UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
ImClone Systems Incorporated
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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PRELIMINARY PROXY MATERIALS
IMCLONE SYSTEMS INCORPORATED
180 Varick Street
New York, NY 10014
(212) 645-1405
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE: May 23, 2002
TIME: 10:00 A.M. (Local Time)
PLACE: Hotel W New York
541 Lexington Avenue
(between 49th and 50th Streets)
New York, New York 10022
ITEMS OF BUSINESS:
1. Election of eleven directors.
2. Approval of the ImClone Systems Incorporated 2002 Stock Option Plan.
3. Approval of an amendment to the Company's Certificate of
Incorporation, as amended, to increase the number of shares of common
stock the Company is authorized to issue from 120,000,000 to
200,000,000 shares.
4. Ratification of the appointment of KPMG LLP as the Company's
independent certified public accountants for the fiscal year ending
December 31, 2002.
5. Any other matters properly brought before the stockholders at the
meeting.
RECORD DATE:
Only holders of the common stock of record at the close of business on
April 16, 2002 are entitled to notice of and to vote at the meeting or any
postponements or adjournments thereof.
ANNUAL REPORT:
Our 2001 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 or submit your vote by telephone or via the
Internet. Sending in your proxy will not prevent you from voting in person at
the meeting.
By Order of the Board of Directors
Daniel S. Lynch
Secretary
New York, New York
April 26, 2002
TABLE OF CONTENTS
ABOUT THE MEETING.................................................................................................1
What is the purpose of the meeting?..........................................................................1
Who may attend the meeting?..................................................................................1
Who is entitled to vote?.....................................................................................1
What constitutes a quorum?...................................................................................2
What vote is required to approve each item?..................................................................2
What are the recommendations of the Board of Directors?......................................................2
How do I vote?...............................................................................................2
What if I am a beneficial owner rather than a holder of record?..............................................3
If I hold my shares in a brokerage account and do not return voting instructions, will my
shares be voted?.............................................................................................3
Can I change my vote after I return my proxy?................................................................3
How are votes counted?.......................................................................................3
Who pays for this proxy solicitation?........................................................................3
STOCK OWNERSHIP...................................................................................................4
Who are the Largest Owners of the Company's Stock?...........................................................4
How Much Stock do Certain Beneficial Owners, the Company's Directors and Executive
Officers Own?................................................................................................4
PROPOSAL NO. 1 -- ELECTION OF BOARD OF DIRECTORS..................................................................6
Nominees for Director........................................................................................6
Business Experience of Nominees for Director.................................................................7
Directors' Compensation......................................................................................9
Information Concerning Board and Committee Meetings and Committees of the Board.............................10
EXECUTIVE COMPENSATION...........................................................................................11
Information Concerning Executive Officers...................................................................11
Employment Agreements.......................................................................................13
Report of the Compensation Committee........................................................................14
Compensation Committee Interlocks and Insider Participation.................................................16
Summary Compensation Table..................................................................................16
Option Grants in Fiscal 2001................................................................................18
Option Exercises and Values for Fiscal 2001.................................................................18
Common Stock Price Performance..............................................................................19
Certain Relationships and Related Transactions...................................................................20
Section 16(a) Beneficial Ownership Reporting Compliance..........................................................22
Report of the Audit Committee....................................................................................23
Fees Paid to KPMG LLP............................................................................................24
PROPOSAL NO. 2 -- APPROVAL OF THE IMCLONE SYSTEMS INCORPORATED 2002 STOCK OPTION PLAN............................24
PROPOSAL NO. 3 -- APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK....................................................27
PROPOSAL NO. 4 -- RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.......................................29
Stockholder Proposals............................................................................................30
Other Matters....................................................................................................30
Appendix A--ImClone Systems Incorporated 2002 Stock Option Plan.................................................A-1
THESE MATERIALS CONSTITUTE PRELIMINARY PROXY MATERIALS FILED WITH
RESPECT TO A FORTHCOMING ANNUAL MEETING OF STOCKHOLDERS. CERTAIN
INFORMATION WILL BE REVISED TO REFLECT ACTUAL FACTS AT THE TIME THAT
THE DEFINITIVE PROXY STATEMENT IS MAILED TO STOCKHOLDERS.
IMCLONE SYSTEMS INCORPORATED
180 VARICK STREET
NEW YORK, NEW YORK 10014
PRELIMINARY 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 Thursday,
May 23, 2002, at Hotel W New York, 541 Lexington Avenue (between 49th and 50th
Streets), New York, New York 10022, and at any postponements or adjournments
thereof. The Notice of Annual Meeting, this proxy statement and the accompanying
proxy card are first being mailed to stockholders on or about April 26, 2002.
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
the ImClone Systems Incorporated 2002 Stock Option Plan, approval of an
amendment to the Company's Certificate of Incorporation, as amended, to increase
the number of authorized shares of common stock and ratification of the
appointment of the Company's independent auditors. In addition, the Company's
management will report on the performance of the Company during fiscal 2001.
Who may attend the meeting?
Although we encourage you to complete and return the proxy card or to
vote by telephone or via the Internet to ensure that your vote is counted, you
may attend the meeting and vote your shares in person. All stockholders as of
the record date, or their duly appointed proxies, may attend the meeting. 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. In all cases, you must bring a form of personal
identification. To ensure the availability of adequate space for the Company's
stockholders wishing to attend the meeting, priority seating will be given to
stockholders of record, stockholders who hold their shares in street name and
invited guests of management. In addition, each stockholder may bring one guest.
In order that seating may be equitably allocated, a stockholder wishing to bring
more than one guest must write to the Secretary of the Company in advance of the
meeting and receive written concurrence.
Who is entitled to vote?
Only stockholders of record at the close of business on the record
date, April 16, 2002, 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
postponements or adjournments thereof. Each outstanding share entitles its
holder to cast one vote on each matter to be voted upon at the meeting.
Pursuant to our Stockholder Agreement with Bristol-Myers Squibb Company
("BMS"), during the period in which BMS has the right to nominate at least one
Director to our Board of Directors (a "BMS Director"), BMS and its affiliates
are required to vote all of their shares in the same proportion as the votes
cast by all of our other stockholders with respect to the election or removal of
non-BMS Directors. BMS has the right to nominate at least one BMS Director if
its ownership interest in the Company is 5% or greater.
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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 business to be conducted at the meeting. As of
the record date, the Company had [73,333,889] shares of common stock
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.
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. This means that
the individuals who receive the highest number of votes will be elected as
Directors, up to the maximum number of Directors to be chosen at the meeting.
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.
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.
What are the recommendations of the Board of Directors?
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.
How do I vote?
You may vote in the following ways:
(a) In person: You may vote in person at the meeting. If you hold your
shares in street name, you must obtain a legal proxy, executed in your favor,
from your broker or nominee if you wish to vote your shares at the meeting.
(b) In writing: 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
sign and return your proxy card but do not give voting instructions, the proxy
holders will vote your shares as recommended by the Board of Directors. If you
are a record holder and attend the meeting, you may deliver your completed proxy
card in person. If you hold your shares in street name, your broker or nominee
has enclosed or provided a voting instruction form for you to use in directing
the broker or nominee how to vote your shares.
(c) By telephone: Call the toll-free telephone number on your proxy
card to vote by telephone. You must have a touch-tone telephone to use this
option. You will need to follow the instructions on your proxy card and the
voice prompts.
(d) Via the Internet: Go to the website listed on your proxy card to
vote via the Internet. You will need to follow the instructions on your proxy
card and on the website.
Telephone and Internet voting options are available 24 hours a day,
seven days a week. When prompted, you will need to enter the control number
shown on your proxy card. You will then be able to vote your shares and confirm
that your instructions have been properly recorded. If you vote by telephone or
via the Internet, your electronic vote authorizes the named proxies in the same
manner as if you signed, dated and returned your proxy card. The telephone and
Internet voting procedures, including the use of control numbers found on the
proxy cards, are designed to authenticate stockholders' identities, to allow
stockholders to vote their shares of common stock and to confirm that their
instructions have been properly recorded. If you vote by telephone or via the
Internet, you do not need to return your proxy card. If you hold your shares in
street name, you may vote
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by telephone or via the Internet if your broker or nominee makes these methods
available, in which case the broker or nominee will enclose the instructions
with this proxy statement.
What if I am a beneficial owner rather than a holder of record?
If your shares are held in a stock brokerage account or by a bank or
other nominee, you are considered to be the beneficial owner of shares held in
street name. These proxy materials are being forwarded to you by your broker or
nominee, who is considered to be the holder of record with respect to your
shares. As the beneficial owner, you have the right to direct your broker as to
how to vote by filling out the voting instruction form provided by your broker
or nominee. Telephone and Internet voting options may also be available to
beneficial owners. As a beneficial owner, you are also invited to attend the
meeting, but you must obtain a legal proxy from the holder of record of your
shares in order to vote in person at the meeting.
If I hold my shares in a brokerage account and do not return voting
instructions, will my shares be voted?
If your shares are held in street name, your broker or nominee will ask
you how you want your shares to be voted. If you provide voting instructions,
your shares must be voted as you direct. If you do not furnish voting
instructions, one of two things can happen, depending upon whether a proposal is
"routine." Under the rules that govern brokers who have record ownership of
shares beneficially owned by their clients, brokers have discretion to cast
votes on routine matters, such as the election of directors and ratification of
the appointment of independent auditors, without voting instructions from their
clients. Brokers are not permitted, however, to cast votes on "non-routine"
matters without such voting instructions. A "broker non-vote" occurs when a
broker holding shares for a beneficial owner does not vote on a particular
proposal because the broker does not have discretionary voting power for that
proposal and has not received voting instructions from the beneficial owner. The
Company believes that all of the proposals being submitted for stockholder
approval at the meeting are routine and, accordingly, does not expect there to
be any broker non-votes at the meeting.
Can I change my vote after I return my proxy?
Yes. Even after you have submitted your proxy, you may change your vote
at any time before the proxy is exercised by filing a notice of revocation or an
executed proxy card bearing a later date with the Secretary of the Company at
the Company's principal executive offices at 180 Varick Street, New York, New
York 10014. You may also change or revoke your proxy by telephone or via the
Internet at any time before the meeting in accordance with the instructions on
the enclosed proxy card. 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.
How are votes counted?
For purposes of determining the presence of a quorum, abstentions and
broker non-votes will be counted by the Company as present at the meeting.
Abstentions and broker non-votes will not be voted either in favor of or against
any of the proposals. For the election of directors, which requires a plurality
of the votes cast, votes withheld from one or more nominees will be excluded
entirely from the vote and will have no effect on the outcome. For the proposed
Amendment to the Company's Certificate of Incorporation, which requires the
affirmative vote of the holders of a majority of the shares outstanding on the
record date, abstentions and broker non-votes will not be counted and will have
the effect of votes against the proposal. For each of the other proposals, which
will be decided by the affirmative vote of the holders of a majority of the
shares present in person or represented by proxy and entitled to vote on such
proposal, abstentions will be counted for purposes of determining the number of
votes cast on the proposal and will have the same effect as negative votes.
Broker non-votes will not be counted and will have no effect on the outcome.
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 Georgeson Shareholder Communications, Inc. to assist us in
soliciting your proxy for a fee of $6,000 plus reasonable out-of-pocket
expenses.
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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 of related persons that is the beneficial owner of more than 5%
of the Company's common stock. This is based solely on Schedule 13G and Schedule
13D reports filed with the Securities and Exchange Commission (the "SEC") as of
March 15, 2002.
How Much Stock Do Certain Beneficial Owners, the Company's Directors and
Executive Officers Own?
The following table shows the amount of common stock of the Company
beneficially owned (unless otherwise indicated) by persons or groups of related
persons that beneficially own greater than 5% of the Company's common stock, the
Company's current Directors, the Named Executive Officers in the Summary
Compensation Table below and the current Directors and executive officers of the
Company as a group. Except as otherwise indicated, all information is as of
March 15, 2002. "Beneficial Ownership" is a technical term defined by the SEC to
mean more than ownership in the usual sense. For example, you "beneficially own"
the Company's common stock if you own it directly or indirectly (e.g., through a
relationship, a position as a trustee or through an agreement) or if you have
the right to acquire it within 60 days (e.g., upon the exercise of options). The
table below, as well as all other portions of this proxy statement, reflects the
Company's 2-for-1 stock split, effected in the form of a dividend, in October
2000.
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER(1) OWNERSHIP CLASS(2)
- ------------------- --------- --------
Bristol-Myers Squibb Company..................................... 14,392,003(3) 19.63%(4)
345 Park Avenue
New York, New York 10154
FMR Group........................................................ 10,974,541(5) 14.90%(4)
82 Devonshire Street
Boston, Massachusetts 02109
Harlan W. Waksal, M.D............................................ 3,106,847(6) 4.22%
Robert F. Goldhammer............................................. 1,461,121(7) 1.99%
Samuel D. Waksal, Ph.D........................................... 581,985(8) *
David M. Kies.................................................... 400,008(9) *
John Mendelsohn, M.D............................................. 373,226(10) *
Vincent T. DeVita, Jr., M.D...................................... 236,555(11) *
Peter Bohlen, Ph.D............................................... 212,954(12) *
Paul B. Kopperl.................................................. 193,556(13) *
William R. Miller................................................ 158,971(14) *
Arnold J. Levine................................................. 106,145(15) *
S. Joseph Tarnowski, Ph.D........................................ 95,061(16) *
Daniel S. Lynch.................................................. 15,000(17) *
Andrew G. Bodnar, M.D. (18)...................................... 0 *
Peter S. Ringrose, Ph.D.(18)..................................... 0 *
All Directors and Executive Officers as a Group (24 persons)..... 8,132,776(19) 10.69%
- ----------
* Less than 1%
(1) Unless otherwise noted, each person's address is in care of ImClone
Systems Incorporated, 180 Varick Street, Sixth Floor, New York, New
York 10014.
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(2) The percentage of voting stock owned by each stockholder is calculated
by dividing (1) the number of shares deemed to be beneficially held by
such stockholder as of March 15, 2002, as determined in accordance with
Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), by (2) the sum of (A) 73,333,889, which is the number
of shares of common stock outstanding as of March 15, 2002, plus (B)
the number of shares of common stock issuable upon exercise of
currently exercisable options and other derivative securities held by
such stockholder. For purposes of this security ownership table,
"currently exercisable options" consist of options exercisable as of
March 15, 2002 or within 60 days after March 15, 2002. Except as
indicated by footnote, the persons named in the table have sole voting
and investment power with respect to all shares of common stock shown
as beneficially owned by them.
(3) This information is as of March 6, 2002 and was obtained from Amendment
No. 2 to Schedule 13D, filed with the SEC on March 6, 2002.
(4) These percentages have been calculated based upon the number of shares
reported as beneficially owned in the stockholder's latest Schedule 13G
or Schedule 13D filing prior to March 15, 2002 and the number of shares
outstanding as of March 15, 2002.
(5) This information is as of December 31, 2001 and was obtained from
Amendment No. 2 to Schedule 13G, filed with the SEC on February 14,
2002. This number consists of 10,974,541 shares beneficially owned by
Fidelity Management & Research Company, a wholly-owned subsidiary of
FMR Corp. and a registered investment adviser, as a result of acting as
an investment adviser to various registered investment companies. The
shares owned by the investment companies include 50,826 shares of
common stock resulting from the assumed conversion of $2,800,000
principal amount of ImClone Systems Incorporated 5 1/2% convertible
notes due 3/01/05 (144A) (18.152 shares of common stock for each $1,000
principal amount of debenture) and 251,405 shares of common stock
resulting from the assumed conversion of $13,850,000 principal amount
of ImClone Systems Incorporated 5 1/2% convertible notes due 3/01/05
(18.152 shares of common stock for each $1,000 principal amount of
debenture). FMR Group is the parent company of various Fidelity funds
and related parties. Edward C. Johnson 3d, Chairman of FMR Corp., and
Abigail P. Johnson, a Director of FMR Corp., are also listed on the
Schedule 13G as beneficial owners of the 10,974,541 shares.
(6) Includes 333,334 shares issuable upon the exercise of currently
exercisable options; 4,086 shares owned by Dr. Waksal's sons and 157
shares owned in a joint account with his wife.
(7) Includes 120,000 shares issuable upon the exercise of currently
exercisable options and 11,785 shares held by Mr. Goldhammer's spouse.
(8) Includes 416,668 shares issuable upon the exercise of currently
exercisable options.
(9) Includes 60,000 shares issuable upon the exercise of currently
exercisable options; 30,000 shares held by a family foundation of which
Mr. Kies is one of the trustees; 16,400 shares held as co-trustee for a
trust for Mr. Kies' minor son and 615 shares held by Mr. Kies' spouse
as to which Mr. Kies disclaims beneficial ownership.
(10) Consists of 373,226 shares issuable upon the exercise of currently
exercisable options.
(11) Includes 236,084 shares issuable upon the exercise of currently
exercisable options.
(12) Includes 208,667 shares issuable upon exercise of currently exercisable
options.
(13) Consists of 53,570 shares issuable upon the exercise of currently
exercisable options; an aggregate of 139,486 shares held by two trusts
of which Mr. Kopperl is sole beneficiary and 500 shares held by Mr.
Kopperl's spouse as to which Mr. Kopperl disclaims beneficial
ownership.
(14) Includes 60,000 shares issuable upon exercise of currently exercisable
options.
(15) Includes 76,474 shares issuable upon exercise of currently exercisable
options.
(16) Includes 86,176 shares issuable upon exercise of currently exercisable
options.
(17) Consists of 15,000 shares issuable upon exercise of currently
exercisable options.
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(18) Address is in care of Bristol-Myers Squibb Company, 345 Park Avenue,
New York, New York 10154.
(19) Includes an aggregate of (1) 2,753,691 shares issuable upon the
exercise of currently exercisable options and (2) 1,115 shares as to
which beneficial ownership is disclaimed.
PROPOSAL NO. 1
ELECTION OF BOARD OF DIRECTORS
An entire Board of Directors, consisting of eleven members, will be
elected at the meeting. The Directors elected will hold office until their
successors are elected, which normally would be expected to occur at the next
annual meeting.
Pursuant to a Stockholder Agreement, dated as of September 19, 2001,
among the Company, Bristol-Myers Squibb Company and Bristol-Myers Squibb
Biologics Company, the size of the Board of Directors was increased from ten to
twelve members, and Bristol-Myers Squibb Company received the right to nominate
two Directors so long as its ownership interest in the Company is 12.5% or
greater.
On April 2, 2002, Richard Barth resigned from the Board of Directors.
On April 3, 2002, the Board of Directors fixed the size of the Board at eleven
members.
Nominations. At the meeting, the Board of Directors expects to nominate
the eleven persons named in this proxy statement as Directors. Although we do
not know of any reason why any of these nominees might not be able to serve, the
Board of Directors may 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
DIRECTOR OF
NAME CURRENT POSITION WITH COMPANY COMPANY SINCE
- ---- ----------------------------- -------------
Andrew G. Bodnar, M.D.(3)(4)......................... Director 2001
Vincent T. DeVita, Jr., M.D.(5)(6)................... Director 1992
Robert F. Goldhammer(3)(4)(6)........................ Chairman of the Board 1984
David M. Kies(2)(4)(6)............................... Director 1996
Paul B. Kopperl(1)(2)(4)(6).......................... Director 1993
Arnold J. Levine, Ph.D.(4)(5)(6)..................... Director 2000
John Mendelsohn, M.D.(5)(6).......................... Director 1998
William R. Miller(1)(2)(3)(4)(6)..................... Director 1996
Peter S. Ringrose, Ph.D.(5).......................... Director 2001
Harlan W. Waksal, M.D.(3)(5)......................... Executive Vice President, Chief Operating 1984
Officer and Director
Samuel D. Waksal, Ph.D.(3)(5)........................ President, Chief Executive Officer and 1985
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
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(5) Member of Research Oversight Committee
(6) Member of Special Committee
BUSINESS EXPERIENCE OF NOMINEES FOR DIRECTOR
ANDREW G. BODNAR, M.D., 54, has been a Director of the Company since
November 2001. Dr. Bodnar was designated and is being nominated as a Director
pursuant to a Stockholder Agreement, dated as of September 19, 2001, among the
Company, Bristol-Myers Squibb Company and Bristol-Myers Squibb Biologics
Company. Dr. Bodnar is Senior Vice President, Medical and External Affairs of
Bristol-Myers Squibb. Previously, Dr. Bodnar served as President,
Oncology/Immunology and Worldwide Strategic Business Development for
Bristol-Myers Squibb's Pharmaceutical Group. Prior to joining Bristol-Myers
Squibb, Dr. Bodnar was Associate Chief of Internal Medicine, Acting Chief of
Cardiology and Director of the Internal Medicine Residency Program at
Massachusetts General Hospital in Boston. Dr. Bodnar serves on the Board of
Trustees of The New York Blood Center, The Fox Chase Cancer Center and The
American Boychoir School.
VINCENT T. DEVITA, JR., M.D., 67, has been a Director of the Company
since February 1992. Since 1993, Dr. DeVita has served as 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, D.C. in 1961.
ROBERT F. GOLDHAMMER, 71, 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 was the Vice Chairman of the Executive Committee of the
Board of Directors of Kidder, Peabody & Company where he was employed from 1956
to 1989. While at Kidder, he was also Chairman of the Boston Stock Exchange
(1969-1972), a member of the Board of Governors of the Investment Bankers
Association (1967) and the Chairman of the New England Group IBA (1966-1967). He
has been since 1991, a partner of Concord International Group, L.P. He serves as
a director on the Boards of Esterline Corporation and Community Connect
Incorporated. Mr. Goldhammer has served as a trustee of the Episcopal Diocese of
Massachusetts. He also served as a trustee of Boston University and the Kennedy
Center of Performing Arts in Washington D.C. Throughout his career, Mr.
Goldhammer has advised numerous firms in the area of fundraising, operations,
marketing, finance, strategy and management. He is a graduate of Boston
University.
DAVID M. KIES, 58, 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.
PAUL B. KOPPERL, 68, has been a Director of the Company since December
1993. He has served as President of Delano & Kopperl, Inc., a private business
strategy and venture investing firm in Boston and its predecessor firms from
1976 to the present. In 2001, Mr. Kopperl retired as President but remains a
director of Pegasus Investments, Inc., a private investment management firm in
Boston. 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 of the Dana-Farber Cancer Institute, Boston, a member of its Executive,
Investment and Trustee Science Committees and a Trustee of
Dana-Farber/Children's Hospital Cancer Care, Inc. He is a director of
Centagenetix, Inc., Cambridge, Massachusetts, serves as Advisor to the Dean,
Harvard School of Public Health, and is a visiting lecturer at the United States
Military Academy, West Point. Over the years he has served as a trustee or
director of numerous businesses and not-for-profit educational, performing arts
and social welfare organizations.
ARNOLD J. LEVINE, PH.D., 62, has been a Director of the Company since
April 2000. Dr. Levine is a cancer biologist and was President of Rockefeller
University from November 1998 to January 2002. Previously, Dr. Levine was the
Harry C. Wiess Professor of Life Sciences at Princeton University, where he
founded Princeton's molecular biology department during a 12-year tenure that
saw the department grow to include two research laboratories and 35 faculty
members. Prior to his work at Princeton, Dr. Levine was Chairman at SUNY Stony
Brook School of Medicine. Dr. Levine is also a Director of Applera Corporation,
Advanced Medicine and Infinity Pharm.
7
JOHN MENDELSOHN, M.D., 65, 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 block
receptors, including epidermal growth factor receptors, which mediate growth
factor activation of cell growth and division. Dr. Mendelsohn is currently a
board member of Enron Corp. and the Greater Houston Partnership and is 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, 73, 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. and Transkaryotic Therapies,
Inc. He is Chairman of the Board of Vion Pharmaceuticals, 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.
PETER S. RINGROSE, PH.D., 56, has been a Director of the Company since
November 2001. Dr. Ringrose was designated and is being nominated as a Director
pursuant to a Stockholder Agreement, dated as of September 19, 2001, among the
Company, Bristol-Myers Squibb Company and Bristol-Myers Squibb Biologics
Company. Dr. Ringrose is President of the Bristol-Myers Squibb Pharmaceutical
Research Institute, and, since January 2000, has been Chief Scientific Officer
of Bristol-Myers Squibb. Dr. Ringrose joined Bristol-Myers Squibb in January
1997 from Pfizer where he was Senior Vice President, Worldwide Discovery and
Medicinal Research and Development, Europe, based in Sandwich, UK. Dr. Ringrose
is a member of the advisory board for the Centre for Medicines Research in the
UK. He is a member of the Science & Regulatory Section executive Committee for
PhRMA (Pharmaceutical Research and Manufacturers of America) and is currently
Chairman-Elect of the Section. He is Chairman of the Hever Group of
pharmaceutical R&D heads, and he sits on the U.S. Council on Competitiveness. In
addition, Dr. Ringrose has been appointed to the Chancellor's Court of
Benefactors at the University of Oxford.
HARLAN W. WAKSAL, M.D., 49, 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 W. Waksal and Dr.
Samuel D. Waksal are brothers.
SAMUEL D. WAKSAL, PH.D., 54, President and Chief Executive Officer 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 has been a
visiting professor at the Weizmann Institute in Israel and the Pasteur Institute
in France. Dr. Waksal currently serves on the Executive Committee of the New
York Biotechnology Association, the Board of Advisors of Rockefeller University
and is Chairman of the New York Council for the Humanities. Dr. Waksal sits on
the Board of Antigenics Inc. Dr. Samuel D. Waksal and Dr. Harlan W. Waksal are
brothers.
8
THE BOARD RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES NAMED ABOVE
(PROPOSAL NO. 1 ON YOUR PROXY CARD).
DIRECTORS' COMPENSATION
CASH COMPENSATION
Exclusive of the Chairman of the Board, each non-employee Director of
the Company for 2001 received 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. This annual compensation was raised to $30,000 for 2002. The
Chairman of the Board 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, the
Chairman of each of the Board committees, exclusive of the Chairman of the
Board, receives $5,000 per year as compensation for services as committee
Chairman. This fee was raised to $10,000 for 2002. Dr. DeVita did not receive
compensation for his service as a Director during 2001 due to his consulting
arrangement with the Company during 2001. See "Certain Relationships and Related
Transactions."
DIRECTORS' STOCK OPTIONS
Pursuant to the Company's 1996 Non-Qualified Stock Option Plan (the
"1996 Non-Qualified Plan"), each Director who is not an employee of the Company
automatically receives on each February 15th an option to purchase 30,000 shares
of common stock except that the Chairman of the Board receives an option to
purchase 60,000 shares. Each individual joining the Board within the first nine
months of the year receives a pro rata portion thereof. 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 employees of the Company
are made a one-time option grant under the 1996 Non-Qualified Plan to purchase
50,000 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. To the extent there is not capacity under
the Company's 1996 Non-Qualified Plan, these grants may come from the Company's
1998 Non-Qualified Stock Option Plan. From time to time, Directors who are not
employees of the Company may be granted additional options in consideration for
providing services on the Board. No such additional grants were made during
2001. If Proposal No. 2 in this proxy statement, "Approval of the ImClone
Systems Incorporated 2002 Stock Option Plan," is approved, Directors will no
longer receive automatic option grants on each February 15th, but it is expected
that they will continue to receive comparable grants on a discretionary basis.
The table below sets forth option grants to Directors who are not
employees of the Company made during the year ended December 31, 2001 in
consideration for such Directors serving on the Board:
NUMBER OF
NAME OPTIONS
- ---- -------
Andrew G. Bodnar.............................................. 50,000(2)
Vincent T. DeVita, Jr......................................... 30,000(1)
Robert F. Goldhammer.......................................... 60,000(1)
David M. Kies................................................. 30,000(1)
Paul B. Kopperl............................................... 30,000(1)
Arnold J. Levine.............................................. 30,000(1)
John Mendelsohn............................................... 30,000(1)
William R. Miller............................................. 30,000(1)
Peter S. Ringrose............................................. 50,000(2)
(1) These options were granted automatically pursuant to the terms of the
1996 Non-Qualified Plan on February 15, 2001 at a per share exercise
price of $37.1875, which is equal to the fair market value of the
common stock on the date of grant. The options vested and became
exercisable in their entirety on February 15, 2002 and terminate on
February 14, 2011.
9
(2) In accordance with Company policy, upon joining the Board of Directors
on November 15, 2001, Dr. Bodnar and Dr. Ringrose were each granted
options to purchase 50,000 shares at a per share exercise price of
$62.07, which is equal to the fair market value of the common stock on
the date of grant. These 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 of
Directors on the scheduled date of vesting.
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, 2001, there were twelve meetings
of the Company's Board. The Board also took certain actions by unanimous written
consent. 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 currently composed
of Samuel D. Waksal (Chairman), Andrew G. Bodnar, Robert F. Goldhammer, William
R. Miller and 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 twice during the year ended December 31,
2001.
The Company has an Audit Committee of the Board currently composed of
Paul B. Kopperl (Chairman) and William R. Miller. The Board expects to appoint
an additional member to the Audit Committee at its next Board meeting. Each of
the members of the Audit Committee is an "independent director" as defined in
Rule 4200 of the listing standards of the National Association of Securities
Dealers, Inc. The Audit Committee operates under a written charter, a copy of
which was attached as Appendix A to the Company's proxy statement for its 2000
fiscal year. The primary functions of the Audit Committee are to monitor the
integrity of the Company's financial reporting process and systems of internal
controls regarding finance, accounting and, with certain exceptions, legal
compliance. The Audit Committee provides an avenue of communication among the
independent auditors, management and the Board of Directors. The Audit Committee
met three times during the year ended December 31, 2001.
The Company has a Compensation and Stock Option Committee (the
"Compensation Committee") of the Board currently composed of William R. Miller
(Chairman), David M. Kies and Paul B. Kopperl. The Compensation Committee is
responsible for developing executive compensation policies. The Compensation
Committee also (i) determines annually 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 annually 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. 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 twice during the year ended December 31, 2001 and
also took certain actions by unanimous written consent.
The Company has a Nominating and Corporate Governance Committee
currently composed of David M. Kies (Chairman), Andrew G. Bodnar, Robert F.
Goldhammer, Paul B. Kopperl, Arnold J. Levine and William R. Miller. 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
Nominating and Corporate Governance Committee met one time during the year ended
December 31, 2001. 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 currently composed of
Samuel D. Waksal (Chairman), Vincent T. DeVita, Jr., Arnold J. Levine, John
Mendelsohn, Peter S. Ringrose and Harlan W. Waksal. The Research Oversight
Committee
10
participates on behalf of the Board in monitoring the research focus of the
Company. The Research Oversight Committee did not meet formally during the year
ended December 31, 2001.
In February 2002, the Board of Directors established a Special
Committee. The Special Committee is currently composed of Vincent T. DeVita,
Jr., Robert F. Goldhammer, David M. Kies, Paul B. Kopperl, Arnold J. Levine,
John Mendelsohn and William R. Miller. The Special Committee has been delegated
all lawful authority of the Board in connection with the investigation of the
SEC into possible violations of the federal securities laws by the Company and
certain unnamed individuals, the subpoena from a grand jury sitting in the
United States District Court for the Southern District of New York related to an
investigation by the United States Department of Justice, the inquiry of the
Oversight and Investigations Subcommittee of the House Energy and Commerce
Committee into the conduct of the Company in the development of the Company's
product candidate, ERBITUX(TM), federal securities actions naming the Company
and certain Directors as defendants, stockholder derivative actions, a proposal
from BMS on February 5, 2002 which sought to restructure the relationship
between the Company and BMS, which has subsequently been resolved through the
amendment of the agreement between the Company and BMS dated March 5, 2002, and
any matters that may arise in the future based upon the same or similar facts or
allegations.
EXECUTIVE COMPENSATION
INFORMATION CONCERNING EXECUTIVE OFFICERS
Certain information concerning executive officers 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 8.
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 8.
PETER BOHLEN, PH.D., 59, has been Senior Vice President, Research of
the Company since January 2001. He joined the Company as Vice President,
Research in September 1996 and served in that capacity through December 2000.
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. He has
authored or co-authored over 200 publications and is a named inventor on 26
patents.
CHARLES DUNNE, 37, has been Vice President, Management Information
Systems and Facilities since January 2001. Mr. Dunne, one of the Company's first
employees, joined the Company in 1984 and has served it in a number of
capacities, including Assistant Vice President, Management Information Systems
and Facilities during 2000, Senior Director, Management Information Systems
during 1999 and Director, Management Information Systems during 1998. Mr. Dunne
supervised the construction of the Company's corporate headquarters and research
laboratories and has implemented all systems at the Company since 1984.
PAUL A. GOLDSTEIN, 37, has been Vice President, Financial Operations
since January 2001. He joined the Company in January 1992 and has served in
various capacities since that date, including Assistant Vice President, Finance
during 2000, Senior Director, Finance and Controller from January 1998 through
December 1999 and Controller from January 1995 through December 1997. Prior to
joining the Company he was employed by Laventhol & Horwath, a certified public
accounting firm in New York City. Mr. Goldstein is a certified public
accountant.
MICHAEL HOWERTON, 50, has served as the Company's Vice President,
Business Development since August 2001. Mr. Howerton is responsible for the
pursuit and development of new business opportunities for the Company, including
acquisitions, product in-licensing and out-licensing and strategic alliances.
Prior to joining the Company, Mr. Howerton built a 25-year career at
Bristol-Myers Squibb Company. In his most recent position at Bristol-Myers
Squibb, Mr. Howerton served as
11
Vice President, Financial Analysis and Assistant Controller from 1998 to 2001,
directing activities relating to the financial and strategic analysis, budgeting
and profit planning of the Company. Prior to this position, Mr. Howerton served
as Vice President, Corporate Development for eight years, and was responsible
for activities relating to the acquisitions, divestitures and strategic
alliances for the Company's Worldwide Medicine Group.
JOHN B. LANDES, 54, has served as Senior Vice President, Legal since
January 2001. He was Vice President, Legal from 1992 to 2000; Vice President,
Business Development from 1992 through 1999 and General Counsel from 1992
through 2002. Prior thereto, he was Vice President, Administration and Legal
since December 1984. He was Secretary of the Company from April 1985 through
February 2002 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.
LILY WAIYEE LEE, PH.D., 46, joined the Company in April 2001 as its
Vice President, Regulatory Affairs and Biostatistics. Dr. Lee was employed at
The Lipsome Company, Division of Elan Corporation, as its Vice President,
Clinical & Regulatory Operations and Biostatistics from 1995 to April 2001 and
as its Executive Director, Biostatistics and Data Management from 1993 through
1994. Prior to that time she was employed for over eight years in various
statistical positions at Ciba Consumer Pharmaceuticals, Division of Ciba Geigy
and at Janssen Pharmaceutica, a division of Johnson & Johnson. Dr. Lee earned a
bachelor degree in statistics from the University of Minnesota and both a
masters degree in Biostatistics and Ph.D. in Demography from the University of
California, Berkeley.
DANIEL S. LYNCH, 44, joined the Company in April 2001 as its Vice
President, Finance and Chief Financial Officer. In September 2001, he was
promoted to Senior Vice President, Finance and in February 2002 was appointed
Secretary of the Company. From May 1999 through March 2001, he served as Chief
Financial Officer of Derby Cycle Corporation. Prior to this, Mr. Lynch served
for 15 years in various capacities at Bristol-Myers Squibb Company, including
from December 1998 through May 1999, as its Vice President, Finance, U.S.
Pharmaceutical, Worldwide Medicines Group; from April 1998 through November 1998
as its Vice President, Finance, Technical Operations, Worldwide Medicines Group;
from July 1997 through March 1998 as its Vice President, Finance,
Intercontinental, Worldwide Medicines Group; and from February 1995 through June
1997 as its Vice President, Finance, Worldwide Consumer Medicines Group.
RONALD A. MARTELL, 40, has served as the Company's Vice President,
Marketing and Sales 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 Manger of Genentech's
Piedmont Sales Division. Prior to that, he served from 1993 as Associate Product
Manager for Genentech's Pulmozyme.
MICHAEL NEEDLE, M.D., 42, has served as the Company's Vice President,
Clinical Affairs since January 2001. He joined the Company in April 2000 as its
Assistant Vice President, Clinical Affairs. Prior to joining the Company, Dr.
Needle served as Director, Oncology Clinical Research of G.D. Searle, a Monsanto
Company. From July 1993 through November 1997 Dr. Needle served as Assistant
Professor of Pediatrics and Neurology, Children's Hospital of Philadelphia,
University of Pennsylvania School of Medicine. Dr. Needle received a Bachelor of
Arts degree in Physics from Binghamton University and a Doctor of Medicine
degree from the State University of New York, Health Science Center at Brooklyn.
Dr. Needle performed his residency in Pediatrics at Kings County Hospital in
Brooklyn and his Pediatric Hematology/Oncology fellowship at the Fred Hutchinson
Cancer Research Center in Seattle and the University of Texas, MD Anderson
Cancer Center in Houston.
ANDREA F. RABNEY, 35, has served as the Company's Vice President,
Corporate Communications since January 2001. She joined the Company in 1993 as
its Director, Corporate Development and Investor Relations and has served in
several other managerial positions since that time, including Senior Director,
Corporate Development & Investor Relations from 1998 to 1999 and Assistant Vice
President, Corporate Communications during 2000. Prior to joining the Company,
Ms. Rabney served as a compliance analyst at Smith Barney Shearson Inc. (now
Salomon Smith Barney) where she was responsible for defining capital markets
guidelines and procedures for foreign and institutional accounts and trading
desks. Ms. Rabney holds a law degree from the Jacob D. Fuchsberg Law Center of
Touro College.
12
CLIFFORD R. SAFFRON, 44, joined the Company on February 1, 2002, as
Vice President, Legal - Special General Counsel. From February 1, 1994 through
November 30, 2001, he was Senior Vice President - Deputy General Counsel of ICN
Pharmaceuticals, Inc. Prior to this, from October 1989 through January 1994, he
was a litigation associate with the law firm of Proskauer Rose LLP in its New
York City office.
S. JOSEPH TARNOWSKI, PH.D., 48, has served as the Company's Senior Vice
President, Product and Process Development since April 2001. He was Vice
President, Product and Process Development from January 1999 through April 2001.
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, was appointed to 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
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.
CATHERINE M. VACZY, 40, has served as the Company's Associate General
Counsel since February 1997 and Vice President, Legal since January 2001. She
served as its Assistant Vice President, Legal during 2000 and as its Senior
Director, Legal, from 1997 through 1999. Prior to joining the Company, Ms. Vaczy
served as a senior associate specializing in corporate and securities matters in
the New York City office of Ross & Hardies, a Chicago-based law firm.
EMPLOYMENT AGREEMENTS
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS. On September 19,
2001, Samuel D. Waksal, Harlan W. Waksal, Daniel S. Lynch and S. Joseph
Tarnowski entered into employment agreements with the Company to be effective as
of the date thereof (the "Commencement Date"). The period of employment, during
which salary, bonus and benefits shall be provided to Dr. Samuel D. Waksal, Dr.
Harlan W. Waksal, Mr. Lynch and Dr. Tarnowski began on the Commencement Date and
will end on the third anniversary thereof (the "Term"); provided, that, with
respect to Dr. Samuel D. Waksal and Dr. Harlan W. Waksal, the Term shall
automatically be extended for one additional day each day, unless a notice not
to extend is provided.
SAMUEL D. WAKSAL. Pursuant to the employment agreement with Dr. Waksal,
he shall serve as the President and Chief Executive Officer and as a member of
the Board of Directors. Dr. Waksal's base salary is required to be not less than
$500,000 and he will be eligible to receive an annual bonus; provided, that, the
annual bonus shall not be less than $1,000,000 less his base salary for the
relevant year.
Dr. Waksal will be entitled to participate in customary employee
benefit plans and programs sponsored by the Company. In addition, the Company
will reimburse Dr. Waksal for up to $15,000 annually for personal tax planning
and financial advice and will provide him with a term life insurance policy with
a death benefit of at least $5,000,000. On the Commencement Date, pursuant to
the terms of the employment agreement, Dr. Waksal was granted a ten year stock
option to acquire 1,250,000 shares of the Company's common stock at an exercise
price per share equal to $50.01, the fair market value at the time of the grant.
The stock option will vest as to 100% of the shares subject thereto on the third
anniversary of the date of grant; provided, that, 33 1/3% of the shares subject
to the stock option will each automatically vest when the Company's ten day
average stock price reaches $60, $80 and $100 per share, respectively. In
addition, the stock option shall become 100% vested upon a "change in control"
of the Company. These options vested as to the first 33 1/3% on October 31,
2001.
If Dr. Waksal's employment is terminated by the Company without "cause"
or by Dr. Waksal for "good reason," Dr. Waksal will be paid or provided, in
addition to accrued but unpaid compensation and benefits and pro-rata bonus, a
(a) lump-sum cash payment equal to three times the sum of his base salary and
highest bonus paid in last three years (with highest bonus paid deemed to be at
least two times his then current base salary); (b) continuation of health and
welfare benefits for three years; (c) immediate vesting of all stock-based
awards, including the stock options discussed above and all outstanding options
shall remain exercisable until the remainder of their term regardless of any
termination of employment provisions therein contained; (d) lump sum payment
equal to the present value of the Company's contributions which would have been
made under all of the Company's retirement plans if he had continued to be
employed by the Company for an additional three years and (e) payment by the
13
Company of all contributions or payments for the year of termination under all
insurance benefits or policies for the benefit of Dr. Waksal of which he shall
become the owner.
If any of the payments to be made to Dr. Waksal could result in the
imposition of an excise tax under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code"), the Company shall pay Dr. Waksal an additional
amount to fully gross him up for such taxes, unless, by reducing the amounts
payable to him by 10%, no amounts would be subject to the excise tax, in which
case the payments shall be so reduced.
The employment agreement contains confidentiality, non-competition and
non-solicitation provisions.
For purposes of the employment agreement, the Company will have "cause"
to terminate Dr. Waksal upon (a) a final conviction or plea of guilty or no
contest to a felony involving moral turpitude or (b) willful misconduct that is
materially and demonstrably injurious economically to the Company. Among other
events, Dr. Waksal will have "good reason" to terminate his employment with the
Company (a) if there is any material and adverse change in his duties or
responsibilities, (b) if there is a reduction in his base salary, bonus
opportunity, or any material benefit, (c) for any reason during the thirty-day
period following the first anniversary of a change in control of the Company,
(d) if the Company provides a notice of non-renewal of the Term, (e) if he is
required to relocate or (e) if there is a breach of any material provision of
the employment agreement by the Company.
HARLAN W. WAKSAL. Dr. Waksal's employment agreement with the Company is
substantially the same as the employment agreement with Dr. Samuel D. Waksal
except that: (a) he will serve as Executive Vice President and Chief Operating
Officer and as a member of the Board of Directors, (b) his base salary is
required to be not less than $455,000 per year and (c) he was granted stock
options to acquire 1,000,000 shares of the Company's common stock.
DANIEL S. LYNCH. Mr. Lynch's employment agreement is substantially the
same as the employment agreement with Dr. Samuel D. Waksal except that: (a) he
will serve as Senior Vice President and Chief Financial Officer, (b) the Term of
his agreement does not automatically renew, (c) his base salary is required to
be not less than $360,000 and his minimum guaranteed bonus is $360,000, (d) he
was granted stock options to acquire 200,000 shares of the Company's common
stock which vest as to 33 1/3% of the shares subject thereto on each of the
first three anniversaries of the date of grant, and (e) upon a termination of
his employment by the Company without "cause" or by Mr. Lynch for "good reason,"
his bonus is deemed to be no less than $360,000. In addition, among other
events, Mr. Lynch will have "good reason" to terminate his employment with the
Company (a) if there is any material and adverse change in his duties or
responsibilities, (b) if there is a reduction in his base salary, bonus
opportunity, or any material benefit, (c) if he is required to relocate or (d)
if there is a breach of any material provision of the employment agreement by
the Company.
S. JOSEPH TARNOWSKI. Dr. Tarnowski's employment agreement is
substantially the same as the employment agreement with Dr. Samuel D. Waksal
except that: (a) he will serve as Senior Vice President -- Manufacturing
Operations and Product Development, (b) the Term of his agreement does not
automatically renew, (c) his base salary is required to be not less than
$225,000 and his minimum guaranteed bonus is $100,000, (d) he was not granted
stock options and (e) upon a termination of his employment by the Company
without "cause" or by Dr. Tarnowski for "good reason," his bonus is deemed to be
no less than $100,000. In addition, among other events, Dr. Tarnowski will have
"good reason" to terminate his employment with the Company (a) if there is any
material and adverse change in his duties or responsibilities, (b) if there is a
reduction in his base salary, bonus opportunity, or any material benefit, (c) if
he is required to relocate or (d) if there is a breach of any material provision
of the employment agreement by the Company.
REPORT OF THE COMPENSATION COMMITTEE
This Report was adopted by the Compensation Committee on April 3, 2002,
at which time the Directors signing this Report constituted the Compensation
Committee membership. Subsequent to the adoption of this Report, William R.
Miller joined the Compensation Committee, replacing Robert F. Goldhammer as
Chairman. During 2001, Richard Barth and Peter S. Ringrose also served on the
Compensation Committee. Dr. Ringrose resigned from the Compensation Committee on
March 19, 2002, and Mr. Barth resigned from the Board of Directors on April 2,
2002.
14
Overall Philosophy
The Company's 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 relate to an individual's performance.
The elements of the executive compensation package are base salary and
participation in annual incentives, including stock options.
In establishing base salaries, annual incentive awards and awards of
stock options, the Compensation Committee considers the executive's annual
review and periodic compensation surveys, including those provided by third
parties covering the biopharmaceutical industry.
The Compensation Committee uses no set formulas and may accord
different weight to different factors for each executive. The Committee looks
toward the progress of the Company's research and development programs, its
ability to gain support for such programs, either internally or externally, its
ability to attract, motivate and retain talented employees and its ability to
secure capital sufficient for its product development to achieve rapid and
effective commercialization as may be practicable.
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
Executive Officers (as defined). It is the policy of the Company to attempt to
have its executive compensation plans treated as 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
Dr. Samuel D. Waksal's base salary was fixed in January 2001 at
$550,000 and represented an increase of 10% over his 2000 base salary. Dr.
Waksal and the Company entered into an employment agreement on September 19,
2001. Also on this date, the Company entered into its strategic partnership with
Bristol-Myers Squibb Company ("BMS"). Under the employment agreement, Dr. Waksal
was granted options to purchase 1,250,000 shares of the Company's common stock
at an exercise price of $50.01 per share. The options vest after three years but
are subject to earlier vesting should certain targets be attained in the
Company's stock price. Dr. Waksal's employment agreement provides for a
guaranteed minimum annual bonus that is not less than the difference between
$1,000,000 and his base salary for the relevant bonus year. Accordingly, Dr.
Waksal was paid a bonus for 2001 of $450,000. This was paid in 2002. Dr. Waksal
was paid no discretionary bonus for 2001.
Compensation and Stock Option Committee
Robert F. Goldhammer, Chairman
David M. Kies
Paul B. Kopperl
The foregoing Report of the Compensation Committee shall not be deemed to be
soliciting material, to be filed with the SEC or to be incorporated by reference
into any of the Company's previous or future filings with the SEC, except as
otherwise explicitly specified by the Company in any such filing.
15
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 2001, the following Board
members served on the Compensation Committee: Robert F. Goldhammer, Richard
Barth, David M. Kies, Paul B. Kopperl and Peter S. Ringrose, none of whom is an
employee of the Company or any of its subsidiaries or has ever been an executive
officer of the Company or any subsidiaries. Dr. Ringrose resigned from the
Compensation Committee on March 19, 2002, and Mr. Barth resigned from the Board
on April 2, 2002. Dr. Ringrose is an executive officer of BMS. In 2001, the
Company accepted a promissory note from Mr. Goldhammer. See "Certain
Relationships and Related Transactions" for descriptions of the Company's
relationship with BMS and the terms of the Company's promissory note from Mr.
Goldhammer.
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 executive officers (other than the
Chief Executive Officer) for the years ended December 31, 2001, 2000 and 1999
who were serving as executive officers at December 31, 2001 and whose total
salary and bonus exceeded $100,000 for the year ended December 31, 2001 (the
"Named Executive Officers").
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY(1) BONUS(2) COMPENSATION(3) OPTIONS(4) COMPENSATION
POSITION YEAR ($) ($) ($) (#) ($)
- ------------------------------ ---- -------- ---------- ---------------- ------------ ------------
Samuel D. Waksal.............. 2001 $ 550,000 $ 450,000(5) $ - 1,250,000(6) $10,435(7)
President and Chief 2000 500,000 1,000,000 - - 10,435(7)
Executive Officer 1999 300,000 600,000 - 2,000,000 10,435(7)
Harlan W. Waksal.............. 2001 451,404 545,000(8) - 1,000,000(6)
Executive Vice President 2000 400,000 800,000 - -
and Chief Operating Officer 1999 250,000 500,000 - 1,300,000
Daniel S. Lynch(9)............ 2001 223,769 525,000(10) - 260,000(11)(12) -
Senior Vice President, Finance
and Chief Financial Officer
S. Joseph Tarnowski........... 2001 217,808 225,000 - 10,000(12)(13) -
Senior Vice President, Product 2000 204,750 100,000 36,083(14) 24,000 -
and Process Development 1999 195,000 60,000 - 150,000 -
Peter Bohlen.................. 2001 215,000 200,000 - -(12) -
Senior Vice President, 2000 183,750 91,000 - 34,000 -
Research 1999 170,000 85,000 - 90,000 -
(1) Amounts shown include compensation deferred pursuant to Section 401(k)
of the Code.
(2) Although the Company has no formal bonus plan, the Compensation
Committee, in its discretion, may award bonuses to officers and other
employees of the Company. The Company has paid bonuses based on
individual and Company performance. Certain employment agreements also
provide for the payment of minimum guaranteed bonuses. 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
Executive 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, 2001, 2000 and 1999, respectively.
16
(4) Options to purchase the number of shares of common stock shown are
recorded for the period in which they were granted.
(5) Pursuant to the terms of the employment agreement entered into between
the Company and Dr. Samuel D. Waksal on September 19, 2001, the date
the Company entered into its strategic partnership with BMS, Dr. Samuel
D. Waksal is guaranteed a minimum annual bonus that is not less than
the difference between $1,000,000 and his base salary for the relevant
bonus year. Dr. Samuel D. Waksal's base salary for 2001 was $550,000,
and he was paid in 2002 his guaranteed bonus for 2001 of $450,000.
(6) These options were granted pursuant to the terms of each of Dr. Samuel
D. Waksal's and Dr. Harlan W. Waksal's employment agreements entered
into on September 19, 2001.
(7) Consists of premium payments on a term life insurance policy for Dr.
Samuel D. Waksal under which his daughters are the beneficiaries.
(8) Pursuant to the terms of the employment agreement entered into between
the Company and Dr. Harlan W. Waksal on September 19, 2001, the date
the Company entered into its strategic partnership with BMS, Dr. Harlan
W. Waksal is guaranteed a minimum annual bonus that is not less than
the difference between $1,000,000 and his base salary for the relevant
bonus year. Dr. Harlan W. Waksal's base salary for 2001 was $455,000,
and he was paid in 2002 his guaranteed bonus for 2001 of $545,000.
(9) Mr. Lynch commenced employment with the Company in April 2001.
(10) Consists of a $75,000 sign-on bonus and a performance bonus of $450,000
paid pursuant to the terms of an employment agreement entered into
between the Company and Mr. Lynch on September 19, 2001, the date the
Company entered into its strategic partnership with BMS.
(11) 200,000 of these options were granted pursuant to the terms of Mr.
Lynch's employment agreement entered into on September 19, 2001, the
date the Company entered into its strategic partnership with BMS.
60,000 of these options were granted in connection with Mr. Lynch's
commencement of employment with the Company.
(12) Options granted on the basis of 2001 performance were granted in 2002
and are not reflected in this Table.
(13) These options were granted to Dr. Tarnowski in connection with his
promotion during 2001 to Senior Vice President.
(14) Consists of relocation expenses associated with the individual joining
the Company.
OPTION GRANTS IN FISCAL 2001
The following table sets forth certain information relating to stock
option grants to the Named Executive Officers during the year ended December 31,
2001.
INDIVIDUAL GRANTS
-----------------------------------------------------
PERCENT OF
TOTAL POTENTIAL REALIZABLE VALUE AT
NUMBER OF OPTIONS ASSUMED ANNUAL RATES OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE APPRECIATION FOR OPTION TERM(3)
UNDERLYING EMPLOYEES OF BASE ($)
OPTIONS IN FISCAL PRICE EXPIRATION -----------------------------------
NAME GRANTED(1) 2001 ($/SHARE)(2) DATE 0% 5% 10%
- ------------------------- ---------- ---------- ------------ ----------- --- ------------ -------------
Samuel D. Waksal......... 1,250,000(4) 33.62% $ 50.01 9/18/11 - $ 39,313,775 $ 99,389,875
Harlan W. Waksal......... 1,000,000(4) 26.90% 50.01 9/18/11 - 31,451,020 79,703,060
17
Daniel S. Lynch(5)....... 200,000(6) 5.37% 50.01 9/18/11 - 6,290,204 15,940,612
60,000(6) 1.61% 28.19 4/2/11 - 1,063,249 2,694,271
S. Joseph Tarnowski(5)... 10,000(7) .27% 37.40 5/6/11 - 237,262 601,222
Peter Bohlen(5).......... - - - - - - -
(1) The Company granted options to purchase a total of 3,717,500 shares of
common stock to employees during 2001. Grants made to employees
relating to 2001 performance were made in 2002.
(2) Options were granted to purchase common stock at an exercise price that
equaled the fair market value of the common stock at the time 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 the 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.
(4) These options were granted pursuant to the terms of each of Dr. Samuel
D. Waksal's and Dr. Harlan W. Waksal's employment agreements entered
into on September 19, 2001 and will vest as to 100% of the shares
subject thereto on the third anniversary of the date of grant;
provided, that, they will automatically vest earlier as to 33 1/3% of
the shares subject to the options on the date the Company's ten day
average stock price reaches $60, $80 and $100 per share, respectively,
should that occur. In addition, the options shall become 100% vested
upon a "change in control" of the Company. These options vested as to
the first 33 1/3% on October 31, 2001.
(5) Options granted on the basis of 2001 performance were granted in 2002
and are not included in this Table.
(6) 200,000 of these options were granted pursuant to the terms of Mr.
Lynch's employment agreement entered into on September 19, 2001 and are
exercisable as to 33 1/3% of the shares on each of the first, second
and third anniversaries of the date of grant. 60,000 of these options
were granted upon the commencement of Mr. Lynch's employment with the
Company and are exercisable as to 25% of the shares on each of the
first, second, third and fourth anniversaries of the date of grant.
(7) These options are exercisable as to 25% of the shares on each of the
first, second, third and fourth anniversaries of the date of grant.
OPTION EXERCISES AND VALUES FOR FISCAL 2001
The following table sets forth option exercises during the year ended
December 31, 2001 by the Named Executive Officers and the value of the options
held by such persons on December 31, 2001, whether or not exercisable on such
date.
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, 2001 DECEMBER 31,2001(2)
ACQUIRED ON VALUE ---------------------------- -----------------------------
EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- ------------------------- ------------ ----------- ------------ ------------- ----------- --------------
Samuel D. Waksal......... 2,300,000 $ 72,015,350 416,668 833,332 $ 0 $ 0
Harlan W. Waksal......... 2,580,000 89,145,000 332,334 666,666 0 0
Daniel S. Lynch.......... 0 0 0 260,000 0 1,096,350
S. Joseph Tarnowski...... 19,324 1,002,035 53,676 97,000 1,728,527 3,223,333
Peter Bohlen............. 46,833 2,589,865 208,667 64,500 7,675,199 1,563,514
18
(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 in most cases did not occur.
(2) The values were calculated by multiplying the closing market price of
the common stock on December 31, 2001 ($46.46 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 is equal to or greater than $46.46,
the option is deemed to have no value.
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 "401(k)") 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 2002, the Company has elected to make voluntary matching
contributions equal to 25% of the first 6% of an employee's eligible
compensation contributed by the employee, limited to $2,500 per employee. The
Company made such a matching contribution for 2001 which totaled approximately
$243,000. The Company anticipates evaluating the level of its matching
contribution, if any, on an annual basis.
COMMON 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)
with The Nasdaq Stock Market (U.S. Companies) Total Return Index and The Nasdaq
Pharmaceutical Stocks Total Return Index for the period from December 31, 1996
through December 31, 2001. The graph assumes $100 was invested in the Company's
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.
19
COMPARISON OF FIVE YEAR TOTAL RETURN AMONG IMCLONE COMPANY STOCK,
NASDAQ STOCK MARKET (U.S. COMPANIES) TOTAL RETURN INDEX AND
NASDAQ PHARMACEUTICAL STOCKS TOTAL RETURN INDEX
[LINE CHART]
NASDAQ
NASDAQ PHARMACEUTICAL
US STOCKS IMCL
---- ------ ----
12/31/96 $100 $100 $100
12/31/97 122 103 83
12/31/98 173 131 93
12/31/99 321 247 406
12/31/00 193 308 902
12/31/01 153 262 952
This Section shall not be deemed to be soliciting material, to be filed with the
SEC or to be incorporated by reference into any of the Company's previous or
future filings with the SEC, except as otherwise explicitly specified by the
Company in any such filing.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH BRISTOL-MYERS SQUIBB COMPANY
Two of the Company's Directors, Dr. Andrew G. Bodnar and Dr. Peter S.
Ringrose, are also officers of BMS. The Company's relationship with BMS is
described below.
On September 19, 2001, the Company entered into an acquisition
agreement (the "Acquisition Agreement") with BMS, a Delaware corporation, and
Bristol-Myers Squibb Biologics Company, a Delaware corporation ("BMS
Biologics"), which is a wholly-owned subsidiary of BMS, providing for the tender
offer by BMS Biologics to purchase up to 14,392,003 shares of the Company's
common stock
20
for $70.00 per share, net to the seller in cash. The tender offer by BMS
Biologics, available to all stockholders, allowed for the Company's present or
former employees and Directors who held exercisable options to purchase shares
of the Company's common stock having exercise prices less than $70.00 per share
to conditionally exercise any or all of those options and tender the underlying
shares in the tender offer. In connection with the Acquisition Agreement, the
Company entered into a stockholder agreement with BMS and BMS Biologics, dated
as of September 19, 2001 (the "Stockholder Agreement"), pursuant to which the
Company agreed with BMS and BMS Biologics to various arrangements regarding the
respective rights and obligations of each party with respect to, among other
things, the ownership of shares of the Company's common stock by BMS and BMS
Biologics. Concurrently with the execution of the Acquisition Agreement and the
Stockholder Agreement, the Company entered into a development, promotion,
distribution and supply agreement (the "Commercial Agreement") with BMS and E.R.
Squibb & Sons, L.L.C., a Delaware limited liability company and a wholly-owned
subsidiary of BMS ("E.R. Squibb"), relating to ERBITUX, the Company's lead
therapeutic product, pursuant to which, among other things, the parties are
co-developing and co-promoting ERBITUX in the United States and Canada, and
co-developing ERBITUX (together with Merck KGaA) in Japan.
On March 5, 2002, the Company amended the Commercial Agreement with
E.R. Squibb and BMS. The amendment changed certain economics of the Commercial
Agreement and has expanded the clinical and strategic role of BMS in the ERBITUX
development program. One of the principal economic changes to the Commercial
Agreement is that the Company received $140,000,000 on March 7, 2002, and an
additional payment of $60,000,000 is payable on March 5, 2003. Such payments are
in lieu of the $300,000,000 payment the Company would have received on
acceptance by the United States Food and Drug Administration ("FDA") of the
ERBITUX Biologics License Application under the original terms of the Commercial
Agreement. In addition, the Company agreed to resume construction of its second
commercial manufacturing facility as soon as reasonably practicable after the
execution of the amendment.
On October 29, 2001, pursuant to the Acquisition Agreement, BMS
Biologics accepted for payment pursuant to the tender offer 14,392,003 shares
the Company's common stock on a pro rata basis from all tendering shareholders
and those conditionally exercising stock options.
The Stockholder Agreement, among other things, gave BMS the right to
nominate two initial directors and also set forth BMS' (i) limitation on
additional purchases of shares, (ii) option to purchase shares in the event of
dilution and (iii) restrictions as to transfer of shares. Currently, BMS has
designated Dr. Ringrose, BMS's Chief Scientific Officer, and Dr. Bodnar, BMS's
Senior Vice President, Medical and External Affairs, as the initial BMS
directors.
In exchange for the rights granted to BMS under the amended Commercial
Agreement, the Company can receive up-front and milestone payments totaling
$900,000,000 in the aggregate, of which $200,000,000 was received on September
19, 2001, $140,000,000 was received on March 7, 2002, $60,000,000 is payable on
March 5, 2003, $250,000,000 is payable upon receipt of marketing approval from
the FDA with respect to the initial indication for ERBITUX and $250,000,000 is
payable upon receipt of marketing approval from the FDA with respect to a second
indication for ERBITUX. All such payments are non-refundable and non-creditable.
Except for the Company's expenses incurred pursuant to a co-promotion option,
E.R. Squibb is also responsible for 100% of the distribution, sales and
marketing costs in the United States and Canada, and as between the Company and
E.R. Squibb, each will be responsible for 50% of the distribution, sales,
marketing costs and other related costs and expenses in Japan. The Commercial
Agreement provides that E.R. Squibb shall pay the Company distribution fees
based on a percentage of annual net sales of ERBITUX by E.R. Squibb in the
United States and Canada. The distribution fee is 39% of net sales in the United
States and Canada. The Commercial Agreement also provides that the distribution
fees for the sale of ERBITUX in Japan by E.R. Squibb or the Company shall be
equal to 50% of operating profit or loss with respect to such sales for any
calendar month. In the event of an operating profit, E.R. Squibb will pay the
Company the amount of such distribution fee, and in the event of an operating
loss, the Company will credit E.R. Squibb the amount of such distribution fee.
The Commercial Agreement provides that the Company will be responsible for the
manufacture and supply of all requirements of ERBITUX in bulk form for clinical
and commercial use in the United States, Canada and Japan and that E.R. Squibb
will purchase all of its requirements of ERBITUX in bulk form for commercial use
from the Company. The Company will supply ERBITUX in bulk form for clinical use
at the Company's fully burdened manufacturing cost and will supply ERBITUX in
bulk form for commercial use at our fully burdened manufacturing cost plus a
mark-up of 10%. In addition to the up-front and milestone payments, the
distribution fees for the United States, Canada and Japan and the 10% mark-up on
the commercial supply of ERBITUX, E.R. Squibb is also responsible for 100% of
the cost of all clinical studies other than those studies undertaken post-launch
which are not pursuant to an Investigational New Drug Application (e.g. phase IV
studies), the cost of which will be
21
shared equally between E.R. Squibb and the Company. As between E.R. Squibb and
the Company, each will be responsible for 50% of the cost of all clinical
studies in Japan.
OTHER ITEMS
The Company accepted from Dr. Samuel D. Waksal, its President and Chief
Executive Officer, a full recourse, unsecured promissory note dated as of
December 21, 2000 in the principal amount of $282,200. The note was payable upon
the earlier of June 21, 2001 or demand by the Company and bore interest at 10.5%
(the prime lending rate plus 1% on the date of the note) for the period that the
loan is outstanding. The Company extended the term of the note to December 21,
2001. As of November 14, 2001, the principal amount of this note and accrued
interest totaling $310,000 had been paid in full.
In July 2001, the Company accepted a promissory note from each of Dr.
Samuel D. Waksal, its President and Chief Executive Officer, Dr. Harlan W.
Waksal, its Executive Vice President and Chief Operating Officer and Mr. Robert
F. Goldhammer, its Chairman of the Board, and, in August 2001, the Company
accepted a promissory note from Dr. Arnold J. Levine, a member of its Board of
Directors, in payment of the aggregate exercise price associated with the
exercise of stock options and warrants they held to purchase a total of
approximately 4,473,000 shares of the Company's common stock. Dr. Samuel D.
Waksal's promissory note was in the amount of $18,178,750; Dr. Harlan W.
Waksal's promissory note was in the amount of $15,747,550; Mr. Goldhammer's
promissory note was in the amount of $1,228,065; and Dr. Levine's promissory
note was in the amount of $87,000. The unsecured promissory notes were
full-recourse, payable on the earlier of one year from the date of the notes or
on demand by the Company and bore interest at the prime lending rate plus 1% (7
3/4% on the date of the note). Interest was payable quarterly and the interest
rate adjusted quarterly during the term of each note to the then current prime
lending rate plus 1%. On October 31, 2001, the Company made demand for repayment
by November 23, 2001, of the principal amount of the notes and accrued interest
thereon. As of November 14, 2001, the principal amount of all of these notes of
$35,241,000 and accrued interest of $879,000 were paid in full.
In December 2001, the Company entered into an agreement to sublease a
1,520 square foot portion of its corporate headquarters and research facility in
New York City to Scientia Health Group Inc. ("Scientia"). Base rent under the
sublease is $5,496 per month and is subject to annual escalation. Scientia is
also responsible for additional rent representing its pro-rata share of
operating expenses. The amount charged to Scientia represents a direct pass
through of the Company's costs. The term of the sublease shall continue month to
month until such notice of termination by the Company. During the year ended
December 31, 2001, the Company incurred, and was subsequently reimbursed by
Scientia, for approximately $111,000 in costs associated with preparing the
premises for occupancy. Dr. Samuel D. Waksal, the Company's President and Chief
Executive Officer, is the Executive Chairman of Scientia.
Certain transactions engaged in by Dr. Samuel D. Waksal, the Company's
President and Chief Executive Officer, in securities of the Company were deemed
to have resulted in "short-swing profits" under Section 16 of the Exchange Act.
In accordance with Section 16(b) of the Exchange Act, Dr. Samuel D. Waksal paid
the Company in March 2002 an aggregate amount of approximately $486,000, as
disgorgement of "short-swing profits" he realized.
During the year ended December 31, 2001, 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the SEC
reports of ownership of Company securities and changes in reported ownership.
Officers, directors and greater than ten percent shareholders are required by
SEC rules to furnish the Company with copies of all Section 16(a) reports they
file.
Based solely on a review of the copies of such forms furnished to the
Company, or written representations from the reporting persons that no Form 5
was required, the Company believes that, during the fiscal year ended December
31, 2001, all Section 16(a) filing requirements applicable to its officers,
directors, and greater than ten percent beneficial owners were met, except that,
between 1992 and 2001, Dr. Samuel D. Waksal failed to timely file 18 Forms 4
with respect to 28 transactions and 6
22
Forms 5 with respect to 16 transactions. In addition, Dr. Harlan W. Waksal
failed to timely report ownership of 200 shares owned jointly with his wife and
failed to include 43 of such shares as part of a sale timely reported on a Form
4. Information concerning these shares and the transaction was promptly reported
to the SEC upon discovery of the omissions.
REPORT OF THE AUDIT COMMITTEE
MEMBERSHIP AND ROLE OF THE AUDIT COMMITTEE
The Audit Committee consists of the following members of the Company's
Board of Directors: Paul B. Kopperl, Chairman, and William R. Miller. During
2001, Richard Barth and Andrew G. Bodnar served on the Audit Committee. Dr.
Bodnar resigned from the Audit Committee on March 4, 2002, and Mr. Barth
resigned from the Board of Directors on April 2, 2002. Mr. Barth was a member of
the Audit Committee on March 22, 2002, the date this Report was adopted. The
Board of Directors, in its business judgment, has determined that each of the
members of the Audit Committee is "independent" as defined under the National
Association of Securities Dealers' listing standards. The Audit Committee
operates under a written charter adopted by the Board of Directors on June 14,
2000, a copy of which was included as Appendix A to the Company's proxy
statement for the 2000 fiscal year. On November 15, 2001, the Audit Committee
reviewed and reassessed the adequacy of the charter and the performance of the
Audit Committee thereunder. The Audit Committee held three (3) meetings during
the fiscal year ended December 31, 2001.
The primary functions of the Audit Committee are to monitor the
integrity of the Company's financial reporting process and systems of internal
controls regarding finance, accounting and, with certain exceptions, legal
compliance and to provide an avenue of communication among the independent
auditors, management and the Board of Directors. In performing all of these
functions, the Audit Committee acts only in an oversight capacity on behalf of
the Board of Directors. The primary duties and responsibilities of the Audit
Committee are to (i) review the Company's annual audited financial statements
prior to filing with the SEC or distribution to the public; (ii) in consultation
with management and the independent auditors, consider the integrity of the
Company's financial reporting procedures and controls; (iii) review with
management and the independent auditors the Company's quarterly financial
statements prior to filing with the SEC or distribution to the public; (iv)
periodically perform self-assessment of Audit Committee performance; (v)
annually review policies and procedures as well as test results associated with
directors' and officers' expense accounts and perquisites; and (vi) annually
review a summary of directors' and officers' related party transactions and
potential conflicts of interest. The Audit Committee also reviews the
performance of the independent auditors and their fees and recommends their
selection and engagement to the Board of Directors.
REVIEW OF THE COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2001
The Audit Committee reviewed and discussed the audited financial
statements of the Company for the fiscal year ended December 31, 2001 with the
Company's management and KPMG LLP, the Company's auditors. This discussion
included an assessment of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant estimates and judgments
and the clarity of disclosures in the financial statements. In addressing the
quality of management's accounting judgments, the members of the Audit Committee
asked for management's representations that the audited financial statements of
the Company have been prepared in conformity with accounting principles
generally accepted in the United States of America and have expressed their
general preference for conservative policies when more than one accounting
option is available.
The Audit Committee also discussed with its independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees), as currently in effect, and, with and
without management present, reviewed and discussed the results of the
independent auditors' examination of the financial statements.
Consistent with Independence Standards Board Standard No. 1
(Independence Discussion with Audit Committees), as currently in effect, the
Audit Committee obtained from KPMG LLP a formal written statement describing all
relationships between the auditors and the Company that might bear on the
auditors' independence from the Company and its management. The Audit Committee
discussed with management and with the auditors the provision of non-audit
services and any relationships that may impact the auditors' objectivity and
independence and has satisfied itself as to the auditors' independence.
In performing all of these functions, the Audit Committee acts only in
an oversight capacity on behalf of the Board of Directors. In its oversight
role, the Audit Committee necessarily relies on the procedures, work and
assurances of the Company's
23
management, which has the primary responsibility for financial statements and
reports, and of the independent auditors, who, in their report, express an
opinion on the conformity of the Company's audited financial statements to
accounting principles generally accepted in the United States of America.
Based on the Audit Committee's review and discussions noted above, the
Audit Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2001.
The Audit Committee and Board of Directors have recommended, subject to
ratification by the stockholders, that KPMG LLP be selected as the Company's
independent certified public accountants for the fiscal year ending December 31,
2002.
Audit Committee
Paul B. Kopperl, Chairman
Richard Barth
William R. Miller
The foregoing Report of the Audit Committee shall not be deemed to be soliciting
material, to be filed with the SEC or to be incorporated by reference into any
of the Company's previous or future filings with the SEC, except as otherwise
explicitly specified by the Company in any such filing.
FEES PAID TO KPMG LLP
AUDIT FEES
The aggregate fees billed by KPMG LLP in connection with its audit of
the Company's annual financial statements for the year 2001 and its review of
the financial statements included in the Company's Form 10-Qs during 2001 were
$174,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not engage KPMG LLP to provide services for the Company
regarding financial information systems design and implementation during 2001.
ALL OTHER FEES
KPMG LLP's fees for all other professional services provided to the
Company during 2001 totaled $240,000, including audit related services of
$96,000 and non-audit related services of $144,000. Audit related services
included fees related to the review of SEC registration statements and various
technical accounting consultations. Non-audit related services consisted
primarily of fees related to tax services, including services rendered in
connection with the BMS transaction. The Audit Committee has considered whether
the provision of all other services by KPMG LLP is compatible with maintaining
KPMG LLP's independence and concluded that KPMG LLP is "independent."
PROPOSAL NO. 2
APPROVAL OF THE IMCLONE SYSTEMS INCORPORATED
2002 STOCK OPTION PLAN
On April 3, 2002, the Board of Directors adopted, subject to
stockholder approval, the ImClone Systems Incorporated 2002 Stock Option Plan
for the purpose of enhancing the ability of the Company and its subsidiaries to
attract and retain officers, employees, directors and consultants of outstanding
ability and to provide officers, employees, directors and consultants with an
interest in the Company parallel to that of the Company's stockholders. The
Compensation Committee has determined that the Company's current Chief Executive
Officer and Chief Operating Officer will not receive option grants under the
2002 Stock Option Plan during 2002. For the period of 2003 and beyond, the
Compensation Committee will assess the appropriateness of granting options to
such individuals based upon their performance and the principles of sound
corporate governance. A brief
24
description of the major provisions of the plan is set forth below to facilitate
an informed decision by the shareholders entitled to vote on the approval of the
plan. This summary highlights only selected information from the plan and does
not contain all of the information that may be important to you. To understand
the terms of the plan fully, you should read the full text of the plan, a copy
of which is attached hereto as Appendix A. The affirmative vote of a majority of
the outstanding shares present and entitled to vote at the annual meeting is
required to approve the plan.
Administration. The plan shall be administered by a committee (the
"Committee") which shall consist of at least two members of the Board of
Directors who are "non-employee directors" within the meaning of Rule 16b-3 as
promulgated under Section 16 of the Securities Exchange Act of 1934, as amended
and who are also "outside directors" within the meaning of Section 162(m) of the
Internal Revenue Code. The Committee will have broad discretion, subject to the
terms of the plan, to approve the selection of participants, prescribe the terms
and conditions of options and establish rules and regulations for the
interpretation and administration of the plan.
In order to administer the plan in an efficient manner, the Committee
may delegate to officers or employees of the Company or any subsidiary, and to
service providers, the authority, subject to such terms as the Committee shall
determine, to perform administrative functions with respect to the plan and
option awards.
Under the plan, members of the Committee shall not be personally liable
for any actions taken in good faith with respect to the plan and shall, to the
extent permitted by law, be fully indemnified by the Company with respect to any
such action or determination.
Eligibility. Individuals eligible to receive options under the plan
shall be the officers, employees, directors and consultants of the Company and
its subsidiaries selected by the Committee; provided that, only employees of the
Company and its subsidiaries may be granted incentive stock options.
Stock Subject to the Plan. Common stock available for issue or
distribution under the plan shall be authorized and unissued shares or shares
reacquired by the Company in any manner. Subject to adjustment under the plan,
the maximum total number of shares of common stock which shall be available for
the grant of options under the plan shall be 3,300,000. For purposes of this
limitation, any common stock subject to an option which is canceled, forfeited
or expires prior to exercise whether such option was granted under this plan or
the 1998 Non-Qualified Stock Option Plan, as amended, the 1996 Non-Qualified
Stock Option Plan, as amended or the 1996 Incentive Stock Option Plan, as
amended (together the "Prior Plans") shall again become available for grant
under the plan. In addition, any shares of common stock tendered and/or withheld
for payment of all or a portion of an option or any applicable withholding taxes
shall again become available for the grant of an option under the plan. The
Company may, but is not required to, use the proceeds it receives in connection
with the exercise of an option under this plan or under the Prior Plans for
exercises occurring after the "Effective Date" (i.e., the date the plan is
approved by a majority vote of the Company's shares) to purchase shares of its
common stock in the open market and any such shares may be used for the issuance
of options under this plan. Subject to adjustment under the plan, no employee
shall be granted, during any three (3) year period, options to purchase more
than 3,300,000 shares of common stock.
Subject to adjustment under the plan, the aggregate number of shares
of common stock with respect to which incentive stock options may be granted
under the plan shall not exceed 825,000 shares of common stock. Any shares of
common stock subject to an incentive stock option granted under the plan or the
1996 Incentive Stock Option Plan, as amended which is canceled, forfeited or
expires prior to exercise shall again be counted toward the aggregate number of
shares available for the grant of incentive stock options under this plan.
If the stockholders approve this plan, no further grants will be made
under the Prior Plans.
The market value of the Company's common stock as reported on Nasdaq as
of April 11, 2002 was $23.81 per share.
Nothing in the plan prohibits the Company from adopting other equity
compensation programs for employees of the Company and its subsidiaries,
including employees eligible for grants under the plan.
Type of Awards. Incentive stock options and nonqualified stock options
may be granted under the plan.
25
Purchase Price. The purchase price per share of common stock
purchasable under an option shall be determined by the Committee and shall not
be less than 100% of the fair market value of the common stock on the date of
grant.
Option Term. Unless otherwise provided at the time of grant, the term
of each option shall be ten (10) years from the date the option is granted.
Unless otherwise provided at the time of grant, upon the death or disability of
a participant, options (other than incentive stock options) that would otherwise
remain exercisable following such death or disability shall remain exercisable
for one year following such death or disability, notwithstanding the term of the
option.
Exercisability; Method of Exercise. Each option shall vest and become
exercisable at a rate determined by the Committee on the date of grant.
Options may be exercised, in whole or in part, by written notice to the
Company, specifying the number of shares to be purchased together with payment
in full of the exercise price. The exercise price may be paid by (i) cash or
certified check or bank check, (ii) surrender of common stock held by the
optionee for at least six (6) months (or such longer or shorter period as may be
required to avoid a charge to earnings for accounting purposes) or the
attestation of ownership of such shares, in either case, if so permitted by the
Company, (iii) through a broker-assisted same-day sale, (iv) through additional
methods prescribed by the Committee or (v) by any combination of the foregoing,
to the extent permitted by applicable law.
Termination of Continuous Service. Unless otherwise provided at the
time of grant, upon a termination of continuous service by an optionee, all
unvested options shall terminate and all vested options shall remain exercisable
for 30 days thereafter (one year in the event of death or disability); provided,
that, if such termination is for cause, all options (whether or not vested)
shall terminate and cease to be exercisable.
Withholding Tax. The Company has the right to require any optionee to
pay to the Company any amount of taxes which the Company shall be required to
withhold with respect to the exercise of an option. Such obligation may be
satisfied as follows (i) in cash or (ii) with the consent of the Committee and
in its sole discretion, the participant may elect to have the Company withhold
shares of common stock having a fair market value equal to the amount of the
withholding tax obligation as determined by the Company.
Acceleration of Exercisability. Unless otherwise provided at the time
of grant, upon the occurrence of a Change in Control (as defined in the plan),
all options shall automatically become vested and exercisable in full.
Forfeiture. Unless otherwise provided at the time of grant, in the
event of a serious breach of conduct by a participant or former participant, the
Committee may (i) cancel any outstanding option granted to such participant or
former participant, in whole or in part, whether or not vested, and/or (ii) if
such conduct or activity occurs within one (1) year following the exercise of an
option, require such participant or former participant to repay to the Company
any gain realized upon the exercise of such option.
Adjustments. The Committee will determine the appropriate adjustments
to be made in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the plan or with respect
to an option upon the occurrence of certain events affecting the capitalization
of the Company.
Termination and Amendment of the Plan. Subject to earlier termination
pursuant to the terms of the plan, the plan shall have an indefinite term;
provided that, the ability to grant incentive stock options will terminate on
April 3, 2012. The Board may amend, suspend or terminate the plan at any time;
provided, that, (a) no such amendment shall be made without shareholder approval
if such approval is necessary to comply with applicable law, regulation or stock
exchange rule and (b) except as provided in the plan, no amendment shall be made
that would adversely affect rights previously granted under the plan.
GENERAL FEDERAL TAX CONSEQUENCES
The following summary of the material federal income tax consequences
to the Company is based on current law, is for general information only and is
not tax advice.
26
Section 162(m) Limitation. Subject to a limited number of exceptions,
Section 162(m) denies a deduction to a publicly held corporation for payments of
remuneration to certain employees to the extent the employee's remuneration for
the taxable year exceeds $1,000,000. For this purpose, remuneration attributable
to stock options is included within the $1,000,000 limitation. However, to the
extent that certain procedural requirements are met (e.g., the plan is approved
by the stockholders of the Company, grants are made by the Committee, the
exercise price is equal to the fair market value of the underlying shares upon
grant, etc.), gain from the exercise of stock options should not be subject to
the $1,000,000 limitation.
The Company has attempted to structure the plan in such a manner that
the remuneration attributable to the stock options will not be subject to the
$1,000,000 limitation. The Company has not, however, requested a ruling from the
Internal Revenue Service or an opinion of counsel regarding this issue.
Non-Qualified Stock Options. An individual receiving non-qualified
stock options should not recognize taxable income at the time of grant. A
participant should generally recognize ordinary compensation income in an amount
equal to the excess, if any, in the fair market value of the option shares on
exercise of the non-qualified stock options over the exercise price thereof. In
general, subject to the limitations set forth in Section 162(m) and discussed
above, the Company is entitled to deduct from its taxable income the amount that
the participant is required to include in ordinary income at the time of such
inclusion.
Incentive Stock Options. An individual granted an incentive stock
option will not generally recognize taxable income at the time of grant or,
subject to certain conditions, at the time of exercise, although he or she may
be subject to alternative minimum tax. In general, if a disqualifying
disposition should occur (i.e., the shares acquired upon exercise of the option
are disposed of within the later of two years from the date of grant or one year
from the date of exercise), a participant will generally recognize ordinary
compensation income in the year of disposition in an amount equal to the excess,
if any, of the fair market value of the option shares at the time of exercise
(or, if less, the amount realized on disposition), over the exercise price
thereof. The Company is not entitled to any deduction on account of the grant of
the incentive stock options or the participant's exercise of the option to
acquire common stock. However, in the event of a subsequent disqualifying
disposition of such shares of common stock acquired pursuant to the exercise of
an incentive stock option under circumstances resulting in taxable compensation
to the participant, subject to the limitations set forth in Section 162(m) and
discussed above, in general, the Company should be entitled to a tax deduction
equal to the amount treated as taxable compensation to the participant.
REGISTRATION WITH SEC
If this Proposal No. 2 is adopted, the Company intends to file a
registration statement covering the offering of the shares under the plan with
the SEC pursuant to the Securities Act of 1933, as amended.
NEW PLAN BENEFITS
Because future participation in the plan and the level of participation
will vary, it is not possible to determine the value of benefits which may be
obtained by those eligible to participate in the plan.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE IMCLONE SYSTEMS
INCORPORATED 2002 STOCK OPTION PLAN (PROPOSAL NO. 2 ON YOUR PROXY CARD).
PROPOSAL NO. 3
APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
On April 3, 2002, the Board of Directors voted unanimously to submit
for stockholder approval a proposed amendment to the Company's Certificate of
Incorporation, as amended, to increase the number of authorized shares of common
stock from 120,000,000 to 200,000,000 shares. The Board of Directors has
declared the proposed amendment to be advisable and in the best interests of the
Company and its stockholders and recommends that the stockholders approve the
amendment.
27
As of March 15, 2002, there were approximately:
- - 73,333,889 shares of common stock issued and outstanding.
- - 12,635,521 shares of common stock reserved for issued and outstanding
options, including those issued under the Company's various option
plans.
- - 2,117,431 additional shares of common stock reserved for issuance under
the Company's various option plans.
- - 189,250 shares of treasury stock.
- - 948,175 shares of common stock reserved for issuance under the
Company's 1998 Employee Stock Purchase Plan, as amended.
- - 869,565 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 ERBITUX, the Company's 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"), of which
$5,000,000 has been received to date and 63,027 shares of common stock
issued. These shares 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 and the undetermined premium, the Company has
currently reserved a number of shares based upon recent market prices.
The 869,565 number set forth above has been calculated based upon the
March 15, 2002 closing price. A different number of shares could be
required based on fluctuations in the price of the common stock.
- - 4,356,508 shares of common stock reserved for issuance upon conversion
of the Company's $240 million of 5 1/2% convertible subordinated notes
due March 1, 2005, which were privately placed in February 2000. The
Company received net proceeds from this offering of approximately
$232.2 million, after deducting expenses associated with the offering.
A holder may convert all or a portion of a note into common stock at
any time on or before March 1, 2005 at a conversion price of $55.09 per
share, subject to adjustment if certain events affecting the Company's
common stock occur.
- - On February 15, 2002, the Board of Directors approved a Stockholder
Rights Plan and declared a dividend of one preferred share purchase
right (a "Right") for each share of common stock outstanding at the
close of business on February 19, 2002. Under certain conditions, each
right entitles the holder thereof to purchase from the Company one
one-hundredth of a share of Series B Participating Cumulative Preferred
Stock, par value $0.001 per share (the "Preferred Stock"), of the
Company at an exercise price of $175 per one one-hundredth of a share
of Preferred Stock. Subject to certain exceptions, the Rights become
exercisable if a person or group acquires 15% or more of the Company's
common stock. If the Rights become exercisable, each holder of a Right
with the exception of the 15% holder, would be entitled to buy
additional shares of the Company's common stock at half of the then
current market price. The Board of Directors may redeem all of the
Rights at a price of $0.001 per Right at any time before any person or
group has acquired 15% of the Company's stock without meeting one of
the exceptions. No shares of common stock were reserved for issuance in
connection with this plan.
Accordingly, giving effect to such issuances and reserves,
approximately 25,549,661 shares of common stock of the 120,000,000 currently
authorized would remain available for issuance. If Proposal No. 2 described in
this proxy statement is approved by stockholders at the meeting, approximately
24,367,092 shares of common stock would be available for issuance unless this
Proposal No. 3 is approved.
28
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 herein. 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.
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 used by the Company in connection with acquisitions, commercial
agreements and stock splits. Such an increase in shares also could be used to
make a change in control of the Company more difficult. Although 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 to make the removal of management more
difficult. 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. Management may itself from time to time
consider a number of strategic alternatives designed to increase shareholder
value, including joint ventures, acquisitions and other forms of alliances as
well as the sale of all or part of the Company, and may determine to issue
shares in connection with such a transaction.
It should be noted that, subject to the limitations discussed above,
the Board can currently take all of the types of Board action described in the
preceding paragraphs. 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. Under
Delaware law, stockholders will not have any dissenters' or appraisal rights in
connection with this amendment. If the stockholders approve the amendment, it
will become effective upon the Company's executing, acknowledging and filing a
Certificate of Amendment with the Secretary of State of Delaware.
AN AFFIRMATIVE VOTE OF A MAJORITY OF SHARES OF COMMON STOCK OUTSTANDING
AND ENTITLED TO VOTE ON THE PROPOSAL WILL CONSTITUTE APPROVAL.
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 follows:
"FOURTH: The total number of shares of capital stock which the
Corporation shall have the authority to issue is two hundred million
(200,000,000) 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 120,000,000 TO 200,000,000 (PROPOSAL NO.
3 ON YOUR PROXY CARD).
PROPOSAL NO. 4
RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Audit Committee and the Board have selected KPMG LLP as the
Company's independent certified public accountants for the year ending December
31, 2002. KPMG LLP has served as the Company's auditor since 1988. The
29
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 INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR
THE YEAR ENDING DECEMBER 31, 2002 (PROPOSAL NO. 4 ON YOUR PROXY CARD).
STOCKHOLDER PROPOSALS
A stockholder proposal intended to be presented at the Company's Annual
Meeting of Stockholders to be held in 2003 must be received by the Company on or
before January 23, 2003 in order to be included in the Company's proxy statement
and form of proxy relating to that meeting. In addition, the Company's By-laws
provide that any stockholder wishing to present a proposal or to nominate a
candidate for Director at an annual meeting must give notice to the Secretary of
the Company not less than 60 nor more than 90 days prior to the date of the
meeting. If, however, the date of the meeting is first publicly announced or
disclosed (in a public filing or otherwise) less than 70 days prior to the date
of the meeting, such advance notice shall be given not more than ten days after
such date is first announced or disclosed. You may obtain a copy of the
Company's By-laws by writing to the Secretary of the Company at the address
shown on the cover of this proxy statement.
OTHER MATTERS
The Board of Directors does not know of any matters, other than those
referred to in this proxy statement, to be presented at the meeting for action
by the stockholders. However, if any other matters are properly brought before
the meeting or any postponements or adjournments thereof, it is intended that
votes will be cast with respect to such matters, pursuant to the proxies, in
accordance with the recommendations of the Board of Directors or, if no
recommendation is given, in the discretion of the person acting under the
proxies.
The Company will provide without charge to each person being solicited
by this proxy statement, upon the written request of any such person, a copy of
the Annual Report of the Company on Form 10-K for the fiscal year ended December
31, 2001 (as filed with the SEC), including the financial statements thereto.
All such requests should be directed to the Secretary of the Company at the
address shown on the cover of this proxy statement.
By Order of the Board of Directors
Daniel S. Lynch
Secretary
New York, New York
April 26, 2002
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. NO MATTER HOW LARGE OR SMALL
YOUR HOLDINGS MAY BE, WE URGE YOU TO FILL IN, SIGN AND RETURN THE ACCOMPANYING
PROXY CARD OR FOLLOW THE PROCEDURES OUTLINED ON THE PROXY CARD TO VOTE BY
TELEPHONE OR VIA THE INTERNET.
30
Appendix A
IMCLONE SYSTEMS INCORPORATED
2002 STOCK OPTION PLAN
1. Purpose. The purpose of the ImClone Systems Incorporated 2002 Stock
Option Plan (the "Plan") is to enhance the ability of ImClone Systems
Incorporated (the "Company") and its Subsidiaries to attract and retain
officers, employees, directors and consultants of outstanding ability and to
provide officers, employees, directors and consultants with an interest in the
Company parallel to that of the Company's shareholders. The term "Company" as
used in this Plan with reference to employment or service shall include the
Company and its Subsidiaries, as appropriate.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean (i) if a Participant is party to an
employment agreement or similar agreement with the Company and such agreement
includes a definition of Cause, the definition contained therein or (ii) if no
such employment or similar agreement exists, it shall mean (A) the Participant's
failure to substantially perform the duties reasonably assigned to him or her by
the Company, which has not been cured by the Participant following 10 days prior
written notice from the Company, (B) a good faith finding by the Company of the
Participant's dishonesty, gross negligence or misconduct, (C) a material breach
by the Participant of any written Company employment policies or rules or (D)
the Participant's conviction for, or his or her plea of guilty or nolo
contendere to, a felony or for any other crime which involves fraud, dishonesty
or moral turpitude.
(c) "Change in Control" of the Company means the occurrence of one
of the following events:
(i) individuals who, on the Effective Date, constitute the Board
(the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the Effective Date whose election or nomination for election was approved by
a vote of at least two-thirds of the Incumbent Directors then on the Board
(either by a specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for director, without objection to
such nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies by or on
behalf of any person other than the Board shall be an Incumbent Director;
(ii) any "person" (as such term is defined in Section 3(a)(9) of
the Securities Exchange Act of 1934 (the "Exchange Act") and as used in Sections
13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after the Effective
Date, a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 35% or more of
the combined voting power of the Company's then outstanding securities eligible
to vote for the election of the Board (the "Company Voting Securities");
provided, however, that an event described in this paragraph (ii) shall not be
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deemed to be a Change in Control if any of following becomes such a beneficial
owner: (A) the Company or any majority-owned subsidiary (provided, that this
exclusion applies solely to the ownership levels of the Company or the
majority-owned subsidiary), (B) any tax-qualified, broad-based employee benefit
plan sponsored or maintained by the Company or any majority-owned subsidiary,
(C) any underwriter temporarily holding securities pursuant to an offering of
such securities, or (D) any person pursuant to a Non-Qualifying Transaction (as
defined in paragraph (iii));
(iii) the consummation of a merger, consolidation, statutory
share exchange or similar form of corporate transaction involving the Company or
any of its Subsidiaries that requires the approval of the Company's
stockholders, whether for such transaction or the issuance of securities in the
transaction (a "Business Combination"), unless immediately following such
Business Combination: (A) 60% or more of the total voting power of (x) the
corporation resulting from such Business Combination (the "Surviving
Corporation"), or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of 100% of the voting securities
eligible to elect directors of the Surviving Corporation (the "Parent
Corporation"), is represented by Company Voting Securities that were outstanding
immediately prior to such Business Combination (or, if applicable, is
represented by shares into which such Company Voting Securities were converted
pursuant to such Business Combination), and such voting power among the holders
thereof is in substantially the same proportion as the voting power of such
Company Voting Securities among the holders thereof immediately prior to the
Business Combination, (B) no person (other than any employee benefit plan (or
related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation), is or becomes the beneficial owner, directly or indirectly,
of 35% or more of the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or if there is no
Parent Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Incumbent Directors at the time of the Board's
approval of the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria
specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying
Transaction"); or
(iv) stockholder approval of a liquidation or dissolution of the
Company, unless the voting common equity interests of an ongoing entity (other
than a liquidating trust) are beneficially owned, directly or indirectly, by the
Company's shareholders in substantially the same proportions as such
shareholders owned the Company's outstanding voting common equity interests
immediately prior to such liquidation and such ongoing entity assumes all
existing obligations of the Company under this Plan.
Notwithstanding the foregoing, a Change in Control of the Company shall not be
deemed to occur solely because any person acquires beneficial ownership of more
than 35% of the Company Voting Securities as a result of the acquisition of
Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, that, if after such acquisition by the
Company such person becomes the beneficial owner of Company
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Voting Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control of the Company
shall then occur.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall mean a committee of at least two members of the
Board appointed by the Board to administer the Plan and to perform the functions
set forth herein and who are "non-employee directors" within the meaning of Rule
16b-3 as promulgated under Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and who are also "outside directors" within the
meaning of Section 162(m) of the Code.
(f) "Common Stock" shall mean the common stock of the Company.
(g) "Continuous Service" means that the Participant's service as an
employee, director or consultant with the Company or a Subsidiary is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or a Subsidiary as an employee,
director or consultant or a change in the entity for which the Participant
renders such service; provided, that, there is no interruption or termination of
the Participant's Continuous Service other than an approved leave of absence.
The Committee, in its sole discretion, may determine whether Continuous Service
shall be considered interrupted.
(h) "Disability" shall have the same meaning as provided in any
long-term disability plan maintained by the Company or any Subsidiary in which a
Participant then participates (the "LTD Plans"); provided, that, if no such plan
exists, it shall have the meaning set forth in Section 22(e)(3) of the Code.
(i) "Fair Market Value" per share as of a particular date shall mean,
unless otherwise determined by the Board, the last reported sale price of the
Common Stock on the NASDAQ (or any other exchange or national market system upon
which price quotations for the Company's Common Stock is regularly available)
for such date.
(j) "Immediate Family Member" shall mean, except as otherwise
determined by the Committee, a Participant's spouse, ancestors and descendants.
(k) "Incentive Stock Option" shall mean a stock option which is
intended to meet the requirements of Section 422 of the Code.
(l) "Nonqualified Stock Option" shall mean a stock option which is not
intended to be an Incentive Stock Option.
(m) "Option" shall mean either an Incentive Stock Option or a
Nonqualified Stock Option.
(n) "Participant" shall mean anyone who is selected to participate in
the Plan in accordance with Section 5.
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(o) "Subsidiary" shall mean any affiliate of the Company selected by
the Board; provided, that, with respect to Incentive Stock Options, it shall
mean any subsidiary of the Company that is a corporation and which at the time
qualifies as a "subsidiary corporation" within the meaning of Section 424(f) of
the Code.
(p) "Substitute Awards" shall mean Options granted or shares issued by
the Company in assumption of, or in substitution or exchange for, awards
previously granted, or the right or obligation to make future awards, by a
company acquired by the Company or with which the Company is combined.
3. Shares Subject to the Plan.
(a) General. Subject to adjustment in accordance with Section 12, the
total of the number of shares of Common Stock which shall be available for the
grant of Options under the Plan shall not exceed 3,300,000 shares of Common
Stock; provided, that, for purposes of this limitation, any Common Stock subject
to an Option which is canceled, forfeited or expires prior to exercise whether
such Option was granted under this Plan or the 1998 Non-Qualified Stock Option
Plan, as amended, the 1996 Non-Qualified Stock Option Plan, as amended or the
1996 Incentive Stock Option Plan, as amended (together, the "Prior Plans") shall
again become available for grant under the Plan. In addition, any shares of
Common Stock tendered and/or withheld for the payment of all or a part of an
Option (whether granted under this Plan or the Prior Plans) or any applicable
withholding taxes shall again become available for the grant of an Option under
the Plan. The Company may, but is not required to, use the proceeds it receives
in connection with the exercise of an Option under this Plan, or under the Prior
Plans for exercises occurring after the Effective Date, to purchase shares of
its Common Stock in the open market and any such shares of Common Stock so
purchased may be used for the issuance of Options under this Plan. Substitute
Options shall not reduce the shares of Common Stock available for grants under
the Plan or to a Participant over a period of time. Subject to adjustment in
accordance with Section 12, no employee shall be granted, during any three (3)
year period, Options to purchase more than 3,300,000 shares of Common Stock.
Common Stock available for issue or distribution under the Plan shall be
authorized and unissued shares or shares reacquired by the Company in any
manner.
(b) Incentive Stock Options. Notwithstanding Section 3(a), subject to
adjustment in accordance with Section 12, the aggregate number of shares of
Common Stock with respect to which Incentive Stock Options may be granted under
the Plan shall not exceed 825,000 shares of Common Stock. Any shares of Common
Stock subject to an Incentive Stock Option granted under this Plan or the 1996
Incentive Stock Option Plan, as amended which is canceled, forfeited or expires
prior to exercise shall again be counted toward the aggregate number of shares
available for the grant of Incentive Stock Options under this Plan.
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4. Administration.
(a) The Plan shall be administered by the Committee. All references to
the Committee hereinafter shall mean the Board if no such Committee has been
appointed.
(b) The Committee shall (i) approve the selection of Participants, (ii)
determine the type of Options to be made to Participants, (iii) determine the
number of shares of Common Stock subject to Options, (iv) determine the terms
and conditions of any Option granted hereunder (including, but not limited to,
any forfeiture conditions on such Option) and (v) have the authority to
interpret the Plan, to establish, amend, and rescind any rules and regulations
relating to the Plan, to determine the terms and provisions of any agreements
entered into hereunder, and to make all other determinations necessary or
advisable for the administration of the Plan. The Committee may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or in any
Option in the manner and to the extent it shall deem desirable to carry it into
effect.
(c) Any action of the Committee shall be final, conclusive and binding
on all persons, including the Company and its Subsidiaries and shareholders,
Participants and persons claiming rights from or through a Participant.
(d) The Committee may delegate to officers or employees of the Company
or any Subsidiary, and to service providers, the authority, subject to such
terms as the Committee shall determine, to perform administrative functions with
respect to the Plan and Option awards.
(e) Members of the Committee and any officer or employee of the Company
or any Subsidiary acting at the direction of, or on behalf of, the Committee
shall not be personally liable for any action or determination taken or made in
good faith with respect to the Plan, and shall, to the extent permitted by law,
be fully indemnified by the Company with respect to any such action or
determination.
5. Eligibility. Individuals eligible to receive Options under the Plan
shall be the officers, employees, directors and consultants of the Company and
its Subsidiaries selected by the Committee; provided, that, only employees of
the Company and its Subsidiaries may be granted Incentive Stock Options.
6. Options. Options may be granted under the Plan in such form as the
Committee may from time to time approve pursuant to terms set forth in an Option
award.
(a) Types of Options. Each Option award shall state whether or not the
Option will be treated as an Incentive Stock Option or Nonqualified Stock
Option. The aggregate Fair Market Value of the Common Stock for which Incentive
Stock Options granted to any one employee under this Plan or any other incentive
stock option plan of the Company or of any of its Subsidiaries may by their
terms first become exercisable during any calendar year shall not exceed
$100,000, determining Fair Market Value as of the date each respective Option is
granted. In the event such threshold is exceeded in any calendar year, such
excess Options shall be automatically deemed to be Nonqualified Stock Options.
To the extent that any Option
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granted under this Plan which is intended to be an Incentive Stock Option fails
for any reason to qualify as such at any time, such Option shall be a
Nonqualified Stock Option.
(b) Option Price. The purchase price per share of the Common Stock
purchasable under an Option shall be determined by the Committee and shall not
be less than 100% of the Fair Market Value of the Common Stock on the date of
grant. In the case of Incentive Stock Options granted to an employee owning
stock possessing more than 10% of the total combined voting power of all classes
of shares of the Company and its Subsidiaries (a "10% Shareholder") the price
per share specified in the agreement relating to such Option shall not be less
than 110% of the Fair Market Value per share of the Common Stock on the date of
grant.
(c) Option Period. Unless otherwise provided in an Option award, the
term of each Option shall be ten (10) years from the date the Option is granted;
provided, that, in the case of Incentive Stock Options granted to 10%
Shareholders, the term of such Option shall not exceed five (5) years from the
date of grant. Notwithstanding the foregoing, unless otherwise provided in an
Option award, upon the death or Disability of a Participant, Options (other than
Incentive Stock Options) that would otherwise remain exercisable following such
death or Disability shall remain exercisable for one year following such death
or Disability notwithstanding the term of such Option.
(d) Exercisability. Each Option shall vest and become exercisable at a
rate determined by the Committee on the date of grant.
(e) Termination of Continuous Service. Unless otherwise provided in an
Option award, any Options held by a Participant upon termination of Continuous
Service shall remain exercisable as follows:
(i) If the Participant's termination of Continuous Service is due
to death, all unvested Options shall automatically terminate and all vested
Options shall be exercisable by the Participant's designated beneficiary, or, if
none, the person(s) to whom such Participant's rights under the Option are
transferred by will or the laws of descent and distribution for 1 year following
such termination of Continuous Service (but in no event beyond the term of the
Option, except as provided in clause (c) above), and shall thereafter terminate.
(ii) If the Participant's termination of Continuous Service is
due to Disability, all unvested Options shall automatically terminate and all
vested Options shall be exercisable by the Participant for 1 year following such
Disability (but in no event beyond the term of the Option, except as provided in
clause (c) above), and shall thereafter terminate.
(iii) If the Participant's termination of Continuous Service is
for Cause, the Option shall terminate upon such termination of Continuous
Service, regardless of whether the Option was then vested and exercisable.
(iv) If the Participant's termination of Continuous Service is
for any other reason, all unvested Options shall terminate on the date of
termination and all Options (to the extent exercisable as of the date of
termination) shall be exercisable for a period of 30-days following such
termination of employment or service (but in no event beyond the term of
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the Option), and shall thereafter terminate. The Participant's status as an
employee shall not be considered terminated in the case of a leave of absence
agreed to in writing by the Company (including, but not limited to, military and
sick leave); provided, that, with respect to Incentive Stock Options, such leave
is for a period of not more than three-months or re-employment upon expiration
of such leave is guaranteed by contract or statute.
(f) Method of Exercise. Options may be exercised, in whole or in part,
by giving written notice of exercise to the Company in a form approved by the
Company specifying the number shares of Common Stock to be purchased. Such
notice shall be accompanied by the payment in full of the Option exercise price.
Unless otherwise provided at the time of grant, the exercise price of the Option
may be paid by (i) cash or certified or bank check, (ii) surrender of Common
Stock held by the Participant for at least six (6) months prior to exercise (or
such longer or shorter period as may be required to avoid a charge to earnings
for financial accounting purposes) or the attestation of ownership of such
shares, in either case, if so permitted by the Company, (iii) through a "same
day sale" commitment from a Participant and a broker-dealer, who is reasonably
acceptable to the Company and who is a member of the National Association of
Securities Dealers, under such terms and conditions which are reasonably
acceptable to the Company, (iv) through additional methods prescribed by the
Committee, as deemed appropriate by the Committee in its discretion, or (v) by
any combination of the foregoing, and, in all instances, to the extent permitted
by applicable law. A Participant's subsequent transfer or disposition of any
Common Stock acquired upon exercise of an Option shall be subject to any Federal
and state laws then applicable, specifically securities law, and the terms and
conditions of this Plan.
7. Special Provisions.
(a) Change in Control. Unless otherwise provided in an Option award,
upon the occurrence of a Change in Control, all Options and shall automatically
become vested and exercisable in full. The Committee may, in its discretion,
include such further provisions and limitations in any award documenting such
Options as it may deem equitable and in the best interests of the Company.
(b) Forfeiture. Notwithstanding anything in the Plan to the contrary
and unless otherwise specifically provided in an Option award, in the event of a
serious breach of conduct by a Participant or former Participant (including,
without limitation, any conduct prejudicial to or in conflict with the Company
or its Subsidiary) the Committee may (i) cancel any outstanding Option granted
to such Participant or former Participant, in whole or in part, whether or not
vested, and/or (ii) if such conduct or activity occurs within one (1) year
following the exercise of an Option, require such Participant or former
Participant to repay to the Company any gain realized upon the exercise of such
Option (with such gain or payment valued as of the date of exercise). Such
cancellation or repayment obligation shall be effective as of the date specified
by the Committee. Any repayment obligation shall be satisfied in cash or, if
permitted in the sole discretion of the Committee, it may be satisfied in shares
of Common Stock (based upon the Fair Market Value of the share of Common Stock
on the date of payment), and the Committee may provide for an offset to any
future payments owed by the Company or any Subsidiary to the Participant or
former Participant if necessary to satisfy the repayment obligation. The
determination of whether a Participant or former Participant has engaged in a
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serious breach of conduct shall be determined by the Committee in good faith and
in its sole discretion.
8. Withholding. Upon (a) disposition of shares of Common Stock acquired
pursuant to the exercise of an Incentive Stock Option granted pursuant to the
Plan within two years of the grant of the Incentive Stock Option or within one
year after exercise of the Incentive Stock Option, or (b) exercise of a
Nonqualified Stock Option (or an Incentive Stock Option treated as a
Nonqualified Stock Option), or (c) under any other circumstances determined by
the Committee in its sole discretion, the Company shall have the right to
require any Participant, and such Participant by accepting the Options granted
under the Plan agrees, to pay to the Company the amount of any taxes which the
Company shall be required to withhold with respect thereto. In the event of
clauses (a), (b) or (c), with the consent of the Committee, at its sole
discretion, such Participant may elect to have the Company withhold shares of
Common Stock having a Fair Market Value equal to the amount of the withholding
tax obligation as determined by the Company; provided, however, that no shares
of Common Stock are withheld with a value exceeding the minimum amount of tax
required to be withheld by law. Such shares so delivered to satisfy the minimum
withholding obligation may be either shares withheld by the Company upon the
exercise of the Option or other shares. At the Committee's sole discretion, a
Participant may elect to have additional taxes withheld and satisfy such
withholding with cash or shares of Common Stock held for at least six (6) months
prior to exercise, if, in the opinion of the Company's outside accountants,
doing so, would not result in a charge against earnings. If the Option is an
Incentive Stock Option, and if the Participant sells or otherwise disposes of
any of the shares acquired pursuant to the Incentive Stock Option on or before
the later of (i) the date two (2) years after the date of grant, and (ii) the
date one (1) year after transfer of such shares to the Participant upon exercise
of the Option, the Participant shall immediately notify the Company in writing
of such disposition.
9. Nontransferability, Beneficiaries. Unless otherwise determined by
the Committee with respect to the transferability of Nonqualified Stock Options
by a Participant to his Immediate Family Members (or to trusts or partnerships
or limited liability companies established for such family members), no Options
shall be assignable or transferable by the Participant, otherwise than by will
or the laws of descent and distribution or pursuant to a beneficiary
designation, and Options shall be exercisable, during the Participant's
lifetime, only by the Participant (or by the Participant's legal representatives
in the event of the Participant's incapacity). Each Participant may designate a
beneficiary to exercise any Option held by the Participant at the time of the
Participant's death. If no beneficiary has been named by a deceased Participant,
any Option held by the Participant at the time of death shall be transferred as
provided in his will or by the laws of descent and distribution. Except in the
case of the holder's incapacity, an Option may only be exercised by the holder
thereof.
10. No Right to Continuous Service. Nothing contained in the Plan or in
any Option under the Plan shall confer upon any Participant any right with
respect to the continuation of service with the Company or any of its
Subsidiaries, or interfere in any way with the right of the Company or its
Subsidiaries to terminate his or her Continuous Service at any time. Nothing
contained in the Plan shall confer upon any Participant or other person any
claim or right to any Option under the Plan.
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11. Governmental Compliance. Each Option under the Plan shall be
subject to the requirement that if at any time the Committee shall determine
that the listing, registration or qualification of any shares issuable or
deliverable thereunder upon any securities exchange or under any Federal or
state law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition thereof, or in connection therewith, no
such Option may be exercised or shares issued or delivered unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
12. Adjustments; Corporate Events.
(a) In the event of any dividend or other distribution (whether
in the form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company, or
exchange of Common Stock or other securities of the Company, issuance of
warrants or other rights to purchase Common Stock or other securities of the
Company, or other similar corporate transaction or event (an "Event"), and in
the Committee's opinion, such event affects the Common Stock such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan or with respect to an Option, then the Committee
shall, in such manner as it may deem equitable, including, without limitation,
adjust any or all of the following: (i) the number and kind of shares of Common
Stock (or other securities or property) with respect to which Options may be
granted; (ii) the number and kind of shares of Common Stock (or other securities
or property) subject to outstanding Options; and (iii) the exercise price with
respect to any Option. The Committee determination under this Section 12(a)
shall be final, binding and conclusive.
(b) Upon the occurrence of an Event in which outstanding Options
are not to be assumed or otherwise continued following such an Event, the
Committee may, in its discretion, terminate any outstanding Option (whether or
not vested) without a Participant's consent and (i) provide for either (A) the
purchase of any such Option for an amount of cash equal to the product of (I)
and (II), where (I) is equal to the number of shares of Common Stock subject to
such Option and (II) is equal to the difference between (a) the Fair Market
Value of one share of Common Stock and (b) the per share exercise price of such
Option; provided, that, if such amount would result in a negative number, the
Option shall automatically terminate and cease to be exercisable without payment
for such termination or (B) the replacement of such Option with other rights or
property selected by the Committee in its sole discretion and/or (ii) provide
that such Option shall be exercisable (whether or not vested) as to all shares
covered thereby for at least thirty (30) days prior to such Event.
(c) The existence of the Plan, the Option awards and the Options
granted hereunder shall not affect or restrict in any way the right or power of
the Company or the shareholders of the Company to make or authorize any
adjustment, recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of the Company,
any issue of stock or of options, warrants or rights to purchase stock or of
bonds, debentures, preferred or prior preference stocks whose rights are
superior to or
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affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
13. Option Awards. Each Option under the Plan shall be evidenced by a
written document setting forth the terms and conditions, as determined by the
Committee, which shall apply to such Option, in addition to the terms and
conditions specified in the Plan.
14. Amendment. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, provided that (a) no amendment shall be made
without shareholder approval if such approval is necessary to comply with any
applicable law, regulation or stock exchange rule and (b) except as provided in
Section 12, no amendment shall be made that would adversely affect the rights of
a Participant under an Option theretofore granted, without such Participant's
written consent.
15. General Provisions.
(a) The Committee may require each Participant acquiring shares
pursuant to an Option under the Plan to represent to and agree with the Company
in writing that such Participant is acquiring the shares for investment and
without a view to distribution thereof.
(b) All certificates for Common Stock delivered under the Plan
pursuant to any Option shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Common Stock is then listed, and any applicable Federal
or state securities law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such restrictions.
If the Committee determines that the issuance of Common Stock hereunder is not
in compliance with, or subject to an exemption from, any applicable Federal or
state securities laws, such shares shall not be issued until such time as the
Committee determines that the issuance is permissible.
(c) It is the intent of the Company that the Plan satisfy, and be
interpreted in a manner that satisfies, the applicable requirements of Rule
16b-3 as promulgated under Section 16 of the Exchange Act so that Participants
will be entitled to the benefit of Rule 16b-3, or any other rule promulgated
under Section 16 of the Exchange Act, and will not be subject to short-swing
liability under Section 16 of the Exchange Act. Accordingly, if the operation of
any provision of the Plan would conflict with the intent expressed in this
Section 15(c), such provision to the extent possible shall be interpreted and/or
deemed amended so as to avoid such conflict.
(d) Except as otherwise provided by the Committee in the
applicable Option award, a Participant shall have no rights as a shareholder
with respect to any shares of Common Stocks subject to an Option until a
certificate or certificates evidencing shares of Common Stock shall have been
issued to the Participant and, subject to Section 12, no adjustment shall be
made for dividends or distributions or other rights in respect of any share for
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which the record date is prior to the date on which Participant shall become the
holder of record thereof.
(e) The law of the State of Delaware shall apply to all Options
and interpretations under the Plan regardless of the effect of such state's
conflict of laws principles.
(f) Where the context requires, words in any gender shall include
any other gender.
(g) Headings of Sections are inserted for convenience and
reference; they do not constitute any part of this plan.
16. Expiration of the Plan. Subject to earlier termination pursuant to
Section 14, the Plan shall have an indefinite term; provided, that, the ability
to grant Incentive Stock Options will terminate on April 3, 2012 which is the
tenth (10th) anniversary of the date on which the Board adopted the Plan.
17. Effective Date; Approval of Shareholders. The Plan is effective as
of the date it is approved by the affirmative vote of the holders of a majority
of the securities of the Company present, or represented, and entitled to vote
at a meeting of stockholders duly held in accordance with the applicable laws of
the State of Delaware (the "Effective Date"). If the Plan is approved, no
further grants shall be made under the terms of the Prior Plans on or after the
Effective Date; provided, that, any outstanding Options made thereunder shall be
governed and controlled by the terms and conditions of such Prior Plans and any
Option awards evidencing such Options.
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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 operations 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 the proxy card to indicate how your shares should be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope. You may also vote your shares by telephone or via the
Internet. If you choose to vote by telephone or via the Internet, you do not
need to return the attached card.
Your vote must be received prior to the Annual Meeting of Stockholders, May 23,
2002.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
ImClone Systems Incorporated
PROXY
IMCLONE SYSTEMS INCORPORATED
PROXY FOR THE MEETING OF STOCKHOLDERS, MAY 23, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Samuel D. Waksal, Robert F. Goldhammer and
Daniel S. Lynch as Proxies, each with power of substitution, and hereby
authorizes each of them to represent and to vote, as designated below, all of
the shares of Common Stock of ImClone Systems Incorporated held of record by the
undersigned on April 16, 2002 at the Annual Meeting of Stockholders on May 23,
2002 and any postponements or adjournments thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY TO EQUISERVE, THE COMPANY'S
TRANSFER AGENT, TO BE RECEIVED NO LATER THAN MAY 22, 2002.
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 AND 4.
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PLEASE VOTE, DATE AND SIGN ON REVERSE SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
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NOTE: Please sign exactly as your name(s) appear(s) on the books of the Company.
Joint owners should each sign personally. 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.
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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IMCLONE SYSTEMS INCORPORATED
C/O EQUISERVE
P.O. BOX 43068
PROVIDENCE, RI 02940
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VOTE BY TELEPHONE VOTE VIA THE INTERNET
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It's fast, convenient and immediate! It's fast and convenient! Your vote
Call Toll-Free on a Touch-Tone Phone is immediately confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683)
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FOLLOW THESE FOUR EASY STEPS: FOLLOW THESE FOUR EASY STEPS:
1. READ THE ACCOMPANYING PROXY 1. READ THE ACCOMPANYING PROXY
STATEMENT AND PROXY CARD. STATEMENT AND PROXY CARD.
2. CALL THE TOLL-FREE NUMBER 2. GO TO THE WEBSITE
1-877-PRX-VOTE (1-877-779-8683). HTTP://WWW.EPROXYVOTE.COM/IMCL
3. ENTER YOUR VOTER CONTROL NUMBER 3. ENTER YOUR VOTER CONTROL NUMBER
LOCATED ON YOUR PROXY CARD ABOVE LOCATED ON YOUR PROXY CARD
YOUR NAME. ABOVE YOUR NAME.
4. FOLLOW THE RECORDED INSTRUCTIONS. 4. FOLLOW THE INSTRUCTIONS PROVIDED.
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YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/imcl
anytime!
DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR VIA THE
INTERNET.
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
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IMCLONE SYSTEMS INCORPORATED
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1. Election of Directors.
Nominees: (01) Andrew G. Bodnar, (02) Vincent T. DeVita, Jr., (03)
Robert F. Goldhammer, (04) Paul B. Kopperl, (05) David M. Kies, (06)
Arnold J. Levine, (07) John Mendelsohn, (08) William R. Miller, (09)
Peter S. Ringrose, (10) Harlan W. Waksal, (11) Samuel D. Waksal
For all [ ] Withheld
nominees from all nominees [ ]
[ ]
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For all nominees except as noted above
FOR AGAINST ABSTAIN
2. Approval of the ImClone Systems Incorporated
2002 Stock Option Plan. [ ] [ ] [ ]
3. Approval of an amendment to the Company's
Certificate of Incorporation, as amended,
to increase the number of shares of common
stock the Company is authorized to issue
from 120,000,000 to 200,000,000 shares. [ ] [ ] [ ]
4. Ratification of the appointment of KPMG LLP
to serve as the Company's independent
certified public accountants for the
fiscal year ending December 31, 2002. [ ] [ ] [ ]
5. Any other business as may come before
the meeting or any postponements
or adjournments thereof.
Mark box at right if you plan to attend the meeting. [ ]
Mark box at right if an address change or comment
has been noted on the reverse side of this card. [ ]
Please be sure to sign and date this Proxy.
Signature: Date:
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Signature: Date:
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