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FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-37742
PROSPECTUS
$300,000,000
COR Therapeutics, Inc.
5.00% Convertible Subordinated Notes due March 1, 2007
and Shares of Common Stock Issuable upon Conversion of the Notes
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This prospectus covers resales by selling security holders of our 5.00%
convertible subordinated notes due March 1, 2007 and shares of our common stock
into which the notes are convertible.
Our 5.00% convertible subordinated notes have the following provisions:
Interest Payments: March 1 and September 1 of each year
Conversion Rate: 29.6056 shares per $1,000 principal amount
Redemption Options: . by us after March 1, 2003
. by noteholders upon a change in control
The notes are general, unsecured obligations that are subordinated in right
of payment to all of our existing and future senior debt. See "Description of
the Notes--Subordination."
Prior to this offering, the notes have been eligible for trading on the
PORTAL Market of the Nasdaq Stock Market. Notes sold by means of this
prospectus are not expected to remain eligible for trading on the PORTAL
Market. We do not intend to list the notes for trading on any national
securities exchange or on the Nasdaq National Market.
Our common stock currently trades on the Nasdaq National Market under the
symbol "CORR." The last reported sale price on August 25, 2000 was $56.875 per
share.
See "Risk Factors" beginning on page 5 of this prospectus to read about
factors you should consider before purchasing the notes or our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
August 28, 2000
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TABLE OF CONTENTS
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Page
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Summary.................................................................... 3
Risk Factors............................................................... 5
Ratio of Earnings to Fixed Charges......................................... 11
Cautionary Note Regarding Forward-Looking Statements....................... 12
Where You Can Find More Information about COR and this Offering............ 12
Use of Proceeds............................................................ 14
Description of the Notes................................................... 15
Certain United States Federal Income Tax Consequences...................... 26
Selling Security Holders................................................... 32
Plan of Distribution....................................................... 35
Legal Matters.............................................................. 36
Experts.................................................................... 36
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INTEGRILIN(R) is a registered trademark of our company. This prospectus also
includes trademarks and service marks of other companies.
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SUMMARY
This summary highlights information contained elsewhere or incorporated by
reference in this prospectus. This summary does not contain all the information
you should consider before investing in our securities. You should read the
entire prospectus, including incorporated documents, carefully.
Our Business
COR develops and commercializes pharmaceutical products to treat and prevent
severe cardiovascular diseases. We have funded our operations primarily through
public and private debt and equity financings and proceeds from research and
development and commercialization collaboration agreements.
Integrilin(R) (eptifibatide) Injection is our first product taken from
discovery to commercialization. In May 1998 the United States Food and Drug
Administration approved Integrilin to treat patients who undergo a procedure
known as angioplasty to open blood vessels. The FDA has also approved
Integrilin to treat patients with intermittent chest pains known as unstable
angina and patients suffering from a kind of heart attack known as non-Q-wave
myocardial infarction, whether the doctor intends to treat these patients with
medicines alone or with a subsequent angioplasty. Integrilin is the only drug
in its class that the FDA has approved for use in all these indications.
We launched Integrilin in the United States with Schering-Plough Ltd. and
Schering Corporation, which we refer to together as "Schering." COR and
Schering co-promote the drug in the United States and share any profits or
losses. We have exclusively licensed Schering to market Integrilin in Europe,
and Schering pays us royalties based on sales of Integrilin in Europe.
Integrilin has also received regulatory approval in a number of countries
outside the European Union and the United States.
COR and Schering are conducting or have conducted clinical trials of
Integrilin with different drugs that dissolve blood clots in patients suffering
heart attacks. COR and Schering also sponsor additional clinical trials of
Integrilin in a variety of clinical settings.
In addition to our commercial activities, we continue to pursue a wide array
of research and development programs. We are developing an oral drug, called
cromafiban, to prevent blood clotting. We have shown in clinical trials that
cromafiban remains active in the body long enough to allow patients to take the
drug only once a day. We also observed in these trials that the level of
activity of the drug in the body does not vary greatly throughout a twenty-four
hour period, and that the drug can be taken with or without food. The most
common complication we observed during these trials was minor bleeding. We also
are conducting preclinical research and development in several other
cardiovascular programs.
We were incorporated under the laws of Delaware in 1988. Our headquarters
are located at 256 East Grand Avenue, South San Francisco, California 94080,
and our telephone number is (650) 244-6800.
The Notes
Interest.................... We will pay interest on the notes on March 1 and
September 1 of each year, commencing September 1,
2000.
Conversion.................. You may convert the notes into shares of our
common stock at any time before the notes mature
unless we have redeemed or repurchased the notes.
The conversion rate is 29.6056 shares of common
stock per $1,000 principal amount of notes. This
is equivalent to a conversion price of $33.78 per
share. We will adjust the conversion rate each
time we take various corporate actions specified
in the indenture governing the notes. See
"Description of the Notes--Conversion Rights."
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Subordination............... The notes are subordinated to our present and
future senior debt. As of June 30, 2000, the
aggregate amount of our outstanding senior debt
was approximately $3.7 million. We may incur
additional senior debt. See "Description of the
Notes--Subordination".
Global Note; Book Entry
System..................... We issued the notes in fully registered form
without interest coupons and in minimum
denominations of $1,000. We have deposited global
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
interests can be transferred only through those
records. See "Description of the Notes--What You
Should Know About How the Notes are Held."
Optional Redemption......... We may redeem all or a portion on the notes, at
our option, on or after March 1, 2003. See
"Description of the Notes--Optional Redemption".
Repurchase at Option of
Holders Upon a Change in
Control.................... Upon a change in control of COR, you will have
the right to require us to repurchase all or a
portion of your notes at 100% of their principal
amount, plus accrued and unpaid interest to the
repurchase date. We may pay the repurchase price
either in cash or, if we satisfy the conditions
set forth in the indenture, in shares of common
stock. There may be circumstances under which the
subordination provisions of the indenture would
prevent us from repurchasing the notes until some
senior debt is paid in full. See "Description of
the Notes--Repurchase at Option of Holders Upon a
Change in Control".
Events of Default........... The following are events of default under the
indenture for the notes:
. we fail to pay the principal of or any premium
on any note when due;
. we fail to pay any interest on any note when
due and that non-payment continues for 30 days;
. we fail to provide the notice that we are
required to give upon a change in control;
. we fail to perform any other covenant in the
indenture and that failure continues for a
period of 60 days after written notice to us;
. we fail to pay some types of indebtedness that
become due for money borrowed by us or any
subsidiary that is in excess of $10 million;
and
. events of bankruptcy, insolvency or
reorganization specified in the indenture.
See "Description of the Notes--Events of
Default".
Governing Law............... The laws of the State of New York govern the
indenture and the notes.
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RISK FACTORS
Our business faces significant risks. You should carefully consider the
following risk factors, in addition to the other information included or
incorporated by reference in this prospectus, before purchasing our securities.
These risks may not be the only risks we face. Additional risks that we do not
yet know of or that we currently think are immaterial also may impair our
business. You could lose all or part of your investment if any of the following
risks actually occurs.
Risks related to an investment in the notes and our common stock
Our indebtedness and debt service obligations may adversely affect our cash
flow.
At June 30, 2000 we had $303.7 million of outstanding debt, including
primarily the notes. During each of the last five years and the six months
ended June 30, 2000, our earnings were insufficient to cover our fixed charges
and are likely to continue to be insufficient to cover fixed charges for at
least 12 months. See "Ratio of Earnings to Fixed Charges." During each of the
next three years, our debt service obligations on the notes will be
approximately $15 million. If we are unable to generate sufficient cash to meet
these obligations and have to use other cash reserves, we may have to delay or
curtail research and development programs.
We intend to fulfill our debt service obligations both from cash generated
by our operations and from our general fund. We may add additional lease lines
to finance capital expenditures and may obtain additional long-term debt and
lines of credit.
Our indebtedness could have significant additional 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 expected cash
flow from operations to service our indebtedness, thereby reducing the
amount of our expected cash flow 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 to less leveraged
competitors and competitors that have better access to capital
resources.
Because the notes rank below our existing and future senior debt, our assets
may not be available to you until we have repaid our senior debt in full.
The notes are unsecured and subordinated in right of payment to all of our
existing and future senior debt. As a result, if we were to declare bankruptcy,
or liquidate or reorganize or if the notes accelerate due to an event of
default and in specific other events, our assets will be available to pay
obligations on the notes only after we have satisfied all of our senior debt
obligations. As a result, we may not have sufficient assets remaining to pay
amounts due on any or all of the notes.
The indenture under which we issued the notes does not prohibit or limit us
from incurring senior debt or other indebtedness and other liabilities. If we
incur additional indebtedness and other liabilities, it could adversely affect
our ability to pay our obligations on the notes. As of June 30, 2000, we had
approximately $3.7 million of indebtedness that would constitute senior debt.
We anticipate that from time to time we will incur additional indebtedness,
including senior debt. See "Description of the Notes--Subordination".
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Because the notes will not be listed on an exchange or on Nasdaq, it is
unlikely a market will develop for them so you should be prepared to hold them
to maturity.
There is no public market for the notes which may significantly limit:
. the liquidity of any market that may develop;
. your ability to sell your notes; and
. the price you will be able to sell your notes.
If 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 intend to list the notes for trading on
any national securities exchange or on the Nasdaq National Market, so you
should be prepared to hold the notes to maturity unless you convert them.
Goldman Sachs & Co., Chase H&Q, a division of Chase Securities Inc., CIBC
World Markets Corp., FleetBoston Robertson Stephens Inc. and Warburg Dillon
Read LLC have advised us that they presently make a market in the notes. They
are not obligated, however, to make a market for the notes, and may discontinue
market-making activities at any time at their sole discretion.
Our common stock price is volatile, and an investment in our securities could
suffer a decline in value.
Our stock price has been highly volatile and may continue to be highly
volatile in the future. Our stock price depends on a number of factors, some of
which are beyond our control, which could cause the market price of our common
stock to fluctuate substantially. These factors include:
. fluctuations in our financial and operating results;
. whether our financial results are consistent with securities analysts'
expectations;
. the results of preclinical and clinical trials;
. announcements of technological innovations or new commercial products by
us or our competitors;
. developments concerning proprietary rights; and
. publicity regarding actual or potential performance of products under
development by us or our competitors.
In the past, stockholders have filed securities class action lawsuits
against companies after the market price of the company's stock has fallen
precipitously. Such a lawsuit could cause us to incur significant defense costs
and divert management's attention and other resources. Any adverse
determination could subject us to significant liabilities.
In addition, the stock market in general has from time to time experienced
extreme price and volume fluctuations. These broad market fluctuations may
lower the market price of our common stock. Moreover, during periods of stock
market price volatility, share prices of many biotechnology companies have
often fluctuated in a manner not necessarily related to the companies'
operating performance. Accordingly, our common stock may be subject to greater
price volatility than the stock market as a whole and you could lose all or
part of your investment.
Because the notes are convertible into shares of our common stock, their
value may be affected by these factors as well.
If a change in control were to occur, we may not have sufficient funds to pay
the redemption price for all the notes tendered.
If there is a change in control of our company, you may require us to redeem
some or all of your notes. Although the indenture allows us in certain
circumstances to pay the redemption price in shares of our common
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stock, if a change in control were to occur, we may not have sufficient funds
to pay the redemption price for all the notes tendered by you and other
holders. There is no sinking fund for the notes. The requirement that we offer
to repurchase the notes upon a change in control does not apply to all possible
transactions in which control of COR could change. See "Description of the
Notes--Repurchase at Option of Holders Upon a Change in Control".
Any future credit agreements or other agreements relating to other
indebtedness, including other senior debt, to which we become a party may
contain restrictions or prohibitions on our redeeming the notes while that
indebtedness is outstanding. If a change in control occurs at a time when we
are prohibited from purchasing or redeeming the notes, we could seek the
consent of lenders to the purchase of the notes or could attempt to refinance
the borrowings that contain this prohibition. If we do not obtain a consent or
repay these borrowings, we would remain prohibited from purchasing or redeeming
the notes. Our failure to redeem the notes would constitute an event of default
under the indenture under which we issued the notes, which might constitute a
default under the terms of other indebtedness that we may enter into from time
to time. In these circumstances, the subordination provisions in the indenture
would likely restrict payments to you.
Anti-takeover provisions in our charter documents and under Delaware law may
make it more difficult to acquire us, even though an acquisition may be
beneficial to our stockholders.
Provisions of our certificate of incorporation and bylaws could make it more
difficult for a third party to acquire us, even if doing so would benefit our
stockholders. These provisions:
. establish that members of the board of directors may be removed only for
cause upon the affirmative vote of stockholders owning at least two-
thirds of our capital stock;
. authorize the issuance of "blank check" preferred stock that could be
issued by our board of directors to increase the number of outstanding
shares and thwart a takeover attempt;
. limit who may call a special meeting of stockholders;
. prohibit stockholder action by written consent, thereby requiring all
stockholder actions to be taken at a meeting of our stockholders; and
. establish advance notice requirements for nominations for election to
the board of directors or for proposing matters that can be acted upon
at stockholder meetings.
In January 1995, our board of directors adopted a preferred share purchase
rights plan, commonly known as a "poison pill." The provisions described above,
our poison pill and provisions of the Delaware General Corporation Law relating
to business combinations with interested stockholders may discourage, delay or
prevent a third party from acquiring us, even if our stockholders might receive
a premium for their shares in the acquisition over then current market prices.
Risks related to our finances
We have a history of operating losses and are uncertain of future
profitability.
Historically, our expenses have exceeded our revenues. As of June 30, 2000,
we had an accumulated deficit of approximately $231.7 million. The extent of
future losses and timing of future profitability are uncertain, even taking
into account our share of revenues from sales of Integrilin. We continue to
incur significant expenses for research and development and to develop, train,
maintain and manage our sales force, and these expenses continue to exceed our
share of Integrilin product revenues. We may never achieve profitability.
If we fail to obtain needed funds, we will be unable to successfully develop
and commercialize products.
We will require significant funds to market Integrilin and conduct the
costly and time-consuming research, preclinical testing and clinical trials
necessary to develop and optimize our technology and potential products,
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to establish manufacturing, marketing and sales capabilities for product
candidates and to bring any such products to market. We may raise these funds
through public or private equity offerings, debt financings or additional
corporate collaborations and licensing arrangements. We may find that
additional funding may not be available to us when we need it, on acceptable
terms or at all.
If we raise capital by issuing equity securities, our stockholders may
experience dilution. To the extent we raise additional funds through
collaborative arrangements, we may be required to relinquish some rights to our
technologies or product candidates or grant licenses on terms that are not
favorable to us. If we are unable to obtain adequate funding when needed,
commercialization of Integrilin may be impaired and we may be required to
curtail one or more development programs.
Risks related to our drug development and commercialization activities
If Integrilin does not achieve commercial success, we will not be able to
generate the revenues necessary to support our business.
Our business depends on the commercial success of Integrilin, which has been
on the market in the United States only two years and currently is our only
marketed product. Marketing outside the United States commenced only within the
last year and Integrilin has not yet achieved acceptance in foreign markets.
Although sales of Integrilin have increased since its launch, if they fail to
continue to increase over current levels, our business will not become
profitable, and we will be forced to scale back our operations and research and
development programs.
We may not be able to compete effectively in the cardiovascular disease market.
Due to the incidence and severity of cardiovascular diseases, the market for
therapeutic products that address these diseases is large, and competition is
intense and expected to increase. Our most significant competitors are major
pharmaceutical companies and more established biotechnology companies. The two
products that compete with Integrilin are ReoPro(R), which is produced by
Johnson & Johnson and sold by Johnson & Johnson and Eli Lilly & Co., and
Aggrastat(R), which is produced and sold by Merck & Co., Inc. In addition, F.
Hoffman-La Roche, Ltd. is currently developing a product, lamifiban, to treat
patients with symptoms of unstable angina. If the FDA approves lamifiban, it
may also directly compete with Integrilin. Our competitors operate large, well-
funded cardiovascular research and development programs and have significant
expertise in manufacturing, testing, regulatory matters and marketing. We also
must compete with academic institutions, governmental agencies, and other
public and private research organizations that conduct research in the
cardiovascular field, seek patent protection for their discoveries and
establish collaborative arrangements for product and clinical development and
marketing.
We may not be able to obtain the regulatory approvals necessary to market new
products and market Integrilin for additional therapeutic uses.
We must satisfy stringent governmental regulations in order to develop,
commercialize and market our products. Integrilin is the only product we have
submitted to the FDA for approval for commercial sale, and it has been approved
for a specific set of therapeutic uses. To grow our business, we will need to
obtain regulatory approval to be able to promote Integrilin for additional
therapeutic uses and to commercialize new product candidates. A company cannot
market a pharmaceutical product in the United States until it has completed
rigorous pre-clinical testing and clinical trials of the product and an
extensive regulatory clearance process that the FDA implements. It typically
takes many years to satisfy regulatory requirements, depending upon the type,
complexity and novelty of the product. The process is very expensive. Of
particular significance are the requirements covering research and development,
testing, manufacturing, quality control, labeling and promotion of drugs for
human use.
Before we can receive FDA clearance to market a product, we must demonstrate
that the product is safe and effective for the patient population that will be
treated. Pre-clinical and clinical data are susceptible to
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varying interpretations that could delay, limit or prevent regulatory
clearances. In addition, we may encounter delays or rejections from additional
government regulation, from future legislation or administrative action or
changes in FDA policy during the period of product development, clinical trials
and FDA regulatory review. Failure to comply with applicable FDA or other
applicable regulatory requirements may result in criminal prosecution, civil
penalties, recall or seizure of products, total or partial suspension of
production or injunction, as well as other regulatory action against our
potential products or us. If a product receives regulatory clearance, its
marketing will be limited to those disease states and conditions for which
clinical trials demonstrate that the product is safe and effective. Any
compound we develop may not prove to be safe and effective in clinical trials
and may fail to meet all of the regulatory requirements needed to receive
marketing clearance.
Outside the United States, our ability to market a product depends on our
receiving a marketing authorization from the appropriate regulatory
authorities. This foreign regulatory approval process includes all of the risks
associated with FDA clearance described above.
If our clinical trials are unsuccessful, or if they experience significant
delays, our ability to commercialize products will be impaired.
We must provide the FDA and foreign regulatory authorities with preclinical
and clinical data that demonstrate that our products are safe and effective
before they can be approved for commercial sale. Clinical development,
including preclinical testing, is a long, expensive and uncertain process. It
may take us several years to complete our testing, and failure can occur at any
stage of testing. Interim results of preclinical or clinical studies do not
necessarily predict their final results, and acceptable results in early
studies might not be seen in later studies. Any preclinical or clinical test
may fail to produce results satisfactory to the FDA. Preclinical and clinical
data can be interpreted in different ways, which could delay, limit or prevent
regulatory approval. Negative or inconclusive results from a preclinical study
or clinical trial or adverse medical events during a clinical trial could cause
a preclinical study or clinical trial to be repeated or a program to be
terminated, even if other studies or trials relating to the program are
successful.
We may not complete our planned preclinical or clinical trials on schedule
or at all. In addition, due to the substantial demand for clinical trial sites
in the cardiovascular area, we may have difficulty obtaining a sufficient
number of appropriate patients or clinician support to conduct our clinical
trials as planned. If so, we may have to expend substantial additional funds to
obtain access to resources or delay or modify our plans significantly. Our
product development costs will increase if we have delays in testing or
approvals. Significant clinical trial delays could allow our competitors to
bring products to market before we do and impair our ability to commercialize
our product or potential products. Even if regulators approve a product for
marketing, it may not be commercially successful.
We depend on our collaborative relationship with Schering to market and sell
Integrilin, and our business will suffer if Schering fails to perform under the
collaboration.
Our strategy is to work with collaborative partners to develop product
candidates and commercialize products. Generally, collaborations with
established pharmaceutical companies provide funding for product development
and the benefit of an established sales and marketing organization. In
particular, our ability to successfully commercialize Integrilin depends on our
collaboration with Schering. Under this collaboration, Schering has agreed to:
. co-market Integrilin with us in the United States and market the product
as our exclusive licensee in certain other markets, including Europe;
. share the profits and pay royalties to us on sales of Integrilin;
. design and conduct advanced clinical trials;
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. fund promotional activities with us; and
. pay us fees upon achievement of certain milestones.
Schering's performance under the collaboration is outside our control. If
Schering fails to perform its obligations diligently and in a timely manner,
commercialization of Integrilin will be impaired and our business will not
become profitable.
If we do not establish additional collaborative relationships, our ability to
develop and commercialize new products will be impaired.
In addition to Integrilin, we have three product candidates in preclinical
and clinical trials and other product candidates in various stages of research
and development. We are a party to numerous research agreements related to
these product candidates, most of which do not contemplate taking a product
candidate through development and commercialization. We will need to enter into
additional collaborations to develop and commercialize these and additional
product candidates. We face significant competition in seeking appropriate
collaborative partners. Negotiating these arrangements is complex and time
consuming. If we are successful in establishing a collaboration, the
collaboration may not be successful. If we fail to establish collaborative
partnerships for our product candidates, we may have to terminate, delay or cut
back development programs.
If our third party manufacturers fail to deliver sufficient quantities of
Integrilin or product candidates on schedule, we may be unable to meet demand
for Integrilin and may experience delays in product development.
We have no manufacturing facilities and, accordingly, rely on third parties
for clinical and commercial production of Integrilin and for clinical
production of product candidates. We have only two manufacturers producing bulk
product, and two manufacturers performing packaging, of Integrilin. We have
four manufacturers producing product candidates for clinical trials. If the
third-party manufacturers or suppliers were to cease production or otherwise
fail to supply us, or if we were unable to renew our manufacturing contracts or
contract for additional manufacturing services on acceptable terms, our ability
to produce Integrilin and to conduct preclinical testing and clinical trials of
product candidates would be impaired. If we do not have adequate supplies of
Integrilin to meet market demand, we may lose potential revenues, and the
health care community may turn to competing products. If we cannot obtain
adequate supplies of product candidates for preclinical and clinical trials,
regulatory approval and development of product candidates may be delayed.
Our ability to generate revenues will be diminished if we fail to obtain
acceptable prices or an adequate level of reimbursement from third party
payors.
Health care insurers, including the United States Health Care Financing
Administration, managed care providers, private health insurers and other
organizations set aggregate dollar amounts that they will reimburse to
hospitals for the medicines and care the hospitals administer to treat
particular conditions. These insurers adjust the amounts periodically, and
could lower the amount that they will reimburse hospitals to treat the
conditions for which the FDA has approved Integrilin. If they do, pricing
levels or sales volumes of Integrilin may decrease and cause a reduction in
sales and a loss of potential revenues. In foreign markets, a number of
different governmental and private entities determine the level at which
hospitals will be reimbursed for administering Integrilin to insured patients.
If these levels are set, or reset, too low, it may not be possible to sell
Integrilin at a profit in these markets. Each of our product candidates, if
approved for marketing, will face the same risk.
If we are unable to protect our patents and proprietary rights, we may not be
able to compete successfully.
We rely on patent and trade secret protection for significant new
technologies, products and processes because of the long development time,
uncertainty and high cost associated with bringing a new product to the
marketplace. Our success will depend in part on our ability to obtain and
enforce patent protection for our
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technology both in the United States and other countries. While we are seeking
and/or maintaining patents for Integrilin and our product candidates, patents
may not issue and issued patents may afford limited or no protection.
We may be required to obtain licenses to patents or other proprietary rights
from third parties. Licenses required under any patents or proprietary rights
may not be made available on terms acceptable to us, if at all. If we do not
obtain required licenses, we may encounter delays in product development while
attempting to redesign products or methods or we could find the development,
manufacture or sale of such products requiring licenses to be foreclosed.
Further, we could incur substantial costs in defending any patent litigation
brought against us or in asserting our patent rights, including those rights
licensed to us by others.
In October 1997, a patent opposition was filed in Europe by another company
against the claims of a patent granted to us in Europe covering broad, generic
claims for Integrilin, as well as numerous related compounds that are not part
of our core technology. The opposition asserts that all claims of the patent
are unpatentable. In July 2000, the Opposition Division of the European Patent
Office confirmed the validity of our patent claims without requiring us to
limit or otherwise amend our claims. The opposition has not yet exhausted its
ability to appeal this decision. If the opposition appeals the decision and the
appeal is successful, it could adversely affect the marketing of Integrilin in
Europe.
If product liability lawsuits are successfully brought against us, we may incur
substantial liabilities.
The testing, marketing and sale of human pharmaceutical products expose us
to significant and unpredictable risks of product liability claims in the event
that the use of our technology or products is alleged to have resulted in
adverse effects. Our products are administered to patients with serious
cardiovascular disease who have a high incidence of mortality. A successful
product liability suit against us could impair our financial condition and
force us to limit commercialization of products.
If we do not attract and retain key employees and consultants, our business
could be impaired.
We are highly dependent on the principal members of our scientific and
management staff. In addition, we rely on consultants to assist us in
formulating our research and development strategy. Attracting and retaining
qualified personnel is critical to our success. Competition for scientific and
managerial personnel is particularly intense in the San Francisco Bay Area
where we, together with numerous other life sciences companies, universities
and research institutions, maintain our operations. Failure to continue to
attract these individuals, or the loss of key personnel, could impair the
progress of our programs.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
each of the last five years and for the six months ended June 30, 2000:
<TABLE>
<CAPTION>
Six months
Years ended December 31, ended
------------------------ June 30,
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges(1)...... -- -- -- -- -- --
</TABLE>
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(1) Earnings for the years ended December 31, 1995, 1996, 1997, 1998 and 1999
and the six months ended June 30, 2000 were insufficient to cover fixed
charges by an amount equal to the net loss for the period.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus and the documents incorporated by
reference are forward-looking statements. These statements are based on our
current expectations, assumptions, estimates and projections about our business
and our industry, and involve known and unknown risks, uncertainties and other
factors that may cause our or our industry's results, levels of activity,
performance or achievement to be materially different from any future results,
levels of activity, performance or achievements expressed or implied in or
contemplated by the forward-looking statements. Words such as "believe,"
"anticipate," "expect," "intend," "plan," "will," "may," "should," "estimate,"
"predict," "potential," "continue," or the negative of such terms or other
similar expressions, identify forward-looking statements. In addition, any
statements that refer to expectations, projections or other characterizations
of future events or circumstances are forward-looking statements. Our actual
results could differ materially from those anticipated in such forward-looking
statements as a result of several factors more fully described under the
caption "Risk Factors" and in the documents incorporated by reference. The
forward-looking statements made in this prospectus relate only to events as of
the date on which the statements are made.
WHERE YOU CAN FIND MORE INFORMATION ABOUT COR AND THIS OFFERING
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3 to register the common stock offered by this prospectus.
However, this prospectus does not contain all of the information contained in
the registration statement and the exhibits and schedules to the registration
statement. We strongly encourage you to carefully read the registration
statement and the exhibits and schedules to the registration statement.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, DC, New York, New York and Chicago,
Illinois. You can request copies of these documents by contacting the SEC and
paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from the SEC's website at www.sec.gov.
The SEC allows us to "incorporate by reference" the information contained in
documents that we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information in this prospectus supersedes information incorporated by reference
that we filed with the SEC prior to the date of this prospectus, while
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings we will make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
1. Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999;
2. Our Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, and June 30, 2000;
3. Our Current Report on Form 8-K, dated February 16, 2000;
4. Our Current Report on Form 8-K, dated March 3, 2000; and
5. The description of our common stock contained in our Registration
Statement on Form 8-A filed on May 17, 1991.
You may request a copy of these filings, at no cost to you, by writing or
telephoning us at: COR Therapeutics, Inc., 256 East Grand Avenue, South San
Francisco, California, 94080, Telephone (650) 244-6800.
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Our common stock is quoted on the Nasdaq National Market under the symbol
"CORR". You may inspect reports and other information concerning us at the
offices of the National Association of Securities Dealers, Inc., 1735 K Street,
N.W., Washington, D.C. 20006.
----------------
WE HAVE AUTHORIZED NO ONE TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS THAT ARE NOT CONTAINED IN THIS PROSPECTUS. YOU SHOULD RELY ONLY
ON THE INFORMATION PROVIDED IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE
THEREIN. YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION.
THIS PROSPECTUS DOES NOT OFFER TO SELL OR BUY ANY NOTES OR SHARES OF COMMON
STOCK IN ANY JURISDICTION WHERE IT IS UNLAWFUL. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE
ON THE FRONT OF THE DOCUMENT.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the notes or the shares of
common stock offered hereby. See "Selling Security Holders".
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DESCRIPTION OF THE NOTES
We issued the notes under a document called the "indenture." The indenture
is a contract between us and Firstar Bank, N.A., who is serving as trustee. New
York law governs both the indenture and the notes.
The following description of the terms of the indenture is a summary. It
summarizes only those portions of the indenture we believe are most important
to your decision to invest in the notes. This section does not describe every
aspect of the notes. The indenture, and not this summary, defines your rights
as a holder of the notes. There may be other provisions in the indenture that
are also important to you. You should read the indenture 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 our quarterly report on Form 10-Q for
the quarter ended March 31, 2000, which is incorporated by reference in this
prospectus. In this section, references to "COR" or "we" or "us" refer solely
to COR Therapeutics, Inc. and not any future subsidiaries.
General
The notes:
. are general unsecured obligations of COR;
. bear an interest rate of 5.00% per year, payable on March 1 and
September 1 of each year, to record holders of the notes as of the
preceding February 15 or August 15;
. mature on March 1, 2007;
. are limited to $300 million aggregate principal amount.
We issued the notes on February 24, 2000. The first interest payment is due
September 1, 2000. Interest payable per $1,000 principal amount of the notes
for the period from February 24, 2000 to September 1, 2000 will be $25.97.
You may convert the notes into shares of common stock initially at the
conversion rate of 29.6056 shares per $1,000 principal amount at any time
before the close of business on March 1, 2007, unless we have previously
redeemed or repurchased the notes. We may adjust the conversion rate as
described below.
We may redeem all or a portion of the notes at our option at any time on or
after March 1, 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 COR, 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."
What You Should Know About How the Notes are Held
We issued the notes:
. in fully registered form;
. without interest coupons; and
. in denominations of $1,000 and greater multiples.
The notes are evidenced by global notes that we deposited with the trustee
as custodian for DTC. DTC is the depository for the global notes which are
registered in the name of Cede & Co., as nominee of DTC. The global notes and
any notes issued in exchange for the global notes are subject to restrictions
on transfer and bear legends regarding those restrictions.
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The global notes 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. DTC or its nominee will be considered the sole owner and
holder of the global notes for all purposes, and as a result:
. you cannot receive notes registered in your name if they are represented
by the global notes;
. 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 notes
or any note they represent for any purpose; and
. all payments on the global notes will be made to DTC or its nominee.
Some potential purchasers, such as certain insurance companies, can only own
securities in definitive, or certificated form, and you may not be able to
transfer your beneficial interests in the global notes 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 notes. The only place
where the ownership of beneficial interests in the global notes 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.
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 do not know what effect settlement in
immediately available funds will have on trading activity in those beneficial
interests.
We are obligated to make cash payments of interest on, and principal of, and
the redemption or repurchase price of, the global notes, as well as any payment
of liquidated damages, to Cede, the nominee for DTC, as the registered owner of
the global notes. We are obligated 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 notes, 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 with respect to that interest, may be
affected by the lack of a physical certificate evidencing its interest.
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DTC has advised us that it will take any action permitted to be taken by
you, 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 with respect to such portion of the principal amount of
the notes represented by the global notes as to which such participant has, or
participants have, given such direction.
DTC's policies and procedures, which may change periodically, will apply to
payments, transfers, exchanges and other matters relating to beneficial
interests in the global notes. 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 notes, including for payments made on the
global notes, 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 of the principal amount of a
note, in $1,000 increments, into shares of common stock at any time prior to
the close of business on March 1, 2007, unless we have previously redeemed or
repurchased the note, at a conversion rate equal to 29.6056 shares per $1,000
principal amount of notes. This conversion rate is equivalent to a conversion
price of $33.78 per share. The conversion rate may adjust. Your right to
convert a note called for redemption or delivered for repurchase will terminate
at the close of business on the business day immediately preceding 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 into our common stock 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. DTC will
effect the conversion upon notice from the holder of a beneficial interest in a
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 lieu
of any fraction of a share. The trustee will send the certificates 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 on a date that is not an interest payment date, you will not
be entitled to receive any interest for the period from the preceding interest
payment date to the date of conversion, except as described below. However, if
you are a holder of a note on a regular record date, including a note
surrendered for conversion after the regular record date, you will receive the
interest payable on the note on the next succeeding interest payment date.
Accordingly, 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 must be accompanied by payment of an
amount equal to the interest payable on the interest payment date on the
principal amount of notes being surrendered for conversion. However, you will
not be required to make that payment if you are converting a note, or a portion
of a note, that we have called for redemption, or that you are entitled to
require us to repurchase from you, if your conversion right would terminate
because of the redemption or repurchase between the regular record date and the
close of business on the next succeeding interest payment date.
You will not receive other payment or adjustment for interest, or for any
dividends on our common stock, 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 that precedes 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 on the issue or delivery of common stock on conversion.
However, we are not required to pay any tax or duty that may be
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payable on 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 no such tax or duty is
payable.
We will adjust the conversion rate if we:
(1) pay a dividend or other distribution payable in common stock on
shares of our capital stock;
(2) issue to all holders of common stock rights, options or warrants
entitling them to subscribe for or purchase common stock at less than the
then current market price of our common stock. However, if those rights,
options or warrants are only exercisable upon the occurrence of triggering
events, then the conversion rate will not adjust until those triggering
events occur;
(3) subdivide, reclassify or combine our common stock;
(4) distribute to all holders of our common stock evidences of our
indebtedness, shares of capital stock, cash or assets, including
securities, but excluding:
. those dividends, rights, options, warrants and distributions
referred to in paragraphs (1) and (2) above,
. dividends and distributions paid exclusively in cash, and
. distributions upon mergers or consolidations;
(5) make a distribution consisting exclusively of cash to all holders of
our common stock if the aggregate amount of the distribution combined
together with:
. other such all-cash distributions made within the preceding 12
months, and
. any cash and the fair market value of other consideration payable in
any tender offer by us or any subsidiary for our common stock
concluded within the preceding 12 months exceeds 10% of our market
capitalization; or
(6) successfully complete a tender offer for our common stock that
involves consideration that, together with:
. any cash and other consideration payable in a tender offer by us or
any subsidiary for our common stock expiring within the 12 months
preceding the expiration of such tender offer, and
. the amount of any such all-cash distributions referred to in
paragraph (5) above to all holders of common stock within the 12
months preceding the expiration of such tender offer exceeds 10% of
our market capitalization on the expiration of such tender offer.
We may make increases in the conversion rate in addition to those required
by the provisions described above that 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. We are not
required to adjust the conversion rate until the cumulative adjustments amount
to 1.0% or more of the conversion rate. We will compute any adjustments to the
conversion rate and give notice to you of any adjustments.
If we merge or consolidate with another person or sell or transfer all or
substantially all of our assets, each note then outstanding will, without the
consent of the holder, 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.
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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
determines to increase the conversion rate we will give you at least 15 days'
notice of such an increase.
If at any time we make a distribution of property to our stockholders that
would be taxable to such stockholders as a dividend for United States federal
income tax purposes, for example, distributions of evidences of indebtedness or
assets of COR, 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. See "Certain United States
Federal Income Tax Consequences--U.S. Holders".
Subordination
The notes are subordinated and, as a result, the payment of the principal,
any premium and interest on the notes, including amounts payable on any
redemption or repurchase, are subordinated to the prior payment in full of all
of our senior debt. "Senior debt" means all other amounts payable in connection
with the following, whether outstanding on the date of the indenture or
subsequently created, incurred or assumed:
. all our indebtedness evidenced by a credit or loan agreement, note,
bond, debenture or other similar instrument;
. all our obligations for money borrowed;
. all our obligations as lessee under leases required to be capitalized on
the balance sheet of the lessee under generally accepted accounting
principles;
. all our obligations under interest rate and currency swaps, caps,
floors, collars, hedge agreements, forward contracts or similar
agreements or arrangements;
. all our obligations with respect to letters of credit, bankers'
acceptances and similar facilities, including related reimbursement
obligations;
. all our obligations issued or assumed as the deferred purchase price of
property or services, but excluding trade accounts payable and accrued
liabilities arising in the ordinary course of business;
. all our obligations of the type referred to above of another person and
all dividends of another person, the payment of which, in either case,
we have assumed or guaranteed, or for which we are responsible or
liable, directly or indirectly, jointly or severally, as obligor,
guarantor or otherwise, or which is secured by a lien on our property;
and
. renewals, extensions, modifications, replacements, restatements and
refundings of, or any indebtedness or obligation issued in exchange for
any indebtedness or obligation described in the bullets above.
Senior debt will not include any indebtedness or obligation if the terms of
the indebtedness or obligation, or the terms of the instrument under which the
indebtedness or obligation is issued, expressly provide that the indebtedness
or obligation is not superior in right of payment to the notes. In addition,
senior debt will not include any particular indebtedness or obligation that we
may owe to any of our direct or indirect subsidiaries.
We are prohibited from making any payment 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
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. an event of default occurs and is continuing on any designated senior
debt, and (1) the event of default permits the holders of the designated
senior debt to accelerate its maturity and (2) the trustee has received
a notice, referred to as a "Payment Blockage Notice," of the default
from a holder of the designated senior debt. Designated senior debt
refers to obligations of senior debt in which the instrument creating or
evidencing the debt or any related agreements or documents to which we
are a party, expressly provides that the indebtedness will be
"designated senior debt" under the indenture. See section entitled "--
Events of Default."
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 (1) the date the nonpayment
default is cured or waived or (2) 179 days after the Payment Blockage Notice is
received.
A nonpayment default that existed on the day a Payment Blockage Notice was
delivered to the trustee cannot 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.
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 creditors, or in bankruptcy, insolvency, receivership or other
similar proceedings, all principal, premium, interest and other amounts due on
all senior debt must be paid in full before you will be entitled to receive any
payment on account of the notes. Because of this subordination, upon
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 June 30, 2000, we had approximately $3.7 million of
senior debt outstanding.
COR does not currently have any subsidiaries. However, the notes are
"structurally subordinated" to all indebtedness and other liabilities,
including trade payables and lease obligations, of any future subsidiaries.
This occurs because any right we have to receive any assets of our subsidiaries
upon their liquidation or reorganization, and the consequent right of the
holders of the notes to participate in those assets, will be effectively
subordinated to the claims of that subsidiary's creditors, including trade
creditors, except to the extent that we are recognized as a creditor of the
subsidiary, in which case our claims would still be subordinate to any security
interest in the assets of the subsidiary and any indebtedness of the subsidiary
senior to that held by us.
The indenture does not limit our ability or the ability of any subsidiary to
incur additional indebtedness, including senior debt.
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Optional Redemption
On and after March 1, 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 March 1 of the following years:
<TABLE>
<CAPTION>
Redemption
Year Price
---- ----------
<S> <C>
2003.......................................................... 102.857%
2004.......................................................... 102.143%
2005.......................................................... 101.429%
2006.......................................................... 100.714%
</TABLE>
and 100% of the principal amount on and after March 1, 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 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 $5,000 or any
greater 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 common stock if we satisfy conditions provided in
the indenture.
Within 30 days after a change in control, we are obligated to give you
notice of the change in control and the repurchase right arising as a result of
the change in control. We must also deliver a copy of this notice to the
trustee. To exercise the repurchase right, you must deliver, on or before the
30th day after the date of our notice, irrevocable written notice to the
trustee of your exercise of your repurchase right, together with the notes with
respect to which that right is being exercised. We are required to make the
repurchase on the date that is 45 days after the date of our notice.
A change in control will occur at the time that any of the following occurs:
(1) any person acquires, directly or indirectly, beneficial ownership of
50% or more of the total voting power of all shares of our capital stock
entitled to vote generally in elections of directors. However, any
acquisition by COR, any subsidiary of COR or any employee benefit plan of
COR will not trigger this provision;
(2) 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 entitled to vote generally in elections of
directors immediately prior to the transaction have, directly or
indirectly, 50% or more of the total voting power of all shares of
capital stock of the continuing or surviving corporation entitled to
vote generally in elections of directors of the continuing or
surviving corporation immediately after the transaction;
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. the transaction is a merger which does not result in any
reclassification, conversion, exchange or cancellation of
outstanding shares of our capital stock; and
. 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 our common stock or another corporation; or
(3) we convey, transfer, sell, lease or otherwise dispose of all or
substantially all of our assets to another person.
However, a change in control will not be deemed to have occurred if the
closing sales price per share of our common stock for any five trading days
within the period of 10 consecutive trading days ending immediately after the
later of the change in control or the public announcement of the change in
control, in the case of a change in control relating to an acquisition of
capital stock, or the period of 10 consecutive trading days ending immediately
before the change in control, in the case of change in control relating to a
merger, consolidation or asset sale, equals or exceeds 105% of the conversion
price of the notes in effect on each of those trading days.
For purposes of these provisions:
. the conversion price is equal to $1,000 divided by the conversion rate;
. whether a person is a "beneficial owner" will be determined in
accordance with Rule 13d-3 under the Exchange Act; and
. "Person" includes any syndicate or group that would be deemed to be a
"person" under Section 13(d)(3) of the Exchange Act.
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 a change in control is subject to
important limitations. Some of the events constituting a change in control
could cause an event of default under, or be prohibited or limited by, the
terms of other senior debt. As a result, unless we were to obtain a waiver, 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 may not
have the financial resources or 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 the section entitled "--Subordination."
Mergers and Sales of Assets by COR
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
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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 each
of the following requirements is met:
. the person formed by the consolidation or into or with which we merge or
the person to which our properties and assets are conveyed, transferred,
sold or leased, is a corporation, limited liability company, partnership
or trust organized and existing under the laws of the United States, any
State or the District of Columbia and, if other than us, shall expressly
assume the due and punctual payment of the principal of, any premium,
and interest on the notes and the performance of our other covenants
under the indenture;
. immediately after giving effect to that transaction, no event of
default, and no event which, after notice or lapse of time or both,
would become an event of default, shall have occurred and be continuing;
and
. an officer's certificate and legal opinion relating to these conditions
is delivered to the trustee.
Events of Default
Any of the following will constitute events of default under the indenture:
. we fail to pay principal of or any premium on any note when due, whether
or not the payment is prohibited by the subordination provisions of the
indenture;
. we fail to pay any interest on any note when due and that default
continues for 30 days, whether or not the payment is prohibited by the
subordination provisions of the indenture;
. we fail to give the notice that we are required to give upon a change in
control, whether or not the notice is prohibited by the subordination
provisions of the indenture;
. 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;
. failure to pay when due the principal of, or acceleration of, any
indebtedness for money borrowed by us or any of our subsidiaries in
excess of $10 million (excluding equipment and facilities leases) if the
indebtedness is not discharged, or the acceleration is not annulled,
within 30 days after written notice to us by the trustee or the holders
of at least 25% in aggregate principal amount of the outstanding notes;
and
. events of bankruptcy, insolvency or reorganization specified in the
indenture.
Subject to the provisions of the indenture relating to the duties of the
trustee in case an event of default shall occur and be continuing, the trustee
will be under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders, unless such
holders shall have offered to the trustee reasonable indemnity. Subject to the
provisions for the indemnification of the trustee, the holders of a majority in
aggregate principal amount of the outstanding notes will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power conferred on the
trustee.
If an event of default, other than an event of default arising from events
of bankruptcy, insolvency or reorganization, occurs and is continuing, either
the trustee or the holders of at least 25% in principal amount of the
outstanding notes may accelerate the maturity of all notes. After acceleration,
but before a judgment or decree based on acceleration, the holders of a
majority in aggregate principal amount of outstanding notes may, under
circumstances set forth in the indenture, rescind the acceleration if all
events of default, other than the nonpayment of principal of the notes which
have become due solely because of the acceleration, have been cured or waived
as provided in the indenture. If an event of default arising from events of
bankruptcy, insolvency or reorganization occurs and is continuing, then the
principal of, and accrued interest on, all of the notes will automatically
become immediately due and payable without any declaration or other act on the
part of the holders of the notes or the trustee.
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Before you may take any action to institute any proceeding relating to the
indenture, or to appoint a receiver or a trustee, or for any other remedy, each
of the following must occur:
. you must have given the trustee written notice of a continuing event of
default;
. the holders of at least 25% of the aggregate principal amount of all
outstanding notes must make a written request of the trustee to take
action because of the default and must have offered reasonable
indemnification to the trustee against the cost, liabilities and
expenses of taking such action; and
. the trustee must not have taken action for 60 days after receipt of such
notice and offer of indemnification.
These limitations do not apply to a suit for the enforcement of payment of
the principal of or any premium or interest on a note, or the repurchase price
payable for a note, on or after the due dates for such payments or of the right
to convert the note in accordance with the indenture.
We will furnish to the trustee annually a statement as to our performance of
our obligations under the indenture and as to any default in performance.
Modification and Waiver
The consent of the holders of a majority in principal amount of the
outstanding notes affected is required to make a modification or amendment to
the indenture. However, a modification or amendment requires the consent of the
holder of each outstanding note affected if it would:
. change the stated maturity of the principal or interest of a note;
. reduce the principal amount, any premium or interest on any note;
. reduce the amount payable upon a redemption or mandatory repurchase;
. modify the provisions with respect to your repurchase rights in a manner
adverse to you;
. 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 you;
. 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 respect to some provisions of the indenture or to waive
some provisions of default; 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 respect to restrictive provisions of the
indenture. The holders of a majority in principal amount of the outstanding
notes may waive any past default, except a default in the payment of principal,
any premium, interest or the repurchase price.
Notes will not be considered outstanding if money for their payment or
redemption has been deposited or set aside in trust for the holders.
We will generally be entitled to set any day as a record date for the
purpose of determining the holders of outstanding notes that are entitled to
take any action under the indenture. In limited circumstances, the trustee
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will be entitled to set a record date for action by holders. If COR or the
trustee set a record date for any action to be taken by holders, such action
may be taken only by persons who are holders of outstanding notes on the record
date and must be taken within 180 days following the record date or such other
period as we may specify, or as the trustee may specify, if it set the record
date. 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.
Under the registration rights agreement we have agreed that we will, at our
expense, use our reasonable efforts to keep effective the shelf registration
statement until two years after the date it is declared effective or, if
earlier, until there are no outstanding registrable securities.
We are permitted to suspend the use of the prospectus that is part of the
shelf registration statement in connection with sales of registrable securities
during prescribed periods of time for reasons relating to pending corporate
developments, public filings with the Commission and other events. If the
periods during which we suspend the use of the prospectus exceeds a total of 45
days in any 90-day period or a total of 90 days in any 365-day period the
interest rate on the notes will increase. We will provide to each holder of
registrable securities copies of the prospectus that is a part of the shelf
registration statement and take other actions required to permit public resales
of the registrable securities.
A holder who elects to sell any registrable securities pursuant to the shelf
registration statement will be required to be named as a selling security
holder in the related prospectus, will be required to deliver a prospectus to
purchasers, may be subject to specific civil liability provisions under the
Securities Act in connection with those sales and will be bound by the
provisions of the registration rights agreement that apply to a holder making
such an election, including any indemnification provisions.
We will, upon the request of any holder of registrable securities who has
not previously returned a completed and signed notice and questionnaire, as
promptly as reasonably practicable, send a notice and questionnaire to such
holder. We will not be required to take any action to name such holder as a
selling securityholder in the shelf registration statement until such holder
has returned a completed and signed notice and questionnaire to us. After we
receive the notice and questionnaire, we will as promptly as practicable
include the registrable securities covered by the notice and questionnaire in
the shelf registration statement, subject to restrictions on the timing and
number of supplements to the shelf registration statement provided in the
registration rights agreement.
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 your expense, 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 your expense before a replacement note will
be issued.
The Trustee
The trustee for the holders of notes issued under the indenture is Firstar
Bank, N.A. If an event of default shall occur, and shall not be cured, the
trustee will be required to use the degree of care of a prudent person in the
conduct of his own affairs in the exercise of its powers. Subject to these
provisions, the trustee will be under no obligation to exercise any of its
rights or powers under the indenture at the request of any holders of notes,
unless they shall have offered to the trustee reasonable security or indemnity.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following generally discusses certain United States federal income tax
consequences to holders of the notes or underlying common stock. This
discussion is based upon the Internal Revenue Code of 1986, as amended,
existing and proposed United States Treasury regulations, Internal Revenue
Service rulings and pronouncements, and judicial decisions now in effect, all
of which are subject to change (possibly with retroactive effect) or different
interpretation.
This discussion is for general information only and does not address all
aspects of United States federal income taxation that may be relevant to you as
a holder of the notes or the common stock into which you may convert the notes.
This discussion does not describe the tax consequences arising under the laws
of any foreign, state or local jurisdiction, nor does it describe all of the
tax consequences that may be relevant to you in light of your personal
circumstances, or to some holders who may be subject to special rules, such as:
. persons who do not hold the notes or the common stock into which they
may convert the notes as capital assets within the meaning of Section
1221 of the Internal Revenue Code;
. holders subject to the alternative minimum tax;
. financial institutions;
. insurance companies;
. tax-exempt entities;
. dealers in securities or foreign currencies;
. persons who hold the notes or common stock in connection with a
conversion, or a straddle, hedging or other risk reduction transaction
for United States federal income tax purposes; or
. persons whose primary form of currency is other than the United States
dollar.
COR has not sought any ruling from the IRS with respect to the statements
made and conclusions reached in this discussion and there can be no assurance
that the IRS will agree with our statements and conclusions.
For purposes of this discussion, the term U.S. holder means a holder that:
. is a citizen or resident of the United States;
. is a corporation, partnership or other entity (other than a trust)
created or organized in or under the laws of the United States;
. is an estate the income of which is subject to United States federal
income taxation regardless of its source;
. is a trust if (a) a United States court is able to exercise primary
supervision over the administration of the trust and (b) one or more
United States persons, within the meaning of Section 7701(a)(30) of the
Internal Revenue Code, referred to as U.S. persons, have authority to
control all substantial decisions of the trust; or
. is in any other way subject to United States federal income taxation on
a net income basis with regard to the notes or common stock.
A non-U.S. holder means a holder that is not a U.S. holder.
PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING
THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THEIR PARTICIPATION
IN THIS OFFERING, AND THEIR OWNERSHIP AND DISPOSITION OF THE NOTES (INCLUDING
CONVERSION OF THE NOTES) OR COMMON STOCK, INCLUDING THE EFFECT THAT THEIR
PARTICULAR CIRCUMSTANCES MAY HAVE ON ANY TAX CONSEQUENCES.
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U.S. Holders
Interest on Notes. Interest we pay on a note will be taxable to a U.S.
holder as ordinary interest income, at the time that the interest is accrued or
actually or constructively received, in accordance with a U.S. holder's method
of accounting for United States federal income tax purposes.
Conversion of Notes. A U.S. holder of a note generally should not recognize
income, gain or loss on the conversion of the note into common stock, including
an optional conversion by COR in the case of a repurchase upon a change in
control, except upon receipt of cash in lieu of a fractional share of common
stock or attributable to accrued but unpaid interest that would be taxable as
interest income. A U.S. holder's aggregate tax basis in the common stock
received upon conversion of the note should equal the U.S. holder's adjusted
tax basis in the note at the time of conversion (less any portion of that basis
that may be allocated to cash received in lieu of a fractional share). The
holding period of the common stock received upon conversion of a note generally
should include the period during which the U.S. holder held the note prior to
the conversion.
You should treat cash received in lieu of a fractional share of common stock
as a payment in exchange for such fractional share. Any gain or loss you
recognize on the receipt of cash paid in lieu of such fractional share
generally will be capital gain or loss equal to the difference between the
amount of cash you receive and the amount of your adjusted tax basis that may
be allocated to the fractional share.
Adjustment of Conversion Price. The conversion price of the notes may
adjust. See "Description of the Notes--Conversion Rights". Under Section 305(c)
of the Internal Revenue Code, and the treasury regulations issued thereunder,
adjustments that effectively increase or decrease the proportionate interest of
U.S. holders of the notes in our assets or earnings (for example, an adjustment
following a distribution of property by us to our stockholders) may give rise
to deemed distributions to U.S. holders. Similarly, a failure to adjust the
conversion price of the notes to reflect a stock dividend or other event
increasing the proportionate interest of stockholders of outstanding common
stock can give rise to deemed distributions to our stockholders. A deemed
distribution will be taxable as a dividend, return of capital or capital gain
in accordance with the earnings and profits rules discussed under "--
Distributions on Common Stock" below whether or not the U.S. holders ever
convert such notes. Generally, a U.S. holder's tax basis in a note will
increase to the extent any constructive distribution is treated as a dividend.
Distributions on Common Stock. If we make distributions on common stock
those distributions will constitute a dividend for United States federal income
tax purposes to the extent of our current or accumulated earnings and profits
as determined under United States federal income tax principles. If we declare
dividends that are paid to U.S. holders that are United States corporations
those dividends may qualify for the dividends-received deduction. Noncorporate
taxpayers and certain corporations are not entitled to the dividends-received
deduction.
To the extent that a U.S. holder receives a distribution on common stock
that exceeds our current and accumulated earnings and profits, that
distribution will be treated first as a nontaxable return of capital reducing
the U.S. holder's tax basis in the common stock. Any distributions in excess of
the U.S. holder's tax basis in the common stock will be treated as capital
gain.
Sale, Exchange or Redemption of Notes or Common Stock. In general, subject
to the discussion in the section entitled "Market Discount" below, a U.S.
holder of a note will recognize capital gain or loss upon the sale, redemption,
retirement or other disposition of the note measured by the difference between
the amount of cash and the fair market value of any property received (except
to the extent attributable to the payment of accrued interest income, which is
taxable as ordinary income) and the U.S. holder's adjusted tax basis in the
note. A U.S. holder's adjusted tax basis in the note generally will equal the
cost of the note to that holder, increased by the amount of any market discount
previously taken into income by the holder or decreased by any premium
amortized by the holder with respect to the note. For the basis and holding
period of shares of common stock received upon conversion of the note, see
"--Conversion of Notes", above.
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In general, subject to the discussion under "--Market Discount" below, a
U.S. holder of common stock received upon conversion of a note will recognize
capital gain or loss upon the sale, exchange, redemption or other disposition
of the common stock under rules similar to the computation of gain or loss on
the disposition of the notes. However, special rules may apply to a redemption
of common stock which may result in the proceeds of the redemption being
treated as a dividend. In general, the maximum tax rate for noncorporate
taxpayers on long-term capital gain is 20% with respect to capital assets
(including the notes and common stock), but only if they have been held for
more than one year at the time of disposition. Capital gain on assets having a
holding period of one year or less at the time of disposition of the assets is
taxed as short-term gain at a maximum rate of 39.6% in the hands of
noncorporate taxpayers. For individual taxpayers, the ability to deduct capital
losses is subject to limitations. For corporate taxpayers, capital gains or
ordinary income are subject to a maximum regular tax rate of 35%.
Market Discount. Your ability to resell the notes may be affected by the
impact of the market discount provisions of the Internal Revenue Code. For this
purpose, the market discount on a note generally will equal the amount by which
the stated redemption price at maturity of the note immediately after its
acquisition (other than at original issue) exceeds the U.S. holder's adjusted
tax basis in the note. Subject to an exception for amounts below a minimum
threshold, these provisions generally require a U.S. holder who acquires a note
at a market discount to treat as ordinary income any gain recognized on the
disposition of such note to the extent of the accrued market discount on such
note at the time of disposition, unless the U.S. holder elects to include
accrued market discount in income currently.
This election to include market discount in income currently, once made,
applies to all market discount obligations acquired on or after the first
taxable year to which the election applies and may not be revoked without the
consent of the IRS. In general, market discount will be treated as accruing on
a straight-line basis over the remaining term of the note at the time of
acquisition, or, at the election of the U.S. holder, under a constant yield
method. A U.S. holder who acquires a note at a market discount and who does not
elect to include accrued market discount in income currently may be required to
defer the deduction of a portion of the interest on any indebtedness incurred
or maintained to purchase or carry the note until the note is disposed of in a
taxable transaction. If a U.S. holder acquires a note with market discount and
receives common stock upon conversion of the note, the amount of accrued market
discount not previously included in income with respect to the converted note
through the date of conversion will be treated as ordinary income upon the
disposition of the common stock.
Under the President's fiscal 2001 budget proposal, accrual basis taxpayers
could be required to accrue market discount currently, subject to limitations.
Amortizable Premium. A U.S. holder who purchases a note at a premium over
its stated principal amount, plus accrued interest, generally may elect to
amortize such premium, referred to as a Section 171 premium, from the purchase
date to the note's maturity date under a constant-yield method that reflects
semiannual compounding based on the note's payment period. Amortizable premium,
however, will not include any premium attributable to a note's conversion
feature. The premium attributable to the conversion feature is the excess, if
any, of the note's purchase price over what the note's fair market value would
be if there were no conversion feature. Amortized Section 171 premium is
treated as an offset to interest income on a note and not as a separate
deduction. The election to amortize premium on a constant yield method, once
made, applies to all debt obligations held or subsequently acquired by the
electing U.S. 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
IRS.
Non-U.S. Holders
Payments of Interest. Generally, interest we pay on the notes to, or on
behalf of, a non-U.S. holder will not be subject to United States federal
withholding tax where the interest is not effectively connected with the
conduct of a trade or business within the United States by a non-U.S. holder
if:
. the non-U.S. holder does not actually or constructively own 10% or more
of the total combined voting power of all classes of our stock within
the meaning of Internal Revenue Code Section 871(h)(3),
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. the non-U.S. holder is not (a) a controlled foreign corporation for
United States federal income tax purposes that is related to us through
stock ownership or (b) a bank that received the note on an extension of
credit made pursuant to a loan agreement entered into in the ordinary
course of its trade or business as described in Section 881(c)(3)(A) of
the Internal Revenue Code, and
. the non-U.S. holder provides a statement signed under penalties of
perjury that includes its name and address and certifies that it is not
a U.S. person in compliance with applicable requirements of the
regulations or an exemption is in any other way established.
If a non-U.S. holder satisfies specific requirements, the certification
described above may be provided by a securities clearing organization, a bank,
or other financial institution that holds customer's securities in the ordinary
course of its trade or business. For this purpose the non-U.S. holder of notes
would be deemed to own constructively the common stock into which it could be
converted. If a non-U.S. holder cannot satisfy these requirements it will be
subject to United States federal withholding tax at a rate of 30% (or lower
treaty rate, if applicable) on interest payments on the notes unless:
. the interest is effectively connected with the conduct of a United
States trade or business, in which case the interest will be subject to
United States federal income tax on net income that applies to U.S.
persons generally, or
. an applicable income tax treaty provides for a lower rate of, or
exemption from, withholding tax.
Conversion of Notes. A non-U.S. holder generally should not be subject to
United States federal withholding tax on the conversion of a note into common
stock. To the extent a non-U.S. holder receives cash in lieu of a fractional
share of common stock on the conversion, it may give rise to a gain that would
be subject to the rules described below with respect to the sale or exchange of
a note or common stock. See "--Sales or Exchange of Notes or Common Stock"
below.
Adjustment of Conversion Price. The conversion price of the notes may be
adjusted in certain circumstances. See "Description of the Notes--Conversion
Rights". Any adjustment could give rise to a deemed distribution to non-U.S.
holders of the notes. See "--U.S. Holders--Adjustment of Conversion Price"
above. In that case, the deemed distribution would be subject to the rules
below regarding withholding of United States federal tax on dividends in
respect of common stock. See "--Distributions on Common Stock" below.
Distributions on Common Stock. If we make distributions on common stock
those distributions will constitute a dividend for United States federal income
tax purposes to the extent of our current or accumulated earnings and profits
as determined under United States federal income tax principles. If we declare
dividends that are paid on common stock held by a non-U.S. holder those
dividends will be subject to United States federal withholding tax at a rate of
30% (or lower treaty rate, if applicable), unless the dividend is effectively
connected with the conduct of a trade or business within the United States by
the non-U.S. holder and, if required by a tax treaty, is attributable to a
permanent establishment maintained in the United States, in which case the
dividend will be subject to United States federal income tax on net income that
applies to U.S. persons generally (and, with respect to corporate holders under
certain circumstances, the branch profits tax). A non-U.S. holder may be
required to satisfy certain certification requirements in order to claim a
reduction of or exemption from withholding under the foregoing rules.
Sales or Exchange of Notes or Common Stock. A non-U.S. holder generally will
not be subject to United States federal withholding tax on gain recognized upon
the sale or other disposition (including a redemption) of a note or common
stock received upon conversion thereof unless the gain is effectively connected
with the conduct of a trade or business within the United States by the non-
U.S. holder and, if required by a tax treaty, is attributable to a permanent
establishment maintained in the United States or unless the non-U.S. holder:
. is a nonresident alien individual who is present in the United States
for 183 or more days in the taxable year in which the gain is realized
and certain other conditions are satisfied, or
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. is subject to tax pursuant to the provisions of United States tax law
applicable to certain United States expatriates.
However, if we were to become a United States real property holding
corporation, a non-U.S. holder may be subject to federal income tax withholding
with respect to gain realized on the disposition of notes or shares of common
stock. In that case, any withholding tax withheld pursuant to the rules
applicable to dispositions of a United States real property interest will be
creditable against such non-U.S. holder's United States federal income tax
liability and may entitle the non-U.S. holder to a refund upon furnishing
required information to the IRS. We do not believe that we are a United States
real property holding corporation or will become one in the future.
United States Estate Tax. Notes owned or treated as owned by an individual
who is not a citizen or resident (as specially defined for United States
federal estate tax purposes) of the United States at the time of death,
referred to a nonresident decedent, will not be includible in the nonresident
decedent's gross estate for United States federal estate tax purposes as a
result of the nonresident decedent's death, provided that, at the time of
death, the nonresident decedent does not own, actually or constructively, 10%
or more of the total combined voting power of all classes of our stock and
payments with respect to such notes would not have been effectively connected
with the conduct of a trade or business in the United States by the nonresident
decedent. Common stock owned or treated as owned by a nonresident decedent will
be includible in the nonresident decedent's gross estate for United States
federal estate tax purposes as a result of the nonresident decedent's death.
Subject to applicable treaty limitations, if any, a nonresident decedent's
estate may be subject to United States federal estate tax on property
includible in the estate for United States federal estate tax purposes.
IRS Reporting and Backup Withholding
Certain noncorporate U.S. holders may be subject to IRS reporting and backup
withholding at a rate of 31% on payments of interest on the notes, dividends on
common stock and proceeds from the sale or other disposition of the notes or
common stock. Backup withholding will only be imposed where the noncorporate
U.S. holder:
. fails to furnish its taxpayer identification number, or TIN, which would
ordinarily be his or her social security number, on a properly completed
Form W-9,
. furnishes an incorrect TIN,
. is notified by the IRS that he or she has failed to properly report
payments of interests or dividends, or
. under certain circumstances, fails to certify, under penalties of
perjury, that he or she has furnished a correct TIN and has not been
notified by the IRS that he or she is subject to backup withholding.
A U.S. holder who fails to provide us with a correct TIN may also be subject
to penalties imposed by the IRS.
We must report annually to the IRS and to each non-U.S. holder any interest
and dividends paid with respect to a note or common stock, respectively, and
that is subject to United States federal withholding tax or that is exempt from
such tax under applicable treaty or the Internal Revenue Code. We also report
to the IRS and to each non-U.S. person any income paid that is exempt from
federal withholding tax because it is effectively connected with a non- U.S.
person's United States trade or business. However, a non-U.S. holder will not
be subject to IRS reporting or backup withholding if we have received
appropriate certification statements from or on behalf of the non-U.S. holder
and provided that we do not have actual knowledge that the non-U.S. holder is a
United States person.
The payment of the proceeds from the disposition of the notes or common
stock to or through the United States office of any United States or foreign
broker will be subject to IRS reporting and possibly backup
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withholding unless the owner certifies as to its non-U.S. status under
penalties of perjury or otherwise establishes an exemption, provided that the
broker does not have actual knowledge that the holder is a U.S. person or that
the conditions of any other exemption are not, in fact, satisfied. The payment
of the proceeds from the disposition of a note or common stock to or through a
non-U.S. office of a non-U.S. broker that is not a United States related person
will not be subject to IRS reporting or backup withholding. For this purpose, a
U.S. related person is:
. a controlled foreign corporation for United States federal income tax
purposes, or
. a non-U.S. 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 (or for such part of the period that the broker
has been in existence) is derived from the activities that are
effectively connected with the conduct of a United States trade or
business.
In the case of the payment of proceeds from the disposition of notes or
common stock to or through a non-U.S. office of a broker that is a U.S. related
person, the regulations require IRS reporting on the payment unless the broker
has documentary evidence in its files that the owner is a non-U.S. holder and
the broker has no knowledge to the contrary. Backup withholding will not apply
to payments made through foreign offices of a broker that is a U.S. person or a
U.S. related person (absent actual knowledge that the payee is a U.S. person).
Any amounts withheld under the backup withholding rates from a payment to a
holder will be allowed as a credit against the holder's United States federal
income tax liability, if any, or will otherwise be refundable, provided that
the requisite procedures are followed. Holders of the notes or common stock
should consult their own tax advisors regarding their qualification for
exemption from backup withholding and the procedure for obtaining such an
exemption, if applicable.
Prospective Final Regulations
The IRS has issued new withholding regulations effective generally for
payments made after December 31, 2000. The proposed regulations provide that
information reporting but not backup withholding, may apply to a payment made
outside the United States of the proceeds of a sale of a note through an office
outside the United States of a broker that is a foreign partnership if one or
more of its partners are U.S. persons, as defined in United States Treasury
regulations, who in the aggregate hold more than 50% of the income or capital
interest in the partnership or such foreign partnership is engaged in a United
States trade or business unless the broker has documentary evidence in its
records that the holder is a non-U.S. person and does not have actual knowledge
that the holder is a U.S. person, or the holder otherwise establishes an
exemption. Non-U.S. holders should consult their own tax advisors with respect
to the future impact of these new withholding regulations.
31
<PAGE>
SELLING SECURITY HOLDERS
We originally issued the notes to the initial purchasers in a transaction
exempt from the registration requirements of the Securities Act, and the notes
were immediately resold by the initial purchasers to persons reasonably
believed by the initial purchasers to be qualified institutional buyers.
Selling holders, including their transferees, pledgees or donees or their
successors, may from time to time offer and sell pursuant to this prospectus
any or all of the notes and common stock into which the notes are convertible.
The following table sets forth information, as of August 28, 2000, with
respect to the selling holders and the principal amounts of notes 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 the 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 since the date on which they provided the information
regarding their notes in transactions exempt from the registration requirements
of the Securities Act.
<TABLE>
<CAPTION>
Shares
of Common
Principal Amount of Stock Common Common Stock Owned
Notes Beneficially Beneficially Stock After Completion
Name Owned and Offered Owned(1) Offered of Offering
---- ------------------- ------------ --------- ------------------
<S> <C> <C> <C> <C>
AAM/Zazove Institutional
Income Fund, L.P. ..... 625,000 18,502 18,502 0
AIG/National Union Fire
Insurance.............. 1,330,000 39,376 39,376 0
AIG SoundShore Holdings
Ltd. .................. 3,500,000 103,620 103,620 0
AIG SoundShore
Opportunity Holdings
Fund Ltd. ............. 3,500,000 103,620 103,620 0
AIG SoundShore Strategic
Holdings Fund Ltd. .... 1,000,000 29,606 29,606 0
Allstate Insurance
Company................ 1,470,000 59,920(2) 43,520 16,400
Aloha Airlines Pilots
Retirement Trust....... 75,000 2,220 2,220 0
Aloha Airlines Non-
Pilots Pension Trust... 130,000 3,848 3,848 0
Argent Classic
Convertible Arbitrage
Fund L.P. ............. 6,250,000 185,034 185,034 0
Argent Classic
Convertible Arbitrage
Fund (Bermuda) L.P. ... 9,500,000 281,253 281,253 0
Argent Convertible
Arbitrage Fund Ltd. ... 2,000,000 59,210 59,210 0
Boulder II Limited...... 7,750,000 229,442 229,442 0
BP. Amoco Plc. Master
Trust.................. 4,069,000 120,464 120,464 0
Castle Convertible Fund,
Inc.................... 500,000 14,802 14,802 0
C&H Sugar Company,
Inc.................... 205,000 6,068 6,068 0
Chrysler Corporation
Master Retirement
Trust.................. 975,000 28,865 28,865 0
DaimlerChrysler
Corporation Emp. #1
Pension Plan dtd
4/1/89................. 1,946,000 57,612 57,612 0
Deutsche Bank Securities
Inc.................... 67,400,000 1,995,418 1,995,418 0
Employee Benefit
Convertible Securities
Fund................... 160,000 4,737 4,737 0
Estate of James
Campbell............... 1,161,000 34,372 34,372 0
Franklin & Marshall
College................ 134,000 3,966 3,966 0
GE Pension Trust........ 964,000 28,538 28,538 0
Goldman Sachs & Co.(3).. 2,741,000 81,149 81,149 0
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Shares
of Common
Principal Amount of Stock Common Common Stock Owned
Notes Beneficially Beneficially Stock After Completion
Name Owned and Offered Owned(1) Offered of Offering
---- ------------------- ------------ ------- ------------------
<S> <C> <C> <C> <C>
Grace Brothers, LTD..... 1,500,000 44,408 44,408 0
Hawaiian Airlines
Employees Pension
Plan--IAM.............. 110,000 3,256 3,256 0
Hawaiian Airlines
Pension Plan for
Salaried Employees..... 30,000 888 888 0
Hawaiian Airlines Pilots
Retirement Trust....... 180,000 5,328 5,328 0
Highbridge International
LLC.................... 27,900,000 825,996 825,996 0
HT Insight Convertible
Securities Fund........ 300,000 8,880 8,880 0
Island Holdings......... 75,000 2,220 2,220 0
ITG. Inc. .............. 220,000 6,512 6,512 0
Jefferies & Company..... 500,000 14,802 14,802 0
JMG Capital Partners,
LP..................... 10,000,000 296,056 296,056 0
JMG Triton Offshore
Fund, Ltd. ............ 14,000,000 414,478 414,478 0
KBC Financial Products.. 4,500,000 133,225 133,225 0
LDG Limited............. 125,000 3,700 3,700 0
Lexington Vantage Fund.. 50,000 1,480 1,480 0
Lipper Convertibles,
L.P. .................. 5,400,000 159,870 159,870 0
Lipper Offshore
Convertibles, L.P. .... 500,000 14,802 14,802 0
Lyxor Master Fund....... 2,300,000 68,092 68,092 0
McMahan Securities
Company L.P. .......... 134,000 3,967 3,967 0
Motion Picture Industry
Health Plan--Active
Member Fund............ 180,000 5,329 5,329 0
Motion Picture Industry
Health Plan--Retiree
Member Fund............ 90,000 2,665 2,665 0
Museum of Fine Arts,
Boston................. 20,000 592 592 0
Nalco Chemical Company.. 525,000 15,542 15,542 0
Nations Convertible
Securities Fund........ 2,840,000 84,080 84,080 0
New York Life Insurance
Company................ 13,550,000 401,154 401,154 0
Onex Industrial Partners
Limited................ 3,750,000 111,020 111,020 0
Parker-Hannifin
Corporation............ 35,000 1,036 1,036 0
Pebble Capital, Inc. ... 3,500,000 103,618 103,618 0
Penn Treaty Network
America Insurance
Company................ 156,000 4,618 4,618 0
ProMutual............... 74,000 2,190 2,190 0
Putnam Asset Allocation
Funds-Balanced
Portfolio.............. 139,000 4,114 4,114 0
Putnam Asset Allocation
Funds-Conservative
Portfolio.............. 89,000 2,634 2,634 0
Putnam Balanced
Retirement Fund........ 39,000 1,154 1,154 0
Putnam Convertible
Income-Growth Trust.... 2,024,000 59,920 59,920 0
Putnam Convertible
Opportunities and
Income Trust........... 59,000 1,746 1,746 0
Queen's Health Plan..... 45,000 1,332 1,332 0
R2 Investments, LDC .... 31,050,000 919,254 919,254 0
Robertson Stephens(4)... 10,000,000 296,056 296,056 0
Salomon Brothers Asset
Management, Inc. ...... 7,000,000 207,238 207,238 0
San Diego County
Employees Retirement
Association............ 2,595,000 76,827 76,827 0
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Shares
of Common
Principal Amount of Stock Common Common Stock Owned
Notes Beneficially Beneficially Stock After Completion
Name Owned and Offered Owned(1) Offered of Offering
---- ------------------- ------------ ------- ------------------
<S> <C> <C> <C> <C>
Silvercreek Limited
Partnership............ 4,000,000 118,422 118,422 0
Southern Farm Bureau
Life Insurance--FRIC... 650,000 19,242 19,242 0
Starvest Combined
Portfolio.............. 1,690,000 50,033 50,033 0
State of Connecticut
Combined Investment
Funds.................. 1,865,000 55,214 55,214 0
State of Oregon/SAIF
Corporation............ 6,425,000 190,216 190,216 0
Tribeca Investment
L.L.C. ................ 5,000,000 148,028 148,028 0
TQA Master Fund, Ltd. .. 1,850,000 49,220 49,220 0
TQA Master Plus Fund,
Ltd. .................. 400,000 11,821 11,842 0
University of
Rochester.............. 19,000 562 562 0
Vanguard Convertible
Securities Fund, Inc... 2,140,000 63,356 63,356 0
Van Kampen Harbor Fund.. 4,250,000 125,824 125,824 0
Zurich HFR Master Hedge
Fund Index Ltd......... 150,000 4,440 4,440 0
Zurich HFR Master Hedge
Fund Index Ltd Global.. 100,000 2,961 2,961 0
Zurich HFR Mstr Hdg
Fund................... 75,000 2,220 2,220 0
</TABLE>
--------
(1) Unless otherwise noted, represents shares of common stock issuable upon
conversion of notes.
(2) Includes 8,200 shares held by Allstate Insurance Company, 1,000 shares held
by Allstate Life Insurance Company, 1,800 shares held by Agents Pension
Plan and 5,400 shares held by Allstate Retirement Plan.
(3) Goldman, Sachs & Co. was an initial purchaser of the notes from us. Goldman
Sachs purchased the notes listed on this table in the after-market for its
own account and not for purposes of distribution.
(4) Robertson Stephens was an initial purchaser of the notes from us. Robertson
Stephens purchased the notes listed on this table for its own account and
not for purposes of distribution.
34
<PAGE>
PLAN OF DISTRIBUTION
The selling holders and their successors, including their transferees,
pledgees or donees or their successors, may sell the notes and the 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 holders of the notes and the common stock into which the notes are
convertible may sell the securities 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 United States inter-dealer system
of a registered national securities association on which the notes or
the common stock may be listed or quoted at the time of sale;
. in the over-the-counter market;
. in transactions otherwise than on these exchanges or systems or in the
over-the-counter market;
. through the writing of options, whether the options are listed on an
options exchange or otherwise; or
. through the settlement of short sales.
In connection with the sale of the notes and the common stock into which the
notes are convertible or otherwise, 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 the common stock into which the
notes are convertible in the course of hedging the positions they assume. The
selling holders may also sell the notes or the common stock into which the
notes are convertible short and deliver these securities to close out their
short positions, or loan or pledge the notes or the common stock into which the
notes are convertible 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 into which the notes are convertible 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.
In order to comply with the securities laws of some states, if applicable,
the holders of the notes and common stock into which the notes are convertible,
may sell in some states only through registered or licensed brokers or dealers.
In addition, in some states the holders of the notes and common stock into
which the notes are convertible may not sell the securities unless they
register or qualify them for sale or comply with an exemption from the
registration or qualification requirements that is available to them.
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock into which the notes are
convertible 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.
35
<PAGE>
In addition, holders of any securities covered by this prospectus that
qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may
sell those securities under Rule 144 or Rule 144A rather than pursuant to this
prospectus. A selling holder may not sell any notes or common stock described
in this prospectus and may not transfer, devise or gift these securities by
other means not described in this prospectus.
To the extent required, the specific notes or 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 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 their and our respective directors, officers and
controlling persons against specific liabilities in connection with the offer
and sale of the notes and the common stock, including liabilities under the
Securities Act. We will pay substantially all of the expenses incurred by the
selling holders incident to the offering and sale of the notes and the common
stock.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for us by
Cooley Godward LLP, Palo Alto, California.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our 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.
36
