payment
of Basic Rent. In addition to the Basic Rent, from and after
the Effective Date, Lessee shall pay all Additional Rent
attributable to or related to the Additional Third Floor
Expansion Premises, including, without limitation, Taxes and
Operating Expenses.
<PAGE>
4. ELECTRIC SERVICE. From and after the Effective Date, the
provisions of Section 6.0 of the Lease shall apply with
respect to the Additional Third Floor Expansion Premises.
5. PARKING. Effective as of the Effective Date, Lessor shall
lease to Lessee, and Lessee shall lease from Lessor, an
additional seven (7) On-Site Parking Spaces, subject to the
provisions of Section 9.0 of the Lease, except that Lessee
shall pay for each On-Site Parking Space so leased, as
Additional Rent, in advance on the first calendar day of each
month, $135 per month for the remainder of the Term.
6. PERMITTED USES. The Additional Third Floor Expansion Premises
shall be used only for the Permitted Uses applicable to the
portions of the Premises other than the Basement Space as set
forth in the Lease.
7. SECURITY DEPOSIT: Not Applicable
8. NO BROKERS: Lessor and Lessee each represents to the other
that is has dealt with no brokers in connection with this
Amendment, and each agrees to indemnify and hold the other
party harmless from and against any claims for commissions or
fees by any person by reason of any act of the indemnifying
party or its representatives.
9. NOTICE OF AMENDMENT TO LEASE: Either party shall, at the
request of the other, execute and acknowledge a Notice of
Amendment to Lease in mutually satisfactory form.
10. AUTHORITY. Contemporaneously with its execution of this
Amendment, Lessee shall furnish to Lessor a certified copy of
the resolution of the Board of Directors of Lessee authorizing
Lessee to enter into this Amendment and to execute and
acknowledge the aforementioned Notice of Amendment to Lease.
11. GENERAL. This amendment constitutes the entire agreement of
the parties with respect to its subject matter, and no oral
statement or prior written matter shall have any force or
effect. This Amendment shall not be modified or canceled
except by writing subscribed to by all parties. This Amendment
shall be governed by and construed in accordance with the laws
of the Commonwealth of Massachusetts. The captions of the
several paragraphs in this Amendment are for convenience only
and shall not be considered in construing this Amendment.
<PAGE>
In all other respects, the terms and provisions of the Lease are hereby ratified
and confirmed and remain in full force and effect and not amended.
EXECUTED UNDER SEAL as of the date set forth above.
Date: 2/7/00 MASSACHUSETTS INSTITUTE OF
TECHNOLOGY
By: /s/ ALLAN S. BUFFERD
--------------------
Allan S. Bufferd
Treasurer
Hereunto duly authorized
Date: 2/4/00 MILLENNIUM PHARMAEUTICALS,
INC.
By: /s/ KEVIN STARR
Duly Authorized Signatory
<PAGE>
Exhibit 10.9
FIRST AMENDMENT TO LEASE
This First Amendment to Lease (this "First Amendment") is entered into
as of the 16th day of March, 1998 by and between FC 45/75 SIDNEY, INC.
("Landlord"), a Massachusetts corporation, having its principal place of
business at 38 Sidney Street, Cambridge, Massachusetts 02139, as landlord, and
Millennium Pharmaceuticals, Inc. ("Tenant"), a Delaware corporation, having its
principal place of business at 238 Main Street, Cambridge, Massachusetts 02142,
as tenant.
RECITALS
A. Pursuant to that certain lease dated as of November 17, 1997 (the
"Original Lease"), Landlord leased to Tenant certain premises located in two (2)
buildings which are now under construction on the land located at 45 Sidney
Street and 75 Sidney Street in Cambridge, Massachusetts, more particularly
defined therein. All capitalized terms not otherwise defined in this First
Amendment shall have the meanings ascribed to them in the Original Lease.
B. Landlord and Tenant now desire to amend the Original Lease pursuant
to the terms of this First Amendment in order to modify the terms and conditions
of Tenant's parking privileges pursuant thereto.
NOW THEREFORE, in consideration of the mutual covenants herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as set forth below.
1. Exhibit A of the Original Lease is amended to delete the
text of the paragraph entitled "Parking Privileges" and substitute the following
text therefor:
(a) During the Term, Landlord shall provide in parking garages
(except as expressly otherwise provided hereinbelow) located in
University Park the aggregate of (i) two (2) parking spaces per 1,000
rsf of floor area of the Premises and (ii) an additional seventy (70)
parking spaces. Not more than three hundred fifty (350) of the parking
spaces to which Tenant is entitled under this Lease are required to be
located in the 101 Pacific Street Garage. If Tenant is, at any time,
entitled to more than three hundred fifty (350) of such parking spaces,
but not more than four hundred sixty five (465) of such parking spaces,
then all or some of such additional parking spaces may be located in
another comparable parking garage or parking garages in University
Park. If Tenant shall be entitled to more than four hundred sixty five
(465) of such parking spaces, then notwithstanding anything to the
contrary hereinabove provided, up to forty-one (41) of such additional
spaces may be located on surface lots rather
<PAGE>
than in parking garages, with the remainder of such parking spaces in a
comparable parking garage or parking garages. Tenant's parking
privileges in the 101 Pacific Street Garage are subject, however, to
the terms and conditions of the Lease pertaining to alternative
temporary parking spaces.
(b) The Tenant shall pay the market rate from time to time in
effect for all of the parking spaces provided by Landlord. The market
rate for garage spaces for the first Lease Year is established to be
$140.00 per month per parking space. For any parking space located in a
surface parking area, the charge for each surface parking space shall
be the lesser of: (a) the market rate for comparable surface parking
spaces in the City of Cambridge, Massachusetts, or (b) whatever amount
Landlord charges for comparable surface parking spaces within
University Park.
(c) Tenant shall have 24-hour access, by security card or
other similar means, to the 101 Pacific Street Garage and any other
parking facility in which it has the right to parking spaces. With
respect to the 101 Pacific Street Garage, the Landlord shall not
provide to other tenants of the Building more than two (2) parking
spaces per 1,000 rsf of floor area unless such tenant occupies less
than 10,000 rsf of floor area in the Building.
2. ORIGINAL PREMISES. Exhibit A of the Original Lease is
amended to delete the text of the paragraph entitled "Original Premises" and
substitute the following text therefor:
Approximately 175,000 total rentable square feet ("rsf") of
space as depicted on Exhibit B-1, as such calculation may be
adjusted in accordance with Section 2.1 of this Lease, of
which approximately 137,958 rsf is contained in the 75 Sidney
Building and 37,042 rsf is contained in the 45 Sidney
Building, as such calculations may be adjusted in accordance
with Section 2.1 of this Lease.
3. TOTAL RENTABLE FLOOR AREA OF BUILDING. Exhibit A of the
Lease is amended to delete the text of the paragraph entitled "Total Rentable
Floor Area of Building" and substitute the following text therefor:
The number of square feet calculated in the manner set forth
in Section 2.1
4. AUTHORITY. Tenant and Landlord each warrant that the person or
persons executing this First Amendment on their respective behalfs has or have
the authority to do so and that such execution has fully obligated and bound
such party to all the terms and provisions of this First Amendment.
5. RATIFICATION. As modified by this First Amendment, the Original
Lease is in full force and effect and Landlord and Tenant ratify and confirm the
same.
<PAGE>
6. INTERPRETATION AND PARTIAL INVALIDITY. If any term of this First
Amendment, or the application thereof to any person or circumstances, shall to
any extent be invalid or unenforceable, the remainder of this First Amendment,
or the application of such term to persons or circumstances other that those as
to which it is invalid or unenforceable, shall not be affected thereby, and each
term of this First Amendment shall be valid and enforceable to the fullest
extent permitted by law. The titles of the paragraphs are for convenience only
and are not to be considered in construing this First Amendment. This First
Amendment contains all of the agreements of the parties with respect to the
subject matter hereof, and supersedes all prior dealings between them with
respect to such subject matter.
IN WITNESS WHEREOF, this First Amendment has been executed and
delivered as of the date first above written as a sealed instrument.
LANDLORD:
FC 45/75 SIDNEY, INC.
By:/s/ Gayle Friedland
-------------------------------------
Name: Gayle Friedland
Title: Vice President
TENANT:
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ Janet C. Bush
------------------------------------
Name: Janet C. Bush
Title: Vice President of Finance
<PAGE>
SECOND AMENDMENT TO LEASE
This SECOND AMENDMENT TO LEASE (this "Amendment"), dated as of June __,
1998, entered into by and between FC 45/75 SIDNEY, INC. ("Landlord"), a
Massachusetts corporation, having its principal place of business at 38 Sidney
Street, Cambridge, Massachusetts 02139, and MILLENNIUM PHARMACEUTICALS, INC.
("Tenant"), a Delaware corporation, having its principal place of business at
238 Main Street, Cambridge, Massachusetts 02142.
RECITALS
A. WHEREAS, pursuant to that certain lease between Landlord and Tenant,
dated as of November 17, 1997 (the "Original Lease") as amended by that certain
First Amendment to Lease dated as of March 16, 1998 (collectively with the
Original Lease, the "Lease"), Landlord leased to Tenant certain premises located
in two (2) buildings which are now under construction on the land located at 45
Sidney Street and 75 Sidney Street in Cambridge, Massachusetts, more
particularly defined therein. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Lease;
B. WHEREAS, Tenant now desires to lease a portion of the Expansion
Space as contemplated under Section 2.7 of the Original Lease; and
C. WHEREAS, Landlord and Tenant now mutually desire to establish the
Expansion Fair Rental Value of such Expansion Space.
NOW THEREFORE, in consideration of the mutual covenants herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as set forth below.
1. DESIRE TO EXPAND. Landlord and Tenant acknowledge that
Tenant desires to expand the Premises to include approximately twenty-two
thousand seven hundred thirty two (22,732) rentable square feet on the fourth
floor of the 45 Sidney Building, as shown on Exhibit A attached hereto (the
"First Expansion Premises"), which comprises the balance of the fourth floor of
the 45 Sidney Building not included in the Original Premises.
2. INCORPORATION OF FIRST EXPANSION PREMISES INTO PREMISES.
Landlord and Tenant agree that, upon execution of this Amendment, the Premises
shall be deemed to include the First Expansion Premises, and all provisions of
the Lease relating to the Commencement Date, the Scheduled Rent Commencement
Date and the Rent Commencement Date with respect to the 45 Sidney Building shall
apply to the First Expansion Premises.
3. EXPANSION FAIR RENTAL VALUE. Landlord and Tenant agree to
establish the Expansion Fair Rental Value of the First Expansion Premises as
follows and agree that the Annual Fixed Rent under the Lease shall be increased
by the amounts respectively set forth below, multiplied by the rentable square
footage of the First Expansion Premises for the periods established below:
<PAGE>
Lease Years One (1) through Five (5): $26.50 per rentable square foot;
Lease Years Six (6) through Fifteen (15): $28.50 per rentable square
foot.
4. TENANT ALLOWANCE. Landlord and Tenant agree that in
accordance with Section 2.7(a) of the Lease, the Tenant Allowance for the First
Expansion Premises shall be $25.00 per rentable square foot of the First
Expansion Premises. Notwithstanding the foregoing, Tenant acknowledges that a
portion of such Tenant Allowance, equal to $3.05 per rentable square foot of the
First Expansion Premises, has already been expended to upgrade the HVAC system
in the 45 Sidney Building, and therefore only $21.95 per rentable square foot of
the First Expansion Premises remains available for disbursement as contemplated
under the Lease.
5. SECURITY DEPOSIT. Landlord and Tenant acknowledge that the
Annual Fixed Rent payable under the Lease is increased by the amounts set forth
in this Amendment, and that upon execution of this Amendment, Tenant shall
deposit with Landlord all additional amounts necessary to increase its Security
Deposit to the amount required under Section 11.1 of the Lease. Notwithstanding
anything to the contrary contained in the Lease, however, Tenant shall not be
obligated to provide any additional amounts toward the TI Security Deposit with
respect to the First Expansion Premises.
6. PARKING. Landlord and Tenant acknowledge that in accordance
with the Lease, Tenant is entitled to two (2) parking spaces per 1,000 rentable
square feet of floor area contained in the First Expansion Premises.
7. AUTHORITY. Tenant and Landlord each warrant that the person
or persons executing this Amendment on their respective behalfs has or have the
authority to do so and that such execution has fully obligated and bound such
party to all the terms and provisions of this Amendment.
8. RATIFICATION. As modified by this Amendment, the Lease is
in full force and effect and Landlord and Tenant ratify and confirm the same.
9. INTERPRETATION AND PARTIAL INVALIDITY. If any term of this
Amendment, or the application thereof to any person or circumstances, shall to
any extent be invalid or unenforceable, the remainder of this Amendment, or the
application of such term to persons or circumstances other that those as to
which it is invalid or unenforceable, shall not be affected thereby, and each
term of this Amendment shall be valid and enforceable to the fullest extent
permitted by law. The titles of the paragraphs are for convenience only and are
not to be considered in construing this Amendment. This Amendment contains all
of the agreements of the parties with respect to the subject matter hereof, and
supersedes all prior dealings between them with respect to such subject matter.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Amendment to
be duly executed, under seal, by persons duly authorized, in multiple copies,
each to be considered an
2
<PAGE>
original hereof, as of the date first set forth above.
LANDLORD:
FC 45/75 SIDNEY, INC.
By: /s/ Gayle Friedland
----------------------------------
Name: Gayle Friedland
Title: Vice-President
TENANT:
MILLENNIUM PHARMACEUTICALS, INC.
By: Janet C. Bush
----------------------------------
Name: Janet C. Bush
Title: VP Finance
3
<PAGE>
Secretary's Certificate
I, John B. Douglas, III, duly elected Secretary of Millennium
Pharmaceuticals, Inc., hereby certify that
the Third Amendment to Lease dated April 20, 1999 entered into by and
between FC 45/75 Sidney, Inc. ("Landlord"), a Massachusetts
corporation, having its principal place of business at 38 Sidney
Street, Cambridge, Massachusetts 02139, and Millennium Pharmaceuticals,
Inc. ("Tenant"), a Delaware corporation, having its principal place of
business at 238 Main Street, Cambridge, Massachusetts 02142 and duly
executed by Gayle Friedland, Vice President of FC 45/75 Sidney, Inc.
and Kevin Staff, Chief Financial Officer of Millennium Pharmaceuticals,
Inc.
was approved by the Board of Directors of Millennium Pharmaceuticals, Inc. on
June 23, 1999.
/s/ John B. Douglas III
--------------------------------
John B. Douglas, III
Secretary
Millennium Pharmaceuticals, Inc.
<PAGE>
THIRD AMENDMENT TO LEASE
This THIRD AMENDMENT TO LEASE (this "Amendment"), dated as of April 20,
1999, entered into by and between FC 45/75 SIDNEY, INC. ("Landlord"), a
Massachusetts corporation, having its principal place of business at 38 Sidney
Street, Cambridge, Massachusetts 02139, and MILLENNIUM PHARMACEUTICALS, INC.
("Tenant"), a Delaware corporation, having its principal place of business at
238 Main Street, Cambridge, Massachusetts 02142.
RECITALS
A. WHEREAS, pursuant to that certain lease between Landlord and Tenant,
dated as of November 17, 1997 (the "Original Lease") as amended by that certain
First Amendment to Lease dated as of March 16, 1998 and that certain Second
Amendment to Lease dated as of June 1, 1998 (collectively with the Original
Lease, the "Lease"), Landlord leased to Tenant certain premises located in two
(2) buildings on the land located at 45 Sidney Street and 75 Sidney Street in
Cambridge, Massachusetts, more particularly defined therein. All capitalized
terms not otherwise defined herein shall have the meanings ascribed to them in
the Lease; and
B. WHEREAS, Landlord and Tenant desire to modify and clarify certain of
the terms and conditions of the Lease pertaining to the consequences following
the occurrence of fire or other casualty damage to the 101 Pacific Street
Garage.
NOW THEREFORE, in consideration of the mutual covenants herein-set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as set forth below.
1. RENAMING OF 101 PACIFIC STREET GARAGE. For all purposes of
the Lease, the term "101 Pacific Street Garage" shall be replaced with the term
"Garage," which in fact has the street address of 30 Pilgrim Street, rather than
101 Pacific Street.
2. SUBSTITUTION OF REPLACEMENT ARTICLE VIII. The text of
Article VIII of the Lease is deleted in its entirety and replacement text,
attached hereto as EXHIBIT A, is hereby substituted therefor.
3. AUTHORITY. Tenant and Landlord each warrant that the person
or persons executing this Amendment on their respective behalfs has or have the
authority to do so and that such execution has fully obligated and bound such
party to all the terms and provisions of this Amendment.
4. RATIFICATION. As modified by this Amendment, the Lease is
in full force and effect and Landlord and Tenant ratify and confirm the same.
<PAGE>
5. INTERPRETATION AND PARTIAL INVALIDITY. If any term of this
Amendment, or the application thereof to any person or circumstances, shall to
any extent be invalid or unenforceable, the remainder of this Amendment, or the
application of such term to persons or circumstances other that those as to
which it is invalid or unenforceable, shall not be affected thereby, and each
term of this Amendment shall be valid and enforceable to the fullest extent
permitted by law. The titles of the paragraphs are for convenience only and are
not to be considered in construing this Amendment. This Amendment contains all
of the agreements of the parties with respect to the subject matter hereof, and
supersedes all prior dealings between them with respect to such subject matter.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Amendment to
be duty executed, under seal, by persons duty authorized, in multiple copies,
each to be considered an original hereof, as of the date first set forth above.
LANDLORD:
FC 45/75 SIDNEY, INC.
By: /s/ Gayle Friedland
-----------------------------------
Name: Gayle Friedland
Title: Vice President
TENANT:
MILLENNIUM PHARAMACEUTICALS, INC..
By: /s/ Kevin Starr
---------------------------------
Name: Kevin Starr
Title: CFO
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<PAGE>
EXHIBIT A
ARTICLE VIII
CASUALTY AND EMINENT DOMAIN
Section 8.1 RESTORATION FOLLOWING CASUALTIES; TERMINATION FOR FAILING
TO MAINTAIN PARKING. If, during the Term, the Building, the Premises or the
Garage shall be damaged by fire or casualty, subject to termination rights of
the Landlord and the Tenant provided below in this Article VIII, the Landlord
shall proceed promptly to exercise diligent efforts to restore, or cause to be
restored, the Building, the Premises or the Garage, as the case may be, to
substantially the condition thereof just prior to time of such damage, but the
Landlord shall not be responsible for delay in such restoration which may result
from External Causes. The Landlord shall have no obligation to expend in the
reconstruction of the Building, the Premises or the Garage more than the sum of
the amount of any deductible and the actual amount of insurance proceeds made
available to the Landlord by its insurer. Any restoration of the Building, the
Premises or the Garage shall be altered to the extent necessary to comply with
then current and applicable laws and codes.
Section 8.2 LANDLORD'S TERMINATION ELECTION. If the Landlord reasonably
determines, based upon certification by its architect or other design
professional, that (a) the amount of insurance proceeds available to the
Landlord is insufficient (by more than the amount of any deductible) to cover
the cost of restoring the Building and the Garage, or (b) the Landlord will be
unable to restore the Building within twelve (12) months from the date of the
casualty, or the Garage within twenty four (24) months from the date of the
casualty, then the Landlord may terminate this Lease by giving notice to the
Tenant. Any such termination shall be effective on the date designated in such
notice from the Landlord, but in any event not later than sixty (60) days after
such notice, and if no date is specified, effective upon the delivery of such
notice. Failure by the Landlord to give the Tenant notice of termination within
ninety (90) days following the occurrence of the casualty shall constitute the
Landlord's agreement to restore the Building and the Garage as contemplated in
Section 8.1.
Section 8.3 TENANT'S TERMINATION ELECTION. If the Landlord has not
terminated this Lease under Section 8.2, but the Landlord has failed to restore
the Premises, within twelve (12) months from the date of the casualty, or failed
to restore the Garage sufficiently to enable the Tenant to exercise its parking
privileges therein within twenty four (24) months from the date of the casualty,
such periods to be subject, however, to extension where the delay in completion
of such work is due to External Causes, then the Tenant shall have the right to
terminate this Lease at any time after the expiration of the aforesaid 12-month
or 24-month period (as extended by delay due to External Causes), as the case
may be, until the restoration is substantially completed, such termination to
take effect as of the date of the Tenant's notice. However, if the Landlord
reasonably determines at any time, and from time to time, during the
restoration, based upon certification by its architect or other design
professional, that such restoration will not be able to be completed before the
deadline date after which the Tenant
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may terminate this Lease under this Section 8.3, and the Landlord specifies
in a notice to the Tenant to such effect a later date that the Landlord
estimates will be the date upon which such restoration will be completed,
then if such later date is ninety (90) days or less after the deadline date,
the Tenant may terminate this Lease within ten (10) days of the Landlord's
notice as aforesaid, or if such later date is greater than ninety (90) days
after the deadline date, the Tenant may terminate this Lease within thirty
(30) days of the Landlord's notice as aforesaid, failing which the deadline
date shall be extended to the date set forth in the Landlord's notice (as
extended by delay due to External Causes). The Landlord shall exercise
reasonable efforts to keep the Tenant advised of the status of restoration
work from time to time, and promptly following any request for information
during the course of the performance of the restoration work.
If the Garage, or any portion thereof, shall be damaged by fire or
casualty so as to render one or more of the Tenant's parking spaces therein
impossible or impracticable to use in the Landlord's reasonable determination,
then the Landlord shall designate, if available to the Landlord and promptly
following the occurrence of any such fire or casualty, any temporary alternative
parking within University Park that may be used for the parking of the
automobiles of the employees and invitees of the Tenant. All such alternative
parking shall be allocated proportionately among all tenants, including the
Tenant, then currently leasing parking spaces within the Garage. The Tenant
shall pay the market rate from time to time in effect for such alternative
parking facilities. In the event the Landlord is unable to secure for the Tenant
such temporary alternative parking so that the aggregate number of parking
spaces shall equal the number to which Tenant is entitled under Exhibit A, then
the Tenant may be entitled to the credit against Annual Fixed Rent as provided
below in Section 8.6.
Section 8.4 CASUALTY AT EXPIRATION OF LEASE. If the Premises shall be
damaged by fire or casualty in such a manner that the Premises cannot, in the
ordinary course, reasonably be expected to be repaired within one hundred twenty
(120) days from the commencement of repair work and such damage occurs within
the last eighteen (18) months of the Term (as the same may have been extended
prior to such fire or casualty), either party shall have the right, by giving
notice to the other not later than sixty (60) days after such damage, to
terminate this Lease, whereupon this Lease shall terminate as of the date of
such notice. Notwithstanding the foregoing, the Landlord shall not have the
right to terminate this Lease under this Section 8.4 provided that the Tenant
shall have exercised its right to extend the Term of this Lease pursuant to
Section 2.6 hereof not later than forty-five (45) days after the date of damage
to the Premises.
Section 8.5 EMINENT DOMAIN. Except as hereinafter provided, if the
Premises, or such portion thereof as to render the balance (if reconstructed to
the maximum extent practicable in the circumstances) unsuitable for the Tenant's
purposes as contemplated under this Lease, shall be taken by condemnation or
right of eminent domain, the Landlord or the Tenant shall have the right to
terminate this Lease and any separate parking lease by notice to the other of
its desire to do so, provided that such notice is given not later than thirty
(30) days after receipt by the Tenant of notice of the effective date of such
taking. If so much of the
2
<PAGE>
Building shall be so taken that the Landlord reasonably determines chat would be
reasonably necessary to raze or substantially alter the Building, the Landlord
shall have the right to terminate this Lease by giving notice to the Tenant of
the Landlord's desire to do so not later than thirty (30) days after the
effective date of such taking.
Should any part of the Premises be so taken or condemned during the
Term, and should this Lease be not terminated in accordance with the foregoing
provisions, the Landlord agrees to use reasonable efforts to put what may remain
of the Premises into proper condition for use and occupation as nearly like the
condition of the Premises prior to such taking as shall be practicable, subject,
however, to applicable laws and codes then in existence.
If the Garage, or such portion thereof as to render the Tenant's
parking privileges therein impossible or impracticable in the Landlord's
reasonable determination, shall be taken by condemnation or right of eminent
domain, then the Landlord shall designate, if available to the Landlord and
promptly following any such taking, alternative parking within University Park
that may be used for the parking of the automobiles of the employees and
invitees of the Tenant. All such alternative parking shall be allocated
proportionately among all tenants, including the Tenant, then currently leasing
parking spaces within the Garage; provided, however, the number of the Tenant's
parking spaces guaranteed by the Landlord in Exhibit A shall not change. The
Tenant shall pay the market rate from time to tune in effect for such
alternative parking facilities. In the event the Landlord is unable to secure
for the Tenant such alternative parking within sixty (60) days after the later
of the effective date of such taking or the date the Landlord and the Tenant
have notice of the effective date of such taking, the Tenant shall have the
right, as its sole remedy, to terminate this Lease and any separate parking
lease by notice to the Landlord of its desire to do so, provided that the
Tenant's notice is given not later than ten (10) days following the expiration
of the aforesaid sixty (60) day period. Such termination shall be effective
thirty (30) days after such notice is given to the Landlord, or such later date
specified by the Tenant in such notice not exceeding one hundred twenty (120)
days after such notice is given.
Section 8.6 RENT AFTER CASUALTY OR TAKING. If the Premises shall be
damaged by fire or other casualty, then until the Lease is terminated or the
Premises is restored, the Annual Fixed Rent and Additional Rent shall be justly
and equitably abated and reduced according to the nature and extent of the loss
of use thereof suffered by the Tenant. If the Garage shall be damaged by fire or
other casualty, then until the Lease is terminated or the Tenant's ability to
use parking spaces therein as contemplated under this Lease is restored, any
parking charges payable under this Lease for spaces that are impossible or
impractical to use as aforesaid shall abate for the period of such unusability
(provided the Tenant shall pay the parking charges referred to herein for any
temporary parking spaces located elsewhere in University Park). In the event of
a loss of parking spaces in the Garage, not offset by the Landlord's provision
of temporary alternative spaces, to the extent the Tenant's parking spaces are
not able to be so provided by the Landlord, there shall be a credit against
Annual Fixed Rent in the amount of any incremental additional costs incurred by
the Tenant in reasonably making alternative arrangements for parking. In the
event of a taking resulting in a loss of parking spaces that
3
<PAGE>
cannot reasonably be replaced by parking spaces secured by the Tenant as
aforesaid, which materially and adversely affects the ability of the Tenant to
continue to conduct business in all or any portion of the Premises, then Annual
Fixed Rent and Additional Rent shall be justly and equitably abated and reduced
according to the nature and extent of the loss of use thereof suffered by the
Tenant. In the event of a taking which permanently reduces the area of the
Premises, a just proportion of the Annual Fixed Rent shall be abated for the
remainder of the Term.
Section 8.7 TEMPORARY TAKING. In the event of any taking of the
Premises or any part thereof for a temporary use not in excess of twelve (12)
months, (i) this Lease shall be and remain unaffected thereby and Annual Fixed
Rent and Additional Rent shall not abate, and (ii) the Tenant shall be entitled
to receive for itself such portion or portions of any award made for such use
with respect to the period of the taking which is within the Term.
Section 8.8 TAKING AWARD. Except as otherwise provided in Section 8.7,
the Landlord shall have and hereby reserves and accepts, and the Tenant hereby
grants and assigns to the Landlord, all rights to recover for damages to the
Building and the Land, and the leasehold interest hereby created, and to
compensation accrued or hereafter to accrue by reason of such taking, damage or
destruction, as aforesaid, and by way of confirming the foregoing, the Tenant
hereby grants and assigns to the Landlord, all rights to such damages or
compensation. Nothing contained herein shall be construed to prevent the Tenant
from prosecuting in any condemnation proceedings a claim for relocation expenses
and improvements made by the Tenant in the Premises that constitute the Tenant's
personal property, including the Removable Alterations.
4
<PAGE>
Exhibit 10.25
L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 1
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
May 5,1999
SUPPLY AGREEMENT
(ON CAMPATH-1H)
<TABLE>
<S> <C>
Supply Agreement.........................................................................................3
WITNESSETH...............................................................................................3
1. DEFINITIONS........................................................................................3
1.1 "L&I Partners, L.P.".........................................................................3
1.2 "Contract Research and Development Agreement"................................................4
1.3 "Product-price"..............................................................................4
1.4 "Capacity"...................................................................................4
1.5 "Product"....................................................................................4
1.6 "Bulk Product"...............................................................................4
1.7 "Final Product"..............................................................................4
1.8 "Finished Product"...........................................................................4
1.9 "Specifications".............................................................................4
1.10 "Process"....................................................................................4
1.11 "Certificate of Analysis"....................................................................5
1.12 "Certificate of Compliance"..................................................................5
1.13 All other terms..............................................................................5
2. SUPPLY.............................................................................................5
2.1 Exclusivity..................................................................................5
2.2 Capacity, Process and Specifications.........................................................5
2.3 Approved Facility............................................................................6
2.4 Subcontracting...............................................................................6
2.5 Rolling Forecasts............................................................................6
2.6 Quantities beyond the [**] forecasts.........................................................7
2.7 Delivery.....................................................................................7
2.8 Minimum quantities...........................................................................7
2.9 Exclusivity/Competition......................................................................7
3. QUALITY/WARRANTY/LIABILITY/INDEMNIFICATION.........................................................8
3.1 Warranty/Limitation..........................................................................8
3.2 Tests of the Product and agreed upon Audits..................................................8
3.3 Defective Product (including loss and inaccurate quantity)...................................8
3.4 Indemnification by L&I Partners, L.P.........................................................8
3.5 Infringement of intellectual property rights.................................................9
3.6 Limitation of Warranty/Liability/Maximum Amount..............................................9
3.7 Delivery/Risk of Loss........................................................................9
3.8 Documentation................................................................................9
3.9 Indemnification by BI Pharma KG.............................................................10
3.10 Superiority.................................................................................10
4. SUPPORT REGARDING POST LICENSING ISSUES...........................................................10
5. PRICE AND PAYMENT.................................................................................10
</TABLE>
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L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 2
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<TABLE>
<S> <C>
5.1 Product-price...............................................................................10
5.2 Surcharge...................................................................................10
5.3 Payment Conditions..........................................................................10
(1) PREMARKETING PHASE:....................................................................10
(2) MARKETING PHASE:........................................................................10
(3) SURCHARGE: .............................................................................10
(4) INVOICE/TRANSFER OF PAYMENTS:...........................................................10
5.4 Currency/Conversion.........................................................................11
5.5 Prices Adjustments..........................................................................11
5.6 Introduction of the Euro....................................................................12
6. CONFIDENTIALITY...................................................................................13
6.1 BI Pharma KG................................................................................13
6.2 L&I Partners, L.P...........................................................................13
6.3 Exceptions..................................................................................13
7. LICENSE...........................................................................................14
7.1 Use of L&I Partners, L.P. Cell Line and Intellectual Property...............................14
7.2 No other Right or License...................................................................14
8. TERM AND TERMINATION..............................................................................14
8.1 Basic Term..................................................................................14
8.2 Automatic Extension.........................................................................14
8.3 Early Termination...........................................................................15
8.4 Termination in case of Breach of Agreement..................................................15
8.5 Premature Termination.......................................................................15
9. MISCELLANEOUS.....................................................................................15
9.1 Force Majeure...............................................................................15
9.2 Publicity...................................................................................16
9.3 Notices.....................................................................................16
9.4 Applicable Law/Jurisdiction.................................................................17
9.5 Compliance with Laws........................................................................17
9.6 Independent Contractors.....................................................................18
9.7 Waiver......................................................................................18
9.8 Severability................................................................................18
9.9 Entirety....................................................................................18
9.10 Assignment..................................................................................18
Appendices..............................................................................................20
</TABLE>
<PAGE>
L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 3
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SUPPLY AGREEMENT
(ON CAMPATH-1H)
THIS SUPPLY-AGREEMENT ("Agreement") is made effective as of June 4, 1999
("Effective Date"), by and between
L&I PARTNERS, L.P.
a limited partnership of the State of Delaware, having its principal business
offices at 11550 IH 10 West, Suite 300, San Antonio, TX 78230, USA
(hereinafter referred to as "L&I PARTNERS, L.P."),
and
BOEHRINGER INGELHEIM PHARMA KG,
whose registered office is at Birkendorfer StraBe 65, 88397 Biberach an der
Riss, Federal Republic of Germany
(hereinafter referred to as "BI PHARMA KG").
WITNESSETH
WHEREAS Dr. Karl Thomae GmbH and L&I Partners, L.P. have - among others -
concluded a Contract Research and Development Agreement regarding the research
and development of a method to produce CAMPATH-1H in a commercial scale, which
has been assigned to BI Pharma KG as of January 1, 1998; and
WHEREAS L&I Partners, L.P. has all rights to the Product and is the owner of the
Process and
WHEREAS L&I Partners, L.P. wishes BI Pharma KG, and BI Pharma KG accepts, to
manufacture and supply L&I Partners, L.P. with Product for commercial use,
manufactured in accordance with the Process.
NOW THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS
In this Agreement the following terms shall have the meanings indicated:
1.1 "L&I PARTNERS, L.P."
means L&I Partners, L.P., Inc. as laid down first above.
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L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 4
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
1.2 "CONTRACT RESEARCH AND DEVELOPMENT AGREEMENT"
means the agreement on CAMPATH-1 H (the humanized IgG 1 monoclonal
antibody specifically directed against CD 52 between Dr. Karl Thomae
GmbH and L&I Partners, L.P dated August 5,1997 regarding the
development of the Process and assigned to BI Pharma KG effective as of
January 1, 1998.
1.3 "PRODUCT-PRICE"
means BI Pharma KG's prices for Product, Bulk Product, Final Product
and/or Finished Product (as the case may be) to be calculated on the
basis of the assumptions set forth in Appendix 1.
1.4 "CAPACITY"
means BI Pharma KG's at a given time total production capacity per year
reserved for CAMPATH-1H in accordance with the Process. The maximum
Capacity shall be [**]kg/year of Product based on the assumptions set
forth in Appendix 1 unless otherwise agreed upon with a reasonable
leadtime.
1.5 "PRODUCT"
means any product containing CAMPATH-1H in Bulk Product or as Final
Product or as Finished Product its sole or combined active ingredient
and produced according to the Process.
1.6 "BULK PRODUCT"
means Product which has been purified to a concentrated form and can be
stored in a liquid or frozen form under appropriate conditions.
1.7 "FINAL PRODUCT"
means unlabelled final container containing liquid Product.
1.8 "FINISHED PRODUCT"
means Final Product and also labeled and packaged.
1.9 "SPECIFICATIONS"
mean the specifications to be enclosed hereto as Appendices 3 for
Product, Final Product and Finished Product produced and supplied
hereunder by BI Pharma KG. These Appendices will be agreed upon by the
parties after the finalization of the Process.
1.10 "PROCESS"
shall be the final Process for manufacturing Product developed and
agreed by the parties according to the Contract Research and
Development Agreement. The actual Process is laid down in documents
added hereto as Appendix 4. For the time being the Process is a
[****].
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L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 5
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1.11 "CERTIFICATE OF ANALYSIS"
shall mean a document describing testing methods and results, the
accuracy of which has been certified by the issuing party.
1.12 "CERTIFICATE OF COMPLIANCE"
shall mean a document (a) listing the expiration date and quantity of a
particular batch of Bulk Drug, Final Product and/or Finished Product,
(b) certifying that such batch was manufactured in accordance with all
Specifications, current cGMP, the BLA/EMEA dossier for the Product (as
applicable), and (c) certifying that such batch is acceptable for
manufacturer release. The agreed upon format is attached hereto as
Appendix 6.
1.13 ALL OTHER TERMS
used herein shall have the same meaning as defined in the Contract
Research and Development Agreement.
2. SUPPLY
2.1 EXCLUSIVITY
Subject to L&I Partners, L.P.'s right to manufacture or have
manufactured by a third party Bulk Product and/or Final Product and/or
to have a third party to produce Final Product and/or Finished Product
from Bulk Product produced by L&I Partners, L.P. as expressly stated in
this Agreement, BI Pharma KG will manufacture and supply Product to L&I
Partners, L.P. or its designee(s) exclusively throughout the world
during the full term of this Agreement and according to the provisions
of this Agreement (incl. rolling forecasts and minimum quantities). L&I
Partners, L.P. will purchase Product from BI Pharma KG throughout the
world for the period of this Agreement. This does not prevent L&I
Partners, L.P. to have Product in reasonable quantities manufactured
for clinical testing purposes solely elsewhere.
To minimize the theoretical risk of the exclusiveness the parties have
agreed on a stock policy as laid down in Appendix 5.
2.2 CAPACITY, PROCESS AND SPECIFICATIONS
Subject to Section 3 below BI Pharma KG undertakes to supply L&I
Partners, L.P. or its designee(s) with the quantities of Product
ordered by L&I Partners, L.P. within its Capacity. All manufacture of
Product hereunder will be made in accordance with the Process and will
be delivered in agreed form suitably packed as specified in the
Specifications.
In case BI Pharma KG cannot produce sufficient commercial quantities of
the Product (provided that L&I Partners, L.P. is adhering to the
provisions of this Agreement (e.g. the rolling forecast system) then
L&I Partners, L.P. shall have the right to manufacture or have
manufactured by a third party the missing quantities; only in this case
and if reasonably necessary, BI Pharma KG shall
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L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 6
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
assist L&I Partners, L.P. in transfer of the Process for a limited time
not to exceed [**] skilled people and [**] L&I Partners, L.P.
Capacity may be increased by BI Pharma KG on the written request of L&I
Partners, L.P. with a reasonable leadtime, not to be less than [**],
if the requested increase requires major investment and/or
construction and if L&I Partners, L.P. commits itself to the taking
over of the expense of the increase of capacity to be reasonably agreed
upon by the Parties.
2.3 APPROVED FACILITY
All quantities of Product will be produced in a production facility
designated by BI Pharma KG which is approved by the FDA and/all of the
European Community regulatory authorities for commercial scale
production and deliveries.
To the extent that L&I Partners, L.P. requests that BI Pharma KG secure
regulatory approval of the manufactured Product in other countries,
then BI Pharma KG shall seek such regulatory approval of its production
facility unless such approval would require change in the production
facility.
L&I Partners, L.P. shall pay any additional costs for such approval.
If changes are required by the respective authority and if BI Pharma KG
does not agree to make such changes at L&I Partners, L.P.'s expense,
then L&I Partners, L.P. shall have the right to seek a third party
manufacturer for the respective country(ies).
BI Pharma KG shall take all commercially reasonable efforts to secure
approval of BI Pharma KG's manufacturing facility by the FDA and the
respective European regulatory authority and BI Pharma KG's obligations
under Section 2.1 above are subject to such approval as the case may
be.
2.4 SUBCONTRACTING
BI Pharma KG will not further contract out to a third party any part of
the manufacturing or release-testing of Product without prior written
approval from L&I Partners, L.P., which shall not be unreasonably
withheld.
2.5 ROLLING FORECASTS
(1) Beginning as of 10 September 1999 and by the 10th of the last
month of each quarter L&I Partners, L.P. will provide BI
Pharma KG with a [**] Product forecast planning horizon for
Final Product and Finished Product or an update thereof. The
planning horizon shall start the first day of the fourth month
after the first forecast which shall be January 2000 or an
update thereof.
The rolling forecasts are to be broken down to single months.
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L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 7
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(2) The forecast for the first year (months 1-12) are [**].
The forecast for the second year (months 13-24) is a [**]
forecast which means that the forecast can [**] within this
period as follows:
the forecast may be [**] within the Capacity, but is limited
to the following restrictions [**]:
months [**] the forecast can be [**]
months [**] the forecast can be [**]
months [**] the forecast can be [**]
months [**] the forecast can be [**]
The forecast for the third year (months 25-36) is a [**]
forecast. The rolling forecasts (including [**] orders) for
Final Product and Finished Product are laid down in Appendix
2.
(3) Whilst the rolling forecast system is not applicable (see
Article 2.5(1) above) L&I Partners, L.P. shall place all
requirements for Product and Final Product [**].
2.6 QUANTITIES BEYOND THE [**] FORECASTS
BI Pharma KG shall use reasonable efforts to manufacture and deliver to
L&I Partners, L.P. all quantities of the Product beyond the [**]
forecasts at L&I Partners, L.P.'s request within its Capacity.
2.7 DELIVERY
BI Pharma KG shall make deliveries by the 15th day of the month for
which [**] order is made.
2.8 MINIMUM QUANTITIES
Provided that the Product is approved in the USA, and starting as of
[**], the minimum quantity of Product to be bought by L&I
Partners, L.P. each calendar year is [**] based on the assumptions set
forth in Appendix 1.
If the quantity falls below the minimum quantity of [**] of Product
annually, BI Pharma KG will charge L&I Partners, L.P. an annual
surcharge according to Article 5.2 below.
2.9 EXCLUSIVITY/COMPETITION
During the term of this Agreement, BI Pharma KG agrees that it will not
supply Product to a third party nor shall BI Pharma KG assist any third
party with respect to development or manufacture of [**], except where
BI Pharma KG is granted marketing rights [**].
<PAGE>
L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 8
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
3. QUALITY/WARRANTY/LIABILITY/INDEMNIFICATION
3.1 WARRANTY/LIMITATION
BI Pharma KG warrants that the Product to be supplied by BI Pharma KG
hereunder corresponds to the Specifications and shall be produced
according to current GMP standard as of the date and time of production
and in accordance with all applicable laws, rules and regulations in
the country where produced.
The Product shall be delivered free and clear of liens and claims which
affect title. BI Pharma KG makes no other warranty of any kind, express
or implied.
3.2 TESTS OF THE PRODUCT AND AGREED UPON AUDITS
L&I Partners, L.P. shall have the right to carry out agreed upon
customary tests of the Product and agreed upon audits at reasonable
times, of the premises and facilities where BI Pharma KG performs work
under this Agreement, and of the premises where it stores raw
materials, auxiliary materials, intermediates, packing materials for
the Product and the Product itself. The agreed upon tests of the
Product shall be included in Appendix 3 hereto.
3.3 DEFECTIVE PRODUCT (INCLUDING LOSS AND INACCURATE QUANTITY)
Claims on account of quantity, quality, loss or damages to the Product
shall be made by L&I Partners, L.P. in writing within [**] following
receipt thereof, and BI Pharma KG's liability for damages for such
claims shall in no event exceed the purchase price or replacement of
goods for the particular shipment with respect to which such claims are
made. No Product will be returned to BI Pharma KG without BI Pharma
KG's written permission.
If L&I Partners, L.P. claims that any shipment of Product did not at
time of delivery meet the Specifications, BI Pharma KG shall conduct an
assay of its retained sample from such shipment. If BI Pharma KG agrees
with L&I Partners, L.P.'s claim, BI Pharma KG shall replace such
shipment of Product within [**] from existing stock of released Product
if available, and if not available, at L&I Partners, L.P.'s option, BI
Pharma KG shall either replace such shipment of Product within [**] or
give credit for such payment to L&I Partners, L.P. If the parties are
unable to resolve their differences, then either party may refer the
matter to an independent specialized firm of international reputation
agreeable to both parties for final analysis, which shall be binding on
both parties hereto.
3.4 INDEMNIFICATION BY L&I PARTNERS, L.P.
In accordance with all applicable laws L&I Partners, L.P. shall be
responsible for, and hold BI Pharma KG harmless from any damage, loss,
cost or expense relating to third party claims or suits arising from
the packaging, use, marketing or sale of the Product by L&I Partners,
L.P., or its licensee(s) or other authorized persons or entities, other
than those which arise out of a breach of warranty by BI Pharma KG and
those which arise out of gross negligence or willful misconduct of BI
Pharma KG or its officers, employees or agents, and provided that upon
receipt of
<PAGE>
L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 9
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
notice by BI Pharma KG of any claims or suits relating to such use or
sale of the Product, BI Pharma KG shall notify L&I Partners, L.P.
thereof without delay and shall permit L&I Partners, L.P. to handle
such claims or suits at the cost and discretion of L&I Partners, L.P.
including but not limited to defense, settlement and compromise
thereof.
3.5 INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS
With respect to the Process, L&I Partners, L.P. shall be responsible
for and hold BI Pharma KG harmless from any third party claim of
infringement of its intellectual property rights from a third party
based upon BI Pharma KG's contractual activities hereunder.
3.6 LIMITATION OF WARRANTY/LIABILITY/MAXIMUM AMOUNT
Except as provided in Article 3.1 above, BI Pharma KG makes no warranty
of any kind, express or implied.
Except for willful misconduct BI Pharma KG shall not be liable for any
lost profits or any special, incidental or consequential damages.
BI Pharma KG's total liability under this Agreement shall in no event
exceed [**] of the sales of Product from BI Pharma KG to L&I Partners,
L.P. or L&I Partners, L.P.'s licensee(s) of the respective year.
3.7 DELIVERY/RISK OF LOSS
BI Pharma KG shall deliver or arrange for the delivery of the Product
purchased by L&I Partners, L.P. to a carrier designated by L&I
Partners, L.P. on the basis of EXW BI Pharma KG's plant in Biberach, in
accordance with Incoterms 1990 as published. Title to the Product sold
hereunder shall pass to L&I Partners, L.P. and BI Pharma KG's liability
as to risk of loss and/or damage during transportation thereof shall
cease upon delivery of the Product in good condition to the carrier at
BI Pharma KG's plant in Biberach designated by L&I Partners, L.P..
3.8 DOCUMENTATION
BI Pharma KG shall certify in writing, that each shipment lot of
Product, was produced and tested in compliance as of the time of
production with (i) the Specifications (including the respective test
methods), (ii) the current GMP requirements, (iii) all other applicable
regulatory documents, in accordance with procedures agreed between BI
Pharma KG and L&I Partners, L.P. BI Pharma KG shall provide L&I
Partners, L.P. with a Certificate of Analysis appropriately signed and
a Certificate of Compliance appropriately signed by BI Pharma KG's
quality assurance, as are necessary to demonstrate BI Pharma KG 's
compliance with this Article 3.8 for and with each shipment lot from BI
Pharma KG 's manufacture site.
<PAGE>
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
3.9 INDEMNIFICATION BY BI PHARMA KG
BI Pharma KG shall indemnify, defend and hold L&I Partners, L.P. and
its officers, employees and agents harmless from and against all third
party losses, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees), including injury to persons or
damage to property, resulting from any breach of the warranties made by
BI Pharma KG under this Agreement or which arise out of and are proved
to be directly associated with the gross negligence or willful
misconduct of BI Pharma KG or its officers, employees or agents in
carrying the obligations under this Agreement and provided that upon
receipt of notice by L&I Partners, L.P. of any claims or suits relating
to such use or sale of the Product, L&I Partners, L.P. shall notify BI
Pharma KG thereof without delay and shall permit BI Pharma KG to handle
such claims or suits at the cost and discretion of BI Pharma KG
including but not limited to defense, settlement and compromise
thereof.
3.10 SUPERIORITY
No provision on L&I Partners, L.P.'s purchase order forms or in BI
Pharma KG's General Conditions of Sale which may purport to impose
different conditions upon L&I Partners, L.P. or BI Pharma KG, nor any
other modification of this Agreement, will be of any force and effect,
unless in writing and signed by both parties claimed to be bound
thereby. In the event of any inconsistencies the terms of this
Agreement shall govern.
4. SUPPORT REGARDING POST LICENSING ISSUES
BI Pharma KG is willing to support L&I Partners, L.P. with regard to
post licensing issues (e.g. possible registration-issues in the various
countries) on commercial conditions to be agreed upon separately.
5. PRICE AND PAYMENT
5.1 PRODUCT-PRICE
The Product-price for the Product shall be calculated according to the
scheme laid down in Appendix 1. The basic product assumptions of that
scheme as [**] will be reassessed after scale-up of the Process to
the commercial scale after the [**]manufacturing campaign successful
batches and then be valid for this Agreement.
5.2 SURCHARGE
If L&I Partners, L.P. doesn't purchase the minimum quantities of
Product in a given year (i.e. supplied quantities are below minimum
quantities), L&I Partners, L.P. shall pay a surcharge according to the
scheme in Appendix 1.
5.3 PAYMENT CONDITIONS
(1) Premarketing Phase:
The Product-price for Product ordered by L&I Partners, L.P. or
according to L&I Partners, L.P.'s instructions during the premarketing
phase shall be payable by
<PAGE>
L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 11
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
L&I Partners, L.P. within 30 (thirty) days after receipt by L&I
Partners, L.P. of notification of release of the respective Bulk
Product.
(2) Marketing Phase:
Unless otherwise provided for in Article 5.3 (1) above, the
Product-price for Product delivered to L&I Partners, L.P. or according
to L&I Partners, L.P.'s instructions shall be payable by L&I Partners,
L.P. within 30 (thirty) days after receipt of Product by the respective
party.
(3) Surcharge:
The surcharge according to Article 5.2 above shall be payable within 30
(thirty) days after receipt of the respective invoice.
(4) Invoice/Transfer of Payments:
All invoices under this Agreement shall be made by BI Pharma KG in
Deutsche Mark and all payments under this Agreement shall be made by
L&I Partners, L.P. in DEM (Deutsche Mark) by wire transfer to an
account to be nominated by BI Pharma KG.
5.4 CURRENCY/CONVERSION
"Deutsche Mark" or "DEM" means the lawful currency for the time being
of Germany or, in case of the implementation of the European Monetary
Union, the "Euro" on the basis of the official conversion rate.
Currency conversions, if any, shall be made using the average quarterly
exchange rates published regularly by Deutsche Bank AG, Frankfurt, or
its successor. The average will be calculated by summing the exchange
rates for the final business day of each of the 3 (three) months in the
applicable calendar quarter and dividing by 3 (three). All currency
conversions will be calculated to an accuracy of at least 3 (three)
digits after the decimal point.
5.5 PRICES ADJUSTMENTS
(a) The Product-price mentioned in Article 5.1 above (basis
14.05.1998) may be increased by BI Pharma KG effective at the
beginning of a calendar year (for the first time effective
January 1, 2000) by [**] per year for [**].
<PAGE>
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
(b) In case any cost increases (in terms of [**] of [**]
for [**] and/or [**]) by more than [**] in a given
calendar year, which BI Pharma KG must demonstrate, the
parties shall agree upon the direct amount of such
increase based on good faith negotiations to be effective
on January 1st of the calendar year following the more than
[**] increase and the price for Product in such calendar year
shall be increased for such amount, provided that the price
increase taken by BI Pharma KG under Article 5.5 (a) shall be
[**] under this Article 5.5 (b).
(c) In case of any cost decrease (as defined in lit. (b) above) by
more than [**] in a given calendar year, the parties shall
agree upon the direct amount of such decrease based on good
faith negotiations to be effective on January 1st of the
calendar year following the more than [**] decrease and the
price for Product in such calendar year shall be decreased for
such amount.
(d) In case of a change of the Process which lasting influences
the basic assumptions, the price shall be recalculated
according to Appendix 1 after [**] and the parties shall agree
on a new price for Product on the basis of an [**] of the
[**] as an [**] and BI Pharma KG shall on an ongoing basis
intend to provide suggestions for such enhancements of the
Process. Such agreed new price will then be effective for
Product produced with the new Process from the next run on.
(e) L&I Partners, L.P. may elect whether the direct amount of an
increase according to (a) and (b) above is payable pursuant
to a separate invoice or by a proportional increase in the
price for Bulk Product, Final Product and/or Finished
Product. If L&I Partners, L.P. [**] BI Pharma KG that [**]
for [**] can be [**] a [**] and of [**] and [**] than [**]
of [**], then [**] for [**] Article 5.5 (b).
5.6 INTRODUCTION OF THE EURO
The introduction of the Euro as the legal currency or legal tender in
Germany (see Article 5.4 above) shall in no way affect the validity of
this Agreement and shall not entitle any party hereto to terminate, or
to require any amendment to this Agreement.
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6. CONFIDENTIALITY
6.1 BI PHARMA KG
shall not disclose L&I Partners, L.P. Confidential Information to any
person other than its employees or employees of affiliated companies of
the Boehringer Ingelheim group who have a need to know such information
in order to perform their duties in carrying out the work hereunder and
who have an obligation to maintain the confidentiality thereof as
provided herein without the other party's written consent.
6.2 L&I PARTNERS, L.P.
shall not disclose any BI Pharma KG Confidential Information to any
person other than
(a) its employees or consultants who are bound by similar
obligations of confidentiality and who have a need to know
such information in order to provide direction to BI Pharma KG
or evaluate the results of the work, or
(b) regulatory authorities, for example, the FDA, that require
such information in order to review an IND, BLA or other
regulatory filing. BI Pharma KG will be informed and must
agree prior to filing of any BI Pharma KG Confidential
Information to regulatory authorities. In these cases where BI
Pharma KG restricts L&I Partners, L.P.'s ability to file BI
Pharma KG Confidential Information, BI Pharma KG agrees to
provide the Confidential Information directly to the
regulatory authorities and will provide a letter of
authorization for cross-reference to L&I Partners, L.P.
(c) persons or entities that manufacture Product for L&I Partners,
L.P. after termination of this Agreement or during this
Agreement as permitted herein without the other party's
written consent.
6.3 EXCEPTIONS
The obligations of confidentiality applicable to L&I Partners, L.P.
Confidential Information and BI Pharma KG Confidential Information
shall not apply to any information that is:
(a) known publicly or becomes known publicly through no fault of
the recipient;
(b) learned by the recipient from a third party entitled to
disclose it;
(c) developed by the recipient independently of information
obtained from the disclosing party;
(d) already known to the recipient before receipt from the
disclosing party, as shown by its prior written records;
<PAGE>
L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 14
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(e) required to be disclosed by law, regulation (e.g. by
SEC-regulation) or the order of a judicial or administrative
authority; or
(f) released with the prior written consent of the disclosing
party.
(g) released to a potential marketing partner after written notice
thereof to BI Pharma KG and under secrecy obligations covering
at least the same extent as stated herein.
7. LICENSE
7.1 USE OF L&I PARTNERS, L.P. CELL LINE AND INTELLECTUAL PROPERTY
L&I Partners, L.P. and BI Pharma KG hereby acknowledge and agree that
L&I Partners, L.P. is providing Cell Line, Process and L&I Partners,
L.P. Confidential Information to BI Pharma KG for use by BI Pharma KG
on behalf of and for the benefit of L&I Partners, L.P. for the purposes
of this Agreement, that BI Pharma KG will make use thereof solely for
such purposes and that L&I Partners, L.P. hereby consents to such use.
BI Pharma KG agrees that L&I Partners is the owner of the Cell Line,
Process, and L&I Partners Confidential Information, and upon
termination of this Agreement such shall be returned to L&I Partners,
L.P., provided however, that BI Pharma KG shall have the right to
retain one copy/sample for documentation purposes solely or if and when
and to the extent required by law or regulation.
7.2 NO OTHER RIGHT OR LICENSE
Except as granted under this Agreement, no right or license, either
express or implied, under any patent or proprietary right is granted
hereunder by virtue of the disclosure of L&I Partners, L.P.
Confidential
Information or BI Pharma KG Confidential Information.
8. TERM AND TERMINATION
8.1 BASIC TERM
This Agreement will come into force and effect as of the date first
above written, and shall remain valid until December 31, 2006.
8.2 AUTOMATIC EXTENSION
This Agreement will automatically extend for additional 3 (three) year
periods in the absence of a written notice of termination by one of the
parties to the other and such written notice shall be given no later
than 2 (two) years prior to the end of the fix period and 3 (three)
years prior to the end of any extension period.
<PAGE>
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
8.3 EARLY TERMINATION
To the extent permitted by law, if either party shall become insolvent
or shall make assignment for the benefit of creditors, or proceedings
in voluntary bankruptcy shall be instituted on behalf of or against a
party or a receiver or trustee of all, or substantially all of the
property of a party shall be appointed to a third party, the other
party shall be entitled to terminate this Agreement by giving written
notice to this effect to the first party whereupon this Agreement shall
so terminate, unless such situation is rectified within a period of 60
(sixty) days.
8.4 TERMINATION IN CASE OF BREACH OF AGREEMENT
Either party may terminate this Agreement for any material breach of
this Agreement, if such breach is not cured within 90 (ninety) days
following receipt by the party committing the breach of written notice
of the intent to terminate. Such termination shall become effective
immediately upon further notice to the defaulting party.
8.5 PREMATURE TERMINATION
8.5.1 This Agreement may be terminated by L&I Partners, L.P. at any time if
L&I Partners, L.P. shall withdraw the Product from all relevant markets
(US, Canadian and Europe).
8.5.2 In this case L&I Partners, L.P. will pay to BI Pharma KG the
Product-price for the [**]ordered quantities (see Article 2.5 above) of
the Product.
8.5.3 Moreover, L&I Partners, L.P. will pay to BI Pharma KG an amount to
cover the production loss caused by the premature termination as
follows:
for the 2 (two) years following the [**] order period (which is year 1)
L&I Partners, L.P. will pay the Product price for the minimum quantity
(according to Article 2.8 above) [**]
[**] for year 2
[**] for year 3.
8.5.4 Due Date
These payments shall be due within 1 (one) month after receipt by BI
Pharma KG of the notice of premature termination from L&I Partners,
L.P. and receipt by L&I Partners, L.P. of the respective invoice of BI
Pharma KG.
9. MISCELLANEOUS
9.1 FORCE MAJEURE
Neither party shall be in breach of this Agreement if there is any
failure of performance under this Agreement (except for payment of any
amounts due hereunder) occasioned by any act of God, fire, act of
government or state, war,
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L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 16
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civil commotion, insurrection, embargo, prevention from or hindrance in
obtaining energy or other utilities, labor disputes of whatever nature
or any other reason beyond the control of either party; provided,
however, that if a party is not able to perform because of a force
majeure pursuant to this Article 8.1 for a period of 6 (six) months,
the other party may terminate this Agreement with immediate effect. In
this case the provisions of Article 8.5.3 shall not apply.
9.2 PUBLICITY
No press release or other form of publicity regarding the work
performed hereunder or this Agreement shall be permitted by either
party to be published unless both parties have indicated their consent
to the form of the release in writing.
Nothing in this Article 9.2 shall prevent the parties from disclosing
this Agreement as required by applicable laws, rules or regulations.
9.3 NOTICES
Any notice required or permitted to be given hereunder by either party
shall be in writing and shall be (i) delivered personally, (ii) sent by
registered mail, return receipt requested, postage prepaid, (iii)
delivered by facsimile with immediate telephonic confirmation of
receipt, to the addresses or facsimile numbers set forth below or (iv)
sent by overnight carrier (such as Federal Express, UPS, DHL, MSAS,
World Courier):
<PAGE>
L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 17
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If to BI Pharma KG: Boehringer Ingelheim Pharma KG
Birkendorfer StraBe 65
D-88397 Biberach an der Riss
Federal Republic of Germany
Attention: Dr. Wolfram Carius
Fax: 0 73 51/54 - 9 80 49
Phone: 0 73 51/54 - 94 21
If to L&I Partners, L.P.: LeukoSite Inc.
215 First Street
Cambridge, MA 02142
Attention: President and CEO
Fax: 617/621 93 49
Phone: 617/621 93 50
with a copy to
Chief Financial Officer and/or
Vice President Manufacturing
at the same address
Each notice shall be deemed given (i) on the date it is received if it
is delivered personally, (ii) 3 (three) days after the date it is sent
by Federal Express, UPS, DHL, MSAS, World Courier or similar service if
receipt is immediately confirmed in writing (iii) on the date it is
received if it is sent by facsimile with immediate telephonic
confirmation of receipt.
9.4 APPLICABLE LAW/JURISDICTION
This Agreement shall be governed by and construed in accordance with
the laws of Germany without regard to its choice of law principles. The
courts of the place of domicile of BI Pharma KG shall have exclusive
jurisdiction over all legal matters and proceedings hereunder.
In case of any dispute, claim or controversy arising out of or relating
to the interpretation, execution or performance of this Agreement the
parties shall first try to settle the matter amicably, possibly by
having recourse to a neutral person acceptable to both parties.
9.5 COMPLIANCE WITH LAWS
BI Pharma KG shall perform the work hereunder in conformance with
current GMP, at the time of the respective production, as applicable,
and all German and/or EEC laws, ordinances and governmental rules or
regulations pertaining thereto.
<PAGE>
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9.6 INDEPENDENT CONTRACTORS
Each of the parties hereto is an independent contractor and nothing
herein contained shall be deemed to constitute the relationship of
partners, joint ventures, nor of principal and agent between the
parties hereto. Neither party shall hold itself out to third persons as
purporting to act on behalf of, or serving as the agent of, the other
party.
9.7 WAIVER
No waiver of any term, provision or condition of this Agreement whether
by conduct or otherwise in any one or more instances shall be deemed to
be or construed as a further or continuing waiver of any such term,
provision or condition or of any other term, provision or condition of
this Agreement.
9.8 SEVERABILITY
If any provision of this Agreement is held to be invalid or
unenforceable by a court of competent jurisdiction all other provisions
shall continue in full force and effect. The parties hereby agree to
attempt to substitute for any invalid or unenforceable provision a
valid or enforceable provision which achieves to the greatest extent
possible the economic legal and commercial objectives of the invalid or
unenforceable provision.
9.9 ENTIRETY
This Agreement, including any exhibits and appendices attached hereto
and referenced herein, constitutes the full understanding of the
parties and a complete and exclusive statement of the terms of their
agreement, and no terms, conditions, understandings or agreements
purporting to modify or vary the terms thereof shall be binding unless
they are hereafter made in writing and signed by both parties.
9.10 ASSIGNMENT
This Agreement shall be binding upon the successors and assigns of the
parties and the name of a party appearing herein shall be deemed to
include the names of its successors and assigns provided always that
nothing herein shall permit any assignment by either party.
However, BI Pharma KG may assign this Agreement to an affiliated
company taking over the operative biotech business of BI Pharma KG and
L&I Partners, L.P. may assign this Agreement in the case of a merger or
acquisition or transfer of its assets related to this Agreement to a
third party without the prior written consent of BI Pharma KG.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives on the day and year first above
written.
Cambridge JUNE 4, 1999 Biberach, MAY 5TH, 1999
------------ -------------
L&I PARTNERS, L.P., INC. BOEHRINGER INGELHEIM PHARMA KG
ppa.
<TABLE>
<S> <C> <C>
[Illegible] /s/ Dr. Deter Jacob /s/ Prof. Dr. Rolf G. Werner
- ------------------------------------ ------------------- ----------------------------
Dr. Deter Jacob Prof. Dr. Rolf G. Werner
(Member of the Board) (Head of Biotech worldwide)
</TABLE>
<PAGE>
L&I Partners, L.P./BI Pharma KG: Supply Agreement Page: 20
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APPENDICES
<TABLE>
<S> <C>
Appendix 1: Product-price and basic product assumptions
Appendix 2: Rolling forecast for Final Product and Finished Product
Appendix 3: Specifications for Product including tests
Appendix 4: Process Description
Appendix 5: Agreed upon stock policy of the Parties
Appendix 6: Agreed upon format of "Certificate of Compliance"
</TABLE>
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
APPENDIX 1
MASTER PROJECTPLAN : CAMPATH-1H
L & I PARTNERS / BI PHARMA KG
Basic Production Assumptions and Pricing System for Commercial Supply
PRODUCTION ASSUMPTIONS:
[**]
Total material amount [**]
SUPPLY QUANTITY PER YEAR PRICE PER GRAM
[**] [**]
PRICE FOR STERILE LIQUID FILLING FOR COMMERCIAL SUPPLY
BATCH SIZE [**] [**]
[**]
BATCH SIZE [**]
[**] [**]
PRICE FOR LABELING AND PACKAGING FOR COMMERCIAL SUPPLY
[**] [**]
*)S = SURCHARGE
The surcharge system is effective, [**]
PRICE CALCULATION FINISHED PRODUCT
[**]
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
APPENDIX 2a
Example for firm order in pre approval phase
ORDER PLANNING SYSTEM OF CAMPATH-1H FINAL PRODUCT
COMMERCIAL SUPPLY PRE FDA APPROVAL
[**]
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
APPENDIX 2b
ROLLING FORECAST PLANNING SYSTEM OF FINAL PRODUCT
CAMPATH-1H (COMMERCIAL SUPPLY)
POST FDA APPROVAL
[**]
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
APPENDIX 3
(Page 1 of 2)
SPECIFICATIONS FOR PRODUCT CAMPATH 1H
INCLUDING TESTS
TABLE 1 SPECIFICATIONS FOR BULK DRUG SUBSTANCE**
[**]
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
APPENDIX 3
(Page 2 of 2)
TABLE 2 SPECIFICATIONS FOR DRUG PRODUCT RELEASE
[**]
<PAGE>
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
APPENDIX 4
DESCRIPTION OF THE PROCESS
The Process for manufacturing Product as agreed upon by the Parties is described
in detail in Section 4.2.3.3., "Description of the Manufacturing Process" of the
BLA (Biologics License Application) as first submitted to the FDA.
<PAGE>
APPENDIX 5
(Section 2.1 of the Supply Agreement on Campath-1H)
SAFETY STOCK POLICY
Drug Product, Finished Product [**]
Bulk Drug Substance [**]
Raw material [**]
The safety stock quantity is calculated based on the given [**] product
request and should ensure a high service level
The safety stocks are built up [**] with respect to the shelf life of
the product and manufacturing flexibility.
<PAGE>
APPENDIX 6
Agreed upon format of "Certificate of Compliance"
See Attachment
<PAGE>
APPENDIX 6
Boehringer
Ingelheim CERTIFICATE OF COMPLIANCE
_______________________________________________________________________________
Product:
_______________________________________________________________________________
Lot No.:
_______________________________________________________________________________
Manufacturing Date:
Expiration Date: ___________________
Number of ampoules:
- --------------------------------------------------------------------------------
It is hereby certified that all manufacturing documents including batch
manufacturing records and in-process control sheets have been inspected and
found to be in compliance with current specifications and that the analyses
carried out in our control laboratory have revealed the results of the
attached analytical certificates and are in compliance with current
specifications.
If occurred, deviations during manufacturing and testing of the product are
documented in the batch manufacturing and testing records and have been
assessed and found to be acceptable.
The batch was manufactured in accordance with cGMP's and with the product's
BLA.
The lot is approved and released.
BOEHRINGER INGELHEIM PHARMA KG
QUALITY ASSURANCE
Signature:
--------------------------------
Date:
--------------------------------
(day/month/year)
<PAGE>
Exhibit 10.29
MILLENNIUM PHARMACEUTICALS, INC.
5.50% CONVERTIBLE SUBORDINATED NOTES DUE JANUARY 15, 2007
REGISTRATION RIGHTS AGREEMENT
January 20, 2000
Goldman, Sachs & Co.,
ING Barings LLC,
FleetBoston Robertson Stephens Inc.,
Credit Suisse First Boston Corporation,
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Millennium Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the Purchasers (as defined herein)
upon the terms set forth in the Purchase Agreement (as defined herein) its 5.50%
Convertible Subordinated Notes due January 15, 2007 (the "Securities"). As an
inducement to the Purchasers to enter into the Purchase Agreement and in
satisfaction of a condition to the obligations of the Purchasers thereunder, the
Company agrees with the Purchasers for the benefit of holders (as defined
herein) from time to time of the Registrable Securities (as defined herein) as
follows:
1. DEFINITIONS.
(a) Capitalized terms used herein without definition shall have the
respective meanings ascribed thereto in the Purchase Agreement. As used in this
Agreement, the following defined terms shall have the following meanings:
"ACT" OR "SECURITIES ACT" means the United States Securities Act of
1933, as amended.
"AFFILIATE" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with such specified person. For purposes of this definition, control of
a person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such person whether by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"COMMISSION" means the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Exchange
Act or the Securities Act, whichever is the relevant statute for the particular
purpose.
"COMMON STOCK" means the Company's common stock, par value $.001 per
share.
"DTC" means The Depository Trust Company.
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"EFFECTIVE FAILURE" has the meaning assigned thereto in Section 7
hereof.
"EFFECTIVENESS PERIOD" has the meaning assigned thereto in Section
2(b)(i) hereof.
"EFFECTIVE TIME" means the date on which the Commission declares the
Shelf Registration Statement effective or on which the Shelf Registration
Statement otherwise becomes effective.
"ELECTING HOLDER" has the meaning assigned thereto in Section 3(a)(iii)
hereof.
"EXCHANGE ACT" means the United States Securities Exchange Act of 1934,
as amended.
"EXPEDITED FILING" has the meaning assigned thereto in Section 3(a)(i)
hereof.
"EXPEDITED FILING QUESTIONNAIRE DEADLINE" has the meaning assigned
thereto in Section 3(a)(i) hereof.
"HOLDER" means any Person that has a beneficial interest in any global
Security that is a Restricted Security or any beneficial interest in a global
security representing shares of Common Stock issuable upon conversion of a
Security.
The term "HOLDER" means, when used with respect to any Security, the
Holder and, with respect to any Common Stock, the record holder of such Common
Stock.
"INDENTURE" means the Indenture, dated as of January 20, 2000, between
the Company and State Street Bank and Trust Company, as amended and supplemented
from time to time in accordance with its terms.
"LIQUIDATED DAMAGES" has the meaning assigned thereto in Section 7
hereof.
"MANAGING UNDERWRITERS" means the investment banker or investment
bankers and manager or managers that shall administer an underwritten offering,
if any, conducted pursuant to Section 6 hereof.
"NASD RULES" means the Rules of the National Association of Securities
Dealers, Inc., as amended from time to time.
"NOTICE AND QUESTIONNAIRE" means a Notice of Registration Statement and
Selling Securityholder Questionnaire substantially in the form of Exhibit A
hereto.
The term "PERSON" means an individual, partnership, corporation, trust
or unincorporated organization, or a government or agency or political
subdivision thereof.
"PRESS RELEASE" means any press release issued by the Company and
disseminated to Reuters Business News Services and Bloomberg News Services.
"PROSPECTUS" means the prospectus (including, without limitation, any
preliminary prospectus, any final prospectus and any prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act) included in the
Shelf Registration Statement, as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable
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Securities covered by the Shelf Registration Statement and by all other
amendments and supplements to such prospectus, including all material
incorporated by reference in such prospectus and all documents filed after the
date of such prospectus by the Company under the Exchange Act and incorporated
by reference therein.
"PURCHASE AGREEMENT" means the purchase agreement dated January __,
2000, between the Purchasers and the Company relating to the Securities.
"PURCHASERS" means the Purchasers named in Schedule I to the Purchase
Agreement.
"REGISTRABLE SECURITIES" means all or any portion of the Securities
issued from time to time under the Indenture in registered form and the shares
of Common Stock issuable upon conversion of such Securities; PROVIDED, HOWEVER,
that a security ceases to be a Registrable Security when it is no longer a
Restricted Security.
"REGISTRATION DEFAULT" has the meaning assigned thereto in Section 7
hereof.
"RESTRICTED SECURITY" means any Security or share of Common Stock
issuable upon conversion thereof except any such Security or share of Common
Stock which (i) has been effectively registered under the Securities Act and
sold in a manner contemplated by the Shelf Registration Statement, (ii) has been
transferred in compliance with Rule 144 under the Securities Act (or any
successor provision thereto) or is transferable pursuant to paragraph (k) of
such Rule 144 (or any successor provision thereto), (iii) has been sold in
compliance with Regulation S under the Securities Act (or any successor thereto)
and does not constitute the unsold allotment of a distributor within the meaning
of Regulation S under the Securities Act or (iv) has otherwise been transferred
and a new Security or share of Common Stock not subject to transfer restrictions
under the Securities Act has been delivered by or on behalf of the Company in
accordance with Article Three of the Indenture.
"RULES AND REGULATIONS" means the published rules and regulations of
the Commission promulgated under the Securities Act or the Exchange Act, as in
effect at any relevant time.
"SHELF REGISTRATION" means a registration effected pursuant to Section
2 hereof.
"SHELF REGISTRATION STATEMENT" means a "shelf" registration statement
filed under the Securities Act providing for the registration of, and the sale
on a continuous or delayed basis by the holders of, all of the Registrable
Securities pursuant to Rule 415 under the Securities Act and/or any similar rule
that may be adopted by the Commission, filed by the Company pursuant to the
provisions of Section 2 of this Agreement, including the Prospectus contained
therein, any amendments and supplements to such registration statement,
including post-effective amendments, and all exhibits and all material
incorporated by reference in such registration statement.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, or any
successor thereto, and the rules, regulations and forms promulgated thereunder,
as the same shall be amended from time to time.
The term "UNDERWRITER" means any underwriter of Registrable Securities
in connection with an offering thereof under a Shelf Registration Statement.
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(b) Wherever there is a reference in this Agreement to a percentage of
the "principal amount" of Registrable Securities or to a percentage of
Registrable Securities, any Common Stock constituting Registrable Securities
shall be treated as representing the principal amount of Securities which was
surrendered for conversion or exchange in order to receive such number of shares
of Common Stock.
2. SHELF REGISTRATION.
(a) The Company shall, within 90 calendar days following the First Time
of Delivery (as defined in the Purchase Agreement), file with the Commission a
Shelf Registration Statement relating to the offer and sale of the Registrable
Securities by the Holders and, thereafter, shall use its reasonable efforts to
cause such Shelf Registration Statement to be declared effective under the Act
within 180 calendar days after the First Time of Delivery (as defined in the
Purchase Agreement); PROVIDED, HOWEVER, that the Company may, upon written
notice to all the Holders, postpone filing or having the Shelf Registration
Statement declared effective for a reasonable period not to exceed 90 days if
the Company possesses material non-public information, the disclosure of which
would, in the Company's reasonable judgment, have a material adverse effect on
the Company and its subsidiaries taken as a whole and PROVIDED FURTHER HOWEVER,
that no holder shall be entitled to be named as a selling securityholder in the
Shelf Registration Statement or to use the Prospectus forming a part thereof for
resales of Registrable Securities unless such holder is an Electing Holder.
(b) The Company shall use its reasonable efforts:
(i) To keep the Shelf Registration Statement continuously
effective in order to permit the Prospectus forming part thereof to be
usable by holders for resales of Registrable Securities for a period of
two years from the later of (x) the Effective Time of the Shelf
Registration Statement and (y) the last Time of Delivery (as defined in
the Purchase Agreement), or such shorter period that will terminate
when there are no Registrable Securities outstanding (in either case,
such period being referred to herein as the "Effectiveness Period");
(ii) After the Effective Time of the Shelf Registration
Statement, promptly upon the request of any holder of Registrable
Securities that is not then an Electing Holder, to take any action
reasonably necessary to enable such holder to use the Prospectus
forming a part thereof for offers and resales of Registrable
Securities, including, without limitation, any action necessary to
identify such holder as a selling securityholder in the Shelf
Registration Statement; PROVIDED, HOWEVER, that nothing in this
subparagraph shall relieve such holder of the obligation to return a
completed and signed Notice and Questionnaire to the Company in
accordance with Section 3(a) hereof; and
(iii) If at any time the Securities, pursuant to Article
Eleven of the Indenture, are convertible into securities other than
shares of Common Stock, the Company shall, or shall cause any successor
under the Indenture to, cause such securities to be included in the
Shelf Registration Statement no later than the date on which the
Securities may then be convertible into such securities.
The Company shall be deemed not to have used its reasonable efforts to keep the
Shelf Registration Statement effective during the Effectiveness Period if the
Company voluntarily takes any action that would result in Electing Holders not
being able to offer and sell any of their
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Registrable Securities during such period, unless (i) such action is required by
applicable law or regulation, or (ii) the Company determines based upon the
advice of counsel that it is advisable to disclose in the Shelf Registration
Statement a financing, acquisition or other corporate transaction or other
material event or circumstance affecting the Company or its securities, and the
Board of Directors of the Company shall have determined in good faith that such
disclosure is not in the best interests of the Company and its stockholders,
and, in the case of clause (i) above, the Company thereafter promptly complies
with the requirements of paragraph 3(j) below.
3. REGISTRATION PROCEDURES. In connection with the Shelf Registration
Statement, the following provisions shall apply:
(a) (i) If the Company expects to file a Shelf Registration Statement
within 30 days of the date hereof (an "Expedited Filing"), it shall (x) mail, as
promptly as reasonably practicable after the date hereof to the Holders of
Registrable Securities, a Notice and Questionnaire with a response deadline of
30 days from the date of such Notice (the "Expedited Filing Questionnaire
Deadline"), and (y) as promptly as reasonably practicable after the response
deadline but in any event no later than 10 days thereafter, prepare a Prospectus
supplement (and if required file an amendment or a supplement to the Shelf
Registration Statement) or take such other measures, if any, as are necessary to
include in the Shelf Registration Statement the Registrable Securities of
Electing Holders. If the Company does not intend to make an Expedited Filing, it
shall mail the Notice and Questionnaire to the Holders of Registrable Securities
not less than 30 calendar days prior to the time the Company intends in good
faith to have the Shelf Registration Statement declared effective. Subject to
Section 3(a)(ii) hereof, no Holder of Registrable Securities shall be entitled
to be named as a selling securityholder in the Shelf Registration Statement as
of the Effective Time (or in the first Prospectus supplement filed thereafter in
the case of an Expedited Filing), and no Holder of Registrable Securities shall
be entitled to use the Prospectus forming a part thereof for offers and resales
of Registrable Securities at any time, unless such Holder has returned a
completed and signed Notice and Questionnaire to the Company by the deadline for
response set forth therein; PROVIDED, HOWEVER, that Holders of Registrable
Securities shall have at least 28 calendar days from the date on which the
Notice and Questionnaire is first mailed to such Holders to return a completed
and signed Notice and Questionnaire to the Company.
(ii) After the Effective Time of the Shelf Registration
Statement (or the Expedited Filing Questionnaire Deadline in the case
of an Expedited Filing), the Company shall, upon the request of any
holder of Registrable Securities that is not then an Electing Holder,
promptly send a Notice and Questionnaire to such holder. The Company
shall not be required to take any action to name such holder as a
selling securityholder in the Shelf Registration Statement or to enable
such holder to use the Prospectus forming a part thereof for resales of
Registrable Securities until such holder has returned a completed and
signed Notice and Questionnaire to the Company. In the event that the
Company receives such completed Notice and Questionnaire after the
Shelf Registration Statement has been declared effective, the Company
will, no later than 20 calendar days following receipt of the complete
Notice and Questionnaire, file any amendments to the Shelf Registration
Statement or supplements related to the Prospectus as are necessary to
permit such Electing Holder to deliver the Prospectus to purchasers of
the Registrable Securities. The Company shall use reasonable efforts to
cause such post-effective amendment to the Shelf Registration Statement
to be declared effective within 45 days of the filing of such
post-effective amendment. Notwithstanding anything to the contrary in
this Agreement, commencing six months after the effective date of the
Shelf Registration Statement, the Company shall not be required to
prepare and file amendments to the Registration
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Statement or supplements to the Prospectus that are necessary to add
Electing Holders and/or Registrable Securities to the Shelf
Registration Statement more frequently than once within any three-month
period, the timing of such filings to be within the reasonable
discretion of the Company; except that this limitation shall not apply
to the Purchasers, as identified in the Purchase Agreement, and except
that, if Goldman, Sachs & Co. advises the Company that this limitation
would materially impact the liquidity of the Registrable Securities for
any Electing Holder or group of Electing Holders, then the Company and
Goldman, Sachs & Co. shall jointly agree in good faith on a more
frequent schedule for these filings taking into account the then
relevant circumstances.
(iii) The term "Electing Holder" shall mean any holder of
Registrable Securities that has returned a completed and signed Notice
and Questionnaire to the Company in accordance with Section 3(a)(i) or
3(a)(ii) hereof.
(b) The Company shall furnish to each Electing Holder, prior to the
Effective Time, a copy of the Shelf Registration Statement initially filed with
the Commission, and shall furnish to such holders, prior to the filing thereof
with the Commission, copies of each amendment thereto and each amendment or
supplement, if any, to the Prospectus included therein, and shall use its best
efforts to reflect in each such document, at the Effective Time or when so filed
with the Commission, as the case may be, such comments as such holders and their
respective counsel reasonably may propose.
(c) The Company shall promptly take such action as may be necessary so
that (i) each of the Shelf Registration Statement and any amendment thereto and
the Prospectus forming part thereof and any amendment or supplement thereto (and
each report or other document incorporated therein by reference in each case)
complies in all material respects with the Securities Act and the Exchange Act
and the respective rules and regulations thereunder, (ii) each of the Shelf
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) each of the Prospectus forming part of the
Shelf Registration Statement, and any amendment or supplement to such
Prospectus, does not at any time during the Effectiveness Period include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(d) The Company shall promptly advise each Electing Holder, and shall
confirm such advice in writing if so requested by any such holder:
(i) when the Shelf Registration Statement and any amendment
thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto has
become effective and issue a Press Release indicating the same;
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the Prospectus
included therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for such purpose;
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(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the securities
included in the Shelf Registration Statement for sale in any
jurisdiction or the initiation of any proceeding for such purpose; and
(v) of the happening of any event or the existence of any
state of facts that requires the making of any changes in the Shelf
Registration Statement or the Prospectus included therein so that, as
of such date, such Shelf Registration Statement and Prospectus do not
contain an untrue statement of a material fact and do not omit to state
a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading (which advice
shall be accompanied by an instruction to such holders to suspend the
use of the Prospectus until the requisite changes have been made;
provided that the Company shall not be permitted to suspend the use of
the Prospectus for more than an aggregate of 45 days in any 90 day
period or 90 days in any 365 day period unless the Company complies
with its obligations to pay Liquidated Damages as set forth in Section
7 hereof).
(e) The Company shall use its reasonable efforts to prevent the
issuance, and if issued to obtain the withdrawal, of any order suspending the
effectiveness of the Shelf Registration Statement at the earliest possible time.
(f) The Company shall furnish to each Electing Holder, without charge,
at least one copy of the Shelf Registration Statement and all post-effective
amendments thereto, including financial statements and schedules, and, if such
holder so requests in writing, all reports, other documents and exhibits that
are filed with or incorporated by reference in the Shelf Registration Statement.
(g) The Company shall, during the Effectiveness Period, deliver to each
Electing Holder, without charge, as many copies of the Prospectus (including
each preliminary Prospectus) included in the Shelf Registration Statement and
any amendment or supplement thereto as such Electing Holder may reasonably
request; and the Company consents (except during the continuance of any event
described in Section 3(d)(v) above) to the use of the Prospectus and any
amendment or supplement thereto by each of the Electing Holders in connection
with the offering and sale of the Registrable Securities covered by the
Prospectus and any amendment or supplement thereto during the Effectiveness
Period.
(h) Prior to any offering of Registrable Securities pursuant to the
Shelf Registration Statement, the Company shall (i) register or qualify or
cooperate with the Electing Holders and their respective counsel in connection
with the registration or qualification of such Registrable Securities for offer
and sale under the securities or "blue sky" laws of such jurisdictions within
the United States as any Electing Holder may reasonably request, (ii) keep such
registrations or qualifications in effect and comply with such laws so as to
permit the continuance of offers and sales in such jurisdictions for so long as
may be necessary to enable any Electing Holder or underwriter, if any, to
complete its distribution of Registrable Securities pursuant to the Shelf
Registration Statement, and (iii) take any and all other actions necessary or
advisable to enable the disposition in such jurisdictions of such Registrable
Securities; PROVIDED, HOWEVER, that in no event shall the Company be obligated
to (A) qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to so qualify but for this
Section 3(h); (B) file any general consent to service of process in any
jurisdiction where it is not as of the date thereof so subject or (C) subject
itself to taxation in any jurisdiction where it is not as of the date thereof so
subject.
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(i) Unless any Registrable Securities shall be in book-entry only form,
the Company shall cooperate with the Electing Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to the Shelf Registration Statement, which certificates, if so
required by any securities exchange upon which any Registrable Securities are
listed, shall be penned, lithographed or engraved, or produced by any
combination of such methods, on steel engraved borders, and which certificates
shall be free of any restrictive legends and in such permitted denominations and
registered in such names as Electing Holders may request in connection with the
sale of Registrable Securities pursuant to the Shelf Registration Statement.
(j) Upon the occurrence of any fact or event contemplated by paragraph
3(d)(v) above, the Company shall promptly prepare a post-effective amendment or
supplement to the Shelf Registration Statement or the Prospectus, or any
document incorporated therein by reference, or file any other required document
so that, as thereafter delivered to purchasers of the Registrable Securities
included therein, the Prospectus will not include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, if the Company determines based upon
the advice of counsel that it is advisable to disclose in the Shelf Registration
Statement a financing, acquisition or other corporate transaction or other
material event affecting the Company or its securities, and the Board of
Directors of the Company shall have determined in good faith that such
disclosure would not be in the best interests of the Company and its
stockholders, the Company shall not be required to prepare and file such
amendment, supplement or document for such period as the Board of Directors of
the Company shall have determined in good faith is in the best interests of the
Company. If the Company notifies the Electing Holders of the occurrence of any
event contemplated by paragraph 3(d)(v) above, each Electing Holder agrees, as a
consequence of the inclusion of any of such holder's Registrable Securities in
the Shelf Registration Statement, to suspend the use of the Prospectus until the
requisite changes to the Prospectus have been made.
(k) Not later than the Effective Time of the Shelf Registration
Statement, the Company shall provide a CUSIP number for the Registrable
Securities that are debt securities.
(l) The Company shall use its best efforts to comply with all
applicable Rules and Regulations, and to make generally available to its
security holders as soon as practicable, but in any event not later than
eighteen months after (i) the effective date (as defined in Rule 158(c) under
the Securities Act) of the Shelf Registration Statement, (ii) the effective date
of each post-effective amendment to the Shelf Registration Statement, and (iii)
the date of each filing by the Company with the Commission of an Annual Report
on Form 10-K that is incorporated by reference in the Shelf Registration
Statement, an earnings statement of the Company and its subsidiaries complying
with Section 11(a) of the Securities Act and the Rules and Regulations
thereunder (including, at the option of the Company, Rule 158).
(m) Not later than the Effective Time of the Shelf Registration
Statement, the Company shall cause the Indenture to be qualified under the Trust
Indenture Act; in connection with such qualification, the Company shall
cooperate with the Trustee under the Indenture and the Holders (as defined in
the Indenture) to effect such changes to the Indenture as may be required for
such Indenture to be so qualified in accordance with the terms of the Trust
Indenture Act; and the Company shall execute, and shall use all reasonable
efforts to cause the Trustee to execute, all documents that may be required to
effect such changes and all other forms and documents required to be filed with
the Commission to enable such Indenture to be so qualified in a timely
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manner. In the event that any such amendment or modification referred to in this
Section 3(m) involves the appointment of a new trustee under the Indenture, the
Company shall appoint a new trustee thereunder pursuant to the applicable
provisions of the Indenture.
(n) In the event of an underwritten offering conducted pursuant to
Section 6 hereof, the Company shall, if requested, promptly include or
incorporate in a Prospectus supplement or post-effective amendment to the Shelf
Registration Statement such information as the Managing Underwriters reasonably
agree should be included therein and to which the Company does not reasonably
object and shall make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after it is notified of the
matters to be included or incorporated in such Prospectus supplement or
post-effective amendment.
(o) The Company shall enter into such customary agreements (including
an underwriting agreement in customary form in the event of an underwritten
offering conducted pursuant to Section 6 hereof) and take all other appropriate
action in order to expedite and facilitate the registration and disposition of
the Registrable Securities, and in connection therewith, if an underwriting
agreement is entered into, cause the same to contain indemnification provisions
and procedures substantially identical to those set forth in Section 5 hereof
with respect to all parties to be indemnified pursuant to Section 5 hereof.
(p) The Company shall:
(i)(A) make reasonably available for inspection by Electing
Holders, any underwriter participating in any disposition pursuant to
the Shelf Registration Statement, and any attorney, accountant or other
agent retained by such holders or any such underwriter all relevant
financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries, and (B) cause the
Company's officers, directors and employees to supply all information
reasonably requested by such holders or any such underwriter, attorney,
accountant or agent in connection with the Shelf Registration
Statement, in each case, as is customary for similar due diligence
examinations; PROVIDED, HOWEVER, that all records, information and
documents that are designated in writing by the Company, in good faith,
as confidential shall be kept confidential by such holders and any such
underwriter, attorney, accountant or agent, unless such disclosure is
made in connection with a court proceeding or required by law, or such
records, information or documents become available to the public
generally or through a third party without an accompanying obligation
of confidentiality; and PROVIDED FURTHER that, if the foregoing
inspection and information gathering would otherwise disrupt the
Company's conduct of its business, such inspection and information
gathering shall, to the greatest extent possible, be coordinated on
behalf of the Electing Holders and the other parties entitled thereto
by one counsel designated by and on behalf of Electing Holders and
other parties;
(ii) in connection with any underwritten offering conducted
pursuant to Section 6 hereof, make such representations and warranties
to the holders participating in such underwritten offering and to the
Managing Underwriters, in form, substance and scope as are customarily
made by the Company to underwriters in primary underwritten offerings
of equity and convertible debt securities and covering matters
including, but not limited to, those set forth in the Purchase
Agreement;
(iii) in connection with any underwritten offering conducted
pursuant to Section 6 hereof, obtain opinions of counsel to the Company
(which counsel and opinions (in form,
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scope and substance) shall be reasonably satisfactory to the Managing
Underwriters) addressed to each holder participating in such
underwritten offering and the underwriters, covering such matters as
are customarily covered in opinions requested in primary under written
offerings of equity and convertible debt securities and such other
matters as may be reasonably requested by such holders and underwriters
(it being agreed that the matters to be covered by such opinions shall
include, without limitation, as of the date of the opinion and as of
the Effective Time of the Shelf Registration Statement or most recent
post-effective amendment thereto, as the case may be, such counsel's
belief as to the absence from the Shelf Registration Statement and the
Prospectus, including the documents incorporated by reference therein,
of an untrue statement of a material fact or the omission of a material
fact required to be stated therein or necessary to make the statements
therein not misleading;
(iv) in connection with any underwritten offering conducted
pursuant to Section 6 hereof, obtain "cold comfort" letters and updates
thereof from the independent public accountants of the Company (and, if
necessary, from the independent public accountants of any subsidiary of
the Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to be,
included in the Shelf Registration Statement), addressed to each holder
participating in such underwritten offering (if such holder has
provided such letter, representations or documentation, if any,
required for such cold comfort letter to be so addressed) and the
underwriters, in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with
primary underwritten offerings;
(v) in connection with any underwritten offering conducted
pursuant to Section 6 hereof, deliver such documents and certificates
as may be reasonably requested by any holders participating in such
underwritten offering and the Managing Underwriters, if any, including,
without limitation, certificates to evidence compliance with Section
3(j) hereof and with any conditions contained in the underwriting
agreement or other agreements entered into by the Company.
(q) The Company will use its best efforts to cause the Common Stock
issuable upon conversion of the Securities to be listed for quotation on The
National Association of Securities Dealers Automated Quotations National Market
System or other stock exchange or trading system on which the Common Stock
primarily trades on or prior to the Effective Time of the Shelf Registration
Statement hereunder.
(r) In the event that any broker-dealer registered under the Exchange
Act shall be an "affiliate" (as defined in Rule 2720(b)(1) of the NASD Rules (or
any successor provision thereto)) of the Company or has a "conflict of interest"
(as defined in Rule 2720(b)(7) of the NASD Rules (or any successor provision
thereto)) and such broker-dealer shall underwrite, participate as a member of an
underwriting syndicate or selling group or assist in the distribution of any
Registrable Securities covered by the Shelf Registration Statement, whether as a
holder of such Registrable Securities or as an underwriter, a placement or sales
agent or a broker or dealer in respect thereof, or otherwise, the Company shall
assist such broker-dealer in complying with the requirements of the NASD Rules,
including, without limitation, by (A) engaging a "qualified independent
underwriter" (as defined in Rule 2720(b)(15) of the NASD Rules (or any successor
provision thereto)) to participate in the preparation of the registration
statement relating to such Registrable Securities, to exercise usual standards
of due diligence in respect thereto and to recommend the public offering price
of such Registrable Securities, (B) indemnifying such qualified independent
underwriter to the extent
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<PAGE>
of the indemnification of underwriters provided in Section 5 hereof, and (C)
providing such information to such broker-dealer as may be required in order for
such broker-dealer to comply with the requirements of the NASD Rules.
(s) The Company shall use its reasonable efforts to take all other
steps necessary to effect the registration, offering and sale of the Registrable
Securities covered by the Shelf Registra tion Statement contemplated hereby.
4. REGISTRATION EXPENSES. The Company shall bear all fees and expenses
incurred in connection with the performance of its obligations under Sections 2,
3 and 6 hereof. In addition, in the event of an underwritten offering of
Registrable Securities conducted pursuant to Section 6 hereof, or if in any
other event the Company requires that inspection and information gathering be
coordinated by counsel for the Electing Holders as provided in Section 3(p)(i)
hereof, the Company shall pay the fees and expenses of a single counsel selected
by the Electing Holders of not less than 25% of the Registrable Securities to be
included in such underwritten offering (or, in any such other event, included in
the Shelf Registration Statement) to represent them (subject to the next
sentence). The Electing Holders participating in such offering (or, in any such
other event, participating in such inspection and information gathering) shall
be responsible, on a pro rata basis based on the respective amount of their
Registrable Securities included in such offering for all fees and expenses of
such counsel in excess of $40,000 and all fees and commissions and underwriting
discounts attributable to the sale of such Registrable Securities.
5. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. Upon the registration of the
Registrable Securities pursuant to Section 2 hereof, the Company shall indemnify
and hold harmless each Electing Holder and each underwriter, selling agent or
each other securities professional that may be deemed an underwriter within the
meaning of Section 2 of the Securities Act, if any, which facilitates the
disposition of Registrable Securities, and each of their respective officers and
directors and each person who controls such Electing Holder, underwriter,
selling agent or other securities professional within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act (each such person being
sometimes referred to as an "Indemnified Person") against any losses, claims,
damages or liabilities, joint or several, to which such Indemnified Person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in any Shelf Registration Statement under which such Registrable
Securities are to be registered under the Securities Act, or any Prospectus
contained therein or furnished by the Company to any Indemnified Person, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Company hereby agrees to reimburse such Indemnified Person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such action or claim as such expenses are incurred; PROVIDED,
HOWEVER, that the Company shall not be liable to any such Indemnified Person in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such Shelf Registration Statement or
Prospectus, or amendment or supplement, in reliance upon and in conformity with
written information furnished to the Company by such Indemnified Person
expressly for use therein.
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<PAGE>
(b) INDEMNIFICATION BY THE HOLDERS AND ANY AGENTS AND UNDERWRITERS.
Each Electing Holder agrees, as a consequence of the inclusion of any of such
holder's Registrable Securities in such Shelf Registration Statement, and each
underwriter, selling agent or other securities professional, if any, which
facilitates the disposition of Registrable Securities shall agree, as a
consequence of facilitating such disposition of Registrable Securities,
severally and not jointly, to (i) indemnify and hold harmless the Company, its
directors, officers who sign any Shelf Registration Statement and each person,
if any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any losses, claims,
damages or liabilities to which the Company or such other persons may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in such Shelf Registration Statement or Prospectus, or any amendment
or supplement, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such holder,
underwriter, selling agent or other securities professional expressly for use
therein, and (ii) reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or defending
any such action or claim as such expenses are incurred.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party under this Section 5, notify such
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under this Section 5. In
case any such action shall be brought against any indemnified party and it shall
notify an indemnifying party of the commencement thereof, such indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
indemnifying party shall not be liable to such indemnified party under this
Section 5 for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any indemnified party. No
indemnifying party shall be required to indemnify an indemnified party for any
amount paid or payable by such indemnified party in the settlement of any
action, proceeding or investigation without the written consent of such
indemnifying party, which consent shall not be unreasonably withheld.
(d) CONTRIBUTION. If the indemnification provided for in this Section 5
is unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
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<PAGE>
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and the indemnified party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 5(d) were determined by
pro rata allocation (even if the Electing Holders or any underwriters, selling
agents or other securities professionals or all of them were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this Section 5(d).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Electing Holders and any underwriters,
selling agents or other securities professionals in this Section 5(d) to
contribute shall be several in proportion to the percentage of principal amount
of Registrable Securities registered or underwritten, as the case may be, by
them and not joint.
(e) Notwithstanding any other provision of this Section 5, in no event
will any (i) Electing Holder be required to undertake liability to any person
under this Section 5 for any amounts in excess of the dollar amount of the
proceeds to be received by such holder from the sale of such holder's
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) pursuant to any Shelf Registration Statement under which
such Registrable Securities are to be registered under the Securities Act and
(ii) underwriter, selling agent or other securities professional be required to
undertake liability to any person hereunder for any amounts in excess of the
discount, commission or other compensation payable to such underwriter, selling
agent or other securities professional with respect to the Registrable
Securities underwritten by it and distributed to the public.
(f) The obligations of the Company under this Section 5 shall be in
addition to any liability which the Company may otherwise have to any
Indemnified Person and the obligations of any Indemnified Person under this
Section 5 shall be in addition to any liability which such Indemnified Person
may otherwise have to the Company. The remedies provided in this Section 5 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to an indemnified party at law or in equity.
6. UNDERWRITTEN OFFERING. Any holder of Registrable Securities who
desires to do so may sell Registrable Securities (in whole or in part) in an
underwritten offering; PROVIDED that (i) the Electing Holders of at least
33-1/3% in aggregate principal amount of the Registrable Securities then covered
by the Shelf Registration Statement shall request such an offering and (ii) at
least such aggregate principal amount of such Registrable Securities shall be
included in such offering; and PROVIDED FURTHER that the Company shall not be
obligated to cooperate with more than one underwritten offering during the
Effectiveness Period. Upon receipt of such a request, the Company
13
<PAGE>
shall provide all holders of Registrable Securities written notice of the
request, which notice shall inform such holders that they have the opportunity
to participate in the offering. In any such underwritten offering, the
investment banker or bankers and manager or managers that will administer the
offering will be selected by, and the underwriting arrangements with respect
thereto (including the size of the offering) will be approved by, the holders of
a majority of the Registrable Securities to be included in such offering;
PROVIDED, HOWEVER, that such investment bankers and managers and underwriting
arrangements must be reasonably satisfactory to the Company. No holder may
participate in any underwritten offering contemplated hereby unless (a) such
holder agrees to sell such holder's Registrable Securities to be included in the
underwritten offering in accordance with any approved underwriting arrangements,
(b) such holder completes and executes all reasonable questionnaires, powers of
attorney, indemnities, underwriting agreements, lock-up letters and other
documents required under the terms of such approved underwriting arrangements,
and (c) if such holder is not then an Electing Holder, such holder returns a
completed and signed Notice and Questionnaire to the Company in accordance with
Section 3(a)(2) hereof within a reasonable amount of time before such
underwritten offering. The holders participating in any underwritten offering
shall be responsible for any underwriting discounts and commissions and fees
and, subject to Section 4 hereof, expenses of their own counsel. The Company
shall pay all expenses customarily borne by issuers, including but not limited
to filing fees, the fees and disbursements of its counsel and independent public
accountants and any printing expenses incurred in connection with such
underwritten offering. Notwithstanding the foregoing or the provisions of
Section 3(n) hereof, upon receipt of a request from the Managing Underwriter or
a representative of holders of a majority of the Registrable Securities to be
included in an underwritten offering to prepare and file an amendment or
supplement to the Shelf Registration Statement and Prospectus in connection with
an underwritten offering, the Company may delay the filing of any such amendment
or supplement for up to 90 days if the Board of Directors of the Company shall
have determined in good faith that the Company has a bona fide business reason
for such delay.
7. LIQUIDATED DAMAGES. Notwithstanding any postponement permitted by
Section 2(a), if (I) on or prior to the 90th day following the date of the First
Time of Delivery (as defined in the Purchase Agreement), a Shelf Registration
Statement has not been filed with the Commission or (ii) on or prior to the
180th day following the date of the First Time of Delivery (as defined in the
Purchase Agreement), such Shelf Registration Statement is not declared effective
by the Commission (each, a "Registration Default"), the Company shall be
required to pay liquidated damages ("Liquidated Damages"), from and including
the day following such Registration Default until such Shelf Registration
Statement is either so filed or so filed and subsequently declared effective, as
applicable. Such Liquidated Damages will accrue at a rate per annum equal to an
additional one-quarter of one percent (0.25%) of the principal amount of
Restricted Securities, to and including the 90th day following such Registration
Default and one-half of one percent (0.5%) thereof from and after the 91st day
following such Registration Default. In the event of the Shelf Registration
Statement ceases to be effective (or the Holders of Registrable Securities are
otherwise prevented or restricted by the Company from effecting sales pursuant
thereto) during the Effectiveness Period (an "Effective Failure") for more than
45 days, whether or not consecutive, in any 90 day period or the 90th day of the
applicable twelve-month period, then the Company shall pay Liquidated Damages in
the amount of one-half of one percent (0.5%) per annum from the 46th day or the
91st day, as the case may be, that such Shelf Registration Statement ceases to
be effective (or the Holders of Registrable Securities are otherwise prevented
or restricted by the Company from effecting sales pursuant thereto) until such
time as the Effective Failure is cured. For the purposes of determining an
Effective Failure, days on which the Company has been obligated to pay
Liquidated Damages in accordance with the foregoing in respect of a prior
Effective Failure within the applicable 90 day or twelve-month period, as the
case may be, shall not be included. In the
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<PAGE>
event the Company fails to file a post-effective amendment to the Shelf
Registration Statement, or the post-effective amendment is not declared
effective, within the periods required by Section 3(a)(ii), the Company shall
pay Liquidated Damages at a rate per annum equal to an additional one-half of
one percent (0.5%) from and including the date of such Registration Default
until such time as such Registration Default is cured. Any amounts to be paid as
Liquidated Damages pursuant to this Section 7 shall be paid semi-annually in
arrears, with the first semi-annual payment due on the first Interest Payment
Date (as defined in the Indenture), as applicable, following the date of such
Registration Default. Such Liquidated Damages will accrue (1) in respect of the
Securities at the rates set forth in this Section 7, as applicable, on the
principal amount of the Securities and (2) in respect of the Common Stock issued
upon conversion of the Securities, at the rates set forth in this Section 7, as
applicable, applied to the Conversion Price (as defined in the Indenture) at
that time. Except as provided in Section 8(j) hereof, the Liquidated Damages as
set forth in this Section 7 shall be the exclusive monetary remedy available to
the Holders of Registrable Securities for such Registration Default or Effective
Failure. In no event shall the Company be required to pay Liquidated Damages in
excess of the applicable maximum amount of one-half of one percent (0.5%) set
forth above, regardless of whether one or multiple Registration Defaults exist.
8. MISCELLANEOUS.
(a) OTHER REGISTRATION RIGHTS. The Company may grant registration
rights that would permit any Person that is a third party the right to
piggy-back on any Shelf Registration Statement, PROVIDED that if the Managing
Underwriter of any underwritten offering conducted pursuant to Section 6 hereof
notifies the Company and the Electing Holders that the total amount of
securities which the Electing Holders and the holders of such piggy-back rights
intend to include in any Shelf Registration Statement is so large as to
materially threaten the success of such offering (including the price at which
such securities can be sold), then the amount, number or kind of securities to
be offered for the account of holders of such piggy-back rights will be reduced
to the extent necessary to reduce the total amount of securities to be included
in such offering to the amount, number and kind recommended by the Managing
Underwriter prior to any reduction in the amount of Registrable Securities to be
included in such Shelf Registration Statement.
(b) AMENDMENTS AND WAIVERS. This Agreement, including this Section
8(b), may be amended, and waivers or consents to departures from the provisions
hereof may be given, only by a written instrument duly executed by the Company
and the holders of a majority in aggregate principal amount of Registrable
Securities then outstanding. Each holder of Registrable Securities outstanding
at the time of any such amendment, waiver or consent or thereafter shall be
bound by any amendment, waiver or consent effected pursuant to this Section
8(b), whether or not any notice, writing or marking indicating such amendment,
waiver or consent appears on the Registrable Securities or is delivered to such
holder.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be given as provided in the Indenture.
(d) PARTIES IN INTEREST. The parties to this Agreement intend that all
holders of Registrable Securities shall be entitled to receive the benefits of
this Agreement and that any Electing Holder shall be bound by the terms and
provisions of this Agreement by reason of such election with respect to the
Registrable Securities which are included in a Shelf Registration Statement. All
the terms and provisions of this Agreement shall be binding upon, shall inure to
the benefit of and shall be enforceable by the respective successors and assigns
of the parties hereto and any holder from time to time of the Registrable
Securities to the aforesaid extent. In the event
15
<PAGE>
that any transferee of any holder of Registrable Securities shall acquire
Registrable Securities, in any manner, whether by gift, bequest, purchase,
operation of law or otherwise, such transferee shall, without any further
writing or action of any kind, be entitled to receive the benefits of and, if an
Electing Holder, be conclusively deemed to have agreed to be bound by and to
perform all of the terms and provisions of this Agreement to the aforesaid
extent.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(G) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
(h) SEVERABILITY. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
hereto shall be enforceable to the fullest extent permitted by law.
(i) SURVIVAL. The respective indemnities, agreements, representations,
warranties and other provisions set forth in this Agreement or made pursuant
hereto shall remain in full force and effect, regardless of any investigation
(or any statement as to the results thereof) made by or on behalf of any
Electing Holder, any director, officer or partner of such holder, any agent or
underwriter, any director, officer or partner of such agent or underwriter, or
any controlling person of any of the foregoing, and shall survive the transfer
and registration of the Registrable Securities of such holder.
(j) SPECIFIC PERFORMANCE. The parties hereto acknowledge that there
would be no adequate remedy at law if the Company fails to perform any of its
obligations hereunder and that the Purchasers and the Holders from time to time
may be irreparably harmed by any such failure, and accordingly agree that the
Purchasers and such Holders, in addition to any other remedy to which they may
be entitled at law or in equity and without limiting the remedies available to
the Electing Holders under Section 7 hereof, shall be entitled to compel
specific performance of the obligations of the Company under this Registration
Rights Agreement in accordance with the terms and conditions of this
Registration Rights Agreement, in any court of the United States or any State
thereof having jurisdiction.
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Please confirm that the foregoing correctly sets forth the agreement
between the Company and you.
Very truly yours,
Millennium Pharmaceuticals, Inc.
By: /s/ JOHN B. DOUGLAS III
Name: John B. Douglas III
Title: General Counsel
Accepted as of the date hereof:
Goldman, Sachs & Co.
ING Barings LLC
FleetBoston Robertson Stephens Inc.
Credit Suisse First Boston
By: /s/ GOLDMAN SACHS & CO.
-----------------------
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
17
<PAGE>
EXHIBIT A
MILLENNIUM PHARMACEUTICALS, INC.
INSTRUCTION TO DTC PARTICIPANTS
(DATE OF MAILING)
URGENT - IMMEDIATE ATTENTION REQUESTED
DEADLINE FOR RESPONSE: [DATE]
The Depository Trust Company ("DTC") has identified you as a
DTC Participant through which beneficial interests in the Millennium
Pharmaceuticals, Inc. (the "Company") 5.50% Convertible Subordinated Notes due
January 15, 2007 (the "Securities") are held.
The Company is in the process of registering the Securities
under the Securities Act of 1933 for resale by the beneficial owners thereof. In
order to have their Securities included in the registration statement,
beneficial owners must complete and return the enclosed Notice of Registration
Statement and Selling Securityholder Questionnaire.
IT IS IMPORTANT THAT BENEFICIAL OWNERS OF THE SECURITIES
RECEIVE A COPY OF THE ENCLOSED MATERIALS AS SOON AS POSSIBLE as their rights to
have the Securities included in the registration statement depend upon their
returning the Notice and Questionnaire by [DEADLINE FOR RESPONSE]. Please
forward a copy of the enclosed documents to each beneficial owner that holds
interests in the Securities through you. If you require more copies of the
enclosed materials or have any questions pertaining to this matter, please
contact: Millennium Pharmaceuticals, Inc., 75 Sidney Street, Cambridge, MA 02139
[TELEPHONE NUMBER OF AND CONTACT NAME AT MILLENNIUM]
18
<PAGE>
MILLENNIUM PHARMACEUTICALS, INC.
NOTICE OF REGISTRATION STATEMENT
AND
SELLING SECURITYHOLDER QUESTIONNAIRE
(Date)
Reference is hereby made to the Registration Rights Agreement
(the "Registration Rights Agreement") between Millennium Pharmaceuticals, Inc.
(the "Company") and the Purchasers named therein. Pursuant to the Registration
Rights Agreement, the Company has filed or intends shortly to file with the
United States Securities and Exchange Commission (the "Commission") a
registration statement on Form S-3 (the "Shelf Registration Statement") for the
registration and resale under Rule 415 of the Securities Act of 1933, as amended
(the "Securities Act"), of the Company's 5.50% Convertible Subordinated Notes
due January 15, 2007 (the "Securities") and the shares of common stock, par
value $.001 per share (the "Common Stock"), issuable upon conversion thereof. A
copy of the Registration Rights Agreement is attached hereto. All capitalized
terms not otherwise defined herein shall have the meanings ascribed thereto in
the Registration Rights Agreement.
Each beneficial owner of Registrable Securities (as defined
below) is entitled to have the Registrable Securities beneficially owned by it
included in the Shelf Registration Statement. In order to have Registrable
Securities included in the Shelf Registration Statement, this Notice of
Registration Statement and Selling Securityholder Questionnaire ("Notice and
Questionnaire") must be completed, executed and delivered to the Company's
counsel at the address set forth herein for receipt ON OR BEFORE [DEADLINE FOR
RESPONSE]. Beneficial owners of Registrable Securities who do not complete,
execute and return this Notice and Questionnaire by such date (i) will not be
named as selling securityholders in the Shelf Registration Statement and (ii)
may not use the Prospectus forming a part thereof for resales of Registrable
Securities.
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and related Prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and related Prospectus.
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The term "REGISTRABLE SECURITIES" is defined in the
Registration Rights Agreement to mean all or any portion of the Securities
issued from time to time under the Indenture in registered form and the shares
of Common Stock issuable upon conversion of such Securities, PROVIDED, HOWEVER,
that a security ceases to be a Registrable Security when it is no longer a
Restricted Security.
The term "RESTRICTED SECURITY" is defined in the Registration
Rights Agreement to mean any Security or share of Common Stock issuable upon
conversion thereof except any such Security or share of Common Stock which (i)
has been effectively registered under the Securities Act and sold in a manner
contemplated by the Shelf Registration Statement, (ii) has been transferred in
compliance with Rule 144 under the Securities Act (or any successor provision
thereto) or is transferable pursuant to paragraph (k) of such Rule 144 (or any
successor provision thereto), (iii) has been sold in compliance with Regulation
S under the Securities Act (or any successor thereto) and does not constitute
the unsold allotment of a distributor within the meaning of Regulation S under
the Securities Act or (iv) has otherwise been transferred and a new Security or
share of Common Stock not subject to transfer restrictions under the Securities
Act has been delivered by or on behalf of the Company in accordance with Article
Three of the Indenture.
ELECTION
The undersigned holder (the "Selling Securityholder") of
Registrable Securities hereby elects to include in the Shelf Registration
Statement the Registrable Securities beneficially owned by it and listed below
in Item (3). The undersigned, by signing and returning this Notice and
Questionnaire, agrees to be bound with respect to such Registrable Securities by
the terms and conditions of this Notice and Questionnaire and the Registration
Rights Agreement, including, without limitation, Section 5 of the Registration
Rights Agreement, as if the undersigned Selling Securityholder were an original
party thereto.
Upon any sale of Registrable Securities pursuant to the Shelf
Registration Statement, the Selling Securityholder will be required to deliver
to the Company and Trustee the Notice of Transfer set forth in Appendix A to the
Prospectus. This Notice of Transfer is set forth as Exhibit A to the Prospectus
and as Exhibit B to the Registration Rights Agreement.
The Selling Securityholder hereby provides the following
information to the Company and represents and warrants that such information is
accurate and complete:
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QUESTIONNAIRE
(1) (a) Full Legal Name of Selling Securityholder:
-----------------------------------------------------
(b) Full Legal Name of Registered Holder (if not the same
as in (a) above) of Registrable Securities Listed in
Item (3) below:
-----------------------------------------------------
(c) Full Legal Name of DTC Participant (if applicable and
if not the same as (b) above) Through Which
Registrable Securities Listed in Item (3) below are
Held:
-----------------------------------------------------
(2) Address for Notices to Selling Securityholder:
--------------------------
--------------------------
--------------------------
Telephone: --------------------------
Fax: --------------------------
Contact Person: --------------------------
(3) Beneficial Ownership of Securities:
EXCEPT AS SET FORTH BELOW IN THIS ITEM (3), THE UNDERSIGNED
DOES NOT BENEFICIALLY OWN ANY SECURITIES OR SHARES OF COMMON
STOCK ISSUED UPON CONVERSION OF ANY SECURITIES.
(a) Principal amount of Registrable Securities (as defined in the
Registration Rights Agreement) beneficially owned:____________
CUSIP No(s). of such Registrable Securities:__________________
Number of shares of Common Stock (if any) issued upon
conversion of such Registrable Securities:____________________
(b) Principal amount of Securities other than Registrable
Securities beneficially owned:________________________________
CUSIP No(s). of such other Securities:________________________
Number of shares of Common Stock (if any) issued upon
conversion of such other Securities:__________________________
(c) Principal amount of Registrable Securities which the
undersigned wishes to be included in the Shelf Registration
Statement:____________________________________________________
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CUSIP No(s). of such Registrable Securities to be included in
the Shelf Registration Statement:_____________________________
Number of shares of Common Stock (if any) issued upon
conversion of Registrable Securities which are to be included
in the Shelf Registration Statement:__________________________
(4) Beneficial Ownership of Other Securities of the Company:
EXCEPT AS SET FORTH BELOW IN THIS ITEM (4), THE UNDERSIGNED
SELLING SECURITYHOLDER IS NOT THE BENEFICIAL OR REGISTERED
OWNER OF ANY SHARES OF COMMON STOCK OR ANY OTHER SECURITIES OF
THE COMPANY, OTHER THAN THE SECURITIES AND SHARES OF COMMON
STOCK LISTED ABOVE IN ITEM (3).
State any exceptions here:
--------------------------------------------------------------
(5) Relationships with the Company:
EXCEPT AS SET FORTH BELOW, NEITHER THE SELLING SECURITYHOLDER
NOR ANY OF ITS AFFILIATES, OFFICERS, DIRECTORS OR PRINCIPAL
EQUITY HOLDERS (5% OR MORE) HAS HELD ANY POSITION OR OFFICE OR
HAS HAD ANY OTHER MATERIAL RELATIONSHIP WITH THE COMPANY (OR
ITS PREDECESSORS OR AFFILIATES) DURING THE PAST THREE YEARS.
State any exceptions here:
(6) Plan of Distribution:
EXCEPT AS SET FORTH BELOW, THE UNDERSIGNED SELLING
SECURITYHOLDER INTENDS TO DISTRIBUTE THE REGISTRABLE
SECURITIES LISTED ABOVE IN ITEM (3) ONLY AS FOLLOWS (IF AT
ALL): SUCH REGISTRABLE SECURITIES MAY BE SOLD FROM TIME TO
TIME DIRECTLY BY THE UNDERSIGNED SELLING SECURITYHOLDER OR,
ALTERNATIVELY, THROUGH UNDERWRITERS, BROKER-DEALERS OR AGENTS.
SUCH REGISTRABLE SECURITIES MAY BE SOLD IN ONE OR MORE
TRANSACTIONS AT FIXED PRICES, AT PREVAILING MARKET PRICES AT
THE TIME OF SALE, AT VARYING PRICES DETERMINED AT THE TIME OF
SALE, OR AT NEGOTIATED PRICES. SUCH SALES MAY BE EFFECTED IN
TRANSACTIONS (WHICH MAY INVOLVE CROSSES OR BLOCK TRANSACTIONS)
(I) ON ANY NATIONAL SECURITIES EXCHANGE OR QUOTATION SERVICE
ON WHICH THE REGISTERED SECURITIES MAY BE LISTED OR QUOTED AT
THE TIME OF SALE, (II) IN THE OVER-THE-COUNTER MARKET, (III)
IN TRANSACTIONS OTHERWISE THAN ON SUCH EXCHANGES OR SERVICES
OR IN THE OVER-THE-COUNTER MARKET, OR (IV) THROUGH THE WRITING
OF OPTIONS. IN CONNECTION WITH SALES OF THE REGISTRABLE
SECURITIES OR OTHERWISE, THE SELLING SECURITYHOLDER MAY ENTER
INTO HEDGING TRANSACTIONS WITH BROKER-DEALERS, WHICH MAY IN
TURN ENGAGE IN SHORT SALES OF THE REGISTRABLE SECURITIES IN
THE COURSE OF HEDGING THE POSITIONS THEY ASSUME. THE SELLING
SECURITYHOLDER MAY ALSO SELL REGISTRABLE SECURITIES SHORT AND
DELIVER
22
<PAGE>
REGISTRABLE SECURITIES TO CLOSE OUT SUCH SHORT POSITIONS, OR
LOAN OR PLEDGE REGISTRABLE SECURITIES TO BROKER-DEALERS THAT
IN TURN MAY SELL SUCH SECURITIES.
State any exceptions here:
Note: In no event may such method(s) of distribution take the
form of an underwritten offering of the Registrable Securities without the prior
agreement of the Company.
By signing below, the Selling Securityholder acknowledges that
it understands its obligation to comply, and agrees that it will comply, with
the provisions of the Exchange Act and the rules and regulations thereunder,
particularly Regulation M.
In the event that the Selling Securityholder transfers all or
any portion of the Registrable Securities listed in Item (3) above after the
date on which such information is provided to the Company, the Selling
Securityholder agrees to notify the transferee(s) at the time of the transfer of
its rights and obligations under this Notice and Questionnaire and the
Registration Rights Agreement.
By signing below, the Selling Securityholder consents to the
disclosure of the information contained herein in its answers to Items (1)
through (6) above and the inclusion of such information in the Shelf
Registration Statement and related Prospectus. The Selling Securityholder
understands that such information will be relied upon by the Company in
connection with the preparation of the Shelf Registration Statement and related
Prospectus.
In accordance with the Selling Securityholder's obligation
under Section 3(a) of the Registration Rights Agreement to provide such
information as may be required by law for inclusion in the Shelf Registration
Statement, the Selling Securityholder agrees to promptly notify the Company of
any inaccuracies or changes in the information provided herein which may occur
subsequent to the date hereof at any time while the Shelf Registration Statement
remains in effect.
23
<PAGE>
All notices hereunder and pursuant to the Registration Rights Agreement shall be
made in writing, by hand-delivery, first-class mail, or air courier guaranteeing
overnight delivery as follows:
(i) To the Company:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
(ii) With a copy to:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Once this Notice and Questionnaire is executed by the Selling
Securityholder and received by the Company's counsel, the terms of this Notice
and Questionnaire, and the representations and warranties contained herein,
shall be binding on, shall inure to the benefit of and shall be enforceable by
the respective successors, heirs, personal representatives, and assigns of the
Company and the Selling Securityholder (with respect to the Registrable
Securities beneficially owned by such Selling Securityholder and listed in Item
(3) above. This Agreement shall be governed in all respects by the laws of the
State of New York.
24
<PAGE>
IN WITNESS WHEREOF, the undersigned, by authority duly given,
has caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.
Dated:
-----------------------------
--------------------------------------------------------------
Selling Securityholder
(Print/type full legal name of beneficial owner of Registrable
Securities)
By:
----------------------------------------------------------
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:
---------------------------
---------------------------
---------------------------
---------------------------
---------------------------
25
<PAGE>
EXHIBIT B
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
State Street Bank and Trust Company
Millennium Pharmaceuticals, Inc.
c/o State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, Massachusetts 02111
Attention: [CORPORATE TRUST SERVICES]
Re: Millennium Pharmaceuticals, Inc. (the "Company")
5.50% Convertible Subordinated Notes due
January 15, 2007 (the "Notes")
Dear Sirs:
Please be advised that _____________________ has transferred
$___________ aggregate principal amount of the above-referenced Notes pursuant
to an effective Registration Statement on Form [___] (File No. 333-____) filed
by the Company.
We hereby certify that the prospectus delivery requirements,
if any, of the Securities Act of 1933, as amended, have been satisfied and that
the above-named beneficial owner of the Notes is named as a "Selling Holder" in
the Prospectus dated [DATE], or in supplements thereto, and that the aggregate
principal amount of the Notes transferred are the Notes listed in such
Prospectus opposite such owner's name.
Dated:
Very truly yours,
------------------------
(Name)
By:________________________
(Authorized Signature)
26
<PAGE>
EXHIBIT 10.34
The Company has entered into an employment offer letter on
substantially the terms set forth in the employment offer letter attached hereto
with each of the below-named executive officers of the Company or its
subsidiary, Millennium Predictive Medicine, Inc., on the dates set forth below:
NAME OF EXECUTIVE OFFICER DATE OF EXECUTION
------------------------- -----------------
Robert I. Tepper, M.D. May 5, 1994
Frank Lee, Ph.D. June 6, 1994
Linda K. Pine September 27, 1994
Kenneth J. Conway June 24, 1997
Michael R. Pavia, Ph.D. July 22, 1997
John B. Douglas III April 28, 1999
<PAGE>
DATE
NAME
ADDRESS
Dear
On behalf of Millennium Pharmaceuticals, Inc. (the "Company"), I am pleased to
offer you the position of XXXX reporting to XXXX.
1. JOB RESPONSIBILITIES: Your job responsibilities in this position will
include the following:
Your short-term goals will include:
Your long-term goals will include:
/ / Actively participate in recruiting an outstanding scientific and
management team for Millennium.
/ / Creating and supporting an environment in the Company that is highly
motivating, creative, goal-oriented and a place where all business
people and scientists want to work.
2. EFFECTIVE DATE: The effective date of your full-time employment with the
Company is to be determined upon your formal acceptance of this offer.
3. SALARY: Your base salary will initially be XXXX per annum. Your salary will
be paid periodically in accordance with the Company's payroll procedures.
In addition, in accordance with the Company's compensation practices, you
will receive, approximately annually, a salary review which will be based
on your performance, the Company's performance and such other factors as
may be determined by the Company's Board of Directors.
4. BENEFITS: You and your dependents will be eligible for the Company's
standard medical, dental, life insurance, disability benefits and Section
125 cafeteria plan. After the standard waiting periods, you will also be
eligible to participate in the Company's 401(k) and Employee Stock Purchase
plans. You will accrue vacation at
<PAGE>
the rate of 1.25 days per month of full-time employment. Standard paid
holidays will be observed. Transportation benefits, including a choice of
MBTA pass up to $60 or contributory off-site parking, are also available.
The Company, however, reserves the right to modify its employee benefit
programs from time-to-time.
5. EQUITY PARTICIPATION, VESTING OF STOCK: Subject to approval by the
Company's Board of Directors, you will be granted an incentive stock option
exercisable for XXXX shares of the Company's Common Stock at an exercise
price equal to the current fair market value of the Company's Common Stock
as determined by the Company's Board of Directors. This option will vest as
to one fourth (1/4) of the shares on the first anniversary of your
commencement of full-time employment with the Company and as to one
forty-eighth (1/48) of the shares at the end of each full month thereafter
until all shares are vested, provided that you remain employed by the
Company. In the event of your death or total and permanent disability (as
defined in the Internal Revenue Code of 1986, as amended) during the first
year of your employment, the initial one-fourth (1/4) of your shares that
would have vested at the end of your first year of employment shall vest.
In the event of termination of your employment for any reason (except as
set forth in the preceding sentence), vesting shall cease. Please refer to
the Company's Incentive Stock Plan for complete details.
In addition, subject to the approval of the respective Boards of Directors
of each Millennium subsidiary, you will be granted stock options of 3,000
shares in each subsidiary under the terms of the Millennium Intercompany
Stock Program. These options will each vest as to one forty-eighth (1/48)
of the shares monthly.
6. EMPLOYMENT PERIOD: Your employment with the Company will be at-will,
meaning that you will not be obligated to remain employed by the Company
for any specified period of time; likewise, the Company will not be
obligated to continue your employment for any specific period and may
terminate your employment at any time, with or without cause.
7. SEVERANCE: In the event that your employment is terminated by the Company
other than for Justifiable Cause (as defined below, the Company will pay
you a severance payment (the "Severance Payment") equal to 12 months'
salary (no stock vesting). The Severance Payment will be payable
periodically in accordance with the Company's payroll procedures as then in
effect and the Company's obligation to make the Severance Payment will
cease in the event that you accept other employment. In the event your
employment is terminated by the Company for Justifiable Cause (as defined
below) or voluntarily by you, you will not be entitled to any Severance
Payment.
For purposes hereof, the term "Justifiable Cause" shall mean the occurrence
of any of the following events: (I) your conviction of, or pleas of nolo
contendere with respect to a felony or a crime involving moral turpitude,
(ii) your commission of an act of personal dishonesty or breach of
fiduciary duty involving personal profit in connection with the Company,
(iii) your commission of an act, or failure to act, which
<PAGE>
the Board of Directors of the Company shall reasonably have found to have
involved willful misconduct or gross negligence on your part, in the
conduct of your duties hereunder, (iv) habitual absenteeism, alcoholism or
drug dependence on your part which interferes with the performance of your
duties hereunder, (v) your willful and material breach or refusal to
perform your services as provided herein, (vi) any other material breach by
you of the provisions hereof or (vii) your willful and material failure or
refusal to carry out a direct request of the Board of Directors or Chief
Executive Officer. In the event that the Company terminates your employment
for Justifiable Cause, the Company will provide you with a statement of the
basis for such termination and an opportunity to respond thereto.
8. EMPLOYMENT ELIGIBILITY VERIFICATION: Please note that all persons employed
in the United States, are required to complete an Employment Eligibility
Verification Form on the first day of employment and submit an original
document or documents that establish identity and employment eligibility
within three business days of employment. For your convenience, we are
enclosing Form I-9 for your review. You will need to complete Section 1 and
present original document(s) of your choice as listed on the reverse side
of the form once you begin work.
9. PROPRIETARY INFORMATION, NO CONFLICTS: You agree to execute the Company's
standard form of Invention, Non-Disclosure and Non-Competition Agreement
and to be bound by all of the provisions thereof. You hereby represent that
you are not presently bound by any employment agreement, confidential or
proprietary information agreement or similar agreement with any current or
previous employer that would impose any restriction on your acceptance of
this offer or that would interfere with your ability to fulfill the
responsibilities of your position with the Company.
10. MEDICAL SURVEILLANCE: As part of Millennium's medical surveillance program,
employees are required to have an initial physical, provided at Mt. Auburn
Hospital. All laboratory employees working with hazardous chemical,
infectious agents, radio labeled materials or animals shall have access to
medical attention, including initial and periodic medical exams without
cost to the employee or loss of pay. An employee may refuse an exam if
he/she signs a release. If you want to decline from having the initial
physical, please notify Human Resources on your first day at New Employee
Orientation. Your initial surveillance examination will be scheduled to
take place during the first week of your employment.
11. NEW EMPLOYEE ORIENTATION: On the first Monday of your employment with the
Company, you should arrive at our 75 Sidney Street location for New
Employee Orientation.
12. SIGN-ON BONUS: The Company will pay you a bonus of XXXX. Payment will be
made on the date of the first paycheck following commencement of your full
time employment. Should you terminate for any reason within 12 months of
your starting date after having received you bonus, the Company reserves
the right to seek repayment of all or a pro-rata portion of your bonus.
<PAGE>
13. RELOCATION EXPENSES: Upon your acceptance of this offer, you are eligible
for reimbursement of the following expenses associated with your
relocation:
XXXX
XXXX, all of us here at Millennium are very enthusiastic about your commitment
to joining the Company and have the highest expectation of your future
contributions.
Please indicate your acceptance of the foregoing by signing the enclosed
copy of this letter and returning it to the Company no later than XXXX.
After that date, the offer will lapse.
Very truly yours,
MILLENNIUM PHARMACEUTICALS, INC.
Linda K. Pine
Sr. Vice President, Human Resources
The foregoing is signed and accepted as of the date first above written by:
- -------------------- ----------------
XXXXXX Date
<PAGE>
Exhibit 10.35
EXECUTIVE EMPLOYMENT AGREEMENT
THIS EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement"), made this 14th
day of October, 1999, is entered into by Millennium Pharmaceuticals, Inc., a
Delaware corporation with its principal place of business at 75 Sidney Street,
Cambridge, MA 02139 (the "Company"), and Christopher K. Mirabelli, residing at 6
Pine Street, Dover, MA 02038 (the "Executive").
The Company desires to employ the Executive, and the Executive desires
to be employed by the Company. In consideration of the mutual covenants and
promises contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
the parties agree as follows:
1. TERM OF EMPLOYMENT. The Company hereby agrees to employ the
Executive, and the Executive hereby accepts employment with the Company, upon
the terms set forth in this Agreement, for the period commencing on the Closing
Date (as defined in Agreement and Plan of Merger (the "Merger Agreement") among
the Company, ANM, Inc., and Leukosite, Inc., a Delaware corporation) and ending
on the date that is three years after the Closing Date, unless sooner terminated
in accordance with the provisions of Section 4 (such period, the "Employment
Period"). Notwithstanding anything in this Agreement to the contrary, in the
event of the termination of the Merger Agreement for any reason, this Agreement
shall simultaneously terminate and be of no further force or effect, and neither
party shall have any liability to the other.
2. TITLE; CAPACITY. The Executive shall serve in such position as the
Company or its Board of Directors (the "Board") and the Executive may determine
from time to time. The Executive shall be based at the Company's headquarters in
Cambridge, Massachusetts, or such place or places in the greater Boston,
Massachusetts area as the Board shall determine. The Executive shall be subject
to the supervision of, and shall have such authority as is delegated to the
Executive by, the Board or the Chief Executive Officer of the Company.
The Executive hereby accepts such employment and agrees to undertake
such duties and responsibilities as the Board or its designee shall from time to
time reasonably assign to the Executive. The Executive agrees to devote his
entire business time, attention and energies to the business and interests of
the Company during the Employment Period. The Executive agrees to abide by the
rules, regulations, instructions, personnel practices and policies of the
Company and any changes therein which may be adopted from time to time by the
Company.
<PAGE>
3. COMPENSATION AND BENEFITS.
3.1 SALARY. The Company shall pay the Executive, in periodic
installments in accordance with the Company's customary payroll practices,
salary at the annual rate of $287,179 or such greater amount as the Board or any
compensation committee of the Board (the "Compensation Committee") may from time
to time determine. The Executive's salary will be reviewed by the Board or the
Compensation Committee on an annual basis.
3.2 BONUS. The Employee shall be eligible to participate in
such annual cash bonus programs as may be established from time to time for its
senior executives, on terms similar to those applicable to other senior
executives.
3.3 FRINGE BENEFITS. The Executive shall be entitled to
participate in all benefit programs, if any, that the Company establishes and
makes available to its employees or senior executives, to the extent that
Executive's position, tenure, salary, age, health and other qualifications make
him eligible to participate.
3.4 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the
Executive for all reasonable travel, entertainment and other expenses incurred
or paid by the Executive in connection with, or related to, the performance of
his duties, responsibilities or services under this Agreement, in accordance
with policies and procedures, and subject to limitations, adopted by the Company
from time to time.
3.5 WITHHOLDING. All salary, bonus and other compensation
payable to the Executive shall be subject to applicable withholding taxes.
3.6 CERTAIN COMPANY OPTIONS. Twenty-five percent of any
options to purchase Company common stock granted to the Executive by the Company
between the Closing Date and the first anniversary of the Closing Date shall
become exercisable on the first anniversary of the Closing Date if (i) the
Executive has completed at least one consecutive year of employment with the
Company after the Closing Date or (ii) the Executive has completed at least six
consecutive months of employment with the Company after the Closing Date and the
Executive has complied with his obligations under Section 5.1(b)(ii) and
Sections 6 and 7 during the six-month period commencing on the date of such
termination.
3.7 CERTAIN TAX GROSS-UP PAYMENTS.
(a) The Company shall, within 30 days after each date on which
the Executive becomes entitled to receive (whether or not then due) a Contingent
Compensation Payment, determine in good faith and deliver to the Executive its
calculations (the "Gross-Up Payment Calculations"), with reasonable detail
regarding the basis for its determinations, as to (i) which of the payments or
benefits due to the
2
<PAGE>
Executive (under this Agreement or otherwise) constitute
Contingent Compensation Payments, (ii) the amount, if any, of Excise Tax payable
by the Executive relating to such Contingent Compensation Payment and (iii) the
amount of the Gross-Up Payment (as defined below) due to the Executive with
respect to such Contingent Compensation Payment. The Executive shall have a
reasonable opportunity to review and discuss with the Company the Gross-Up
Payment Calculations, and in the event the Executive does not approve of such
calculations, the parties shall cooperate in good faith to reach agreement. If
such disagreement is not resolved within a 60-day period following the delivery
by the Company to the Executive of its Gross-Up Payment Calculations, such
dispute shall, at the request of either party, be settled exclusively and
expeditiously by the Company's independent auditors (which must be a "Big Five"
firm). Judgment may be entered on the independent auditor's determination in any
court having jurisdiction. On the later to occur of (A) 90 days after the due
date of each Contingent Compensation Payment to the Executive (or, if earlier,
the due date for payment of the Excise Tax relating to such Contingent
Compensation Payment), or (B) five days following the date the Company and the
Executive reach agreement (or the date of the arbitrator's determination) on the
amount of the Gross-Up Payment with respect to such Contingent Compensation
Payment, the Company shall pay to the Executive, in cash, the Gross-Up Payment
with respect to such Contingent Compensation Payment. Notwithstanding the
foregoing, as a condition to the obligation of the Company to pay any Gross-Up
Payments, the Executive shall be required to take such actions without
substantial incremental expense to the Executive which the Company may suggest
and as to which the Executive may agree (not to be unreasonably withheld) as
being appropriate to minimize or avoid any liability for Excise Taxes on any of
the Contingent Compensation Payments to be made to the Executive. Without
limiting the foregoing, the Company and the Executive shall discuss in good
faith the following actions by the Executive: (i) exercising during 1999 all
non-statutory stock options currently held by the Executive which will be vested
on or prior to December 31, 1999 (or such lesser number of options as is
determined by the Company to be necessary to eliminate any liability for the
Excise Tax on any such Contingent Compensation Payment; and (ii) using other
reasonable efforts to increase his 1999 taxable income so as to minimize or
avoid the application of the Excise Tax on the Contingent Compensation Payments,
including, at the request of the Company, requesting Leukosite, Inc. to
accelerate such additional number of unvested non-statutory options prior to
December 31, 1999 as the Company may request and exercising during 1999 any such
options so accelerated.
(b) For purposes of this Section 3.7, the following terms
shall have the following respective meanings:
(i) "Contingent Compensation Payment" shall mean any
payment to the Executive, regardless of whether payable under this Agreement,
which
3
<PAGE>
relative to Leukosite, Inc. is or may be a "parachute payment" within the
meaning of Section 280G(b)(2)(A) of the Code (Determined without reference to
the threshold of Section 280G(b)(2)(A)(ii) of the Code).
(ii) "Gross-Up Payment" shall mean an amount equal to
the sum of (i) the amount of the Excise Tax payable with respect to a Contingent
Compensation Payment and (ii) the amount necessary to pay all additional taxes
imposed on (or economically borne by) the Executive (including the Excise Taxes,
state and federal income and employment taxes and all applicable withholding
taxes) attributable to the receipt of such Gross-Up Payment. For purposes of the
preceding sentence, all taxes attributable to the receipt of the Gross-Up
Payment shall be computed assuming the application of the maximum tax rates
provided by law.
(iii) "Excise Tax" shall mean the excise tax payable
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code").
4. TERMINATION OF EMPLOYMENT PERIOD. The employment of the Executive by
the Company pursuant to this Agreement (but not any consulting services that the
Executive may be required to render pursuant to Section 5.1(b)(ii) hereof) shall
terminate upon the occurrence of any of the following:
4.1 At the election of the Company, for Cause (as defined
below), immediately upon written notice by the Company to the Executive (unless
such Cause is capable of being cured, in which case 15 days following the date
of such written notice if such Cause has not been cured by such time), which
notice shall identify the Cause upon which the termination is based.
Notwithstanding the foregoing, the Company shall not terminate the Executive's
employment for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the entire Board of Directors at a meeting of the Board of Directors
called and held for such purpose (after reasonable notice to the Executive and
an opportunity for him, together with his counsel, to be heard before the Board
of Directors), finding that in the good faith opinion of the Board of Directors
the Executive was guilty of the conduct enumerated in any of clauses (i) through
(iii) below under the definition of Cause and specifying the particulars thereof
in detail. For the purposes of this Section 4.1, "Cause" shall mean (i) the
Executive has failed to perform his reasonably assigned duties for the Company
and has failed to remedy such failure within 10 days following written notice
from the Company to the Executive notifying him of such failure, (ii) the
Executive has engaged in dishonesty, gross negligence or willful misconduct in a
manner which is detrimental to the Company, or (iii) the conviction of the
Executive of, or the entry of a pleading of guilty
4
<PAGE>
or nolo contendere by the Executive to, any crime involving moral turpitude or
any felony;
4.2 Upon the death or disability of the Executive. As used in
this Agreement, the term "disability" shall mean the inability of the Executive,
due to a physical or mental disability, for a period of 90 days, whether or not
consecutive, during the Employment Period to perform the services contemplated
under this Agreement, with or without reasonable accommodation as that term is
defined under state or federal law. A determination of disability shall be made
by a physician satisfactory to both the Executive and the Company, PROVIDED THAT
if the Executive and the Company do not agree on a physician, the Executive and
the Company shall each select a physician and these two together shall select a
third physician, whose determination as to disability shall be binding on all
parties;
4.3 At the election of the Company, without Cause, following
30 days' prior written notice by the Company to the Executive; or
4.4 At the election of the Executive, following 30 days' prior
written notice by the Executive to the Company.
5. EFFECT OF TERMINATION.
5.1 PAYMENTS UPON TERMINATION.
(a) In the event the Executive's employment is terminated
pursuant to Section 4, the Company shall pay to the Executive the compensation
and benefits otherwise payable to him under Section 3 through the last day of
his actual employment by the Company.
(b) In the event the Executive's employment is terminated
during the Employment Period (i) by the Company, without Cause, (ii) by the
Executive after the Executive has completed at least six consecutive months of
employment with the Company after the Closing Date, (iii) by the Executive for
Good Reason (as defined below) prior to the completion by the Executive of at
least six consecutive months of employment with the Company after the Closing
Date, or (iv) as a result of the Executive's death or disability:
(i) the Company shall continue to pay to the
Executive his salary pursuant to Section 3.1 above as in effect on the date of
termination and continue to provide to the Executive the other benefits owed to
him under Section 3.3 (to the extent such benefits can be provided to
non-employees) until, in each such case, the date 18 months after the date of
termination. In addition, the Company shall pay to the Executive in a lump sum
upon the date of termination an amount equal to six months' salary pursuant to
Section 3.1 above; and
5
<PAGE>
(ii) as partial consideration for the Company's
agreements in Section 5.1(b)(i), the Executive shall, at the Company's
request, provide the Company with two days of consulting services per month
during the six-month period commencing on the date of such termination of
employment. The Executive shall perform such consulting services at such
reasonable times and places as shall be designated by the Company upon
reasonable prior notice to the Executive. The Company shall promptly reimburse
the Executive for all reasonable out-of-pocket expenses incurred by the
Executive in performing such consulting services. For purposes of this
Agreement, the term "Good Reason" shall mean any of the following:
(A) the assignment to the Executive of any duties
inconsistent with the Executive's status as a senior executive
officer of the Company;
(B) a reduction by the Company in the Executive's
annual base salary as in effect on the date hereof or as the
same may be increased from time to time;
(C) the Company's requiring the Executive to be based
anywhere other than the Boston Metropolitan Area;
(D) the failure by the Company, without the
Executive's consent, to pay to the Executive any portion of
the Executive's compensation within fourteen days of the date
such compensation is due; or
(E) any purported termination of the Executive's
employment which is not effected pursuant to, and in
accordance with, the provisions of Section 4 hereof.
5.2 NO DUTY TO MITIGATE DAMAGES. The Executive shall not be
required to mitigate the amount of any payment or benefit to which he may be
entitled pursuant to this Agreement following the termination of the Executive's
employment hereunder, whether by seeking other employment or otherwise, and the
amount of any such payment or benefit shall not be reduced, in whole or in part,
by the amount of any compensation or benefit earned by the Executive from any
endeavor (including other employment) following such termination.
6
<PAGE>
5.3 DEATH OR INCOMPETENCE. In the event that the Executive
shall die or shall become incompetent, any and all payments that the Company
shall be required to make to the Executive pursuant to this Agreement shall be
made to the executors, administrators, legal representatives or heirs, as the
case may be, of the Executive.
5.4 RESIGNATION OF BOARD SEAT. The Executive agrees to resign
as a member of the Board of Directors of the Company immediately upon, and
effective with, the termination or cessation of his employment by the Company
for any reason, and the Company shall have no obligation to make any payments to
the Executive under this Section 5 until the Executive shall have so resigned as
a member of the Board (and any payments otherwise due during the period the
Executive remains as a member of the Board of Directors shall be forfeited).
5.5 SURVIVAL. The provisions of Sections 5, 6, 7 and 9 shall
survive the termination of this Agreement.
6. NON-SOLICITATION.
6.1 RESTRICTED ACTIVITIES. While the Executive is employed by
the Company and for a period of two years after the termination or cessation of
such employment for any reason, the Executive will not directly or indirectly,
either alone or in association with others, (i) solicit, or permit any
organization directly or indirectly controlled by the Executive to solicit, any
Executive of the Company to leave the employ of the Company, or (ii) solicit for
employment, hire or engage as an independent contractor, or permit any
organization directly or indirectly controlled by the Executive to solicit for
employment, hire or engage as an independent contractor, any person who was
employed by the Company at any time during the term of the Employee's employment
with the Company or service as a consultant to the Company pursuant to Section
5.1(b)(ii); PROVIDED, that this clause (ii) shall not apply to any individual
whose employment with the Company has been terminated for a period of six months
or longer.
6.2 EXTENSION. If the Executive violates the provisions of
Section 6.1, the Executive shall continue to be bound by the restrictions set
forth in Section 6.1 until a period of two years has expired without any
violation of such provisions.
6.3 INTERPRETATION. If any restriction set forth in this
Section 6 is found by any court of competent jurisdiction to be unenforceable
because it extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it shall be interpreted to extend
only over the maximum period of time, range of activities or geographic area as
to which it may be enforceable. For purposes of this Section 6 and Section 7,
the Company shall include all subsidiaries and other affiliates of the Company.
7
<PAGE>
6.4 EQUITABLE REMEDIES. The restrictions contained in this
Section 6 are necessary for the protection of the business and goodwill of the
Company and are considered by the Executive to be reasonable for such purpose.
The Executive agrees that any breach of this Section 6 is likely to cause the
Company substantial and irrevocable damage and therefore, in the event of any
such breach, the Executive agrees that the Company, in addition to such other
remedies which may be available, shall be entitled to specific performance and
other injunctive relief.
7. PROPRIETARY INFORMATION AND DEVELOPMENTS.
7.1 PROPRIETARY INFORMATION.
(a) The Executive agrees that all information, whether or not
in writing, of a private, secret or confidential nature concerning the Company's
business, business relationships or financial affairs (collectively,
"Proprietary Information") is and shall be the exclusive property of the
Company. By way of illustration, but not limitation, Proprietary Information may
include inventions, products, processes, methods, techniques, formulas,
compositions, compounds, projects, developments, plans, research data, clinical
data, financial data, personnel data, computer programs, customer and supplier
lists, and contacts at or knowledge of customers or prospective customers of the
Company. The Executive will not disclose any Proprietary Information to any
person or entity other than employees of the Company or use the same for any
purposes (other than in the performance of his duties as an Executive of the
Company) without written approval by an officer of the Company, either during or
after his employment with the Company, unless and until such Proprietary
Information has become public knowledge without fault by the Executive.
(b) The Executive agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, laboratory notebooks, program
listings, or other written, photographic, or other tangible material containing
Proprietary Information, whether created by the Executive or others, which shall
come into his custody or possession, shall be and are the exclusive property of
the Company to be used by the Executive only in the performance of his duties
for the Company. All such materials or copies thereof and all tangible property
of the Company in the custody or possession of the Executive shall be delivered
to the Company, upon the earlier of (i) a request by the Company or (ii)
termination of his employment. After such delivery, the Executive shall not
retain any such materials or copies thereof or any such tangible property.
(c) The Executive agrees that his obligation not to disclose
or to use information and materials of the types set forth in paragraphs (a) and
(b) above, and his obligation to return materials and tangible property, set
forth in paragraph (b) above, also extends to such types of information,
materials and tangible property of customers
8
<PAGE>
of the Company or suppliers to the Company or other third parties who may have
disclosed or entrusted the same to the Company or to the Executive.
7.2 DEVELOPMENTS.
(a) The Executive will make full and prompt disclosure to the
Company of all inventions, improvements, discoveries, methods, developments,
software, and works of authorship, whether patentable or not, which are created,
made, conceived or reduced to practice by him or under his direction or jointly
with others during his employment by the Company or service as a consultant to
the Company pursuant to Section 5.1(b)(ii), whether or not during normal working
hours or on the premises of the Company (all of which are collectively referred
to in this Agreement as "Developments").
(b) The Executive agrees to assign and does hereby assign to
the Company (or any person or entity designated by the Company) all his right,
title and interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. However, this paragraph (b)
shall not apply to Developments which do not relate to the present or planned
business or research and development of the Company and which are made and
conceived by the Executive not during normal working hours, not on the Company's
premises and not using the Company's tools, devices, equipment or Proprietary
Information. The Executive understands that, to the extent this Agreement shall
be construed in accordance with the laws of any state which precludes a
requirement in an Executive agreement to assign certain classes of inventions
made by an employee, this paragraph (b) shall be interpreted not to apply to any
invention which a court rules and/or the Company agrees falls within such
classes. The Executive also hereby waives all claims to moral rights in any
Developments.
(c) The Executive agrees to cooperate fully with the Company,
both during and after his employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights, patents and other
intellectual property rights (both in the United States and foreign countries)
relating to Developments. The Executive shall sign all papers, including,
without limitation, copyright applications, patent applications, declarations,
oaths, formal assignments, assignments of priority rights, and powers of
attorney, which the Company may deem necessary or desirable in order to protect
its rights and interests in any Development. The Executive further agrees that
if the Company is unable, after reasonable effort, to secure the signature of
the Executive on any such papers, any executive officer of the Company shall be
entitled to execute any such papers as the agent and the attorney-in-fact of the
Employee, and the Executive hereby irrevocably designates and appoints each
executive officer of the Company as his agent and attorney-in-fact to execute
any such
9
<PAGE>
papers on his behalf, and to take any and all actions as the Company may deem
necessary or desirable in order to protect its rights and interests in any
Development, under the conditions described in this sentence.
7.3. UNITED STATES GOVERNMENT OBLIGATIONS. The Executive
acknowledges that the Company from time to time may have agreements with other
parties or with the United States Government, or agencies thereof, which impose
obligations or restrictions on the Company regarding inventions made during the
course of work under such agreements or regarding the confidential nature of
such work. The Executive agrees to be bound by all such obligations and
restrictions which are made known to the Executive and to take all appropriate
action necessary to discharge the obligations of the Company under such
agreements.
7.4 EQUITABLE REMEDIES. The restrictions contained in this
Section 7 are necessary for the protection of the business and goodwill of the
Company and are considered by the Executive to be reasonable for such purpose.
The Executive agrees that any breach of this Section 7 is likely to cause the
Company substantial and irrevocable damage which is difficult to measure.
Therefore, in the event of any such breach, the Executive agrees that the
Company, in addition to such other remedies which may be available, shall have
the right to obtain an injunction from a court restraining such a breach or
threatened breach and the right to specific performance of the provisions of
this Section 7.
8. OTHER AGREEMENTS. The Executive represents that his performance of
all the terms of this Agreement and the performance of his duties as an
Executive of the Company do not and will not breach any agreement with any prior
employer or other party to which the Executive is a party (including without
limitation any nondisclosure or non-competition agreement).
9. MISCELLANEOUS.
9.1 NOTICES. Any notice delivered under this Agreement shall
be deemed duly delivered four business days after it is sent by registered or
certified mail, return receipt requested, postage prepaid, or one business day
after it is sent for next-business day delivery via a reputable nationwide
overnight courier service, in each case to the address of the recipient set
forth on the signature page hereto. Either party may change the address to which
notices are to be delivered by giving notice of such change to the other party
in the manner set forth in this Section 9.1.
9.2 PRONOUNS. Whenever the context may require, any pronouns
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular forms of nouns and pronouns shall include the
plural, and vice versa.
10
<PAGE>
9.3 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of this
Agreement.
9.4 AMENDMENT. This Agreement may be amended or modified only
by a written instrument executed by both the Company and the Executive.
9.5 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.
9.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of both parties and their respective successors
and assigns, including any corporation with which or into which the Company may
be merged or which may succeed to its assets or business, provided, however,
that the obligations of the Executive are personal and shall not be delegated by
him. The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company is
required to perform it.
9.7 WAIVERS. No delay or omission by the Company in exercising
any right under this Agreement shall operate as a waiver of that or any other
right. A waiver or consent given by the Company on any one occasion shall be
effective only in that instance and shall not be construed as a bar or waiver of
any right on any other occasion.
9.8 CAPTIONS. The captions of the sections of this Agreement
are for convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.
9.9 SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
9.10 INDEMNIFICATION. The Company shall indemnify and hold
harmless the Executive against all loss, cost, liability and expense arising out
of or relating to the Executive's service to the Company and all of its
subsidiaries and affiliates, whether as an officer, director, employee,
fiduciary of any employee benefit plan or otherwise, to the fullest extent
permitted by law and to the fullest extent provided in the Certificate of
Incorporation and By-Laws of the Company on the date hereof.
9.11 SETTLEMENT OF DISPUTES; ARBITRATION. Any dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by
11
<PAGE>
arbitration in Boston, Massachusetts, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on the
arbitrator' s award in any court having jurisdiction.
9.12 ATTORNEYS' FEES. The non-prevailing party shall pay all
of the reasonable legal fees and expenses of the prevailing party's counsel in
connection with any contest or dispute regarding the nature of any termination
of the Executive's employment or in seeking to obtain or enforce any right or
benefit provided by this Agreement.
THE EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.
12
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year set forth above.
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ MARK LEVIN
----------------------------------
Title:_______________________________
Address: 75 Sidney Street
Cambridge, MA 02139
EXECUTIVE
/s/ CHRISTOPHER K. MIRABELLI
----------------------------------
Christopher K. Mirabelli
Address: ____________________________
____________________________
____________________________
<PAGE>
FIRST AMENDMENT
TO
EXECUTIVE EMPLOYMENT AGREEMENT
THIS FIRST AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT (this
"Amendment"), made this 21st day of December, 1999, is entered into by and
between Millennium Pharmaceuticals, Inc., a Delaware corporation with its
principal place of business at 75 Sidney Street, Cambridge, MA 02139 (the
"Company"), and Christopher K. Mirabelli, residing at 6 Pine Street, Dover, MA
02038 (the "Executive") and amends that certain Executive Employment Agreement,
dated as of October 14, 1999 (the "Original Agreement"), by and between the
Company and the Executive. Capitalized terms used herein without definition
shall have the meaning for such terms as set forth in the Original Agreement.
WHEREAS, the Company and the Executive previously entered into the
Original Agreement with respect to prospective employment arrangements between
the Executive and the Company;
WHEREAS, according to the terms of the Original Agreement, the
Executive agreed to discuss in good faith with the Company the following actions
in connection with minimizing or avoiding liability for Excise Taxes on the
Contingent Compensation Payments to be made to the Executive: (i) exercising
during 1999 all non-statutory stock options currently held by the Executive
which will be vested on or prior to December 31, 1999; and (ii) using other
reasonable efforts to increase the Executive's taxable income, including the
acceleration of additional unvested non-statutory options prior to December 31,
1999 and exercising any such options so accelerated;
WHEREAS, the consummation of the proposed merger between LeukoSite,
Inc. ("LeukoSite") and ANM, Inc., a wholly-owned subsidiary of the Company,
which is to occur (subject to LeukoSite stockholder approval) on or around
December 22, 1999 renders obsolete the utility of the actions set forth in the
preceding paragraph; and
WHEREAS, the Executive is nevertheless willing to undertake certain
other actions to minimize or avoid liability for Excise Taxes on the Contingent
Compensation Payments to be made to the Executive for which the Company would
otherwise be responsible under the Original Agreement;
NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Executive and the Company hereby agree as follows:
1. The last sentence of Section 3.7(a) is hereby deleted in its
entirety and replaced with the following sentence:
<PAGE>
2
"Without limiting the foregoing, the Company and the
Executive, after having discussed matters in good faith,
hereby agree that the Executive shall (i) consent to the
amendment of Section 16 of the LeukoSite 1993 Stock Option
Plan, as amended, in or substantially in the form attached
hereto (as amended, the "Plan") and (ii) waive full and
immediate acceleration rights as to some or all of his Excess
ISO Shares (as defined in the Plan) if the Executive is a
Restricted ISO Optionee (as defined in the Plan), which Excess
ISO Shares shall become exercisable as provided for in the
Plan."
2. Section 9.10 is hereby amended and restated in its entirety as
follows:
"9.10 INDEMNIFICATION. The Company shall indemnify and hold
harmless the Executive against: (a) all loss, cost, liability
and expense arising out of or relating to the Executive's
service to the Company and all of its subsidiaries and
affiliates, whether as an officer, director, employee,
fiduciary of any employee benefit plan or otherwise, to the
fullest extent permitted by law and to the fullest extent
provided in the Certificate of Incorporation and By-Laws of
the Company on the date hereof; and (b) any Excise Taxes (on
an after-tax basis, including any Excise Tax and state and
federal income and employment taxes, computed on a basis
comparable to a Gross-Up Payment, and all interest, additions
and penalties thereon) arising out of the Executive's
entitlement to or receipt of Contingent Compensation Payments
as the same may be finally determined; provided, however, that
in the event of either clause (a) or (b), the Employee shall
have no right to settle any claims, or make any payments, to
any third parties (including, without limitation, the Internal
Revenue Service) for which the Company is liable hereunder
without the prior written consent of the Company (which
consent shall not be unreasonably withheld, conditioned or
delayed), and the Company shall have the right to control any
proceedings brought by or against any third party to the
extent related to matters with respect to which the Company
would have liability hereunder."
3. Except as expressly provided in this Amendment, all of the
terms and provisions of the Original Agreement shall remain in full force and
effect and all references to the Original Agreement shall hereinafter be deemed
to be references to the Original Agreement as amended by this Amendment.
<PAGE>
3
4. This Amendment may be executed in counterparts and shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts.
[REST OF PAGE LEFT INTENTIONALLY BLANK]
<PAGE>
4
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year set forth above.
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/ JOHN B. DOUGLAS III
-------------------------------
Name:
Title:
EXECUTIVE
/s/ CHRISTOPHER K. MIRABELLI
----------------------------------
Christopher K. Mirabelli
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF MILLENNIUM PHARMACEUTICALS, INC.
NAME OF SUBSIDIARY JURISDICTION OF ORGANIZATION
- ------------------ ----------------------------
Millennium Predictive Medicine, Inc. Delaware
LeukoSite, Inc. Delaware
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements on Form S-3 (Nos. 333-28239 and 333-90399) and in the related
Prospectuses and in Form S-8 (Nos. 333-15355, 333-15353, 333-29321,
333-15349, 333-15357, 333-29319, 333-84381, 333-84373, 333-84377, 333-93397,
and 333-93249) of Millennium Pharmaceuticals, Inc. of our report dated
January 27, 2000, with respect to the consolidated financial statements of
Millennium Pharmaceuticals, Inc. included in this Annual Report (Form 10-K)
for the year ended December 31, 1999.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 22, 2000
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