<PAGE>
Filed pursuant to Rule 424(b)(3)
Registration No. 333-31344
PROSPECTUS
MILLENNIUM PHARMACEUTICALS, INC.
$400,000,000 Principal Amount 5.50% Convertible Subordinated Notes
Due January 15, 2007
4,753,920 Shares of Common Stock issuable upon conversion of the Notes
211,554 Shares of Common Stock issuable upon exercise of outstanding warrants to
purchase common stock
--------------------------
This prospectus covers resales by selling holders of:
- our 5.50% Convertible Subordinated Notes due January 15, 2007;
- our common stock into which the notes are convertible; and
- our common stock issuable upon exercise of warrants to purchase
our common stock held by GATX Capital Corporation and MM Ventures
Our 5.50% Convertible Subordinated Notes have the following provisions:
INTEREST PAYMENTS: January 15 and July 15 of each year
CONVERSION RATE: 11.8848 shares per $1,000 principal amount
REDEMPTION OPTIONS: - By us at any time after January 15, 2003
- By noteholders in the event of a change in
control
We will not receive any of the proceeds from the sale of the notes or
shares by the selling holders.
Our common stock is quoted on The Nasdaq National Market under the
symbol "MLNM." The last reported sale price of our common stock on April 26,
2000 was $58.625.
The notes are currently designated for trading on the PORTAL Market of
the Nasdaq Stock Market.
SEE "RISK FACTORS" BEGINNING ON PAGE 6 TO READ ABOUT FACTORS YOU SHOULD
CONSIDER BEFORE BUYING THE NOTES OR OUR COMMON STOCK.
---------------------
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed upon the accuracy
or adequacy of this prospectus. Any representation to the contrary is a criminal
offense.
---------------------
Prospectus dated April 27, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY.............................................................3
RISK FACTORS........................................................6
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION.................16
RATIO OF EARNINGS TO FIXED CHARGES.................................16
USE OF PROCEEDS....................................................17
DESCRIPTION OF THE NOTES...........................................18
DESCRIPTION OF CAPITAL STOCK.......................................33
THE WARRANTS.......................................................35
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS...........36
SELLING HOLDERS....................................................43
PLAN OF DISTRIBUTION...............................................54
EXPERTS............................................................55
LEGAL MATTERS......................................................56
WHERE YOU CAN FIND MORE INFORMATION................................56
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................56
</TABLE>
-2-
<PAGE>
SUMMARY
MILLENNIUM PHARMACEUTICALS, INC.
OUR BUSINESS
Our goal is to become the biopharmaceutical company of the future by
building on our broad scientific and technological capabilities and methods,
which we call our "technology platform," to develop breakthrough drugs and
predictive medicine products and services. Predictive medicine involves
identifying information that enables healthcare professionals to make better
informed decisions about drug treatment and other aspects of patient care.
We use many of the same elements of our technology platform throughout
our business, from the discovery of disease-related genes, to the development of
drugs to specifically address these diseases, to the management of patients
affected by these diseases. As a result, we speak of our technological approach
as being applicable from "gene to patient." We continually seek to expand our
technology platform in an effort to increase the speed of drug discovery and
development and improve the resulting drugs.
We have entered into research, development and commercialization
arrangements, which we call "strategic alliances," with major pharmaceutical and
biotechnology companies relating to a broad range of therapeutic and predictive
medicine products and services. These alliances provide us with the opportunity
to receive royalties and profit sharing, if we and our alliance partners are
successful in developing and commercializing products. In addition, these
alliances provide substantial funding for our research and development and the
continued enhancement of our technology platform.
Our principal executive offices are located at 75 Sidney Street,
Cambridge, MA 02139. Our telephone number is (617) 679-7000, and our Internet
address is www.mlnm.com. We do not intend for this reference to our Web site to
constitute incorporation by reference of the information contained at our site.
SUMMARY OF THE NOTES
<TABLE>
<S> <C>
Interest............................ We will pay interest on the notes on January 15 and July 15 of each
year, commencing July 15, 2000.
Maturity............................ The notes mature on January 15, 2007
Conversion.......................... You may convert the notes into shares of common stock at a conversion
rate of 11.8848 shares of common stock per $1,000 principal amount of
notes, which is equivalent to a conversion price of approximately $84.14
per share. We will adjust the conversion rate each time we take various
corporate actions specified in the indenture governing the notes. You
may convert the notes at any time before the close of business on the
maturity date, unless we have previously redeemed or repurchased the
notes. Holders of notes called for redemption or submitted for
repurchase may convert the notes up to and including, but not after, the
business day before the date fixed for redemption or repurchase. See
"Description of the Notes--Conversion Rights."
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Subordination....................... The notes are subordinated to our present and future "senior debt," as
this prospectus defines that term. The notes are also effectively
subordinated in right of payment to all indebtedness and other
liabilities of our subsidiaries. As of March 31, 2000, the aggregate
amount of our outstanding senior debt was approximately $50.729 million,
and the aggregate amount of indebtedness and other liabilities of our
subsidiaries was approximately $2.790 million. The indenture governing
the notes does not restrict our ability to incur senior debt or the
ability of our subsidiaries to incur indebtedness. See "Description of
the Notes--Subordination."
Global note, Book-entry
system.............................. We issued the notes only in fully registered form without interest
coupons and in minimum denominations of $1,000. We have deposited one
global note evidencing the notes with the trustee for the notes, as
custodian for The Depository Trust Company. DTC and its participants
maintain records that show beneficial interests in the notes, and those
beneficial interests can be transferred only through those records. See
"Description of the Notes--Form, Denomination, Transfer, Exchange and
Book-Entry Procedures."
Optional redemption................. We may redeem the notes, at our option, in whole or in part, on or after
January 15, 2003, at the redemption prices set forth in this prospectus
plus accrued and unpaid interest to the redemption date. See
"Description of the Notes--Optional Redemption."
Repurchase at option of holders upon a
change in control................... Upon a "change in control," as this prospectus defines that term, you
will have the right to require us to repurchase your notes, in whole or
in part, at 100% of their principal amount, plus accrued interest to the
repurchase date. We will pay the repurchase price in cash or, at our
option, and subject to conditions specified in the indenture, in shares
of our common stock. If we pay the repurchase price in common stock, we
will value the common stock at 95% of the average closing sales prices
of the common stock for the five trading days preceding and including
the third trading day prior to the repurchase date. This right is not
available if the average closing sales price per share of our common
stock is equal to or greater than 105% of the conversion price of the
notes before a merger, consolidation or asset sale or after the later of
an acquisition of capital stock or its announcement. See "Description
of the Notes--Repurchase at Option of Holders Upon a Change in Control."
Use of Proceeds..................... We will not receive any of the proceeds from the sale of the notes or
the shares of our common stock by the selling holders.
Events of default................... The following will be events of default under the indenture for the
notes:
- if we fail to pay principal of or any premium on any note when
due, whether or not the subordination provisions of the indenture
prohibit the payment;
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
- if we fail to pay any interest on any note when due and that
default continues for 30 days, whether or not the
subordination provisions of the indenture prohibit the payment;
- if we fail to provide the notice that we are required to
give in the event of a "change in control," whether or not the
subordination provisions of the indenture prohibit the notice;
- if we fail to perform any other covenant in the indenture and
that failure continues for 60 days after written notice to us
by the trustee or the holders of at least 25% in aggregate
principal amount of outstanding notes;
- we fail to pay when due or accelerated any indebtedness
for money borrowed by us or any of our significant subsidiaries
in excess of $10,000,000, and any grace period has expired,
if we do not discharge the indebtedness, or our lender
does not annul the acceleration, within 30 days
after written notice to us by the trustee or the holders of
at least 25% in aggregate principal amount of the
outstanding notes; and
- events of bankruptcy, insolvency or reorganization with respect to us or any of
our significant subsidiaries specified in the indenture.
PORTAL trading of notes............. The National Association of Securities Dealers, Inc. has designated the
notes for trading on their Private Offerings, Resales and Trading
through Automated Linkages (PORTAL) Market.
Governing Law....................... The laws of the State of New York govern the indenture and the notes.
</TABLE>
STOCK SPLIT
On February 28, 2000, our board of directors approved a two-for-one
split of our common stock in the form of a stock dividend. The distribution date
for this stock dividend was April 18, 2000. On the dividend distribution date,
stockholders of record as of March 28, 2000 received one additional share of
common stock for each share held on March 28, 2000. Except as explicitly noted
to the contrary, the references to our shares of common stock in this prospectus
give effect to this stock split.
RISK FACTORS
You should read the "Risk Factors" section, beginning on page 6 of this
Prospectus, so that you understand the risks associated with an investment in
the notes or our common stock.
5
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE NOTES OR IN OUR COMMON STOCK INVOLVES A HIGH
DEGREE OF RISK. IF ANY OF THE FOLLOWING EVENTS OCCURS, OUR BUSINESS, FINANCIAL
CONDITION AND RESULTS OF OPERATIONS WOULD LIKELY SUFFER, POSSIBLY MATERIALLY.
REGULATORY RISKS
WE HAVE NOT YET RECEIVED MARKETING APPROVAL FOR ANY PRODUCT OR SERVICE RESULTING
FROM OUR DEVELOPMENT EFFORTS AND MAY NOT BE ABLE TO OBTAIN ANY SUCH APPROVAL
We have completed development of only one product candidate, CAMPATH
- -Register Trademark- monoclonal antibody, which we developed in our partnership
with Ilex Oncology, Inc. This partnership only recently applied to the U.S. Food
and Drug Administration for approval to market this product. It is possible that
the FDA will not grant this marketing approval. As of March 31, 2000, we and our
alliance partners were conducting clinical trials of six product candidates
resulting from our research and development programs, including clinical trials
of CAMPATH -Register Trademark- monoclonal antibody, and preclinical testing of
approximately ten product candidates resulting from these programs.
All of the 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. This process is lengthy,
often taking a number of years, and expensive. In some cases, the length of time
that it takes for us to achieve various regulatory approval milestones affects
the payments that we are eligible to receive under our strategic alliance
agreements.
We may need to successfully address a number of technological
challenges in order to complete development 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 preclude our obtaining regulatory approval or prevent or limit commercial
use.
WE HAVE ONLY LIMITED EXPERIENCE IN REGULATORY AFFAIRS, AND SOME OF OUR PRODUCTS
MAY BE BASED ON NEW TECHNOLOGIES; THESE FACTORS MAY AFFECT OUR ABILITY OR THE
TIME WE REQUIRE TO OBTAIN NECESSARY REGULATORY APPROVALS
We have only limited experience in filing and prosecuting applications
necessary to gain regulatory approvals which may affect our ability to obtain
these approvals. Moreover, certain of the products that are likely to result
from our research and development programs may be based on new technologies and
new therapeutic approaches that have not been extensively tested in humans. The
regulatory requirements governing these types of products may be more rigorous
than for conventional products. As a result, we may experience a longer
regulatory process in connection with any products that we develop based on
these new technologies or new therapeutic approaches.
RISKS RELATING TO OUR INDUSTRY, BUSINESS AND STRATEGY
BECAUSE THE GENOMICS INDUSTRY IS NEW, IT IS POSSIBLE THAT THE DISCOVERIES AND
TECHNOLOGY ON WHICH THIS INDUSTRY IS BASED WILL NOT RESULT IN COMMERCIAL
PRODUCTS OR SERVICES
The genomics industry is new and evolving rapidly. We focus our
genomics research primarily on diseases that may be linked to several or many
genes working in combination. Both we and the general scientific and medical
communities have only a limited understanding relating to the role of genes and
their products in these diseases. To date, we have not commercialized any
products or services, and we may not be successful in doing so in the future. In
addition, relatively few products based on gene discoveries have been developed
and commercialized by others. Rapid technological development by us
6
<PAGE>
or others may result in compounds, products or processes becoming obsolete
before we recover our development expenses.
OUR PLAN TO GROW THROUGH ACQUISITIONS OF OTHER COMPANIES WILL NOT BE SUCCESSFUL
IF WE ARE UNABLE TO INTEGRATE ACQUIRED COMPANIES WITH OUR OTHER OPERATIONS OR IF
THE TECHNOLOGY OR PERSONNEL OF ACQUIRED COMPANIES DO NOT MEET OUR EXPECTATIONS
We completed our merger with LeukoSite on December 22, 1999. We may not
be able to successfully integrate or profitably manage LeukoSite's businesses.
In addition, the combination of our business with LeukoSite's may not achieve
revenues, net income or loss levels, efficiencies or synergies that justify the
merger. The combined company may experience slower rates of growth as compared
to the historical rates of growth of Millennium and LeukoSite independently. We
plan to make additional acquisitions in the future, which will entail similar
risks.
COMPETITION FOR SCIENTIFIC AND MANAGERIAL PERSONNEL IN OUR INDUSTRY IS INTENSE;
WE WILL NOT BE ABLE TO SUSTAIN OUR OPERATIONS AND GROW IF WE ARE NOT ABLE TO
ATTRACT AND RETAIN KEY PERSONNEL
Our success substantially depends on the ability, experience and
performance of our senior management and other key personnel. If we lose one or
more of the members of our senior management or other key employees, our
business and operating results could be seriously harmed.
In addition, our future success will depend heavily on our ability to
continue to hire, train, retain and motivate additional skilled managerial and
scientific personnel. The pool of personnel with the skills that we require is
limited. Competition to hire from this limited pool is intense.
The stock options held by LeukoSite employees became fully vested upon
the closing of our acquisition of LeukoSite. This acceleration may adversely
affect our ability to retain former LeukoSite employees.
WE FACE SUBSTANTIAL COMPETITION, WHICH MAY RESULT IN OTHERS DISCOVERING,
DEVELOPING OR COMMERCIALIZING PRODUCTS AND SERVICES BEFORE OR MORE SUCCESSFULLY
THAN WE DO
The fields of genomics, biotechnology and pharmaceuticals are highly
competitive. Many of our competitors are substantially larger than we are and
have substantially greater capital resources, research and development staffs
and facilities than we have. Furthermore, many of our competitors are more
experienced than we are in drug discovery, development and commercialization,
obtaining regulatory approvals and product manufacturing and marketing. As a
result, our competitors may identify genes associated with diseases or discover,
develop and commercialize products or services based on such genes before we do.
In addition, our competitors may discover, develop and commercialize products or
services which render non-competitive or obsolete the products or services that
we or our strategic alliance partners are seeking to develop and commercialize.
WE MAY NOT BE ABLE TO OBTAIN BIOLOGICAL MATERIAL, INCLUDING HUMAN AND ANIMAL DNA
SAMPLES, REQUIRED FOR OUR GENETIC STUDIES, WHICH COULD DELAY OR IMPEDE OUR DRUG
DISCOVERY EFFORTS
Our gene identification strategy includes genetic studies of families
and populations prone to particular diseases. These studies require the
collection of large numbers of DNA samples from affected individuals, their
families and other suitable populations as well as animal models. The
availability of DNA samples and other biological material is important to our
ability to discover the genes responsible for human diseases through human
genetic approaches and other studies. Competition for these resources is
intense. Access to suitable populations, materials and samples could be limited
by forces beyond our control, including governmental actions. Some of our
competitors may have obtained access to significantly more family and population
resources and biological materials than we have obtained. As a
7
<PAGE>
result, we may not be able to obtain access to DNA samples necessary to support
our human gene discovery programs.
RISKS RELATING TO OUR FINANCIAL RESULTS AND STRUCTURE AND NEED FOR FINANCING
WE HAVE INCURRED SUBSTANTIAL LOSSES, WE EXPECT TO CONTINUE TO INCUR LOSSES AND
WE WILL NOT BE SUCCESSFUL UNLESS WE REVERSE THIS TREND
We have incurred losses in four of the last six years, including the
year ended December 31, 1999. We expect to continue to incur substantial
operating losses in future periods. To date, substantially all of our revenues
have resulted from payments from strategic alliance partners. We have not
received any revenues from the sale of products or clinical or diagnostic
services.
We expect to increase our spending significantly as we continue to
expand our infrastructure, research and development programs and
commercialization activities. As a result, we will need to generate significant
revenues to pay these costs and achieve profitability. We cannot be certain
whether or when we will become profitable because of the significant
uncertainties with respect to our ability to generate revenues from the sale of
products and services and from existing and potential future strategic
alliances.
OUR SUBSTANTIAL INDEBTEDNESS MAY ADVERSELY AFFECT OUR CASH FLOW AND OPERATIONS
AND BE DIFFICULT FOR US TO REPAY, WHICH COULD ADVERSELY AFFECT THE VALUE OF YOUR
INVESTMENT IN US
We have substantial amounts of outstanding indebtedness, primarily the
notes. We also may obtain additional long term debt and working capital lines of
credit. As a result of this indebtedness, our principal and interest payment
obligations are substantial. Under the terms of our indebtedness and capital
lease lines outstanding as of March 31, 2000, we are required to make total
principal payments of $10,787,487 and interest payments of $24,036,603 to our
lenders in 2000. There is the possibility that we may be unable to generate cash
sufficient to pay the principal of, interest on and other amounts due in respect
of our indebtedness when due. In particular, we may require funds from external
sources, such as new borrowings, to repay the notes when their entire principal
amount becomes due in a single payment on their maturity date.
Our substantial leverage could have significant negative consequences,
including:
- increasing our vulnerability to general adverse economic and
industry conditions;
- limiting our ability to obtain additional financing;
- requiring the dedication of a substantial portion of our cash
from operations to service our indebtedness, thereby reducing the
amount of our cash available for other purposes, including
capital expenditures;
- limiting our flexibility in planning for, or reacting to, changes
in our business and the industry in which we compete; and
- placing us at a possible competitive disadvantage vis-a-vis less
leveraged competitors and competitors that have better access to
capital resources.
WE MAY NEED ADDITIONAL FINANCING, WHICH MAY BE DIFFICULT TO OBTAIN; OUR FAILURE
TO OBTAIN NECESSARY FINANCING OR DOING SO ON UNATTRACTIVE TERMS COULD AVERSELY
AFFECT OUR DISCOVERY AND DEVELOPMENT PROGRAMS AND OTHER OPERATIONS
8
<PAGE>
We will require substantial funds to conduct research and development,
including preclinical testing and clinical trials of our potential products,
meet our obligations to our strategic alliance partners, manufacture and market
any products and services that are approved for commercial sale and meet our
debt service obligations. Additional financing may not be available when we need
it or may not be available on terms that are favorable to us.
If we are unable to obtain adequate funding on a timely basis, we may
be required to significantly curtail one or more of our discovery or development
programs. We could be required to seek funds through arrangements with
collaborative partners or others that may require us to relinquish rights to
certain of our technologies, product candidates or products which we would
otherwise pursue on our own.
RISKS RELATING TO STRATEGIC ALLIANCE PARTNERS
WE DEPEND SIGNIFICANTLY ON OUR STRATEGIC ALLIANCE PARTNERS TO DEVELOP AND
COMMERCIALIZE PRODUCTS AND SERVICES BASED ON OUR WORK; OUR BUSINESS MAY SUFFER
IF ANY OF OUR STRATEGIC ALLIANCE PARTNERS BREACHES THEIR AGREEMENT OR FAILS TO
SUPPORT OR TERMINATES THEIR ALLIANCE WITH US
We conduct most of our discovery and development activities through
strategic alliances. The success of these programs depends heavily on the
efforts and activities of our strategic alliance partners. Each of our alliance
partners has significant discretion in determining the efforts and resources
that they will apply to the alliance. Our existing and any future alliances may
not be scientifically or commercially successful.
The risks that we face in connection with these alliances include:
- All of our strategic alliance agreements are subject to
termination under various circumstances, including in many cases
on short notice without cause.
- In our strategic alliance agreements, we generally agree not to
conduct specified types of research and development in the field
that is the subject of the alliance. These agreements may have
the effect of limiting the areas of research and development we
may pursue, either alone or in collaboration with third parties.
- Our alliance partners may develop and commercialize, either alone
or with others, products and services that are similar to or
competitive with the products and services that are the subject
of the alliance with us.
- Our alliance partners may change the focus of their development
and commercialization efforts. Pharmaceutical and biotechnology
companies historically have re-evaluated their priorities
following mergers and consolidations, which have been common in
recent years in these industries.
- We will rely on our alliance partners to manufacture most
products covered by our alliances. For example, Becton Dickinson
has the sole right to manufacture Melastatin-TM-.
WE MAY NOT BE SUCCESSFUL IN ESTABLISHING ADDITIONAL STRATEGIC ALLIANCES, WHICH
COULD ADVERSELY AFFECT OUR ABILITY TO DEVELOP AND COMMERCIALIZE PRODUCTS
An important element of our business strategy is entering into
strategic alliances for the development and commercialization of products and
services based on our discoveries. We face significant competition in seeking
appropriate alliance partners. Moreover, these alliance arrangements are complex
to negotiate and time-consuming to document. We may not be successful in our
efforts to establish additional strategic alliances or other alternative
arrangements. The terms of any additional
9
<PAGE>
strategic alliances or other arrangements that we establish may not be favorable
to us. Moreover, such strategic alliances or other arrangements may not be
successful.
RISKS RELATING TO INTELLECTUAL PROPERTY
IF WE ARE UNABLE TO OBTAIN PATENT PROTECTION FOR OUR DISCOVERIES, THE VALUE OF
OUR TECHNOLOGY AND PRODUCTS WILL BE ADVERSELY AFFECTED; IF WE INFRINGE PATENT OR
OTHER INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES, WE MAY NOT BE ABLE TO
DEVELOP AND COMMERCIALIZE OUR PRODUCTS AND SERVICES OR THE COST OF DOING SO MAY
INCREASE
Our patent positions, and those of other pharmaceutical and
biotechnology companies, are generally uncertain and involve complex legal,
scientific and factual questions.
Our ability to develop and commercialize products and services depends
in significant part on our ability to:
- Obtain patents;
- Obtain licenses to the proprietary rights of others on
commercially reasonable terms;
- Operate without infringing upon the proprietary rights of others;
- Prevent others from infringing on our proprietary rights; and
- Protect trade secrets.
THERE IS SIGNIFICANT UNCERTAINTY ABOUT THE VALIDITY AND PERMISSIBLE SCOPE OF
GENOMICS PATENTS IN OUR INDUSTRY, WHICH MAY MAKE IT DIFFICULT FOR US TO OBTAIN
PATENT PROTECTION FOR OUR DISCOVERIES
The validity and permissible scope of patent claims in the
pharmaceutical and biotechnology fields, including the genomics field, involve
important unresolved legal principles and are the subject of public policy
debate in the United States and abroad. For example, there is significant
uncertainty both in the United States and abroad regarding the patentability of
gene sequences in the absence of functional data and the scope of patent
protection available for full-length genes and partial gene sequences. Moreover,
certain groups have made certain gene sequences available in publicly accessible
databases. These and other disclosures may adversely affect our ability to
obtain patent protection for gene sequences claimed by us in patent applications
that we file subsequent to such disclosures. There is also some uncertainty as
to whether human clinical data will be required for issuance of patents for
human therapeutics. If such data are required, our ability to obtain patent
protection could be delayed or otherwise adversely affected.
THIRD PARTIES MAY OWN OR CONTROL PATENTS OR PATENT APPLICATIONS AND REQUIRE US
TO SEEK LICENSES, WHICH COULD INCREASE OUR DEVELOPMENT AND COMMERCIALIZATION
COSTS, OR PREVENT US FROM DEVELOPING OR MARKETING PRODUCT OR SERVICE CANDIDATES
We may not have rights under some patents or patent applications
related to our proposed products, processes or services. Third parties may own
or control these patents and patent applications in the United States and
abroad. Therefore, in some cases, such as those described below, to develop,
manufacture, sell or import certain of our proposed products, processes or
services, we or our alliance partners may choose to seek, or be required to
seek, licenses under third party patents issued in the United States and abroad
or those which might issue from United States and foreign patent applications.
In such event, we would be required to pay license fees or royalties or both to
the licensor. If licenses are
10
<PAGE>
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 -Register Trademark- product candidates are
humanized monoclonal antibodies. We are aware of third party patents and patent
applications which relate to certain humanized or modified antibodies, products
useful for making humanized or modified antibodies, and processes for making and
using humanized or modified antibodies. We are also aware of third party patents
and patent applications relating to certain manufacturing processes, products
thereof and materials useful in such processes.
Our product candidates LDP-977, LDP-341, and LDP-519 are all small
molecule drug candidates. With respect to LDP-341, we are aware of third party
patents or patent applications which relate to either intermediates or synthetic
processes used in the synthesis of these compounds. Additionally, for the use of
LDP-341 and LDP-519 in the treatment of infarctions we are aware of the
existence of a potentially interfering patent application filed by one of our
former consultants.
WE MAY BECOME INVOLVED IN EXPENSIVE PATENT LITIGATION OR OTHER PROCEEDINGS,
WHICH COULD RESULT IN OUR INCURRING SUBSTANTIAL COSTS AND EXPENSES OR
SUBSTANTIAL LIABILITY FOR DAMAGES OR REQUIRE US TO STOP OUR DEVELOPMENT AND
COMMERCIALIZATION EFFORTS
There has been substantial litigation and other proceedings regarding
the patent and other intellectual property rights in the pharmaceutical and
biotechnology industries. We may become a party to patent litigation or other
proceedings regarding intellectual property rights. For example, we believe that
we hold patent applications that cover genes that are also claimed in patent
applications filed by others. Interference proceedings before the United States
Patent and Trademark Office may be necessary to establish which party was the
first to invent these genes.
The cost to us of any patent litigation or other proceeding, even if
resolved in our favor, could be substantial. Some of our competitors may be able
to sustain the cost of such litigation or proceedings more effectively than we
can because of their substantially greater financial resources. If a patent
litigation or other proceeding is resolved against us, we or our alliance
partners may be enjoined from developing, manufacturing, selling or importing
our products, processes or services without a license from the other party and
we may be held liable for significant damages. We may not be able to obtain any
required license on commercially acceptable terms or at all.
Uncertainties resulting from the initiation and continuation of patent
litigation or other proceedings could have a material adverse effect on our
ability to compete in the marketplace. Patent litigation and other proceedings
may also absorb significant management time.
RISKS RELATING TO PRODUCT MANUFACTURING, MARKETING AND SALES
BECAUSE MANY OF THE PRODUCTS AND SERVICES THAT WE DEVELOP WILL BE BASED ON NEW
TECHNOLOGIES AND THERAPEUTIC APPROACHES, THE MARKET MAY NOT BE RECEPTIVE TO
THESE PRODUCTS AND SERVICES UPON THEIR INTRODUCTION
The commercial success of our products and services that are approved
for marketing will depend upon their acceptance by the medical community and
third party payors as clinically useful, cost effective and safe. Many of the
products and services that we are developing are based upon new technologies or
therapeutic approaches. As a result, it may be more difficult for us to achieve
market acceptance of our products and services, particularly the first products
and services that we introduce to the market based on new technologies and
therapeutic approaches.
11
<PAGE>
BECAUSE WE HAVE NO SALES, MARKETING OR DISTRIBUTION EXPERIENCE AND CAPABILITIES,
WE WILL BE DEPENDENT ON THIRD PARTIES TO SUCCESSFULLY PERFORM THESE FUNCTIONS OR
WILL BE REQUIRED TO INCUR SIGNIFICANT COSTS AND DEVOTE SIGNIFICANT EFFORTS TO
DEVELOP THESE CAPABILITIES
We have no sales, marketing or distribution experience and
capabilities. We plan to rely significantly on sales, marketing and distribution
arrangements with our strategic alliance partners and other third parties for
the products and services that we are developing. For example, our partnership
that holds CAMPATH -Register 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 -Register Trademark- product throughout the
world other than the Far East. If in the future we determine to perform sales,
marketing and distribution functions ourselves, we would face a number of
additional risks, including the need to recruit experienced marketing and sales
personnel.
BECAUSE WE HAVE LIMITED MANUFACTURING CAPABILITIES, WE WILL BE DEPENDENT ON
THIRD PARTY MANUFACTURERS TO MANUFACTURE PRODUCTS FOR US OR WILL BE REQUIRED TO
INCUR SIGNIFICANT COSTS AND DEVOTE SIGNIFICANT EFFORTS TO ESTABLISH OUR OWN
MANUFACTURING FACILITIES AND CAPABILITIES
We have limited manufacturing experience and no commercial scale
manufacturing capabilities. In order to continue to develop products and
services, apply for regulatory approvals and, ultimately, commercialize any
products and services, we will need to develop, contract for or otherwise
arrange for the necessary manufacturing capabilities.
We currently rely upon third parties to produce material for
preclinical testing purposes and expect to continue to do so in the future. We
also expect to rely upon other third parties, including our 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 -Register
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.
As a result, we have experienced some difficulty finding manufacturers for our
products with adequate capacity for our anticipated future needs. 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.
Reliance on third party manufacturers entails risks to which we would
not be subject if we manufactured products ourselves, including reliance on the
third party for regulatory compliance and quality assurance, the possibility of
breach of the manufacturing agreement by the third party because of factors
beyond our control and the possibility of termination or nonrenewal of the
agreement by the third party, based on its own business priorities, at a time
that is costly or inconvenient for us.
We may in the future determine to manufacture certain of our products
in our own manufacturing facilities. We will require substantial additional
funds and need to recruit qualified personnel in order to build or lease and
operate any manufacturing facilities.
IF WE FAIL TO OBTAIN AN ADEQUATE LEVEL OF REIMBURSEMENT FOR OUR FUTURE PRODUCTS
OR SERVICES BY THIRD PARTY PAYORS, THERE MAY BE NO COMMERCIALLY VIABLE MARKETS
FOR OUR PRODUCTS OR SERVICES
The availability and levels of reimbursement by governmental and other
third party payors affects the market for any pharmaceutical product or
healthcare service. These third party payors continually attempt to contain or
reduce the costs of healthcare by challenging the prices charged for medical
products and services. In certain foreign countries, particularly the countries
of the European Union, the
12
<PAGE>
pricing of prescription pharmaceuticals is subject to governmental control. We
may not be able to sell our products and services profitably if reimbursement is
unavailable or limited in scope or amount.
In both the United States and certain foreign jurisdictions, there have
been a number of legislative and regulatory proposals to change the healthcare
system. Further proposals are likely. The potential for adoption of these
proposals affects or will affect our ability to raise capital, obtain additional
collaborative partners and market our products.
If we or our alliance partners obtain marketing approvals for our
products and services, we expect to experience pricing pressure due to the trend
toward managed health care, the increasing influence of health maintenance
organizations and additional legislative proposals.
ETHICAL, LEGAL AND SOCIAL ISSUES RELATED TO GENETIC TESTING MAY CAUSE OUR
DIAGNOSTIC PRODUCTS TO BE REJECTED BY CUSTOMERS OR PROHIBITED OR CURTAILED BY
GOVERNMENTAL AUTHORITIES
Diagnostic tests that evaluate genetic predisposition to disease raise
issues regarding the use and confidentiality of the information provided by such
tests. Insurance carriers and employers might discriminate on the basis of such
information, resulting in a significant barrier to the acceptance of such tests
by customers. This type of discrimination could cause governmental authorities
to prohibit or limit the use of such tests.
RISKS RELATING TO THE NOTES
BECAUSE THE NOTES RANK BELOW OUR EXISTING AND FUTURE SENIOR DEBT, WE MAY BE
UNABLE TO REPAY OUR OBLIGATIONS UNDER THE NOTES
The notes are unsecured and subordinated in right of payment to all of
our existing and future senior debt. Because the notes are subordinate to our
senior debt, if we experience:
- a bankruptcy, liquidation or reorganization,
- an acceleration of the notes because of an event of default under
the indenture, or
- other events described in the indenture
we will be permitted to make payments on the notes only after we have satisfied
all of our senior debt obligations. Therefore, we may not have sufficient assets
remaining to pay amounts due on any or all of the notes. In addition, the notes
effectively will be subordinate to all liabilities, including trade payables, of
our subsidiaries and any subsidiaries that we may in the future acquire or
establish. Consequently, our right to receive assets of any subsidiaries upon
their liquidation or reorganization, and the rights of the holders of the notes
to share in those assets, would be subordinate to the claims of the
subsidiaries' creditors.
The notes are our obligations exclusively. The indenture for the notes
does not limit our ability or that of any of our presently existing or future
subsidiaries, to incur senior debt, other indebtedness and other liabilities. We
may have difficulty paying what we owe under the notes if we, or any of our
subsidiaries, incur additional indebtedness or other liabilities. As of March
31, 2000, we had approximately $50.729 million of senior debt outstanding, and
our subsidiaries had approximately $2.790 million of outstanding indebtedness
and other liabilities (excluding intercompany liabilities). From time to time we
and our subsidiaries may incur additional indebtedness, including senior debt,
which could adversely affect our ability to pay our obligations under the notes.
13
<PAGE>
WE MAY BE UNABLE TO REPAY THE NOTES WHEN DUE OR REPURCHASE THE NOTES WHEN WE ARE
REQUIRED TO DO SO
At maturity, the entire outstanding principal amount of the notes will
become due and payable. In addition, if a change in control occurs, each holder
of the notes may require us to repurchase all or a portion of that holder's
notes. At maturity or if a change in control occurs, we may not have sufficient
funds or may be unable to arrange for additional financing to pay the principal
amount or repurchase price due. Under the terms of the indenture for the notes,
we may elect, if we satisfy conditions specified in the indenture, to pay the
repurchase price with shares of common stock. Our borrowing arrangements or
agreements relating to senior debt to which we become a party may contain
restrictions on, or prohibitions against, our repurchases of the notes. If the
maturity date or change in control occurs at a time when our other arrangements
prohibit us from repurchasing the notes, we could try to obtain the consent of
the lenders under those arrangements to purchase the notes, or we could attempt
to refinance these borrowings that contain the restrictions. If we do not obtain
the necessary consents or refinance these borrowings, we will be unable to
repurchase the notes. In that case, our failure to repurchase any tendered notes
or notes due upon maturity would constitute an event of default under the
indenture. Any such default, in turn, may cause a default under the terms of our
senior debt. As a result, in those circumstances, the subordination provisions
of the indenture would, absent a waiver, prohibit any repurchase of the notes
until we pay the senior debt in full. See "Description of the Notes --
Repurchase at the Option of Holders Upon a Change of Control."
BECAUSE THERE IS NO PUBLIC MARKET FOR THE NOTES BEING OFFERED, YOU MAY NOT BE
ABLE TO RESELL THEM EASILY OR AT A FAVORABLE PRICE
There is no public market for the notes and we are not certain of:
- the liquidity of any market that may develop;
- the ability of the holders to sell their notes; or
- the price at which the holders would be able to sell their notes.
If such a market were to develop, the notes could trade at prices that
may be higher or lower than the principal amount or purchase price, depending on
many factors, including prevailing interest rates, the market for similar notes,
and our financial performance. We do not presently intend to apply for the
listing of the notes on any securities exchange or for inclusion of the notes in
the automated quotation system of the National Association of Securities
Dealers, Inc. The notes are eligible for trading on The PORTAL Market.
Goldman, Sachs & Co., FleetBoston Robertson Stephens, Inc., ING Barings
LLC and Credit Suisse First Boston Corporation have advised us that they
presently make a market in the notes. They are not obligated, however, to make a
market in the notes, and any such market-making may be discontinued at any time
at their sole discretion. In addition, such market-making activity will be
subject to the limits imposed by the Securities Act and the Exchange Act.
Accordingly, no assurance can be given as to the development or liquidity of any
market for the notes.
RISKS RELATING TO AN INVESTMENT IN OUR COMMON STOCK
WE HAVE ANTITAKEOVER DEFENSES THAT COULD DELAY OR PREVENT AN ACQUISITION AND
COULD ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK
Provisions of our certificate of incorporation and bylaws and of
Delaware law could have the effect of delaying, deferring or preventing an
acquisition of Millennium Pharmaceuticals. For example, we
14
<PAGE>
have divided our board of directors into three classes that serve staggered
three-year terms, we may authorize the issuance of up to 5,000,000 shares of
"blank check" preferred stock, our stockholders may not take actions by written
consent and our stockholders are limited in their ability to introduce proposals
at stockholder meetings.
OUR STOCK PRICE COULD BE VOLATILE, WHICH COULD CAUSE YOU TO LOSE PART OR ALL OF
YOUR INVESTMENT
The market price of our common stock, like that of the common stock of
many other biotechnology companies, may be highly volatile. Factors such as:
- announcements of technological innovations or new commercial
products by us or our competitors;
- disclosure of results of clinical testing or regulatory
proceedings;
- governmental regulation and approvals;
- developments in patent or other proprietary rights, including as
a result of any public policy concerns;
- public concern as to the safety of products developed by us;
- our financial results; and
- general market conditions.
may have a significant effect on the market price of our common stock. In
addition, the stock market has experienced extreme price and volume
fluctuations. This volatility has significantly affected the market prices of
securities of many biotechnology and pharmaceutical companies for reasons
frequently unrelated to or disproportionate to the operating performance of the
specific companies. These broad market fluctuations may adversely affect the
market price of our common stock.
15
<PAGE>
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This prospectus and the documents incorporated by reference in this
prospectus contain "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, and Section 21E of the Securities Exchange
Act of 1934 that involve risks and uncertainties, such as statements concerning:
<TABLE>
<S> <C>
- growth and future operating results; - discovery and development of products;
- developments in our markets and - new products;
strategic focus;
- strategic alliances;
- potential acquisitions and the - our manufacturing, marketing, sales and
integration of acquired businesses, distribution capabilities; and
products and technologies;
- intellectual property; - future economic business and regulatory
conditions.
</TABLE>
Words such as "project," "believe," "anticipate," "plan," "expect,"
"estimate," "intend," "should," "would," "could" or "may," or other words that
convey uncertainty of future events or outcome generally accompany these
forward-looking statements. This prospectus discloses important factors that
could cause actual results to differ materially from these expectations,
including the "Risk Factors" beginning on page 6. You should read these factors
and other cautionary statements made in this prospectus and the documents
incorporated by reference as being applicable to all related forward-looking
statements whenever they appear in this prospectus and the documents
incorporated by reference. We assume no obligation to update them even though
our situation may change in the future.
RATIO OF EARNINGS TO FIXED CHARGES
We present below the ratio of our earnings to our fixed charges.
Earnings consist of net income (loss) from operations before minority interest
plus fixed charges. Fixed charges consist of interest expense and that portion
of rental expense we believe to be representative of interest. The amounts for
the year ended December 31, 1999 include a charge for in process research and
development for $350,503,000 recorded in connection with the merger with
LeukoSite, Inc.
The pro forma amounts for the year ended December 31, 1999 gives effect
to the merger with LeukoSite as if it had occurred on January 1, 1999. The pro
forma amounts exclude the charge for in process research and development for
$350,503,000.
<TABLE>
<CAPTION>
Year ended December 31,
(in thousands)
(unaudited)
Pro Forma
1994 1995 1996 1997 1998 1999 1999
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges -- 1.51 -- -- -- -- --
Coverage deficiency ($6,372) -- ($8,768) ($84,632) ($3,841) ($381,884) ($110,175)
</TABLE>
16
<PAGE>
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the notes or
of our common stock by the selling holders.
17
<PAGE>
DESCRIPTION OF THE NOTES
We issued the notes under a document called an "indenture." The
indenture is a contract between us and State Street Bank and Trust Company, who
acts as trustee. The indenture and the notes are governed by New York law. In
this section, references to "Millennium" or "we" or "us" refer solely to
Millennium Pharmaceuticals, Inc. and not its subsidiaries.
The following description of the terms of the indenture is a summary.
It summarizes only those portions of the indenture which we believe are most
important to your decision to invest in the notes. Because this section is a
summary, it does not describe every aspect of the notes. You should keep in
mind, however, that it is the indenture, and not this summary, which defines
your rights as a holder of the notes. There may be other provisions in the
indenture which are also important to you. You should read the indenture itself
for a full description of the terms of the notes. We will provide a copy, at no
charge, if you contact us. The indenture is also an exhibit to the Annual Report
on Form 10-K for the fiscal year ended December 31, 1999, which is incorporated
by reference in this prospectus. For details on how you can view or copy the
exhibits to our registration statement and information which is incorporated by
reference in this prospectus, see "Where You Can Find More Information" on page
48 of this prospectus.
GENERAL
The notes:
- Are general, unsecured obligations of Millennium;
- Are subordinated, which means that they rank behind certain of
our indebtedness as, described below
- Are limited to $400,000,000 aggregate principal amount;
- Mature on January 15, 2007; and
- Bear interest at a rate of 5.50% per year, payable twice a year
on January 15 and July 15 to record holders of the notes as of
the preceding January 1 or July 1.
The notes were issued on January 20, 2000. The first interest payment
is due on July 15, 2000. Interest payable per $1,000 principal amount of notes
for the period from January 20, 2000 to July 15, 2000 will be $26.7361.
You may convert the notes into shares of our common stock at any time
before the close of business on January 15, 2007, unless the notes have been
previously redeemed or repurchased. The conversion rate is currently 11.8848
shares per each $1,000 principal amount of notes, which is equivalent to a
conversion price of approximately $84.14 per share. The conversion rate may be
adjusted as described below under "--Conversion Rights."
We may redeem the notes, in whole or part, at our option at any time on
or after January 15, 2003 at the redemption prices set forth below under
"--Optional Redemption," plus accrued and unpaid interest to the redemption
date. If there is a change in control of Millennium, you may have the right to
require us to repurchase your notes as described below under "--Repurchase at
Option of Holders Upon a Change in Control."
18
<PAGE>
FORM, DENOMINATION, TRANSFER, EXCHANGE AND BOOK-ENTRY PROCEDURES
The notes are not listed on an exchange, but trade over the counter. We
issued the notes:
- in fully registered form;
- without interest coupons; and
- in denominations of $1,000 and greater multiples.
We deposited one global note, representing all of the notes, with the
trustee as custodian for The Depository Trust Company, as the depositary, and
registered the global notes in the name of Cede & Co. as the depositary's
nominee. Except as set forth below, the global notes may be transferred, in
whole or in part, only to another nominee of the depositary or to a successor of
the depositary or its nominee.
The global note will not be registered in the name of any person, or
exchanged for notes that are registered in the name of any person, other than
DTC or its nominee, unless either of the following occurs:
- DTC notifies us that it is unwilling, unable or no longer
qualified to continue acting as the depositary for the global
note; or
- an event of default with respect to the notes represented by the
global note has occurred and is continuing.
In those circumstances, DTC will determine in whose names any
securities issued in exchange for the global note will be registered.
DTC or its nominee will be considered the sole owner and holder of the
global note for all purposes, and as a result:
- you cannot get notes registered in your name if they are
represented by the global note;
- you cannot receive certificated, or physical, notes in exchange
for your beneficial interest in the global notes;
- you will not be considered to be the owner or holder of the
global note or any note it represents for any purpose; and
- all payments on the global note will be made to DTC or its
nominee.
The laws of some jurisdictions require that some kinds of purchasers
can only own securities in definitive, or certificated, form. These laws may
limit your ability to transfer your beneficial interests in the global note to
these types of purchasers.
Only institutions that have accounts with DTC or its nominee, called
"participants," and persons that may hold beneficial interests through
participants can own a beneficial interest in the global note. The only place
where the ownership of beneficial interests in the global note appears, and the
only way the transfer of those interests can be made, is on the records kept by
DTC and the records kept by those participants. Participants' ownership of
beneficial interests in the global note appears on the records kept by DTC and
the ownership of beneficial interests by others appears on the records kept by
those participants.
19
<PAGE>
Secondary trading in bonds and notes of corporate issuers is generally
settled in clearing-house, or next-day, funds. In contrast, beneficial interests
in a global note usually trade in DTC's same-day funds settlement system, and
settle in immediately available funds. We make no representations as to the
effect that settlement in immediately available funds will have on trading
activity in those beneficial interests.
We are required to make cash payments of interest on and principal of
and the redemption or repurchase price of the global note, as well as any
payment of liquidated damages under the registration rights agreement, described
later in this Section under the caption "-- Registration Rights," to Cede, the
nominee for DTC, as the registered owner of the global note. We are required to
make these payments by wire transfer of immediately available funds on each
payment date.
DTC has informed us that, with respect to any cash payment of interest
on, principal of, or the redemption or repurchase price of, the global note, as
well as any payment of liquidated damages, DTC's practice is to credit
participants' accounts on the payment date with payments in amounts
proportionate to their respective beneficial interests in the notes represented
by the global note as shown on DTC's records, unless DTC has reason to believe
that it will not receive payment on that payment date. Payments by participants
to owners of beneficial interests in notes represented by the global note held
through participants will be the responsibility of those participants, as is now
the case with securities held for the accounts of customers registered in
"street name."
We will send any redemption notices to Cede. We understand that if less
than all the notes are being redeemed, DTC's practice is to determine by lot the
amount of the holdings of each participant to be redeemed.
We also understand that neither DTC nor Cede will consent or vote with
respect to the notes. We have been advised that under its usual procedures, DTC
will mail an "omnibus proxy" to us as soon as possible after the record date.
The omnibus proxy assigns Cede's consenting or voting rights to those
participants to whose accounts the notes are credited on the record date
identified in a listing attached to the omnibus proxy.
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global note to pledge the
interest to persons or entities that do not participate in the DTC book-entry
system, or otherwise take actions in respect of that interest, may be affected
by the lack of a physical certificate evidencing its interest.
DTC has advised us that it will take any action permitted to be taken
by a holder of notes, including the presentation of notes for exchange, only at
the direction of one or more participants to whose account with DTC interests in
the global note are credited and only in respect of such portion of the
principal amount of the notes represented by the global note as to which such
participant has, or participants have, given such direction.
DTC has also advised us as follows:
- DTC is a limited purpose trust company organized under the laws
of the State of New York, a member of the Federal Reserve System,
a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act;
- DTC was created to hold securities for its participants and
facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry
changes in accounts of its participants;
20
<PAGE>
- Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and other organizations;
- DTC is owned by a number of its participants and by the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. and the
National Association of Securities Dealers, Inc.;
- Indirect access to the DTC system is available to other entities
such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant,
either directly or indirectly.
The policies and procedures of DTC, which may change periodically, will
apply to payments, transfers, exchanges and other matters relating to beneficial
interests in the global note. We and the Trustee have no responsibility or
liability for any aspect of DTC's or any participants' records relating to
beneficial interests in the global note, including for payments made on the
global note, and we and the trustee are not responsible for maintaining,
supervising or reviewing any of those records.
CONVERSION RIGHTS
You may, at your option, convert any portion, in $1,000 increments, of
the principal amount of a note you hold into shares of our common stock at any
time before the close of business on January 15, 2007, unless the note has been
previously redeemed or repurchased, at a conversion rate equal to 11.8848 shares
per $1,000 principal amount of notes. This conversion rate equals a conversion
price of approximately $84.14 per share. The conversion rate is subject to
adjustment as described below. Your right to convert a note called for
redemption or delivered for repurchase will end at the close of business on the
business day immediately before the redemption date or repurchase date for that
note, unless we default in making the payment due upon redemption or repurchase.
You can convert a note by delivering it at the Corporate Trust Office
of the trustee, with a duly signed and completed notice of conversion, a copy of
which may be obtained from the trustee. In the case of a global note, DTC will
effect the conversion upon notice from the holder of a beneficial interest in
the global note in accordance with DTC's rules and procedures. The conversion
date will be the date on which the note and the duly signed and completed notice
of conversion are delivered to the Corporate Trust Office of the trustee.
As promptly as practicable on or after the conversion date, we will
issue and deliver to the trustee a certificate or certificates for the number of
full shares of common stock issuable upon conversion, together with payment in
place of any fraction of a share. The certificates will be sent by the trustee
to the conversion agent for delivery to the holder of the note being converted.
The shares of common stock issuable upon conversion of the notes will be fully
paid and nonassessable and will also rank equally with other outstanding shares
of our common stock.
If you convert a note on a date that is not an interest payment date,
you will not be entitled to receive any interest for the period from the next
preceding interest payment date to the date of conversion, except as described
below. If you are a holder of a note on a regular record date, including a note
that is subsequently surrendered for conversion after the regular record date,
you will receive the interest payable on such note on the next succeeding
interest payment date. To correct for this resulting overpayment of interest,
any note surrendered for conversion during the period from the close of business
on a regular record date to the opening of business on the next succeeding
interest payment date will be required to be accompanied by payment of an amount
equal to the interest payable on such interest payment date on the principal
amount of notes being surrendered for conversion. However, you will not be
required to make that payment if you are converting a note, or a portion of a
note, that we have called for redemption, or that you are entitled to require us
to repurchase from you, if your conversion right
21
<PAGE>
would terminate because of the redemption or repurchase between the regular
record date and the close of business on the next succeeding interest payment
date.
No other payment or adjustment for interest, or for any dividends on
our common stock, will be made upon conversion. If you receive common stock upon
conversion of a note, you will not be entitled to receive any dividends payable
to holders of common stock as of any record date before the close of business on
the conversion date. We will not issue fractional shares upon conversion of
notes. Instead, we will pay an amount in cash based on the market price of the
common stock at the close of business on the conversion date.
If you deliver a note for conversion, you will not be required to pay
any taxes or duties in respect of the issue or delivery of common stock on
conversion. However, we are not required to pay any tax or duty that may be
payable in respect of any transfer involved in the issue or delivery of the
common stock in a name other than that of the holder of the note. We will not
issue or deliver certificates representing shares of common stock unless the
person requesting the issuance or delivery has paid to us the amount of any such
tax or duty or has established to our satisfaction that such tax or duty is
payable.
The conversion rate is subject to adjustment if we:
- pay a dividend or other distribution payable in common stock on
shares of our capital stock;
- issue to holders of common stock rights, options or warrants
entitling them to subscribe to or purchase our common stock or
preferred stock at less than the then current market price of the
common stock or preferred stock; however, if those rights,
options or warrants are only exercisable upon the occurrence of
certain triggering events, then the conversion rate will not be
adjusted until the triggering events occur;
- subdivide, reclassify or combine our common stock;
- distribute to holders of our common stock evidences of
indebtedness, shares of capital stock, cash or assets, including
securities, but excluding dividends, rights, options, warrants
and distributions referred to in the first two bullet points of
this list, dividends and distributions paid exclusively in cash
and distributions upon mergers or consolidations;
- make a distribution consisting exclusively of cash, with some
exceptions set forth in the indenture, to holders of our common
stock if the amount of the distribution, when added to any other
cash distributions within the preceding 12 months, exceeds 10% of
our market capitalization; or
- successfully complete a tender offer for our common stock that
involves consideration that exceeds 10% of our market
capitalization on the expiration of such tender offer when
combined with any other tender offers within 12 months or all
cash distributions, with some exceptions set forth in the
indenture, within the preceding 12 months
We are not required to adjust the conversion rate until the cumulative
adjustments amount to 1.0% of the conversion rate or more. We will compute any
adjustments to the conversion rate and give notice to the holders of any such
adjustments. We also may make such increases in the conversion rate in addition
to those required by the provisions described above as we may consider to be
advisable so that any event treated for United States federal income tax
purposes as a dividend of stock or stock rights will not be taxable to the
recipients.
22
<PAGE>
If we merge or consolidate with another person or sell or transfer all
or substantially all of our assets, each note then outstanding will become
convertible only into the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by a holder of the
number of shares of common stock into which the note was convertible immediately
prior to the merger, consolidation or sale. This calculation will be made based
on the assumption that the holder of common stock failed to exercise any rights
of election that the holder may have to select a particular type of
consideration. The adjustment will not be made for a merger that does not result
in any reclassification, conversion, exchange or cancellation of our common
stock.
We may, from time to time, increase the conversion rate by any amount
for any period of at least 20 days if our Board of Directors has determined that
such increase would be in our best interests. If our Board of Directors makes
such a determination, it will be conclusive. We will give holders of notes at
least 15 days' notice of such an increase in the Conversion Rate. No such
increase will be taken into account for purposes of determining whether the
closing price of the common stock exceeds the conversion price by 105% in
connection with an event which otherwise would be a "change in control," as
defined below.
If at any time we distribute property to our shareholders that would be
taxable to such shareholders as a dividend for United States federal income tax
purposes, for example, distributions of evidences of indebtedness or assets of
Millennium, but generally not stock dividends on common stock or rights to
subscribe for common stock, and, pursuant to the anti-dilution provisions of the
indenture, the number of shares into which notes are convertible is increased,
that increase may be deemed for United States federal income tax purposes to be
the payment of a taxable dividend to holders of notes. See "Material United
States Federal Income Tax Considerations."
SUBORDINATION
The notes are subordinated and, as a result, the payment of the
principal, any premium and interest on the notes, including amounts payable on
any redemption or repurchase, will be subordinated to the prior payment in full
of all our senior debt. "Senior debt" means all other amounts payable in
connection with, the following, whether outstanding on the date of the indenture
or arising later:
- our indebtedness evidenced by a credit or loan agreement, note,
bond, debenture or other similar instrument;
- all our obligations for money borrowed;
- our obligations as lessee under leases required to be capitalized
on the balance sheet of the lessee under generally accepted
accounting principles;
- all our obligations under interest rate and currency swaps, caps,
floors, collars, hedge agreements, forward contracts or similar
agreements or arrangements;
- all our obligations with respect to letters of credit, bankers'
acceptances and similar facilities, including related
reimbursement obligations;
- all our obligations issued or assumed as the deferred purchase
price of property or services, but excluding trade accounts
payable and accrued liabilities arising in the ordinary course of
business;
- all our obligations of the type referred to above of another
person and all dividends of another person, the payment of which,
in either case, we have assumed or guaranteed,
23
<PAGE>
or for which we are responsible or liable, directly or
indirectly, jointly or severally, as obligor, guarantor or
otherwise, or which is secured by a lien on our property; and
- renewals, extensions, modifications, replacements, restatements
and refundings of, or any indebtedness or obligation issued in
exchange for any indebtedness or obligation described above.
Senior debt does not include any indebtedness or obligation if the
terms of the indebtedness or obligation, or the terms of the instrument under
which the indebtedness or obligation is issued, expressly provide that the
indebtedness or obligation is not superior in right of payment to the notes. In
addition, Senior debt does not include any particular indebtedness or obligation
that we may owe to any of our direct or indirect subsidiaries.
We may not make any payment on account of principal, premium or
interest on the notes, or redemption or repurchase of the notes, if either of
the following occurs:
- we default in our obligations to pay principal, premium, interest
or other amounts on our senior debt, including a default under
any redemption or repurchase obligation, and the default
continues beyond any grace period that we may have to make those
payments; or
- an event of default occurs and is continuing on any Designated
Senior Debt, as defined below, and (A) the event of default
permits the holders of the Designated Senior Debt to accelerate
its maturity and (B) the trustee has received a payment blockage
notice of the default from a holder of the Designated Senior
Debt.
If payments of the notes have been blocked by a payment default on
senior debt, payments on the notes may resume when the payment default has been
cured or waived. If payments on the notes have been blocked by a nonpayment
default, payments on the notes may resume on the earlier of (A) the date the
nonpayment default is cured or waived or (B) 179 days after the payment blockage
notice is received unless the Designated Senior Debt has been accelerated.
No nonpayment default that existed on the day a payment blockage notice
was delivered to the trustee can be used as the basis for any subsequent payment
blockage notice. In addition, once a holder of Designated Senior Debt has
blocked payment on the notes by giving a payment blockage notice, no new period
of payment blockage can be commenced until both of the following are satisfied:
- 365 days have elapsed since the effectiveness of the immediately
prior payment blockage notice; and
- all scheduled payments of principal, any premium and interest on
the notes that have come due have been paid in full in cash.
"Designated Senior Debt" means our obligations under any particular
senior debt in which the instrument creating or evidencing the debt, or the
assumption or guarantee of the debt, or related agreements or documents to which
we are a party, expressly provides that the indebtedness will be "Designated
Senior Debt" for purposes of the indenture. That instrument, agreement or other
document may place limitations and conditions on the right of that senior debt
to exercise the rights of Designated Senior Debt.
In addition, upon any acceleration of the principal due on the notes as
a result of an event of default or payment or distribution of our assets to
creditors upon any dissolution, winding up, liquidation or reorganization,
whether voluntary or involuntary, marshaling of assets, assignment for the
benefit of credits, or in bankruptcy, insolvency, receivership or other similar
proceedings, all principal, premium,
24
<PAGE>
interest and other amounts due or to become due on all senior debt must be paid
in full before you will be entitled to receive any payment. Because of this
subordination, in the event of insolvency, our creditors who are holders of
senior debt may recover more, ratably, than you would, and this subordination
may reduce or eliminate payments to you. As of March 31, 2000, we had
approximately $50.729 million of senior debt outstanding.
In addition, the notes are "structurally subordinated" to all
indebtedness and other liabilities, including trade payables and lease
obligations, of our subsidiaries. This occurs because any right of Millennium to
receive any assets of our subsidiaries upon their liquidation or reorganization,
and the consequent right of the holders of the notes to receive a portion of
those assets, will be effectively subordinated to the claims of that
subsidiary's creditors, including trade creditors, unless Millennium itself is
recognized as a creditor of the subsidiary. Even if Millennium is recognized as
a creditor of the subsidiary, the claims of Millennium would still be
subordinate to any security interest in the assets of the subsidiary and any
indebtedness of the subsidiary that is senior to that held by Millennium.
The indenture does not limit our ability or the ability of any of our
subsidiaries to incur indebtedness, including senior debt.
OPTIONAL REDEMPTION
On and after January 15, 2003, we may redeem the notes, in whole or in
part, at our option, at the redemption prices specified below. The redemption
price, expressed as a percentage of principal amount, is as follows for the
12-month periods beginning on January 15 of the following years:
<TABLE>
<CAPTION>
YEAR REDEMPTION
PRICE
- ---- ----------
<S> <C>
2003................................................... 103.1429%
2004................................................... 102.3571%
2005................................................... 101.5714%
2006................................................... 100.7857%
</TABLE>
and 100% of the principal amount on or after January 15, 2007. In each case we
will also pay accrued interest to the redemption date. The Indenture requires us
to give notice of redemption not more than 60 and not less than 30 days before
the redemption date.
No "sinking fund" is provided for the notes, which means that the
indenture does not require us to redeem or retire the notes periodically.
REPURCHASE AT OPTION OF HOLDERS UPON A CHANGE IN CONTROL
If a change in control, as defined below, occurs, you will have the
right, at your option, to require us to repurchase all of your notes not called
for redemption, or any portion of the principal amount of your notes that is
equal to $1,000 or any integral multiple of $1,000. The price we are required to
pay is 100% of the principal amount of the notes to be repurchased, together
with interest accrued to the repurchase date.
At our option, instead of paying the repurchase price in cash, we may
pay the repurchase price in common stock valued at 95% of the average of the
closing sales prices of the common stock for the five trading days immediately
preceding and including the third day prior to the repurchase date. We may only
pay the repurchase price in our common stock if we satisfy the conditions
specified in the indenture.
25
<PAGE>
Within 30 days after the occurrence of a change in control, we are
obligated to give you notice of the change in control and of the repurchase
right arising as a result of the change in control. We must also deliver a copy
of this notice to the trustee. To exercise the repurchase right, you must
deliver on or before the 30th day after the date of our notice irrevocable
written notice to the trustee of your exercise of your repurchase right,
together with the notes with respect to which that right is being exercised. We
are required to make the repurchase on the date that is 45 days after the date
of our notice.
For these purposes, a change in control will occur if any of the
following occurs:
- any person except for Millennium, any subsidiary of Millennium or
any employee benefit plan of Millennium, acquires beneficial
ownership, directly or indirectly of 50% or more of the total
voting power of all shares of our capital stock;
- we consolidate with or merge with or into any other person or
another person merges into us, except if the transaction
satisfies any of the following:
- the holders of 50% or more of the total voting power of all
shares of our capital stock before the transaction have,
directly or indirectly, 50% or more of the total voting
power of all shares of capital stock of the continuing or
surviving corporation after the transaction;
- the transaction is a merger which does not result in any
reclassification, conversion, exchange or cancellation of
outstanding shares of our capital stock; or
- the transaction is a merger effected only to change our
jurisdiction of incorporation and it results in a
reclassification, conversion or exchange of outstanding
shares of our common stock only into shares of common stock
of us or another corporation; or
- we convey, transfer, sell, lease or otherwise dispose of all or
substantially all of our assets to another person, unless the
holders of 50% or more of the total voting power of all shares of
our capital stock before the transaction have, directly or
indirectly, 50% or more of the total voting power of all shares
of capital stock of such person after the transaction.
However, a change in control will not occur if the closing sales price
per share of our common stock for any five trading days within the period of 10
consecutive trading days ending immediately after the later of the change in
control or the public announcement of the change in control, in the case of a
change in control relating to an acquisition of capital stock, or the period of
10 consecutive trading days ending immediately before the change in control, in
the case of change in control relating to a merger, consolidation or asset sale,
equals or exceeds 105% of the conversion price of the notes in effect on each of
those trading days.
For purposes of these provisions:
- the conversion price is equal to $1,000 divided by the conversion
rate;
- whether a person is a "beneficial owner" will be determined in
accordance with Rule 13d-3 under the Securities Exchange Act of
1934, and
- "Person" includes any syndicate or group that would be deemed to
be a "person" under Section 13(d)(3) of the Exchange Act.
26
<PAGE>
Rule 13e-4 under the Exchange Act requires the dissemination of
prescribed information to security holders in the event of an issuer tender
offer and may apply in the event that the repurchase option becomes available to
you. We will comply with this rule to the extent it applies at that time.
We may, to the extent permitted by applicable law, at any time purchase
notes in the open market or by tender at any price or by private agreement. Any
note that we so purchase may, to the extent permitted by applicable law, be
reissued or resold or may, at our option, be surrendered to the trustee for
cancellation. Any notes surrendered may not be reissued or resold and will be
canceled promptly.
The definition of change in control includes a phrase relating to the
conveyance, transfer, sale, lease or disposition of "all or substantially all"
of our assets. There is no precise, established definition of the phrase
"substantially all" under applicable law. Accordingly, your ability to require
us to repurchase your notes as a result of conveyance, transfer, sale, lease or
other disposition of less than all of our assets may be uncertain.
The foregoing provisions would not necessarily provide you with
protection if we are involved in a highly leveraged or other transaction that
may adversely affect you.
Our ability to repurchase notes upon the occurrence of a change in
control is subject to important limitations. Moreover, a change in control could
cause an event of default under, or be prohibited or limited by, or require
consent under, the terms of our senior debt. As a result, unless we were to
obtain a waiver or consent, a repurchase of the notes could be prohibited under
the subordination provisions of the Indenture until the senior debt is paid in
full. Further, we cannot assure you that we would have the financial resources,
or would be able to arrange financing, to pay the repurchase price for all the
notes that might be delivered by holders of notes seeking to exercise the
repurchase right. If we were to fail to repurchase the notes when required
following a change in control, an event of default under the indenture would
occur, whether or not such repurchase is permitted by the subordination
provisions of the Indenture. Any such default may, in turn, cause a default
under our senior debt. See "--Subordination."
MERGERS AND SALES OF ASSETS
We may not consolidate with or merge into any other person or convey,
transfer, sell or lease our properties and assets substantially as an entirety
to any person, and we may not permit any person to consolidate with or merge
into us or convey, transfer, sell or lease such person's properties and assets
substantially as an entirety to us, unless both of the following requirements is
met:
- Either:
- We are the surviving or purchasing entity; or
- The resulting, surviving or purchasing entity is a
corporation organized under the laws of any state in the
United States or the District of Columbia and expressly
assumes by supplemental indenture all of our obligations in
connection with the notes and the indenture; and
- No event of default exists immediately before or after the merger,
consolidation or sale.
EVENTS OF DEFAULT
The following are events of default under the indenture:
- if we fail to pay principal of or any premium on any note when due,
whether or not the subordination provisions of the indenture prohibit
the payment;
27
<PAGE>
- if we fail to pay any interest on any note when due and that default
continues for 30 days, whether or not the subordination provisions of
the indenture prohibit the payment;
- if we fail to give the notice that we are required to give in the
event of a change in control, whether or not the subordination
provisions of the indenture prohibit the notice;
- if we fail to perform any other covenant in the indenture and that
failure continues for 60 days after written notice to us by the
trustee or the holders of at least 25% in aggregate principal amount
of outstanding notes;
- we fail to pay when due or accelerated any indebtedness of ours or any
of our subsidiaries in excess of $10,000,000, and any grace period has
expired, if we do not discharge the indebtedness, or our lender does
not annul the acceleration, within 30 days after written notice to us
by the trustee or the holders of at least 25% in aggregate principal
amount of the outstanding notes; and
- events of bankruptcy, insolvency or reorganization with respect to us
or any of our significant subsidiaries specified in the indenture.
Except as required by the indenture, the trustee is under no obligation
to exercise any of its rights or powers under the indenture at the request or
direction of any of the holders, unless such holders shall have offered to
reasonably indemnify the trustee. Subject to such provisions for indemnifying
the trustee, the holders of a majority in aggregate principal amount of the
outstanding notes have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee or exercising
any trust or power conferred on the trustee.
If an event of default, other than an event of default arising from
events of bankruptcy, insolvency or reorganization, occurs and is continuing,
either the trustee or the holders of at least 25% in principal amount of the
outstanding notes may accelerate the maturity of all notes. After acceleration,
but before a judgment or decree based on acceleration, the holders of a majority
in aggregate principal amount of outstanding notes may, under circumstances set
forth in the indenture, rescind the acceleration if all events of default, other
than the nonpayment of principal of the notes which have become due solely
because of the acceleration, have been cured or waived as provided in the
indenture. If an event of default arising from events of bankruptcy, insolvency
or reorganization occurs and is continuing, then the principal of, and accrued
interest on, all of the notes will automatically become immediately due and
payable without any declaration or other act on the part of the holders of the
notes or the trustee.
Before you may take any action to institute any proceeding relating to
the indenture, or to appoint a receiver or a trustee, or for any other remedy,
each of the following must occur:
- you must have given the trustee written notice of a continuing event
of default;
- the holders of at least 25% of the aggregate principal amount of all
outstanding notes must make a written request of the trustee to take
action because of the default and must have offered reasonable
indemnification to the trustee against the cost, liabilities and
expenses of taking such action; and
- the trustee must not have taken action for 60 days after receipt of
such notice and offer of indemnification.
These limitations do not apply to a suit for the enforcement of payment
of the principal of or any premium or interest on a note, or the repurchase
price payable for a note, on or after the due dates for such payments or of the
right to convert the note in accordance with the Indenture.
28
<PAGE>
We will furnish to the trustee annually a statement as to our
performance of our obligations under the Indenture and as to any default in
performance.
MODIFICATION AND WAIVER
The consent of the holders of a majority in principal amount of the
outstanding notes affected is required to make a modification or amendment to
the Indenture. However, a modification or amendment requires the consent of the
holder of each outstanding note affected if it would:
- change the stated maturity of the principal or interest of a note;
- reduce the principal amount of, any premium on, or interest on, any
note;
- reduce the amount payable upon a redemption or mandatory repurchase;
- modify the provisions with respect to the repurchase rights of holders
of notes in a manner adverse to the holders;
- change the place or currency of payment on a note;
- impair the right to institute suit for the enforcement of any payment
on any note;
- modify the subordination provisions in a manner that is adverse to the
holders of the notes;
- adversely affect the right to convert the notes;
- modify our obligation to deliver information required under Rule 144A
to permit resales of the notes and common stock issued upon conversion
of the notes if we cease to be subject to the reporting requirements
under the Exchange Act;
- reduce the percentage of holders whose consent is needed to modify or
amend the Indenture;
- reduce the percentage of holders whose consent is needed to waive
compliance with certain provisions of the Indenture or to waive
certain defaults; or
- modify the provisions dealing with modification and waiver of the
indenture.
The holders of a majority in principal amount of the outstanding notes
must consent to waive compliance by us with certain restrictive provisions of
the Indenture. The holders of a majority in principal amount of the outstanding
notes may waive any past default, except an uncured default in the payment of
principal, any premium, interest or the repurchase price.
Notes will not be considered outstanding if money for their payment or
redemption has been deposited or set aside in trust for the holders.
We are generally entitled to set any day as a record date for the
purpose of determining the holders of outstanding notes that are entitled to
take any action under the indenture. In limited circumstances, the trustee is
entitled to set a record date for action by holders. If a record date is set for
any action to be taken by holders, such action may be taken only by persons who
are holders of outstanding notes on the record date and must be taken within 180
days following the record date or such
29
<PAGE>
other period as we may specify. If the trustee sets the record date, it may
specify the period following the record date in which the action must be taken.
This period may be shortened or lengthened as long as it is less than 180 days.
REGISTRATION RIGHTS
When we issued the notes, we entered into a registration rights
agreement and agreed to file the shelf registration statement of which this
prospectus is a part. Under the registration rights agreement we also agreed
that we will, at our expense:
- use our reasonable efforts to cause the shelf registration statement
to be declared effective under the Securities Act by July 18, 2000,
subject to our right to postpone having the shelf registration
statement declared effective for an additional 90 days in limited
circumstances; and
- use our reasonable efforts to keep effective the shelf registration
statement until the earlier of:
- two years after the date it is declared effective; or
- the date on which there are no outstanding registrable
securities.
We are permitted to suspend the use of this prospectus in connection
with sales of registrable securities during prescribed periods of time for
reasons relating to pending corporate developments, public filings with the SEC
and other events. The periods during which we can suspend the use of the
prospectus may not, however, exceed a total of 45 days in any 90-day period or a
total of 90 days in any 365-day period. We will provide to each holder of
registrable securities copies of this prospectus, notify each holder when the
shelf registration statement has become effective and take certain other actions
required to permit public resales of the registrable securities. We will issue a
press release to Reuters Economic Services and Bloomberg Business News promptly
following the effectiveness of the shelf registration statement and take certain
other actions required to permit public resales of the registrable securities.
We may, upon written notice to all the holders of notes, postpone
having the shelf registration statement declared effective for a reasonable
period not to exceed 90 days if we possess material non-public information the
disclosure of which would have a material adverse effect on us and our
subsidiaries taken as a whole. Notwithstanding any such postponement, additional
interest, referred to as "liquidated damages," will accrue on the notes if the
shelf registration statement is not declared effective by July 18, 2000.
In that case, liquidated damages will accrue (1) in respect of the
notes at the rates set forth below on the principal amount of the notes and (2)
in respect of the common stock issued upon conversion of the notes, at the rates
set forth below applied to the conversion price at that time. Liquidated damages
will accrue on the notes from and including the day following the registration
default to but excluding the day on which the registration default has been
cured. Liquidated damages will be paid semi-annually in arrears, with the first
semi-annual payment due on the first interest payment date following the date on
which the liquidated damages begin to accrue.
The rates at which liquidated damages will accrue will be as follows:
- 0.25% of the principal amount per annum to and including the 90th day
after the registration default; and
30
<PAGE>
- 0.5% of the principal amount per annum from and after the 91st day
after the registration default.
In addition, the interest rate on the notes will be increased if:
- the shelf registration statement ceases to be effective, or we
otherwise prevent or restrict holders of registrable securities from
making sales under the shelf registration statement, for more than 45
days, whether or not consecutive, during any 90-day period; or
- the shelf registration statement ceases to be effective, or we
otherwise prevent or restrict holders of registrable securities from
making sales under the shelf registration statement, for more than 90
days, whether or not consecutive, during any 365-day period.
In either event, the interest rate on the notes will increase by 0.50%
per annum (1) in respect of the notes, on the principal amount of the notes and
(2) in respect of the common stock issued upon conversion of the notes, applied
to the conversion price at that time. Liquidated damages will accrue from the
46th day of the 90-day period or the 91st day of the 365-day period. The
increased rate will continue until the earlier of the following:
- the time the shelf registration statement again becomes effective or
the holders of registrable securities are again able to make sales
under the shelf registration statement, depending on which event
triggered the increase in interest rate; or
- the time the shelf registration statement is no longer required to be
kept effective.
We have agreed in the registration rights agreement to use all
reasonable efforts to cause the shares of our common stock issuable upon
conversion of the notes to be quoted on The Nasdaq National Market. However, if
the common stock is not then quoted on The Nasdaq National Market, we will use
all reasonable efforts to cause the shares of common stock upon conversion of
the common stock to be quoted or listed on whichever market or exchange the
common stock is then quoted or listed, upon effectiveness of the shelf
registration statement.
This summary of certain provisions of the registration rights agreement
is not complete and is subject to, and qualified in its entirety by reference
to, all the provisions of the registration rights agreement, a copy of which
will be made available to beneficial owners of the notes upon request to us.
NOTICES
We will give notice to holders of the notes by mail to the addresses of
the holders as they appear in the security register. Notices will be deemed to
have been given on the date of mailing.
REPLACEMENT OF NOTES
We will replace, at the expense of the holders, notes that become
mutilated, destroyed, stolen or lost upon delivery to the trustee of the
mutilated notes or evidence of the loss, theft or destruction thereof
satisfactory to us and the trustee. In the case of a lost, stolen or destroyed
note, indemnity satisfactory to the trustee and us may be required at the
expense of the holder of the note before a replacement note will be issued.
THE TRUSTEE
State Street Bank and Trust Company is the trustee for the holders of
notes issued under the indenture. If an event of default shall occur, and shall
not be cured, the trustee will be required to use the
31
<PAGE>
degree of care of a prudent person in the conduct of his own affairs in the
exercise of its powers. Subject to these provisions, the trustee will be under
no obligation to exercise any of its rights or powers under the indenture at the
request of any holders of notes, unless they shall have offered to the trustee
reasonable security or indemnity.
32
<PAGE>
DESCRIPTION OF CAPITAL STOCK
THE FOLLOWING DESCRIPTION OF OUR COMMON STOCK AND PREFERRED STOCK
SUMMARIZES THE MATERIAL TERMS AND PROVISIONS OF THESE TYPES OF SECURITIES. FOR
THE COMPLETE TERMS OF OUR COMMON STOCK AND PREFERRED STOCK, PLEASE REFER TO OUR
CHARTER AND BYLAWS THAT ARE INCORPORATED BY REFERENCE INTO THE REGISTRATION
STATEMENT WHICH INCLUDES THIS PROSPECTUS. THE TERMS OF THESE SECURITIES MAY ALSO
BE AFFECTED BY THE DELAWARE GENERAL CORPORATION LAW. WHILE THE TERMS SUMMARIZED
BELOW WILL APPLY GENERALLY TO ANY FUTURE COMMON STOCK OR PREFERRED STOCK THAT WE
MAY OFFER, THE PARTICULAR TERMS OF ANY SERIES OF THESE SECURITIES WILL BE
DESCRIBED IN MORE DETAIL IN THE APPLICABLE PROSPECTUS SUPPLEMENT AND MAY VARY
FROM THE TERMS SUMMARIZED BELOW.
On February 28, 2000, our board of directors approved a two-for-one
split of our common stock in the form of a stock dividend. The distribution date
for this stock dividend was April 18, 2000. On the dividend distribution date,
stockholders of record as of March 28, 200 received one additional share of
common stock for each share held on March 28, 2000.
On January 31, 2000, our board of directors voted to recommend to our
stockholders that our corporate charter be amended to increase the authorized
number of shares of common stock, $0.001 par value per share, from 100,000,000
shares to 500,000,000 shares. This proposal was adopted at our annual meeting of
stockholders held on April 12, 2000 and our charter was so amended on that date.
On March 31, 2000 we had 91,314,874 shares of common stock issued and
outstanding.
We also are authorized by our charter to issue 5,000,000 shares of
undesignated preferred stock, $.001 par value per share, of which no shares are
issued and outstanding.
COMMON STOCK
VOTING. Holders of common stock are entitled to one vote for each share
held on all matters submitted to a vote of stockholders and do not have
cumulative voting rights. Accordingly, holders of a majority of the shares of
common stock entitled to vote in any election of directors may elect all of the
directors standing for election.
DIVIDENDS. If our board of directors declares a dividend, holders of
common stock will receive payments on a ratable basis from our funds that are
legally available to pay dividends. However, this dividend right is subject to
any preferential dividend rights we may grant to the persons who hold preferred
stock, if any is outstanding.
LIQUIDATION. If we are dissolved, the holders of our common stock will
be entitled to share ratably in all the assets that remain after we pay our
liabilities and any amounts we may owe to the persons who hold preferred stock,
if any is outstanding.
OTHER. Holders of our common stock do not have preemptive,
subscription, redemption or conversion rights. The outstanding shares of our
common stock are, and the shares issuable by us upon the conversion of the notes
and upon exercise of the warrants will be, when issued, fully paid and
nonassessable.
PREFERRED STOCK
Our board of directors is authorized, subject to any limitations
prescribed by law, without further stockholder approval, to issue from time to
time up to 5,000,000 shares of preferred stock, in one or more series. Each such
series of preferred stock shall have such number of shares, designations,
preferences, voting powers, qualifications and special or relative rights or
privileges as shall be determined by our
33
<PAGE>
board of directors, which may include, among others, dividend rights, voting
rights, redemption and sinking fund provisions, liquidation preferences,
conversion rights and preemptive rights.
Our stockholders have granted the board of directors authority to issue
the preferred stock and to determine its rights and preferences in order to
eliminate delays associated with a stockholder vote on specific issuances. The
rights of the holders of common stock will be subject to, and may be adversely
affected by, the rights of holders of any preferred stock that may be issued in
the future. The issuance of preferred stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, a majority
of our outstanding voting stock. We have no present plans to issue any shares of
preferred stock.
WARRANTS
As of March 31, 2000, there were outstanding warrants to purchase an
aggregate of 577,710 shares of common stock, at exercise prices ranging from
$1.50 per share to $18.80 per share. None of the warrants confer upon their
holders any rights as stockholders.
DELAWARE LAW AND CERTAIN CHARTER AND BY-LAW PROVISIONS
BUSINESS COMBINATIONS. We are subject to the provisions of Section 203
of the General Corporation Law of Delaware. Section 203 prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. A "business
combination" includes mergers, asset sales and other transactions resulting in a
financial benefit to the interested stockholder. Subject to certain exceptions,
an "interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years did own, 15% or more of the
corporation's voting stock.
STAGGERED BOARD. Our certificate of incorporation provides for the
division of our board of directors into three classes as nearly equal in size as
possible with staggered three-year terms. In addition, our certificate of
incorporation provides that directors may be removed only for cause by the
affirmative vote of the holders of two-thirds of the shares of capital stock of
the corporation entitled to vote. Under our certificate of incorporation, any
vacancy on the board of directors, however occurring, including a vacancy
resulting from an enlargement of the board of directors, may only be filled by
vote of a majority of the directors then in office. The classification of the
board of directors and the limitations on the removal of directors and filling
of vacancies could have the effect of making it more difficult for a third party
to acquire, or of discouraging a third party from acquiring, control of us.
SUPERMAJORITY VOTES REQUIRED. The Corporation Law of Delaware provides
generally that the affirmative vote of a majority of the shares entitled to vote
on any matter is required to amend a corporation's certificate of incorporation
or bylaws, unless a corporation's certificate of incorporation or bylaws, as the
case may be, requires a greater percentage. Our certificate of incorporation and
bylaws require the affirmative vote of the holders of at least 75% of the shares
of our common stock issued and outstanding and entitled to vote to amend or
repeal any of the provisions described in the prior paragraph.
INDEMNIFICATION. Our certificate of incorporation contains certain
provisions permitted under the Corporation Law of Delaware relating to the
liability of directors. The provisions eliminate a director's liability for
monetary damages for a breach of fiduciary duty, except in certain circumstances
involving wrongful acts, such as the breach of a director's duty of loyalty or
acts or omissions which involve intentional misconduct or a knowing violation of
law. The limitation of liability described above does not alter the liability of
our directors and officers under federal securities laws. Furthermore, our
certificate of incorporation contains provisions to indemnify our directors and
officers to the fullest extent permitted by the Corporation Law of Delaware.
These provisions do not limit or eliminate our right or the right of any
34
<PAGE>
stockholder to seek non-monetary relief such as an injunction or rescission in
the event of a breach by a director or an officer of his duty of care to us. We
believe that these provisions will assist us in attracting and retaining
qualified individuals to serve as directors.
STOCKHOLDER ACTION; SPECIAL MEETING OF STOCKHOLDERS. Our certificate of
incorporation provides that stockholders may take action only at a duly called
annual or special meeting of stockholders and may not take action by written
consent. Our certificate of incorporation further provides that special meetings
of our stockholders may be called only by the chairman of the board, by a
majority of the board of directors or by our Chief Executive Officer, and in no
event may the stockholders call a special meeting.
ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS. Our bylaws provide that stockholders seeking to bring business
before an annual meeting of stockholders, or to nominate candidates for election
as directors at an annual meeting of stockholders, must provide timely written
notice. To be timely, a stockholder's notice must be delivered to or mailed and
received at our principal executive offices not less than 60 days nor more than
90 days prior to the meeting, provided, however, that if less than 70 days
notice of the meeting date is provided, the stockholder's notice must be
received within 10 days following such notice of the meeting date. The bylaws
also include a similar requirement for making nominations at special meetings
and specify certain requirements as to the form and content of a stockholder's
notice. These provisions may preclude stockholders from bringing matters before
an annual meeting of stockholders or from making nomination for directors at an
annual or special meeting of stockholders.
AUTHORIZED BUT UNISSUED SHARES. The authorized but unissued shares of
common stock and preferred stock are available for future issuance without
stockholder approval, subject to limitations imposed by the Corporation Law of
Delaware and the Nasdaq National Market. These additional shares may be utilized
for a variety of corporate purposes, including future public offerings to raise
additional capital, corporate acquisitions and employee benefit plans. The
existence of authorized but unissued and unreserved common stock and preferred
stock could render more difficult or discourage an attempt to obtain control of
us by means of a proxy contest, tender offer, merger or otherwise.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is Boston
EquiServe L.P., Canton, Massachusetts.
THE WARRANTS
We issued the warrants to purchase shares of common stock to
predecessors of GATX Capital Corporation and MM Ventures on October 28, 1994 in
connection with an equipment financing transaction. The warrants entitle the
holders to purchase a total of 211,554 shares of our common stock at an exercise
price of $1.50 per share at any time through October 28, 2004.
35
<PAGE>
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a description of the material U.S. federal income tax
considerations relating to the purchase, ownership and disposition of the notes
and of common stock into which notes may be converted, but does not purport to
be a complete analysis of all the potential tax considerations relating thereto.
This description is based on laws, regulations, rulings and decisions now in
effect, all of which are subject to change, possibly with retroactive effect.
Except as specifically discussed below with regard to holders who are not U.S.
persons, as that term is defined in the Internal Revenue Code, this summary
applies only to holders (which, for purposes of this section shall mean the
beneficial owners of the notes and the common stock) who will hold notes and
common stock into which notes may have been converted as "capital assets"
(within the meaning of Section 1221 of the Internal Revenue Code) and who, for
U.S. federal income tax purposes, are:
- individual citizens or residents of the U.S.,
- corporations,
- partnerships,
- other entities created or organized in or under the laws of the U.S.
or of any political subdivision thereof, or
- estates, the income of which are subject to U.S. federal income
taxation regardless of the source of such income or trusts subject to
the primary supervision of a U.S. court and the control of one or more
U.S. persons.
Persons that are not U.S. persons are subject to special U.S. federal income tax
considerations, some of which are discussed below.
This discussion does not address tax considerations applicable to an
investor's particular circumstances or to investors that may be subject to
special tax rules, such as:
- banks,
- holders subject to the alternative minimum tax,
- tax-exempt organizations,
- insurance companies,
- foreign persons except to the extent specifically set forth below,
- dealers in securities or currencies,
- persons that will hold notes as a position in a hedging transaction,
straddle or conversion transaction for tax purposes,
- traders in securities that elect to use the mark-to-market method of
accounting,
- persons whose functional currency for tax purposes is not the U.S.
dollar, or
36
<PAGE>
- persons deemed to sell notes or common stock under the constructive
sale provisions of the Internal Revenue Code.
We have not sought any ruling from the Internal Revenue Service or an
opinion of counsel with respect to the statements made and the conclusions
reached in the following summary, and there can be no assurance that the
Internal Revenue Service will agree with such statements and conclusions. This
description does not consider the effect of U.S. federal estate or gift tax
laws, except as set forth below with respect to holders who are not U.S.
persons, or the tax laws of any applicable foreign, state, local or other
jurisdiction.
INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN
TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME
TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING
UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE,
LOCAL OR FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
TAXATION OF INTEREST
Interest paid on the notes will be included in the income of a holder
as ordinary income at the time it is received or accrued, in accordance with the
holder's regular method of tax accounting. Under Treasury Regulations, the
possibility of an additional payment under a note may be disregarded for
purposes of determining the amount of interest or original issue discount income
to be recognized by a holder in respect of such note (or the timing of such
recognition) if the likelihood of the payment, as of the date the notes are
issued, is remote. Our failure to file or cause to be declared effective a shelf
registration statement as described under "Description of the
Notes--Registration Rights" may result in the payment of predetermined
liquidated damages in the manner described therein. In addition, a holder may
require us to redeem any and all of his notes in the event of a change in
control. We believe that the likelihood of a liquidated damages payment with
respect to the notes is remote and do not intend to treat such possibility as
affecting the yield to maturity of any note. Similarly, we intend to take the
position that the likelihood of a change in control is remote under the Treasury
Regulations, and likewise do not intend to treat the possibility of a change in
control as affecting the yield to maturity of any note. In the event either
contingency occurs, it would affect the amount and timing of the income that
must be recognized by a holder of notes.
MARKET DISCOUNT
The market discount rules discussed below apply to a note purchased at
a price less that its stated redemption price at maturity.
A holder that purchases a note at a market discount generally will be
required to treat any principal payment on the note and any gain on the
disposition of the note as ordinary income to the extent of the accrued market
discount (not previously included in income) at the time of such payment or
disposition. In general, market discount is the amount by which the note's
stated redemption price at maturity exceeds the holder's basis in the note
immediately after the note is acquired. A note is not treated as purchased at a
discount, however, if the market discount is less than .25 percent of the stated
redemption price at maturity multiplied by the number of complete years to
maturity from the date the holder acquired the note. Market discount on a note
will accrue on a straight-line basis, unless the holder elects to accrue such
discount on a constant yield-to-maturity basis. This election is irrevocable and
applies only to the note for which it is made. The holder may also elect to
include market discount in income currently as it accrues. This election applies
to all market discount obligations acquired on or after the first day of the
first taxable year to which the election applies and may not be revoked without
the consent of the Internal Revenue Service.
37
<PAGE>
If a holder of a note acquired at a market discount disposes of such
note in any non-taxable transaction (other than a transaction described in
Section 1276(c) of the Internal Revenue Code), accrued market discount will be
includible as ordinary income to the holder as if such holder had sold the note
at its fair market value. Although it is not free from doubt, any accrued market
discount not taken into income prior to the conversion of a note into shares of
common stock should carry over to the common stock received upon the conversion
and be treated as ordinary income upon a subsequent disposition of the common
stock to the extent of any gain recognized on such disposition. A holder may be
required to defer until maturity of the note (or, in certain circumstances, its
earlier disposition) the deduction of all or a portion of the interest expense
attributable to debt incurred or continued to purchase or carry a note with
market discount, unless an election to include the market discount in income on
a current basis is made.
AMORTIZABLE BOND PREMIUM
If a holder purchases a note for an amount that, after being reduced by
an amount equal to the value of the conversion feature, is in excess of the
note's stated redemption price at maturity, such holder will generally be
considered to have purchased a note with "amortizable bond premium." A holder
generally may elect to amortize such premium using the constant
yield-to-maturity method. The amount amortized in any year generally will be
treated as a reduction of the holder's interest income on the note. If the
amortizable bond premium allocable to a year exceeds the amount of interest
allocable to that year, the excess would be allowed as a deduction for that year
but only to the extent of the holder's prior interest inclusions with respect to
the note. The premium on a note held by a holder that does not make such an
election will decrease the gain or increase the loss otherwise recognizable on
the sale, redemption, retirement or other disposition of the note. The election
to amortize the premium on a constant yield-to-maturity method generally applies
to all bonds held or subsequently acquired by the electing holder on or after
the first day of the first taxable year to which the election applies and may
not be revoked without the consent of the Internal Revenue Service. On
conversion of a note into shares of common stock, no additional amortization of
any bond premium would be allowed and any remaining premium would be added to
the holder's basis in the common stock received.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
Upon the sale, exchange (other than a conversion) or redemption of a
note, a holder generally will recognize capital gain or loss equal to the sum of
the amount of cash proceeds and the fair market value of any property received
on the sale, exchange or redemption, minus such holder's adjusted tax basis in
the note. Any amounts attributable to accrued interest, however, will be taxed
as ordinary income to the extent the holder had not previously included such
amounts in the holder's taxable income. A holder's adjusted tax basis in a note
generally will equal the cost of the note to such holder increased by the amount
of any accrued interest previously included in the holder's taxable income. Such
capital gain or loss will be long-term capital gain or loss if the holder's
holding period in the note is more than one year at the time of sale, exchange
or redemption. Long-term capital gains recognized by an individual will
generally be subject to a maximum rate of tax of 20%. The deductibility of
capital losses is subject to limitations.
CONVERSION OF THE NOTES
A holder generally will not recognize any income, gain or loss upon
conversion of a note into common stock except to the extent that any portion of
the common stock is considered to be attributable to accrued interest not
previously included in income and thus taxable as ordinary income, or with
respect to cash received in lieu of a fractional share of common stock. A
holder's tax basis in the common stock received on conversion of a note will be
the same as such holder's adjusted tax basis in the note at the time of
conversion reduced by any basis allocable to a fractional share interest, and
the holding period for the common stock received on conversion will generally
include the holding period of the note converted, except that a holder's tax
basis in shares of common stock considered attributable to accrued interest
38
<PAGE>
generally will equal the amount of such accrued interest included in income, and
the holding period for such shares shall begin on the date following the day of
conversion.
Cash received in lieu of a fractional share of common stock upon
conversion will be treated as a payment in exchange for the fractional share of
common stock. Accordingly, the receipt of cash in lieu of a fractional share of
common stock generally will result in capital gain or loss (measured by the
difference between the cash received for the fractional share and the holder's
adjusted tax basis in the fractional share).
DIVIDENDS
Dividends, if any, paid on the common stock after a conversion
generally will be included in the income of a holder as ordinary income to the
extent of our current or accumulated earnings and profits. Distributions in
excess of our current and accumulated earnings and profits will be treated as a
return of capital to the extent of the holder's basis in the common stock and
thereafter as capital gain.
Holders of convertible debt instruments such as the notes may, in
certain circumstances, be deemed to have received constructive distributions
where the conversion ratio of such instruments is adjusted. Adjustments to the
conversion price made pursuant to a bona fide reasonable adjustment formula
which has the effect of preventing the dilution of the interest of the holders
of the debt instruments, however, will generally not be considered to result in
a constructive distribution of stock. Certain of the possible adjustments
provided in the notes, including, without limitation, adjustments in respect of
cash distributions to our stockholders, will not qualify as being pursuant to a
bona fide reasonable adjustment formula. If such adjustments are made, the
holders of notes will be deemed to have received constructive distributions in
amounts based upon the value of such holders' increased interests in the equity
of Millennium resulting from such adjustments. The amount of any such
distribution will be treated as a distribution to a stockholder with the tax
consequences specified in the preceding paragraph. Accordingly, noteholders
could be considered to have received distributions taxable as dividends to the
extent of our current and accumulated earnings and profits even though they did
not receive any cash or property as a result of such adjustments. In certain
circumstances the failure of the notes to provide for such an adjustment may
result in a deemed distribution to the holders of common stock.
SALE OF COMMON STOCK
Upon the sale or exchange of common stock, a holder generally will
recognize capital gain or loss equal to the sum of the amount of cash and the
fair market value of any property received upon the sale or exchange minus such
holder's adjusted tax basis in the common stock. Such capital gain or loss will
be long-term capital gain or loss if the holder's holding period in the common
stock is more than one year at the time of the sale or exchange. Long-term
capital gains recognized by an individual will generally be subject to a maximum
rate of tax of 20%. The deductibility of capital losses is subject to
limitations. A holder's basis and holding period in common stock received upon
conversion of a note are generally determined as discussed above under
"--Conversion of the Notes."
SPECIAL TAX RULES APPLICABLE TO NON-U.S. HOLDERS
In general, subject to the discussion below concerning backup
withholding:
(a) Payments of principal or interest on the notes by us or any
paying agent to a beneficial owner of a note that is not a U.S. person will not
be subject to U.S. withholding tax, provided that, in the case of interest,
39
<PAGE>
(1) such holder does not own, actually or constructively,
10% or more of the total combined voting power of all classes of our stock
entitled to vote, within the meaning of Section 871(h)(3) of the Internal
Revenue Code,
(2) such holder is not a controlled foreign corporation
within the meaning of the Internal Revenue Code that is related, directly or
indirectly, to us through stock ownership,
(3) such holder satisfies the certification requirements
under Section 871(h) or Section 881(c) of the Internal Revenue Code and Treasury
Regulations thereunder,
(b) A holder of a note or common stock who is not a U.S. person
will not be subject to U.S. federal income tax on gains realized from the sale,
exchange or other disposition of such note or common stock unless
(1) such holder is an individual who is present in the
U.S. for 183 days or more in the taxable year of sale, exchange or other
disposition, and certain conditions are met,
(2) such gain is effectively connected with the conduct
by the holder of a trade or business in the U.S. and, if certain tax treaties
apply, is attributable to a U.S. permanent establishment maintained by the
holder,
(3) the holder is subject to Internal Revenue Code
provisions applicable to certain U.S. expatriates, or
(4) in the case of common stock held by a person who
holds more than 5% of such stock, we are or have been, at any time within the
shorter of the five-year period preceding such sale or other disposition or the
period such holder held the common stock, a U.S. real property holding
corporation for U.S. federal income tax purposes. We do not believe that we are
currently or ever have been a U.S. real property holding corporation or that we
will become one in the future;
(c) Interest on notes not excluded from U.S. withholding tax as
described in (a) above and dividends on common stock after conversion paid to a
holder of a note or common stock who is not a U.S. person generally will be
subject to U.S. withholding tax at a 30% rate, except where an applicable tax
treaty provides for the reduction or elimination of such withholding tax.
To satisfy the certification requirements referred to in (a) (4) above,
Sections 871(h) and 881(c) of the Internal Revenue Code and currently effective
Treasury Regulations thereunder require that either
(1) the beneficial owner of a note must certify, under
penalties of perjury, to us or our paying agent, as the case may be, that such
owner is not a U.S. person and must provide such owner's name and address, and
U.S. taxpayer identification number ("TIN"), if any, or
(2) a securities clearing organization, bank or other
financial institution that holds customer securities in the ordinary course of
its trade or business and holds the note on behalf of the beneficial owner
thereof must certify, under penalties of perjury, to us or our paying agent, as
the case may be, that such certificate has been received from the beneficial
owner and must furnish the payor with a copy thereof.
Such requirement will be fulfilled if the beneficial owner of a note
certifies on Internal Revenue Service Form W-8BEN or successor form, under
penalties of perjury, that it is not a U.S. person and provides its name and
address or any financial institution of the type described above holding the
note on behalf of the beneficial owner files a statement with the withholding
agent to the effect that it has received such a statement from the beneficial
owner and furnishes the withholding agent with a copy thereof. A
40
<PAGE>
certificate described in this paragraph is effective only with respect to
payments of interest made to the certifying holder after delivery of the
certificate in the calendar year of its delivery and the two immediately
succeeding calendar years.
Treasury Regulations effective for payments made after December 31,
2000, will provide alternative methods for satisfying the certification
requirements described above, subject to certain grandfathering provisions. The
new Treasury Regulations also will require, in the case of notes held by a
foreign partnership, that the certification be provided by the partners rather
than by the foreign partnership and that the partnership provide certain
information. A look-through rule will apply in the case of tiered partnerships.
If a holder of a note or common stock who is not a U.S. person is
engaged in a trade or business in the U.S. and if interest on the note,
dividends on the common stock, or gain realized on the sale, exchange or other
disposition of the note or common stock, is effectively connected with the
conduct of such trade or business and, if certain tax treaties apply, is
attributable to a U.S. permanent establishment maintained by the holder in the
U.S., the holder, although exempt from U.S. withholding tax provided that the
certification requirements discussed in the next sentence are met, will
generally be subject to U.S. federal income tax on such interest, dividends or
gain on a net income basis in the same manner as if it were a U.S. person. In
lieu of the certificate described above, such a holder will be required, under
currently effective Treasury Regulations, to provide us with a properly executed
Internal Revenue Service Form W-8ECI or successor form in order to claim an
exemption from withholding tax. In addition, if such holder is a foreign
corporation, it may be subject to a branch profits tax equal to 30%, or such
lower rate provided by an applicable treaty, of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments. For
purposes of the branch profits tax, interest on a note, dividends on the common
stock and any gain recognized on the sale, exchange or other disposition of a
note or common stock generally will be included in the earnings and profits of
such holder if any such interest, dividends or gain is effectively connected
with the conduct by the holder of a trade or business in the U.S. The new
Treasury Regulations will change certain of the withholding reporting and
certification requirements described above, effective for payments made after
December 31, 2000, subject to certain grandfathering provisions.
U.S. FEDERAL ESTATE TAX. A note held by an individual who at the time
of death is not a citizen or resident of the U.S. as each term is specially
defined for U.S. federal estate tax purposes, will not be subject to U.S.
federal estate tax if the individual did not actually or constructively own 10%
or more of the total combined voting power of all classes of our stock entitled
to vote and, at the time of the individual's death, payments with respect to
such note would not have been effectively connected with the conduct by such
individual of a trade or business in the U.S. Common stock held by an individual
who at the time of death is not a citizen or resident of the U.S. will be
included in such individual's estate for U.S. federal estate tax purposes unless
an applicable estate tax treaty otherwise applies.
Holders who are not U.S. persons should consult with their tax advisors
regarding U.S. and foreign tax consequences with respect to the notes and common
stock.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding of U.S. federal income tax at a rate of 31% may
apply to payments made in respect of a note or common stock to a holder that is
not an "exempt recipient" and that fails to provide certain identifying
information, such as the holder's TIN, in the manner required. Generally,
individuals are not exempt recipients, whereas corporations and certain other
entities are exempt recipients. Payments made in respect of a note or common
stock generally must be reported to the Internal Revenue Service, unless the
holder is an exempt recipient or otherwise establishes an exemption.
In the case of payments of interest on a note to a holder who is not a
U.S. person, Treasury Regulations provide that backup withholding and
information reporting will not apply to payments with
41
<PAGE>
respect to which either requisite certification has been received or an
exemption has otherwise been established; provided that neither we nor a paying
agent have actual knowledge that the holder is a U.S. person or that the
conditions of any other exemption are not in fact satisfied.
Dividends on the common stock paid to holders who are not U.S. persons
but who are subject to U.S. withholding tax, as described above, generally will
be exempt from U.S. backup withholding tax but will be subject to certain
information reporting.
Payments of the proceeds of the sale of a note or common stock to or
through a foreign office of a U.S. broker or a foreign office of a broker that
is a controlled foreign corporation within the meaning of the Internal Revenue
Code or a foreign person 50% or more of whose gross income from all sources for
the three-year period ending with the close of its taxable year preceding the
payment was effectively connected with the conduct of a trade or business within
the U.S., are currently subject to certain information reporting requirements,
unless the payee is an exempt recipient or such broker has evidence in its
records that the payee is a holder who is not a U.S. person and has no actual
knowledge that such evidence is false and certain other conditions are met.
Temporary Treasury Regulations indicate that such payments are not currently
subject to backup withholding.
Under current Treasury Regulations, payments of the proceeds of a sale
of a note or common stock to or through the U.S. office of a broker will be
subject to information reporting and backup withholding unless the payee
certifies under penalties of perjury that it is not a U.S. person (and no agent
or broker who is responsible for receiving or reviewing such statement has
actual knowledge that it is incorrect), satisfies certain other qualifications
and provides his or her name and address or the payee otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules from a payment
to a holder of a note or common stock will be allowed as a refund or credit
against such holder's U.S. federal income tax provided that the required
information is furnished to the Internal Revenue Service.
As noted above, the new Treasury Regulations will generally be
applicable to payments made after December 31, 2000. In general, the new
Treasury Regulations do not significantly alter the substantive withholding and
information reporting requirements but unify current certification procedures
and forms and clarify reliance standards. Under the new Treasury Regulations,
United States information requirements will apply to a payment made outside the
U.S. of the proceeds of a sale of a note or common share through an office
outside the United States of a broker that is a foreign partnership, if at any
time during its tax year, one or more of the partnership's partners are U.S.
persons (as defined in U.S. Treasury Regulations) who in the aggregate hold more
than 50% of the income or capital interests in the partnership, or if, at any
time during its tax year, such foreign partnership is engaged in a United States
trade or business, unless the broker has evidence in its records that the payee
is a holder who is not a U.S. person and has no actual knowledge that such
evidence is false and certain other conditions are met.
Under the new Treasury Regulations, special rules apply which permit
the shifting of primary responsibility for withholding to certain financial
intermediaries acting on behalf of beneficial owners. A holder of a note or
common stock should consult with its tax advisor regarding the application of
the backup withholding rules to its particular situation, the availability of an
exemption therefrom, the procedure for obtaining such an exemption, if
available, and the impact of the new Treasury Regulations on payments made with
respect to notes or common stock after December 31, 2000.
THE PRECEDING DISCUSSION OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES IS
FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH
PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR AS TO THE PARTICULAR
U.S. FEDERAL, STATE, AND LOCAL TAX CONSEQUENCES OF PURCHASING, HOLDING AND
DISPOSING OF THE NOTES AND COMMON STOCK. TAX ADVISORS SHOULD ALSO BE
CONSULTED AS TO THE U.S. ESTATE AND GIFT TAX CONSEQUENCES AND THE FOREIGN TAX
CONSEQUENCES OF PURCHASING,
42
<PAGE>
HOLDING AND DISPOSING OF THE NOTES AND COMMON STOCK, AS WELL AS THE
CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.
SELLING HOLDERS
The notes were originally issued by us and sold by Goldman, Sachs &
Co., FleetBoston Robertson Stephens, Inc., ING Barings LLC and Credit Suisse
First Boston Corporation as the initial purchasers in transactions exempt from
the registration requirements of the Securities Act to persons reasonably
believed by the initial purchasers to be qualified institutional buyers. The
warrants were originally issued by us to predecessors of GATX Capital
Corporation and of MM Ventures in transactions exempt from the registration
requirements of the Securities Act. Selling holders, including their
transferees, pledgees, or donees or their successors, may from time to time
offer and sell any or all of the notes and the common stock into which the notes
are convertible pursuant to this prospectus.
The following table sets forth information, as of April 26, 2000, with
respect to the selling holders and the principal amounts of notes and amounts of
common stock beneficially owned by each selling holder that may be offered under
this prospectus. The information is based on information provided by or on
behalf of the selling holders. The selling holders may offer all, some or none
of the notes or common stock into which the notes are convertible. Because the
selling holders may offer all or some portion of the notes or the common stock,
we cannot estimate the amount of the notes or our common stock that will be held
by the selling holders upon termination of any sales. In addition, the selling
holders identified below may have sold, transferred or otherwise disposed of all
or a portion of their notes or common stock since the date on which they
provided the information regarding their notes or common stock in transactions
exempt from the registration requirements of the Securities Act. No selling
holder named in the table below beneficially owns one percent or more of our
common stock, assuming conversion of a selling holder's notes or exercise of a
selling holder's warrants.
<TABLE>
<CAPTION>
Number of
Percentage Shares of Number of
of the Common Number of Shares of Percentage
Notes Notes Notes Stock Shares of Common of Shares of
Beneficially Beneficially Beneficially Beneficially Common Stock Common Stock
Owned Notes Owned Owned Owned Stock Beneficially Beneficially
Selling Prior to Offered After After the Prior to Offered Owned After Owned After
Securityholder Offering Hereby Offering (1) Offering Offering Hereby Offering(1) Offering(1)
(in $1,000) (in $1,000) (in $1,000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1976 9 9 0 0 106 106 0 0
Distribution
Trust fbo Aerin
Lauder-Zinterhofer
1976 9 9 0 0 106 106 0 0
Distribution
Trust fbo Jane
A. Lauder
AAM/Zazove 1,000 1,000 0 0 11,884 11,884 0 0
Institutional
Income Fund, L.P.
AIG/National 675 675 0 0 8,022 8,022 0 0
Union Fire
Insurance
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
Number of
Percentage Shares of Number of
of the Common Number of Shares of Percentage
Notes Notes Notes Stock Shares of Common of Shares of
Beneficially Beneficially Beneficially Beneficially Common Stock Common Stock
Owned Notes Owned Owned Owned Stock Beneficially Beneficially
Selling Prior to Offered After After the Prior to Offered Owned After Owned After
Securityholder Offering Hereby Offering (1) Offering Offering Hereby Offering(1) Offering(1)
(in $1,000) (in $1,000) (in $1,000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AllState 1,555 1,555 0 0 97,480 18,480 0 0
Insurance
Company
Alscott 3,000 3,000 0 0 35,654 35,654 0 0
Investments, LLC
Argent Classic 25,000 25,000 0 0 297,120 297,120 0 0
Convertible
Arbitrage Fund
(Bermuda) L.P.
Argent 3,000 3,000 0 0 35,654 35,654 0 0
Convertible
Arbitrage Fund
LTD.
Arkansas 3,865 3,865 0 0 45,934 45,934 0 0
Teachers
Retirement
System
Bancroft 500 500 0 0 5,942 5,942 0 0
Convertible
Fund, Inc.
Bank Austria 2,500 2,500 0 0 29,712 29,712 0 0
Cayman Island,
Ltd.
Bankers Trust 1,000 1,000 0 0 11,884 11,884 0 0
Equities
Strategies
Baptist Health 183 183 0 0 2,174 2,174 0 0
of South Florida
BBT Fund, L.P. 9,000 9,000 0 0 106,963 106,963 0 0
Bear, Stearns & 5,000 5,000 0 0 59,424 59,424 0 0
Co. Inc.
BNP Arbitrage 10,800 10,800 0 0 128,355 128,355 0 0
SNC
Boston Museum 171 171 0 0 2,032 2,032 0 0
of Fine Arts
Boulder Capital 850 850 0 0 10,102 10,102 0 0
Inc.
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
Number of
Percentage Shares of Number of
of the Common Number of Shares of Percentage
Notes Notes Notes Stock Shares of Common of Shares of
Beneficially Beneficially Beneficially Beneficially Common Stock Common Stock
Owned Notes Owned Owned Owned Stock Beneficially Beneficially
Selling Prior to Offered After After the Prior to Offered Owned After Owned After
Securityholder Offering Hereby Offering (1) Offering Offering Hereby Offering(1) Offering(1)
(in $1,000) (in $1,000) (in $1,000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Boulder II 3,350 3,350 0 0 39,814 39,814 0 0
Limited
BVI Social 18 18 0 0 213 213 0 0
Security Board
Chrysler 3,780 3,780 0 0 44,924 44,924 0 0
Corporation
Master
Retirement Trust
CIBC World 10,500 10,500 0 0 124,790 124,790 0 0
Markets
City University 62 62 0 0 736 736 0 0
of New York
Cova Bond 700 700 0 0 8,319 8,319 0 0
Debenture Fund
Credit Suisse 12,830 12,830 0 0 152,481 152,481 0 0
First Boston
Corporation
David Lipscomb 95 95 0 0 1,129 1,129 0 0
University
General
Endowment
Deephaven 8,700 8,700 0 0 103,397 103,397 0 0
Domestic
Convertible
Trading Ltd.
Delphi 20 20 0 0 237 237 0 0
Foundation, Inc.
Delta Air Lines 1,460 1,460 0 0 17,351 17,351 0 0
Master Trust
Deutsche Bank 30,300 30,300 0 0 360,109 360,109 0 0
Securities Inc.
ELF Aquitane 250 250 0 0 2,971 2,971 0 0
Pension
</TABLE>
45
<PAGE>
<TABLE>
<CAPTION>
Number of
Percentage Shares of Number of
of the Common Number of Shares of Percentage
Notes Notes Notes Stock Shares of Common of Shares of
Beneficially Beneficially Beneficially Beneficially Common Stock Common Stock
Owned Notes Owned Owned Owned Stock Beneficially Beneficially
Selling Prior to Offered After After the Prior to Offered Owned After Owned After
Securityholder Offering Hereby Offering (1) Offering Offering Hereby Offering(1) Offering(1)
(in $1,000) (in $1,000) (in $1,000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ellsworth 500 500 0 0 5,942 5,942 0 0
Convertible
Growth and
Income Fund,
Inc.
Engineers Joint 525 525 0 0 6,239 6,239 0 0
Pension Fund
EQAT Alliance 1,805 1,805 0 0 21,452 21,452 0 0
Balanced Account
EQAT Alliance 2,695 2,695 0 0 32,029 32,029 0 0
Growth & Income
EQAT Alliance 1,505 1,505 0 0 17,886 17,886 0 0
Growth Investors
Equitable Life 110 110 0 0 1,307 1,307 0 0
Assurance
Separate
Account -
Balanced
Equitable Life 1,855 1,855 0 0 22,046 22,046 0 0
Assurance
Separate
Account -
Convertibles
Family Service 300 300 0 0 3,565 3,565 0 0
Life Insurance
Co.
Fidelity 8,250 8,250 0 0 98,049 98,049 0 0
Financial
Trust:
Fidelity Convertible &
Securities Trust
First Republic 170 170 0 0 2,020 2,020 0 0
Bank
Fuji U.S. 500 500 0 0 5,942 5,942 0 0
Income Open
GATX Capital 0 0 0 0 112,000 112,000 0 0
Corporation(2)
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
Number of
Percentage Shares of Number of
of the Common Number of Shares of Percentage
Notes Notes Notes Stock Shares of Common of Shares of
Beneficially Beneficially Beneficially Beneficially Common Stock Common Stock
Owned Notes Owned Owned Owned Stock Beneficially Beneficially
Selling Prior to Offered After After the Prior to Offered Owned After Owned After
Securityholder Offering Hereby Offering (1) Offering Offering Hereby Offering(1) Offering(1)
(in $1,000) (in $1,000) (in $1,000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
General Motors 3,770 3,770 0 0 58,405 44,805 0 0
Employees
Global Group
Pension Trust
General Motors 205 205 0 0 2,436 2,436 0 0
Foundation, Inc.
GLG Global 2,000 2,000 0 0 23,769 23,769 0 0
Convertible Fund
GLG Global 500 500 0 0 5,942 5,942 0 0
Convertible
UCITS Fund
GLG Market 10,000 10,000 0 0 118,848 118,848 0 0
Neutral Fund
Global Bermuda 1,500 1,500 0 0 34,227 17,827 0 0
Limited
Partnership
Goldman Sachs 17,922 17,922 0 0 212,999 212,999 0 0
and Company
Grable 96 96 0 0 1,140 1,140 0 0
Foundation
Grady Hospital 98 98 0 0 1,164 1,164 0 0
Granville 9,500 9,500 0 0 112,905 112,905 0 0
Capital
Corporation
Guardian Life 11,400 11,400 0 0 209,686 135,486 0 0
Insurance Co.
Guardian 300 300 0 0 3,565 3,565 0 0
Pension Trust
Highbridge 32,500 32,500 0 0 386,256 386,256 0 0
International
LLC
Hotel Union & 271 271 0 0 3,220 3,220 0 0
Hotel Industry
of Hawaii
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
Number of
Percentage Shares of Number of
of the Common Number of Shares of Percentage
Notes Notes Notes Stock Shares of Common of Shares of
Beneficially Beneficially Beneficially Beneficially Common Stock Common Stock
Owned Notes Owned Owned Owned Stock Beneficially Beneficially
Selling Prior to Offered After After the Prior to Offered Owned After Owned After
Securityholder Offering Hereby Offering (1) Offering Offering Hereby Offering(1) Offering(1)
(in $1,000) (in $1,000) (in $1,000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Independence 30 30 0 0 356 356 0 0
Blue Cross
ING Barings LLC 550 550 0 0 6,536 6,536 0 0
ITG Inc. 120 120 0 0 1,426 1,426 0 0
J.P. Morgan 1,000 1,000 0 0 11,884 11,884 0 0
Securities Inc.
Jeffries & Co. 6 6 0 0 71 71 0 0
Inc.
JMG Capital 11,213 11,213 0 0 133,264 133,264 0 0
Partners, L.P.
JMG Triton 18,712 18,712 0 0 222,388 222,388 0 0
Offshore Fund,
Ltd.
John M. Olin 1,000 1,000 0 0 11,884 11,884 0 0
Foundation
Lakeshore 3,000 3,000 0 0 68,254 35,654 0 0
International
Ltd.
Lipper 8,500 8,500 0 0 101,020 101,020 0 0
Convertibles,
L.P.
Lipper Offshore 500 500 0 0 5,942 5,942 0 0
Convertibles,
L.P. #2
Local 32 32 0 0 380 380 0 0
Initiatives
Support
Corporation
Lord Abbett 6,600 6,600 0 0 78,439 78,439 0 0
Bond Debenture
Fund
Lord, Abbett & 1,350 1,350 0 0 16,044 16,044 0 0
Co. Oxford Fund
Lyxor Master 5,650 5,650 0 0 67,149 67,149 0 0
Fund
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
Number of
Percentage Shares of Number of
of the Common Number of Shares of Percentage
Notes Notes Notes Stock Shares of Common of Shares of
Beneficially Beneficially Beneficially Beneficially Common Stock Common Stock
Owned Notes Owned Owned Owned Stock Beneficially Beneficially
Selling Prior to Offered After After the Prior to Offered Owned After Owned After
Securityholder Offering Hereby Offering (1) Offering Offering Hereby Offering(1) Offering(1)
(in $1,000) (in $1,000) (in $1,000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maryland State 1,392 1,392 0 0 16,543 16,543 0 0
Retirement
System
Merrill Lynch 234 234 0 0 2,781 2,781 0 0
Insurance Group
Memphis 1,020 1,020 0 0 12,122 12,122 0 0
Light, Gas
& Water
Retirement
Fund
Minnesota 29 29 0 0 344 344 0 0
Bakers Union
Pension Fund
MM Ventures (3) 0 0 0 0 99,554 99,554 0 0
Morgan Stanley 6,670 6,670 0 0 79,271 79,271 0 0
& Co.
Morgan Stanley 2,000 2,000 0 0 23,769 23,769 0 0
Dean Witter
Convertible
Securities Trust
Motion Picture 440 440 0 0 5,229 5,229 0 0
Industry Health
Plan - Active
Member Fund
Motion Picture 220 220 0 0 2,614 2,614 0 0
Industry Health
Plan - Retiree
Member Fund
Motors 1,005 1,005 0 0 11,944 11,944 0 0
Insurance
Corporation
Mount Sinai 1,000 1,000 0 0 11,884 11,884 0 0
School of
Medicine
Museum of Fine 50 50 0 0 594 594 0 0
Arts, Boston
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
Number of
Percentage Shares of Number of
of the Common Number of Shares of Percentage
Notes Notes Notes Stock Shares of Common of Shares of
Beneficially Beneficially Beneficially Beneficially Common Stock Common Stock
Owned Notes Owned Owned Owned Stock Beneficially Beneficially
Selling Prior to Offered After After the Prior to Offered Owned After Owned After
Securityholder Offering Hereby Offering (1) Offering Offering Hereby Offering(1) Offering(1)
(in $1,000) (in $1,000) (in $1,000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Nalco Chemical 265 265 0 0 3,149 3,149 0 0
Company
New Hampshire 320 320 0 0 3,803 3,803 0 0
Retirement
System
New Orleans 100 100 0 0 1,188 1,188 0 0
Firefighters
Pension Trust
New York Life 750 750 0 0 8,913 8,913 0 0
Insurance &
Annuity
Corporation
New York Life 4,500 4,500 0 0 53,481 53,481 0 0
Insurance
Company
Nicholas-Applegate 1,185 1,185 0 0 14,083 14,083 0 0
Convertible Fund
Occidental 173 173 0 0 2,056 2,056 0 0
Petroleum
OCM Convertible 1,920 1,920 0 0 22,818 22,818 0 0
Trust
Ohio Bureau of 119 119 0 0 1,414 1,414 0 0
Workers
Compensation
Onex Industrial 1,800 1,800 0 0 21,392 21,392 0 0
Partners Limited
Oppenheimer 3,500 3,500 0 0 41,596 41,596 0 0
Convertible
Securities Fund
Pacific Life 500 500 0 0 5,942 5,942 0 0
Insurance
Company
Paloma 5,100 5,100 0 0 60,612 60,612 0 0
Securities LLC
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
Number of
Percentage Shares of Number of
of the Common Number of Shares of Percentage
Notes Notes Notes Stock Shares of Common of Shares of
Beneficially Beneficially Beneficially Beneficially Common Stock Common Stock
Owned Notes Owned Owned Owned Stock Beneficially Beneficially
Selling Prior to Offered After After the Prior to Offered Owned After Owned After
Securityholder Offering Hereby Offering (1) Offering Offering Hereby Offering(1) Offering(1)
(in $1,000) (in $1,000) (in $1,000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Parker-Hannifin 60 60 0 0 713 713 0 0
Corporation
Partner 805 805 0 0 9,567 9,567 0 0
Reinsurance
Company Ltd.
Pebble Capital 500 500 0 0 5,942 5,942 0 0
Inc.
PGEP IV, LLC 61 61 0 0 724 724 0 0
Physicians Life 416 416 0 0 4,944 4,944 0 0
Pilgrim 4,690 4,690 0 0 55,739 55,739 0 0
Convertible Fund
ProMutual 200 200 0 0 2,376 2,376 0 0
Putnam Asset 450 450 0 0 5,348 5,348 0 0
Allocation
Funds-Balanced
Portfolio
Putnam Asset 300 300 0 0 3,565 3,565 0 0
Allocation
Funds-Conservative
Portfolio
Putnam Balanced 110 110 0 0 1,307 1,307 0 0
Retirement Fund
Putnam 5,837 5,837 0 0 69,371 69,371 0 0
Convertible
Income-Growth
Trust
Putnam 140 140 0 0 1,663 1,663 0 0
Convertible
Opportunities
and Income Trust
Ramius Capital 500 500 0 0 5,942 5,942 0 0
Holdings, Ltd.
Rhone-Poulenc 70 70 0 0 831 831 0 0
Rorer Pension
Plan
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
Number of
Percentage Shares of Number of
of the Common Number of Shares of Percentage
Notes Notes Notes Stock Shares of Common of Shares of
Beneficially Beneficially Beneficially Beneficially Common Stock Common Stock
Owned Notes Owned Owned Owned Stock Beneficially Beneficially
Selling Prior to Offered After After the Prior to Offered Owned After Owned After
Securityholder Offering Hereby Offering (1) Offering Offering Hereby Offering(1) Offering(1)
(in $1,000) (in $1,000) (in $1,000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
S G Cowen 6,000 6,000 0 0 71,308 71,308 0 0
Securities Corp.
Sage Capital 3,000 3,000 0 0 35,654 35,654 0 0
Limited
Partnership
Sagemore Hill 5,000 5,000 0 0 59,424 59,424 0 0
Hub Fund Ltd.
San Diego City 1,052 1,052 0 0 12,502 12,502 0 0
Retirement
San Diego 2,531 2,531 0 0 30,080 30,080 0 0
County
Convertible
San Diego 2,030 2,030 0 0 24,126 24,126 0 0
County
Employees
Retirement
Assoc.
Scudder 283 283 0 0 3,363 3,363 0 0
Dividend and
Growth Fund
Shell Pension 53 53 0 0 629 629 0 0
Trust
Starvest 850 850 0 0 10,102 10,102 0 0
Combined
Portfolio
State 1,920 1,920 0 0 22,818 22,818 0 0
Employees' Retirement
Fund of the State of
Delaware
State of 4,245 4,245 0 0 50,450 50,450 0 0
Connecticut
Combined
Investment Funds
The Estate of 570 570 0 0 6,774 6,774 0 0
James Campbell
The Frist 265 265 0 0 3,149 3,149 0 0
Foundation
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
Number of
Percentage Shares of Number of
of the Common Number of Shares of Percentage
Notes Notes Notes Stock Shares of Common of Shares of
Beneficially Beneficially Beneficially Beneficially Common Stock Common Stock
Owned Notes Owned Owned Owned Stock Beneficially Beneficially
Selling Prior to Offered After After the Prior to Offered Owned After Owned After
Securityholder Offering Hereby Offering (1) Offering Offering Hereby Offering(1) Offering(1)
(in $1,000) (in $1,000) (in $1,000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TQA Master Fund 1,000 1,000 0 0 11,884 11,884 0 0
TQA Master Plus 1,000 1,000 0 0 11,884 11,884 0 0
Fund
Tracor Inc. 96 96 0 0 1,140 1,140 0 0
Employees
Retirement Plan
U.S. Olympic 1,000 1,000 0 0 11,884 11,884 0 0
Foundation
University of 50 50 0 0 594 594 0 0
Rochester
Value Line 600 600 0 0 7,130 7,130 0 0
Convertible
Fund, Inc.
Van Kampen 632 632 0 0 7,511 7,511 0 0
Convertible
Securities Fund
Van Kampen 3,368 3,368 0 0 40,028 40,028 0 0
Harbor Fund
Vanguard 3,960 3,960 0 0 47,063 47,063 0 0
Convertible
Securities
Fund, Inc.
Viacom Pension 36 36 0 0 427 427 0 0
Plan Master
Trust
Wake Forest 1,271 1,271 0 0 15,105 15,105 0 0
University
Warburg Dillon 3,000 3,000 0 0 35,654 35,654 0 0
Read LLC
White River 5,000 5,000 0 0 59,424 59,424 0 0
Securities LLC
Winchester 250 250 0 0 2,971 2,971 0 0
Convertible
Plus Ltd.
</TABLE>
53
<PAGE>
<TABLE>
<CAPTION>
Number of
Percentage Shares of Number of
of the Common Number of Shares of Percentage
Notes Notes Notes Stock Shares of Common of Shares of
Beneficially Beneficially Beneficially Beneficially Common Stock Common Stock
Owned Notes Owned Owned Owned Stock Beneficially Beneficially
Selling Prior to Offered After After the Prior to Offered Owned After Owned After
Securityholder Offering Hereby Offering (1) Offering Offering Hereby Offering(1) Offering(1)
(in $1,000) (in $1,000) (in $1,000)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Writers Guild - 326 326 0 0 3,874 3,874 0 0
Industry Health
Fund
Zurich HFR 70 70 0 0 831 831 0 0
Master Hedge
Fund Index, Ltd.
</TABLE>
(1) We do not know if, when or in what amounts a selling securityholder may
offer securities for sale and we do not know that the selling
securityholders will sell any or all of the securities offered hereby.
Because the selling securityholders may offer all or some of the
securities pursuant to this prospectus, and because there are currently
no other agreements, arrangements or understandings with respect to the
sale of any of the securities that will be held by the selling
securityholders, no estimate can be given as to the amount of the
securities that will be held by the selling securityholders after
completion of the offering made by this prospectus. However, for
purposes of this table, we have assumed that, after completion of the
offering, no securities will be held by the selling securityholders.
(2) GATX Capital Corporation holds warrants to purchase 112,000 shares of
common stock, all of which are currently exercisable.
(3) MM Ventures holds warrants to purchase 99,554 shares of common stock, all
of which are currently exercisable.
PLAN OF DISTRIBUTION
The selling holders and their successors, including their transferees,
pledgees or donees or their successors, may sell the notes and our common stock
into which the notes are convertible directly to purchasers or through
underwriters, broker-dealers or agents, who may receive compensation in the form
of discounts, concessions or commissions from the selling holders or the
purchasers. These discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved.
The notes and common stock may be sold in one or more transactions at
fixed prices, at prevailing market prices at the time of sale, at prices related
to the prevailing market prices, at varying prices determined at the time of
sale, or at negotiated prices. These sales may be effected in transactions,
which may involve crosses or block transactions:
- on any national securities exchange or U.S. inter-dealer system of a
registered national securities association on which the notes or our
common stock may be listed or quoted at the time of sale;
- in the over-the-counter market;
54
<PAGE>
- in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
- through the writing of options, whether the options are listed on an
options exchange or otherwise; or
- through the settlement of short sales.
In connection with the sale of the notes and common stock, the selling
holders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the notes or
common stock in the course of hedging the positions they assume. The selling
holders may also sell the notes or common stock short and deliver these
securities to close out their short positions, or loan or pledge the notes or
common stock to broker-dealers that in turn may sell these securities.
The aggregate proceeds to the selling holders from the sale of the
notes or common stock offered by them will be the purchase price of the notes or
common stock less discounts and commissions, if any. Each of the selling holders
reserves the right to accept and, together with their agents from time to time,
to reject, in whole or in part, any proposed purchase of notes or common stock
to be made directly or through agents. We will not receive any of the proceeds
from this offering.
Our common stock is quoted on The Nasdaq National Market. The notes are
currently designated for trading on the PORTAL Market of the NASD.
In order to comply with the securities laws of some states, if
applicable, the notes and common stock may be sold in these jurisdictions only
through registered or licensed brokers or dealers. In addition, in some states
the notes and common stock may not be sold unless they have been registered or
qualified for sale or an exemption from registration or qualification
requirements is available and is complied with.
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock may be "underwriters"
within the meaning of Section 2(11) of the Securities Act. Any discounts,
commissions, concessions or profit they earn on any resale of the shares may be
underwriting discounts and commissions under the Securities Act. Selling holders
who are "underwriters" within the meaning of Section 2(11) of the Securities Act
will be subject to the prospectus delivery requirements of the Securities Act.
The selling holders have acknowledged that they understand their obligations to
comply with the provisions of the Exchange Act and the rules thereunder relating
to stock manipulation, particularly Regulation M.
In addition, any securities covered by this prospectus which qualify
for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold
under Rule 144 or Rule 144A rather than pursuant to this prospectus.
To the extent required, the specific notes or shares of our common
stock to be sold, the names of the selling holders, the respective purchase
prices and public offering prices, the names of any agent, dealer or
underwriter, and any applicable commissions or discounts with respect to a
particular offer will be set forth in an accompanying prospectus supplement or,
if appropriate, a post-effective amendment to the registration statement of
which this prospectus is a part.
We entered into a registration rights agreement for the benefit of
holders of the notes to register their notes and our common stock under
applicable federal and state securities laws under specific circumstances and at
specific times. The registration rights agreement provides for
cross-indemnification of the selling holders and us and our respective
directors, officers and controlling persons against specific
55
<PAGE>
liabilities in connection with the offer and sale of the notes and our common
stock, including liabilities under the Securities Act. We will pay
substantially all of the expenses incurred by the selling holders of incident
to the offering and sale of the notes and our common stock. We estimate that
our total expenses of the offering of the notes and common stock will be
approximately $159,524.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements included in our Annual report on form 10-K for the year
ended December 31, 1999, as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. Our
financial statements are incorporated by reference in reliance on Ernst & Young
LLP's report, given on their authority as experts in accounting and auditing.
The consolidated financial statements of LeukoSite, Inc. as of December
31, 1997 and 1998 and for each of the three years in the period ended December
31, 1998 and the financial statements of L&I Partners, L.P. as of December 31,
1997 and 1998 and for the period from inception through December 31, 1997, the
year ended December 31, 1998 and the period from inception through December 31,
1998 incorporated by reference in this prospectus and elsewhere in the
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
The financial statements of CytoMed, Inc. as of December 31, 1998 and
1997 and for each of the three years in the period ended December 31, 1998
incorporated in this Prospectus by reference to the Millennium Pharmaceuticals
Form 8-K/A dated January 6, 2000, have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
LEGAL MATTERS
The validity of the notes and our common stock issuable upon conversion
of the notes and issuable upon exercise of the warrants has been passed upon by
Hale and Dorr LLP.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other documents with the
Securities and Exchange Commission. You may read and copy any document we file
at the SEC's public reference room at Judiciary Plaza Building, 450 Fifth
Street, N.W., Washington, D.C. 20549. You should call 1-800-SEC-0330 for more
information on the public reference room. The SEC maintains an Internet site
that contains reports, proxy and information statements and other information
about issuers that file electronically with the SEC. The address of the SEC's
Internet site is http://www.sec.gov.
This prospectus is part of a registration statement that we filed with
the SEC. The registration statement contains more information than this
prospectus regarding us, the notes and our common stock, including certain
exhibits and schedules. You can obtain a copy of the registration statement from
the SEC at the address listed above or from the SEC's Internet site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate" into this prospectus information
that we file with the SEC in other documents. This means that we can disclose
important information to you by referring to other documents that contain that
information. The information incorporated by reference is considered to be part
of this prospectus. Information contained in this prospectus and information
that we file with the SEC
56
<PAGE>
in the future and incorporate by reference in this prospectus automatically
updates and supersedes previously filed information. We incorporate by
reference the documents listed below and any future filings we make with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, prior to the sale of all the notes and shares of our common stock
covered by this prospectus.
(1) Our Annual Report on Form 10-K for the year ended December 31, 1999;
(2) Our current reports on Form 8-K filed with the SEC on January 6, 2000,
January 11, 2000, January 19, 2000, February 9, 2000, April 13, 2000
and April 25, 2000 and our amendments to current reports on Form 8-K/A
filed with the SEC on January 6, 2000 and January 27, 2000;
(3) All of our filings pursuant to the Exchange Act after the date of
filing the initial registration statement and prior to effectiveness
of the registration statement; and
(4) The description of our common stock contained in our registration
statement on Form 8-A filed with the SEC on April 26, 1996, including
any amendments or reports filed for the purpose of updating that
description.
You may request, orally or in writing, a copy of these documents, which
will be provided to you at no cost, by contacting:
Investor Relations
Millennium Pharmaceuticals, Inc.
75 Sidney Street
Cambridge, MA 02139
Telephone: (617) 679-7000
57
