As filed with the Securities and Exchange Commission on October 22, 2001
Registration No. 333-67506
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ENZON, INC.
(Exact name of registrant as specified in its charter)
Delaware 2836 22-2372868
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code)
20 Kingsbridge Road
Piscataway, New Jersey 08854
(732) 980-4500
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Arthur J. Higgins
President and Chief Executive Officer
Enzon, Inc.
20 Kingsbridge Road
Piscataway, New Jersey 08854
(732) 980-4500
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
Kevin T. Collins, Esq.
Dorsey & Whitney LLP
250 Park Avenue
New York, New York 10177
(212) 415-9319
Facsimile: (212) 953-7201
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earliest effective registration
statement for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: / /
CALCULATION OF REGISTRATION FEE
------------------------------------------------- ----------------- -------------------- ----------------------- -------------------
Proposed Maximum
Offering Price Per Proposed Maximum
Title of Each Class of Amount to be Note Aggregate Offering Amount of
Securities to be Registered Registered(1)(2) Price(1) Registration Fee
------------------------------------------------- ----------------- -------------------- ----------------------- -------------------
4 1/2% Convertible Subordinated Notes due 2008 $400,000,000 100% $400,000,000 $100,000(3)
------------------------------------------------- ----------------- -------------------- ----------------------- -------------------
Common Stock, par value $0.01 per share(2) 5,635,390 shares -- -- --
------------------------------------------------- ----------------- -------------------- ----------------------- -------------------
(1) Equals the aggregate principal amount of the securities being registered.
(2) Such number represents the number of shares of common stock that are
currently issuable upon conversion of the notes; pursuant to Rule 416 under
the Securities Act of 1933, as amended, the registrant is also registering
such indeterminate number of shares of common stock as may be issued from
time to time upon conversion of the notes as a result of the antidilution
protection of the notes. Pursuant to Rule 457(i), no registration fee is
required for these shares.
(3) Previously paid.
-----------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
PROSPECTUS (Subject to Completion)
Dated October 22, 2001
$400,000,000
Enzon, Inc.
4 1/2% Convertible Subordinated Notes Due 2008
-----------
Certain securityholders of Enzon, Inc. may offer for sale 4 1/2% Convertible
Subordinated Notes due 2008 of Enzon, and the shares of common stock of Enzon
into which the notes are convertible, at various times at market prices
prevailing at the time of sale or at privately negotiated prices. The selling
holders may sell the notes or the common stock to or through underwriters,
broker-dealers or agents, who may receive compensation in the form of discounts,
concessions or commissions.
Interest on the notes is payable in arrears on January 1 and July 1 of each
year, beginning on January 1, 2002. The notes will mature on July 1, 2008 unless
earlier converted or redeemed.
The holders of the notes may convert any portion of a note (in multiples of
$1,000) into common stock at any time on or before July 1, 2008, at a conversion
price of $70.98 per share, subject to adjustment in certain events.
On or after July 7, 2004, we may redeem any of the notes at the redemption
prices set forth herein plus accrued interest.
The notes are subordinated in right of payment to all of our senior
indebtedness. As of June 30, 2001, we had no senior indebtedness outstanding.
For a more detailed description of the notes, see "Description of Notes,"
beginning on page 20.
The common stock is quoted on the Nasdaq National Market under the symbol
"ENZN." On October 19, 2001, the reported last sale price of the common stock
on the Nasdaq National Market was $62.70 per share.
We will not receive any proceeds from the sale of the notes and the common stock
into which the notes are convertible by the selling holders. We will pay all
expenses (other than selling commissions and fees and stock transfer taxes) of
the registration and sale of the notes and the common stock.
-----------
Investing in the notes or the common stock into which the notes are convertible
involves a high degree of risk. See "Risk Factors" beginning on page 5.
-----------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
_______________________, 2001
TABLE OF CONTENTS
Page
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OUR COMPANY 3
RISK FACTORS 5
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 15
RATIO OF EARNINGS TO FIXED CHARGES 17
USE OF PROCEEDS 17
DESCRIPTION OF NOTES 18
DESCRIPTION OF CAPITAL STOCK 28
CERTAIN UNITED STATES AND FEDERAL INCOME TAX CONSIDERATIONS 31
SELLING HOLDERS 36
PLAN OF DISTRIBUTION 39
LEGAL MATTERS 40
EXPERTS 40
WHERE YOU CAN FIND MORE INFORMATION 40
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In this prospectus, "Enzon," "company," "we," "us," "our" and "ours"
refer to Enzon, Inc., and "common stock" refers to Enzon's common stock, par
value $0.01 per share, in each case except where the context otherwise requires
or as otherwise indicated.
You should only rely on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone to provide you with different information. The selling holders are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of the document.
OUR COMPANY
We are a biopharmaceutical company that develops and commercializes
enhanced therapeutics for life- threatening diseases through the application of
our two proprietary platform technologies: PEG and single-chain antibodies. We
apply our PEG, or polyethylene glycol, technology to improve the delivery,
safety and efficacy of proteins and small molecules with known therapeutic
efficacy. We apply our single-chain antibody, or SCA, technology to discover and
produce antibody-like molecules that offer many of the therapeutic benefits of
monoclonal antibodies while addressing some of their limitations.
PEG Products
PEG-INTRON(TM) is a PEG-enhanced version of Schering-Plough's
alpha-interferon product, INTRON(R) A. We have designed PEG-INTRON to allow for
less frequent dosing and to yield greater efficacy as compared to INTRON A. Our
worldwide partner for PEG-INTRON, Schering-Plough, received approval for the
treatment of adult patients with chronic hepatitis C in May 2000 in the European
Union and in January 2001 in the United States. PEG-INTRON was also recently
approved in the European Union and the United States for use in combination with
REBETOL(R) (ribavirin, USP) Capsules for the treatment of chronic hepatitis C in
adult patients not previously treated with alpha-interferon. A Phase III
clinical trial is also being conducted for PEG-INTRON for the treatment of
malignant melanoma, and earlier stage clinical trials of PEG-INTRON are being
conducted for other indications, including HIV. Schering-Plough's worldwide
sales of INTRON A, REBETRON(TM) Combination Therapy and PEG-INTRON for all
indications in 2000 totaled $1.4 billion.
PROTHECAN(R) is a PEG-enhanced version of camptothecin, a compound in
the class of molecules called topoisomerase I inhibitors. Camptothecin has been
shown in clinical testing to be potent against certain tumor types, but it
possesses limited clinical utility due to significant side effects and poor
solubility. We have shown in pre-clinical studies that PROTHECAN preferentially
accumulates in tumors and has better efficacy compared to camptothecin as well
as other topoisomerase I inhibitors. In July 2001, we initiated a Phase II
clinical trial of PROTHECAN in patients with small-cell lung cancer.
PEG-paclitaxel is a PEG-modified version of paclitaxel. We have
designed PEG-paclitaxel to be delivered without the need for solubilizing agents
or premedications and to be more efficacious than TAXOL(R) (paclitaxel). We
filed an Investigational New Drug, or IND, application with the FDA for
PEG-paclitaxel in December 2000. In May 2001, we initiated the patient dosing in
a Phase I clinical trial for PEG-paclitaxel. The trial is designed to determine
the safety, tolerability and pharmacology of PEG-paclitaxel in patients with
advanced solid tumors and lymphomas.
We have commercialized two additional products based on our PEG
technology: ADAGEN for the treatment of a congenital enzyme deficiency disease
called Severe Combined Immunodeficiency Disease, or SCID, and ONCASPAR(R) for
the treatment of acute lymphoblastic leukemia. Each of these products is a
PEG-enhanced version of a naturally occurring enzyme. Both products have been on
the market for several years and have demonstrated the safe and effective
application of our PEG technology.
Single-Chain Antibodies
SCAs are genetically engineered proteins which possess the binding
specificity and affinity of monoclonal antibodies and are designed to expand on
the therapeutic and diagnostic applications possible with monoclonal antibodies.
Preclinical studies have shown that SCAs allow for greater tissue penetration
and faster clearance from the body. We believe that we possess strong
intellectual property in the area of SCAs. The most clinically advanced SCA
based on our technology is being developed by one of our licensees, Alexion
Pharmaceuticals, for complications arising during cardiopulmonary bypass
surgery, for which a Phase IIb clinical trial has been completed, and myocardial
infarction, for which Phase II clinical trials are ongoing.
Strategy
To further realize the potential value of our PEG and SCA technologies,
we intend to pursue the following strategic initiatives:
o continue to identify proteins and small molecules of known
therapeutic value that we believe can be improved by our PEG
technology and develop PEG-enhanced versions of such
compounds;
o acquire technologies and companies which are complementary to
our technologies and clinical focus;
o enter into license agreements with third parties to apply our
PEG technology to their existing compounds; and
o advance our SCA technology through in-licensing,
collaborations and entering into license agreements with third
parties.
Corporate Information
Enzon, Inc. was incorporated in Delaware in 1981. Our principal
executive offices are located at 20 Kingsbridge Road, Piscataway, New Jersey,
08854. Our telephone number at this location is (732) 980-4500. Our web site is
located at http://www.enzon.com. The information contained on our web site is
not a part of this registration statement.
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ADAGEN(R), ONCASPAR(R) and PROTHECAN(R) are our registered trademarks.
Other trademarks and trade names used in this registration statement are the
property of their respective owners.
4
RISK FACTORS
You should carefully consider the risks described below before making
an investment decision. The risks described below are not the only ones facing
our company. Additional risks not presently known to us or that we currently
deem immaterial may also impair our business operations.
Our business, financial condition or results of operations could be
materially adversely affected by any of these risks. The trading price of the
notes and our common stock could decline due to any of these risks, and you may
lose all or part of your investment.
This prospectus also contains and incorporates by reference
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the risks faced by us
described below and elsewhere in and incorporated by reference in this
prospectus.
Risks Related To Our Company
Our near term success is heavily dependent on Schering-Plough's
effective marketing of PEG-INTRON.
In the near term, our results of operations are heavily dependent on
Schering-Plough's sales of PEG-INTRON. Under our agreement with Schering-Plough,
pursuant to which we applied our PEG technology to develop a modified form of
Schering-Plough's INTRON A, we will receive royalties on worldwide sales of
PEG-INTRON. Schering-Plough is responsible for conducting and funding the
clinical studies, obtaining regulatory approval and marketing the product
worldwide on an exclusive basis. Schering-Plough received marketing
authorization for PEG-INTRON in the United States in January 2001 and in the
European Union in May 2000 for the treatment of hepatitis C. Schering-Plough has
also been granted marketing approval for the sale of PEG-INTRON and REBETOL
Capsules as combination therapy for the treatment of hepatitis C in March 2001
in the European Union and in August 2001 in the United States. If
Schering-Plough fails to effectively market PEG-INTRON or discontinues the
marketing of PEG-INTRON for these indications this would have a material adverse
effect on our business, financial condition and results of operations.
Even though the use of PEG-INTRON as a stand alone therapy and as
combination therapy with REBETOL received FDA approval, we cannot assure you
that Schering-Plough will be successful in marketing PEG-INTRON or that
Schering-Plough will not continue to market INTRON A, either as a stand-alone
product or in combination therapy with REBETOL. The amount and timing of
resources dedicated by Schering-Plough to the marketing of PEG-INTRON is not
within our control. If Schering-Plough breaches or terminates its agreement with
us, the commercialization of PEG-INTRON could be slowed or blocked completely.
Our revenues will be negatively affected if Schering-Plough continues to market
INTRON A in competition with PEG-INTRON or if it cannot meet the manufacturing
demands of the market. If Schering-Plough breaches the agreement, a dispute may
arise between us. A dispute would be both expensive and time-consuming and may
result in delays in the commercialization of PEG-INTRON, which would likely have
a material adverse effect on our business, financial condition and results of
operations.
We have a history of losses and we may not sustain profitability.
We have incurred substantial losses since our inception. As of June 30,
2001, we had an accumulated deficit of approximately $118 million. Although we
earned a profit for the year ended June 30, 2001, we cannot assure you that we
will be able to remain profitable. Our ability to remain profitable will depend
primarily on Schering-Plough's effective marketing of PEG-INTRON, as well as on
the rate of growth in our other product sales or royalty revenue and on the
level of our expenses. Our ability to achieve long-term profitability will
depend upon our or our licensees' ability to obtain regulatory approvals for
additional product candidates. Even if our product candidates receive regulatory
approval, we cannot assure you that our products will achieve market acceptance
or will be commercialized successfully or that our operations will sustain
profitability.
5
We are subject to extensive regulation. Compliance with these
regulations can be costly, time consuming and subject us to unanticipated delays
in developing our products.
The manufacturing and marketing of pharmaceutical products in the
United States and abroad are subject to stringent governmental regulation. The
sale of any of our products for use in humans in the United States will require
the prior approval of the FDA. Similar approvals by comparable agencies are
required in most foreign countries. The FDA has established mandatory procedures
and safety standards that apply to the clinical testing, manufacture and
marketing of pharmaceutical products. Obtaining FDA approval for a new
therapeutic product may take several years and involve substantial expenditures.
ADAGEN was approved by the FDA in 1990. ONCASPAR was approved in the United
States and in Germany in 1994, and in Canada in 1997, in each case for patients
with acute lymphoblastic leukemia who are hypersensitive to native forms of
L-asparaginase. ONCASPAR was approved in Russia in April 1993 for therapeutic
use in a broad range of cancers. PEG-INTRON was approved in Europe and the
United States for the treatment of hepatitis C in May 2000 and January 2001,
respectively. Except for these approvals, none of our other products has been
approved for sale and use in humans in the United States or elsewhere.
We cannot assure you that we or our licensees will be able to obtain
FDA or other relevant marketing approval for any of our other products. In
addition, any approved products are subject to continuing regulation. If we or
our licensees fail to comply with applicable requirements it could result in:
o criminal penalties,
o civil penalties,
o fines,
o recall or seizure,
o injunctions requiring suspension of production,
o orders requiring ongoing supervision by the FDA, or
o refusal by the government to approve marketing or export
applications or to allow us to enter into supply contracts.
If we or our licensees fail to obtain or maintain requisite
governmental approvals or fail to obtain or maintain approvals of the scope
requested, it will delay or preclude us or our licensees or marketing partners
from marketing our products. It could also limit the commercial use of our
products. Any such failure or limitation may have a material adverse effect on
our business, financial condition and results of operations.
We have experienced problems complying with the FDA's regulations for
manufacturing our products, and we may not be able to resolve these problems.
Manufacturers of drugs also must comply with the applicable FDA good
manufacturing practice regulations, which include quality control and quality
assurance requirements as well as the corresponding maintenance of records and
documentation. Manufacturing facilities are subject to ongoing periodic
inspection by the FDA and corresponding state agencies, including unannounced
inspections, and must be licensed as part of the product approval process before
they can be used in commercial manufacturing. We or our present or future
suppliers may be unable to comply with the applicable good manufacturing
practice regulations and other FDA regulatory requirements. We manufacture
ONCASPAR and ADAGEN, and Schering-Plough is responsible for the manufacture of
PEG-INTRON.
During 1998, we began to experience manufacturing problems with one of
our FDA-approved products, ONCASPAR. The problems were due to increased levels
of white particulates in batches of ONCASPAR, which resulted in an increased
rejection rate for this product. During fiscal 1999, we agreed with the FDA to
temporary labeling and distribution restrictions for ONCASPAR and instituted
additional inspection and labeling procedures prior to distribution. During May
1999, the FDA required us to limit distribution of ONCASPAR to only those
6
patients who are hypersensitive to native L-asparaginase. In November 1999, as a
result of manufacturing changes we implemented the FDA withdrew this
distribution restriction.
In July 1999, the FDA conducted an inspection of our manufacturing
facility in connection with our product license for ADAGEN. Following that
inspection, the FDA documented several deviations from Current Good
Manufacturing Practices, known as cGMP, in a Form 483 report. We provided the
FDA with a corrective action plan. In November 1999, the FDA issued a warning
letter citing the same cGMP deviations listed in the July 1999 Form 483, but it
also stated that the FDA was satisfied with our proposed corrective actions. As
a result of the deviations, the FDA decided not to approve product export
requests from us for ONCASPAR until it determined that all noted cGMP deviations
were either corrected or in the process of being corrected. This restriction was
removed in August 2000.
Since January 2000,the FDA has conducted follow-up inspections as well
as routine inspections of our manufacturing facility related to ONCASPAR and
ADAGEN. Following certain of these inspections,the FDA issued Form 483 reports,
citing deviations from cGMP. We have or are in the process of responding to such
reports with corrective action plans and are currently in discussion with the
FDA concerning some observations set forth in the Form 483s.
We are aware that the FDA has conducted inspections of certain of the
manufacturing facilities of Schering-Plough and those inspections have resulted
in the issuance of Form 483s citing deviations from cGMP.
In March 2001, we voluntarily replaced a batch of ADAGEN that was found
to have an impurity which we believe was introduced in the filling process.
If we or our licensees, including Schering-Plough, face additional
manufacturing problems in the future or if we or our licensees are unable to
satisfactorily resolve current or future manufacturing problems, the FDA could
require us or our licensees to discontinue the distribution of our products or
to delay continuation of clinical trials. If we or our licensees, including
Schering-Plough, cannot market and distribute our products for an extended
period, sales of the products will suffer, which would adversely affect our
financial results.
Our clinical trials could take longer to complete and cost more than we
expect.
We will need to conduct significant additional clinical studies of all
of our product candidates which have not yet been approved for sale. These
studies are costly, time consuming and unpredictable. Any unanticipated costs or
delays in our clinical studies could harm our business, financial condition and
results of operations.
A Phase III clinical trial is being conducted for PEG-INTRON for one
cancer indication. Schering-Plough is also in early stage clinical trials for
PEG-INTRON in other cancer indications. We are currently conducting early stage
clinical trials of two other PEG products, PROTHECAN currently in Phase II and
PEG-paclitaxel currently in Phase I. The rate of completion of clinical trials
depends upon many factors, including the rate of enrollment of patients. If we
or the other sponsors of these clinical trials are unable to accrue sufficient
clinical patients in such trials during the appropriate period, such trials may
be delayed and will likely incur significant additional costs. In addition, FDA
or institutional review boards may require us to delay, restrict, or discontinue
our clinical trials on various grounds, including a finding that the subjects or
patients are being exposed to an unacceptable health risk.
The cost of human clinical trials varies dramatically based on a number
of factors, including:
o the order and timing of clinical indications pursued,
o the extent of development and financial support from corporate
collaborators,
o the number of patients required for enrollment,
o the difficulty of obtaining clinical supplies of the product
candidate, and
o the difficulty in obtaining sufficient patient populations and
clinicians.
7
All statutes and regulations governing the conduct of clinical trials
are subject to change in the future, which could affect the cost of our clinical
trials. Any unanticipated costs or delays in our clinical studies could harm our
business, financial condition and results of operations.
In some cases, we rely on corporate collaborators or academic
institutions to conduct some or all aspects of clinical trials involving our
product candidates. We will have less control over the timing and other aspects
of these clinical trials than if we conducted them entirely on our own. We
cannot assure you that these trials will commence or be completed as we expect
or that they will be conducted successfully.
If pre-clinical and clinical trials do not yield positive results, our
product candidates will fail.
If pre-clinical and clinical testing of one or more of our product
candidates do not demonstrate the safety and efficacy of the desired
indications, those potential products will fail. Numerous unforeseen events may
arise during, or as a result of, the testing process, including the following:
o the results of pre-clinical studies may be inconclusive, or
they may not be indicative of results that will be obtained in
human clinical trials,
o potential products may not have the desired effect or may have
undesirable side effects or other characteristics that
preclude regulatory approval or limit their commercial use if
approved,
o results attained in early human clinical trials may not be
indicative of results that are obtained in later clinical
trials, and
o after reviewing test results, we or our corporate
collaborators may abandon projects which we might previously
have believed to be promising.
Clinical testing is very costly and can take many years. The failure to
adequately demonstrate the safety and efficacy of a therapeutic product under
development would delay or prevent regulatory approval, which could adversely
affect our business and financial performance.
In June 2001, we reported that Schering-Plough completed its Phase III
clinical trial which compared PEG-INTRON to INTRON A in patients with newly
diagnosed chronic myelogenous leukemia, or CML. In the study, although
PEG-INTRON demonstrated clinical comparability and a comparable safety profile
with INTRON A, the efficacy results for PEG-INTRON did not meet the
protocol-specified statistical criteria for non-inferiority, the primary
endpoint of the study. The results of this Phase III study have not yet been
presented or published, and are not publicly available at this time. We cannot
assure you that those results will support any marketing approval of PEG-INTRON
for the treatment of CML.
Even if we obtain regulatory approval for our products, they may not be
accepted in the marketplace.
The commercial success of our products will depend upon their
acceptance by the medical community and third-party payors as clinically useful,
cost-effective and safe. Even if our products obtain regulatory approval, we
cannot assure you that they will achieve market acceptance of any kind. The
degree of market acceptance will depend on many factors, including:
o the receipt, timing and scope of regulatory approvals,
o the timing of market entry in comparison with potentially
competitive products,
o the availability of third-party reimbursement, and
o the establishment and demonstration in the medical community
of the clinical safety, efficacy and cost-effectiveness of
drug candidates, as well as their advantages over existing
technologies and therapeutics.
8
If any of our products do not achieve market acceptance, we will likely
lose our entire investment in that product.
We depend on our collaborative partners. If we lose our collaborative
partners or they do not apply adequate resources to our collaborations, our
product development and financial performance may suffer.
We rely heavily and will depend heavily in the future on collaborations
with corporate partners, primarily pharmaceutical companies, for one or more of
the research, development, manufacturing, marketing and other commercialization
activities relating to many of our product candidates. If we lose our
collaborative partners, or if they do not apply adequate resources to our
collaborations, our product development and financial performance may suffer.
The amount and timing of resources dedicated by our collaborators to
their collaborations with us is not within our control. If any collaborator
breaches or terminates its agreements with us, or fails to conduct its
collaborative activities in a timely manner, the commercialization of our
product candidates could be slowed or blocked completely. We cannot assure you
that our collaborative partners will not change their strategic focus or pursue
alternative technologies or develop alternative products as a means for
developing treatments for the diseases targeted by these collaborative programs.
Our collaborators could develop competing products. In addition, our revenues
will be affected by the effectiveness of our corporate partners in marketing any
successfully developed products.
We cannot assure you that our collaborations will be successful.
Disputes may arise between us and our collaborators as to a variety of matters,
including financing obligations under our agreements and ownership of
intellectual property rights. These disputes may be both expensive and
time-consuming and may result in delays in the development and commercialization
of products.
We are dependent upon a single outside supplier for each of the crucial
raw materials necessary to the manufacture of each of our products and product
candidates.
We cannot assure you that sufficient quantities of our raw material
requirements will be available to support the continued research, development or
manufacture of our products. We purchase the unmodified compounds utilized in
our approved products and products under development from outside suppliers. We
may be required to enter into supply contracts with outside suppliers for
certain unmodified compounds. We do not produce the unmodified adenosine
deaminase used in the manufacture of ADAGEN or the unmodified forms of
L-asparaginase used in the manufacture of ONCASPAR. We have a supply contract
with an outside supplier for the supply of each of these unmodified compounds.
If we experience a delay in obtaining or are unable to obtain any unmodified
compound, including unmodified adenosine deaminase or unmodified L-asparaginase,
on reasonable terms, or at all, it could have a material adverse effect on our
business, financial condition and results of operations.
If we are required to obtain an alternate source for an unmodified
compound utilized in a product, the FDA and relevant foreign regulatory agencies
will likely require that we perform additional testing to demonstrate that the
alternate material is biologically and chemically equivalent to the unmodified
compound previously used in our clinical trials. This testing could delay or
stop development of a product, limit commercial sales of an approved product and
cause us to incur significant additional expenses. If we are unable to
demonstrate that the alternate material is chemically and biologically
equivalent to the previously used unmodified compound, we will likely be
required to repeat some or all of the pre-clinical and clinical trials conducted
for the compound. The marketing of an FDA approved drug could be disrupted while
such tests are conducted. Even if the alternate material is shown to be
chemically and biologically equivalent to the previously used compound, the FDA
or relevant foreign regulatory agency may require that we conduct additional
clinical trials with the alternate material.
There is one FDA-approved supplier of the adenosine deaminase enzyme,
or ADA, in ADAGEN. The ADA enzyme, until recently, was obtained by our supplier
from bovine intestines in cattle of German origin. Bovine spongiform
encephalopathy (BSE or mad cow disease) has been detected in cattle herds in
Germany after we acquired the ADA enzyme and at a time when the herds were
identified by the supplier as BSE-free. The FDA has advised us that we may
continue to distribute our current inventory of ADAGEN which contains the ADA
enzyme obtained from cattle of German origin until such time as we are able to
obtain FDA approval of the use of the ADA enzyme obtained from cattle of New
Zealand origin. We cannot assure you that the FDA will approve the use of the
9
ADA obtained in New Zealand prior to the time that our current inventory of
ADAGEN is exhausted. If we do not receive such timely approval, we will be
unable to distribute ADAGEN.
The United States and foreign patents upon which our original PEG
technology was based have expired. We depend on patents and proprietary rights,
which may offer only limited protection against potential infringement and the
development by our competitors of competitive products.
Research Corporation Technologies, Inc. held the patent upon which our
original PEG technology was based and had granted us a license under such
patent. Research Corporation's patent contained broad claims covering the
attachment of PEG to polypeptides. However, this United States patent and its
corresponding foreign patents have expired. Based upon the expiration of the
Research Corporation patent, other parties will be permitted to make, use or
sell products covered by the claims of the Research Corporation patent, subject
to other patents, including those which we hold. We have obtained several
patents with claims covering improved methods of attaching or linking PEG to
therapeutic compounds. We cannot assure you that any of these patents will
enable us to prevent infringement or that competitors will not develop
alternative methods of attaching PEG to compounds potentially resulting in
competitive products outside the protection that may be afforded by our patents.
We are aware that others have also filed patent applications and have been
granted patents in the United States and other countries with respect to the
application of PEG to proteins and other compounds. We cannot assure you that
the expiration of the Research Corporation patent or other patents related to
PEG that have been granted to third parties will not have a material adverse
effect on our business, financial condition and results of operations.
The pharmaceutical industry places considerable importance on obtaining
patent and trade secret protection for new technologies, products and processes.
Our success depends, in part, on our ability to develop and maintain a strong
patent position for our products and technologies both in the United States and
in other countries. We have been licensed, and been issued, a number of patents
in the United States and other countries, and we have other patent applications
pending to protect our proprietary technology. Although we believe that our
patents provide certain protection from competition, we cannot assure you that
such patents will be of substantial protection or commercial benefit to us, will
afford us adequate protection from competing products, or will not be challenged
or declared invalid. In addition we cannot assure you that additional United
States patents or foreign patent equivalents will be issued to us. The scope of
patent claims for biotechnological inventions is uncertain, and our patents and
patent applications are subject to this uncertainty.
To facilitate development of our proprietary technology base, we may
need to obtain licenses to patents or other proprietary rights from other
parties. If we are unable to obtain such licenses, our product development
efforts may be delayed or blocked.
We are aware that certain organizations are engaging in activities that
infringe certain of our PEG and SCA technology patents. We cannot assure you
that we will be able to enforce our patent and other rights against such
organizations.
We expect that there will continue to be significant litigation in the
biotechnology and pharmaceutical industries regarding patents and other
proprietary rights. We have become involved in patent litigation, and we may
likely become involved in additional patent litigation in the future. We may
incur substantial costs in asserting any patent rights and in defending suits
against us related to intellectual property rights. Such disputes could
substantially delay our product development or commercialization activities and
could have a material adverse effect on our business, financial condition and
results of operations. We are involved in one pending litigation matter in which
we are seeking to enforce certain of our patents.
We also rely on trade secrets, know-how and continuing technological
advancements to protect our proprietary technology. We have entered into
confidentiality agreements with our employees, consultants, advisors and
collaborators. However, these parties may not honor these agreements, and we may
not be able to successfully protect our rights to unpatented trade secrets and
know-how. Others may independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to our trade secrets and
know-how.
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We have limited sales and marketing experience, which makes us
dependent on our marketing partners.
Other than ADAGEN, which we market on a worldwide basis to a small
patient population, we have not engaged in the direct commercial marketing of
any of our products and therefore we do not have significant experience in
sales, marketing or distribution. For some of our products, we have provided
exclusive marketing rights to our corporate partners in return for milestone
payments and royalties to be received on sales. To the extent that we enter into
licensing arrangements for the marketing and sale of our products, any revenues
we receive will depend primarily on the efforts of these third parties. We will
not control the amount and timing of marketing resources that such third parties
devote to our products. In addition, if we market products directly, significant
additional expenditures and management resources would be required to increase
the size of our internal sales force. In any sales or marketing effort, we would
compete with many other companies that currently have extensive and well-funded
sales operations. Our marketing and sales efforts may be unable to compete
successfully against other such companies.
We may acquire other companies and may be unable to successfully
integrate such companies with our operations.
We may expand and diversify our operations with acquisitions. If we are
unsuccessful in integrating any such company with our operations, or if
integration is more difficult than anticipated, we may experience disruptions
that could have a material adverse effect on our business, financial condition
and results of operations. Some of the risks that may affect our ability to
integrate or realize any anticipated benefits from any acquisition include those
associated with:
o unexpected losses of key employees or customers of the
acquired company;
o conforming the acquired company's standards, processes,
procedures and controls with our operations;
o coordinating our new product and process development;
o diversion of existing management relating to the integration
and operation of the acquired company;
o hiring additional management and other critical personnel; and
o increasing the scope, geographic diversity and complexity of
our operations.
We may need to obtain additional financing to meet our future capital
needs, and this financing may not be available when we need it.
Our current development projects require substantial capital. We may
require substantial additional funds to conduct research activities,
pre-clinical studies, clinical trials and other activities relating to the
successful commercialization of potential products. In addition, we may seek to
acquire additional technologies and companies which could require substantial
capital. We do not expect to achieve significant sales or royalty revenue from
our current FDA-approved products, ADAGEN and ONCASPAR. In addition, we cannot
be sure that we will be able to obtain significant revenue from PEG-INTRON.
Additional funds from other sources may not be available on acceptable terms, if
at all. If adequate funds are unavailable from operations or additional sources
of financing, we may have to delay, reduce the scope of or eliminate one or more
of our research or development programs or one or more of our proposed
acquisitions of technologies or companies which could materially and adversely
affect our business, financial condition and operations.
While we believe that our cash, cash equivalents and investments will
be adequate to satisfy our capital needs for the foreseeable future, our actual
capital requirements will depend on many factors, including:
o the level of revenues we receive from our FDA-approved
products and product candidates,
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o continued progress of our research and development programs,
o our ability to establish additional collaborative
arrangements,
o changes in our existing collaborative relationships,
o progress with pre-clinical studies and clinical trials,
o the time and costs involved in obtaining regulatory clearance
for our products,
o the costs involved in preparing, filing, prosecuting,
maintaining and enforcing patent claims,
o competing technological and market developments, and
o our ability to market and distribute our products and
establish new collaborative and licensing arrangements.
We may seek to raise any necessary additional funds through equity or
debt financings, collaborative arrangements with corporate partners or other
sources which may be dilutive to existing stockholders. We cannot assure you
that we will be able to obtain additional funds on acceptable terms, if at all.
If adequate funds are not available, we may be required to:
o delay, reduce the scope or eliminate one or more of our
development projects,
o obtain funds through arrangements with collaborative partners
or others that may require us to relinquish rights to
technologies, product candidates or products that we would
otherwise seek to develop or commercialize ourselves, or
o license rights to technologies, product candidates or products
on terms that are less favorable to us than might otherwise be
available.
We depend on key personnel and may not be able to retain these
employees or recruit additional qualified personnel, which would harm our
business.
Because of the specialized scientific nature of our business, we are
highly dependent upon qualified scientific, technical and managerial personnel.
There is intense competition for qualified personnel in the pharmaceutical
field. Therefore, we may not be able to attract and retain the qualified
personnel necessary for the development of our business. The loss of the
services of existing personnel, as well as the failure to recruit additional key
scientific, technical and managerial personnel in a timely manner, would harm
our research and development programs and our business.
Risks Related To Our Industry
We face rapid technological change and intense competition, which could
harm our business and results of operations.
The biopharmaceutical industry is characterized by rapid technological
change. Our future success will depend on our ability to maintain a competitive
position with respect to technological advances. Rapid technological development
by others may result in our products and technologies becoming obsolete.
We face intense competition from established biotechnology and
pharmaceutical companies, as well as academic and research institutions that are
pursuing competing technologies and products. We know that competitors are
developing or manufacturing various products that are used for the prevention,
diagnosis or treatment of diseases that we have targeted for product
development. Many of our competitors have substantially greater research and
development capabilities and experiences and greater manufacturing, marketing
and financial resources than we do. Accordingly, our competitors may develop
technologies and products that are superior to
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those we or our collaborators are developing and render our technologies and
products or those of our collaborators obsolete and noncompetitive. In addition,
many of our competitors have much more experience than we do in pre-clinical
testing and human clinical trials of new drugs, as well as obtaining FDA and
other regulatory approval. If we cannot compete effectively, our business and
financial performance would suffer.
We may be sued for product liability.
Because our products and product candidates are new treatments with
limited, if any, past use on humans, their use during testing or after approval
could expose us to product liability claims. We maintain product liability
insurance coverage in the total amount of $40.0 million for claims arising from
the use of our products in clinical trials prior to FDA approval and for claims
arising from the use of our products after FDA approval. We cannot assure you
that we will be able to maintain our existing insurance coverage or obtain
coverage for the use of our other products in the future. Also, this insurance
coverage and our resources may not be sufficient to satisfy any liability
resulting from product liability claims, and a product liability claim may have
a material adverse effect on our business, financial condition or results of
operations.
Sales of our products could be adversely affected if the costs for
these products are not reimbursed by third-party payors.
In recent years, there have been numerous proposals to change the
health care system in the United States. Some of these proposals have included
measures that would limit or eliminate payments for medical procedures and
treatments or subject the pricing of pharmaceuticals to government control. In
addition, government and private third-party payors are increasingly attempting
to contain health care costs by limiting both the coverage and the level of
reimbursement of drug products. Consequently, significant uncertainty exists as
to the reimbursement status of newly-approved health care products.
Our ability to commercialize our products will depend, in part, on the
extent to which reimbursement for the cost of the products and related
treatments will be available from third-party payors. If we or any of our
collaborators succeeds in bringing one or more products to market, we cannot
assure you that third-party payors will establish and maintain price levels
sufficient for realization of an appropriate return on our investment in product
development. In addition, lifetime limits on benefits included in most private
health plans may force patients to self-pay for treatment. For example, patients
who receive ADAGEN are expected to require injections for their entire lives.
The cost of this treatment may exceed certain plan limits and cause patients to
self-fund further treatment. Furthermore, inadequate third-party coverage may
lead to reduced market acceptance of our products. Significant changes in the
health care system in the United States or elsewhere could have a material
adverse effect on our business and financial performance.
Risks Related To Our Subordinated Notes and Our Common Stock
Our notes are subordinated.
Our 4.5% convertible subordinated notes are unsecured and subordinated
in right of payment to all of our existing and future senior indebtedness. In
the event of our bankruptcy, liquidation or reorganization, or upon acceleration
of the notes due to an event of default under the indenture and in certain other
events, our assets will be available to pay obligations on the notes only after
all senior indebtedness has been paid. As a result, there may not be sufficient
assets remaining to pay amounts due on any or all of the outstanding notes. We
are not prohibited from incurring debt, including senior indebtedness, under the
indenture. If we were to incur additional debt or liabilities, our ability to
pay our obligations on the notes could be adversely affected. As of June 30,
2001, we had no senior indebtedness outstanding. See "Description of Notes -
Subordination of Notes."
The price of our common stock has been, and may continue to be,
volatile which may significantly affect the trading price of our notes.
Historically, the market price of our common stock has fluctuated over
a wide range, and it is likely that the price of our common stock will fluctuate
in the future. The market price of our common stock could be impacted due to a
variety of factors, including:
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o the results of pre-clinical testing and clinical trials by us,
our corporate partners or our competitors,
o announcements of technical innovations or new products by us,
our corporate partners or our competitors,
o the status of corporate collaborations and supply
arrangements,
o regulatory approvals,
o government regulation,
o developments in patent or other proprietary rights,
o public concern as to the safety and efficacy of products
developed by us or others,
o litigation,
o acts of war or terrorism in the United States or worldwide,
and
o general market conditions in our industry.
In addition, due to one or more of the foregoing factors in one or more
future quarters, our results of operations may fall below the expectations of
securities analysts and investors. In that event, the market price of our common
stock could be materially and adversely affected.
The stock market has recently experienced extreme price and volume
fluctuations. These fluctuations have especially affected the market price of
the stock of many high technology and healthcare-related companies. Such
fluctuations have often been unrelated to the operating performance of these
companies. Nonetheless, these broad market fluctuations may negatively affect
the market price of our common stock.
We may be unable to redeem our notes upon a fundamental change.
We may be unable to redeem our notes in the event of a fundamental
change. Upon a fundamental change, holders of the notes may require us to redeem
all or a portion of the notes. If a fundamental change were to occur, we may not
have enough funds to pay the redemption price for all tendered notes. Any future
credit agreements or other agreements relating to our indebtedness may contain
similar provisions, or expressly prohibit the repurchase of the notes upon a
fundamental change or may provide that a fundamental change constitutes an event
of default under that agreement. If a fundamental change occurs at a time when
we are prohibited from purchasing or redeeming notes, we could seek the consent
of our lenders to redeem the notes or could attempt to refinance this debt. If
we do not obtain a consent, we could not purchase or redeem the notes. Our
failure to redeem tendered notes would constitute an event of default under the
indenture. In such circumstances, or if a fundamental change would constitute an
event of default under our senior indebtedness, the subordination provisions of
the indenture would restrict payments to the holders of notes. The term
"fundamental change" is limited to certain specified transactions and may not
include other events that might adversely affect our financial condition or the
market value of the notes or our common stock. Our obligation to offer to redeem
the notes upon a fundamental change would not necessarily afford holders of the
notes protection in the event of a highly leveraged transaction, reorganization,
merger or similar transaction involving us. See "Description of Notes -
Redemption at Option of the Holder."
A public market for our notes may fail to develop or be sustained.
The initial purchasers of the notes, although they have advised us that
they intend to make a market in the notes, are not obligated to do so and may
discontinue this market making activity at any time without notice. In addition,
market making activity by the initial purchasers will be subject to the limits
imposed by the Securities Act of 1933, as amended and the Exchange Act of 1934,
as amended. As a result, we cannot assure you that any market for the notes will
develop or, if one does develop, that it will be maintained. If an active market
for the notes fails to develop or be sustained, the trading price of the notes
could be materially adversely affected.
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Events with respect to our share capital could cause the price of our
common stock to decline.
Sales of substantial amounts of our common stock in the open market, or
the availability of such shares for sale, could adversely affect the price of
our common stock. An adverse effect on the price of our common stock may
adversely affect the trading price of the notes. We had 41,990,859 shares of
common stock outstanding as of June 30, 2001. The following securities that may
be exercised for, or are convertible into, shares of our common stock were
issued and outstanding as of June 30, 2001:
o Options. Stock options to purchase 3,283,817 shares of our
common stock at a weighted average exercise price of
approximately $24.98 per share; of this total, 1,939,502 were
exercisable at a weighted average exercise price of $6.23 per
share as of such date.
o Series A Preferred Stock. 7,000 shares of our Series A
preferred stock are outstanding, which were convertible into
an aggregate of 15,909 shares of our common stock as of such
date.
The shares of our common stock that may be issued under the options are
currently registered with the SEC. The shares of common stock that may be issued
upon conversion of the Series A preferred stock are eligible for sale without
any volume limitations pursuant to Rule 144(k) under the Securities Act.
We have a significant amount of indebtedness.
As a result of the initial offering of the notes, our long-term debt is
$400,000,000. This indebtedness has affected us by:
o significantly increasing our interest expense and related debt
service costs, and
o making it more difficult to obtain additional financing.
We may not generate sufficient cash flow from operations to satisfy the
annual debt service payments that will be required under the notes. This may
require us to use a portion of the proceeds of the notes to pay interest or
borrow additional funds or sell additional equity to meet our debt service
obligations. If we are unable to satisfy our debt service requirements,
substantial liquidity problems could result, which would negatively impact our
future prospects.
The market for unrated debt is subject to disruptions, which could have
an adverse effect on the market price of the notes.
Our notes have not been rated. As a result, holders of the notes have
the risks associated with an investment in unrated debt. Historically, the
market for unrated debt has been subject to disruptions that have caused
substantial volatility in the prices of such securities and greatly reduced
liquidity for the holders of such securities. If the notes are traded, they may
trade at a discount from their initial offering price, depending on, among other
things, prevailing interest rates, the markets for similar securities, general
economic conditions and our financial condition, results of operations and
prospects. The liquidity of, and trading markets for, the notes also may be
adversely affected by general declines in the market for unrated debt. Such
declines may adversely affect the liquidity of, and trading markets for, the
notes, independent of our financial performance or prospects. In addition,
certain regulatory restrictions prohibit certain types of financial institutions
from investing in unrated debt, which may further suppress demand for such
securities. We cannot assure you that the market for the notes will not be
subject to similar disruptions. Any such disruptions may have an adverse effect
on the holders of the notes.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some statements incorporated by reference or contained in this
prospectus discuss our future expectations, contain projections of our results
of operations or financial condition or include other "forward-looking"
information within the meaning of Section 27A of the Securities Act. Our actual
results may differ materially from those expressed in forward-looking statements
made or incorporated by reference in this prospectus. Forward-looking statements
that express our beliefs, plans, objectives, assumptions or future events or
performance may involve estimates, assumptions, risks and uncertainties.
Therefore, our actual results and performance may differ materially
15
from those expressed in the forward-looking statements. Forward-looking
statements often, although not always, include words or phrases such as the
following:
o "will likely result"
o "are expected to"
o "will continue"
o "is anticipated"
o "estimate"
o "intends"
o "plans"
o "projection"
o "outlook"
You should not unduly rely on forward-looking statements contained or
incorporated by reference in this prospectus. Actual results or outcomes may
differ materially from those predicted in our forward-looking statements due to
the risks and uncertainties inherent in our business, including risks and
uncertainties in:
o clinical trial results
o obtaining and maintaining regulatory approval of our products
o market acceptance of and continuing demand for our products
o the impact of competitive products and pricing
o our ability to obtain additional financing to support our
operations
o factors discussed in the documents listed below
You should read and interpret any forward-looking statement together
with the following documents:
o our most recent annual report on Form 10-K
o our quarterly reports on Form 10-Q
o the risk factors contained in this prospectus under the
caption "Risk Factors"
o our other filings with the Securities and Exchange Commission
Any forward-looking statement speaks only as of the date on which that
statement is made. We will not update any forward-looking statement to reflect
events or circumstances that occur after the date on which such statement is
made.
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RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges was negative for all periods
presented, other than the year ended June 30, 2001, because we incurred net
losses in the periods prior to the year ended June 30, 2001. The dollar amounts
of the deficiencies for these periods and the ratio of earnings to fixed charges
for the year ended June 30, 2001 are disclosed below (dollars in thousands):
Year Ended
June 30,
--------------------------------------------------------------------------------
2001 2000 1999 1998 1997
--------------- ---------------- --------------- ---------------- --------------
Ratio of earnings to fixed
charges*. . 22:1 N/A N/A N/A N/A
Deficiency of earnings available to
cover fixed charges*. . . . . . . . N/A $(6,306) $(4,919) $(3,617) $(4,557)
-------------
* Earnings consist of net income (loss) plus fixed charges less capitalized
interest and preferred stock dividends. Fixed charges consist of interest
expense, including amortization of debt issuance costs and that portion of
rental expense we believe to be representative of interest.
USE OF PROCEEDS
All of the securities offered pursuant to this prospectus are being
offered by the selling holders listed under "Selling Holders." We will not
receive any proceeds from the sale by the selling holders of the notes or the
underlying common stock.
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DESCRIPTION OF NOTES
The notes were issued under an indenture dated as of June 26, 2001,
between Enzon, as issuer, and Wilmington Trust Company, as trustee. You may
request a copy of the indenture from the trustee.
The following description is a summary of the material provisions of
the notes and the indenture. It does not purport to be complete. This summary is
subject to and is qualified by reference to all the provisions of the indenture,
including the definitions of certain terms used in the indenture. Wherever
particular provisions or defined terms of the indenture or form of note are
referred to, these provisions or defined terms are incorporated in this
prospectus by reference.
As used in this "Description of Notes" section, references to "Enzon,"
"we," "our" or "us" refer solely to Enzon and not to our subsidiaries.
General
The notes are general unsecured obligations of Enzon, subordinate in
right of payment to certain current and future indebtedness as described under
"--Subordination of Notes." The notes are convertible into common stock as
described under "--Conversion of Notes." The notes are limited to $400,000,000
aggregate principal amount. The notes are issued only in denominations of $1,000
and multiples of $1,000. The notes will mature on July 1, 2008 unless earlier
converted, redeemed at our option or redeemed at the holder's option upon a
fundamental change.
Neither we nor any of our subsidiaries are subject to any financial
covenants under the indenture. In addition, neither we nor any of our
subsidiaries are restricted under the indenture from paying dividends, incurring
debt (including senior indebtedness), or issuing or repurchasing our securities.
Holders of notes are not afforded protection under the indenture in the
event of a highly leveraged transaction or a change in control of us except to
the extent described below under "--Redemption at Option of the Holder."
We pay interest in arrears on January 1 and July 1 of each year,
beginning January 1, 2002, to record holders at the close of business on the
preceding December 15 and June 15, as the case may be, except:
o that interest payable upon redemption will be paid to the
person to whom principal is payable, unless the redemption
date is an interest payment date; and
o as set forth in the next sentence.
In the case of any note, or portion of any note, which is converted
into common stock during the period after any record date for any interest
payment but prior to the next interest payment date:
o if the note has been called for redemption on a redemption
date that occurs during this period, we will not be required
to pay interest on the interest payment date;
o if the note is to be redeemed in connection with a fundamental
change on a redemption date that occurs during this period, we
will not be required to pay interest on the interest payment
date; or
o if otherwise, any note not called for redemption that is
submitted for conversion during this period must also be
accompanied by an amount equal to the interest due on the
interest payment date on the converted principal amount,
unless at the time of conversion there is a default in the
payment of interest on the notes. See "--Conversion of Notes."
We will maintain an office in the Borough of Manhattan, the City of New
York, for the payment of interest, which shall initially be an office or agency
of the trustee. We may pay interest either:
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o by check mailed to your address as it appears in the note
register, provided that if you are a holder of the notes with
an aggregate principal amount in excess of $2.0 million, you
shall be paid, at your written election, by wire transfer in
immediately available funds; or
o by wire transfer to an account maintained by such holder in
the United States.
However, payments to The Depository Trust Company, New York, New York,
which we refer to as DTC, will be made by wire transfer of immediately available
funds to the account of DTC or its nominee. Interest will be computed on the
basis of a 360-day year composed of twelve 30-day months.
Conversion of Notes
Holders of the notes may convert their notes, in whole or in part, into
common stock through the final maturity date of the notes, subject to prior
redemption of the notes. If we call notes for redemption, holders may convert
the notes only until the close of business on the business day prior to the
redemption date unless we fail to pay the redemption price. If holders have
submitted their notes for redemption upon a fundamental change, then holders may
only convert their notes upon the withdrawal of their redemption election.
Holders may convert their notes in part so long as this part is $1,000 in
principal amount or an integral multiple of $1,000. If any notes not called for
redemption are converted after a record date for any interest payment date and
prior to the next interest payment date, the notes so converted must be
accompanied by an amount equal to the interest payable on the interest payment
date on the converted principal amount unless a default in the payment of
interest exists at the time of conversion.
The initial conversion price for the notes is $70.98 per share of
common stock, subject to adjustment as described below. We will not issue
fractional shares of common stock upon conversion of notes. Instead, we will pay
cash equal to the market price of the common stock on the business day prior to
the conversion date. Except as described below, holders of notes will not
receive any accrued interest or dividends upon conversion.
To convert a note into common stock a holder must:
o complete and manually sign the conversion notice on the back
of the note or facsimile of the conversion notice and deliver
this notice to the conversion agent;
o surrender the note to the conversion agent;
o if required, furnish appropriate endorsements and transfer
documents;
o if required, pay all transfer or similar taxes; and
o if required, pay funds equal to interest payable on the next
interest payment date.
The date the holder complies with these requirements is the conversion
date under the indenture.
We will adjust the conversion price if any of the following events
occurs:
(1) we issue common stock as a dividend or distribution on our common
stock;
(2) we issue to all holders of common stock certain rights or warrants
to purchase our common stock;
(3) we subdivide or combine our common stock;
(4) we distribute to all holders of our common stock, shares of our
capital stock, evidences of indebtedness or assets, including securities but
excluding:
o rights or warrants listed in (2) above;
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o dividends or distributions listed in (1) above; and
o cash distributions listed in (5) below;
(5) we distribute cash, excluding any dividend or distribution in
connection with our liquidation, dissolution or winding up or any quarterly cash
dividend on our common stock to the extent that the aggregate cash dividend per
share of common stock in any quarter does not exceed the greater of:
o the amount per share of common stock of the next preceding
quarterly cash dividend on the common stock to the extent that
the preceding quarterly dividend did not require an adjustment
of the conversion price pursuant to this clause (5), as
adjusted to reflect subdivisions or combinations of the common
stock; and
o 3.75% of the average of the last reported sale price of the
common stock during the ten trading days immediately prior to
the declaration date of the dividend.
If an adjustment is required to be made under this clause (5) as a
result of a distribution that is a quarterly dividend, the adjustment would be
based upon the amount by which the distribution exceeds the amount of the
quarterly cash dividend permitted to be excluded pursuant to this clause (5). If
an adjustment is required to be made under this clause (5) as a result of a
distribution that is not a quarterly dividend, the adjustment would be based
upon the full amount of the distribution;
(6) we or one of our subsidiaries makes a payment in respect of a
tender offer or exchange offer for our common stock to the extent that the cash
and value of any other consideration included in the payment per share of common
stock exceeds the current market price per share of common stock on the trading
day next succeeding the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer; and
(7) someone other than us or one of our subsidiaries makes a payment in
respect of a tender offer or exchange offer in which, as of the closing date of
the offer, our board of directors is not recommending rejection of the offer.
The adjustment referred to in this clause (7) will only be made if:
o the tender offer or exchange offer is for an amount that
increases the offeror's ownership of common stock to more than
25% of the total shares of common stock outstanding; and
o the cash and value of any other consideration included in the
payment per share of common stock exceeds the current market
price per share of common stock on the business day next
succeeding the last date on which tenders or exchanges may be
made pursuant to the tender or exchange offer.
However, the adjustment referred to in this clause (7) will generally not be
made if as of the closing of the offer, the offering documents disclose a plan
or an intention to cause us to engage in a consolidation or merger or a sale of
all or substantially all of our assets.
To the extent that we have a rights plan in effect upon conversion of
the notes into common stock, holders will receive, in addition to the common
stock, the rights under the rights plan whether or not the rights have separated
from the common stock at the time of conversion, subject to limited exceptions.
In the event of:
o any reclassification of our common stock;
o a consolidation, merger or combination involving us; or
o a sale or conveyance to another person or entity of all or
substantially all of our property and assets;
in which holders of our common stock would be entitled to receive stock, other
securities, other property, assets or cash for their common stock, upon
conversion of holders of the notes will be entitled to receive the same type of
20
consideration which they would have been entitled to receive if they had
converted the notes into our common stock immediately prior to any of these
events.
You may in certain situations be deemed to have received a distribution
subject to United States federal income tax as a dividend in the event of any
taxable distribution to holders of common stock or in certain other situations
requiring a conversion price adjustment. See "United States Federal Tax
Considerations."
We may, from time to time, reduce the conversion price for a period of
at least 20 days if our board of directors has made a determination that this
reduction would be in our best interests. Any such determination by our board
will be conclusive. We would give holders at least 15 days' notice of any
reduction in the conversion price. In addition, we may reduce the conversion
price if our board of directors deems it advisable to avoid or diminish any
income tax to holders of common stock resulting from any stock or rights
distribution. See "United States Federal Tax Considerations."
We will not be required to make an adjustment in the conversion price
unless the adjustment would require a change of at least 1% in the conversion
price. However, we will carry forward any adjustments that are less than one
percent of the conversion price. Except as described above in this section, we
will not adjust the conversion price for any issuance of our common stock or
convertible or exchangeable securities or rights to purchase our common stock or
convertible or exchangeable securities.
Optional Redemption by Enzon
The notes are not entitled to any sinking fund. At any time on or after
July 7, 2004, we may redeem the notes in whole or in part at the following
prices expressed as a percentage of the principal amount:
Redemption Period Price
----------------- -----
Beginning on July 7, 2004 and ending on June 30, 2005......... 102.571%
Beginning on July 1, 2005 and ending on June 30, 2006......... 101.929%
Beginning on July 1, 2006 and ending on June 30, 2007......... 101.286%
Beginning on July 1, 2007 and ending on June 30, 2008......... 100.643%
and 100 percent if redeemed at July 1, 2008. In each case, we will pay interest
to, but excluding, the redemption date. If the redemption date is an interest
payment date, interest shall be paid to the record holder on the relevant record
date. We are required to give notice of redemption by mail to holders not more
than 60 days but not less than 30 days prior to the redemption date.
If less than all of the outstanding notes are to be redeemed, the
trustee will select the notes to be redeemed in principal amounts of $1,000 or
multiples of $1,000 by lot, pro rata or by another method the trustee considers
fair and appropriate. If a portion of your notes is selected for partial
redemption and you convert a portion of your notes, the converted portion will
be deemed to be of the portion selected for redemption.
We may not redeem the notes if we have failed to pay interest on the
notes and such failure to pay is continuing. We will issue a press release if we
redeem the notes.
Redemption at Option of the Holder
If a fundamental change of Enzon occurs prior to July 1, 2008, holders
of notes may require us to redeem their notes, in whole or in part, on a
repurchase date that is 30 days after the date of our notice of the fundamental
change. The notes will be redeemable in integral multiples of $1,000 principal
amount.
We will redeem the notes at a price equal to 100 percent of the
principal amount to be redeemed, plus accrued interest to, but excluding, the
repurchase date. If the repurchase date is an interest payment date, we will pay
interest to the record holder on the relevant record date.
We will mail to all record holders a notice of a fundamental change of
Enzon within 10 days after it has occurred. We are also required to deliver to
the trustee a copy of the fundamental change notice. If a holder elects to
redeem their notes, they must deliver to us or our designated agent, on or
before the 30th day after the date of our
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fundamental change notice, their redemption notice and any notes to be redeemed,
duly endorsed for transfer. We will promptly pay the redemption price for notes
surrendered for redemption following the repurchase date.
A "fundamental change" of Enzon is any transaction or event (whether by
means of an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise) in connection with
which all or substantially all of our common stock is exchanged for, converted
into, acquired for or constitutes solely the right to receive, consideration
which is not all or substantially all common stock that:
o is listed on, or immediately after the transaction or event
will be listed on, a United States national securities
exchange, or
o is approved, or immediately after the transaction or event
will be approved, for quotation on the Nasdaq National Market
or any similar United States system of automated dissemination
of quotations of securities prices.
We will comply with any applicable provisions of Rule 13e-4 and any
other tender offer rules under the Exchange Act in the event of a fundamental
change.
These fundamental change redemption rights could discourage a potential
acquiror of Enzon. However, this fundamental change redemption feature is not
the result of management's knowledge of any specific effort to obtain control of
Enzon by means of a merger, tender offer or solicitation, or part of a plan by
management to adopt a series of anti-takeover provisions. The term "fundamental
change" is limited to specified transactions and may not include other events
that might adversely affect our financial condition or business operations. Our
obligation to offer to redeem the notes upon a fundamental change would not
necessarily afford holders protection in the event of a highly leveraged
transaction, reorganization, merger or similar transaction involving Enzon.
We may be unable to redeem the notes in the event of a fundamental
change. If a fundamental change were to occur, we may not have enough funds to
pay the redemption price for all tendered notes. Any future credit agreements or
other agreements relating to our indebtedness may contain provisions prohibiting
redemption of the notes under certain circumstances, or expressly prohibit our
repurchase of the notes upon a fundamental change or may provide that a
fundamental change constitutes an event of default under that agreement. If a
fundamental change occurs at a time when we are prohibited from purchasing or
redeeming notes, we could seek the consent of our lenders to redeem the notes or
attempt to refinance this debt. If we do not obtain consent, we would not be
permitted to purchase or redeem the notes. Our failure to redeem tendered notes
would constitute an event of default under the indenture, which might constitute
a default under the terms of our other indebtedness. In these circumstances, or
if a fundamental change would constitute an event of default under our senior
indebtedness, the subordination provisions of the indenture would restrict
payments to the holders of notes.
Subordination of Notes
Payment on the notes will, to the extent provided in the indenture, be
subordinated in right of payment to the prior payment in full of all of our
senior indebtedness. The notes also are effectively subordinated to all debt and
other liabilities, including trade payables and lease obligations, if any, of
our subsidiaries.
Upon any distribution of our assets upon any dissolution, winding up,
liquidation or reorganization, the payment of the principal of, or premium, if
any, interest, and liquidated damages, if any, on the notes will be subordinated
in right of payment to the prior payment in full in cash or other payment
satisfactory to the holders of senior indebtedness of all senior indebtedness.
In the event of any acceleration of the notes because of an event of default,
the holders of any outstanding senior indebtedness would be entitled to payment
in full in cash or other payment satisfactory to the holders of senior
indebtedness of all senior indebtedness obligations before the holders of the
notes are entitled to receive any payment or distribution. We are required under
the indenture to promptly notify holders of senior indebtedness, if payment of
the notes is accelerated because of an event of default.
We may not make any payment on the notes if:
o a default in the payment of designated senior indebtedness
occurs and is continuing beyond any applicable period of grace
(called a "payment default"); or
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o a default other than a payment default on any designated
senior indebtedness occurs and is continuing that permits
holders of designated senior indebtedness to accelerate its
maturity, or in the case of a lease, a default occurs and is
continuing that permits the lessor to either terminate the
lease or require us to make an irrevocable offer to terminate
the lease following an event of default under the lease, and
the trustee receives a notice of such default (called "payment
blockage notice") from us or any other person permitted to
give such notice under the indenture (called a "non-payment
default").
We may resume payments and distributions on the notes:
o in case of a payment default, upon the date on which such
default is cured or waived or ceases to exist; and
o in case of a non-payment default, the earlier of the date on
which such nonpayment default is cured or waived or ceases to
exist or 179 days after the date on which the payment blockage
notice is received, if the maturity of the designated senior
indebtedness has not been accelerated, or in the case of any
lease, 179 days after notice is received if we have not
received notice that the lessor under such lease has exercised
its right to terminate the lease or require us to make an
irrevocable offer to terminate the lease following an event of
default under the lease.
No new period of payment blockage may be commenced pursuant to a payment
blockage notice unless 365 days have elapsed since the initial effectiveness of
the immediately prior payment blockage notice. No non-payment default that
existed or was continuing on the date of delivery of any payment blockage notice
shall be the basis for any later payment blockage notice.
If the trustee or any holder of the notes receives any payment or
distribution of our assets in contravention of the subordination provisions on
the notes before all senior indebtedness is paid in full in cash or other
payment satisfactory to holders of senior indebtedness, then such payment or
distribution will be held in trust for the benefit of holders of senior
indebtedness or their representatives to the extent necessary to make payment in
full cash or payment satisfactory to the holders of senior indebtedness of all
unpaid senior indebtedness.
Because of the subordination provisions discussed above, in the event
of our bankruptcy, dissolution or reorganization, holders of senior indebtedness
may receive more, ratably, and holders of the notes may receive less, ratably,
than our other creditors. This subordination will not prevent the occurrence of
any event of default under the indenture.
The notes are exclusively obligations of Enzon. A substantial portion
of our operations are conducted through our subsidiaries. As a result, our cash
flow and our ability to service our debt, including the notes, is dependent upon
the earnings of our subsidiaries. In addition, we are dependent on the
distribution of earnings, loans or other payments from our subsidiaries. In
addition, any payment of dividends, distributions, loans or advances by our
subsidiaries to us could be subject to statutory or contractual restrictions.
Payments to us by our subsidiaries will also be contingent upon our
subsidiaries' earnings and business considerations.
Our right to receive any assets of any of our subsidiaries upon their
liquidation or reorganization, and therefore the right of the holders to
participate in those assets, will be effectively subordinated to the claims of
that subsidiary's creditors, including trade creditors. In addition, even if we
were a creditor to any of our subsidiaries, our rights as a creditor would be
subordinate to any security interest in the assets of our subsidiaries and any
indebtedness of our subsidiaries senior to that held by us.
The term "senior indebtedness" is defined in the indenture and includes
principal, premium, interest, rent, fees, costs, expenses and other amounts
accrued or due on our existing or future indebtedness, as defined below, or any
existing or future indebtedness guaranteed or in effect guaranteed by us,
subject to certain exceptions. The term does not include:
o any indebtedness that by its express terms is not senior to
the notes or is pari passu or junior to the notes; or
23
o any indebtedness we owe to any of our majority-owned
subsidiaries; or
o the notes.
The term "indebtedness" is also defined in the indenture and includes,
in general terms, our liabilities in respect of borrowed money, notes, bonds,
debentures, letters of credit, bank guarantees, bankers' acceptances, capital
and certain other leases, interest rate and foreign currency derivative
contracts or similar arrangements, guarantees and certain other obligations
described in the indenture, subject to certain exceptions. The term does not
include, for example, any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services.
The term "designated senior indebtedness" is defined in the indenture
and includes, in general terms, any senior indebtedness that by its terms
expressly provides that it is "designated senior indebtedness" for purposes of
the indenture.
As of June 30, 2001, we had no senior indebtedness outstanding and our
subsidiaries had no significant indebtedness. Neither we nor our subsidiaries
are prohibited from incurring debt, including senior indebtedness, under the
indenture. We may from time to time incur additional debt, including senior
indebtedness. Our subsidiaries may also from time to time incur additional debt
and liabilities.
We are obligated to pay reasonable compensation to the trustee and to
indemnify the trustee against certain losses, liabilities or expenses incurred
by the trustee in connection with its duties relating to the notes. The
trustee's claims for these payments will generally be senior to those of
noteholders in respect of all funds collected or held by the trustee.
Events of Default; Notice and Waiver
The following will be events of default under the indenture:
o we fail to pay principal or premium, if any, when due upon
redemption or otherwise on the notes, whether or not the
payment is prohibited by subordination provisions;
o we fail to pay any interest and liquidated damages, if any, on
the notes, when due and such failure continues for a period of
30 days, whether or not the payment is prohibited by
subordination provisions of the indenture;
o we fail to perform or observe any of the covenants in the
indenture for 60 days after notice; or
o certain events involving our bankruptcy, insolvency or
reorganization.
The trustee may withhold notice to the holders of the notes of any
default, except defaults in payment of principal, premium, interest or
liquidated damages, if any, on the notes. However, the trustee must consider it
to be in the interest of the holders of the notes to withhold this notice.
If an event of default occurs and continues, the trustee or the holders
of at least 25% in principal amount of the outstanding notes may declare the
principal, premium, if any, and accrued interest and liquidated damages, if any,
on the outstanding notes to be immediately due and payable. In case of certain
events of bankruptcy or insolvency involving us, the principal, premium, if any,
and accrued interest and liquidated damages, if any, on the notes will
automatically become due and payable. However, if we cure all defaults, except
the nonpayment of principal, premium, if any, interest or liquidated damages, if
any, that became due as a result of the acceleration, and meet certain other
conditions, with certain exceptions, this declaration may be cancelled and the
holders of a majority of the principal amount of outstanding notes may waive
these past defaults. Payment of principal, premium, if any, or interest on the
notes that are not made when due will accrue interest at the annual rate of 4
1/2 % from the required payment date.
The holders of a majority of outstanding notes will have the right to
direct the time, method and place of any proceedings for any remedy available to
the trustee, subject to limitations specified in the indenture.
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No holder of the notes may pursue any remedy under the indenture,
except in the case of a default in the payment of principal, premium or interest
on the notes, unless:
o the holder has given the trustee written notice of an event of
default;
o the holders of at least 25% in principal amount of outstanding
notes make a written request, and offer reasonable indemnity,
to the trustee to pursue the remedy;
o the trustee does not receive an inconsistent direction from
the holders of a majority in principal amount of the notes;
and
o the trustee fails to comply with the request within 60 days
after receipt.
Modification and Waiver
The consent of the holders of a majority in principal amount of the
outstanding notes is required to modify or amend the indenture. However, a
modification or amendment requires the consent of the holder of each outstanding
note if it would:
o extend the fixed maturity of any note;
o reduce the rate or extend the time for payment of interest of
any note;
o reduce the principal amount or premium of any note;
o reduce any amount payable upon redemption of any note;
o adversely change our obligation to redeem any note upon a
fundamental change;
o impair the right of a holder to institute suit for payment on
any note;
o change the currency in which any note is payable;
o impair the right of a holder to convert any note;
o adversely modify, in any material respect, the subordination
provisions of the indenture; or
o reduce the percentage of notes required for consent to any
modification of the indenture.
We are permitted to modify certain provisions of the indenture without
the consent of the holders of the notes.
Form, Denomination and Registration
The notes will be:
o in fully registered form;
o without interest coupons; and
o in denominations of $1,000 principal amount and integral
multiples of $1,000.
Except as indicated below, the notes will be evidenced by one or more
global notes. We will deposit the global note or notes with DTC and register the
global notes in the name of Cede & Co. as DTC's nominee. Except as set forth
below, a global note may be transferred, in whole or in part, only to another
nominee of DTC or to a successor of DTC or its nominee.
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Holders of notes may hold their interests in a global note directly
through DTC if such holder is a participant in DTC, or indirectly through
organizations that are participants in DTC (called "participants"). Transfers
between participants will be effected in the ordinary way in accordance with DTC
rules and will be settled in clearing house funds. The laws of some states
require that certain persons take physical delivery of securities in definitive
form. As a result, the ability to transfer beneficial interests in the global
note to such persons may be limited.
Holders of notes who are not participants may beneficially own
interests in a global note held by DTC only through participants, or certain
banks, brokers, dealers, trust companies and other parties that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly (called "indirect participants"). So long as Cede & Co., as the
nominee of DTC, is the registered owner of a global note, Cede & Co. for all
purposes will be considered the sole holder of such global note. Except as
provided below, owners of beneficial interests in a global note will:
o not be entitled to have certificates registered in their
names;
o not receive physical delivery of certificates in definitive
registered form; and
o not be considered holders of the global note.
We will pay interest on and the redemption price of a global note to
Cede & Co., as the registered owner of the global note, by wire transfer of
immediately available funds on each interest payment date or the redemption or
repurchase date, as the case may be. Neither we, the trustee nor any paying
agent will be responsible or liable:
o for the records relating to, or payments made on account of,
beneficial ownership interests in a global note; or
o for maintaining, supervising or reviewing any records relating
to the beneficial ownership interests.
We have been informed that DTC's practice is to credit participants'
accounts on that payment date with payments in amounts proportionate to their
respective beneficial interests in the principal amount represented by a global
note as shown in the records of DTC, 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 the principal amount represented by a global
note held through participants will be the responsibility of the participants,
as is now the case with securities held for the accounts of customers registered
in "street name."
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global note to pledge such
interest to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interest, may be affected by the lack
of a physical certificate evidencing its interest.
Neither we, the trustee, registrar, paying agent nor conversion agent
will have any responsibility for the performance by DTC or its participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations. DTC has advised us that it will take any
action permitted to be taken by a holder of notes, including the presentation of
notes for exchange, only at the direction of one or more participants to whose
account with DTC interests in the global note are credited, and only in respect
of the principal amount of the notes represented by the global note as to which
the participant or participants has or have given such direction.
DTC has advised us that it is:
o a limited purpose trust company organized under the laws of
the State of New York, and a member of the Federal Reserve
System;
o a "clearing corporation" within the meaning of the Uniform
Commercial Code; and
o a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act.
26
DTC was created to hold securities for its participants and to
facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes to the accounts of its
participants. Participants include securities brokers, dealers, banks, trust
companies and clearing corporations and other organizations. Some of the
participants or their representatives, together with other entities, own DTC.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
DTC has agreed to the foregoing procedures to facilitate transfers of
interests in a global note among participants. However, DTC is under no
obligation to perform or continue to perform these procedures, and may
discontinue these procedures at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
us within 90 days, we will issue notes in certificated from in exchange for
global notes.
Registration Rights of the Noteholders
Under a registration rights agreement, we are required to use our
reasonable efforts to cause a shelf registration statement, of which this
prospectus is a part, to become effective and to use reasonable efforts to keep
the shelf registration statement effective until the earlier of:
o all of the registrable securities have been sold pursuant to
the shelf registration statement; or
o the expiration of the holding period under Rule 144(k) under
the Securities Act, or any successor provision.
When we use the term "registrable securities" in this section, we are
referring to the notes and the common stock issuable upon conversion of the
notes until the earliest of:
o the effective registration under the Securities Act and the
resale of the securities in accordance with the registration
statement;
o the expiration of the holding period under Rule 144(k) under
the Securities Act; and
o the sale to the public pursuant to Rule 144 under the
Securities Act, or any similar provision then in force, but
not Rule 144A.
We may suspend the use of the prospectus under certain circumstances
relating to pending corporate developments, public filings with the SEC and
similar events. Any suspension period shall not:
o exceed 30 days in any three-month period; or
o an aggregate of 90 days for all periods in any 12-month
period.
Notwithstanding the foregoing, we will be permitted to suspend the use
of the prospectus for up to 60 days in any 3-month period under certain
circumstances, relating to possible acquisitions, financings or other similar
transactions.
We will pay predetermined liquidated damages if the shelf registration
statement is not timely filed or made effective or if the prospectus is
unavailable for periods in excess of those permitted above:
o on the notes at an annual rate equal to 0.5% of the aggregate
principal amount of the notes outstanding until the
registration statement is filed or made effective or during
the additional period the prospectus is unavailable; and
o on the common stock that has been converted, at an annual rate
equal to 0.5% of the conversion price during such periods.
27
A holder who elects to sell registrable securities pursuant to the
shelf registration statement will be required to:
o be named as a selling stockholder in the related prospectus;
o deliver a prospectus to purchasers; and
o be subject to the provisions of the registration rights
agreement, including indemnification provisions.
The summary of the registration rights agreement is not complete. This
summary is subject to, and is qualified in its entirety by reference to, all the
provisions of the registration rights agreement.
Information Concerning the Trustee
We have appointed Wilmington Trust Company, the trustee under the
indenture, as paying agent, conversion agent, note registrar and custodian for
the notes. The trustee or its affiliates may provide banking and other services
to us in the ordinary course of their business.
The indenture contains certain limitations on the rights of the
trustee, if it or any of its affiliates is then our creditor, to obtain payment
of claims in certain cases or to realize on certain property received on any
claim as security or otherwise. The trustee and its affiliates will be permitted
to engage in other transactions with us. However, if the trustee or any
affiliate continues to have any conflicting interest and a default occurs with
respect to the notes, the trustee must eliminate such conflict or resign.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 60,000,000 shares of common
stock, par value $.01 per share, and 3,000,000 shares of preferred stock, par
value $.01 per share. Unless otherwise designated by our board of directors, all
issued shares shall be deemed common stock with equal rights and preferences.
Common Stock
As of June 30, 2001, there were 41,990,859 shares of our common stock
outstanding. In addition, as of June 30, 2001, there were stock options
outstanding to purchase an aggregate of 3,283,817 shares of common stock.
Holders of our common stock are entitled to one vote for each share
held on all matters submitted to a vote of stockholders and do not have
cumulative voting rights. Directors are elected by a plurality of the votes of
the shares present in person or represented by proxy at the annual meeting and
entitled to vote in such election. Holders of our common stock are entitled to
receive ratably the dividends, if any, as may be declared by the board of
directors out of legally available funds. These rights are subject to the prior
rights of any preferred stock then outstanding.
Upon our liquidation, dissolution or winding up, the holders of common
stock are entitled to receive ratably our net assets available after the payment
of all debts and other liabilities, and after the satisfaction of the rights of
any outstanding preferred stock. Holders of the common stock have no preemptive,
subscription, redemption or conversion rights, nor are they entitled to the
benefit of any sinking fund. The outstanding shares of common stock are validly
issued, fully paid and non-assessable. The rights, powers, preferences and
privileges of holders of common stock are subordinate to, and may be adversely
affected by, the rights of the holders of shares of any series of preferred
stock whether outstanding or issued in the future.
Preferred Stock
Our board of directors has the authority to issue up to 3,000,000
shares of preferred stock in one or more series and to fix the powers,
designations, preferences and relative rights thereof without any further vote
of shareholders. The voting powers of holders of common stock could be diluted
by the issuance of this preferred stock. The issuance of this preferred stock
could also have the effect of delaying, deferring or preventing a change
28
in our control. The issuance of this preferred stock could decrease the amount
of earnings and assets available for distribution to holders of our common stock
or adversely affect the rights and powers, including voting rights, of the
holders of our common stock.
Series A Preferred Stock
As of June 30, 2001, there were 7,000 shares of our Series A preferred
stock outstanding. Shares of our Series A preferred stock are convertible into
common stock at a conversion price of $11.00 per share. The value of the shares
of Series A preferred stock for conversion purposes is $25.00 per share. Holders
of the Series A preferred stock are entitled to an annual dividend of $2.00 per
share, payable semiannually, but only when and if declared by our board of
directors, out of funds legally available. Dividends on the Series A preferred
stock are cumulative and accrue and accumulate but will not be paid, except in
liquidation or upon conversion, until such time as the board of directors deems
it appropriate in light of our then current Financial condition. No dividends
are to be paid or set apart for payment on our common stock, nor are any shares
of common stock to be redeemed, retired or otherwise acquired for valuable
consideration unless we have paid in full or made appropriate provision for the
payment in full of all dividends which have then accumulated on the Series A
preferred stock. Holders of the Series A preferred stock are entitled to one
vote per share on matters to be voted upon by our stockholders and except as
required by Delaware law, our Series A preferred stock votes together with our
common stock as a single class on all matters which come to a vote of our
stockholders. As of June 30, 2001, undeclared accrued dividends in arrears were
$157,811 or $22.54 per share of Series A preferred stock. All shares of common
stock are junior in rank to the Series A preferred stock with respect to the
preferences as to dividends, distributions and payments upon our liquidation,
dissolution or winding up.
Registration Rights
We have granted Schering-Plough piggyback and demand registration
rights with respect to 847,489 shares of our common stock that were issued in
June 1995. In addition, there are demand and/or piggyback registration rights on
240,323 shares of common stock. Two persons affiliated with Evolution Capital
have piggyback and demand registration rights with respect to 188,779 shares of
our common stock issued upon the exercise of warrants. The demand rights give
these warrant holders a one-time right to require us to register, upon their
request. In addition, transferees of the Carson Group, Inc. and two of its
principals have piggyback registration rights with respect to an aggregate of
51,147 shares of our common stock issued upon exercise of warrants as
consideration for finder's services that were provided to us. Transferees of
Clearwater Fund IV were also granted piggyback registration rights under a
registration rights agreement with us with respect to the 206,227 shares of
common stock issued upon exercise of the warrants they held, which shares are
currently covered by an effective registration statement. Absent any contractual
limitations, the holders of these rights could cause a significant number of
shares of our common stock to be registered and sold in the public market. Such
sales, or the perception that these sales could occur, may have an adverse
effect on the market price for our common stock and could impair our ability to
raise capital through an offering of equity securities. We have obtained waivers
of all such piggyback registration rights applicable to this offering, except
rights with respect to an aggregate of 17,500 shares of our common stock.
We originally registered the resale of approximately 3,983,000 shares
of our common stock owned by stockholders who purchased such shares in a private
placement of shares of our common stock that closed in July 1998.
We originally registered the resale of approximately 4,122,317 shares
of our common stock owned by stockholders who purchased such shares in a private
placement of shares of our common stock that closed in January and March 1996.
We are required to maintain the effectiveness of this registration statement
until the earlier of the date that all of the shares are sold or March 15, 2004.
Indemnification and Limitation of Liability
Our charter documents provide that our directors and officers shall be
indemnified by us to the fullest extent permitted by Delaware law, as it now
exists or may in the future be amended, against all expenses and liabilities
reasonably incurred in connection with their service for or on behalf of us. In
addition, our certificate of incorporation provides that our directors will not
be personally liable for monetary damages to us for breaches of their fiduciary
duty as directors, unless they violated their duty of loyalty to either us or
our stockholders, acted in
29
bad faith, knowingly or intentionally violated the law, authorized illegal
dividends or redemptions or derived an improper personal benefit from their
action as directors. We have insurance which insures our directors and officers
against certain losses and which insures us against our obligations to indemnify
our directors and officers. Our officers and directors have executed indemnity
agreements with us which supplement the protections provided by our certificate
of incorporation and by-laws.
These agreements require us to pay for any damages, judgments,
settlements, costs and expenses for the defense of legal actions, claims,
proceedings and appeals due to any actual or alleged breach of duty, neglect,
error, misstatement, misleading statement, omission or other act done, suffered
or wrongfully attempted by the officer or director. If we do not pay such costs
and expenses within 90 days after we receive a written claim, such officers or
directors may bring a suit against us to recover the unpaid amount of the claim.
If such officer or director is successful, we will be required to pay for the
expenses incurred relating to the claim.
Provisions of our Certificate of Incorporation, By-laws and State Law Provisions
with Potential Antitakeover Effects
Certain provisions of our certificate of incorporation and by-laws, as
well as Delaware law, may operate in a manner that could discourage or render
more difficult a takeover of our company or the removal of our management or may
limit the price certain investors may be willing to pay for shares of our common
stock.
Our by-laws provide for the division of the board of directors into
three classes as nearly equal in size as possible with staggered three-year
terms. In addition, it provides that directors may be removed only for cause by
the affirmative vote of the holders of a majority of our outstanding shares of
capital stock entitled to vote. Any vacancy on the board of directors, however
occurring, including a vacancy resulting from an enlargement of the Board, may
only be filled by vote of a majority of the directors then in office. The likely
effect of the classification of the board of directors and the limitations on
the removal of directors and filling of vacancies is an increase in the time
required for the stockholders to change the composition of the board of
directors. For example, because only three directors may be replaced by
stockholder vote at each annual meeting of stockholders, stockholders seeking to
replace a majority of the members of the board of directors will need at least
two annual meetings of stockholders to effect this change. In addition, our
board of directors has the authority to issue up to 3,000,000 shares of
preferred stock in one or more series and to fix the powers, designations,
preferences and relative rights thereof without any further vote of our
stockholders. The voting powers of holders of our common stock could be diluted
by the issuance of this preferred stock. The issuance of this preferred stock
could also have the effect of delaying, deferring or preventing a change in
control. In addition, the issuance of this preferred stock could decrease the
amount of earnings and assets available for distribution to holders of our
common stock or adversely affect the rights and powers, including voting rights,
of the holders of our common stock.
The provisions of Section 203 of the General Corporation Law of
Delaware will prohibit us from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless:
o before such person became an interested stockholder, the board
of directors of the corporation approved the transaction in
which the interested stockholder became an interested
stockholder or approved the business combination,
o upon the closing of the transaction that resulted in the
interested stockholder becoming such, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding shares held by directors who are also officers of
the corporation and shares held by employee stock plans, or
o following the transaction in which such person became an
interested stockholder, the business combination is approved
by the board of directors of the corporation and authorized at
a meeting of stockholders by the affirmative vote of the
holders of at least two-thirds of the outstanding voting stock
of the corporation not owned by the interested stockholder.
30
A "business combination" includes mergers, asset sales, consolidations
and other transactions resulting in a financial benefit to the interested
stockholder. An "interested stockholder" is defined as a person who, at the time
of determination of whether a person s an interested stockholder:
o beneficially owns 15% or more of our common stock, or
o is an affiliate or associate of ours and beneficially owned
15% or more of our common stock at any time within three years
of the date of determination.
A Delaware corporation may "opt out" of Section 203 with an express
provision in its original certificate of incorporation or an express provision
in its certificate of incorporation or by-laws resulting from an amendment
approved by holders of at least a majority of the outstanding voting stock.
Neither our certificate nor our by-laws contain any such exclusion.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Continental
Stock Transfer & Trust Company. Its address is Two Broadway, 19th Floor, New
York, New York 10004.
CERTAIN UNITED STATES AND FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material U.S. federal income tax
considerations relating to the purchase, ownership and disposition of the notes
and common stock into which the notes may be converted, but does not purport to
be a complete analysis of all the potential tax considerations relating thereto.
This summary is based on laws, regulations, rulings and decisions now in effect,
all of which are subject to change or differing interpretation possibly with
retroactive effect. Except as specifically discussed below with regard to
non-U.S. holders (as defined below), this summary applies only to U.S. holders
(as defined below) that are beneficial owners of the notes and that will hold
the notes and common stock into which the notes may be converted as "capital
assets" (within the meaning of Section 1221 of the Internal Revenue Code of
1986, as amended (the "Code")).
For purposes of this summary, U.S. holders include (1) individual
citizens or residents of the U.S., including an alien individual who is a lawful
permanent resident of the United States or who meets the substantial presence
residency test under the federal income tax laws, (2) corporations or
partnerships (including any entity treated as a corporation or a partnership for
U.S. tax purposes) created or organized in or under the laws of the U.S., any
State of the United States or the District of Columbia, (3) estates, the incomes
of which are subject to U.S. federal income taxation regardless of the source of
such income or (4) trusts subject to the primary supervision of a U.S. court and
the control of one or more U.S. persons. Persons other than U.S. holders
("non-U.S. holders") are subject to special U.S. federal income tax
considerations, some of which are discussed below.
If a partnership (including for this purpose any entity treated as a
partnership for U.S. tax purposes) is a beneficial owner of the notes or common
stock into which the notes may be converted, the U.S. tax treatment of a partner
in the partnership will generally depend on the status of the partner and the
activities of the partnership. A holder of the notes or common stock into which
the notes may be converted that is a partnership and partners in such
partnership should consult their individual tax advisors about the U.S. federal
income tax consequences of holding and disposing of the notes and the common
stock into which the notes may be converted.
This discussion does not address tax considerations applicable to an
investor's particular circumstances or to investors that may be subject to
special tax rules such as (1) banks, thrifts, regulated investment companies, or
other financial institutions or financial service companies, (2) S corporations,
(3) holders subject to the alternative minimum tax, (4) tax-exempt
organizations, (5) insurance companies, (6) foreign persons or entities (except
to the extent specifically set forth below), (7) brokers or dealers in
securities or currencies, (8) holders whose "functional currency" is not the
U.S. dollar, or (9) persons that will hold the notes as a position in a hedging
transaction, "straddle," "conversion transaction" (as defined for tax purposes)
or persons deemed to sell the notes or common stock under the constructive sale
provisions of the Code.
This summary discusses the tax considerations applicable to the initial
purchasers of the notes who purchase the notes at their "issue price" as defined
in Section 1273 of the Code and the regulations thereunder and
31
does not discuss the tax considerations applicable to subsequent purchasers of
the notes. We have not sought any ruling from the Internal Revenue Service, or
IRS, or an opinion of counsel with respect to the statements made and the
conclusions reached in the following summary, and there can be no assurance that
the IRS will agree with such statements and conclusions. In addition, the IRS is
not precluded from successfully adopting a contrary position. This summary does
not consider the effect of the federal estate or gift tax laws (except as set
forth below with respect to non-U.S. holders) or the tax laws of any applicable
foreign, state, local or other jurisdiction. This summary also assumes that the
IRS will respect the classification of the notes as indebtedness for federal
income tax purposes.
INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX
LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES ARISING
UNDER THE FEDERAL ESTATE OR GIFT TAX RULES OR UNDER THE LAWS OF ANY STATE, LOCAL
OR FOREIGN TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
U.S. Holders
Taxation of Interest
Interest paid on the notes will be included in the income of a U.S.
holder as ordinary income at the time it is treated as received or accrued, in
accordance with such holder's regular method of accounting for U.S. federal
income tax purposes. Under Treasury Regulations, the possibility of an
additional payment under a note may be disregarded for purposes of determining
the amount of interest or original issue discount income to be recognized by the
holder in respect of such note (or the timing of such recognition) if the
likelihood of the payment, as of the date the notes are issued, is remote.
Failure of Enzon to file or cause to be declared effective a shelf registration
statement as described under "Description of Notes-Registration Rights of the
Noteholders" may result in the payment of predetermined liquidated damages in
the manner described in that section of this prospectus. In addition, holders
may require Enzon to redeem any and all of their notes in the event of a
fundamental change, and Enzon may redeem some or all of the notes on or after
July 7, 2004 subject to certain conditions. Enzon believes that the likelihood
of a liquidated damages payment with respect to the notes is remote and does not
intend to treat such possibility as affecting the yield to maturity of any note.
Similarly, Enzon intends to take the position that a "fundamental change" or a
redemption is remote under the Treasury Regulations, and likewise does not
intend to treat the possibility of a "fundamental change" or a redemption as
affecting the yield to maturity of any note. In the event any of these
contingencies occurs, it may affect the amount and timing of the income that
must be recognized by a U.S. holder of notes.
Sale, Exchange or Redemption of the Notes
Upon the sale, exchange (other than a conversion) or redemption of a
note, a U.S. holder generally will recognize capital gain or loss equal to the
difference between (1) the amount of cash proceeds and the fair market value of
any property received on the sale, exchange or redemption (except to the extent
such amount is attributable to accrued interest income not previously included
in income, which will be taxable as ordinary income, or is attributable to
accrued interest that was previously included in income, which amount may be
received without generating further income) and (2) such holder's adjusted tax
basis in the note. A U.S. holder's adjusted tax basis in a note generally will
equal the cost of the note to such holder less any principal payments received
by you. Such capital gain or loss will be long-term capital gain or loss if the
U.S. holder's holding period in the note is more than one year at the time of
sale, exchange or redemption. Long-term capital gains recognized by some
noncorporate U.S. holders, including individuals, will generally be subject to
taxation at reduced rates. The deductibility of capital losses is subject to
limitations.
Conversion of the Notes
A U.S. holder generally will not recognize any income, gain or loss
upon conversion of a note into common stock except with respect to cash received
in lieu of a fractional share of common stock or common stock that is
attributable to accrued interest not previously included in income. Cash
received in lieu of a fractional share of common stock upon conversion will be
treated as a payment in exchange for the fractional share of common stock.
Accordingly, the receipt of cash in lieu of a fractional share of common stock
generally will result in capital gain or
32
loss (measured by the difference between the cash received for the fractional
share and the holder's adjusted tax basis in the fractional share). Common stock
received upon conversion that is attributable to accrued interest not previously
included in income will be subject to the rules described above with respect to
taxation of interest. See "U.S. Holders-Taxation of Interest" above.
A U.S. holder's tax basis in the common stock received on conversion of
a note will be the same as such holder's adjusted tax basis in the note at the
time of conversion (reduced by any basis allocable to a fractional share
interest), and the holding period for the common stock received on conversion
will generally include the holding period of the note converted. However, a U.S.
holder's tax basis in shares of common stock considered attributable to accrued
interest not previously included in income (or to cash tendered with notes
converted after a record date for a particular interest payment date and prior
to such interest payment date) generally will equal the amount of such accrued
interest (and/or cash), and the holding period for such shares shall begin on
the date of conversion.
Distributions on Common Stock
Distributions, if any, made on the common stock after a conversion
generally will be included in the income of a U.S. holder as ordinary dividend
income to the extent of our current or accumulated earnings and profits. A
dividend distribution to a corporate U.S. holder may qualify for a
dividends-received deduction; however, certain holding period requirements,
taxable income and other limitations may apply. Distributions in excess of our
current and accumulated earnings and profits will be treated as a non-taxable
return of capital that reduces the U.S. holder's basis in the common stock
dollar-for-dollar until the basis has been reduced to zero, and thereafter as
capital gain.
Holders of convertible debt instruments such as the notes may, in some
circumstances, be deemed to have received distributions of stock if the
conversion price of such instruments is adjusted to the extent the adjustment
results in an increase in the holder's proportionate interest in the earnings
and profits or assets of Enzon. However, adjustments to the conversion price
made pursuant to a bona fide, reasonable adjustment formula which has the effect
of preventing the dilution of the interest of the holders of the debt
instruments will generally not be considered to result in a constructive
distribution of stock. Some of the possible adjustments provided in the notes
(including, without limitation, adjustments in respect of taxable dividends to
our stockholders or adjustments at our discretion) will not qualify as being
pursuant to a bona fide reasonable adjustment formula. If such adjustments are
made, U.S. holders of notes will be deemed to have received constructive
distributions taxable as dividends to the extent of our current and accumulated
earnings and profits even though they have not received any cash or property as
a result of such adjustments. A holder's tax basis in a note, however, generally
will be increased by the amount of any constructive dividend included in taxable
income. In addition, in some circumstances, an adjustment or the failure to
provide for an adjustment may result in taxable dividend income to the holders
of common stock.
Sale, Exchange or Redemption of Common Stock
Upon the sale, exchange or redemption of common stock a U.S. holder
generally will recognize capital gain or loss equal to the difference between
(1) the amount of cash and the fair market value of any property received upon
the sale or exchange and (2) such U.S. holder's adjusted tax basis in the common
stock. Such capital gain or loss will be long-term capital gain or loss if the
U.S. holder's holding period in common stock is more than one year at the time
of the sale, exchange or redemption. Long-term capital gains recognized by some
non-corporate U.S. holders, including individuals, will generally be subject to
taxation at reduced rates. A U.S. holder's basis and holding period in common
stock received upon conversion of a note are determined as discussed above under
"Conversion of the Notes." The deductibility of capital losses is subject to
limitations.
Backup Withholding and Information Reporting
Backup withholding of U.S. federal income tax at a rate currently of 31
percent may apply to payments pursuant to the terms of a note or common stock
(including proceeds received upon the sale, exchange, redemption, retirement or
other disposition of the notes or common stock) to a U.S. holder that is not an
"exempt recipient" and that fails to provide required identifying information
(such as the holder's U.S. taxpayer identification number, or "TIN") in the
manner required. Generally, individuals are not exempt recipients. Corporations
are generally exempt recipients, whereas other entities may be exempt
recipients. Payments made in respect of a note or common stock (including
proceeds received upon the sale, exchange, redemption, retirement or other
disposition of the notes or
33
common stock) must be reported to the IRS, unless the U.S. holder is an exempt
recipient or otherwise establishes an exemption. Any amounts withheld from a
payment to a U.S. holder under the backup withholding rules is allowable as a
refund or credit against the holder's U.S. federal income tax, provided that the
required information is furnished to the IRS in a timely manner.
Non-U.S. Holders
In general, subject to the discussion below concerning backup
withholding:
Taxation of Interest
Payments of interest on the notes by us or any paying agent to a
beneficial owner of a note that is a non-U.S. holder generally will not be
subject to U.S. withholding tax, provided that (l) such non-U.S. holder does not
own, actually or constructively pursuant to the conversion feature of the notes
or otherwise, 10 percent or more of the total combined voting power of all
classes of our stock entitled to vote within the meaning of Section 871(h)(3) of
the Code, (2) such non-U.S. holder is not a "controlled foreign corporation"
within the meaning of Section 957(a) of the Code with respect to which we are a
"related person" within the meaning of Section 864(d)(4) of the Code, (3) such
non-U.S. holder is not a bank receiving interest described in Section
881(c)(3)(A) of the Code, and (4) the certification requirements under Section
871(h) or Section 881(c) of the Code and Treasury Regulations thereunder are
satisfied.
To satisfy the certification requirements referred to in (4) above,
Sections 871(h) and 881(c) of the Code and currently effective Treasury
regulations thereunder require that either (1) the beneficial owner of a note
must certify, under penalties of perjury, to us or our paying agent, as the case
may be, that such owner is a non-U.S. holder and must provide such owner's name
and address, and TIN, if any, on Form W-8BEN (or a suitable substitute form) or
(2) a securities clearing organization, bank or other financial institution that
holds customers' securities in the ordinary course of its trade or business (a
"Financial Institution") and holds the note on behalf of the beneficial owner
thereof must certify, under penalties of perjury, to us or our paying agent, as
the case may be, that a Form W-8BEN (or a suitable substitute form) has been
received from the beneficial owner or a qualifying intermediary and must furnish
the payor with a copy thereof.
Interest on notes not excluded from U.S. withholding tax as described
above and not effectively connected with a United States trade or business
generally will be subject to U.S. withholding tax at a 30 percent rate, except
where an applicable U.S. income tax treaty provides for the reduction or
elimination of such withholding tax.
Sale, Exchange or Redemption of the Notes or Common Stock
A non-U.S. holder of a note or common stock will not be subject to U.S.
federal income tax on gains realized on the sale, exchange or redemption of such
note or common stock unless (1) such non-U.S. holder is an individual who is
present in the United States for 183 days or more in the taxable year of sale,
exchange or other disposition, and other required conditions are met, (2) such
gain is effectively connected with the conduct by the non-U.S. holder of a trade
or business in the United States and, if an applicable U.S. income tax treaty
requires, is attributable to a U.S. permanent establishment maintained by the
non-U.S. holder, (3) the non-U.S. holder is subject to Code provisions
applicable to some U.S. expatriates, or (4) in certain circumstances, if we are,
or have been at any time within the shorter of the five-year period preceding
such sale or other disposition or the period such non-U.S. holder held the
common stock or note, a U.S. real property holding corporation (a "USRPHC")
within the meaning of Section 897(c)(2) of the Code for U.S. federal income tax
purposes. We do not believe that we are currently a USRPHC or that we will
become one in the future.
Conversion of the Notes
A non-U.S. holder generally should not be subject to U.S. federal
income tax on the conversion of a note into common stock. To the extent a
non-U.S. holder receives cash in lieu of a fractional share of common stock upon
conversion, such cash may give rise to gain that would be subject to the rules
described above with respect to the sale, exchange or redemption of a note or
common stock. See "Non-U.S. holders-Sale, Exchange or Redemption of the Notes or
Common Stock" above. To the extent a non-U.S. holder receives upon conversion
common stock that is attributable to accrued interest not previously included in
income, such stock may give rise to income that
34
would be subject to the rules described above with respect to the taxation of
interest. See "Non-U.S. Holders-Taxation of Interest" above.
Distributions on Common Stock
Distributions on common stock after conversion will constitute a
dividend for U.S. federal income tax purposes to the extent of our current or
accumulated earnings and profits as determined under U.S. federal income tax
principles. Dividends paid on common stock held by a non-U.S. holder generally
will be subject to U.S. withholding tax at a 30 percent rate, except where an
applicable U.S. income tax treaty provides for the reduction or elimination of
such withholding tax or where the dividends are effectively connected with the
holder's conduct of a trade or business in the United States and are taxable as
described below. A non-U.S. holder may be required to satisfy specific
requirements in order to claim a reduction or exemption from withholding under
the foregoing rules.
Distributions in excess of our current and accumulated earnings and
profits as determined under U.S. federal income tax principles will be treated
as a non-taxable return of capital that reduces the non-U.S. holder's basis in
the common stock dollar-for-dollar until the basis has been reduced to zero, and
therafter as capital gain. Such capital gain will generally not be taxable to a
non-U.S. holder except under the circumstances described above under "Non-U.S.
Holders-Sale, Exchange or Redemption of the Notes or Common Stock."
The conversion price of the notes is subject to adjustment in some
circumstances. Any such adjustment or failure to make an adjustment could, in
some circumstances, give rise to a deemed distribution to non-U.S. holders of
the notes or common stock that is taxable as a dividend to the extent of our
accumulated earnings and profits. See "U.S. Holders-Distributions on Common
Stock" above. In such case, the deemed distribution would be subject to the
rules described above regarding U.S. withholding tax on dividends.
Income or Gains Effectively Connected With A U.S. Trade or Business
If a non-U.S. holder of a note or common stock is engaged in a trade or
business in the U.S. and if interest on the note, dividends on the common stock,
or gain realized on the sale, exchange or other disposition of the note or
common stock is effectively connected with the conduct of such trade or business
(and, if applicable tax treaty requires, is attributable to a U.S. permanent
establishment maintained by the non-U.S. holder in the U.S.), the non-U.S.
holder, although exempt from U.S. withholding tax (provided that the
certification requirements discussed in the next sentence are met), will
generally be subject to U.S. federal income tax on such interest, dividends or
gain on a net income basis in the same manner as if it were a U.S. holder. The
non-U.S. holder will be required, under currently effective Treasury
Regulations, to provide us with a properly executed IRS Form W-8ECI or successor
form in order to claim an exemption from U.S. withholding tax. In addition, if
such non-U.S. holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30% (or such lower rate provided by an applicable U.S.
income tax treaty) of a portion of its effectively connected earnings and
profits for the taxable year.
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 with respect to the
note if the individual did not actually or constructively own 10 percent 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 such note would not have
been effectively connected with the conduct by such individual of a trade or
business in the U.S. Common stock held by an individual, actually or
constructively, 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 such individual's estate for U.S. federal estate tax purposes,
unless an applicable estate tax treaty otherwise provides.
Non-U.S. holders should consult with their tax advisors regarding U.S.
federal, state and local and foreign income and estate tax consequences with
respect to the notes and common stock.
Backup Withholding and Information Reporting
A non-U.S. holder may have to comply with specific certification
procedures to establish that he is not a U.S. person in order to avoid
information reporting and backup withholding tax requirements with respect to
our
35
payments of principal and interest on the notes. In addition, we must report
annually to the IRS and to each non-U.S. holder the amount of any dividends paid
to, and the tax withheld with respect to, such holder, regardless of whether any
tax was actually withheld. 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. Any amounts
withheld under the backup withholding rules from a payment to a non-U.S. holder
of a note or common stock will be allowed as a refund or credit against such
holder's U.S. federal income tax provided that the required information is
furnished to the IRS in a timely manner. Non-U.S. holders of the notes or our
common stock should consult their tax advisors regarding the application of
information reporting and backup withholding in their particular situations, the
availability of exemptions and the procedure for obtaining any available
exemption.
THE PRECEDING DISCUSSION OF THE MATERIAL U.S. FEDERAL INCOME TAX
CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE.
ACCORDINGLY, EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS TAX ADVISOR AS TO THE
PARTICULAR U.S. FEDERAL, STATE, AND LOCAL TAX CONSEQUENCES OF PURCHASING,
HOLDING AND DISPOSING OF THE NOTES AND OUR COMMON STOCK. TAX ADVISORS SHOULD
ALSO BE CONSULTED AS TO THE U.S. ESTATE AND GIFT TAX CONSEQUENCES AND THE
FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF THE NOTES AND
OUR COMMON STOCK, AS WELL AS THE CONSEQUENCES OF ANY PROPOSED CHANGE IN
APPLICABLE LAWS.
SELLING HOLDERS
The notes were originally issued by Enzon and sold by Morgan Stanley &
Co. Incorporated, CIBC World Markets Corp., SG Cowen Securities Corporation and
Legg Mason Wood Walker Incorporated, as initial purchasers, in a transaction
exempt from the registration requirements of the Securities Act to persons
reasonably believed by such initial purchasers to be "qualified institutional
buyers" (as defined in Rule 144A under the Securities Act). Selling holders,
which term includes their transferees, pledges or donees or their successors,
may from time to time offer and sell pursuant to this prospectus any or all of
the notes and the underlying common stock.
The following table sets forth information with respect to the selling
holder of the notes and the respective number of notes beneficially owned by
each selling holder that may be offered pursuant to this prospectus. As of the
date hereof, no holders of notes have converted notes into common stock.
Currently, the notes are convertible into common stock at a conversion price of
$70.98. The conversion price is subject to adjustment upon the events described
under "Description of Notes -- Conversion of Notes." Subsequent to the
conversion of notes, the common stock issued on conversion may be sold by the
selling holders pursuant to this prospectus.
Principal Amount
Selling Holder of Notes
-------------- --------
Alexandra Global Investment Fund 1, Ltd. ............. $ 5,000,000
Aristeia Partners, L.P. .............................. $ 2,860,000
Aristeia Capital LLB ................................. $ 10,140,000
Allstate Insurance Company ........................... $ 1,600,000
Allstate Life Insurance Company ...................... $ 400,000
Alpine Associates .................................... $ 8,500,000
Alpine Partners, L.P. ................................ $ 1,300,000
American Samoa Government ............................ $ 100,000
Arbitex Master Fund L.P. ............................. $ 13,000,000
Argent Classic Convertible
Arbitrage Fund (Bermuda) Ltd. ........................ $ 5,500,000
Argent Convertible Arbitrage Fund Ltd. ............... $ 2,000,000
Argent LowLev Convertible Arbitrage Fund LLC ......... $ 500,000
36
Bank of Austria Cayman Island, Ltd. .................. $ 4,000,000
Bankers Trust Company, Trustee for
Daimler Chrysler Corp. Emp#1 Pension Plan ............ $ 5,275,000
Black Diamond Offshore Ltd. .......................... $ 843,000
BNP Paribas Equity Strategies, SNC ................... $ 23,324,000
BP Amoclo Plc. Master Trust .......................... $ 2,711,000
Castle Convertible Fund, Inc. ........................ $ 1,000,000
CIBC World Markets ................................... $ 4,000,000
Coastal Convertible Ltd. ............................. $ 2,000,000
Common Fund Fixed Income Arbitrage Co. ............... $ 200,000
Cooper Neff Convertible Strategies Fund, L.P. ........ $ 4,004,000
DeAm Convertible Arbitrage Fund ...................... $ 3,000,000
Deutsche Banc/Alex Brown ............................. $ 13,500,000
Double Black Diamond Offshore LDC .................... $ 3,937,000
Fidelity Financial Trust: Fidelity Convertible
Securities Fund ...................................... $ 2,000,000
First Union National Bank ............................ $ 29,000,000
Franklin and Mashall College ......................... $ 305,000
Goldman Sachs and Company ............................ $ 5,000,000
Greyhound Lines, Inc. ................................ $ 300,000
Helix Convertible Opportunities Fund Ltd. ............ $ 2,650,000
Helix Convertible Opportunities, LP .................. $ 2,650,000
Highbridge International LLC ......................... $ 5,000,000
Hotel Union & Hotel Industry of Hawaii ............... $ 1,000,000
James Campbell Corporation ........................... $ 416,000
James Campbell, The Estate of ........................ $ 320,000
Jefferies & Company Inc. ............................. $ 22,000
JMG Capital Partners LP .............................. $ 5,000,000
JMG Triton Offshore Fund, Ltd. ....................... $ 3,000,000
JP Morgan Securities Inc. ............................ $ 17,000,000
K.D. Offshore Fund C.V ............................... $ 1,875,000
Kellner, DiLeo & Co. ................................. $ 1,875,000
Lancer Securities Cayman Ltd. ........................ $ 500,000
Lipper Convertibles Series II, L.P. .................. $ 1,750,000
Lipper Convertibles, L.P. ............................ $ 18,000,000
Lipper Offshore Convertibles, L.P. ................... $ 5,250,000
McMahan Securities Co. L.P. .......................... $ 2,250,000
Morgan Stanley & Co. ................................. $ 30,000,000
New York Life Insurance and Annuity Corporation ...... $ 1,450,000
37
New York Life Insurance Company ...................... $ 13,950,000
Onex Industrial Partners Limited ..................... $ 4,290,000
Palladin Securites LLC ............................... $ 1,500,000
Pebble Capital Inc. .................................. $ 720,000
Penn Treaty Network America Insurance
Company .............................................. $ 395,000
Quattro Fund Ltd. .................................... $ 3,000,000
R2Investments, LDC ................................... $ 10,000,000
RAM Trading Ltd. ..................................... $ 500,000
RCG Latitude Master Fund ............................. $ 1,000,000
Robertson Stephens ................................... $ 500,000
Rockhaven Premier Dividend Fund ...................... $ 690,000
Sagamore Hill Hub Fund Ltd. .......................... $ 18,000,000
Sage Capital ......................................... $ 4,000,000
SG Cowen Securities Corporation ...................... $ 500,000
Silver Creek II Limited .............................. $ 6,390,000
Silver Creek Limited Partnership ..................... $ 1,600,000
Smithfield Trust Company ............................. $ 20,000
State Street Bank, Custodian for GE
Pension Trust ........................................ $ 2,425,000
Sturgeon Limited ..................................... $ 672,000
TQA Master Fund, Ltd. ................................ $ 1,000,000
TQA Master Plus Fund, Ltd. ........................... $ 4,500,000
Tribeca Investments, L.L.C ........................... $ 31,500,000
UBS AG London Branch ................................. $ 8,000,000
UBS O'Connor LLC F/B/O
UBS Global Equity Arbitrage Master Ltd. .............. $ 2,000,000
Viacom Inc. Pension Plan Master Trust ................ $ 106,000
Whitebox Convertible Arbitrage Partners LP ........... $ 5,000,000
Worldwide Transactions Ltd. .......................... $ 220,000
ZCM Asset Holding Co. (Bermuda) Ltd. ................. $ 500,000
Zurich Institutional Benchmarks ...................... $ 325,000
Zurich Institutional Benchmarks ...................... $ 200,000
Master Fund Ltd.
Any other Holder of Notes or Future Transferee
From any Such Holder ................................. $ 21,190,000
------------
Total ................................................ $400,000,000
============
None of the selling holders has, or within the past three years has
had, any position, office or other material relationship with us or any of our
predecessors or affiliates. Because the selling holders may, pursuant to this
prospectus, offer all or some portion of the notes or the common stock issuable
upon conversion of the notes, no estimate can be given as to the amount of the
notes or the common stock issuable upon conversion of the notes that will be
held by the selling holders upon termination of any such sales. In addition, the
selling holders identified
38
above may have sold, transferred or otherwise disposed of all or a potion 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.
PLAN OF DISTRIBUTION
The selling holders and their successors (which term includes their
transferees, pledgees or donees or their successors) may sell the notes and the
common stock into which the notes are convertible directly to purchasers or
through underwriters, broker-dealers or agents, who may receive compensation in
the form of discounts, concessions or commissions from the selling holders or
the purchasers (which discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved).
The notes and the common stock into which the notes are convertible may
be sold in one or more transactions at fixed prices, at prevailing market prices
at the time of sale, at prices related to such prevailing market prices, at
varying prices determined at the time of sale, or at negotiated prices. Such
sales may be effected in transactions (which may involve crosses or block
transactions) (1) on any national securities exchange or quotation service on
which the notes or the common stock may be listed or quoted at the time of sale,
(2) in the over-the-counter market, (3) in transactions otherwise than on such
exchanges or services or in the over-the-counter market, (4) through the writing
of options (whether such options are listed on an options exchange or
otherwise), (5) through the settlement of short sales or (6) through the
combination of the above. 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 with the notes are convertible and deliver these
securities to close out such 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
hereby will be the purchase price of such 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 the sale of the
notes or the underlying common stock covered by this prospectus.
Our outstanding common stock is listed for trading on the Nasdaq
National Market. We do not intend to list the notes for trading on any national
securities exchange or on the Nasdaq National Market and can give no assurance
about the development of any trading market for the notes.
In order to comply with the securities laws of some states, if
applicable, the notes and common stock into which the notes are convertible may
be sold in such jurisdictions only through registered or licensed brokers or
dealers. In addition, in some states the notes and common stock into which the
notes are convertible may not be sold unless they have been registered or
qualified for sale or an exemption from registration or qualification
requirements is available and is complied with.
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock 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, and have agreed that they will not engage in any transaction in
violation of such provisions.
In addition, any securities covered by this prospectus which qualify
for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold
under Rule 144 or Rule 144A rather than pursuant to this prospectus. We cannot
assure you that a selling holder will not sell any notes or common stock
described herein or will not transfer, devise or gift such securities by other
means not described in this prospectus.
39
To the extent required, the specific notes or common stock to be sold,
the name 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 certain circumstances and at certain
times. The registration rights agreement provides for cross-indemnification of
the selling holders and Enzon and their respective directors, officer and
controlling persons against certain liabilities in connection with the offer and
sale of the notes and common stock, including liabilities under the Securities
Act. Enzon will pay substantially all of the expenses incurred by the selling
holders and Enzon incident to the offering and sale of the notes and the common
stock, provided that each selling holder will be responsible for payment of
commission, concessions and discounts of underwriters, broker-dealers or agents.
LEGAL MATTERS
Certain legal matters relating to the notes and the underlying common
stock will be passed upon for Enzon by Dorsey & Whitney LLP, New York, New York.
EXPERTS
The consolidated financial statements of Enzon, Inc. and subsidiaries
as of June 30, 2001 and 2000, and for each of the years in the three-year period
ended June 30, 2001, have been incorporated by reference in this prospectus and
in the registration statement in reliance upon the report of KPMG LLP,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a
registration statement on Form S-3 with respect to the notes and the common
stock offered by this prospectus. This prospectus, which constitutes a part of
the registration statement, does not contain all of the information set forth in
the registration statement or the exhibits and schedules which are a part of the
registration statement. For further information about us, the notes and our
common stock, you should review the registration statement and exhibits and
schedules thereto. We file annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy materials that we have filed with the Securities and
Exchange Commission at the following Securities and Exchange Commission public
reference rooms:
450 Fifth Street, N.W. 500 West Madison Street
Room 1024 Suite 1400
Washington, D.C. 20549 Chicago, Illinois 60661
Please call the Securities and Exchange Commission at 1-800-SEC-0330
for further information on the public reference rooms.
Our common stock is quoted on the Nasdaq National Market under the
symbol "ENZN," and our Securities and Exchange Commission filings can also be
read at the following Nasdaq address:
Nasdaq Operations
1735 K Street, N.W.
Washington, D.C. 20006
Our Securities and Exchange Commission filings are also available to
the public on the Securities and Exchange Commission `s Internet website at
http://www.sec.gov.
40
We incorporate by reference into this prospectus the documents listed
below and any future filings we make with the Securities and Exchange Commission
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act,
including any filings after the date of this prospectus, until either of the
following has occurred: (1) all the notes have been sold, or (2) the holding
period applicable to the notes and the underlying common stock under Rule 144(k)
under the Securities Act, or any successor provision, has expired. The
information incorporated by reference is an important part of this prospectus.
Any statement in a document incorporated by reference into this prospectus will
be deemed to be modified or superseded to the extent a statement contained in
(x) this prospectus or (y) any other subsequently filed document that is
incorporated by reference into this prospectus modifies or supersedes such
statement.
o Our Annual Report on Form 10-K for our fiscal year ended June
30, 2001.
o Our Report on Form 8-K filed on October 5, 2001.
You may request a copy of these filings, at no cost, by writing to us
at the following address or telephoning us at (732) 980-4500 between the hours
of 9:00 a.m. and 4:00 p.m., Eastern Standard time:
Enzon, Inc.,
Attention: Investor Relations
20 Kingsbridge Road
Piscataway, NJ 08854
41
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale of securities being registered hereby.
All amounts are estimates except for the registration fee.
Amount to be
Paid
Registration Fee................................................$ 100,000
Legal fees and expenses......................................... 50,000
Accounting fees and expenses.................................... 25,000
Printing Expenses............................................... 25,000
Miscellaneous................................................... 10,000
----------------
TOTAL........................................................$ 210,000
================
Item 15. Indemnification of Officers and Directors
Section 145 of the Delaware General Corporation Law contains detailed
provisions for indemnification of directors and officers of Delaware
corporations against expenses, judgments, fines and settlements in connection
with litigation.
In accordance with the DGCL, Article 10 of our certificate of
incorporation provides that a director shall not be liable to us:
o for any breach of the director's duty of loyalty to us or our
stockholders;
o for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law;
o under section 174 of the DGCL providing for liability of
directors for unlawful payment of dividends or unlawful stock
purchases or redemptions;
o for any transaction from which a director derived an improper
benefit; or
o for any act or omission occurring prior to the date when said
Article 10 became effective.
Section 8.1 of our bylaws provides for the indemnification, to the
fullest extent authorized by law, of any person made, or threatened to be made,
a party to an action or proceeding, whether criminal, civil, administrative or
investigative, against expenses, judgments, fines, and amounts paid in
settlement incurred in connection with such action or proceeding, by reason of
the fact that such person is or was a director or officer of Enzon. Enzon's
Directors' and Officers' Liability Insurance, which is provided for under
Section 8.3 of our bylaws, insures our directors and officers against any
liability arising out of such person's status as a director or officer, and
insures us against our obligations to indemnify our directors and officers.
Our officers and directors have executed indemnity agreements with us
which supplement the protections provided by our certificate of incorporation
and bylaws. These agreements require us to pay for any damages, judgments,
settlements, costs and expenses for the defense of legal actions, claims,
proceedings and appeals due to
II-1
any actual or alleged breach of duty, neglect, error, misstatement, misleading
statement, omission or other act done, suffered or wrongfully attempted by the
officer or director. If we do not pay such costs and expenses within 90 days
after we receive a written claim, such officers or directors may bring a suit
against us to recover the unpaid amount of the claim. If such officer or
director is successful, we will be required to pay for the expenses incurred
relating to the claim.
Item 16. Exhibits
(a) The following exhibits are filed as part of this Registration
Statement:
Exhibit
Number Description of Exhibit
---------------- -------------------------------------------------------------------------------------------------
4.1* Indenture, dated as of June 26, 2001, between the Registrant and Wilmington Trust Company, as
trustee, including the form of 41/2% Convertible Subordinated Note due 2008 attached as Exhibit
A thereto
4.2* Registration Rights Agreement between the Registrant and the initial purchasers, dated as of
June 26, 2001
5.1* Opinion of Dorsey & Whitney LLP
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of KPMG LLP, Independent Certified Public Accountants
23.2* Consent of Dorsey & Whitney LLP (included in Exhibit 5.1)
24.1* Power of Attorney (included on the signature page of the Registration Statement)
25.1* Form T-1 Statement of Eligibility of the Wilmington Trust Company to act as trustee under the
indenture
---------------------
* Previously filed as an exhibit to the Registration Statement on Form
S-3 (333-67506) filed with the Commission on August 14, 2001 and
incorporated herein by reference thereto.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of
the Securities Act,
(b) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement,
(c) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that clauses (a) and (b) do not apply if the information
required to be included in a post-effective amendment by such clauses is
contained in periodic reports filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) of Section 15(d) of the Exchange Act that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as the indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions referenced in Item 15 of
this Registration Statement, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer, or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered hereunder,
the registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Piscataway, State of New Jersey, on October 22, 2001.
ENZON, INC.
By: /s/ ARTHUR J. HIGGINS
----------------------------------
Arthur J. Higgins
President, Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the indicated capacities
on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ ARTHUR J. HIGGINS President, Chief Executive Officer and Director October 22, 2001
------------------------------- (principal executive officer)
Arthur J. Higgins
/s/ KENNETH J. ZUERBLIS Vice President, Finance, Chief Financial Officer and October 22, 2001
------------------------------- Secretary
Kenneth J. Zuerblis (principal financial and accounting officer)
* Chairman of the Board October 22, 2001
-------------------------------
Randy H. Thurman
* Director October 22, 2001
-------------------------------
David S. Barlow
* Director October 22, 2001
-------------------------------
Rolf A. Classon
* Director October 22, 2001
-------------------------------
Rosina B. Dixon, M.D.
* Director October 22, 2001
-------------------------------
David W. Golde, M.D.
* Director October 22, 2001
-------------------------------
Robert LeBuhn
/s/ KENNETH J. ZUERBLIS
-------------------------------
Kenneth J. Zuerblis
Attorney-in-fact
II-4
Exhibit Exhibit Index
Number Description of Exhibit
------ ----------------------
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of KPMG LLP, Independent Certified Public Accountants
II-5