Filed pursuant to Rule 424(b)(3)
Registration Statement No. 333-68556
PROSPECTUS
$300,000,000
COR THERAPEUTICS, INC.
4.50% Convertible Senior Notes due June 15, 2006
and Shares of Common Stock Issuable Upon Conversion of the Notes
----------------
This prospectus covers resales by selling security holders of our 4.50%
convertible senior notes due June 15, 2006 and shares of our common stock into
which the notes are convertible.
Our 4.50% convertible senior notes have the following provisions:
Interest Payments: June 15 and December 15 of each year
Conversion Rate: 24.9389 shares per $1,000 principal
amount
Redemption Options: . by us after June 15, 2004
. by noteholders upon a change in
control
The notes are senior, unsecured obligations that are senior to our 5.00%
convertible subordinated notes due March 1, 2007 and that rank equally with
our existing and future unsecured and unsubordinated indebtedness. See
"Description of the Notes--Ranking."
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 trades on the Nasdaq National Market under the symbol
"CORR." The last reported sale price on September 20, 2001 was $22.46 per
share.
See "Risk Factors" beginning on page 6 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.
September 21, 2001
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TABLE OF CONTENTS
Page
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Summary................................................................. 3
Risk Factors............................................................ 6
Ratio of Earnings to Fixed Charges...................................... 13
Cautionary Note Regarding Forward-Looking Statements.................... 13
Where You Can Find More Information About Us and this Offering.......... 13
Use of Proceeds......................................................... 14
Description of the Notes................................................ 15
Material United States Federal Income Tax Considerations................ 26
Selling Security Holders................................................ 33
Plan of Distribution.................................................... 36
Legal Matters........................................................... 37
Experts................................................................. 37
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INTEGRILIN(R) is a registered trademark of our company. This prospectus also
includes trademarks and service marks of other companies.
2
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 Therapeutics, Inc. is dedicated to the discovery, development and
marketing of novel therapeutic products to establish new standards of care for
treating and preventing acute and chronic cardiovascular diseases. We market
INTEGRILIN(R) (eptifibatide) Injection, our approved drug, to treat patients
with acute cardiovascular disease. We are also developing a portfolio of
product candidates to treat and prevent a broad range of acute and chronic
cardiovascular and other conditions.
INTEGRILIN 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
type 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 INTEGRILIN in the United States and share any profits or
losses. INTEGRILIN also has received regulatory approval for various
cardiovascular indications in the European Union and a number of other
countries. We have exclusively licensed to Schering the right to market
INTEGRILIN outside the United States, and Schering pays us royalties based on
sales of INTEGRILIN outside the United States.
In January 2001, we, Schering and Genentech, Inc., entered into an agreement
to co-promote INTEGRILIN with Genentech's fibrinolytic, or clot-dissolving
drugs, TNKase(TM) (tenecteplase) and Activase(R) (alteplase, recombinant)
across the United States. We, Schering and Genentech have also agreed to an
exclusive clinical collaboration for any future large-scale clinical trials
that combine a fibrinolytic with drugs in the same class as INTEGRILIN.
In addition to our commercial activities, we continue to pursue a wide array
of research and development programs. We believe these programs have
therapeutic potential for a variety of indications including acute coronary
syndromes, stroke, restenosis, cancer and venous and arterial thrombosis.
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 June 15
and December 15 of each year, commencing
December 15, 2001.
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 24.9389
shares of common stock per $1,000 principal
amount of notes. This is equivalent to a
conversion price of $40.10 per share. We will
3
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."
Ranking....................... The notes are senior unsecured obligations that
are senior to our 5% convertible subordinated
notes due 2007 and that rank equally with our
existing and future unsecured and
unsubordinated indebtedness. As a result, the
notes effectively rank junior to approximately
$1.8 million in capital lease obligations
outstanding as of the date of this prospectus.
We currently have $300 million of subordinated
indebtedness outstanding. The indenture
governing the notes will not restrict COR from
incurring additional senior or other
indebtedness and other liabilities. See
"Description of the Notes--Ranking."
Global Notes; 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,
which we refer to as DTC. 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 by Us..... We may redeem all or a portion of the notes, at
our option, on or after June 15, 2004. 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, subject to certain conditions and
restrictions, to require us to repurchase your
notes, in whole or in part, 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. If we pay
the repurchase price in common stock, the
common stock will be valued at 95% of the
average closing sales prices of the common
stock for the five trading days preceding and
including the third trading day prior to the
repurchase date. 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;
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. 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.
5
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 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 since June 1998. Marketing outside the
United States commenced in mid-1999, 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, we
may not achieve sustained profitability, 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. 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 to 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 may 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. Preclinical and clinical data are susceptible to 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,
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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. Schering has applied for an
expanded marketing authorization for INTEGRILIN in the European Union. A
payment from Schering to us is due upon approval of the expanded marketing
authorization. The timing of any approval, and any related payment, is
uncertain. If Schering is unable to obtain approval for the expanded marketing
authorization, continued commercialization of INTEGRILIN in the European Union
will be impaired and we will not receive the related payment from Schering or
be able to record the anticipated revenue. Our public guidance regarding our
results of operations for the year ending December 31, 2001 includes this
anticipated revenue.
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 outside the United States;
. share profits and losses in the United States and pay royalties to us on
sales of INTEGRILIN outside the United States;
. provide manufacturing and manufacturing support services;
. design and conduct advanced clinical trials;
. 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 may not be
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 various product candidates in pre-
clinical 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.
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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 pre-clinical
and clinical data that demonstrate that our products are safe and effective
before they can be approved for commercial sale. Clinical development,
including pre-clinical 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 pre-clinical or clinical studies do not
necessarily predict their final results, and acceptable results in early
studies might not be seen in later studies. Any pre-clinical or clinical test
may fail to produce results satisfactory to the FDA. Pre-clinical and clinical
data can be interpreted in different ways, which could delay, limit or prevent
regulatory approval. Negative or inconclusive results from a pre-clinical study
or clinical trial or adverse medical events during a clinical trial could cause
a pre-clinical 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 pre-clinical 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.
If our 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
and Schering 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, one of which is Schering,
performing packaging of INTEGRILIN. We have additional manufacturers producing
product candidates for clinical trials. We rely on our contract manufacturers
to deliver INTEGRILIN and product candidates that have been manufactured in
accordance with Current Good Manufacturing Practices and other applicable
regulations.
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, or if Schering and our other contract manufacturers were to fail to
adhere to Current Good Manufacturing Practices, our ability to produce
INTEGRILIN and to conduct pre-clinical 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 healthcare
community may turn to competing products. If we cannot obtain adequate supplies
of product candidates for pre-clinical and clinical trials, regulatory approval
and development of product candidates may be delayed.
Our ability to commercialize cromafiban may be diminished if the ongoing
clinical study of roxifiban is unsuccessful.
Previous clinical trials of oral GP IIb-IIIa inhibitors developed by other
pharmaceutical companies have thus far failed to demonstrate the safety and
efficacy of drugs in this class. DuPont Pharmaceuticals is conducting an
ongoing Phase III clinical trial of the oral GP IIb-IIIa inhibitor, roxifiban.
New patient enrollment for the trial has been deferred while DuPont effects
changes to the trial design and protocol. If the roxifiban trial is
unsuccessful, we may be unwilling to pursue development of our oral GP IIb-IIIa
inhibitor, cromafiban. Even if we were willing to continue to develop
cromafiban after an unsuccessful roxifiban trial, we may not be able to secure
development partners for the drug, obtain regulatory approval for continued
clinical studies or to enroll patients in such studies.
8
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.
Healthcare 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 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 be issued, 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.
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.
Risks related to our finances
We have a history of annual operating losses and are uncertain of future
profitability.
Historically, our expenses have exceeded our revenues. As of June 30, 2001,
we had an accumulated deficit of approximately $231,433,000. 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
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significant expenses for research and development and to develop, train,
maintain and manage our sales force, and these expenses have exceeded our share
of INTEGRILIN product revenues. We may never achieve ongoing profitability.
If we should need additional funds beyond our existing capital resources and
fail to obtain them, we will be unable to successfully develop and
commercialize products.
We may require significant additional funds beyond our existing capital
resources to market INTEGRILIN and conduct the costly and time-consuming
research, pre-clinical testing and clinical trials necessary to develop and
optimize our technology and potential products, 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.
Our indebtedness and debt service obligations may adversely affect our cash
flow.
At August 31, 2001, we had $601,781,000 of outstanding debt, including
primarily our convertible senior and subordinated notes. During each of the
last five years, our earnings were insufficient to cover our fixed charges.
Although our earnings were sufficient to cover our fixed charges for the six
months ended June 30, 2001, they may not continue to be in the future. See
"Ratio of Earnings to Fixed Charges." During each of the next three years, our
debt service obligations on the notes being offered and our debt service
obligations on our convertible subordinated notes will total approximately
$28,500,000 in interest payments. If we are unable to generate sufficient cash
to meet these obligations and have to use existing cash or investments, 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 existing cash and investments. 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.
Risks related to an investment in the notes and our common stock
Some of our existing obligations are secured and effectively rank senior to the
notes.
The notes are intended to be senior unsecured indebtedness and rank equally
in right of payment with our existing and future unsecured and unsubordinated
indebtedness. As a result, the notes effectively rank junior in right of
payment to approximately $1.8 million of capital lease obligations outstanding
as of the date of this
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prospectus, to the extent of the security for those obligations, but rank
senior to $300 million of outstanding 5% convertible subordinated notes due
2007. In the event of bankruptcy, liquidation or reorganization or upon
acceleration of the notes, payment on the notes could be less, ratably, than on
our secured indebtedness and more, ratably, than on our subordinated
indebtedness. Depending upon the circumstances, we may not have sufficient
assets remaining to pay amounts due on the notes then outstanding.
The indenture governing the notes does not prohibit or limit us from
incurring additional indebtedness and other liabilities, or from pledging
assets to secure such indebtedness and liabilities. The incurrence of
additional indebtedness, and in particular the granting of a security interest
to secure that indebtedness, could adversely affect our ability to pay our
obligations on the notes. We anticipate that from time to time we will incur
additional indebtedness in the future. See "Description of Notes--Ranking."
Because the notes are not 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., Robertson Stephens, Inc., Credit Suisse First Boston
Corporation, CIBC World Markets Corp. and Needham & Company, Inc. have advised
us that they intend to 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 our pre-clinical and clinical trials and other companies'
clinical trials of products and product candidates in the same class as
our products and product candidates;
. 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.
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In addition, the stock market in general has from time to time and, in
particular, recently 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 a part of your investment.
Because our convertible senior notes and convertible subordinated 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 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 shortfall between cash available and total
amounts then due and payable 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:
. 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; and
. limit who may call a special meeting of stockholders; and
. require a vote of 2/3 of our voting stock to approve any business
combination with a holder of 15% or more of our voting stock, or any
person affiliated with a person who is or was a holder of 15% or more of
our voting stock, unless procedural and minimum price requirements are
met.
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 preferred share purchase rights plan 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.
12
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, 2001:
Six months
Year ended December 31, ended June 30,
------------------------ --------------
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- --------------
Ratio of earnings to fixed charges..... (1) (1) (1) (1) (1) 1.05
--------
(1) Earnings were insufficient to cover fixed charges by $36.5, $33.5, $27.6,
$26.1 and $16.7 million for the years ended December 31, 1996, 1997, 1998,
1999 and 2000, respectively.
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 US AND THIS OFFERING
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3 to register the notes and 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,
2000;
2. Our Quarterly Reports on Form 10-Q for the fiscal quarters ended March
31, and June 30, 2001;
13
3. Our Current Reports on Form 8-K, dated June 4, and June 7, 2001; and
4. 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.
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.
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."
14
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 June 30, 2001, 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 senior, unsecured and unsubordinated obligations of COR;
. bear an interest rate of 4.50% per year, payable on June 15 and December
15 of each year, to record holders of the notes as of the preceding June
1 or December 1;
. mature on June 15, 2006;
. are limited to $300 million aggregate principal amount.
The first interest payment on the notes is due December 15, 2001. Interest
payable per $1,000 principal amount of the notes for the period from June 11,
2001 to December 15, 2001 will be $23.13.
You may convert the notes into shares of common stock initially at the
conversion rate of 24.9389 shares per $1,000 principal amount at any time
before the close of business on June 15, 2006, unless we have previously
redeemed or repurchased the notes. The conversion rate may be adjusted as
described below.
We may redeem the notes at our option, in whole or in part, at any time on
or after June 15, 2004 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:
. only in fully registered form;
. without interest coupons; and
. in denominations of $1,000 and greater multiples.
The notes are evidenced by one or more 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. Except
as set forth below, record ownership of the global notes may be transferred, in
whole or in part, only to another nominee of DTC or to a successor of DTC or
its nominee.
15
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 unless either of the following occurs:
. DTC notifies us that it is unwilling, unable or no longer qualified to
continue acting as the depositary for the global notes; or
. an event of default with respect to the notes represented by the global
notes has occurred and is continuing.
In those circumstances, DTC will determine in whose names any securities
issued in exchange for the global notes will be registered.
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.
The laws of some jurisdictions require that certain kinds of purchasers (for
example, certain insurance companies) can only own securities in definitive
(certificated) form. These laws may limit your ability to transfer your
beneficial interests in the global notes to these types of purchasers.
Only institutions (such as a securities broker or dealer) 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 (for their participants' interests) and the
records kept by those participants (for interests of persons held by
participants on their behalf).
Secondary trading in bonds and notes of corporate issuers is generally
settled in clearing-house, or next-day funds. In contrast, beneficial interests
in a global note usually trade in DTC's same-day funds settlement system, and
settle in immediately available funds. We make no representations as to the
effect that settlement in immediately available funds will have on trading
activity in those beneficial interests.
We are 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 notes 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 notes 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.
16
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 notes 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.
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
notes 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 has also advised us as follows: DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
DTC was created to hold securities for its participants and facilitate the
clearance and settlement of securities transactions between participants
through electronic book-entry changes in accounts of its participants.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations. Certain of
such participants (or their representatives), together with other entities, own
DTC. Indirect access to the DTC system is available to other entities such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
The policies and procedures of DTC, which may change periodically, will
apply to payments, transfers, exchanges and other matters relating to
beneficial interests in the global 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. During the time
when the notes are evidenced by the global notes, where we refer in this
prospectus to actions you may take as a holder of the notes we are referring to
your taking such actions through the policies and procedures established by
DTC.
Conversion Rights
You may, at your option, convert any portion of the principal amount of a
note that is an integral multiple of $1,000, into shares of common stock at any
time prior to the close of business on June 15, 2006, unless the note has been
previously redeemed or repurchased, at a conversion rate equal to 24.9389
shares per $1,000 principal amount of notes. This conversion rate is equivalent
to a conversion price of $40.10 per share. The conversion rate is subject to
adjustment as described below. Your right to convert a note called for
redemption or delivered for repurchase will 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 the note by delivering it at the corporate trust office of
the trustee, accompanied by a duly signed and completed notice of conversion, a
copy of which may be obtained from the trustee. In the case of a global note,
DTC will effect the conversion upon notice from the holder of a beneficial
interest in 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 so 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
cash payment in lieu of any fraction of a share. The trustee will send the
certificates to the conversion agent for
17
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 shares of our common stock outstanding from
time to time.
If you surrender a note for conversion 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.
No other payment or adjustment for interest, or for any dividends on our
common stock, will be made upon conversion. If you receive common stock upon
conversion of a note, you will not be entitled to receive any dividends payable
to holders of common stock as of any record date 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 in respect of the issue or delivery of common stock on
conversion. However, we are not required to pay any tax or duty that may be
payable in respect of any transfer involved in the issue or delivery of the
common stock in a name other than that of the holder of the note. We will not
issue or deliver certificates representing shares of common stock unless the
person requesting the issuance or delivery has paid to us the amount of any
such tax or duty or has established to our satisfaction that no such tax or
duty is payable.
The conversion rate is subject to adjustment if:
(1) there is a dividend or other distribution payable in common stock on
shares of our capital stock;
(2) we 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, calculated as described in the
indenture, of our common stock;
(3) we subdivide, reclassify or combine our common stock;
(4) we 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) we make a distribution consisting exclusively of cash (excluding any
cash portion of distributions referred to in paragraph (4) above, or
cash distributed upon a merger or consolidation as discussed below) 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
in respect of which no adjustment has been made, and
18
. any cash and the fair market value of other consideration payable in
respect of any tender offer by us or any subsidiary for our common
stock concluded within the preceding 12 months in respect of which no
adjustment has been made, exceeds 10% of our market capitalization
being the product of the current market price per share of our common
stock on the record date for such distribution and the number of
shares of common stock then outstanding; or
(6) the successful completion of a tender offer by us or any of our
subsidiaries for our common stock which involves aggregate
consideration that, together with:
. any cash and other consideration payable in a tender offer by us or
any of our subsidiaries for our common stock expiring within the 12
months preceding the expiration of such tender offer in respect of
which no adjustment has been made, and
. the aggregate 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 in respect of
which no adjustment has been made, exceeds 10% of our market
capitalization on the expiration of such tender offer.
We reserve the right to make such 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,
or so that we may diminish any income tax liabilities, to the recipients. No
adjustment of the conversion rate will be required to be made 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 of any note, become convertible only into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number of shares of
common stock into which the note was convertible immediately prior to the
merger, consolidation or sale. This calculation will be made based on the
assumption that the holder of common stock failed to exercise any rights of
election that the holder may have to select a particular type of consideration.
The adjustment will not be made for a merger that does not result in any
reclassification, conversion, exchange or cancellation of our common stock.
We may, from time to time, increase the conversion rate by any amount for
any period of at least 20 days if our Board of Directors has determined that
such increase would be in our best interests. If our Board of Directors makes
such a determination, it will be conclusive. We will give holders of notes at
least 15 days' notice of such an increase in the conversion rate. No such
increase shall be taken into account for purposes of determining whether the
closing price of the common stock exceeds the conversion price by 105% in
connection with an event which otherwise would be a change in control.
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 to the holders of notes. See
"Material United States Federal Income Tax Consideration--U.S. Holders."
Ranking
The notes rank pari passu in right of payment with all of our unsecured and
unsubordinated indebtedness and are senior in right of payment to our
outstanding 5% convertible subordinated notes due 2007 (the "2007 Notes"). The
notes constitute "Designated Senior Debt" (as defined in the indenture
governing the 2007 1Notes) with respect to the 2007 Notes. However, the notes
are also effectively subordinated to any of our secured debt to the extent of
the value of the assets securing such indebtedness.
19
We do not currently have any subsidiaries. However, the notes will be
"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 of our
subsidiaries to incur indebtedness, including secured indebtedness.
Optional Redemption by Us
On and after June 15, 2004, 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 June 15 of the following years:
Redemption
Year Price
---- ----------
2004............................................................ 101.8%
2005............................................................ 100.9%
and 100% of the principal amount on and after June 15, 2006. In each case we
will also pay accrued and unpaid 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 and unpaid 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 be deemed to have occurred at the time after the
notes are originally issued that any of the following occurs:
(1) any person, including any syndicate or group deemed to be a "person"
under Section 13(d)(3) of the Exchange Act, acquires, directly or
indirectly, beneficial ownership through a purchase, merger or other
acquisition transaction or series of transactions, of shares of our
capital stock entitling that
20
person to exercise 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 us, any of our subsidiary or any of our
employee benefit plan 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 our common stock 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;
. the transaction is a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of our common 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.
Certain rules under the Exchange Act require the dissemination of
prescribed information to security holders in the event of an issuer tender
offer and may apply in the event that the repurchase option becomes available
to you. We will comply with these rules to the extent they apply at that time.
We may, to the extent permitted by applicable law, at any time purchase
notes in the open market or by tender at any price or by private agreement.
Any note that we so purchase may, to the extent permitted by applicable law,
be reissued or resold or may, at our option, be surrendered to the trustee for
cancellation. Any notes surrendered may not be reissued or resold and will be
canceled promptly.
The definition of change in control includes a phrase relating to the
conveyance, transfer, sale, lease or disposition of "all or substantially all"
of our assets. There is no precise, established definition of the phrase
"substantially all" under applicable law. Accordingly, your ability to require
us to repurchase your notes as a result of conveyance, transfer, sale, lease
or other disposition of less than all of our assets may be uncertain.
The foregoing provisions would not necessarily provide you with protection
if we are involved in a highly leveraged or other transaction that may
adversely affect you.
21
Our ability to repurchase notes upon the occurrence 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 debt instruments. As a result, unless we obtain a waiver, a
repurchase of the notes could cause a default under such other debt
instruments. Further, we can not assure you that we have the financial
resources, or would be able to arrange financing, to pay the repurchase price
for all the notes that might be delivered by holders of notes seeking to
exercise the repurchase right. If we were to fail to repurchase the notes when
required following a change in control, an event of default under the indenture
would occur. Any such default may, in turn, cause a default under other debt
instruments, including the 2007 Notes.
Mergers and Sales of Assets by Us
We may not consolidate with or merge into any other person or convey,
transfer, sell or lease our properties and assets substantially as an entirety
to any person, and we may not permit any person to consolidate with or merge
into us or convey, transfer, sell or lease such person's properties and assets
substantially as an entirety to us, unless 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
The following will be events of default under the indenture:
. we fail to pay principal of or any premium on any note when due;
. we fail to pay any interest on any note when due and that default
continues for 30 days;
. we fail to give the notice that we are required to give in the event of
a change in control;
. we fail to perform any other covenant in the indenture and that failure
continues for 60 days after written notice to us by the trustee or the
holders of at least 25% in aggregate principal amount of outstanding
notes;
. we fail to pay when due the principal of, or acceleration of, any
indebtedness for money borrowed by us or any of our subsidiaries in
excess of $10 million 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.
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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 and unpaid interest on, all of the notes will
automatically become immediately due and payable without any declaration or
other act on the part of the holders of the notes or the trustee.
Before you may take any action to institute any proceeding relating to the
indenture, or to appoint a receiver or a trustee, or for any other remedy, each
of the following must occur:
. you must have given the trustee written notice of a continuing event of
default;
. the holders of at least 25% of the aggregate principal amount of all
outstanding notes must make a written request of the trustee to take
action because of the default and must have offered reasonable
indemnification to the trustee against the cost, liabilities and
expenses of taking such action; and
. the trustee must not have taken action for 60 days after receipt of such
notice and offer of indemnification.
These limitations do not apply to a suit for the enforcement of payment of
the principal of or any premium or interest on a note, or the repurchase price
payable for a note, on or after the due dates for such payments or of the right
to convert the note in accordance with the indenture.
We will furnish to the trustee annually a statement as to our performance of
our obligations under the indenture and as to any default in performance.
Modification and Waiver
The consent of the holders of a majority in principal amount of the
outstanding notes affected is required to make a modification or amendment to
the indenture. However, a modification or amendment requires the consent of the
holder of each outstanding note affected if it would:
. change the stated maturity of the principal or interest of a note;
. reduce the principal amount, any premium or interest on any note;
. change our obligation to pay liquidated damages in connection with our
registration obligations described under "Registration Rights" below;
. modify any of the provisions restricting us and our affiliates from
reselling the notes or common stock issuable pursuant to the notes that
we may acquire if they have the status of restricted securities;
. reduce the amount payable upon a redemption or mandatory repurchase;
. modify the provisions with respect to the repurchase rights of holders
of notes in a manner adverse to the holders;
. change the place or currency of payment on a note;
. impair the right to institute suit for the enforcement of any payment on
any note;
. 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;
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. reduce the percentage of holders whose consent is needed to modify or
amend the indenture;
. reduce the percentage of holders whose consent is needed to waive
compliance with certain provisions of the indenture or to waive certain
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 certain 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 or interest on the notes, or default in respect of a covenant or
provision requiring the consent of each holder as described above.
Notes will not be considered outstanding if money for their payment or
redemption has been deposited or set aside in trust for the holders.
We will generally be entitled to set any day as a record date for the
purpose of determining the holders of outstanding notes that are entitled to
take any action under the indenture. In limited circumstances, the trustee will
be entitled to set a record date for action by holders. If a record date is set
for any action to be taken by holders, such action may be taken only by persons
who are holders of outstanding notes on the record date and must be taken
within 180 days following the record date or such other period as we may
specify (or as the trustee may specify, if it set the record date). This period
may be shortened or lengthened (but not beyond 180 days) from time to time.
Registration Rights
When we issued the notes, we entered into a registration rights agreement
and agreed to file the shelf registration statement of which this prospectus is
a part. Under the registration rights agreement, we also agreed that we will,
at our expense:
. use our reasonable efforts to cause the shelf registration statement to
be declared effective under the Securities Act by December 7, 2001,
subject to our right to postpone having the shelf registration statement
declared effective for an additional 90 days in limited circumstances;
and
. use our reasonable efforts to keep effective the shelf registration
statement until 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 be increased. We will provide to each holder of
registrable securities copies of the prospectus that is a part of the shelf
registration statement, notify each holder when the shelf registration
statement has become effective and take other actions required to permit public
resales of the registrable securities.
We may, upon written notice to all the holders of notes, postpone having the
shelf registration statement declared effective for a reasonable period not to
exceed 90 days if we possess material non-public information the disclosure of
which would have a material adverse effect on us and our subsidiaries taken as
a whole.
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, may 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 certain indemnification provisions.
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After the shelf registration statement becomes effective, 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.
We have agreed in the registration rights agreement to use our reasonable
efforts to cause the shares of common stock issuable upon conversion of the
notes to be quoted on the Nasdaq National Market. However, if the common stock
is not then quoted on the Nasdaq National Market, we will use our reasonable
efforts to cause the shares of common stock issuable upon conversion of the
notes to be quoted or listed on whichever market or exchange the common stock
is then quoted or listed, upon effectiveness of the shelf registration
statement.
This summary of some provisions of the registration rights agreement is not
complete and is subject to, and qualified in its entirety by reference to, all
the provisions of the registration rights agreement, a copy of which will be
made available to beneficial owners of the notes upon request to us.
Notices
We will give notice to holders of the notes by mail to the addresses of the
holders as they appear in the security register. Notices will be deemed to have
been given on the date of mailing.
Replacement of Notes
We will replace, at 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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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discusses the material U.S. federal income tax consequences to
holders of the notes or our common stock into which the notes may be converted.
This discussion is for general information only and does not address all
aspects of U.S. federal income taxation that may be relevant to you in light of
your personal circumstances. This summary is based on the provisions of the
Internal Revenue Code of 1986, as amended, applicable existing and proposed
U.S. Treasury regulations, and judicial authority and current administrative
rulings and practice, all of which are subject to change, possibly on a
retroactive basis, or to differing interpretation. Except as otherwise noted,
this summary applies only to holders, as defined below, that hold the notes and
our common stock into which the notes may be converted as capital assets within
the meaning of Section 1221 of the Internal Revenue Code (generally, for
investment). It does not address tax consequences applicable to those U.S.
holders that may be subject to special tax rules, such as:
. financial institutions,
. regulated investment companies,
. tax-exempt organizations,
. expatriates,
. persons subject to the alternative minimum tax provisions of the Internal
Revenue Code,
. pension funds,
. insurance companies,
. dealers in securities or foreign currencies,
. persons that will hold notes as a position in a hedging transaction,
straddle, conversion transaction or other risk reduction transaction for
tax purposes,
. persons deemed to sell notes or common stock under the constructive sale
provisions of the Internal Revenue Code,
. persons who hold notes through a partnership or other pass through
entity, or
. persons that have a primary form of currency other than the U.S. dollar
(except as disclosed below under "Non-U.S. Holders").
We have not sought any ruling from the Internal Revenue Service, or IRS,
with respect to the statements made and the conclusions reached in the
following summary, and there can be no assurance that the IRS will agree with
our statements and conclusions. Moreover, this discussion does not address the
effect of any applicable state, local or foreign tax laws. INVESTORS
CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME, GIFT AND ESTATE TAX LAWS
TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER
THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION OR UNDER ANY
APPLICABLE TAX TREATY.
For purposes of this discussion, the term U.S. holder means a beneficial
owner of a note or common stock that is for U.S. federal income tax purposes,
(i) a citizen or resident of the U.S., (ii) a corporation created or organized
in or under the laws of the U.S., (iii) an estate, the income of which is
subject to U.S. federal income taxation regardless of its source, or (iv) a
trust if (a) its administration is subject to the primary supervision of a
court within the U.S. and one or more U.S. persons have authority to control
all of its substantial decisions, or (b) it was in existence on August 20,
1996, and has elected to continue to be treated as a U.S. trust. For U.S.
federal income tax purposes, income earned through a foreign or domestic
partnership or similar entity is generally attributed to its owners. A non-U.S.
holder means a holder of a note or common stock that is not a U.S. holder for
U.S. federal income tax purposes.
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U.S. Holders
The following is a summary of the material U.S. federal income tax
consequences resulting from the ownership and disposition of the notes and
common stock by U.S. holders.
Payment of Interest
Any interest we pay on a note generally will be includable in the income of
a U.S. holder as ordinary income at the time the interest is received or
accrued, in accordance with each U.S. holder's method of accounting for U.S.
federal income tax purposes.
Sale, Exchange or Redemption of the Notes
Except as set forth below under "Conversion of the Notes" and "Market
Discount," upon the sale, exchange or redemption of a note (including the
repurchase of a note for cash pursuant to the exercise of a repurchase right in
the event of a Change in Control), a U.S. holder generally will recognize
capital gain or loss equal to the difference between the amount realized on the
sale, exchange or redemption and the U.S. holder's adjusted tax basis in that
note. For these purposes, the amount realized on the sale, exchange or
redemption of a note does not include any amount attributable to accrued but
unpaid interest, which will be taxable as such unless previously taken into
account. A U.S. holder's adjusted tax basis in a note generally will be the
U.S. dollar value of the purchase price of that note on the date of purchase
increased by any market discount previously included in income by the holder
and reduced by any amortized premium. Gain or loss so recognized will generally
be capital gain or loss and will be long-term capital gain or loss if, at the
time of the sale, exchange or redemption, the note was held for more than one
year. In general, the maximum federal tax rate for noncorporate taxpayers on
long-term capital gain is 20% with respect to capital assets (including the
notes and common stock) and 18% if such capital assets are held for more than
five years. Capital gain on assets having a holding period of one year or less
at the time of their disposition is taxed as short-term capital gain at a
current maximum federal rate of 39.1% in the hands of noncorporate taxpayers.
For individual taxpayers, the deductibility of capital losses is subject to
limitations. For corporate taxpayers, both capital gains and ordinary income
are subject to a maximum regular federal tax rate of 35%.
Constructive Dividends on Notes
The conversion price of the notes may adjust under certain circumstances.
Section 305 of the Internal Revenue Code treats as a distribution taxable as a
dividend (to the extent of our current or accumulated earnings and profits)
certain actual or constructive distributions of stock with respect to stock or
convertible securities. Under applicable Treasury regulations, an adjustment of
conversion price may, under certain circumstances, be treated as a constructive
dividend to the extent it increases the proportional interest of a U.S. holder
of a note in our fully diluted common stock, whether or not the holder ever
converts the note into our common stock. Generally, a holder's tax basis in a
note will be increased by the amount of any constructive dividend. Similarly, a
failure to adjust the conversion price of the notes to reflect a stock dividend
or similar event could in some circumstances give rise to constructive dividend
income to U.S. holders of common stock.
Conversion of the Notes
A U.S. holder generally will not recognize any income, gain or loss upon
conversion of a note into our common stock (and a U.S. holder generally will
not recognize any income, gain or loss upon the repurchase of a note, in the
event of a Change in Control, for common stock pursuant to the exercise of such
repurchase right), except with respect to cash received in lieu of a fractional
share of common stock, except to the extent that the common stock issued upon
conversion is treated as attributable to accrued interest on the note (which
will be treated as interest for federal income tax purposes) and except with
respect to market discount, as described below under "Market Discount." A U.S.
holder's tax basis in the common stock received on conversion or repurchase of
a note will be the same as that U.S. holder's adjusted tax basis in the note at
the
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time of conversion or repurchase reduced by any basis allocable to a fractional
share. The holding period for the common stock received on conversion or
repurchase will generally include the holding period of the note converted or
repurchased. However, a holder's tax basis in shares of common stock
attributable to accrued interest generally will equal the amount of accrued
interest included in income and the holding period will begin on the day
following the date of conversion or repurchase.
You should treat cash received in lieu of a fractional share of common stock
upon conversion or repurchase as a payment in exchange for a fractional share
of common stock. The receipt of cash in lieu of a fractional share of common
stock generally will result in capital gain or loss (measured by the difference
between the cash you received for the fractional share and your adjusted tax
basis in the fractional share). The fair market value of the shares of common
stock received which is attributable to accrued interest will be taxable as
ordinary income.
Dividends on Common Stock
If we make distributions on our common stock, those distributions will
generally be treated as a dividend, subject to tax as ordinary income, to the
extent of our current or accumulated earnings and profits as of the year of
distribution, then as a tax-free return of capital to the extent of the U.S.
holder's adjusted tax basis in the common stock and thereafter as gain from the
sale or exchange of that stock.
In general, a dividend distribution to a corporate U.S. holder may qualify
for the 70% dividends received deduction if the U.S. holder owns less than 20%
of the voting power and value of our stock (other than any non-voting, non-
convertible, non-participating preferred stock). A corporate U.S. holder that
owns 20% or more of the voting power and value of our stock (other than any
non-voting, non-convertible, non-participating preferred stock) generally will
qualify for an 80% dividends received deduction.
Sale of Common Stock
Upon the sale or exchange of our common stock, a U.S. holder generally will
recognize capital gain or loss equal to the difference between (i) the amount
of cash and the fair market value of any property received upon the sale or
exchange and (ii) the U.S. holder's adjusted tax basis in the common stock.
That capital gain or loss will be long-term if the U.S. holder's holding period
is more than one year and will be short-term if the holding period is equal to
or less than one year. In the case of certain noncorporate taxpayers, including
individuals, long-term capital gains are taxed at a maximum federal rate of
20%, and 18% if such capital assets are held for more than five years, and
short-term capital gains are taxed at a current maximum federal rate of 39.1%.
A U.S. holder's basis and holding period in our common stock received upon
conversion of a note are determined as discussed above under "Description of
Notes--Conversion of the Notes." Corporate taxpayers are subject to a maximum
regular federal tax rate of 35% on all capital gains and ordinary income.
Market Discount
The resale of notes may be affected by the impact on a purchaser of the
market discount provisions of the Internal Revenue Code. For this purpose, the
market discount on a note generally will equal the amount, if any, 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 a limited exception, 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 that note to
the extent of the accrued market discount on that note at the time of maturity
or disposition, unless the U.S. holder elects to include accrued market
discount in income over the life of the note.
This election to include market discount in income over the life of the
note, 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
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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. If an election is made, it will apply only to the note with respect to
which it is made, and may not be revoked. A U.S. holder who acquires a note at
a market discount and who does not elect to include accrued market discount in
income over the life of the note 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 maturity or 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 when the holder
disposes of the common stock.
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 that premium
(referred to as 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.
Backup Withholding and Information Reporting
A U.S. holder of notes or common stock may be subject to backup withholding
at a rate of 30.5% with respect to certain reportable payments, including
interest payments, dividend payments and, under certain circumstances,
principal payments on the notes. These backup withholding rules apply if the
U.S. holder, among other things, (i) fails to furnish a social security number
or other taxpayer identification number certified under penalties of perjury
within a reasonable time after the request therefor, (ii) furnishes an
incorrect taxpayer identification number, (iii) fails to report properly
interest or dividends or (iv) under certain circumstances, fails to provide a
certified statement, signed under penalties of perjury, that the taxpayer
identification number furnished is the correct number and that the U.S. holder
is not subject to backup withholding. A U.S. holder who does not provide us
with its correct taxpayer identification number may also be subject to
penalties imposed by the IRS. Any amount withheld from a payment to a holder
under the backup withholding rules is creditable against the holder's federal
income tax liability. Backup withholding will not apply, however, with respect
to payments made to certain U.S. holders, including corporations and tax-exempt
organizations, provided their exemption from backup withholding is properly
established. We will report to U.S. holders of notes and common stock and to
the IRS the amount of any reportable payments for each calendar year and the
amount of tax withheld, if any, with respect to those payments.
Non-U.S. Holders
The following discussion is a summary of the principal U.S. federal income
and estate tax consequences resulting from the ownership of the notes or our
common stock by non-U.S. holders.
Payment of Interest
Generally, interest income of a non-U.S. holder that is not effectively
connected with a U.S. trade or business will be subject to a withholding tax at
a 30% rate (or lower rate specified by an applicable income tax treaty).
However, interest income earned on the notes by a non-U.S. holder may qualify
for an exemption, referred to as the portfolio interest exemption, and as a
result should not be subject to U.S. federal income tax
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or withholding (subject to the discussion below of backup withholding).
Interest we pay on the notes to a non-U.S. holder generally should qualify for
the portfolio interest exemption if:
(1) the interest is not effectively connected with the conduct of a trade
or business within the U.S. by the non-U.S. holder;
(2) the non-U.S. holder does not actually or constructively own 10% or more
of the total voting power of all classes of our stock entitled to vote;
(3) the non-U.S. holder is not a controlled foreign corporation that is
related to us through stock ownership (for this purpose, the holder of
notes would be deemed to own constructively the common stock into which
it could be converted);
(4) the non-U.S. holder, under penalty of perjury, certifies to us or our
agent that it is not a U.S. person and provides its name and address
(or otherwise satisfies the applicable identification requirements);
and
(5) the non-U.S. holder is not a bank receiving interest pursuant to a loan
agreement entered into in the ordinary course of its trade or business.
If a non-U.S. holder satisfies certain requirements, the certification
described above may be provided by a securities clearing organization, a bank,
or other financial institution that holds customers' securities in the ordinary
course of its trade or business.
Recently revised Treasury regulations have modified the certification and
identification requirements. These regulations now require foreign partnerships
and certain foreign trusts to provide additional documentation which (i)
certifies that the individual partners, beneficiaries, or owners of the
partnership or trust are not U.S. holders, and (ii) provides the individual
partners', beneficiaries' or owners' names and addresses.
A non-U.S. holder that is not exempt from tax under these rules will be
subject to U.S. federal income tax withholding at a rate of 30% on payments of
interest, unless the interest is effectively connected with the conduct of a
U.S. trade or business of the holder or a lower treaty rate applies and, in
either case, the non-U.S. holder provides us with proper certification as to
the holder's exemption from withholding. If the interest is effectively
connected to the conduct of a U.S. trade or business, it will be subject to the
U.S. federal income tax on net income that applies to U.S. persons generally
(and, with respect to corporate holders and under certain circumstances, the
branch profits tax, which is generally imposed at a 30% rate). Non-U.S. holders
should consult applicable income tax treaties, which may provide different
rules. Even though effectively connected interest is subject to income tax, and
may be subject to the branch profits tax, it is not subject to withholding tax
if the holder delivers a properly executed IRS Form W-8ECI to us or to our
agent.
Conversion of the Notes
A non-U.S. holder generally will not be subject to U.S. federal income tax
on the conversion of a note into shares of our common stock. To the extent a
non-U.S. holder receives cash in lieu of a fractional share of common stock on
conversion, that cash may give rise to gain that would be subject to the rules
described below with respect to the sale or exchange of a note or common stock.
Constructive Dividends on Notes
The conversion price of the notes may adjust in certain circumstances. An
adjustment could potentially give rise to a deemed distribution to non-U.S.
holders of the notes. See "--U.S. Holders--Constructive Dividends on Notes"
above. In that case, the deemed distribution would be subject to the rules
below regarding withholding of U.S. federal tax on dividends in respect of
common stock. See "--Dividends" below.
Dividends
Subject to the discussion below of backup withholding, dividends, if any,
paid on our common stock to a non-U.S. holder generally will be subject to a
30% U.S. federal withholding tax, subject to reduction for
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non-U.S. holders eligible for the benefits of certain income tax treaties.
Dividends for this purpose may include stock distributions treated as deemed
dividends as discussed in "--U.S. Holders--Constructive Dividends on Notes"
above. Under recently revised Treasury regulations, holders will be required to
satisfy certain certification requirements to claim treaty benefits.
Except to the extent otherwise provided under an applicable tax treaty, a
non-U.S. holder generally will be taxed in the same manner as a U.S. holder on
dividends paid (or deemed paid) that are effectively connected with the conduct
of a trade or business in the U.S. by the non-U.S. holder (and, if required by
a tax treaty, is attributable to a permanent establishment maintained in the
U.S.).
If that non-U.S. holder is a foreign corporation, it may also be subject to
a U.S. branch profits tax on that effectively connected income at a 30% rate or
a lower rate as may be specified by an applicable income tax treaty.
Gain on Disposition of the Notes and Common Stock
A non-U.S. holder generally will not be subject to U.S. federal income tax
or withholding tax on gain realized on the sale, exchange or redemption of a
note, or the sale or exchange of common stock, unless:
(i) in the case of an individual non-U.S. holder, that holder is present
in the U.S. for 183 days or more in the year of the sale, exchange or
redemption and certain other requirements are met; or
(ii) the gain is effectively connected with the conduct of a U.S. trade or
business of the non-U.S. holder.
However, if we were to become a U.S. real property holding corporation, or
USRPHC, a non-U.S. holder could 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 U.S. real property interests would be creditable
against that non-U.S. holder's U.S. federal income tax liability and could
entitle that non-U.S. holder to a refund upon furnishing required information
to the IRS. We do not believe that we are a USRPHC or will become a USRPHC in
the future.
U.S. Federal Estate Tax
A note held by an individual who at the time of death is not a citizen or
resident of the U.S., as specially defined for U.S. federal estate tax
purposes, will not be subject to U.S. federal estate tax if the individual did
not actually or constructively own 10% or more of the total combined voting
power of all classes of our stock and, at the time of the individual's death,
payments with respect to that note would not have been effectively connected
with the conduct by that individual of a trade or business in the U.S. Common
stock held by an individual who at the time of death is not a citizen or
resident of the U.S., as specially defined for U.S. federal estate tax
purposes, will be included in that individual's estate for U.S. federal estate
tax purposes, and the applicable rate of tax may be reduced or eliminated if an
estate tax treaty otherwise applies.
Backup Withholding and Information Reporting
We must report annually to the IRS and to each non-U.S. holder the amount of
any interest or dividends paid to that non-U.S. holder, and tax withheld, if
any, with respect to those payments. Copies of these information returns may
also be made available under the provisions of a specific treaty or agreement
to the tax authorities of the country in which the non-U.S. holder resides or
is incorporated.
U.S. backup withholding and information reporting will not apply to payments
of interest or principal on the notes by us or our agent to a non-U.S. holder
if the non-U.S. holder satisfies the certification or identification
requirements described in "Non-U.S. Holders--Payment of Interest," above,
unless the payor knows or has reason to know that the holder is not entitled to
an exemption from information reporting or backup withholding tax. The payment
of the proceeds on the disposition of notes or shares of common stock to or
through the U.S. office of a U.S. or foreign broker will be subject to
information reporting and backup
31
withholding unless the owner provides the certification described above or
otherwise establishes an exemption. The proceeds of the disposition by a non-
U.S. holder of notes or shares of common stock effected outside the U.S. to or
through a foreign office of a broker generally will not be subject to backup
withholding or information reporting. However, if the broker is a U.S. person
or has certain connections to the U.S., information reporting requirements, but
not backup withholding, will apply unless the broker has documentary evidence
in its files of the holder's non-U.S. status and has no actual knowledge (or
reason to know) to the contrary or unless the holder otherwise establishes an
exemption.
32
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 September 20, 2001, 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.
Principal Common
Amount of Stock Owned
Notes Shares of After
Beneficially Common Stock Common Completion
Owned and Beneficially Stock of
Name Offered(1) Owned(2) Offered Offering(3)
---- ------------ ------------ ------- -----------
AIG/National Union Fire
Insurance................. 850,000 21,198 21,198 0
Alexandra Global Investment
Fund 1, Ltd............... 3,000,000 252,449(7) 74,816 177,633
Allstate Corporation....... 2,250,000(4) 107,378(5) 56,112 51,266(6)
Alpine Associates.......... 7,300,000 182,053 182,053 0
Alpine Partners, L.P....... 1,200,000 29,926 29,926 0
Alta Partners Holdings,
LDC....................... 3,010,000 75,066 75,066 0
American Samoa Government.. 102,000 2,543 2,543 0
AmerUs Group Pension Plan.. 1,000,000 24,938 24,938 0
Argent Classic Convertible
Arbitrage Fund
(Bermuda) Ltd............. 6,500,000 280,524(7) 162,102 118,422
Argent Classic Convertible
Arbitrage Fund L.P........ 1,000,000 54,543(7) 24,938 29,605
Argent LowLev Convertible
Arbitrage Fund LLC........ 500,000 12,469 12,469 0
Bank Austria Cayman Island
Ltd....................... 5,750,000 143,398 143,398 0
Bankers Trust Company
Trustee for
DaimlerChrysler Corp Emp#1
Pension Plan DTD 4/1/89... 2,885,000 71,948 71,948 0
BBT Fund, L.P.............. 5,000,000 124,694 124,694 0
BP Amoco Plc. Master
Trust..................... 1,535,000 38,281 38,281 0
CALAMOS Market Neutral
Fund--CALAMOS
Investment Trust.......... 4,600,000 114,718 114,718 0
CFFX, LLC.................. 3,500,000 87,286 87,286 0
Chrysler Corporation Master
Retirement Trust.......... 4,695,000 160,016(7) 117,088 42,928
Citicorp Life Insurance
Company................... 18,000 448 448 0
Clinton Multistrategy
Master Fund, Ltd.......... 5,250,000 129,682 129,682 0
Clinton Riverside
Convertible Portfolio
Limited................... 5,250,000 129,682 129,682 0
Consulting Group Capital
Markets Funds............. 200,000 4,987 4,987 0
Convertible Securities
Fund...................... 150,000 3,740 3,740 0
Credit Suisse First Boston
Corporation (8)........... 11,250,000 280,562(7) 280,562 0
Delta Air Lines Master
Trust (c/o Oaktree
Capital Management, LLC).. 1,595,000 40,665(7) 39,777 888
Delta Pilots D & S Trust
(c/o Oaktree Capital
Management, LLC).......... 835,000 20,823 20,823 0
Deutsche Banc Alex. Brown
Inc....................... 26,750,000 1,043,520(7) 667,115 376,405
Estate of James Campbell... 216,000 10,330(7) 5,386 4,944
Fidelity Financial Trust:
Fidelity Convertible
Securities Fund........... 4,000,000 99,755 99,755 0
First Union National Bank.. 8,000,000 199,511 199,511 0
Franklin and Marshall
College................... 165,000 4,114 4,114 0
Golden Rule Insurance
Company................... 300,000 7,481 7,481 0
Harris Insight Convertible
Securities Fund........... 600,000 14,963 14,963 0
HBK Master Fund L.P........ 15,000,000 751,383(9) 374,083 377,300(9)
Hotel Union & Hotel
Industry of Hawaii........ 515,000 12,843 12,843 0
J.P. Morgan Securities,
Inc....................... 29,125,000 986,726 726,345 260,381
James Campbell
Corporation............... 286,000 7,132 7,132 0
JAS Securities............. 1,650,000 41,149 41,149 0
Jefferies & Company, Inc... 1,012,000 25,238 25,238 0
JMG Capital Partners LP.... 5,000,000 376,341(7) 124,694 251,647
JMG Triton Offshore Fd
Ltd....................... 5,000,000 139,496(7) 124,694 14,802
L.A. Fire and Police
Pension Fund............... 2,200,000 54,865 54,865 0
Leonardo L.P............... 11,000,000 274,327 274,327 0
Lincoln National Global
Asset Allocation Fund,
Inc....................... 40,000 997 997 0
33
Principal Common
Amount of Stock Owned
Notes Shares of After
Beneficially Common Stock Common Completion
Owned and Beneficially Stock of
Name Offered(1) Owned(2) Offered Offering(3)
---- ------------ ------------ ------- -----------
Lipper Convertibles, L.P....... 4,750,000 544,779(7) 118,459 426,320
Lipper Offshore Convertibles,
L.P........................... 1,175,000 103,317(7) 29,303 74,014
McMahan Securities Co., L.P.... 950,000 26,918(7) 23,691 3,227
Morgan Stanley & Co............ 5,000,000 124,694 124,694 0
Morgan Stanley Dean Witter
Convertible Securities Trust.. 1,500,000 37,408 37,408 0
Motion Picture Industry Health
Plan--Active Member Fund...... 430,000 14,719(7) 10,723 3,996
Motion Picture Industry Health
Plan--Retiree Member Fund..... 185,000 6,241(7) 4,613 1,628
Museum of Fine Arts, Boston.... 10,000 545(7) 249 296
Nations Convertible Securities
Fund.......................... 5,850,000 145,892 145,892 0
OCM Convertible Trust.......... 2,865,000 97,649(7) 71,449 26,200
Ondeo Nalco.................... 220,000 5,486 5,486 0
Onyx Fund Holdings, Ldc........ 5,700,000 142,151 142,151 0
Pacific Life Insurance
Company....................... 1,000,000 24,938 24,938 0
Parker-Hannifin Corporation.... 160,000 5,026(7) 3,990 1,036
Partner Reinsurance Company.... 725,000 24,593(7) 18,080 6,513
Penn Treaty Network America
Insurance Company............. 220,000 5,486 5,486 0
Primerica Life Insurance
Company....................... 328,000 8,179 8,179 0
Putnam Asset Allocation Funds--
Balanced Portfolio............ 680,000 21,073(7) 16,958 4,115
Putnam Asset Allocation Funds--
Conservative Portfolio........ 530,000 15,851(7) 13,217 2,634
Putnam Convertible Income--
Growth Fund................... 5,110,000 187,358(7) 127,437 59,921
Putnam Convertible
Opportunities and Income
Trust......................... 180,000 6,235(7) 4,489 1,746
Putnam Variable Trust-Putnam VT
Global Asset Allocation Fund.. 180,000 4,489 4,489 0
RCG Latitude Master Fund....... 1,500,000 37,408 37,408 0
RCG Multi Strategy LP.......... 250,000 6,234 6,234 0
Robertson Stephens(10)......... 10,000,000 338,205(7) 249,389 88,816
Sagamore Hill Hub Fund Ltd..... 10,000,000 249,389 249,389 0
Sage Capital................... 100,000 72,066(7) 2,493 69,573
Salomon Brothers Asset
Management, Inc............... 13,500,000 336,675 336,675 0
Shephard Investments
International, Ltd............ 4,000,000 378,521(7) 99,755 278,766
Southern Farm Bureau Life
Insurance..................... 850,000 21,198 21,198 0
Stark International............ 6,000,000 253,252(7) 149,633 103,619
Starvest Combined Portfolio.... 925,000 23,068 23,068 0
State Employees' Retirement
Fund of the State of
Delaware...................... 1,865,000 63,534(7) 46,511 17,023
State of Connecticut Combined
Investment Funds.............. 3,985,000 135,795(7) 99,381 36,414
State Street Bank Custodian for
GE Pension Trust.............. 1,330,000 33,168 33,168 0
The Travelers Indemnity
Company....................... 1,239,000 30,899 30,899 0
The Travelers Insurance
Company--Life................. 579,000 14,439 14,439 0
The Travelers Insurance
Company--Separate Account
TLAC.......................... 41,000 1,022 1,022 0
The Travelers Life and Annuity
Company....................... 45,000 1,122 1,122 0
The Travelers Series Trust
Convertible Bond Portfolio.... 250,000 6,234 6,234 0
TQA Master Fund, Ltd........... 3,950,000 225,071(7) 98,508 126,563
TQA Master Plus Fund, Ltd...... 2,500,000 91,952(7) 62,347 29,605
Tribeca Investment L.L.C....... 1,500,000 37,408 37,408 0
UBS O'Connor LLC, F/B/O UBS
Global Equity Arbitrage Master
Ltd........................... 2,000,000 49,877 49,877 0
Vanguard Convertible Securities
Fund, Inc..................... 4,820,000 162,244(7) 120,205 42,039
ZCM Asset Holding Company...... 250,000 9,194(7) 6,234 2,960
Zurich Institutional Benchmarks
Master Fund Limited........... 334,000 8,329 8,329 0
--------
(1) Consists solely of principal amount of the 4.50% Convertible Senior Notes
being offered hereby.
(2) Unless otherwise noted, represents shares of common stock issuable upon
conversion of the 4.50% Convertible Senior Notes.
(3) Unless otherwise noted, represents shares of common stock issuable upon
conversion of our 5.00% Convertible Subordinated Notes.
(4) Consists of $1,800,000 principal amount of the 4.50% Convertible Senior
Notes held by Allstate Insurance Company and $450,000 principal amount of
the 4.50% Convertible Senior Notes held by Allstate Life Insurance
Company.
(5) Consists of 44,890 shares of common stock issuable upon conversion of our
4.50% Convertible Senior Notes held by Allstate Insurance Company; 11,222
shares of common stock issuable upon conversion of our 4.50% Convertible
Senior Notes held by Allstate Life Insurance Company; 15,394 shares of
common stock issuable upon conversion of our 5.00% Convertible
Subordinated Notes held by Allstate Insurance Company; 2,072 shares of
common stock issuable upon conversion of our
34
5.00% Convertible Subordinated Notes held by Allstate Life Insurance
Company; 20,100 shares of common stock held by Allstate Insurance Company;
1,000 shares of common stock held by Allstate Life Insurance Company; 3,500
shares of common stock held by Agents Pension Plan; 8,300 shares of common
stock held by Allstate Retirement Plan; and 900 shares of common stock held
by Allstate New Jersey Insurance Company.
(6) Consists of 15,394 shares of common stock issuable upon conversion of our
5.00% Convertible Subordinated Notes held by Allstate Insurance Company;
2,072 shares of common stock issuable upon conversion of our 5.00%
Convertible Subordinated Notes held by Allstate Life Insurance Company;
20,100 shares of common stock held by Allstate Insurance Company; 1,000
shares of common stock held by Allstate Life Insurance Company; 3,500
shares of common stock held by Agents Pension Plan; 8,300 shares of common
stock held by Allstate Retirement Plan; and 900 shares of common stock
held by Allstate New Jersey Insurance Company.
(7) Includes common stock issuable upon conversion of our 5.00% Convertible
Subordinated Notes.
(8) Credit Suisse First Boston Corporation was an initial purchaser of the
Notes from us. Credit Suisse First Boston Corporation purchased the notes
listed on this table for its own account and not for purposes of
distribution.
(9) Includes 377,300 shares of common stock.
(10) 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.
35
PLAN OF DISTRIBUTION
The selling holders and their successors, including donees, pledgees,
partnership distributees and other transferees receiving notes or common stock
from selling holders in non-sale related transfers, 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.
36
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.
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, 2000, 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.
37