SCHEDULE 14A INFORMATION
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Imclone Systems Incorporated.
(Name of Registrant as Specified In Its Charter)
______________________________________________________________________
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IMCLONE SYSTEMS INCORPORATED
180 Varick Street
New York, NY 10014
(212) 645-1405
----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date: May 24, 1999
Time: 10:00 a.m.
Place: New York Hilton & Towers
1355 Avenue of the Americas
New York, New York 10019
----------------------------
Items of Business:
1 Election of ten directors.
2. Approval of an amendment to the Company's 1996 Incentive Stock Option Plan,
as amended (the "1996 ISO Plan") to increase the number of shares of common
stock which are authorized to be issued under the 1996 ISO Plan.
3. Approval of amendments to the 1996 Non-Qualified Stock Option Plan, as
amended (the "1996 Non-Qualified Plan") to (i) increase the number of shares
of common stock which are authorized to be issued under the 1996
Non-Qualified Plan, and (ii) increase the annual option grant made to members
of the Board of Directors and the Chairman who are not full-time employees of
the Company under the 1996 Non-Qualified Plan.
4. Approval of an amendment to the Company's certificate of incorporation to
increase the number of shares of common stock the Company is authorized to
issue.
5. Approval of the grant of an option to the President and Chief Executive
Officer.
6. Approval of the grant of an option to the Executive Vice President and Chief
Operating Officer.
7. Ratification of the appointment of KPMG LLP as the Company's independent
certified public accountants for the fiscal year ending December 31, 1999.
8. Any other matters properly brought before the shareholders at the meeting.
Record Date:
Only holders of the common stock of record at the close of business on
April 7, 1999 are entitled to notice of and to vote at the meeting.
Annual Report:
Our 1998 Annual Report, which is not a part of the proxy soliciting
material, is enclosed.
Proxy Voting:
It is important that your shares be represented and voted at the meeting.
To vote, please complete, sign and date the enclosed proxy and promptly return
it in the envelope provided to our transfer agent, EquiServe, 150 Royall Street,
Mail Stop 45-02-62, Canton, MA 02021. Sending in your proxy will not prevent you
from voting in person at the meeting.
By Order of the Board of Directors
/s/ John B. Landes
New York, New York JOHN B. LANDES
April 21, 1999 Secretary
(i)
Table of Contents
ABOUT THE MEETING..............................................................1
What is the purpose of the meeting?............................................1
Who is entitled to vote?.......................................................1
Who can attend the meeting?....................................................1
What constitutes a quorum?.....................................................1
How do I vote?.................................................................2
Can I change my vote after I return my proxy card?.............................2
What are the Board's recommendations?..........................................2
What vote is required to approve each item?....................................2
How are votes counted?.........................................................2
Who pays for this proxy solicitation?..........................................2
STOCK OWNERSHIP................................................................3
Who are the largest owners of the Company's stock?.............................3
How much stock do the Company's directors, certain officers
and certain others own?......................................................3
ITEM 1--ELECTION OF BOARD OF DIRECTORS.........................................5
Nominees for Director..........................................................5
Business Experience of Nominees for Director...................................6
Directors' Compensation........................................................8
Information Concerning Board and Committee Meetings............................9
Information Concerning Officers...............................................10
Certain Transactions..........................................................11
Executive Compensation........................................................11
Report of the Compensation Committee on Executive Compensation................11
Compensation Committee Interlocks and Insider Participation...................13
Summary Compensation Table....................................................14
Option Grants for Fiscal 1998.................................................16
Option and Warrant Exercises and Values for Fiscal 1998.......................17
Stock Price Performance.......................................................18
ITEM 2 -- Approval of amendment to the 1996 Incentive Stock Option Plan.......19
ITEM 3 -- Approval of amendments to the 1996 Non-Qualified Stock Option
Plan........................................................................23
ITEM 4 -- Approval of amendment to the Certificate of Incorporation...........27
ITEM 5 -- Approval of option grant to the President and Chief Executive
Officer.....................................................................29
ITEM 6 -- Approval of option grant to the Executive Vice President and
Chief Operating Officer.....................................................31
ITEM 7 -- Ratification of the appointment of KPMG LLP for fiscal 1999.........33
Stockholder Proposals for fiscal 1999.........................................33
(i)
IMCLONE SYSTEMS INCORPORATED
180 Varick Street
New York, New York 10014
-----------------
PROXY STATEMENT
-----------------
This proxy statement is furnished in connection with the solicitation of
proxies for use at the Annual Meeting of Stockholders of ImClone Systems
Incorporated (the "Company") to be held at 10:00 a.m., local time, on Monday,
May 24, 1999, at the New York Hilton & Towers, 1355 Avenue of the Americas, New
York, New York 10019, and at any adjournments thereof.
ABOUT THE MEETING
What is the purpose of the meeting?
At the meeting, stockholders will act upon the matters outlined in the
accompanying notice of meeting, including the election of directors, approval of
an amendment to the Company's 1996 Incentive Stock Option Plan, as amended (the
"'96 ISO Plan"), approval of amendments to the Company's 1996 Non-Qualified
Stock Option Plan, as amended (the "1996 Non-Qualified Plan"), approval of an
amendment to the Company's certificate of incorporation, approval of the grant
of an option to the Company's President and Chief Executive Officer, approval of
the grant of an option to the Company's Executive Vice President and Chief
Operating Officer and ratification of the Company's independent auditors. In
addition, the Company's management will report on the performance of the Company
during fiscal 1998 and respond to questions from stockholders.
Who is entitled to vote?
Only stockholders of record at the close of business on the record date, April
7, 1999, are entitled to receive notice of the meeting and to vote the shares of
common stock that they held on that date at the meeting, or any postponement or
adjournment of the meeting. Each outstanding share entitles its holder to cast
one vote on each matter to be voted upon.
Who can attend the meeting?
Although we encourage you to complete and return the proxy card to ensure that
your vote is counted, you can attend the annual meeting and vote your shares in
person. All stockholders as of the record date, or their duly appointed proxies,
may attend the meeting. Please note that if you hold your shares in "street
name" (that is, through a broker or other nominee), you will need to bring a
copy of a brokerage statement reflecting your stock ownership as of the record
date and check in at the registration desk at the meeting.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a majority
of the shares of common stock outstanding on the record date will constitute a
quorum, permitting the meeting to conduct its business. As of the record date,
24,618,255 shares of common stock of the Company were outstanding. Proxies
received but marked as abstentions and broker non-votes will be included in the
calculation of the number of shares considered to be present at the meeting.
How do I vote?
If you complete and properly sign the accompanying proxy card and return it to
the Company, it will be voted as you direct. If you are a registered stockholder
and attend the meeting, you may deliver your completed proxy card in person.
"Street name" stockholders who wish to vote at the meeting will need to obtain a
proxy form from the institution that holds their shares.
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your proxy, you may change your vote at any
time before the proxy is exercised by filing with the Secretary of the Company
either a notice of revocation or a duly executed proxy bearing a later date. The
powers of the proxy holders will be suspended if you attend the meeting in
person and so request, although attendance at the meeting will not by itself
revoke a previously granted proxy.
What are the Board's recommendations?
The persons named as proxy holders on the proxy card will vote in accordance
with the recommendations of the Board of Directors (the "Board"). The Board's
recommendation is "for" each of the items set forth in this proxy statement.
With respect to any other matter that properly comes before the meeting, the
proxy holders will vote as recommended by the Board or, if no recommendation is
given, in their own discretion.
What vote is required to approve each item?
Election of Directors. The affirmative vote of a plurality of the votes cast at
the meeting is required for the election of directors.
Amendment of Certificate of Incorporation. The affirmative vote of the holders
of a majority of the shares outstanding on the record date will be required for
approval. A properly executed proxy marked "ABSTAIN" with respect to any such
item will not be voted.
Other Items. For each other item, the affirmative vote of the holders of a
majority of the shares present in person or represented by proxy and entitled to
vote on the item will be required for approval. A properly executed proxy marked
"ABSTAIN" with respect to any such item will not be voted although it will be
counted for purposes of determining the number of votes cast on the item.
Accordingly, an abstention will have the effect of a negative vote. An
abstention will, however, be counted for purposes of determining whether there
is a quorum.
How are votes counted?
If you hold your shares in "street name" through a broker or other nominee, your
broker or nominee will not be permitted to vote your shares on matters that the
New York Stock Exchange does not determine to be routine. Thus, if you do not
give your broker or nominee specific instructions on non-routine matters, your
shares may not be voted on those matters and will not be counted in determining
the number of shares necessary for approval. Shares represented by such "broker
non-votes" will, however, be counted in determining whether there is a quorum
and in determining the number of votes cast on a routine item. Items 1,4 and 7
are considered routine matters.
Items 2, 3, 5 and 6 are considered non-routine matters.
Who pays for this proxy solicitation?
We do. In addition to sending you these materials, some of our employees may
contact you by telephone, by mail, or in person. None of these employees will
receive any extra compensation for doing this. In addition, we have retained
Corporate Investor Communications, Inc. to assist us in soliciting your proxy
for a fee of $5,000 plus reasonable out-of-pocket expenses.
2
STOCK OWNERSHIP
Who are the largest owners of the Company's stock?
Except as set forth in the table below, the Company knows of no single person or
group that is the beneficial owner of more than 5% of the Company's common
stock. Unless otherwise indicated, information about 5% beneficial holders is
based solely on Schedule 13G reports filed with the Securities and Exchange
Commission ("SEC").
How much stock do the Company's directors, certain officers and certain others
own?
The following table shows the amount of common stock of the Company beneficially
owned (unless otherwise indicated) by the Company's directors, the Named
Officers in the Summary Compensation Table below and the directors and executive
officers of the Company as a group. Except as otherwise indicated, all
information is as of April 1, 1999. "Beneficial Ownership" is a technical term
defined by the SEC to mean more than ownership in the usual sense. For example,
you "beneficially own" our common stock if you own it directly or indirectly
(through a relationship, a position as a director or trustee or through an
agreement).
Shares
Beneficially Percent
Name and Address(1) Owned Owned(2)
- ------------------- ----- --------
The Group Oracle ................................. 1,496,700(3) 5.86%
712 Fifth Avenue, NY, NY 10019
Samuel D. Waksal, Ph.D ........................... 1,300,583(4) 5.12%
Harlan W. Waksal, M.D ............................ 1,098,380(5) 4.36%
Robert F. Goldhammer ............................. 852,390(6) 3.39%
Carl S. Goldfischer, M.D ......................... 241,666(7) *
John B.Landes .................................... 233,500(8) *
John Mendelsohn, M.D ............................. 173,476(9) *
David M. Kies .................................... 150,500(10) *
Paul B. Kopperl .................................. 71,460(11) *
Vincent T. DeVita, Jr., M.D ...................... 63,592(12) *
Jean Carvais, M.D ................................ 48,542(13) *
William R. Miller ................................ 29,897(14) *
Richard Barth .................................... 29,000(15) *
John A. Gilly, Ph.D .............................. 5,198(16) *
All Directors and Executive Officers as a group
(11) persons) .................................. 4,059,486 14.98%
* Less than 1%.
(1) Unless otherwise noted, each person's address is in care of ImClone
Systems Incorporated, 180 Varick Street, Seventh Floor, New York, New York
10014.
3
(2) The percentage of voting stock owned by each stockholder is calculated by
dividing (i) the number of shares deemed to be beneficially held by such
stockholder as of April 1, 1999, as determined in accordance with Rule
13d-3 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), by (ii) the sum of (A) 24,617,358 which is the number of shares of
common stock outstanding as of April 1, 1999 plus (B) the number of shares
of common stock issuable upon exercise of currently exercisable options
and warrants held by such stockholder. For purposes of this security
ownership table "currently exercisable options" and "currently exercisable
warrants" consist of options and warrants exercisable as of April 1, 1999
or within 60 days after April 1, 1999. Shares of the Company's Series A
Convertible Preferred Stock (the "Series A preferred stock" or "Series A
preferred shares") are not included in the denominator because they do not
have voting rights.
(3) Includes 925,000 shares issuable upon the exercise of currently
exercisable warrants. This information is as of April 5, 1999 and was
obtained from a letter of confirmation supplied by The Oracle Group. The
Oracle Group is comprised of various investment partnerships and managed
accounts controlled by Larry N. Feinberg.
(4) Includes 350,000 shares issuable upon the exercise of currently
exercisable warrants and 415,000 shares issuable upon the exercise of
currently exercisable options.
(5) Includes 240,000 shares issuable upon the exercise of currently
exercisable options; 340,680 shares issuable upon the exercise of
currently exercisable warrants; and 2,600 shares owned by Dr. Waksal's
sons as to which he disclaims beneficial ownership.
(6) Includes 113,542 shares issuable upon the exercise of currently
exercisable options; 379,990 shares issuable upon the exercise of
currently exercisable warrants; and 13,314 shares held in trust as to
which Mr. Goldhammer disclaims beneficial ownership.
(7) Consists of 241,666 shares issuable upon exercise of currently exercisable
options.
(8) Includes 94,000 shares issuable upon the exercise of currently exercisable
options and 104,000 shares issuable upon the exercise of currently
exercisable warrants.
(9) Consists of 173,476 shares issuable upon the exercise of currently
exercisable options.
(10) Includes 12,500 shares issuable upon the exercise of currently exercisable
options and 8,000 shares held by Mr. Kies as custodian for his son as to
which he disclaims beneficial ownership.
(11) Includes 42,500 shares issuable upon the exercise of currently exercisable
options; and 500 shares held by Mr. Kopperl's spouse as to which Mr.
Kopperl disclaims beneficial ownership.
(12) Includes 63,292 shares issuable upon the exercise of currently exercisable
options.
(13) Consists of 48,542 shares issuable upon the exercise of currently
exercisable options.
(14) Includes 28,897 shares issuable upon the exercise of currently exercisable
options.
(15) Includes 27,500 shares issuable upon exercise of currently exercisable
options.
(16) Consists of shares of common stock, 191 of which are held in a custodial
account for the benefit of Dr. Gilly's sons. Dr. Gilly ceased employment
with the Company as of December 31, 1998 and all his options remaining
unexercised on that date were cancelled.
(17) Includes an aggregate of (i) 2,477,585 shares issuable upon the exercise
of currently exercisable options and warrants and (ii) 24,414 shares as to
which beneficial ownership is disclaimed. Shares held by Mr. Landes have
not been included as he is not considered an executive officer of the
Company and shares held by Mr. Gilly have not been included as he no
longer is employed by the Company.
4
PROPOSAL NO. 1
ELECTION OF BOARD OF DIRECTORS
An entire board of directors, consisting of ten members, will be elected
at the meeting. The directors elected will hold office until their successors
are elected, which should occur at the next annual meeting.
Nominations. At the meeting, the Board of Directors will nominate the persons
named in this proxy statement as directors. Although we don't know of any reason
why any of these nominees might not be able to serve, the board of directors
will propose a substitute nominee if any nominee is not available for election.
General Information About the Nominees. All of the nominees are currently
directors of the Company. Each of the nominees has agreed to be named in the
proxy statement and to serve as a director if elected.
Nominees For Director
Current Position Director of
Name with Company Company Since
- ---- ------------ -------------
Richard Barth (1)(2) Director 1996
Jean Carvais, M.D. Director 1993
Vincent T. DeVita, Jr., M.D. (1)(5) Director 1992
Robert F. Goldhammer (2)(3)(4) Chairman of the Board 1984
David M. Kies (2)(4) Director 1996
Paul B. Kopperl (1)(2)(4) Director 1993
John Mendelsohn, M.D. (4)(5) Director 1998
William R. Miller (1)(4) Director 1996
Harlan W. Waksal, M.D. (3)(4)(5) Executive Vice President, 1984
Chief Operating Officer and
Director
Samuel D. Waksal, Ph.D. (3)(5) President, Chief Executive 1985
Officer and Director
(1) Member of Audit Committee
(2) Member of Compensation and Stock Option Committee
(3) Member of Executive Committee
(4) Member of Nominating and Corporate Governance Committee
(5) Member of Research Oversight Committee
5
BUSINESS EXPERIENCE OF NOMINEES FOR DIRECTOR
Richard Barth, 67, has been a Director of the Company since October 1996.
Mr. Barth served as Chairman of the Board of Ciba-Geigy Corporation, United
States ("Ciba-Geigy") from 1990 until December 1996, and was President and Chief
Executive Officer of Ciba-Geigy from 1986 until April 1996. Mr. Barth is a
member of the Board of Directors of numerous organizations, including Novartis
Corporation, United States, The Bank of New York and Bowater, Inc., and serves
as Chairman of the Board of Trustees of New York Medical College.
Jean Carvais, M.D., 72, has been a Director of the Company since July
1993, and has since 1984 been an independent consultant to companies in the
pharmaceutical industry. Prior to that time, Dr. Carvais was President of The
Research Institute of Roger Bellon, S.A., now a division of Rhone-Poulenc Rorer,
Inc. ("Rhone-Poulenc"). As such, he was involved in the development of a line of
anti-cancer drugs, including Bleomycin and Adriamycin, as well as a new line of
antibiotics and quinolones. Following the acquisition of Roger Bellon, S.A. by
Rhone-Poulenc, Dr. Carvais became a member of Rhone-Poulenc's central research
committee which directs the company's worldwide research and development
activities. Dr. Carvais is a director of Columbia Laboratories, Inc.
Vincent T. DeVita, Jr., M.D., 64, has been a Director of the Company since
February 1992. Dr. DeVita is Director of the Yale Cancer Center as well as
Professor of Medicine and Professor of Epidemiology and Public Health at Yale
University School of Medicine, New Haven, Connecticut. From September 1988
through June 1995, Dr. DeVita served as Attending Physician at Memorial
Sloan-Kettering Cancer Center ("Sloan-Kettering"), New York, and through June
1991 as Physician-in-Chief. From 1980 to 1988, he served under Presidential
appointment as Director of the National Cancer Institute ("NCI"), where he had
held various positions since 1966. During his years with the NCI, Dr. DeVita was
instrumental in developing the first successful combination cancer chemotherapy
program. This work ultimately led to effective regimens of curative chemotherapy
for a variety of cancers. Dr. DeVita's numerous awards include the 1990 Armand
Hammer Cancer Prize and the 1982 Albert and Mary Lasker Medical Research Award
for his contribution to the cure of Hodgkin's disease. Dr. DeVita received his
M.D. from the George Washington University School of Medicine, Washington, DC,
in 1961.
Robert F. Goldhammer, 68, has served as the Company's Chairman of the
Board since February 1991 and has been a Director of the Company since October
1984. Mr. Goldhammer has been a partner of Concord International Investment
Group, L.P. since 1991. He was a partner of Rohammer Corporation, a private
investment company, from 1989 to 1991. He was a managing director of Kidder,
Peabody Group Inc., an investment banking firm, from May 1988 to January 1989.
He is a director of Esterline Technologies Corporation.
David M. Kies, 55, has been a Director of the Company since June 1996. Mr.
Kies is a Partner of the New York based law firm Sullivan & Cromwell,
specializing in mergers and acquisitions, securities and general corporate
matters. Mr. Kies joined Sullivan & Cromwell in 1968, and was elected a partner
of the firm in 1976. From 1991 until 1995, he was the managing partner of the
firm's London office.
Paul B. Kopperl, 65, has served on the Board since December 1993. He is
President of Pegasus Investments, Inc., Boston, a private investment management
firm established in 1994. He has served as President of Delano & Kopperl, Inc.,
a financial advisory firm in Boston and its predecessor firms from 1976 to the
present. From 1967 through 1975 he was Vice President and a principal of Kidder,
Peabody & Co. Incorporated, New York, an investment banking firm. From 1959 to
1967 he was an associate with Goldman, Sachs & Co., New York. Mr. Kopperl is a
Trustee and Governor of the Dana-Farber Cancer Institute, Boston, and over the
years has served as a trustee or director of numerous not-for-profit
educational, performing arts and social welfare organizations and businesses.
John Mendelsohn, M.D., 62, has been a Director of the Company since
February 1998. He has served as the President of M.D. Anderson Cancer Center,
University of Texas, where he has also been Professor of Medicine since 1996.
From 1985 to 1996 he was Chairman of the Department of Medicine at
Sloan-Kettering, New York, as well as holder of the Winthrop Rockefeller Chair
in Medical Oncology at Sloan-Kettering. He was also Professor and Vice-Chairman
of Medicine at Cornell University Medical College and an attending physician at
both Memorial and New York Hospitals. Dr. Mendelsohn served on the faculty of
the University of California, San Diego and was instrumental in the creation of
the University's Cancer Center, where he served as Director from 1976 to 1985.
Dr. Mendelsohn's work has focused on growth factors and their role in regulating
the proliferation of cancer cells through cell surface receptors. Dr. Mendelsohn
was responsible for developing specific monoclonal antibodies that
6
block receptors, including epidermal growth factor receptors, which mediate
growth factor activation of cell and growth and division. Dr. Mendelsohn is
currently a board member of the Richard Lounsbery Foundation and the Greater
Houston Partnership, and a fellow of the New York Academy of Medicine. In 1997,
Dr. Mendelsohn was elected to the Institute of Medicine of the National Academy
of Sciences.
William R. Miller, 70, has been a Director of the Company since June 1996.
Mr. Miller served as Vice Chairman of the Board of Directors of the
Bristol-Myers Squibb Company from 1985 until 1991, at which time he retired. Mr.
Miller is a director of Isis Pharmaceuticals, Inc., Transkaryotic Therapies,
Inc., Westvaco Corporation and Xomed Surgical Products, Inc. He is Chairman of
the Board of Vion Pharmaceuticals, Inc. and SIBIA Neurosciences, Inc. He is
Chairman of the Board of Trustees of the Cold Spring Harbor Laboratory and is a
past Chairman of the Board of the Pharmaceutical Manufacturers Association. Mr.
Miller is a Trustee of the Manhattan School of Music, Metropolitan Opera
Association and Opera Orchestra of New York. He is a member of Oxford University
Chancellor's Court of Benefactors, Honorary Fellow of St. Edmund Hall and
Chairman of the English-Speaking Union of the United States.
Harlan W. Waksal, M.D., 46, is a founder of the Company and has been a
Director since April 1984. He has directed the Company's research and
development since April 1985, and has served as the Company's Executive Vice
President and Chief Operating Officer since March 1987. From 1985 to March 1987,
Dr. Waksal served as the Company's President. Dr. Waksal received his training
in Internal Medicine from Tufts-New England Medical Center Hospital and in
Pathology from Kings County Hospital in Brooklyn, New York from 1982 to 1987.
From 1984 to 1985, Dr. Waksal was Chief Resident in Pathology at Kings County
Hospital. He received his Medical Degree from Tufts University School of
Medicine in 1979. He is currently Adjunct Assistant Professor in the Department
of Pathology at Downstate Medical Center, New York. Dr. Harlan Waksal and Dr.
Samuel Waksal are brothers.
Samuel D. Waksal, Ph.D., 51, President of the Company, is a founder of the
Company and has been its Chief Executive Officer and a Director since August
1985 and President since March 1987. From 1982 to 1985, Dr. Waksal was a member
of the faculty of Mt. Sinai School of Medicine as Associate Professor of
Pathology and Director of the Division of Immunotherapy within the Department of
Pathology. He has served as visiting Investigator of the National Cancer
Institute, Immunology Branch, Research Associate of the Department of Genetics,
Stanford University Medical School, Assistant Professor of Pathology at Tufts
University School of Medicine and Senior Scientist for the Tufts Cancer Research
Center. Dr. Waksal was a scholar of the Leukemia Society of America from 1979 to
1984. Dr. Waksal currently serves on the Executive Committee of the New York
Biotechnology Association, the Board of Directors of Cadus Pharmaceutical
Corporation and is Chairman of the New York Council for the Humanities. Dr.
Samuel Waksal and Dr. Harlan Waksal are brothers.
The Board recommends a vote "FOR" each of the nominees named above
(Proposal No. 1 on your proxy card).
7
DIRECTORS' COMPENSATION
Cash Compensation
Each director of the Company, exclusive of the Chairman, who is not an
employee of the Company or who does not otherwise provide consulting services to
the Company receives compensation of $10,000 per year, or a pro rata portion
thereof for persons not serving the full fiscal year, for such person's services
as a director as well as reimbursement of the director's reasonable
out-of-pocket expenses incurred in connection with his Board and Board committee
activities. The Chairman, who is not an employee of the Company, receives
$150,000 per year for his services as Chairman as well as reimbursement of his
reasonable out of pocket expenses incurred in connection with his Board and
Board committee activities. In addition, subject to the first sentence of this
paragraph, the Chairman of each of the Audit Committee, Compensation and Stock
Option Committee and Nominating and Corporate Governance Committee receives
$5,000 per year as compensation for the services of each as Chairman.
Directors' Stock Options
Pursuant to the Company's 1996 Non-Qualified Plan, directors who are not
full-time employees of the Company automatically receive on each February 15th
an option to purchase 2,500 shares of common stock, or a pro rata portion
thereof for persons not having served the full fiscal year. Such options vest
after one full year of service on the Board from the date of grant and have an
exercise price equal to the fair market value of the common stock on the date of
grant. Directors newly joining the Board who are not full-time employees of the
Company are made a one-time option grant under the 1996 Non-Qualified Plan to
purchase 25,000 shares of common stock. Such options vest as to 25% of the
shares of common stock over the four-year period commencing with the date of
grant, subject to such individual's continued service on the Board on the
scheduled date of vesting, and have an exercise price equal to the fair market
value of the common stock on the date of grant. From time to time, non-employee
directors are granted additional options in consideration for providing services
on the Board. No such additional options were granted in 1998. Shareholders are
being asked to approve an amendment to the 1996 Non-Qualified Plan to increase
the automatic annual grant to directors (except the Chairman) who are not
full-time employees of the Company from 2,500 to 15,000 and to increase the
automatic annual grant to the Chairman who is not a full-time employee from
2,500 to 30,000 (Proposal No. 3 to this proxy statement).
The table below sets forth option grants to non-employee directors during
the year ended December 31, 1998 in consideration for such directors serving on
the Board:
Name Number of Options
---- -----------------
Richard Barth 2,500(1)
Jean Carvais 2,500(1)
Vincent T. DeVita, Jr. 2,500(1)
Robert F. Goldhammer 2,500(1)
David M. Kies 2,500(1)
Paul B. Kopperl 2,500(1)
John Mendelsohn 2,226(1)
25,000(2)
William R. Miller 2,500(1)
(1) These options were granted automatically pursuant to the terms of the 1996
Non-Qualified Plan on February 15, 1998 at a per share exercise price of $6.94
which is equal to the fair market value of the common stock on the date of
grant. They vested and became exercisable in their entirety on February 15, 1999
and terminate February 14, 2008. Pursuant to the terms of the 1996 Non-Qualified
Plan, Dr. Mendelsohn received a smaller grant due to his joining the Board after
the beginning of the 1998 fiscal year.
(2) This option was granted automatically pursuant to the terms of the 1996
Non-Qualified Plan upon Dr. Mendelsohn's newly joining the Board in January
1998. It is exercisable at a per share exercise price of $5.97, the fair market
value of the common stock on the date of grant, and vests as to 25% of the
shares of common stock on each of January 30, 1999, January 30, 2000, January
30, 2001 and January 30, 2002, subject to Dr. Mendelsohn's continued service on
the Board.
8
INFORMATION CONCERNING BOARD AND COMMITTEE
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors oversees the business and affairs of the Company
and monitors the performance of management. In accordance with corporate
governance principles, the Board does not involve itself in day-to-day
operations. During the year ended December 31, 1998, there were five meetings of
the Company's Board. No incumbent director attended fewer than 75% of the total
number of meetings of the Board and of the Committees of the Board on which he
served.
The Company has an Executive Committee of the Board composed of Dr. Samuel
D. Waksal (Chairman), Robert F. Goldhammer and Dr. Harlan W. Waksal. The
Executive Committee acts for the Board when formal Board action is required
between Board meetings. The Executive Committee has all the power of the full
Board in the management of the business and affairs of the Company, except those
powers that by law cannot be delegated by the Board. The Executive Committee met
two times during the year ended December 31, 1998 and also took during the year
certain other action by means of unanimous written consent.
The Company has an Audit Committee of the Board composed of Paul B.
Kopperl (Chairman), Vincent T. DeVita, Jr., Richard Barth and William R. Miller.
The Audit Committee considers matters relating to the adequacy of the Company's
internal financial controls and the objectivity of the Company's financial
reporting, reviews the Company's annual financial statements and the performance
of the Company's auditors and makes recommendations to the Board with respect to
these matters. The Audit Committee also reviews the Company's "Year 2000"
compliance program. The Audit Committee's Chairman reviews the Company's
quarterly financial statements. The Audit Committee met twice during the year
ended December 31, 1998.
The Company has a Compensation and Stock Option Committee (the
"Compensation Committee") of the Board composed of Robert F. Goldhammer
(Chairman), Paul B. Kopperl, David M. Kies and Richard Barth. The Compensation
Committee is responsible for developing executive compensation policies. The
Compensation Committee (i) determines on an annual basis the base salary to be
paid to the Chief Executive Officer and determines bonuses and incentive awards
to be paid from time to time to the Chief Executive Officer; and (ii) approves
on an annual basis a salary plan for other senior officers on the recommendation
of the Chief Executive Officer in conjunction with other senior personnel and
approves bonuses and incentive awards to be paid from time to time to such
senior officers on the recommendation of the Chief Executive Officer in
conjunction with other senior personnel. The Compensation Committee also
administers the Company's various stock option and purchase plans, including the
granting of options under the option plans. The Compensation Committee met one
time during the year ended December 31, 1998 and also took during the year
certain other action by means of unanimous written consent.
The Company has a Nominating and Corporate Governance Committee composed
of David M. Kies (Chairman), Paul B. Kopperl, John Mendelsohn, William R.
Miller, Robert F. Goldhammer and Harlan W. Waksal. The Nominating and Corporate
Governance Committee considers and makes recommendations to the Board regarding
Board and committee nominees and membership, director performance and officer
candidates. The Nominating and Corporate Governance Committee also considers and
makes recommendations to the Board with respect to corporate organizational and
governance matters. The Corporate Governance Committee did not meet during the
year ended December 31, 1998 but took certain action by means of unanimous
written consent. The Nominating and Corporate Governance Committee considers
nominations for director made by stockholders of the Company in accordance with
the procedures for submission of proposals at annual or special meetings of
stockholders set forth in the Company's Amended and Restated By-laws.
The Company has a Research Oversight Committee composed of Samuel D.
Waksal (Chairman), Vincent T. DeVita, Jr., John Mendelsohn and Harlan W. Waksal.
The Research Oversight Committee is responsible for directing the research focus
of the Company. The Research Oversight Committee did not meet during the year
ended December 31, 1998.
9
INFORMATION CONCERNING OFFICERS
Certain information concerning each officer of the Company is provided
below.
Samuel D. Waksal, Ph.D., is the President and Chief Executive Officer of
the Company. Certain information concerning Dr. Waksal appears on page seven.
Harlan W. Waksal, M.D., is the Executive Vice President and Chief
Operating Officer of the Company. Certain information concerning Dr. Waksal
appears on page seven.
Peter Bohlen, Ph.D., 56, has been Vice President, Research of the Company
since September 1996. From November 1995 to July 1996 he was Senior Director of
Ixsys, a privately-held biotechnology company. From October 1987 to June 1996 he
was department head of the Molecular Biology Section of American Cyanamid's
Medical Research Division and director of the company's angiogenesis program. He
also has held academic positions at the Salk Institute, San Diego and the
University of Zurich, Switzerland. Dr. Bohlen received his Ph.D. in chemistry
from the University of Berne in Switzerland. In 1983, he received the Cloetta
Award in Switzerland for his contributions in the field of protein analysis.
Michael Feldman, Ph.D., 73, became Vice President, Discovery Research for
the Company in May 1995. Prior thereto he served as Director of Basic Research
for the Company since 1993. Dr. Feldman is former head of the Department of Cell
Biology at the Weizmann Institute of Science in Rehovot, Israel, and a former
dean of its graduate school. He has done pioneering work in the areas of
transplantation immunology, differentiation of lymphocytes and cancer
immunology. In 1984, he received the Griffuel Award in France for his work in
cancer metastasis, and in 1986 received the Rothschild Award for his work in
immunology. Dr. Feldman is a member of the Israeli Academy of Sciences and
Humanities and the World Academy of Arts and Sciences.
Carl S. Goldfischer, M.D., 40, has served as Vice President, Finance and
Chief Financial Officer since May 1996. From June 1994 until joining the
Company, Dr. Goldfischer served as a healthcare analyst with Reliance Insurance
Company. From June 1991 until June 1994, Dr. Goldfischer was Director of
Research for D. Blech & Co., an investment banking firm. Dr. Goldfischer
received a doctorate of medicine from Albert Einstein College of Medicine in
1988 and served as a resident in radiation oncology at Montefiore Hospital of
the Albert Einstein College of Medicine until 1991. Dr. Goldfischer is a
director of Immulogic Pharmaceutical Corporation. Dr. Goldfischer has resigned
from the Company to resume his career in investment banking. This resignation is
expected to be effective the end of May 1999.
John B. Landes, 51, has served as Vice President, Business Development and
General Counsel since November 1992. Prior thereto, he was Vice President,
Administration and Legal since December 1984. He also has been Secretary of the
Company since April 1985 and served as its Treasurer from April 1984 through
September 1991, except for an interim period from December 1988 to February
1991. From 1978 to 1984, Mr. Landes was an associate attorney with the Boston
law firm of Mahoney, Hawkes and Goldings.
Ronald A. Martell, 37, has served as the Company's Vice President,
Marketing since November 1998. Prior to joining the Company he worked at
Genentech, Inc. for ten years where he held various positions. Most recently,
from 1996 until joining the Company, he served as Genentech's Group Manager of
Oncology Products where he directed the launch of Herceptin, Genentech's
monoclonal antibody product approved to treat breast cancer. From 1995 to 1996
he served as Senior Product Manager where he launched Pulmozyme for cystic
fibrosis in Europe. From 1994 through 1995 he served as Manager of Genentech's
Piedmont Sales Division. Prior to that, he served from 1993 as Associate Product
Manager for Genentech's Pulmozyme.
S. Joseph Tarnowski, Ph.D., 45, has served as the Company's Vice
President, Product and Process Development since January 1999. Prior to joining
the Company, he held various positions with CellPro Inc., the principal business
of which was the development, manufacture and marketing of automated systems
that utilize monoclonal antibodies to purify large quantities of specific cells
for therapeutic and diagnostic applications. He joined CellPro in June 1992 as
Vice President of Operations and was appointed to the position of Vice President
of Research and Development in June 1995 and became Senior Vice President and
Chief Technical Officer in December 1996. From November 1986 to May 1992, Dr.
Tarnowski was Director, Process and Product Development of Scios Nova Inc.
(formerly California Biotechnology Inc.), a company that develops recombinant
10
human proteins for therapeutic uses. Dr. Tarnowski received a Ph.D. in
Biochemistry from the University of Tennessee in 1979 and was a Postdoctoral
Fellow at the Roche Institute of Molecular Biology from 1979 through 1981.
Section 16(a) Beneficial Ownership Reporting Compliance
Ownership of and transactions in the Company's securities by executive
officers and directors of the Company and owners of 10% or more of the Company's
outstanding common stock are required to be reported to the SEC pursuant to
Section 16(a) of the Exchange Act. During the year ended December 31, 1998,
based on information received by the Company, one form was untimely filed for
each of Dr. Samuel Waksal, Dr. Harlan Waksal, Dr. Carl S. Goldfischer and Mr.
Robert F. Goldhammer.
CERTAIN TRANSACTIONS
During the year ended December 31, 1998, the Company paid Dr. Vincent T.
DeVita, Jr., a director of the Company, a total of $100,000 for scientific
consulting services provided to the Company by Dr. DeVita.
In January 1998, the Company accepted a promissory note totaling
approximately $131,000 from its President and CEO in connection with the
exercise of a warrant to purchase 87,305 shares of the Company's common stock.
The note is due no later than two years from issuance and is full recourse.
Interest is payable on the first anniversary date of the promissory note and on
the stated maturity or any accelerated maturity at the annual rate of 8.5%. At
December 31, 1998, the total amount due the Company, including interest, was
approximately $142,000 and is classified in the stockholders' equity section of
the balance sheet as a note receivable from officer and stockholder.
In October 1998, the Company accepted an unsecured promissory note
totaling $100,000 from its Executive Vice President and COO. The note was
payable on demand including interest at the annual rate of 8.25% for the period
that the loan was outstanding. On April 8, 1999, Dr. Waksal repaid the note in
full, including all interest accrued thereon.
In January 1999, the Company accepted an unsecured promissory note
totaling $60,000 from its Vice President, Product and Process Development. The
note is payable upon the earlier of on demand or July 28, 1999 and bears
interest at an annual rate equal to the prime rate at Citibank, N.A. plus 1% for
the period that the loan is outstanding. The loan was made as a bridge in
connection with the officer's relocation in connection with accepting employment
with the Company.
EXECUTIVE COMPENSATION
Report of Compensation Committee
The Compensation Committee is responsible for developing and making
recommendations to the Board with respect to the Company's executive
compensation policies. Pursuant to authority delegated by the Board, the
Committee determines the executive compensation policy of the Company and
determines on an annual basis the compensation to be paid to the Chief Executive
Officer and approves compensation to other officers of the Company, at the
recommendation of the Chief Executive Officer and other supervising personnel.
Overall Philosophy
The Company's overall executive compensation philosophy is based on the
premise that compensation should be set at levels that support the Company's
business strategies and long-term objectives and should reward executives for
their contributions to the enhancement of shareholder value. The key elements of
the executive compensation package are base salary, annual incentive awards and
stock options. In establishing base salaries, annual incentive awards and awards
of stock options, the Compensation Committee considers periodic compensation
surveys, including those provided by third parties covering the
biopharmaceutical industry. Officers' compensation is compared to that of other
executives in peer group surveys.
11
In evaluating each senior executive's performance, the Company generally
conforms to the following process:
o Company and individual goals and objectives are set at the beginning
of the performance cycle.
o At the end of the performance cycle, the executive's manager, or in
the case of the Chief Executive Officer, the Compensation Committee,
evaluates the accomplishment of the executive's goals and objectives
and his or her contributions to the Company.
o The executive's performance is then reviewed by the executive's
manager with the executive and consideration is given to goals for
the following performance cycle.
o The comparative results, combined with comparative compensation
practices of other companies in the industry, are then used to
determine salary, bonus, and stock option levels.
The Compensation Committee uses no set formulas in making these
determinations and may afford different weight to different factors for each
senior executive. Such weighting may vary from year to year. In determining
compensation, the Compensation Committee does not attempt to correlate
compensation with specific financial results, such as revenues or profits, for
the current period. This is in large part due to the nature of the
biopharmaceutical industry in which traditional evaluations of corporate
performance may not apply in reviewing the performance of executives. The
Committee looks toward the progress of the Company's research and development
programs, its ability to gain appropriate levels of support for its programs
through its strategic partnering agreements, its ability to attract, motivate
and retain talented employees and its ability to secure capital sufficient for
its product development programs to achieve rapid and effective
commercialization as may be practicable.
Base Salary
At the end of each year, the Compensation Committee reviews and
establishes the base salary of the Chief Executive Officer based on a comparison
to national surveys, taking into consideration the Company's performance and
current circumstances, accomplishment of his goals and objectives and his
contributions to the Company. The Compensation Committee also reviews and
approves, or modifies, a salary plan for the other senior executives prepared by
the Chief Executive Officer in conjunction with other senior personnel.
Annual Incentive Awards
Although the Company does not have a formal bonus plan for its management,
the Compensation Committee determines annual incentive awards to senior
executives from time to time based on individual performance and Company
performance. Specific performance goals of each executive are determined early
each year in direct consultation with the executive's supervisor. These
performance goals include successful and cost efficient management of the
executive's department and specific contributions made by that department to the
immediate and ultimate goals of the Company. For the Chief Executive Officer,
such goals are determined in reference to the CEO's plan for the coming year for
the Company as a whole, as presented to the Board. The awarding of annual
incentive awards takes into consideration individual efforts as well as
performance of the Company as a whole. In evaluating performance of the Company
as a whole, several factors are examined, including productivity of research and
development programs, successful movement of development stage products toward
commercialization, fostering development of successful corporate partnerships,
expense control, financing efforts and progress of the Company toward its
short-term and long-term goals.
Long-Term Incentive Compensation
Stock options and warrants are considered as long-term incentives and are
intended to link the interests of the executive with those of the stockholder.
Such securities will provide value to the grantee when the price of the
Company's stock increases.
The Compensation Committee conducts a formal review from time to time
of the stock option and warrant holdings and vesting schedule of each officer.
The Compensation Committee authorizes stock option grants (and, in
12
some cases, grants of warrants) to the executives with consideration to the
growth and performance of the Company, individual performance and contribution,
total stock option and warrant and vesting levels and length of service.
For their performance in the year ended December 31, 1998, the CEO and the
other Named Officers (as hereinafter defined) were awarded no warrants and were
awarded options to purchase an aggregate of 945,000 shares of common stock. See
"Option Grants for Fiscal 1998."
Deductibility of Compensation
The Compensation Committee has reviewed the impact of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), which, beginning in
1994, limits the deductibility of certain otherwise deductible compensation in
excess of $1 million paid to the Chief Executive Officer and the other Named
Officers (as hereinafter defined). It is the policy of the Company to attempt to
have its executive compensation plans treated as tax deductible compensation
whenever, in the judgment of the Compensation Committee, to do so would be
consistent with the objectives of that compensation plan.
Chief Executive Officer Compensation
The key elements of the compensation for the Chief Executive Officer are
base salary, annual incentive awards and stock options or warrants. In
evaluating Dr. Samuel Waksal's 1998 performance and in determining Dr. Waksal's
1998 compensation, the Compensation Committee, along with the full Board,
considered the performance of the Company in 1998. In 1998, the Company advanced
its cancer vaccine product, BEC2, into a Phase III clinical trial, which is the
Company's first Phase III trial and one of the first Phase III trials for any
cancer vaccine. C225, the Company's lead product under development, also
continued to advance with the Company obtaining FDA approval in January 1999 to
commence a Phase III trial for C225 in head and neck cancers. The financing of
C225 through development was also further strengthened with the closing of a
license and development agreement with Merck KGaA where the Company further
succeeded in retaining North American rights. Also considered was the continued
strength of the Company's research pipeline, particularly with respect to
anti-angiogenesis, a core area of the Company's research, as well as
pro-angiogenesis.
Compensation and Stock Option Committee
Robert F. Goldhammer, Chairman
Richard Barth
David M. Kies
Paul B. Kopperl
Compensation Committee Interlocks and Insider Participation
As of December 31, 1998, the members of the Compensation Committee were
Richard Barth, Robert F. Goldhammer (Chairman), David M. Kies and Paul B.
Kopperl, none of whom is an employee of the Company.
13
SUMMARY COMPENSATION TABLE
The Summary Compensation Table sets forth the cash and non-cash
compensation awarded to, earned by, or paid to the Company's Chief Executive
Officer and the four most highly compensated officers (other than the Chief
Executive Officer) for the years ended December 31, 1998, 1997 and 1996 who were
serving as officers at December 31, 1998 and whose total salary and bonus
exceeded $100,000 for the year ended December 31, 1998 (the "Named Officers").
Long Term
Annual Compensation Compensation Awards
------------------------------------------- -------------------
Other Annual Securities Underlying All Other
Salary Bonus Compensation Options and Warrants Compensation
Year ($)(1) ($)(2) ($)(3) (#)(4) ($)
---- ------ ----- ------------ ---------------------- ------------
Samuel D. Waksal ............ 1998 $300,000 $400,000 -- 300,000 $ 10,435(7)
President and Chief 1997 225,000 280,000(5) -- 250,000(6) 10,435 10,435(7)
Executive Officer 1996 225,000 200,000(5) -- 45,000 10,435(7)
Harlan W. Waksal ............ 1998 250,000 300,000 -- 250,000 --
Executive Vice 1997 195,000 250,000(8) -- 497,000(6)(9) --
President and Chief 1996 195,000 200,000(8) -- 40,000
Operating Officer
John B. Landes .............. 1998 165,000 120,000 -- 135,000 --
Vice President, 1997 165,000 90,000 -- 25,000 --
Business Development 1996 165,000 50,000 -- 30,000 --
and General Counsel
Carl S. Goldfischer(10) ..... 1998 175,000 75,000 -- 125,000 --
Vice President, Finance 1997 175,000 90,000 -- 25,000(6) --
and Chief Financial 1996 109,000 75,000 -- 225,000 --
Officer
John A. Gilly(11) ............ 1998 175,000 -- -- 135,000(12) --
Vice President, 1997 165,000 100,000 -- 35,000(12) --
Biopharmaceutical 1996 165,000 100,000 -- 75,000(12) --
Operations
(1) Amounts shown include compensation deferred pursuant to Section 401(k) of
the Internal Revenue Code of 1986, as amended (the "Code").
(2) Although the Company has no formal bonus plan, the Compensation Committee,
in its discretion, may award bonuses to officers of the Company. The
Company has paid bonuses based on individual and Company performance.
Amounts shown include awards paid relative to services rendered in each of
the last three fiscal years. All bonus awards for each of the last three
fiscal years were paid in cash. Bonuses are recorded for the period in
which they were earned.
(3) Excludes perquisites and other personal benefits for each Named Officer
which did not equal or exceed the lesser of $50,000 or 10% of such
individual's base salary and bonus for the years ended December 31, 1998,
1997 and 1996, respectively.
(4) Options or warrants to purchase the number of shares of common stock shown
are recorded for the period in which they were granted, except as
discussed in footnote 6.
14
(5) During 1996, Dr. Samuel D. Waksal was paid a $100,000 bonus relating to
his 1996 performance. During 1996, the Compensation Committee determined
to consider the payment to him of an additional bonus, in an amount to be
determined, subject to the Company's completion by June 30, 1997 of a
corporate partnership, or similar arrangement, with acceptable terms. In
connection with the December 1997 amendment of the Company's BEC2 Research
and License Agreement with Merck KGaA and sale to Merck KGaA of
$40,000,000 of the Company's Series A preferred stock, the Compensation
Committee determined to extend the June 30, 1997 period, and Dr. Samuel D.
Waksal was paid a bonus of $100,000. This amount is reflected as a 1996
bonus.
(6) Options to purchase 250,000, 100,000 and 25,000 shares of common stock,
respectively, held by Drs. Samuel D. Waksal, Harlan W. Waksal and Carl S.
Goldfischer, respectively, were granted in January 1998 and relate to 1997
performance.
(7) Consists of premium payments on a term life insurance policy for Dr.
Samuel D. Waksal under which his daughters are the beneficiaries.
(8) During 1996, Dr. Harlan W. Waksal was paid a $100,000 bonus relating to
his 1996 performance. During 1996, the Compensation Committee determined
to consider the payment to him of an additional $100,000 bonus at the end
of the six month period ending June 30, 1997. In June 1997, the
Compensation Committee determined to award such additional bonus to Dr.
Harlan W. Waksal. This amount is reflected as a 1996 bonus.
(9) In March 1997, the Board extended the term of a warrant to purchase
397,000 shares of common stock held by Dr. Harlan W. Waksal which was due
to expire. The term was extended for a period of two years on the same
terms and conditions as the original grant. For purposes of this table,
this extension is treated as a new warrant grant. In April 1997, Dr.
Harlan W. Waksal exercised this warrant.
(10) Dr. Goldfischer commenced employment with the Company on May 20, 1996 and
has resigned from the Company with an expected effective date of the end
of May 1999.
(11) Dr. Gilly ceased employment with the Company as of December 31, 1998.
(12) These options terminated unexercised as to 135,000 shares, 0 shares and
75,000, respectively, in connection with Dr. Gilly's cessation of
employment with the Company as of December 31, 1998.
15
OPTION GRANTS IN FISCAL 1998
The following table sets forth certain information relating to stock
option grants to the Named Officers during the year ended December 31, 1998.
% of Total
Number of Options/
Securities Warrants Potential Realizable
Underlying Granted to Value at Assumed Annual Rates of
Options/ Employees Stock Price Appreciation
Warrants in Fiscal Exercise Price for Option/Warrant Term (3)
Name Granted Year(1) ($/share)(2) Expiration Date 0%($) 5%($) 10%($)
---- --------- ------- ------------ --------------- ---------------------------------------
Samuel D. Waksal 300,000(4) 15% $ 11.375 May 25, 2008 ---- $ 1,321,719$ 4,125,953
Harlan W. Waksal 250,000(4) 13% 11.375 May 25, 2008 ---- 1,101,433 3,438,294
John B. Landes 7% 11.375 May 25, 2008 ----
135,000(4) 594,774 1,856,679
Carl S. 125,000(4) 6% 11.375 May 25, 2008 ----
Goldfischer 550,716 1,719,147
John A. Gilly 135,000(5) 7% 11.375 ---- ---- ---- ----
(1) The Company granted options to purchase a total of 1,889,500 shares of
common stock to employees during 1998. This number excludes options to
purchase a total of 375,000 granted in January 1998 to Drs. Samuel D.
Waksal, Harlan W. Waksal and Carl S. Goldfischer because they relate to
1997 performance and have previously been reported as 1997 compensation.
(2) All options were granted to purchase common stock at an exercise price
that equaled or exceeded the fair market value of the common stock on the
date of grant.
(3) The amounts set forth in the three columns represent hypothetical gains
that might be achieved by the holders if the respective options are
exercised at the end of their terms. These gains are based on assumed
rates of stock price appreciation of 0%, 5% and 10% compounded annually
from the dates the respective options were granted. The 0% appreciation
column is included because the options were granted with exercise prices
which equaled or exceeded the fair market value of the underlying common
stock on the date of grant, and thus will have no value unless the
Company's stock price increases above the exercise prices.
(4) These options vest and become exercisable as to 40% on May 26, 1999, as to
an additional 30% on May 26, 2000 and as to the remaining 30% on May 26,
2001, subject to the respective holder's continued employment with the
Company on the relevant vesting date.
(5) This option terminated in its entirety unexercised on December 31, 1998
due to Dr. Gilly's ceasing to be employed by the Company.
16
OPTION AND WARRANT EXERCISES AND VALUES FOR FISCAL 1998
The following table sets forth option and warrant exercises during the
year ended December 31, 1998 by the Named Officers and the value of the options
and warrants held by such persons on December 31, 1998, whether or not
exercisable on such date.
Number of Shares Underlying Value of Unexercised
Shares Unexercised Options/Warrants In-The-Money Options/Warrants at
Acquired on Value at December 31, 1998(#) December 31, 1998($)(2)
Name Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------------- ----------- ------------- ----------- -------------
Samuel D. Waksal 87,305 $ 436,525 395,000 550,000 $ 1,247,050 $ 750,000
Harlan W. Waksal ---- ---- 380,680 350,000 2,578,715 300,000
John B. Landes 23,000 144,260 144,000 150,000 863,127 ----
Carl S. Goldfischer ---- ---- 166,666 208,334 127,166 119,509
John A. Gilly(3) 50,000 202,939 ---- ---- ---- ----
(1) The values realized were calculated by multiplying the closing market
price of the common stock on the date of exercise by the respective number
of shares exercised and subtracting the aggregate exercise price.
Accordingly, such values realized assume a sale of such common stock on
the date of exercise, which may not necessarily have occurred.
(2) The values were calculated by multiplying the closing market price of the
common stock on December 31, 1998 ($9.063 per share as reported by the
Nasdaq National Market on that date) by the respective number of shares
and subtracting the aggregate exercise price, without making any
adjustments for vesting, termination contingencies or other variables. If
the exercise price of an option or warrant is equal to or greater than
$9.063 the option or warrant is deemed to have no value.
(3) John A. Gilly ceased to be employed by the Company as of December 31,
1998. On this date all his unexercised options terminated in their
entirety.
Other Benefit Plans
The Company has no defined benefit or defined contribution retirement
plans other than the ImClone Systems Incorporated 401(k) Employee Savings Plan
(the "Plan") established under Section 401(k) of the Code. Contributions to the
Plan are voluntary, and substantially all full-time employees are eligible to
participate. For 1999, the Company has elected to make voluntary matching
contributions equal to 25% of the first 4% of an employee's eligible
compensation contributed by the employee, limited to $2,500 per employee. The
Company made such a matching contribution for 1998 which totaled $47,000. The
Company anticipates evaluating the level of its matching contribution, if any,
on an annual basis.
17
STOCK PRICE PERFORMANCE
The graph below provides a comparison of the cumulative total return
(assuming reinvestment of dividends) for the Company (which paid no dividends),
The Nasdaq Stock Market (U.S. Companies) Total Return Index, and the Nasdaq
Pharmaceutical Stocks Total Return Index for the period from December 31, 1993
through December 31, 1998. The graph assumes $100 was invested in ImClone common
stock and each of the indexes at the beginning of such period. The Nasdaq Stock
Market (U.S. Companies) Total Return Index comprises all domestic common shares
traded on the Nasdaq National Market and the Nasdaq SmallCap Market. The Nasdaq
Pharmaceutical Stocks Total Return Index represents all companies, including
biotechnology companies, trading on Nasdaq classified under the Standard
Industrial Classification Code for pharmaceuticals.
COMPARISON OF FIVE YEAR TOTAL RETURN AMONG
IMCLONE, NASDAQ STOCK MARKET (U.S. COMPANIES) TOTAL RETURN INDEX AND NASDAQ
PHARMACEUTICAL STOCKS TOTAL RETURN INDEX
Date ImClone Systems Nasdaq Pharmaceutical
-------------- --------------- ---------------- ----------------
12/31/93 100 100 100
12/31/94 15 98 75
12/31/95 124 138 138
12/31/96 159 170 138
12/31/97 133 209 143
12/31/98 148 293 183
18
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO THE COMPANY'S 1996 INCENTIVE STOCK OPTION PLAN
In February 1996, the Company's Board adopted the 1996 ISO Plan in order
to enable the Company to attract and retain key executives and other employees
and to promote the interests of the Company. Subject to shareholder approval, on
March 29, 1999, the Board approved amendments to the 1996 ISO Plan to increase
the total number of shares of common stock which may be issued pursuant to
options granted under the 1996 ISO Plan from 3,000,000 to 4,000,000, which
number shall be reduced by the number of shares which have been or may be issued
pursuant to options granted under the 1996 Non-Qualified Plan.
The Board believes that a key ingredient in attracting, motivating and
retaining qualified executives and other employees is to offer significant
potential rewards based upon the Company's success through the issuance of stock
options. The amendment to the 1996 ISO Plan increasing the shares of common
stock authorized under the plan and presented to the stockholders for their
approval is designed to assist the Company in accomplishing this goal. Of the
3,000,000 shares of common stock currently authorized in the aggregate under the
1996 ISO Plan and the 1996 Non-Qualified Plan, at April 1, 1999 an aggregate of
58,592 shares remained available for future grants.
The following summary description of the 1996 ISO Plan is qualified in its
entirety by the full text of the 1996 ISO Plan which may be obtained by the
Company's stockholders upon request to the Secretary of the Company. The 1996
ISO Plan has been approved by the Board and by the shareholders.
The last sale price of a share of the Company's common stock as reported
by the Nasdaq National Market on April 8, 1999 was $17.00.
Purpose of the Plan. The purpose of the 1996 ISO Plan is to promote the
interests of the Company by affording key executives and other employees of the
Company an opportunity to acquire a proprietary interest in the Company pursuant
to stock options issued by the Company, and thus to create in such persons
increased personal interest in its continued success.
Administration of the Plan. The 1996 ISO Plan is administered by the
Compensation Committee, comprised of not less than two persons. The members of
the Compensation Committee serve at the pleasure of the Board, which has the
power at all times to remove members from the Compensation Committee or to add
members thereto. Vacancies in the Compensation Committee, however caused, are
filled by action of the Board. All decisions or determinations of the
Compensation Committee are made by the majority vote or decision of all of its
members. The interpretation and construction by the Compensation Committee of
the provisions of the 1996 ISO Plan or of the options granted thereunder are
final unless otherwise determined by the Board.
Eligibility to Participate in the Plan. Key executives and other employees
of the Company are eligible for the grant of options under the 1996 ISO Plan.
Common Stock Subject to the Plan. Currently, the number of shares of
common stock to be issued or sold pursuant to options granted under the 1996 ISO
Plan may not exceed 3,000,000 shares, less the number of shares of common stock
to be issued or sold pursuant to options granted under the 1996 Non-Qualified
Plan. The shareholders are being asked to amend the 1996 ISO Plan (and the 1996
Non-Qualified Plan) at the meeting to increase this number to 4,000,000. At
April 1, 1999 an aggregate of 58,592 shares remained available for future
grants.
If any change is made in the shares of common stock subject to the 1996
ISO Plan or subject to any option granted under the 1996 ISO Plan (through
merger, consolidation, reorganization, recapitalization, stock dividend,
split-up, combination of shares, exchange of shares, issuance of rights to
subscribe, or change in capital structure), appropriate adjustments shall be
made by the Compensation Committee as to the maximum number of shares subject to
the 1996 ISO Plan and the number of shares and price per share subject to
outstanding options as shall be equitable to prevent dilution or enlargement of
option rights. Any such determination made by the Compensation Committee shall
be final, binding and conclusive upon each participant.
19
Amendments or Discontinuation of the1996 ISO Plan. The Board may make such
amendments, changes and additions to the 1996 ISO Plan, or may discontinue and
terminate the 1996 ISO Plan, as it may deem advisable from time to time;
provided, however, that no action may affect or impair any options theretofore
granted under such plan, and provided, further, however, that the affirmative
vote of the owners of a majority of the outstanding shares of common stock
present at a meeting in person or by proxy and entitled to vote at the meeting
shall be necessary to effect any amendment to the 1996 ISO Plan which would
increase the number of shares of common stock subject to options granted under
such plan or which would authorize incentive stock options at a price below the
fair market value (or 110% thereof, if the employee owns more than 10% of the
voting securities of the Company at the time of the grant) of the shares of
common stock subject to the option.
ERISA. The 1996 ISO Plan is not subject to any provision of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
Description of Options
Nontransferability. Options granted pursuant to the 1996 ISO Plan are not
transferable by the holder thereof, other than by will, the laws of descent and
distribution, or (if authorized in the applicable stock option agreement)
pursuant to a qualified domestic relations order, as defined by the Code or
Title I of ERISA or the rules thereunder.
Granting of Options. The Compensation Committee shall determine the key
executives and other employees to be granted options under the 1996 ISO Plan,
the number of shares of common stock subject to such options, the exercise
prices of options, the terms thereof and any other provisions not inconsistent
with the 1996 ISO Plan. To the extent the aggregate fair market value of common
stock with respect to which incentive stock options are exercisable for the
first time by any holder during any calendar year (under all plans of the
Company and its parent and subsidiary corporations) exceeds $100,000 (based upon
the fair market value of such common stock on the date of the grant of such
options), those options exercisable with respect to those shares valued in
excess of $100,000 will be treated as non-qualified stock options. All stock
options granted pursuant to the 1996 ISO Plan shall be evidenced by stock option
agreements, which need not be identical, between the Company and the participant
in such form as the Compensation Committee shall from time to time approve,
subject to the terms of the 1996 ISO Plan. Each stock option agreement shall
state the total number of shares of common stock with respect to which the
option is granted, the terms and conditions of the option, and the exercise
price or prices thereof.
Life of the Plan. Options may be granted under the 1996 ISO Plan until
February 25, 2006.
Exercise Price. The price at which the shares of common stock subject to
each option granted under the 1996 ISO Plan may be purchased (the "option price"
or "exercise price") shall be determined by the Compensation Committee, which
shall have the authority at the time the option is granted to prescribe in any
stock option agreement that the price per share, with the passage of
pre-determined periods of time, shall increase from the original price to higher
prices. In no event may the exercise price of an option granted under the 1996
ISO Plan be less than 100% (110% in the case of 10% stockholders) of the fair
market value of the common stock on the date of the grant. The exercise price of
all options granted under the 1996 ISO Plan is payable in full upon the exercise
of such option, which payment shall be in cash, by check or in stock (that has
been owned by the participant for at least six months) or notes of the Company,
or, as agreed to by the Board, other consideration. In the case of payment made
in stock of the Company, the stock shall be valued at its Fair Market Value (as
hereinafter defined) on the last business day prior to the date of exercise. The
term "Fair Market Value" for the common stock on any particular date shall mean
the last reported sale price of the common stock on the principal market on
which the common stock trades on such date or, if no trades of common stock are
made or reported on such date, then on the next preceding date on which the
common stock traded.
Terms and Conditions of Exercise; Exercise Period. The terms and
conditions of any option granted under the 1996 ISO Plan and the exercise period
are governed by the option agreement between the holder of the option and the
Company. Subject to the limitations set forth in the 1996 ISO Plan, the terms of
such option agreements, including the exercise period, are determined by the
Compensation Committee and need not be uniform among recipients of similar
options. Options granted pursuant to the 1996 ISO Plan may be exercised only if
the participant was, at all times during the period beginning on the date the
option was granted and ending on the date of such exercise, an employee of the
Company. The right to exercise any unexercised portion of any option granted
20
under the 1996 ISO Plan terminates on the date of termination of the
relationship between the participant and the Company, for any reason, without
regard to cause, other than by reason of death or disability except as otherwise
provided in connection with a particular option or a particular termination. The
option may not be exercised thereafter, and the shares of common stock subject
to the unexercised portion of such option may again be subject to new options
under the 1996 ISO Plan. In the event a participant dies or is disabled while he
is an employee of the Company, any options theretofore granted to him shall be
exercisable only within the next 12 months immediately succeeding such death or
disability and then only (a) in the case of death, by the person or persons to
whom the participants right's under such option shall pass by will or the laws
of descent and distribution, and in the case of disability, by such participant
or his legal representatives and (b) if and to the extent that he was entitled
to exercise such option at the date of his death or disability except as
otherwise provided in connection with a particular option or a particular
individual's death or disability. The maximum option term under the 1996 ISO
Plan is ten years after the date of grant.
U.S. Federal Income Tax Consequences
The following is a summary of the U.S. Federal income tax consequences
under current tax law (without regard to any proposed changes, which may be
retroactive in effect) with respect to incentive stock options granted to U.S.
employees under the 1996 ISO Plan. For this purpose, it is assumed that the
shares acquired pursuant to the exercise of an option are held by the optionee
as a capital asset. Certain other rules not discussed herein apply to the use of
previously acquired shares of common stock in payment of the option exercise
price.
Options granted under the 1996 ISO Plan are intended to be "incentive
stock options" described in Section 422 of the Code.
Incentive Stock Options. In general, no taxable income will be recognized
by an optionee upon the grant or exercise of an incentive stock option. The
optionee's tax basis in the shares received on the exercise of such an option
will be equal to the option price paid by the optionee for such shares.
If the stock received upon exercise of an incentive stock option is held
more than one year after the date of transfer of such shares to the optionee and
more than two years from the date of grant of the option, any gain or loss
recognized by the optionee on the subsequent sale of the stock will be a
long-term capital gain or loss, as the case may be. If the shares received upon
the exercise of an incentive stock option are disposed of prior to the end of
such holding periods, an amount equal to the excess (if any) of (a) the lower of
the disposition price or the fair market value of such shares on the date of
exercise of the incentive stock option, over (b) the optionee's tax basis in
such shares will be treated as ordinary income, and any further gain will be a
short-term or long-term capital gain depending upon the period the shares were
held. Any loss on the disposition of such shares will be a short-term or
long-term capital loss depending upon the period the shares were held.
Cancellation or Surrender. Consideration received by an optionee upon the
surrender to, or cancellation by, the Company of an incentive stock option will
be taxable as ordinary income to the optionee and generally allowed as an income
tax deduction to the Company.
Alternative Minimum Tax. In addition to the Federal income tax
consequences described above, an optionee may be subject to the Federal
alternative minimum tax. In general, upon the exercise of any incentive stock
option an amount equal to the excess of the fair market value of the shares
acquired on the exercise date over the exercise price will be treated as an item
of adjustment for purposes of the alternative minimum tax. If, however, the
shares are disposed of in the same taxable year in which the exercise occurs,
the maximum amount that will be treated as an item of adjustment will be an
amount equal to the excess of the amount received upon such disposition over the
exercise price.
The forgoing does not purport to be a complete summary of the federal
income tax considerations that may be relevant to holders of options or to the
Company. It also does not reflect provisions of the income tax laws of any
municipality, state or foreign country in which an optionee may reside, nor does
it reflect the tax consequences of an optionee's death.
21
New Plan Benefits
The benefits or amounts that will be received or allocated in the future
under the 1996 ISO Plan are not determinable.
The Board recommends a vote "FOR" approval of the amendment to the 1996
ISO Plan to increase the total number of shares of common stock which may be
issued pursuant to options which may be granted under the 1996 ISO Plan from
3,000,000 to 4,000,000, which number shall be reduced by the number of shares of
common stock which have been or may be issued pursuant to options granted under
the 1996 Non-Qualified Plan. (Proposal No. 2 on your proxy card).
22
PROPOSAL NO. 3
APPROVAL OF AMENDMENTS TO THE 1996 NON-QUALIFIED STOCK OPTION PLAN
In February 1996, the Company's Board adopted the 1996 Non-Qualified
Plan in order to enable the Company to attract and retain key executives, other
employees, advisors, consultants and directors and to promote the interests of
the Company by affording such persons an opportunity to acquire a proprietary
interest in the Company. Subject to shareholder approval, on March 29, 1999, the
Board approved amendments to the 1996 Non-Qualified Plan to increase the total
number of shares of common stock which may be issued pursuant to options granted
under the 1996 Non-Qualified Plan from 3,000,000 to 4,000,000, which number
shall be reduced by the number of shares which have been or may be issued
pursuant to options granted under the 1996 ISO Plan.
The Board believes that a key ingredient in attracting, retaining and
motivating key executives and other employees, advisors, consultants and
directors is to offer significant potential rewards based upon the Company's
success through the issuance of stock options. The amendment to the 1996
Non-Qualified Plan increasing the shares of common stock authorized for issuance
presented herein to the stockholders for their approval is designed to assist
the Company in accomplishing this goal. Of the 3,000,000 shares of common stock
currently authorized under the 1996 Non-Qualified Plan and 1996 ISO Plan, at
April 1, 1999 an aggregate of 58,592 shares remained available for future
grants.
The following summary description of the 1996 Non-Qualified Plan is
qualified in its entirety by the full text of the 1996 Non-Qualified Plan which
may be obtained by the Company's stockholders upon request to the Secretary of
the Company. The 1996 Non-Qualified Plan has been approved by the Board and by
the shareholders.
The last sale price of a share of the Company's common stock as reported
by the Nasdaq National Market on April 8, 1999 was $17.00.
Purpose of the Plan. The purpose of the 1996 Non-Qualified Plan is to
promote the interests of the Company by affording key executives, other
employees, consultants, advisors and directors of the Company an opportunity to
acquire a proprietary interest in the Company pursuant to stock options issued
by the Company and thus to create in such persons increased personal interest in
its continued success.
Administration of the Plan. The 1996 Non-Qualified Plan is administered by
the Compensation Committee and is comprised of not less than two persons who
shall be appointed by the Board from among the members of the Board. The members
of the Compensation Committee serve at the pleasure of the Board, which has the
power at all times to remove members from the Compensation Committee or to add
members thereto. Vacancies in the Compensation Committee, however caused, are
filled by action of the Board. All decisions or determinations of the
Compensation Committee are made by the majority vote or decision of all of its
members. The interpretation and construction by the Compensation Committee of
the provisions of the 1996 Non-Qualified Plan or of the options granted
thereunder are final unless otherwise determined by the Board.
Eligibility to Participate in the Plan. Key executives, other employees,
consultants, advisors and directors of the Company are eligible for the grant of
options under the 1996 Non-Qualified Plan.
Common Stock Subject to the Plan. Currently, the number of shares of
common stock to be issued or sold pursuant to options granted under the 1996
Non-Qualified Plan may not exceed 3,000,000 shares, less the number of shares of
common stock to be issued or sold pursuant to options granted under the 1996 ISO
Plan. The shareholders are being asked to amend the 1996 Non-Qualified Plan (and
the 1996 ISO Plan) at the meeting to increase this number to 4,000,000. At April
1, 1999 an aggregate of 58,592 shares remained available for future grants.
If any change is made in the shares of common stock subject to the 1996
Non-Qualified Plan or subject to any option granted under the 1996 Non-Qualified
Plan (through merger, consolidation, reorganization, recapitalization, stock
dividend, split-up, combination of shares, exchange of shares, issuance of
rights to subscribe, or change in capital structure), appropriate adjustments
shall be made by the Compensation Committee as to the maximum number of shares
subject to the 1996 Non-Qualified Plan and the number of shares and price per
share
23
subject to outstanding options as shall be equitable to prevent dilution or
enlargement of option rights. Any such determination made by the Compensation
Committee shall be final, binding and conclusive upon each participant.
Amendments or Discontinuation of the Plan. The Board may make such
amendments, changes and additions to the 1996 Non-Qualified Plan, or may
discontinue and terminate the 1996 Non-Qualified Plan, as it may deem advisable
from time to time; provided, however, that no action may affect or impair any
options theretofore granted under such plan, and provided, further, however,
that the affirmative vote of the owners of a majority of the outstanding shares
of common stock present at a meeting in person or by proxy and entitled to vote
at the meeting shall be necessary to effect any amendment to the 1996
Non-Qualified Plan which would increase the number of shares of common stock
subject to options granted under such plan.
ERISA. The 1996 Non-Qualified Plan is not subject to any provision of
ERISA.
Description of Options
Nontransferability. Options granted pursuant to the 1996 Non-Qualified
Plan are not transferable by the holder thereof, other than by will, the laws of
descent and distribution, or (if authorized in the applicable stock option
agreement) pursuant to a qualified domestic relations order, as defined by the
Code or Title I of ERISA or the rules thereunder.
Granting of Options. The Compensation Committee shall determine the key
executives, other employees, consultants, advisors and directors to be granted
options under the 1996 Non-Qualified Plan, the number of shares of common stock
subject to such options, the exercise prices of options, the terms thereof and
any other provisions not inconsistent with the 1996 Non-Qualified Plan. All
stock options granted pursuant to the 1996 Non-Qualified Plan shall be evidenced
by stock option agreements, which need not be identical, between the Company and
the participant in such form as the Compensation Committee shall from time to
time approve, subject to the terms of the 1996 Non-Qualified Plan. Each stock
option agreement shall state the total number of shares of common stock with
respect to which the option is granted, the terms and conditions of the option,
and the exercise price or prices thereof.
The Non-Qualified Plan provides that annually, on February 15 of each of
the Company's fiscal years, any director of the Company who at the time is not a
full-time employee of the Company (a "Participating Director") will be
automatically granted an option for 2,500 shares of common stock (a
"Participating Director Option"). Each person who becomes a Participating
Director after the first day of the Company's fiscal year and within nine months
of that date will be granted, on the date that person becomes a Participating
Director, a Participating Director Option for a number of shares of common stock
determined by pro rating the normal 2,500 share annual amount based on the
period of time remaining in the fiscal year in which such person becomes a
Participating Director. No person who owns 10% or more of the outstanding common
stock of the Company (including shares of common stock issuable upon exercise of
outstanding options and warrants) will be granted Participating Director
Options. The shareholders are being asked pursuant to this Proposal No. 3 to
amend the 1996 Non-Qualified Plan at the meeting to increase the Participating
Director Option from 2,500 to 15,000 for Participating Directors (except the
Chairman) and from 2,500 to 30,000 for the Chairman, commencing with the
February 2000 Participating Director Option.
Life of the Plan. Options may be granted under the 1996 Non-Qualified Plan
until June 3, 2006.
Exercise Price. The price at which the shares of common stock subject to
each option (other than Participating Director Options) granted under the 1996
Non-Qualified Plan may be purchased (the "option price" or "exercise price")
shall be determined by the Compensation Committee, which shall have the
authority at the time the option is granted to prescribe in any stock option
agreement that the price per share, with the passage of pre-determined periods
of time, shall increase from the original price to higher prices. Participating
Director Options have an exercise price equal to the fair market value of the
common stock on the date of the grant. The exercise price of all options granted
under the 1996 Non-Qualified Plan is payable in full upon the exercise of such
option, which payment shall be in cash, by check or in stock (that has been
owned by the participant for at least six months) or notes of the Company, or,
as agreed to by the Board, other consideration. In the case of payment made in
stock of the Company, the stock shall be valued at its Fair Market Value (as
hereinafter defined) on the last business day prior to the date of exercise. The
term "Fair Market Value" for the common stock on any particular date shall mean
the last reported sale price of the common stock on the principal market on
which the common stock trades on such date
24
or, if no trades of common stock are made or reported on such date, then on the
next preceding date on which the common stock traded.
Terms and Conditions of Exercise; Exercise Period. The terms and
conditions of any option granted under the 1996 Non-Qualified Plan and the
exercise period are governed by the option agreement between the holder of the
option and the Company. Subject to the limitations set forth in the 1996
Non-Qualified Plan, the terms of such option agreements, including the exercise
period, are determined by the Compensation Committee and need not be uniform
among recipients of similar options. Options (other than Participating Director
Options) granted pursuant to the 1996 Non-Qualified Plan may be exercised only
if the participant was, at all times during the period beginning on the date the
option was granted and ending on the date of such exercise, an advisor or
consultant to or director or employee of the Company. The right to exercise any
unexercised portion of any option (other than Participating Directors Options)
granted under the 1996 Non-Qualified Plan terminates on the date of termination
of the relationship between the participant and the Company, for any reason,
without regard to cause, other than by reason of death or disability, except as
otherwise provided in connection with a particular option or a particular
termination. The option may not be exercised thereafter, and the shares of
common stock subject to the unexercised portion of such option may again be
subject to new options under the 1996 Non-Qualified Plan. In the event a
participant dies or is disabled while he is an advisor or consultant to or a
director or employee of the Company, any options (other than Participating
Director Options) theretofore granted to him shall be exercisable only within
the next 12 months immediately succeeding such death or disability and then only
(a) in the case of death, by the person or persons to whom the participants
rights under such option shall pass by will or the laws of descent and
distribution, and in the case of disability, by such participant or his legal
representatives and (b) if and to the extent that he was entitled to exercise
such option at the date of his death or disability except as otherwise provided
in connection with a particular option or a particular individual's death or
disability. Participating Director Options remain exercisable for ten years
after the date of grant and the option holder (or his legal representative or
that of his estate) may continue to exercise an option notwithstanding that the
holder ceases to be a Participating Director. The maximum option term under the
1996 Non-Qualified Plan is ten years after the date of grant.
U.S. Federal Income Tax Consequences
The following is a summary of the U.S. Federal income tax consequences
under current tax law (without regard to any proposed changes, which may be
retroactive in effect) with respect to non-qualified stock options granted to
U.S. key executives, other employees, advisors, consultants or directors under
the 1996 Non-Qualified Plan. For this purpose, it is assumed that the shares
acquired pursuant to the exercise of an option are held by the optionee as a
capital asset. Certain other rules not discussed here apply to the use of
previously acquired shares of common stock in payment of the option exercise
price.
The 1996 Non-Qualified Plan is not qualified under Section 401(a) of the
Code.
Non-Qualified Options. No taxable income will be recognized by an optionee
upon the grant of a non-qualified stock option. Upon the exercise of the option,
the excess of the fair market value of the shares at the time of such exercise
over the exercise price will be treated as compensation. Any amounts treated as
compensation (i) will be taxable as ordinary income to the optionee and (ii)
generally will be allowed as an income tax deduction to the Company. The
optionee's tax basis for shares acquired upon exercise of the option will be
increased by any amounts so treated as compensation.
Any gain or loss realized by an optionee on the subsequent sale of shares
acquired upon the exercise of a non-qualified stock option will be short-term or
long-term capital gain depending on the period the shares were held.
Cancellation or Surrender. Consideration received by an optionee upon the
surrender to, or cancellation by, the Company of a non-qualified stock option
will be taxable as ordinary income to the optionee and generally allowed as an
income tax deduction to the Company.
New Plan Benefits
Other than option grants of Participating Director Options, the benefits
or amounts that will be received or allocated in the future under the 1996
Non-Qualified Plan are not determinable.
25
The Board recommends a vote "FOR" approval of amendments to the 1996
Non-Qualified Plan to (i) increase the number of shares of the Company's common
stock which may be issued pursuant to options which may be granted under the
1996 Non-Qualified Plan from 3,000,000 to 4,000,000, which number shall be
reduced by the number of shares of common stock which have been or may be issued
pursuant to options granted under the 1996 ISO Plan, and (ii) increase the
annual option grant made to non-employee members of the Board of Directors and
the non-employee Chairman under the 1996 Non-Qualified Plan from 2,500 to 15,000
and from 2,500 to 30,000, respectively. (Proposal No. 3 on your proxy card).
26
PROPOSAL NO. 4
APPROVAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
At present, the Company is authorized to issue two classes of capital
stock consisting of common stock with a par value of $.001 per share and
preferred stock with a par value of $1.00 per share. 45,000,000 shares of common
stock and 4,000,000 shares of preferred stock are currently authorized. As of
April 1, 1999, 400,000 shares of preferred stock were outstanding and had been
designated as Series A convertible preferred stock. As of April 1, 1999 there
were approximately:
o 24,668,175 shares of common stock issued and outstanding.
o 4,559,099 shares of common stock reserved for issuance for options
issued and outstanding, including under the Company's various option
plans.
o 2,263,590 shares of common stock reserved for issuance pursuant to
outstanding warrants.
o 761,557 shares of common stock reserved for issuance under the
Company's various option plans and 1998 Employee Stock Purchase
Plan.
o 2,700,826 shares of common stock reserved for issuance pursuant to
400,000 shares of outstanding Series A preferred stock issued in
December 1997 for an aggregate of $40,000,000. 100,000 of the Series
A preferred stock could be immediately converted into shares of
common stock beginning on December 15, 1997. An additional 100,000
will be able to be converted into shares of common stock on or after
each of January 1, 2000, January 1, 2001 and January 1, 2002. Any
Series A preferred stock converted into common stock before January
1, 2000 will be converted at a conversion price of $12.50 per share
of common stock. After that, the number of shares of common stock
into which shares of Series A preferred stock are convertible is not
fixed. Instead, the conversion price is determined under a formula
based upon the market price of our common stock at specified
measurement dates, which are generally one year apart. Because,
except for the first tranche, the exact number of shares needed to
be reserved cannot be determined due to the fluctuating market
price, the Company has currently reserved a number of shares for the
first tranche equal to 800,000 and a number of shares for all
subsequent tranches based upon the market price at April 1, 1999. A
different number of shares could be required based on fluctuations
in the price of the common stock.
o 1,652,892 shares of common stock reserved for issuance as shares of
common stock that may be issued in the event the Company achieves
certain milestones in the development of C225, our lead therapeutic
product pursuant to the terms of a Development and License Agreement
entered into with Merck KGaA in December 1998. Under this agreement,
Merck KGaA is paying to the Company, among other things, $30 million
assuming the Company achieves certain milestones for which Merck
KGaA will receive equity (the "Milestone Shares") in ImClone which
will be priced at varying premiums to the then market price of the
common stock depending upon the timing of the achievement of the
respective milestones. Because the exact number of shares needed to
be reserved cannot be determined due to the fluctuating market
price, the Company has currently reserved a number of shares based
upon the market price at April 1, 1999. A different number of shares
could be required based on fluctuations in the price of the common
stock.
Accordingly, giving effect to such issuances and reserves, approximately
8,393,861 shares of common stock would remain available for issuance. If
Proposal Nos. 2, 3, 5 and 6 described in this proxy statement are approved by
shareholders at the meeting, approximately 5,743,861 shares of common stock
would remain available for issuance.
The Board of Directors believes that it is in the best interests of the
Company to increase the authorized number of shares of common stock from
45,000,000 to 60,000,000, and on March 29, 1999 the Board voted unanimously to
submit to a vote of stockholders an amendment to the Company's certificate of
incorporation so increasing the authorized common stock. The Company has no
present agreement, commitment, plan or intent to issue any of the additional
shares of common stock provided for in this Proposal other than as discussed
above. If this Proposal is approved, the additional authorized common stock, as
well as the currently authorized but unissued common stock (but for those shares
which are reserved), would be immediately available in the future for such
corporate purposes as the Board deems advisable from time to time without
further action by the stockholders, unless such action is required by applicable
law or any stock exchange or securities market upon which the Company's shares
may be listed.
27
The additional authorized common stock resulting from the approval of
this Proposal will have the same terms and rights as the existing common stock.
Holders of the common stock of the Company do not presently have preemptive
rights nor will they as a result of the approval of this Proposal.
The Board anticipates that the authorized common stock in excess of those
shares issued and reserved for issuance (including, if authorized, the
additional common stock provided for in this Proposal) will be utilized for
general corporate purposes, including grants of stock options. These shares may
also be publicly sold or privately placed as part of financing transactions and
may be utilized by the Company in connection with acquisitions, commercial
agreements and stock splits. Such increase in shares also could be used to make
more difficult a change in control of the Company. Though the Company has no
current plan or intention to issue such shares as a takeover defense, the
additional authorized shares could be used to discourage persons from attempting
to gain control of the Company or make more difficult the removal of management.
Management is not currently aware of any specific effort to obtain control of
the Company by means of a merger, tender offer, solicitation in opposition to
management, or otherwise.
It should be noted that, subject to the limitations discussed above, all
of the types of Board action described in the preceding paragraphs can currently
be taken and the power of the Board to take such actions would not be enhanced
by the passage of this Proposal, although this Proposal would increase the
number of shares of common stock that are subject to such action.
If this Proposal is approved and the amendment to the certificate of
incorporation becomes effective, the first paragraph of Article Fourth of the
certificate of incorporation, which sets forth the Company's presently
authorized capital stock, will be amended to read as set forth below.
"FOURTH: The total number of shares of capital stock which the
Corporation shall have the authority to issue is sixty million
(60,000,000) shares of common stock with a par value of one tenth of
one cent ($.001) per share and four million (4,000,000) shares of
preferred stock with a par value of one dollar ($1.00) per share."
The Board recommends a vote "FOR" approval of the amendment to the
Company's certificate of incorporation to increase the total number of
authorized shares of common stock from 45,000,000 to 60,000,000 (Proposal No. 4
on your proxy card).
28
PROPOSAL NO. 5
APPROVAL OF GRANT BY THE BOARD OF DIRECTORS TO THE PRESIDENT AND CHIEF
EXECUTIVE OFFICER OF AN OPTION TO PURCHASE COMMON STOCK
The Compensation Committee granted, subject to Board approval, shareholder
approval and a favorable opinion from an unaffiliated executive compensation
consulting firm, an option to Dr. Samuel D. Waksal, President and Chief
Executive Officer, for the purchase of 1,000,000 shares of common stock. The
Board approved the grant, subject to shareholder approval, on March 29, 1999.
The Compensation Committee and the Board have received a favorable opinion from
an unaffiliated executive compensation consulting firm as to the reasonableness
of the grant. The Compensation Committee and the Board determined that the
exercise price at which such shares could be purchased pursuant to the option
should be equal to the last reported sale price of the common stock on the date
of grant, which assuming shareholder approval of the grant, will be May 24, 1999
which is the date of the meeting. The last reported sale price of the common
stock as reported by the Nasdaq National Market on the date of Compensation
Committee approval, Board approval and April 1, 1999 as reported by Nasdaq was
$13 1/4, $15 1/8 and $16 1/2, respectively.
In evaluating the reasonableness of this grant the following was
considered:
o The critical importance of Dr. Samuel D. Waksal to the Company's
ongoing research and development initiatives.
o The difficulty of replacing this individual.
o The objective of providing strong incentive to Dr. Samuel D. Waksal
consistent with enhancing shareholder value.
o The vesting requirements placed on this grant.
o The multi-year nature of the award, which essentially serves as an
acceleration of grants that might otherwise be made in the future,
it being the intent of the Board that there be no additional option
grants to Dr. Samuel D. Waksal until 2003 at the earliest.
o The reasonable size of the award compared to the Company's total
shares outstanding, both on a primary and fully-diluted basis.
Following is a description of the option, including certain federal income
tax consequences.
Description of Option and New Plan Benefits
The option will not be granted to Dr. Samuel D. Waksal unless and until
shareholder approval is obtained at the meeting on May 24, 1999. The exercise
price will be the last reported sale price of the common stock on May 24, 1999.
The option will vest in its entirety on May 24, 2006; except that the option may
vest earlier as follows:
- --------------------------------------------------------------------------------
Number of Shares Vesting Date Target Price of Stock
- --------------------------------------------------------------------------------
200,000 May 24, 2000 If for any ten consecutive trading
days from May 24, 1999 through
May 23, 2000 the last reported
sale price of the common stock
exceeds $25.
- --------------------------------------------------------------------------------
200,000 May 24, 2001 If for any ten consecutive trading
days from May 24, 2000 through
May 23, 2001 the last reported
sale price of the common stock
exceeds $34.
- --------------------------------------------------------------------------------
200,000 May 24, 2002 If for any ten consecutive trading
days from May 24, 2001 through
May 23, 2002 the last reported
sale price of the common stock
exceeds $47.
- --------------------------------------------------------------------------------
200,000 May 24, 2003 If for any ten consecutive trading
days from May 24, 2002 through
May 23, 2003 the last reported
sale price of the common stock
exceeds $62.
- --------------------------------------------------------------------------------
200,000 May 24, 2004 If for any ten consecutive trading
days from May 24, 2003 through
May 23, 2004 the last reported
sale price of the common stock
exceeds $75.
- --------------------------------------------------------------------------------
1,000,000
- --------------------------------------------------------------------------------
29
Additionally, the option will vest on any given vesting date for which the
applicable target price was achieved as to any shares as to which the option did
not vest on any prior vesting date as a result of the target price not having
been achieved. For example, assume there are no ten consecutive trading days
during the period May 24, 1999 through May 23, 2000 that the last reported sale
price of the common stock exceeds $25, and that during the period May 24, 2000
through May 23, 2001 there is a ten consecutive trading day period during which
the last reported sale price of the common stock exceeds $34. Under this
scenario, Dr. Samuel D. Waksal's option vests as to no shares on May 24, 2000
and as to 400,000 shares on May 24, 2001.
The vesting of the option will accelerate in the event of an acquisition
of the Company where Dr. Samuel D. Waksal's position with the Company is
terminated.
Once vested as to any shares, the option may be exercised in whole or in
part as to such shares from time to time until May 24, 2009 so long as Dr.
Samuel D. Waksal remains employed by the Company. Payment of the exercise price
of the option must be made in full in cash at the time of exercise. The option
will provide for certain adjustments in the event of certain mergers,
consolidations, reorganizations, recapitalizations, stock dividends, split-ups
continuations or similar events involving the Company or common stock.
The option will otherwise contain usual and customary terms which shall be
substantially the same as those contained in the Company's 1996 Non-Qualified
Plan discussed under Proposal No. 3.
It is the intent of the Board that this grant provides significant
retention value and incentive with respect to the continued employment of Dr.
Samuel D. Waksal over the next four years, and that there be no additional
option grants to him until 2003 at the earliest.
The Company does not anticipate any particular events which would require
administration of the option. However, all decisions of the Company regarding
the option are expected to be made by the Board or a duly authorized committee
of the Board.
The option is not subject to any provision of ERISA.
The common stock which may be purchased by exercise of the option has not
been registered under the Securities Act of 1933, as amended (the "Securities
Act") and unless the Company registers the stock in the future, the stock
acquired by exercise of the option will be restricted stock and will not be
freely tradable. The Board may at any time elect to file a registration
statement under the Securities Act covering the stock, which would permit the
holder of the option to sell the stock freely after exercise. It is expected
that such a registration statement will be filed in the future.
U.S. Federal Income Tax Consequences
The following is a summary of the U.S. Federal income tax consequences
under current tax law (without regard to any proposed changes, which may be
retroactive in effect) with respect to the non-qualified stock option proposed
to be granted to Dr. Samuel D. Waksal. For this purpose, it is assumed that the
shares acquired pursuant to the exercise of the option are held as a capital
asset
The option will not be qualified under Section 401(a) of the Code.
No taxable income will be recognized by Dr. Samuel D. Waksal upon the
grant of the option. Upon the exercise of the option, the excess of the fair
market value of the shares at the time of such exercise over the exercise price
will be treated as compensation. Any amounts treated as compensation (i) will be
taxable as ordinary income to Dr. Samuel D. Waksal and (ii) generally will be
allowed as an income tax deduction to the Company. His tax basis for shares
acquired upon exercise of the option will be increased by any amounts so treated
as compensation.
Any gain or loss realized on the subsequent sale of shares acquired upon
the exercise of the option will be short-term or long-term capital gain
depending on the period the shares were held.
Consideration received upon the surrender to, or cancellation by, the
Company of the option will be taxable as ordinary income to him and generally
allowed as an income tax deduction to the Company.
The Board recommends a vote "FOR" approval of the grant of an option to
purchase 1,000,000 shares of common stock to the Company's President and Chief
Executive Officer (Proposal No. 5 on your proxy card).
30
PROPOSAL NO. 6
APPROVAL OF GRANT BY THE BOARD OF DIRECTORS TO THE EXECUTIVE VICE PRESIDENT
AND CHIEF OPERATING OFFICER OF AN OPTION TO PURCHASE COMMON STOCK
The Compensation Committee granted, subject to Board approval, shareholder
approval and a favorable opinion from an unaffiliated executive compensation
consulting firm, an option to Dr. Harlan W. Waksal, Executive Vice President and
Chief Operating Officer, for the purchase of 650,000 shares of common stock. The
Board approved the grant, subject to shareholder approval, on March 29, 1999.
The Compensation Committee and the Board have received a favorable opinion from
an unaffiliated executive compensation consulting firm as to the reasonableness
of the grant. The Compensation Committee and the Board determined that the
exercise price at which such shares could be purchased pursuant to the option
should be equal to the last reported sale price of the common stock on the date
of grant, which assuming shareholder approval of the grant, will be May 24, 1999
which is the date of the meeting. The last reported sale price of the common
stock as reported by the Nasdaq National Market on the date of Compensation
Committee approval, Board approval and April 1, 1999 as reported by Nasdaq was
$13 1/4, $15 1/8 and $16 1/2, respectively.
In evaluating the reasonableness of this grant the following was
considered:
o The critical importance of Dr. Harlan W. Waksal to the Company's
ongoing research and development initiatives.
o The difficulty of replacing this individual.
o The objective of providing strong incentive to Dr. Harlan W. Waksal
consistent with enhancing shareholder value.
o The vesting requirements placed on this grant.
o The multi-year nature of the award, which essentially serves as an
acceleration of grants that might otherwise be made in the future,
it being the intent of the Board that there be no additional option
grants to Dr. Harlan W. Waksal until 2003 at the earliest.
o The reasonable size of the award compared to the Company's total
shares outstanding, both on a primary and fully-diluted basis.
Following is a description of the option, including certain federal income
tax consequences.
Description of Option and New Plan Benefits
The option will not be granted to Dr. Harlan W. Waksal unless and until
shareholder approval is obtained at the meeting on May 24, 1999. The exercise
price will be the last reported sale price of the common stock on May 24, 1999.
The option will vest in its entirety on May 24, 2006; except that the option may
vest earlier as follows:
- --------------------------------------------------------------------------------
Number of Shares Vesting Date Target Price of Stock
130,000 May 24, 2000 If for any ten consecutive trading
days from May 24, 1999 through
May 23, 2000 the last reported
sale price of the common stock
exceeds $25.
- --------------------------------------------------------------------------------
130,000 May 24, 2001 If for any ten consecutive trading
days from May 24, 2000 through
May 23, 2001 the last reported
sale price of the common stock
exceeds $34.
- --------------------------------------------------------------------------------
130,000 May 24, 2002 If for any ten consecutive trading
days from May 24, 2001 through
May 23, 2002 the last reported
sale price of the common stock
exceeds $47.
- --------------------------------------------------------------------------------
130,000 May 24, 2003 If for any ten consecutive trading
days from May 24, 2002 through
May 23, 2003 the last reported
sale price of the common stock
exceeds $62.
- --------------------------------------------------------------------------------
130,000 May 24, 2004 If for any ten consecutive trading
days from May 24, 2003 through
May 23, 2004 the last reported
sale price of the common stock
exceeds $75.
- --------------------------------------------------------------------------------
650,000
- --------------------------------------------------------------------------------
31
Additionally, the option will vest on any given vesting date for which the
applicable target price was achieved as to any shares as to which the option did
not vest on any prior vesting date as a result of the target price not having
been achieved. For example, assume there are no ten consecutive trading days
during the period May 24, 1999 through May 23, 2000 that the last reported sale
price of the common stock exceeds $25, and that during the period May 24, 2000
through May 23, 2001 there is a ten consecutive trading day period during which
the last reported sale price of the common stock exceeds $34. Under this
scenario, Dr. Harlan W. Waksal's option vests as to no shares on May 24, 2000
and as to 260,000 shares on May 24, 2001.
The vesting of the option will accelerate in the event of an acquisition
of the Company where Dr. Harlan W. Waksal's position with the Company is
terminated.
Once vested as to any shares, the option may be exercised in whole or in
part as to such shares from time to time until May 24, 2009 so long as Dr.
Harlan W. Waksal remains employed by the Company. Payment of the exercise price
of the option must be made in full in cash at the time of exercise. The option
will provide for certain adjustments in the event of certain mergers,
consolidations, reorganizations, recapitalizations, stock dividends, split-ups
continuations or similar events involving the Company or common stock.
The option will otherwise contain usual and customary terms which shall be
substantially the same as those contained in the Company's 1996 Non-Qualified
Plan discussed under Proposal No. 3.
It is the intent of the Board that this grant provides significant
retention value and incentive with respect to the continued employment of Dr.
Harlan W. Waksal over the next four years, and that there be no additional
option grants to him until 2003 at the earliest.
The Company does not anticipate any particular events which would require
administration of the option. However, all decisions of the Company regarding
the option are expected to be made by the Board or a duly authorized committee
of the Board.
The option is not subject to any provision of ERISA.
The common stock which may be purchased by exercise of the option has not
been registered under the Securities Act and unless the Company registers the
stock in the future, the stock acquired by exercise of the option will be
restricted stock and will not be freely tradable. The Board may at any time
elect to file a registration statement under the Securities Act covering the
stock, which would permit the holder of the option to sell the stock freely
after exercise. It is expected that such a registration statement will be filed
in the future.
U.S. Federal Income Tax Consequences
The following is a summary of the U.S. Federal income tax consequences
under current tax law (without regard to any proposed changes, which may be
retroactive in effect) with respect to the non-qualified stock option proposed
to be granted to Dr. Harlan W. Waksal. For this purpose, it is assumed that the
shares acquired pursuant to the exercise of the option are held as a capital
asset.
The option will not be qualified under Section 401(a) of the Code.
No taxable income will be recognized by Dr. Harlan W. Waksal upon the
grant of the option. Upon the exercise of the option, the excess of the fair
market value of the shares at the time of such exercise over the exercise price
will be treated as compensation. Any amounts treated as compensation (i) will be
taxable as ordinary income to Dr. Harlan W. Waksal and (ii) generally will be
allowed as an income tax deduction to the Company. His tax basis for shares
acquired upon exercise of the option will be increased by any amounts so treated
as compensation.
Any gain or loss realized on the subsequent sale of shares acquired upon
the exercise of the option will be short-term or long-term capital gain
depending on the period the shares were held.
Consideration received upon the surrender to, or cancellation by, the
Company of the option will be taxable as ordinary income to him and generally
allowed as an income tax deduction to the Company.
The Board recommends a vote "FOR" approval of the grant of the option to
purchase 650,000 shares of common stock to the Company's Executive Vice
President and Chief Operating Officer (Proposal No. 6 on your proxy card).
32
PROPOSAL NO. 7
RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board has selected KPMG LLP as independent certified public
accountants for the Company for the year ending December 31, 1999. KPMG LLP has
served as the Company's auditor since 1988. The ratification of the selection of
independent certified public accountants is to be voted upon at the meeting, and
it is intended that the persons named in the accompanying proxy will vote for
KPMG LLP. Representatives of KPMG LLP are expected to attend the meeting, to
have an opportunity to make a statement if they desire to do so and to be
available to respond to appropriate questions.
The Board recommends a vote "FOR" the ratification of the selection of
KPMG LLP to act as the Company's certified public accountants for the year
ending December 31, 1999 (Proposal No. 7 on your proxy card).
STOCKHOLDERS' PROPOSALS
A stockholder proposal intended to be presented at the Company's Annual
Meeting of Stockholders to be held in 2000 must be received by the Company on or
before December 25, 1999 in order to be included in the Company's proxy
statement and form of proxy relating to that meeting.
Please complete, sign and date the enclosed proxy card, which is revocable
as described herein, and mail it promptly in the enclosed postage-paid envelope.
By Order of the Board of Directors
/s/ John B. Landes
John B. Landes
Secretary
New York, New York
April 21, 1999
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. WE URGE YOU TO FILL IN,
SIGN AND RETURN THE ACCOMPANYING PROXY CARD, NO MATTER HOW LARGE OR SMALL YOUR
HOLDINGS MAY BE.
33
Appendix A
IMCLONE SYSTEMS INCORPORATED
Dear Stockholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Company that require your immediate attention and approval. These are discussed
in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares shall be
voted, then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders, May 24,
1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
ImClone Systems Incorporated
PLEASE MARK VOTES AS IN
X THIS EXAMPLE
- ---
ImClone Systems Incorporated
Mark box at right if an address change or comment has been noted on the reverse
side of this card. ______
RECORD DATE SHARES:
1) ELECTION OF DIRECTORS. For: _____ Withhold: _____ For All Except: _____
Nominees:
Richard Barth
Jean Carvais
Vincent T. DeVita, Jr.
Robert F. Goldhammer
David M. Kies
Paul B. Kopperl
John Mendelsohn
William R. Miller
Harlan W. Waksal
Samuel D. Waksal
NOTE: If you do not wish your shares voted "For" a particular nominee, mark the
"For All Except" box and strike a line through the name(s) of the nominee(s).
Your shares shall be voted for the remaining nominee(s).
2) To approve an amendment to the Company's 1996 Incentive Stock Option Plan,
as amended (the "1996 ISO Plan") to increase the number of shares of the
Company's common stock which may be issued pursuant to options which may
be granted under the 1996 ISO Plan from 3,000,000 to 4,000,000, which
number shall be reduced by the number of shares of common stock which have
been or may be issued pursuant to options granted under the Company's 1996
Non-Qualified Stock Option Plan, as amended (the "1996 Non-Qualified
Plan").
For: _____ Against: _____ Abstain: _____
3) To approve amendments to the 1996 Non-Qualified Plan to (i) increase the
number of shares of the Company's common stock which may be issued
pursuant to options which may be granted under the 1996 Non-Qualified Plan
from 3,000,000 to 4,000,000, which number shall be reduced by the number
of shares of common stock which have been or may be issued pursuant to
options granted under the 1996 ISO Plan, and (ii) increase the annual
option grant made to non-employee members of the Board of Directors and
the non-employee Chairman under the 1996 Non-Qualified Plan from 2,500 to
15,000 and from 2,500 to 30,000, respectively.
For: _____ Against: _____ Abstain: _____
4) To approve an amendment to the Company's certificate of incorporation to
increase the number of shares of common stock the Company is authorized to
issue from 45,000,000 to 60,000,000.
For: _____ Against: _____ Abstain: _____
5) To approve the grant of an option to the President and Chief Executive
Officer to purchase 1,000,000 shares of the Company's common stock.
For: _____ Against: _____ Abstain: _____
6) To approve the grant of an option to the Executive Vice President and
Chief Operating Officer to purchase 650,000 shares of the Company's common
stock.
For: _____ Against: _____ Abstain: _____
7) To ratify the appointment of KPMG LLP to serve as the Company's
independent certified public accountants for the fiscal year ending
December 31, 1999.
For: _____ Against: _____ Abstain: _____
8) To consider and act upon any other business as may come before the meeting
or any adjournment thereof.
Please be sure to sign and date this Proxy. Date:
- --------------------------------------------------------------
Stockholder sign here Co-owner sign here
IMCLONE SYSTEMS INCORPORATED
Proxy for the Meeting of Stockholders, May 24, 1999
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Robert F. Goldhammer, John B. Landes and Samuel
D. Waksal as Proxies each with power of substitution and hereby authorizes each
of them to represent and to vote, as designated below, all the shares of Common
Stock of ImClone Systems Incorporated held of record by the undersigned on April
7, 1999 at the Annual Meeting of Stockholders to be held at 10:00 a.m. on May
24, 1999 or any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY TO STATE STREET BANK AND TRUST
COMPANY. THE COMPANY'S TRANSFER AGENT, TO BE RECEIVED NO LATER THAN MAY 23,
1999.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2, 3, 4, 5, 6 AND 7.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE
NOTE: Please sign exactly as your name(s) appear(s) on this card. All joint
owners should sign. When signing as executor, administrator, attorney, trustee
or guardian or as custodian for a minor, please give full title as such. If a
corporation, please sign in full corporate name and indicate the signer's
office. If a partner, sign the partnership name.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
________________________________ ___________________________________
________________________________ ___________________________________
________________________________ ___________________________________