UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to SectionPROXY STATEMENT PURSUANT TO SECTION 14(a) of the Securities
Exchange Act ofOF 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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12sec.240.14a-12
ImClone Systems IncorporatedIMCLONE SYSTEMS INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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:
----------------------------------------------------------------------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------- --------------------------------------------------------------------------------
(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):
----------------------------------------------------------------------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------------------------------------------------------------------------------
[ ] 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:
----------------------------------------------------------------------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------------------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------------------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------------------------------------------------------------------------------
[IMCLONE LOGO]
IMCLONE SYSTEMS INCORPORATED
180 VARICK STREET
NEW YORK,Varick Street
New York, NY 10014
(212) 645-1405
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
DATE: MAY 23, 2002September 15, 2003
TIME: 10:00 A.M. (LOCAL TIME)(Local Time)
PLACE: HOTEL W NEW YORK
541 LEXINGTON AVENUE
(BETWEEN 49TH AND 50TH STREETS)
NEW YORK, NEW YORK 10022ImClone Systems Incorporated
33 Chubb Way
Somerville, New Jersey 08876
ITEMS OF BUSINESS:
1. Election of elevenfive directors.
2. Approval of an amendment to the ImClone Systems Incorporated 2002 Stock
Option Plan.
3. Approval of an amendment to the Company's Certificate of
Incorporation, as amended,Plan (the "2002 Option Plan") to increase the number of shares
of common
stock the Company is authorized to issue from 120,000,000 to
200,000,000 shares.be issued under the 2002 Option Plan.
3. Approval of the ImClone Systems Incorporated Annual Incentive Plan (the
"Annual Incentive Plan").
4. Ratification of the appointment of KPMG LLP as the Company's independent
certified public accountants for the fiscal year ending December 31,
2002.2003.
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, 2002August 20, 2003 are entitled to notice of and to vote at the meeting or any
postponements or adjournments thereof.
ANNUAL REPORT:
Our 2001The Company's 2002 Annual Report on Form 10-K, 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
/s/ Daniel S. Lynch
Daniel S. LynchMichael J. Howerton
Michael J. Howerton
Secretary
New York, New York
April 29, 2002August 21, 2003
TABLE OF CONTENTS
ABOUT THE MEETING........................................................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?............................................................................... 1
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................................................... 2
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..........................................................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......................... 6DIRECTORS............ 7
Nominees for Director.................................................. 6Director....................................... 7
Business Experience of Nominees for Director........................... 7Director................ 8
Business Experience of Current Non-Nominee Directors........
Directors' Compensation................................................Compensation..................................... 9
Information Concerning Board and Committee Meetings and
Committees of the Board............................................... 10
EXECUTIVE COMPENSATION...................................................Board................................... 11
Recent Corporate Governance Initiatives..................... 12
Information Concerning Executive Officers.............................. 11Officers................... 16
Employment Agreements.................................................. 14Agreements....................................... 18
Report of the Compensation Committee................................... 15Committee........................ 22
Compensation Committee Interlocks and Insider
Participation......................................................... 16Participation............................................. 23
Summary Compensation Table............................................. 17Table.................................. 24
Option Grants in Fiscal 2001........................................... 182002................................ 26
Option Exercises and Values for Fiscal 2001............................ 192002................. 27
Common Stock Price Performance......................................... 20Performance.............................. 29
Certain Relationships and Related Transactions........................... 21Transactions.............. 30
Section 16(a) Beneficial Ownership Reporting Compliance.................. 23Compliance..... 31
Report of the Audit Committee............................................ 23Committee............................... 32
Fees Paid to KPMG LLP.................................................... 25LLP....................................... 33
PROPOSAL NO. 2 -- APPROVAL OF AN AMENDMENT TO THE IMCLONE
SYSTEMS INCORPORATED 2002 STOCK OPTION PLAN.................................... 25PLAN............... 35
PROPOSAL NO. 3 -- APPROVAL OF AN AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK...................................... 28IMCLONE SYSTEMS INCORPORATED
ANNUAL INCENTIVE PLAN..................................... 39
(i)
PROPOSAL NO. 4 -- RATIFICATION OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS..................................................... 30ACCOUNTANTS........................................ 42
Stockholder Proposals.................................................... 31Proposals....................................... 42
Other Matters............................................................ 31Matters............................................... 42
Appendix A -- ImClone Systems Incorporated Audit Committee
Charter................................................... A-1
Appendix B -- ImClone Systems Incorporated 2002 Stock Option
Plan................................................................... A-1Plan...................................................... B-1
Appendix C -- ImClone Systems Incorporated Annual Incentive
Plan...................................................... C-1
(ii)
IMCLONE SYSTEMS INCORPORATED
180 VARICK STREET
NEW YORK, NEW YORK 10014
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies for use at the Annual Meeting of Stockholders of ImClone Systems
Incorporated (the "Company") to be held at 10:00 a.m., local time, on Thursday,
May 23, 2002,Monday,
September 15, 2003, at Hotel WImClone Systems Incorporated, 33 Chubb Way, Somerville,
New York, 541 Lexington Avenue (between 49th and 50th
Streets), New York, New York 10022,Jersey 08876, 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 29, 2002.August 25, 2003.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE MEETING?What is the purpose of the meeting?
At the meeting, stockholders will act upon the matters outlined in the
accompanying notice of meeting, including the election of Directors, approval of
an amendment to the 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 stockImClone Systems Incorporated Annual Incentive Plan 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?2002.
Who may attend the meeting?
Although we encouragethe Company encourages 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?Who is entitled to vote?
Only stockholders of record at the close of business on the record date,
April 16, 2002,August 20, 2003, 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 ourthe Company's Stockholder Agreement, dated as of September 19,
2001, with Bristol-Myers Squibb Company ("BMS") and Bristol-Myers Squibb
Biologics Company (the "Stockholder Agreement"), during the period in which BMS
has the right to nominate at least one Director to ourthe Company's 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 ourthe Company's
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. WHAT CONSTITUTES A QUORUM?BMS currently has the right to
nominate two Directors.
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
1
meeting. As of the record date, the Company had 73,343,28174,591,027 shares of common
stock outstanding. Proxies
1
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?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?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 DOHow do I VOTE?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 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.
2
WHAT IFWhat if I AM A BENEFICIAL OWNER RATHER THAN A HOLDER OF RECORD?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
2
beneficial owner, you have the right to direct your broker or nominee 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.
IFIf I HOLD MY SHARES IN A BROKERAGE ACCOUNT AND DO NOT RETURN VOTING
INSTRUCTIONS, WILL MY SHARES BE VOTED?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 directorsDirectors 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.
CANCan I CHANGE MY VOTE AFTERchange my vote after I RETURN MY PROXY?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?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,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 will not be counted and will have no effect on the outcome. 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.
WHO PAYS FOR THIS PROXY SOLICITATION?
We do.votes, but broker non-votes will not be counted as entitled
to vote.
Who pays for this proxy solicitation?
The Company does. In addition to sending you these materials, some of ourthe
Company's 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 havethe Company has retained Georgeson Shareholder Communications, Inc. to assist
usthe Company in soliciting your proxy for a fee of $6,000 plus reasonable
out-of-pocket expenses.
3
STOCK OWNERSHIP
WHO ARE THE LARGEST OWNERS OF THE COMPANY'S STOCK?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
MarchApril 15, 2002.
HOW MUCH STOCK DO CERTAIN BENEFICIAL OWNERS, THE COMPANY'S DIRECTORS AND
EXECUTIVE OFFICERS OWN?2003.
How Much Stock Do Certain Beneficial Owners, the Company's Directors and
Executive Officers Own?
The following table shows the amount of the Company's 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,directors, the Named Executive Officers in the Summary
Compensation Table belowCompany's named executive officers and the
Company's current Directorsdirectors and executive officers of the
Company as a group. Except as
otherwise indicated, all ownership information is as of MarchApril 15, 2002.2003.
"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 BENEFICIAL PERCENT OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF BENEFICIAL OWNER(1) OWNERSHIP CLASS(2)
- ------------------- ------------------------------------------------- ----------------- ----------
Bristol-Myers Squibb Company................................ 14,392,003(3) 19.63%19.45%(4)
345 Park Avenue
New York, New York 10154
Capital Research and Management Company..................... 6,388,040(5) 8.62%(4)
333 South Hope Street
Los Angeles, CA 90071
FMR Group................................................... 10,974,541(5) 14.90%4,775,560(6) 6.45%(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%3,106,847(7) 4.19%
Samuel D. Waksal, Ph.D. .................................... 581,985(8) *1,415,317(8) 1.91%
David M. Kies............................................... 400,008(9)447,508(9) *
John Mendelsohn, M.D. ...................................... 373,226(10)415,726(10) *
Vincent T. DeVita, Jr., M.D. ............................... 236,555(11) *
Peter Bohlen, Ph.D. ........................................ 212,954(12)279,055(11) *
Paul B. Kopperl............................................. 193,556(13)261,056(12) *
William R. Miller........................................... 158,971(14)201,471(13) *
Arnold J. Levine, Ph.D. .................................... 106,145(15)Daniel S. Lynch............................................. 196,667(14) *
S. Joseph Tarnowski, Ph.D. ................................. 95,061(16)182,364(15) *
Daniel S. Lynch............................................. 15,000(17)Arnold J. Levine............................................ 161,145(16) *
Andrew G. Bodnar, M.D.(18).................................. 0, J.D.(17)............................ 50,000(18) *
Peter S. Ringrose, Ph.D.(18)................................ 0Lily Waiyee Lee............................................. 43,808(19) *
Clifford R. Saffron......................................... 35,000(20) *
John A. Fazio............................................... 6,308(21) *
All Current Directors and Executive Officers as a Group (24(21
persons).................................................. 8,132,776(19) 10.69%3,470,398(22) 4.69%
- ---------------
* 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.
(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 MarchApril 15, 2002,2003, as determined in
4
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as
amended (the "Exchange 4
Act"), by (2) the sum of (A) 73,333,889,74,007,744, which is
the number of shares of common stock outstanding as of MarchJune 15, 2002,2003, 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 MarchApril 15, 20022003 or
within 60 days after MarchApril 15, 2002.2003. 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 MarchApril 15, 20022003 and the number of shares
outstanding as of MarchJune 15, 2002.2003.
(5) This information is aswas obtained from a Schedule 13G filed with the Securities
and Exchange Commission on February 10, 2003. It includes 363,040 shares of
December 31, 2001 andcommon stock resulting from the assumed conversion of the $20,000,000
principal amount of ImClone Systems Incorporated 5 1/2% convertible notes
due March 1, 2005.
(6) This information was obtained from Amendment No. 24 to Schedule 13G, filed
with the SEC on February 14, 2002. This number consists of 10,974,541includes 4,766,438 shares
beneficially owned by Fidelity Management & Research Company, a wholly-ownedwholly
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 10,974,5414,775,560 shares.
(6)(7) Includes 333,334 shares issuable upon the exercise of currently exercisable
options;options, 4,086 shares owned by Dr. Harlan W. Waksal's sons and 157 shares
owned in a joint account with his wife.
(7)(8) Includes 120,0001,250,000 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. In an action brought by the Company on August 14, 2002 against Dr.
Samuel D. Waksal in Supreme Court of the State of New York, New York
County, the Company is seeking the cancellation of 833,333 of these
options. See, "Employment and Separation Agreements". Dr. Samuel D. Waksal
formerly served as the Company's President and Chief Executive Officer.
(9) Includes 60,000102,500 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'
eldest minor son and 615 shares held by Mr. Kies' spouse as to which Mr.
Kies disclaims beneficial ownership.
(10) Consists of 373,226415,726 shares issuable upon the exercise of currently
exercisable options.
(11) Includes 236,084278,584 shares issuable upon the exercise of currently exercisable
options.
(12) Includes 208,667 shares issuable upon exercise of currently exercisable
options.
(13) Consists of 53,57096,070 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.
(13) Includes 102,500 shares issuable upon exercise of currently exercisable
options.
(14) Includes 60,000Consists of 196,667 shares issuable upon exercise of currently exercisable
options.
(15) Includes 76,474173,176 shares issuable upon exercise of currently exercisable
options.
(16) Includes 86,176131,474 shares issuable upon exercise of currently exercisable
options.
(17) Consists of 15,000 shares issuable upon exercise of currently exercisable
options.
(18) Address is in care of Bristol-Myers Squibb Company, 345 Park Avenue, New
York, New York 10154.
(18) Consists of 50,000 shares issuable upon exercise of currently exercisable
options.
(19) Includes 42,000 shares issuable upon exercise of currently exercisable
options.
(20) Includes 32,500 shares issuable upon exercise of currently exercisable
options.
5
(21) Consists of 6,308 shares issuable upon exercise of currently exercisable
options.
(22) Includes an aggregate of (1) 2,753,691(i) 2,729,309 shares issuable upon the exercise of
currently exercisable options and (2)(ii) 1,115 shares as to which beneficial
ownership is disclaimed. 5Dr. Samuel D. Waksal and Dr. Harlan W. Waksal are
no longer directors or executive officers of the Company. Their respective
beneficial ownership of ImClone Systems securities as of April 15, 2003 is
listed in the chart above.
6
PROPOSAL NO. 1
ELECTION OF BOARD OF DIRECTORS
An entire Board of Directors, consisting of elevenfive 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. The Board is actively involved in an ongoing search for additional
candidates for director positions, and has engaged, for a customary fee, a
professional search firm to assist the Board in identifying qualified
candidates.
Pursuant to athe Stockholder Agreement dated as of September 19, 2001,
among the Company,described above, 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("BMS") 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 fromBMS continues to have an
ownership interest greater than 12.5% and to possess the Board ofright to nominate two
Directors. On
April 3, 2002,However, BMS has not yet nominated a replacement to fill the seat on
the Board of Directors fixedvacated by Peter S. Ringrose, M.A., Ph.D., who retired in
2002 from his position of Chief Scientific Officer and President, Pharmaceutical
Research Institute at BMS, and also resigned from his Director position at the
size ofCompany. Therefore, the BoardCompany currently expects that BMS will nominate only
one Director for election at eleven
members.the meeting.
Nominations. At the meeting, the Board of Directors expects to nominate
the elevenfive persons named in this proxy statement as Directors. Although we dothe
Company does 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 DIRECTOR OF COMPANY SINCE
- ---- ----------------------------- --------------------------------------
Andrew G. Bodnar, M.D.(3)(4)...................., J.D.(5)(6)............ Director 2001
Vincent T. DeVita, Jr., M.D.(4)(5)(6)....................... Director 1992
Robert F. Goldhammer(3)(4)John A. Fazio(1)(6)................... Chairman of the Board 1984........................... Director 2003
David M. Kies(2)(4)(3)(5)(6)............................................... Lead 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)(5)(6).............................. Director 1996
Peter S. Ringrose, Ph.D.(5)..................... Director 2001
Harlan W. Waksal, M.D.(3)(5).................... Executive Vice President, Chief 1984
Operating Officer and Director
Samuel D. Waksal, Ph.D.(3)(5)................... President, Chief Executive Officer 1985
and Director
- ---------------
(1) Member of Audit Committee
(2) Member of Compensation and Stock Option Committee
(3) Member of Executive Committee
(4) Member of Nominating and Corporate Governance Committee
(5)(4) Member of Research Oversight Committee
(6)(5) Member of Special Committee
6(6) Member of the Chief Executive Officer Search Committee
7
BUSINESS EXPERIENCE OF NOMINEES FOR DIRECTOR
ANDREW G. BODNAR, M.D., 54,J.D., 55, 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, Strategy and Medical and& External
Affairs of Bristol-Myers Squibb.Squibb Company. 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., 67,68, 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,JOHN A. FAZIO, 59, has served as the Company's Chairman of the
Board since February 1991 and has been a Director of the Company since October
1984.February
2003. Mr. GoldhammerFazio is a Certified Public Accountant and Certified Management
Accountant and was with PricewaterhouseCoopers ("PwC") from 1966 to 2000. As a
Senior General Practice Partner, he served as the Vicelead audit partner to a number
of PwC's key multinational and national clients. Mr. Fazio was also a National
Business Leader in PwC's pharmaceutical practice in which he was responsible for
developing and delivering services on business issues impacting the industry to
assist clients in creating value-adding opportunities. As the head of PwC's
Strategic Risk Services practice, he managed a group of senior specialists to
assist companies in identifying key risks within their businesses and to
establish controls to mitigate such risks. Mr. Fazio is a Director of Dendrite
International, Inc. Also active in several professional organizations, he was
Chairman of the ExecutiveAccounting and Auditing Standards Committee of the BoardNew Jersey
Society of DirectorsCertified Public Accountants, the State Society's senior technical
committee. Mr. Fazio earned his Bachelor of Kidder, Peabody & Company where he was employedScience in Accounting from 1956
to 1989. While at Kidder, he was also Chairman of the Boston Stock Exchange
(1969-1972),Penn
State University in 1965 and 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 BostonMasters Degree in Accounting from Ohio State
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.1967.
DAVID M. KIES, 58,59, has been a Director of the Company since June 1996. Mr.
Kies is a Partner of the New York basedYork-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.
7
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.
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, 73,75, 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 isand 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 anda director of Opera Orchestra of New York.York and a
Managing Director of the Metropolitan Opera Association. 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.
8
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.
THE BOARD RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES NAMED ABOVE
(PROPOSAL NO. 1 ON YOUR PROXY CARD).
8
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,$30,000 for 2002 services as a Director, or a
pro ratarated 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. TheExclusive of Directors
appointed as Chairman of the Board receivesor Lead Director, each non-employee Director
of the Company will receive compensation of $30,000 for 2003 services as a
Director, or a pro rated portion thereof for persons not serving the full fiscal
year, as well as reimbursement of his reasonable out-of-pocket expenses incurred
in connection with his Board and Board committee activities.
For 2002, the Chairman of the Board received $150,000 per year for his services as
Chairman as well as reimbursement of his reasonable outout-of-pocket expenses
incurred in connection with his Board and Board committee activities. On January
24, 2003, the annual compensation for the Chairman of pocketthe Board was lowered to
$50,000 for 2003, or a pro rated portion thereof if not serving the full fiscal
year. Mr. Robert F. Goldhammer resigned as Chairman of the Board on April 29,
2003 and continued service as a Director until he resigned as a Director on July
17, 2003. Accordingly, Mr. Goldhammer's total compensation for 2003 was
$22,979.28. On May 14, 2003, the Board appointed a Lead Director and set
compensation for this position at a rate of $45,000 per year or a prorated
portion thereof for persons not serving the full fiscal year, 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,committee, exclusive of the
Chairman of the Board, receives $5,000 perwill receive $10,000 in 2003, or a pro rated portion
thereof for persons not serving the full fiscal year, as compensation for
services as committee Chairman. ThisFor 2003, each Director, including the Chairman
of the Board and Lead Director, will receive an additional $1,000 per meeting
fee was raisedwhere such meeting is in addition to $10,000the Board's regularly scheduled
meetings for 2002. Dr. DeVita did notthe year. For each Board committee meeting that such Director
attends, whenever such meeting is in addition to the Board committee's regularly
scheduled meetings for the year, such Director will receive compensation for his service as a Director during 2001 due to his consulting
arrangement with the Company during 2001, which consulting arrangement has been
terminated. See "Certain Relationships and Related Transactions."an additional $400
per meeting.
DIRECTORS' STOCK OPTIONS
Pursuant to the Company's 1996 Non-Qualified Stock Option Plan (the
"1996 Non-Qualified Plan"), eachEach Director who is not an employee of the Company automatically receives on each February 15th an optionwas granted for 2002
options to purchase 30,000 shares of common stock, except that the Chairman of
the Board receiveswas granted for each of 2002 and 2003 options to purchase 60,000
shares of common stock. On January 24, 2003, the Chairman of the Board, Mr.
Goldhammer, was granted options to purchase 60,000 shares of common stock,
vesting as to 25% on each of April 24, 2003; July 24, 2003; October 24, 2003 and
January 24, 2004. In light of Mr. Goldhammer's resignation as Chairman of the
Board on April 29, 2003 and continued service as a Director until July 17, 2003
this option grant was amended to 37,912 shares of common stock, vesting as to
15,000 shares on April 24, 2003; 7,912 shares on July 24, 2003; 7,500 shares on
October 24, 2003 and 7,500 shares on January 24, 2004. Due to Mr. Goldhammer's
July 17, 2003 resignation from the Board, this option grant was again amended
solely to comprise 15,000 shares which vested on April 24, 2003. On May 14,
2003, the option grant for the position of Lead Director was set at 45,000
shares. As a result, the Company's Lead Director was granted an option to
purchase 60,000 shares.10,467 shares of common stock, vesting as to 2,967 shares on July 24,
2003; 3,750 shares on October 24, 2003 and 3,750 shares on January 24, 2004,
representing the prorated portion of such additional share grant after
accounting for the Lead Director's previous option grant as a Director for 2003.
Each individual newly joining the Board withinduring the first nine
months of thefiscal year receives a
pro ratarated portion thereof. Suchof the options vestdescribed above based on the portion of the
fiscal year served. Prior to January 2003, such options generally vested after
one full year12 months of service on the Board from the date of grant, subject to such
individual's continued service on the Board on the scheduled date of vesting and
havehad an exercise price equal to the fair market value of the common stock on the
date of grant. EachBeginning in January 2003, such options vest quarterly, subject
to such individual's continued service on the Board on the scheduled date of
vesting and have an exercise price
9
equal to the fair market value of the common stock on the date of grant. In
addition, each Director newly joining the Board who is not an employee of the
Company is made a one-time option grant under the 1996 Non-Qualified Planof options 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, "Approval2002. In 2003, options to purchase
5,000 shares of common stock having an exercise price equal to the fair market
value of the ImClone Systems Incorporated 2002 Stock Option Plan," is approved, Directors
will no longer receive automatic option grantscommon stock on the date of grant, which fully vested on the date
of grant, were granted to each February 15th, but it is
expected that they will continue to receive comparable grants on a discretionary
basis.
9
of Drs. DeVita, Levine and Mendelsohn and Messrs.
Goldhammer, Kies, Kopperl and Miller. The table below sets forth option grants
that were made during the year ended December 31, 2002 in consideration for such
Directors serving on the Board 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:Company:
NUMBER OF
NAME OPTIONS
- ---- ---------------------
Richard Barth............................................... 30,000(1)(3)
Andrew G. Bodnar............................................ 50,000(2)30,000(1)
Vincent T. DeVita, Jr. ..................................... 30,000(1)
John A. Fazio............................................... 0(2)
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)30,000(1)(3)
- ---------------
(1) These options were granted automatically, pursuant to the terms of the 1996
Non-Qualified Stock Option Plan, on February 15, 20012002 at a per share
exercise price of $37.1875,$18.44, 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, 20022003 and will terminate on February 14,
2011.2012.
(2) In accordance with Company policy, upon joiningMr. Fazio joined the Board of Directors on
November 15, 2001, Dr. Bodnarin 2003.
(3) Mr. Barth 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 onresigned from the Board of Directors on the scheduled
date of vesting.in 2002 and therefore
forfeited these options.
10
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, 2001,2002, there were twelvefourteen meetings of the Company's
Board. The Board also took certain actions by unanimous written consent. NoExcept
for Dr. Arnold J. Levine, no incumbent Director attended fewer than 75% of the
aggregate of the total number of meetings of the Board and the total number of
the Committeesmeetings held by all 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.Miller, Arnold J. Levine and John A. Fazio.
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. (an "Independent Director"). John A. Fazio is an "Audit
Committee Financial Expert" as that term is defined by the rules of the
Securities Exchange Commission (the "SEC"). Mr. Kopperl is not standing for
re-election to the Board and it is expected that Mr. Fazio will assume the role
of Chairman of the Audit Committee. The Audit Committee operates under a written
charter. The written charter a copy of
whichthat was in effect through August 14, 2003 was
attached as Appendix A to the Company's proxy statement for its 2000 fiscal
year. The primary functions of the Audit Committee arecurrent written charter was adopted on August 14, 2003 and is attached
as Appendix A to monitor the
integrity of the Company's financial reporting processthis proxy statement 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.described below under "Corporate
Governance Initiatives". The Audit Committee met threeseven times during the year
ended December 31, 2001.
10
2002.
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.Kopperl, all of whom are Independent
Directors. 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 annuallyoperates under 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 optionswritten charter described
below under the option plans."Corporate Governance Initiatives". The Compensation Committee met
twicefour times during the year ended December 31, 20012002, 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.Miller, all of whom are Independent Directors. 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
Corporateoperates under a written charter described below
under "Corporate Governance Committee also considers and makes recommendations to the
Board with respect to corporate organizational and governance matters.Initiatives". The Nominating and Corporate
Governance Committee met one timethree times during the year ended December 31, 2001.2002.
The Nominating and Corporate Governance Committee considers nominations for
directorDirector 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. Such procedures require
that notice by any stockholder be delivered to the Secretary of the Company not
less than 60 nor more than 90 days prior to the date of the meeting, which
notice shall include a statement in writing setting forth the name of the person
to be nominated as Director, the number and class of all shares of each class of
stock of the Company beneficially owned by such person, the information
regarding such person required by paragraphs (a), (e) and (f) of Item 401 of
Regulation S-K adopted by the SEC (or the corresponding provisions of any
regulation subsequently adopted by the SEC applicable to the Company), such
person's signed consent to serve as a Director of the Company if elected, such
person's name and address and the number and class of all shares of each class
of stock of the Company beneficially owned by such person. In nominating
candidates for Director, the Nominating and Corporate Governance Committee
considers such factors as judgment, skill, diversity, experience in the
biotechnology/pharmaceutical industry, experience in medical research or
oncology, the prospective interplay of the candidate's experience with the
experience of other Board members, and the extent to which the candidate would
be a desirable addition to the Board and any committees of the Board. In
evaluating current Directors for re-nomination to the Board, the Nominating and
Corporate Governance Committee assesses the performance of each such Director,
as well as the challenges and needs of the Company. In response to recent proxy
rule amendments proposed, but not yet issued, by the SEC, the Company plans to
evaluate the need to issue additional guidance to stockholders on Nominating and
Corporate Governance Committee policies and procedures.
11
The Company has a Research Oversight Committee currently composed of
Samuel D. Waksal (Chairman), Vincent T. DeVita, Jr. (Chairman), Arnold J. Levine and John Mendelsohn, Peter S. Ringrose and Harlan W. Waksal.Mendelsohn. The
Research Oversight Committee participates on behalf of the Board in monitoring the research focus
of the Company. The Research Oversight Committee did not meet formallymet fourteen times during the year ended December
31, 2001.2002.
In February 2002, the Board of Directors established a Special Committee.
The Special Committee is currently composed of Andrew G. Bodnar, 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 ofby 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(which has subsequently been resolved through the amendment of the agreement
between the Company and BMS dated March 5, 2002,2002), and any matters that may arise
in the future based upon the same or similar facts or allegations. The Special
Committee met twelve times during the year ended December 31, 2002.
RECENT CORPORATE GOVERNANCE INITIATIVES
The Company has strengthened and will continue to strengthen the controls
and procedures and improve the Company's corporate governance in order to ensure
the accuracy and timeliness of its financial reporting, as well as the Company's
compliance with tax and other regulatory requirements. As part of this
commitment, the Company has initiated a number of steps, including those in
response to the Sarbanes-Oxley Act of 2002 and corresponding SEC and Nasdaq
requirements or proposals. Specific actions taken or planned by the Company
include the following:
- The Company has adopted Corporate Governance Guidelines, a Code of
Business Conduct and Ethics, and formal charters for all of its Board
committees. In addition, all employees, officers, directors, consultants
and Scientific Advisory Board members will be required to sign an
acknowledgement on an annual basis that they have read the Code of
Business Conduct and Ethics policy, understand its contents, and agree to
abide by its terms as a condition of employment or association with the
Company. The Company plans to post a copy of the Company's Corporate
Governance Guidelines, Code of Business Conduct and Ethics, and Board
committee charters on the Company's website, www.imclone.com, in the near
future.
- The Company has both strengthened the Audit Committee's Charter and
appointed a new member to its Board of Directors and Audit Committee,
John A. Fazio. Mr. Fazio is a former Senior General Practice Partner of
PricewaterhouseCoopers, qualifies as a "Audit Committee Financial Expert"
under the Sarbanes-Oxley Act, and brings considerable financial expertise
in the pharmaceutical industry.
- The Company has established a Disclosure Committee to formally organize
and oversee the disclosure process. The Committee consists of finance,
investor relations, intellectual property, internal audit and legal
personnel, with a mandate to design and establish controls and other
procedures to assist its senior officers in overseeing the accuracy and
timeliness of the Company's disclosures.
- The Company has created an Internal Audit function with a formal charter,
which mandates that the department provide independent, objective and
timely analyses and assurances to senior management and the Board of
Directors as to the adequacy and effectiveness of the Company's risk
management, control and governance processes.
- The Company has conducted a comprehensive review of the adequacy of its
policies and procedures with respect to the administration of its equity
compensation plans (including stock option and warrant plans) and
purchases and sales of the Company's securities. The Company revised its
Insider Trading Policy and now requires that all employees, officers,
directors, consultants and Scientific Advisory
12
Board members sign an acknowledgement that they have read the policy,
understand its contents and agree to abide by its terms as a condition of
employment or association with the Company. In addition, the Company has
significantly increased the number of senior managers designated as
executive officers obligated to file reports under Section 16(a) of the
Exchange Act. In addition, the Company has conducted an internal review
of its tax withholding and reporting policies and established procedures
to ensure that the Company is in compliance with federal, state and local
tax codes and regulations.
- The Company is taking steps to ensure that it is in compliance with the
requirements of Section 404 of the Sarbanes-Oxley Act. The Company
intends to modify and enhance its internal control structure consistent
with the broad guidelines issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO"). The COSO Integrated
Framework -- Internal Controls report provides a sound basis for
establishing internal control systems and determining their
effectiveness. It is generally regarded as providing the most
recognizable and suitable set of control criteria against which internal
controls and procedures for financial reporting may be judged, and it
meets the test of an authoritative framework that is widely accepted. The
SEC's rules for Section 404 refer to the COSO framework and U.S.
professional auditing literature embraces COSO. For this purpose, the
Company will engage the assistance of a professional services firm that,
in addition to providing expert advice and guidance, will ensure that an
objective assessment is performed.
- The Company has established the position of Chief Tax Officer, a new
position charged with the responsibility of supervising the Company's
policies and procedures with respect to federal, state, local and foreign
tax administration and compliance, including, but not limited to,
compliance with tax withholding requirements.
Corporate Governance Guidelines
The Company's Corporate Governance Guidelines (the "Guidelines") were
adopted on November 20, 2002 in order to promote the functioning of the
Company's Board and its committees. The Guidelines set forth certain goals
relating to the composition of the Board. The Guidelines also establish the
procedures and criteria for the selection of Directors, a majority of which must
consist of "independent directors" under proposed requirements set forth in
recently proposed amendments to the rules of the Nasdaq Stock Market, Inc.
("Nasdaq"). The Guidelines specify the frequency of Board meetings and executive
sessions for independent directors. The Guidelines provide that the Board shall
have, at a minimum, all the committees required by Nasdaq. Currently, the
committees of the Board are: the Audit Committee, the Compensation and Stock
Option Committee, the Nominating and Corporate Governance Committee, the
Research Oversight Committee, the Special Committee and the Chief Executive
Officer Search Committee. The Guidelines also set forth the principles for
compensation of the Chief Executive Officer of the Company, executives of the
Company and the Board, as well as certain expectations regarding the performance
of Directors' duties, including commitment to the Company and attendance at
Board meetings, duty of loyalty to the Company, and confidentiality.
Code of Business Conduct and Ethics
The Code of Business Conduct and Ethics (the "Code"), adopted by the
Company's Board on November 20, 2002, sets forth the key guiding principles that
represent Company policies and establish conditions for employment at or
association with the Company. These principles include:
- conducting the Company's business affairs with integrity and honesty and
in full compliance with all applicable laws, rules and regulations;
- a prohibition against trading on inside information;
- the protection of confidential proprietary information belonging to the
Company;
- avoiding potential or actual conflicts of interests;
13
- the protection and proper use of Company assets;
- a prohibition against misuse of corporate property, information or
position;
- fair dealing practices;
- full, fair, accurate, timely and understandable disclosure to security
holders about the Company's financial condition and results of
operations;
- compliance with the Code and all applicable laws, rules and regulations,
and reporting of illegal or unethical behavior;
- equal opportunity, non-discrimination and fair employment policies;
- rules regarding political contributions and activities; and
- compliance with all applicable environmental and workplace health and
safety laws and regulations.
In addition, the Code establishes procedures for employees, officers,
directors, consultants and Scientific Advisory Board members associated with the
Company to follow in situations which may conflict with the Code's ethical
principles.
Audit Committee Charter
On August 14, 2003, the Company adopted its Audit Committee Charter, which
provides that the Audit Committee shall be comprised of at least three
Directors, each of whom shall be an "independent director" as defined in Rule
4200 (a)(14) of the listing standards of the National Association of Securities
Dealers, Inc., as required by the Sarbanes-Oxley Act of 2002. All of the members
of the Audit Committee must be able to read and understand fundamental financial
statements, including the Company's balance sheet, income statement and cash
flow statement, and at least one of the members shall qualify as an "Audit
Committee Financial Expert" as that term is defined by the Sarbanes-Oxley Act of
2002.
The Audit Committee is an oversight body primarily concerned with
overseeing the accounting and financial reporting processes of the Company and
audits of the Company's financial statements. Accordingly, the Audit Committee
assists the Board with oversight of (i) the integrity of the Company's financial
statements, (ii) the Company's procedures and processes for compliance with
legal and regulatory requirements, (iii) the independent auditors'
qualifications and independence, and (iv) the performance of the independent
auditors and the Company's internal audit function. Furthermore, the Audit
Committee is responsible for the preparation of its report to be included in the
Company's annual proxy statement.
The Audit Committee's responsibilities include, among others, (i) to
appoint, retain, oversee and terminate the independent auditors, including sole
authority to approve all audit engagement fees and terms, (ii) to pre-approve
all audit and non-audit services to be provided by the independent auditors,
(iii) to meet with management, the independent auditors and, if appropriate, the
head of the internal auditing department to discuss, among other things, the
scope of the annual audit, the annual audited financial statements and quarterly
financial statements, any significant matters arising from any audit, and any
major issues regarding accounting principles and financial statement
presentations, (iv) to review and evaluate the qualifications, performance and
independence of the independent auditors, including their responsibilities,
rotation, scope of audit and results of audit, (v) to review all related party
transactions of the Company, and (vi) to establish procedures for the receipt,
retention and treatment of complaints or suggestions received by the Company
regarding accounting, internal accounting controls or auditing matters and for
the confidential, anonymous submission by employees of the Company of concerns
regarding questionable accounting or auditing matters.
The Audit Committee Charter provides the Audit Committee with the resources
and authority appropriate to discharge its duties and responsibilities,
including the authority to select, retain, terminate, and approve the fees and
other retention terms of special or independent counsel, accountants or other
experts and advisors, as it deems necessary or appropriate. The Audit Committee
Charter also establishes certain governance procedures relating to the
nomination of Directors to the Audit Committee, the frequency of Audit Committee
meetings and reporting by the Audit Committee to the Board. This summary of the
Audit
14
Committee Charter is qualified in its entirety by reference to the full text of
such Charter attached as Appendix A to this proxy statement.
Compensation and Stock Option Committee Charter
On November 20, 2002, the Company adopted its Compensation and Stock Option
Committee Charter which provides that the Compensation and Stock Option
Committee (the "Compensation Committee") shall be comprised of at least three
Directors, each of whom shall be (i) independent under Nasdaq rules, (ii) Non-
Employee Directors for purposes of Section 16 of the Exchange Act ("Section
16"), and (iii) Outside Directors for purposes of Section 162(m) of the Internal
Revenue Code.
The Compensation Committee has the responsibility to (i) oversee the
Company's compensation and benefits policies generally, (ii) evaluate
performance and set compensation for executive officers obligated to make
reports under Section 16(a) of the Exchange Act, and (iii) prepare the report on
executive compensation required to be included in the Company's annual proxy
statement. In connection with these responsibilities, the Compensation Committee
has the power to determine the Company's compensation and benefits (subject, if
applicable, to shareholder ratification), including reviewing and approving any
incentive compensation plans and equity-based plans of the Company. In addition,
the Compensation Committee recommends Director compensation to the Board for its
approval.
The Compensation and Stock Option Committee Charter provides the
Compensation Committee with the sole authority to retain and terminate any
compensation consultant assisting it, including sole authority to approve all
such compensation consultant's fees and other retention terms. The Compensation
and Stock Option Committee Charter also establishes certain governance
procedures relating to the nomination of Directors to the Compensation
Committee, the frequency of Compensation Committee meetings and reporting by the
Compensation Committee to the Board.
Nominating and Corporate Governance Committee Charter
On November 20, 2002, the Company adopted its Nominating and Corporate
Governance Committee Charter, which provides that the Nominating and Corporate
Governance Committee (the "Nominating Committee") shall be comprised of at least
three Directors, each of whom shall be independent under Nasdaq rules. The
Nominating Committee has the responsibility to (i) identify and recommend
individuals for nomination as Directors, (ii) evaluate Board performance, and
(iii) develop and recommend to the Board Corporate Governance Guidelines and a
Code of Business Conduct and Ethics of the Company.
The Nominating and Corporate Governance Committee Charter provides the
Nominating Committee with the resources and authority appropriate to discharge
its duties and responsibilities, including the authority to select, retain,
terminate, and approve the fees and other retention terms of special counsel or
other experts and consultants, as it deems necessary or appropriate. The
Nominating and Corporate Governance Committee Charter also establishes certain
governance procedures relating to the nomination of Directors to the Nominating
Committee, the frequency of Nominating Committee meetings and reporting by the
Nominating Committee to the Board.
Research Oversight Committee Charter
On November 20, 2002, the Company adopted its Research Oversight Committee
Charter, which provides that the Research Oversight Committee (the "Research
Committee") shall be comprised of at least three Directors. The Research
Committee has the responsibility to assist in the evaluation and oversight of
the Company's basic scientific research, including (i) periodic reviews of the
Company's research focus and efforts, (ii) review of priorities and research
project timelines, (iii) assessment of research resource allocation, and (iv)
reporting to the Board on the effectiveness of the Company's research efforts.
The Research Oversight Committee Charter also establishes certain
governance procedures relating to the nomination of Directors to the Research
Committee, the frequency of Research Committee meetings and reporting by the
Research Committee to the Board.
15
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 9.
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.
11
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 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, 44,45, 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 Chief Financial Officer and in
February 2002 was appointed Secretary of the Company. In April 2003, he became
Acting Chief Executive Officer and was appointed Senior Vice President and Chief
Administrative Officer. 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
12
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,PETER BOHLEN, PH.D., 60, has served as the Company'sbeen Senior Vice President, Marketing and Sales since November 1998. Prior to joiningResearch of 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.Research in
September 1996 and served in that capacity through December 2000. Prior to
joining the Company,ImClone, Dr. Needle served as Director, Oncology Clinical Research of G.D. Searle, a Monsanto
Company. From July 1993 through November 1997Bohlen has held managerial positions in drug discovery with
pharmaceutical and biotechnology concerns, and he has spent 15 years in various
academic positions. Dr. Needle served as Assistant
Professor of Pediatrics and Neurology, Children's Hospital of Philadelphia,
University of Pennsylvania School of Medicine. Dr. NeedleBohlen received a Bachelor of
Artshis doctoral degree in Physicschemistry 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 CenterBerne, Switzerland. His scientific work has focused on the
function of growth factors that regulate the formation of new blood vessels in
Houston.
ANDREA F. RABNEY, 35,tumors.
CLIFFORD R. SAFFRON, 45, has served as the Company's Senior Vice President
Corporate Communicationsand General Counsel 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.
CLIFFORD R. SAFFRON, 44,2003. He joined the Company on February 1,
2002, as Vice President, Legal --and 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., 48,49, has served as the Company's Senior Vice
President, Manufacturing Operations and Product 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,MICHAEL P. BAILEY, 38, has served as the Company's Associate General
Counsel since February 1997 and Vice President,
LegalMarketing since January 2003. Mr. Bailey joined the Company in 1999 as Director
of Marketing and has served as a key member of the commercial team overseeing
both the product management and strategic planning groups. Prior to joining the
Company, Mr. Bailey served at Genentech, Inc. from 1997 through 1999 where he
managed the company's Cardiovascular Development Portfolio as Group Manager
Product Manager. From 1992 through 1997, Mr. Bailey served as one of two MBA
graduates selected for Smith-Kline Beecham's Executive Marketing Program. Within
the program, Mr. Bailey held a variety of commercial roles, including sales
(hospital and retail), strategic planning (new product marketing and managed
care), and product management. Mr. Bailey holds an MBA in International
Marketing from the University of Notre Dame.
PETER R. BORZILLERI, 47, joined the Company in September 2002, as Vice
President, Internal Audit. Prior to joining the Company, Mr. Borzilleri held
financial and administrative management positions with various international
companies. Most recently, he was Vice President, Assistant Corporate Controller
for Automatic Data Processing, Inc., one of the world's largest providers of
computerized transaction processing, data
16
communication and information services. From 1999 to 2001, he was Vice
President, Corporate Controller for United Rentals, Inc., the largest equipment
rental company in North America. From 1994 to 1999 he was Vice President, Group
Controller for Mannesmann Corp., the U.S. operations of a German industrial
company. Prior to that, he spent nine years with the Volvo North America Group,
with most of his time as the top financial and administrative executive of their
U.S. marine and industrial engine business, Volvo Penta North America. He
started his career in public accounting with the firm Deloitte & Touche, where
he spent seven years in their audit group. Mr. Borzilleri is a Certified Public
Accountant.
MARGARET DALESANDRO, PH.D., 56, joined the Company in September 2002 as
Vice President, Project Management. She has responsibility for both Project and
Alliance Management functions within the Company. From February 2000 to
September 2002, Dr. Dalesandro was Senior Director of Project and Portfolio
Management at GlaxoSmithKline plc where she led global multi-disciplinary
project teams in the development and delivery of market-aligned Cardiovascular
and Urology therapies. From October 1998 through January 2000, Dr. Dalesandro
led the Technology Assessment practice in the U.S. for Cambridge Pharma
Consultancy. She consulted with major pharmaceutical and biotechnology companies
to develop business strategies based on evaluation of commercial opportunities
and risk in new product development. From September 1989 through September 1998,
Dr. Dalesandro held various positions in R&D at Centocor, Inc., including
director of the departments of Emerging Technologies and Immunobiology. She also
established the department of Cardiovascular Research within Centocor
Diagnostics. Dr. Dalesandro received both M.A. and Ph.D. degrees in Biochemistry
from Bryn Mawr College. She was an NIH Postdoctoral Fellow in Molecular
Immunology at Bowman Gray School of Medicine, Winston-Salem, NC.
CHARLES DUNNE, 39, has been Vice President, Management Information Systems
and Facilities since January 2001. SheMr. 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, 38, 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 J. HOWERTON, 51, has served as the Company's Vice President,
Finance and Business Development, and as its Acting Chief Financial Officer and
Secretary since May 2003. From August 2001 until May 2003, Mr. Howerton served
as the Company's Vice President, Business Development and was 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 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 Medicines
Group.
LILY WAIYEE LEE, PH.D., 47, 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 Pharmaceutical, a division of Johnson & Johnson. Dr. Lee earned a
bachelor degree in
17
statistics from the University of Minnesota and both a masters' degree in
Biostatistics and Ph.D. in Demography from the University of California,
Berkeley.
RONALD A. MARTELL, 41, 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 Manager 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., 43, 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, Legal
13
during 2000Clinical 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, M.D.
Anderson Cancer Center in Houston.
ANDREA F. RABNEY, 36, 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, Legal,Corporate
Development & Investor Relations from 1997 through 1999.1998 to 1999 and Assistant Vice President,
Corporate Communications during 2000. Prior to joining the Company, Ms. VaczyRabney
served as a senior associate specializingcompliance 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.
ERIK D. RAMANATHAN, 32, has served as the Company's Vice President, Legal
and Associate General Counsel since January 2003. He joined the Company in corporateJuly
2000 as its Director, Legal and securities matterswas promoted to Senior Director, Legal in
January 2002 and to Assistant Vice President, Legal in August 2002. From
September 1996 until January 2002, he specialized in health care transactions as
an attorney at the New York City officelaw firm of Ross & Hardies,Proskauer Rose LLP. Mr. Ramanathan holds
a Chicago-based law firm.degree from Harvard Law School and an undergraduate science degree from
The Johns Hopkins University.
DOUGLAS E. SWAN, 51, joined the Company in July 2003 as its Vice President,
Sales. Prior to his employment with ImClone Systems, from 1999 through 2003, he
served as Vice President, North America for Oncology and Vice President, Global
Marketing for the Biosciences Division with Baxter Healthcare Corporation,
headquartered in Deerfield, IL. From 1996 to 1999, he served as Director of
Marketing for Genentech, Inc. where he led the market preparation and subsequent
launches of two monoclonal antibodies targeting lymphoma and breast cancer. Mr.
Swan began his pharmaceutical career with Bristol-Myers Squibb and held a
variety of Sales, Sales Management, Reimbursement and Marketing positions. He
holds a Bachelors of Science degree in Medical Biology from the University of
New England.
EMPLOYMENT AND SEPARATION AGREEMENTS
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS.AGREEMENTS. On September 19, 2001, Samuel D. Waksal,Daniel S. Lynch, S. Joseph
Tarnowski, Harlan W. Waksal Daniel S. Lynch and S. Joseph
TarnowskiSamuel D. Waksal entered into employment
agreements with the Company to be effective as of the date thereof (the "Commencement Date").that date. The period of
employment, during which salary, bonus and benefits shallwere to be provided to Mr.
Daniel S. Lynch, Dr. S. Joseph Tarnowski, Dr. Harlan W. Waksal and Dr. Samuel D.
Waksal Dr.
Harlan W. Waksal, Mr. Lynch and Dr. Tarnowski began on the Commencement DateSeptember 19, 2001 and willwere to end on the third anniversary
thereof (the "Term");thereof; provided that, with respect to Dr. Harlan W. Waksal and Dr. Samuel D.
Waksal, and Dr. Harlan W. Waksal, the Term shallterm was to automatically be extended for one additional day each
18
day served, unless a notice not to extend is provided. SAMUELThe employment agreements
with Dr. Samuel D. WAKSAL.Waksal and with Dr. Harlan W. Waksal are no longer in effect.
As of February 1, 2002, Clifford R. Saffron entered into an employment
agreement with the Company, effective as of that date and for a term of one year
from that date, during which period salary, bonus and benefits were to be
provided to Mr. Saffron. This employment agreement was amended by letter
agreement dated April 18, 2002, which provided for promotion of Mr. Saffron and
a corresponding additional grant of options. This employment agreement is no
longer in effect.
The terms and conditions of these employment and separation agreements are
discussed below.
DANIEL S. LYNCH. Pursuant to the employment agreement with Dr. Waksal,Mr. Daniel S.
Lynch, he shall serveoriginally served as the Company's Senior Vice President and Chief
ExecutiveFinancial Officer and currently serves as a member of
the Board of Directors. Dr. Waksal'sCompany's Senior Vice President,
Chief Administrative Officer and Acting Chief Executive Officer. Mr. Lynch's
base salary is required to be not less than $500,000$360,000 and he will beis 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$360,000.
Mr. Lynch is entitled to participate in customary employee benefit plans
and programs sponsored by the Company. In addition, the Company will reimburse
Dr. WaksalMr. Lynch 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,September 19, 2001, pursuant to the terms of
the employment agreement, Dr. WaksalMr. Lynch was granted a ten year stock option to
acquire 1,250,000200,000 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
optionoptions will vest as to 100%33 1/3% of the shares subject thereto on the first,
second and third anniversary of the date of grant;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"
ofMr. Lynch is
then employed by the Company.
These options vested as to the first 33 1/3% on October 31,
2001.
If Dr. Waksal'sMr. Lynch's employment is terminated by the Company without "cause" or
by Dr. WaksalMr. Lynch for "good reason," Dr. WaksalMr. Lynch will be paid or provided, in addition
to accrued but unpaid compensation and benefits and pro-rata bonus, (a) a
(a)
lump-sum cash payment equal to three times the sum of his base salary and
highest bonus paid in the last three years (with highest bonus paid deemed to be
at least two times his then current base salary)$500,000); (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 remainderexpiration of their term regardless of any termination of employment
provisions therein contained; (d) lump sum payment equal to the present value of
the Company'smaximum contributions which wouldthe Company could have been made under all of the Company'sits
retirement plans if he had continued to be employed by the Company for an
additional three years and (e) payment by the Company of all contributions or
payments for the year of termination under all insurance benefits or policies
for the benefit of Dr. WaksalMr. Lynch of which he shallwould become the owner.
If any of the payments to be made to Dr. WaksalMr. Lynch 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. WaksalMr. Lynch an additional amount to fully
gross him up for such taxes, unless, by reducing the amounts payable to him by
less than 10%, no amounts would be subject to the excise tax, in which case the
payments shall be so reduced.
The employment agreement also contains confidentiality, non-competition and
non-solicitation provisions.
For purposes of the employment agreement, the Company will have "cause" to
terminate Dr. WaksalMr. Lynch 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 14
other
events, Dr. WaksalMr. 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) 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'sCompany . Since its execution, this
employment agreement withhas not been amended to reflect any of the Companychanges in Mr.
Lynch's responsibilities or title.
19
S. JOSEPH TARNOWSKI. Dr. Tarnowski's employment agreement is substantially
the same as the employment agreement with Dr. Samuel D. WaksalMr. Daniel S. Lynch, except that: (a)
he will serveserves as ExecutiveSenior Vice President, Manufacturing Operations and Chief Operating
Officer and as a member of the Board of Directors,Product
Development; (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$225,000 and
his minimum guaranteed bonus is $360,000,$100,000, (c) he is not being reimbursed for
annual tax planning or financial advice; (d) he was granted a term life
insurance policy with a death benefit of at least $2,000,000; and (e) he was not
granted any additional stock options, to acquire 200,000 shares of the Company's common
stock whichhowever, consistent with Mr. Lynch's
agreement, all existing stock-based awards will immediately 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
hisif Dr.
Tarnowski's employment agreement is terminated by the Company without "cause" or
by Mr. LynchDr. Tarnowski for "good reason," and his bonus is deemed to be no less than
$360,000.$100,000 for purposes of calculating the lump sum cash payment in such event. In
addition, among other events, Mr. LynchDr. Tarnowski will have "good reason" to terminate
his employment with the CompanyCompany: (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'sCLIFFORD R. SAFFRON. Pursuant to the employment agreement is
substantiallywith Mr.
Saffron, he originally served as the sameCompany's Vice President and Special
General Counsel and later served as the Company's Senior Vice President and
Special General Counsel. Mr. Saffron currently serves as the Company's Senior
Vice President and General Counsel, but his employment agreement expired on
February 1, 2003 after its one-year term.
Under Mr. Saffron's employment agreement, Mr. Saffron's base salary was
$225,000 per year and he was eligible to receive an annual target bonus of
$100,000 upon attaining performance goals established by the Company. Mr.
Saffron was entitled to participate in customary employee benefit plans and
programs sponsored by the Company. Pursuant to the terms of the employment
agreement, Mr. Saffron was granted stock options to acquire 60,000 shares of the
Company's common stock at an exercise price per share equal to $18.44, the fair
market value at the time the grant was approved by the Board of Directors. The
stock options vested as to 25% of the shares on the date of grant and as to 25%
of the shares on the first anniversary of the date of grant. The remaining
options will vest as to 25% of the shares on each of the second and third
anniversaries of the date of grant. In addition, Mr. Saffron was paid a signing
bonus of $25,000 in March 2002 pursuant to the employment agreement.
Mr. Saffron's employment agreement was amended by letter agreement dated
April 18, 2002, providing for Mr. Saffron's promotion to Senior Vice President
and Special General Counsel. Under the letter agreement, Mr. Saffron was also
granted additional options to acquire 10,000 shares of the Company's stock at an
exercise price per share equal to $21.54, the fair market value at the time the
grant was approved by the Board of Directors. These stock options vested as to
25% of the shares on the date of grant and will vest as to 25% of the shares on
each of the first, second and third anniversaries of the date of grant.
HARLAN W. WAKSAL. Pursuant to the employment agreement with Dr. Samuel D. Waksal,
except that: (a)which has now been terminated, he will serveoriginally served as Seniorthe Company's Executive
Vice President -- Manufacturing
Operations and Product Development, (b)Chief Operating Officer and Director, then as the Term of his agreement does not
automatically renew, (c) hisCompany's
President and Chief Executive Officer and Director and then as the Company's
Chief Scientific Officer and Director. Dr. Waksal's base salary iswas required to
be not less than $225,000$455,000 and his minimum guaranteed bonus is $100,000, (d) he was eligible to receive an annual bonus;
provided, that, the annual bonus was not to be less than $1,000,000 minus his
base salary for the relevant year.
Dr. Waksal was entitled to participate in customary employee benefit plans
and programs sponsored by the Company. In addition, the Company reimbursed Dr.
Waksal for up to $15,000 annually for personal tax planning and financial
advice. Dr. Waksal was also entitled to a term life insurance policy with a
death benefit of at least $5,000,000, but he did not pursue the issuance of such
a policy. On September 19, 2001, pursuant to the terms of the employment
agreement, Dr. Waksal was granted a ten year stock option to acquire 1,000,000
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 options were
to 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
were to each automatically vest prior to the third anniversary if Dr. Waksal
remained employed by the Company when the Company's ten day average stock price
reaches $60, $80 and (e)$100 per share, respectively. In addition, these
20
stock options were to become 100% vested upon a termination"change in control" of histhe
Company. These options vested as to the first 33 1/3% on October 31, 2001.
The term of Dr. Waksal's employment agreement was to automatically extend
beyond its three year initial term for one additional day each day served,
unless a notice by the Company not to extend was provided. If Dr. Waksal's
employment was terminated by the Company without "cause" or by Dr. TarnowskiWaksal for
"good reason," Dr. Waksal was to 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 ispaid in last
three years (with highest bonus paid deemed to be noat 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 were to remain exercisable
until the expiration of their term regardless of any termination of employment
provisions therein contained; (d) lump sum payment equal to the present value of
the maximum contributions the Company could have made under all its retirement
plans if he had continued to be employed by the Company for an additional three
years and (e) payment by the 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 would 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 Company was to pay Dr. Waksal an additional amount to
fully gross him up for such taxes, unless, by reducing the amounts payable to
him by less than $100,000. In addition, among10%, no amounts would be subject to the excise tax, in which
case the payments were to be so reduced.
The employment agreement also contained confidentiality, non-competition
and non-solicitation provisions.
For purposes of the employment agreement, we had "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.
Tarnowski will haveWaksal had "good reason" to terminate his employment with the Company (a) if
there iswere any material and adverse change in his duties or responsibilities,
(b) if there iswere 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
provided a notice of non-renewal of the term, (e) if he iswere required to
relocate, or (d)(f) if there iswere a breach of any material provision of the
employment agreement by the Company. Since its execution, this employment
agreement was not amended to reflect any of the changes in Dr. Waksal's
responsibilities or title.
As of July 22, 2003, the Company accepted the resignation of Dr. Harlan W.
Waksal. Pursuant to his employment agreement, Dr. Waksal received a lump sum
payment totaling approximately $4,424,000 and is entitled to receive for defined
periods of time the continuation of certain benefits including health care and
life insurance coverage through July 2006, with an estimated cost of $38,000. In
addition, all outstanding stock options held by Dr. Harlan W. Waksal, comprising
options to purchase 1,000,000 shares of common stock of the Company at a per
share exercise price of $50.01 that were granted on September 19, 2001, were
deemed amended such that the 666,666 options that remained unvested as of the
date of his resignation vested immediately on that date. The amended stock
option awards can be exercised at any time until the end of the term of such
awards.
SAMUEL D. WAKSAL. Dr. Samuel D. Waksal's employment agreement with the
Company which has now been terminated, was substantially the same as the
employment agreement with Dr. Harlan W. Waksal except that: (a) Dr. Samuel D.
Waksal served as the Company's President and Chief Executive Officer; (b) his
base salary was required to be not less than $500,000 per year; and (c) he was
granted stock options to acquire 1,250,000 shares of the Company's common stock.
On May 22, 2002, the Company entered into a Separation Agreement with Dr. Samuel
D. Waksal pursuant to which Dr. Samuel D. Waksal resigned his directorship,
offices and positions within the Company effective as of that date and
terminated his employment agreement with the Company. Pursuant to the terms of
the Separation Agreement, the Company agreed to provide to Dr. Samuel D. Waksal:
(i) a cash payment of $7,000,000; (ii) medical, hospitalization, dental and life
21
insurance programs for a period of three years at the level in effect while Dr.
Samuel D. Waksal was employed by the Company; (iii) term life insurance
purchased by the Company for the benefit of Dr. Samuel D. Waksal or his
designated beneficiaries with a death benefit of $5,000,000, to be maintained by
us for six years; (iv) the immediate vesting of 833,333 unvested employee stock
options held by Dr. Samuel D. Waksal; (v) the payment of all reasonable business
expenses incurred by Dr. Samuel D. Waksal prior to his termination; (vi)
payments that the Dr. Samuel D. Waksal was entitled to receive under Section
8(e) of his employment agreement; (vii) payment of the cost of a crisis
management consultant for a period of six months; and (vii) payment for legal
fees incurred in connection with the negotiation of the Separation Agreement of
up to $35,000. In an action brought by the Company in August 2002 against Dr.
Samuel D. Waksal, the Company is seeking repayment from Dr. Samuel D. Waksal of
all of the above-described amounts paid under the Separation Agreement and the
cancellation of the 833,333 employee stock options that became vested pursuant
to the Separation Agreement.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
This Report was adopted by the Compensation and Stock Option Committee (the
"Compensation Committee") on April 3, 2002,2003, 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, replacingDuring 2002,
Robert F. Goldhammer, as
Chairman. During 2001, Richard Barth and Peter S. Ringrose alsoand Richard Barth served on the
Compensation Committee. Mr. Goldhammer resigned from the Compensation Committee
on April 3, 2002, Dr. Ringrose resigned from the Compensation Committee on March
19, 2002, and Mr. Barth resigned from the Board of Directors on April 2, 2002.
Overall PhilosophyMr. Goldhammer and Dr. Ringrose resigned from the Compensation Committee because
it was determined that they were not "independent" as defined under the National
Association of Securities Dealers' ("NASD") listing standards. Each of the
current members of the Compensation Committee is "independent" under that
standard. The Compensation Committee operates under a written charter adopted by
the Board of Directors on November 20, 2002.
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, and long-term incentive compensation,
including stock options.
In establishing base salaries, annual and long-term 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.
15
industry, awards given to the executive
in past years, progress toward or attainment of the Company's corporate goals
and objectives including performance, shareholder return and such other factors
as the Compensation Committee deems appropriate and in the best interests of the
Company (including the cost to the Company of such compensation).
The Compensation Committee uses no set formulas and may accord different
weight at different times to different factors for each executive. TheAmong the
factors, the Committee looks towardconsiders the progress of the Company's research and
development and capital investment 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 CompensationDEDUCTIBILITY 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 thecertain other
Named
Executive Officers (as defined).executive officers. It is the general policy of the Company to attempt to
have its
executive compensation plansplan qualify to be 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 Compensationplan and the best interests
of the Company.
22
CHIEF EXECUTIVE OFFICER COMPENSATION
Dr. Samuel D. Waksal served as President and CEO until May 22, 2002. From
January 1, 2002 through May 22, 2002, he received no incentive awards, stock
options or cash bonus other than a guaranteed minimum bonus under his employment
agreement relating to 2001 services. Dr. Samuel D. Waksal received $55,917 of
perquisites during 2002. For more information regarding Dr. Samuel D. Waksal's
separation from the Company refer to "Employment and Separation Agreements"
herein.
Dr. Harlan Waksal became President and CEO on May 23, 2002. Pursuant to the
terms of his employment agreement with the Company dated September 19, 2001, Dr.
Harlan Waksal's base salary for 2002 was fixed in January 2001 at $550,000
and represented an$455,000. Dr. Harlan Waksal received no
salary increase for 2002. Pursuant to the terms 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.
Harlan Waksal was granted
optionsentitled to purchase 1,250,000 sharesa guaranteed cash bonus for 2002 equal to a
minimum of the Company's common stock at an
exercise price of $50.01 per share. The options vest after three years but are
subject$545,000. Dr. Harlan Waksal voluntarily declined to earlier vesting should certain targets be attainedaccept any cash
bonus relating to 2002 services. Dr. Harlan Waksal received no option grant
during 2002. Dr. Harlan Waksal received in the Company's
stock price. Dr. Waksal's employment agreement provides forApril 2002 a guaranteed minimum annual bonus
that is not less than the difference between $1,000,000 andof $545,000 under his base salary for the relevant bonus year. Accordingly,employment agreement relating to 2001 services. Dr. Harlan
Waksal was paid a
bonus for 2001received $104,084 of $450,000. This was paid inperquisites during 2002. Dr. Waksal was paid no
discretionary bonus for 2001.
Compensation and Stock Option
Committee
Robert F. Goldhammer,William R. Miller, 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.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 2001,2002, the following Board
membersDirectors
served on the Compensation Committee: Robert F. Goldhammer, Richard Barth, David
M. Kies, Paul B. Kopperl, and Peter S. Ringrose and William R. Miller, none of whom
is an employee of the Company or any of its subsidiaries ornor 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, 2002.2002 and Mr. Goldhammer resigned from the Compensation Committee on
April 3, 2002 and from the Board on July 17, 2003. Dr. Ringrose iswas an executive
officer of BMS. In 2001, the
Company accepted a promissory noteBMS prior to his recent retirement from Mr. Goldhammer.BMS. 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.
16BMS.
23
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
OfficerOfficers during fiscal year 2002 and the four most highly compensated executive
officers (other than the Chief Executive Officer)Officers) for each of the years ended
December 31, 2002, 2001 2000 and 19992000 who were serving as executive officers at
December 31, 20012002 and whose total salary and bonus exceeded $100,000 for the
year ended December 31, 2001 (the
"Named Executive Officers").2002.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION ------------------------------------------------ ---------------------AWARDS
-------------------------------------------- -----------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING PAYOUTS ALL OTHER
SALARY(1) BONUS(2) OTHER ANNUAL SECURITIES UNDERLYINGNAME AND SALARY BONUS COMPENSATION NAME ANDSTOCK OPTIONS LTIP COMPENSATION
PRINCIPAL POSITION YEAR ($)(1) ($) COMPENSATION(3) OPTIONS(4)(#) ($)(2) (3) AWARD(S) SARS PAYOUTS (4)
- --------------------------------------------- ---- --------- ----------- --------------- ----------------------------- ---------- ------------ ---------- ---------- ------- ------------
Samuel D. Waksal.......... 2001 $550,000
Harlan W. Waksal(5)........ 2002 $444,500 $ 450,000--(6) $104,084(7) $ -- 1,250,000(6)-- $ 10,435(7)-- $ 2,750
President and Chief 2000 500,000 1,000,0000 -- -- 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)545,000(6) 102,577(7) -- 1,000,000(6)1,000,000 -- 2,550
Executive ViceOfficer 2000 400,000 800,000 105,157(7) -- -- President and Chief 1999 250,000 500,000 -- 1,300,000
Operating Officer1,700
Daniel S. Lynch(9)........ 2001 223,769 525,000(10)Lynch(8)......... 2002 351,692 360,000(9) 130,958(10) -- 260,000(11)(12)267,500 -- 2,750
Senior Vice President, 2001 223,769 525,000(11) -- -- 260,000 -- 1,589
Finance and Chief
Financial Officer
Lily W. Lee(12)............ 2002 258,654 75,000 -- -- 26,250 -- 2,668
Vice President,
Regulatory 2001 172,436 200,000 -- -- 60,000 -- 2,344
Affairs and Biostatistics
S. Joseph Tarnowski.......Tarnowski........ 2002 230,798 100,000 -- -- 97,500 -- 2,750
Senior Vice President, 2001 217,808 225,000 -- 10,000(12)(13)-- 10,000 -- 2,306
Manufacturing Operations 2000 204,750 100,000 36,083(13) -- 24,000 -- 1,700
and Product Development
Clifford R. Saffron(14).... 2002 199,904 125,000 -- -- 89,000 -- --
Senior Vice President 2000 204,750 100,000 36,083(14) 24,000and
General Counsel
Samuel D. Waksal(15)....... 2002 215,769 -- Manufacturing 1999 195,000 60,000 -- 150,000 --
Operations and
Product Development
Peter Bohlen.............. 2001 215,000 200,00055,917(16) -- --(12) -- Senior Vice7,001,713(17)
Former President and 2001 550,000 450,000(18) 268,037(19) -- 1,250,000 -- 2,063
Chief Executive Officer 2000 183,750 91,000500,000 1,000,000 302,428(20) -- 34,000 -- Research 1999 170,000 85,000 -- 90,000 --1,700
- ---------------
(1) Amounts shown include compensation deferred pursuant to Section 401(k) of
the Internal Revenue Code.
(2) Although the Company has no formal bonus plan, the Company's Compensation
and Stock Option Committee, in its discretion, may award bonuses to the
Company's officers and other employees of the
Company.employees. 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 certain 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 baseannual salary plus bonus.
(4) Amounts shown include amounts paid by the Company as a matching
contribution to employees' 401(k) accounts.
(5) Dr. Harlan W. Waksal was the Company's President and bonus forChief Executive
Officer from May 22, 2002 until April 29, 2003, when he became the
years ended December 31, 2001,
2000 and 1999, respectively.
(4) Options to purchaseCompany's Chief Scientific Officer. He resigned from all positions with the
numberCompany as of shares of common stock shown are recorded
for the period in which they were granted.
(5)July 22, 2003.
(6) Pursuant to the terms of thean employment agreement entered intodated September 19, 2001,
Dr. Harlan W. Waksal was 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 elected to forgo his bonus for 2002 and he
was paid in 2002 his guaranteed bonus for 2001 of $545,000. This employment
agreement is no longer in effect.
(7) Includes the cost of tickets to New York City area sporting events for
personal use at $71,911, $76,703 and $44,950 for 2002, 2001 and 2000,
respectively.
24
(8) Mr. Lynch commenced employment with the Company in April 2001. Effective
April 29, 2003, Mr. Lynch was promoted to Senior Vice President and Chief
Administrative Officer, Acting Chief Executive Officer.
(9) Pursuant to the terms of an employment agreement dated September 19, 2001,
Mr. Lynch is guaranteed a minimum annual bonus that is not less than his
base salary for the relevant bonus year.
(10) Includes $99,741 for initiation costs, dues and other fees relating to
membership at a country club.
(11) Consists of a $75,000 sign-on bonus and a performance bonus of $450,000
paid pursuant to the terms of an employment agreement dated September 19,
2001.
(12) Dr. Lee commenced employment with the Company in April 2001.
(13) Consists of relocation expenses associated with Dr. Tarnowski joining the
Company.
(14) Mr. Saffron commenced employment with the Company in February 2002.
(15) Dr. Samuel D. Waksal on September 19, 2001,was the dateCompany's President and Chief Executive
Officer from March 1987 until May 22, 2002, at which time he resigned all
positions with the Company.
(16) Includes $24,000 for personal tax planning and financial advice and $15,436
for personal automobile expenses.
(17) Pursuant to a Separation Agreement dated May 22, 2002, the Company entered into its strategic partnership with BMS,paid Dr.
Samuel D. Waksal $7,000,000. In an action brought by the Company in August
2002 against Dr. Samuel D. Waksal, the Company is seeking repayment from
Dr. Samuel D. Waksal of this and other amounts paid under the Separation
Agreement.
(18) Pursuant to the terms of an employment agreement dated September 19, 2001,
Dr. Samuel D. Waksal was 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 theThis employment agreement entered into between the
Companyis no longer in effect.
(19) Includes $73,463 for personal tax planning 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
17
between $1,000,000financial advice and his base salary$94,600
for the relevant bonus year. Dr.
Harlan W. Waksal's base salarycost of tickets to New York City area sporting events for 2001 was $455,000,personal
use.
(20) Includes $135,802 for personal tax planning 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 $450,000
paid pursuant to the terms of an employment agreement entered into between
the Company and Mr. Lynch on September 19, 2001, the date the Company
entered into its strategic partnership with BMS.
(11) 200,000 of these options were granted pursuant to the terms of Mr. Lynch's
employment agreement entered into on September 19, 2001, the date the
Company entered into its strategic partnership with BMS. 60,000 of these
options were granted in connection with Mr. Lynch's commencement of
employment with the Company.
(12) Options granted on the basis of 2001 performance were granted in 2002 and
are not reflected in this Table.
(13) These options were granted to Dr. Tarnowski in connection with his
promotion during 2001 to Senior Vice President.
(14) Consists of relocation expenses associated with the individual joining the
Company.financial advice.
25
OPTION GRANTS IN FISCAL 20012002
The following table sets forth certain information relating to stock option
grants to the Named Executive Officers during the year ended December 31, 2001.2002.
INDIVIDUAL GRANTS
-------------------------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
ASSUMED
NUMBER OF PERCENT OFASSUMED ANNUAL RATES OF
SECURITIES PERCENT OF TOTAL STOCK PRICE APPRECIATION SECURITIES TOTALFOR
UNDERLYING OPTIONS FOR OPTION TERM(3)
UNDERLYING GRANTED TO EXERCISE OF OPTION TERM(3)($)
OPTIONS TO EMPLOYEES IN BASE PRICE EXPIRATION ------------------------------------------------------------------------
NAME GRANTED(1) FISCAL 20012002 ($/SHARE)(2) DATE 0% 5% 10%
- ---- ---------- ------------------------------ ------------ ---------- ------ -------------- ------------------ ---------- ----------
Harlan W. Waksal(9).... -- -- $ -- -- -- $ -- $ --
Daniel S. Lynch........ 200,000(4)(5) 5.62% 30.08 1/16/2012 -- 3,782,120 9,583,881
60,000(6) 1.69% 6.94 8/5/2012 -- 261,871 663,634
7,500(4)(5) .21% 11.91 12/19/2012 -- 56,176 142,361
Lily Waiyee Lee........ 24,000(4)(5) .67% 30.08 1/16/2012 -- 453,854 1,150,066
20,000(6) .56% 6.94 8/5/2012 -- 87,291 221,211
6,250(4)(5) 21% 11.91 12/19/2012 -- 46,813 118,634
S. Joseph Tarnowski.... 70,000(4)(5) 1.97% 30.08 1/16/2012 -- 1,323,742 3,354,358
20,000(6) .56% 6.94 8/5/2012 -- 87,291 221,211
7,500(4)(5) .21% 11.91 12/19/2012 -- 56,176 142,361
Clifford R. Saffron.... 60,000(7) 1.69% 18.44 2/14/2012 -- 695,809 1,763,317
10,000(8) .28% 21.54 4/17/2012 -- 135,464 343,292
12,000(6) .34% 6.94 8/5/2012 -- 52,374 132,727
7,000(4)(5) .20% 11.91 12/19/2012 -- 52,431 132,870
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
Daniel S. Lynch(5)... 200,000(6) 5.38% 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)......Waksal(9).... -- -- -- -- -- -- --
- ---------------
(1) The Company granted options to purchase a total of 3,717,5003,559,557 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. 18
Options granted on the basis of 2002 performance
were also granted in 2002 and are included in this Table.
(5) These options are exercisable as to 50% of the shares on each of the first
and second anniversaries of the date of grant.
(6) 200,000These options are exercisable as to 100% of thesethe shares on the second
anniversary of the date of grant.
(7) These options were granted pursuant to the terms of Mr. Lynch'sSaffron's employment
agreement entered into on September 19, 2001as of February 1, 2002 and are exercisable as to 33 1/3%25%
of the shares on the date of grant and are exercisable as to 25% of the
shares on each of the first, second and third anniversaries of the date of
grant.
60,000 of these(8) These options were granted uponpursuant to the commencementterms of the April 18, 2002
letter agreement effecting Mr. Lynch's employment withSaffron's promotion to Senior Vice President
and Special General Counsel and are exercisable as to 25% of the Companyshares on
the date of grant and are exercisable as to 25% of the shares on each of the
first, second, third and fourththird anniversaries of the date of grant.
(7) These options are exercisable(9) Samuel D. Waksal served as to 25%the Company's President and Chief Executive
Officer during the portion of the shares on eachfiscal year beginning January 1, 2002 and
ending May 22, 2002. Harlan W. Waksal served as the Company's President and
Chief Executive Officer during the portion of the first,
second, thirdfiscal year beginning on
May 22, 2002 and fourth anniversaries of the date of grant.ending on December 31, 2002.
26
OPTION EXERCISES AND VALUES FOR FISCAL 2001YEAR-END OPTION VALUES
The following table sets forth option exercises during the year ended
December 31, 20012002 by the Named Executive Officers and the value of the options
held by such persons on December 31, 2001,2002, whether or not exercisable on such
date.
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 20012002 DECEMBER 31, 2001(2)2002(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE--------------------------------- ---------------------------------
NAME (#) ($EXERCISE(#) REALIZED($) (#) (#) ($EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) ($UNEXERCISABLE($)
- ---- ----------- ----------- ----------- ------------- ----------- --------------------------- ---------------- -------------- ----------------
Samuel D. Waksal............ 2,300,000 $72,015,350 416,668 833,332 $Harlan W. Waksal..... 0 $0 333,334 666,666 0 $ 0
Harlan W. Waksal............ 2,580,000 89,145,000 333,334 666,666Daniel S. Lynch...... 0 0 Daniel S. Lynch.............81,667 445,833 0 220,800
Lily Waiyee Lee...... 0 0 15,000 95,250 0 260,000 0 1,096,35073,600
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 1,563,514Tarnowski.. 0 0 105,676 142,500 362,726 265,600
Clifford R.
Saffron............ 0 0 15,000 74,000 0 44,160
Samuel D. Waksal..... 0 0 1,250,000(2) 0 0 0
- ---------------
(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, 20012002 ($46.4610.62 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,$10.62, the option is deemed to
have no value.
(2) In an action brought by the Company on August 14, 2002 against Dr. Samuel D.
Waksal in Supreme Court of the State of New York, New York County, the
Company is seeking the cancellation of 833,333 of these options. See
"Employment and Separation Agreements".
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)" Plan") established under Section 401(k) of the Code.Internal Revenue Code of
1986, as amended. Contributions to the 410(k) Plan are voluntary, and
substantially all full-time employees are eligible to participate. For 2002,2003, 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$2,750 per employee. Neither the employee contributions nor the
Company's voluntary matching contributions are invested in the Company's
securities. The Company has made such a matching contribution for 20012002, which totaled
approximately $243,000.$314,000. The Company anticipates evaluating the level of itsthe
Company's matching contribution, if any, on an annual basis.
19The following table sets forth certain information regarding equity
compensation plan information for the year ended December 31, 2002.
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
FUTURE ISSUANCE UNDER
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE EQUITY COMPENSATION
BE ISSUED UPON EXERCISE EXERCISE PRICE OF PLANS (EXCLUDING
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, SECURITIES REFLECTED IN
WARRANTS AND RIGHTS WARRANTS AND RIGHTS COLUMN(A))
PLAN CATEGORY (A) (B) (C)
- ------------- ----------------------- -------------------- -----------------------
Equity Compensation Plans
Approved by Security
Holders.................. 7,352,647 $29.54 2,038,765
Equity Compensation Plans
Not Approved by Security
Holders.................. 6,160,486 $28.72 0
Total...................... 13,513,133 $29.16 2,038,765
27
1998 NON-QUALIFIED STOCK OPTION PLAN
The Company's 1998 Non-Qualified Stock Option Plan was adopted on May 27,
1998 and has not been approved by shareholders. Under the plan, non-qualified
stock options to purchase the Company's common stock may be granted to persons
who at the time of grant are consultants, advisors or non-officer employees of
the Company or a subsidiary. The maximum number of shares that may be issued
under the plan is 10 million, subject to adjustments for corporate transactions.
The plan is administered by the Compensation and Stock Option Committee (the
"Compensation Committee").
No options may be granted after May 27, 2008 and each option must have a
term not exceeding 10 years. The number of underlying shares, the exercise price
and other terms and conditions of the stock options granted under the plan are
determined by the Compensation Committee, but, except as otherwise provided by
the Compensation Committee, unvested options are forfeited immediately upon a
termination of employment for any reason except death or disability and vested
options are exercisable for 30 days after such termination. In the case of a
termination by reason of death or disability vested options are generally
exercisable for 12 months.
Options are not transferable except in the case of death or, if permitted
by the Compensation Committee, to certain members of the immediate family of the
optionee. The Board of Directors may amend or terminate the plan at any time
except for actions which are adverse to options previously granted.
28
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, 19961997
through December 31, 2001.2002. 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.
COMPARISON OF FIVE YEAR TOTAL RETURN AMONG
IMCLONE COMPANYSYSTEMS INCORPORATED COMMON STOCK,
NASDAQ STOCK MARKET (U.S. COMPANIES) TOTAL RETURN INDEX AND
NASDAQ PHARMACEUTICAL STOCKS TOTAL RETURN INDEX
[PERFORMANCE GRAPH](PERFORMANCE GRAPH)
NASDAQ
PHARMACEUTICAL
NADSDAQIMCL NASDAQ US STOCKS
IMCL
---------- --------------------- ------------- --------- --------------
12/31/9697................................................. $ 100.00 $100.00 $100.00
12/31/98................................................. $ 100.00111.12 $141.00 $126.95
12/31/99................................................. $ 100.00485.95 $261.96 $239.34
12/31/97 122.00 103.00 83.0000................................................. $1,079.34 $157.56 $298.54
12/31/98 173.00 131.00 93.0001................................................. $1,139.69 $125.01 $254.43
12/31/99 321.00 247.00 406.00
12/31/00 193.00 308.00 902.00
12/31/01 153.00 262.00 952.0002................................................. $ 260.51 $ 86.44 $164.38
The material under the caption "Common Stock Price Performance" 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.
2029
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH BRISTOL-MYERS SQUIBB COMPANY
TwoOne of the Company's Directors, Dr. Andrew G. Bodnar and Dr. Peter S.
Ringrose, areis also officersan officer of
BMS.Bristol-Myers Squibb Company, a Delaware corporation ("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 ("BMS
Biologics"), providing for the tender offer by BMS Biologics to purchase up to
14,392,003 shares of the Company's common stock 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 formerthen-current employees and Directors who
held exercisable options to purchase the Company's 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. The Stockholder
Agreement also sets forth BMS's (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. 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 andwhich is a wholly-owned subsidiary of BMS ("E.R. Squibb"),
relating to ERBITUX, the Company's lead therapeutic product candidate, pursuant
to which, among other things, the parties are co-developing and co-promoting
ERBITUX in the United States and Canada, and co-developing and co-promoting
ERBITUX (togetherin Japan (either together or co-exclusively 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 payablewas received 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 facilitythe
Company's Multiple Product 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 of 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 sharesDirectors so
long as its ownership interest in the event of
dilution and (iii) restrictions as to transfer of shares. Currently,Company is 12.5% or greater. Initially,
BMS has designated Dr. Peter S. Ringrose, BMS's former Chief Scientific Officer and
President, Pharmaceutical Research Institute, and Dr. Andrew G. Bodnar, BMS's
Senior Vice President, Strategy and Medical and& External Affairs, as the initial BMS
directors.Directors. BMS continues to have an ownership interest greater than 12.5% and to
possess the right to nominate two Directors. However, BMS has not yet nominated
a replacement to fill the seat on the Board vacated by Dr. Ringrose, who retired
in 2002 from his position at BMS, and also resigned from his Director position
with the Company. Therefore, the Company currently expects that BMS will
nominate only one Director for election at the meeting.
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 payablewas received
on March 5, 2003, $250,000,000 is payable upon receipt of marketing approval
from the FDA with 21
respect to
30
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 that the Company
has exercised, E.R. Squibb is also responsible for 100% of the distribution, sales
and marketing costs for ERBITUX in the United States and Canada, and as between the Company
and E.R. Squibb will 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 Commercial Agreement
provides that 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. phasePhase IV studies), the cost of which will be 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 Presidenthas also agreed, and Chief
Executive Officer, a full recourse, unsecured promissory note dated as of
December 21, 2000may agree in the principal amountfuture, to share with E.R. Squibb, on
terms other than the foregoing, costs of $282,200.clinical trials that The note was payable uponCompany
believes are not potentially registrational but should be undertaken prior to
launch in the earlier of June 21, 2001United States, Canada or demand byJapan.
On January 2, 2002, the Company and bore interest at 10.5%
(the prime lending rate plus 1% on the dateexecuted a letter of intent with Lonza
Biologics plc ("Lonza") to enter into a long-term supply agreement. The
long-term supply agreement would have applied to a large scale manufacturing
facility that Lonza is constructing, which would have been able to produce
ERBITUX in 20,000 liter batches. The Company paid Lonza $3,250,000 upon
execution of the note)letter of intent for the period that the
loan is outstanding. The Company extended the termexclusive right to negotiate a
long-term supply agreement for a portion 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.facility's manufacturing
capacity. In July 2001,September 2002, 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 Chairmanwrote-off the deposit because the
exclusive negotiation period ended on September 30, 2002. In light of the
Board, and, in August 2001,assistance the Company accepted a promissory note from Dr. Arnold J. Levine, a member of its Board of
Directors, in payment ofprovided to BMS with respect to preserving and then
relinquishing 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
22
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. Waksalmanufacturing capacity described above, BMS paid the Company
$3,250,000 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, which services have
been terminated.April 2003.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 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 Companythe Company's 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 formsreports 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, 2001,2002, all Section 16(a) filing requirements applicable to itsthe Company's
executive 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 17 Forms 4
with respect to 26 transactions and 6 Forms 5 with respect to 17 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.met.
31
REPORT OF THE AUDIT COMMITTEE
MEMBERSHIP AND ROLE OF THE AUDIT COMMITTEE
This report was adopted by the Audit Committee on August 12, 2003. The
Audit Committee consists of the following members of the Company's Board of
Directors: Paul B. Kopperl, Chairman, and William R. Miller.Miller, Arnold Levine and John
A. Fazio. Mr. Fazio was appointed to the Board of Directors and the Audit
Committee on February 27, 2003. Mr. Fazio is an Audit Committee Financial
Expert, as that term is defined by the rules of the Securities and Exchange
Commission. During 2001, Richard Barth and2002, Andrew G. Bodnar and Richard Barth served on the Audit
Committee. Dr. Bodnar resigned from the Audit Committee on March 4, 2002,
because he was not "independent" as defined under the National Association of
Securities Dealers' listing standards and Mr. Barth resigned from the Board of
Directors on April 2, 2002. Mr. Barth was a memberEach 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 thecurrent members of the Audit Committee
is "independent" as defined under the National Association of Securities
Dealers' listing standards. The Audit Committee operatesformerly operated under a
written charter adopted by the Board of Directors on June 14, 2000, a copy of
which was included as Appendix Aan appendix to the Company's proxy
statementProxy Statement for the 2000
fiscal year. On November 15, 2001,year, and currently operates under a written charter adopted by the Board
of Directors on August 14, 2003, a copy of which is included as Appendix A to
this proxy statement. Among other matters, the Audit Committee reviewedin its oversight
role reviews and reassessedreassesses the adequacy of the charter and the performance of
the Audit Committee thereunder.thereunder at least annually. The Audit Committee held three (3)seven
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
23
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.2002.
REVIEW OF THE COMPANY'S AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED
DECEMBER 31, 20012002
The Audit Committee reviewed and discussed the audited financial statements
of the Company for the fiscal year ended December 31, 20012002 with the Company's
management and KPMG LLP, the Company's independent auditors. This discussionprocess
included an assessment of the quality, not just the acceptability, of the
accounting principles utilized, 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 and received 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 expressedrepeated
their general preference forthat conservative policies be followed when more than
one accounting option is available.
The Audit Committee also discussed with itsthe independent auditors the
matters required to be discussed by Statementapplicable statements on Auditing Standards
No. 61
(Communicationconcerning communication with Audit Committees),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 auditorsit 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 independent auditors the provision of non-audit services provided
by KMPG LLP and any relationships that might have impacted or may impact the
auditors' objectivity and independence and has satisfied itself as to the
auditors' independence.
At each of its meetings in 2002 (and in prior years) the Audit Committee
followed the practice in executive session whereby each of the Company's
principal legal, compliance, accounting and finance managers as well as KPMG LLP
had the opportunity individually to raise and discuss any issues or concerns
that he, she or they may have had about the adequacy and proper, timely
functioning of the Company's control, reporting, disclosure and compliance
systems and procedures.
In July 2002 the Audit Committee established an internal audit function
reporting directly to the Committee and conducted a search for a qualified
individual to serve in this capacity. In September 2002 the Committee directed
the Company to hire a qualified person as Vice President, Internal Audit and
thereafter provided oversight of his duties and performance.
32
As previously disclosed in the Company's 2002 Annual Report on Form 10-K
and in other filings with the Securities and Exchange Commission on March 30,
2003, consistent with its Charter and as confirmed by the Board of Directors,
the Audit Committee undertook an investigation of potential withholding tax
liabilities and other matters related to the exercise of certain Company common
stock options and warrants by then-current and former officers, other employees
and directors. The Audit Committee engaged Simpson Thacher & Bartlett LLP to
conduct the investigation in conjunction with Company counsel, Davis Polk &
Wardwell. The Company's independent auditors, KPMG LLP, were kept informed of
the status and findings of the investigation on an ongoing basis throughout the
process and at its conclusion. As a result of the investigation, the Company
restated its financial statements previously filed with the Securities and
Exchange Commission for the fiscal years ended December 31, 2000 and 2001;
amended its first three quarterly reports on Form 10-Q for the fiscal year ended
December 31, 2002; initiated certain Board of Director and executive management
changes; and, as more fully described in the Company's Annual report on Form
10-K for the fiscal year ended December 31, 2002, continued the assessment and,
by instituting certain remedial actions, the strengthening of the Company's
internal controls, compliance procedures and disclosure processes.
In performing all of these functions, the Audit Committee actsacted and
continued to act 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 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, on June
23, 2003, 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, 2001.2002.
The Audit Committee and Board of Directors havehas recommended, subject to ratification by the
stockholders, that KPMG LLP be selected as the Company's independent certified public accountantsauditors
for the fiscal year ending December 31, 2002.2003.
This report is submitted on behalf of the current members of the Audit
Committee, except Mr. Fazio who did not join the Audit Committee until February
27, 2003.
Audit Committee
Paul B. Kopperl, Chairman
Richard BarthArnold J. Levine
William R. Miller
24
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 duringwere $174,000 and $1,512,177 for the fiscal
years 2001 were
$174,000.and 2002, respectively.
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 2001.2001 or
2002.
33
ALL OTHER FEES
KPMG LLP's fees for all other professional services provided to the Company
incurred during 2001 totaledand 2002 were $240,000 and $104,175, respectively,
including audit related services of $96,000 and $10,750, respectively, and
non-audit related services of $144,000.$144,000 and $93,425, respectively. 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.services. 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."
34
PROPOSAL NO. 2
APPROVAL OF AN AMENDMENT TO THE IMCLONE SYSTEMS INCORPORATED
2002 STOCK OPTION PLAN
On April 3, 2002, the Board of Directors adopted subject to stockholder
approval,and, on June 11, 2002, the
shareholders approved 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.shareholders. 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 soundsolid
corporate governance.
The proposed amendment to the plan would increase the maximum total number
of shares of common stock currently available for grant of options under the
plan from 3,300,000 shares to 6,600,000 shares, and increase the number of
shares of common stock with respect to which incentive stock options may be
granted under the plan from 825,000 shares to 1,650,000 shares. The affirmative
vote of a majority of the outstanding shares present and entitled to vote at the
annual meeting is required to approve the amendment to the plan. A brief
description of the major provisions of the plan including the proposed
amendments to the plan is set forth below to facilitate an informed decision by
the shareholders entitled to vote on the approval of the amendment to 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 existing plan, a
copy of which is attached hereto as Appendix A.B.
SUMMARY OF PLAN:
Administration. The affirmative vote
of a majority of the outstanding shares present and entitled to vote at the
annual meetingplan is required to approve the plan.
Administration. The plan shall be administered by a committee
(the "Committee") which shall consistconsisting 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 havehas 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.
25
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 theare
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 becomprises 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 becurrently is available
for the grant of options under the plan shallis 3,300,000. The stockholders are being
asked to approve an amendment to the plan to increase the number of shares of
common stock that are authorized to be 3,300,000.issued under the plan from 3,300,000 to
6,600,000. 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 under 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
becomebecomes 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 becomebecomes available for the grant of an
option
35
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 present and entitled to vote
at the annual meeting)June 11, 2002 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. The shareholders are
being asked to approve the increase of this number to 1,650,000 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, noNo further grants willmay be made under the Prior Plans.
The market value of the Company's common stock as reported on Nasdaq as of
April 22, 2002August 20, 2003 was $19.97$40.81 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.
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.
26
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 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.
36
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.
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.
27
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.
37
REGISTRATION WITH THE SEC
If this Proposal No. 2 is adopted, theThe Company intends to filehas filed 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 AMENDMENT TO THE
IMCLONE SYSTEMS INCORPORATED 2002 STOCK OPTION PLAN (PROPOSAL NO. 2 ON YOUR
PROXY CARD).
38
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.ANNUAL INCENTIVE PLAN
The Board of Directors has declaredapproved and recommends that stockholders
approve the proposed amendmentadoption of the Annual Incentive Plan which is intended to be advisable and incomply
with Section 162(m) of the best interestsInternal Revenue Code. The Annual Incentive Plan, if
approved by stockholders, will provide for the payment of bonuses to each
executive officer of the Company and its stockholderssubsidiaries, and recommends that the stockholders approve the
amendment.
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.
28
- 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 issuedother key executives
who are selected to participate in the eventAnnual Incentive Plan by the Company achieves
certain milestones in the development of ERBITUX, the Company's lead
therapeutic product candidate, 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 sharesCompensation
Committee. The bonuses 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 ina participant's share of performance
awards based on the pricesatisfaction 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.
-performance objectives as described below.
On February 15, 2002,January 24, 2003, the Board of Directors approved a Stockholder
Rightsthe Annual Incentive
Plan. The Annual Incentive Plan and declared a dividend of one preferred share purchase
right (a "Right") for each share of common stock outstanding atpermits the close of business on February 19, 2002. Under certain conditions, each
right entitles the holder thereofCompensation Committee 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"),grant
performance awards based upon pre-established performance goals to executives of
the Company and its subsidiaries selected by the Compensation Committee, whether
or not such executives, at the time of grant, are subject to the limit on
deductible compensation under Section 162(m) of the Internal Revenue Code.
In order to qualify for deductibility under Section 162(m) of the Internal
Revenue Code, the Annual Incentive Plan, including the performance goals for
determining performance awards ("Performance Awards") set forth in the Annual
Incentive Plan must be approved by the stockholders. If the Annual Incentive
Plan is not approved by the Company's stockholders, no Performance Awards
granted under the Annual Incentive Plan will be paid whether or not the
Performance Awards would otherwise be earned.
Stockholder approval of the Annual Incentive Plan is recommended by the
Board of Directors in order to continue to provide an exerciseincentive to executive
officers and other selected key executives of the Company and its subsidiaries
to contribute to the growth, profitability and increased stockholder value of
the Company, to retain such executives, and to endeavor to maintain the
tax-deductible status of such incentive payments to the Company's Chief
Executive Officer and four most-highly paid executive officers at year end who
are named in the Company's Proxy Statement for the year in which such amounts
are claimed as a deduction by the Company. A copy of the Annual Incentive Plan
is attached to this Proxy Statement as Appendix C. The description of the plan
that follows is qualified in its entirety by reference to the plan as attached.
The Annual Incentive Plan will be administered by the Compensation
Committee, which committee must be composed of at least two members of the Board
of Directors who qualify as "outside directors" within the meaning of Section
162(m) of the Internal Revenue Code. The Compensation Committee will select plan
participants from among executive officers and other key executives of the
Company and its subsidiaries. The number of participants in the Annual Incentive
Plan is not determinable from year to year. Under the Annual Incentive Plan, the
Compensation Committee may, in its sole discretion, grant Performance Awards to
eligible employees.
Performance Awards. Under the Annual Incentive Plan, the Compensation
Committee has the authority to grant Performance Awards which provide
participants with the right to such an award based upon the achievement of one
or more levels of performance required to be attained with respect to a
performance goal, as defined below (a "Performance Goal"), set by the
Compensation Committee during a Performance Period (the "Performance
Objective"). The Annual Incentive Plan contemplates that the following
Performance Goals may be selected by the Compensation Committee and shall mean
or may be expressed in terms of any of the following business criteria: revenue;
earnings before interest, taxes, depreciation and amortization; funds from
operations; funds from operations per share; operating income or (losses); pre
or after tax income or (losses); cash available for distribution; cash available
for distribution per share; net earnings or (losses); earnings per share
(losses); return on equity; return on assets; share price performance;
improvements in the Company's attainment of $175 perexpense levels; and implementing or
completion of critical projects, including, without limitation, strategic plans,
or improvement in cash-flow (before or after tax); development of critical
projects; or product development or progress relating to research and
development. A Performance Goal may be measured over a Performance Period on a
periodic, annual, cumulative or average basis and may be established on a
corporate-wide basis or established with respect to one one-hundredthor more operating units,
divisions, subsidiaries, acquired businesses, minority investments, partnerships
or joint ventures. For purposes of the Annual Incentive Plan, a Performance
Period shall mean the calendar year, or such other shorter or longer
39
period designated by the Compensation Committee, during which performance will
be measured in order to determine a participant's entitlement to receive payment
of a sharePerformance Award.
The Annual Incentive Plan contemplates that the Compensation Committee will
establish the Performance Objective for each Performance Award, consisting of
Preferred Stock. Subject to certain exceptions, the Rights
become exercisable if a person or group acquires 15%one or more business criteria permitted as a Performance Goal hereunder, one or
more levels of performance with respect to each such criteria and the amount or
amounts payable or other rights to which the participant will be entitled upon
achievement of such levels of performance. More than one Performance Goal may be
incorporated in a Performance Objective, in which case achievement with respect
to each Performance Goal may be assessed individually or in combination with
each other. The Compensation Committee may, in connection with the establishment
of Performance Objectives for a Performance Period, establish a matrix setting
forth the relationship between performance on two or more Performance Goals and
the amount of the Company's common stock. IfPerformance Award payable for that Performance Period. The
level or levels of performance specified with respect to a Performance Goal may
be established in absolute terms, as objectives relative to performance in prior
periods, as an objective compared to the Rights become exercisable, each holderperformance of one or more comparable
companies or an index covering multiple companies, or otherwise as the
Compensation Committee may determine. Performance Objectives may differ for
Performance Awards granted to any one participant or to different participants.
The Performance Objective applicable to a Performance Period must be
established by the Compensation Committee prior to, or reasonably promptly
following the inception of, a RightPerformance Period, but no later than the earlier
of the date that is 90 days after the commencement of the Performance Period or
the date prior to the date on which twenty-five percent of the Performance
Period has elapsed, as required by Section 162(m) of the Internal Revenue Code.
Upon certification of the achievement of Performance Objectives by the
Compensation Committee which entitle a participant to the payment of a
Performance Award, unless such participant has elected to defer payment upon
approval by the Compensation Committee, the award shall be settled in cash or
other property. A participant will not be granted Performance Award for any
Performance Periods commencing in a calendar year that permit the participant in
the aggregate to earn a cash payment or payment in other property, in excess of
$2,000,000.
Miscellaneous Provisions. The Compensation Committee is authorized at any
time during or after a Performance Period, in its sole and absolute discretion,
to reduce or eliminate any Performance Awards (in whole or in part), of any
participant, for any reason, including changes in the participant's position or
duties with the exceptionCompany or any subsidiary during a Performance Period, whether
due to any termination of employment (including death, disability, retirement,
voluntary termination or termination with or without cause) or otherwise;
provided, that, no such reduction or elimination may cause Performance Awards to
fail to qualify as qualified performance based compensation under Section 162(m)
of the 15% holder, wouldInternal Revenue Code. To the extent necessary to preserve the intended
economic effects of the Annual Incentive Plan to the Company and its
subsidiaries and the participants, the Compensation Committee is also authorized
during or after a Performance Period to adjust the Performance Objectives, the
Performance Awards, or both (whichever is applicable) to take into account a
change in corporate capitalization, a corporate transaction, any partial or
complete liquidation of the Company or any subsidiary or a change in accounting
rules; provided that, no such adjustment may cause Performance Awards to fail to
qualify as qualified performance based compensation under Section 162(m) of the
Internal Revenue Code.
Under the Annual Incentive Plan, each participant (upon advance approval of
the Compensation Committee) will have the right to defer receipt of part or all
of any payment due with respect to a Performance Award, subject to the terms,
conditions and administrative guidelines as the Compensation Committee shall
determine from time to time.
In the event of a Change in Control (as defined in the Annual Incentive
Plan), (i) with respect to the Performance Awards, any incomplete Performance
Periods in effect on the date the Change in Control occurs shall end on the date
of such change, and the Compensation Committee will (A) determine the extent to
which the Performance Objective with respect to such Performance Periods has
been met based on such audited or unaudited financial information then available
as it deems necessary, and (B) cause to be paid to
40
each participant partial or full Performance Awards for the Performance Periods
based on the Compensation Committee's determination of the degree of attainment
of the Performance Objective. Following a Change in Control, the Compensation
Committee may not reduce or eliminate any Performance Award (in whole or in
part). However, the Performance Award paid to the participant will be prorated
to reflect the period of time elapsed during the Performance Period. Any
resulting amount due to a participant will be paid in a cash lump sum no later
than 15 days after a Change in Control, unless a participant has previously
elected to defer receipt of such amounts notwithstanding a Change in Control.
In the event a participant terminates his or her employment for any reason
during a Performance Period, he or she (or his or her beneficiary, in the case
of death) will generally not be entitled to buy additionalreceive an Performance Award for
such Performance Period unless the Compensation Committee, in its sole and
absolute discretion, elects to pay a Performance Award to such participant. In
the event of the death of a participant, any payments due to such participant
will continue to be paid to his or her beneficiary or, failing such designation,
to his or her estate.
The Board of Directors, or a committee designated by the Board of
Directors, may, at any time, terminate or, from time to time, amend, modify or
suspend the Annual Incentive Plan and the terms and provisions of any
Performance Award theretofore awarded to any participant which has not been
settled (either by payment or deferral). No Performance Award may be granted
during any suspension of the Plan or after its termination. Any such amendment
may be made without stockholder approval.
The Annual Incentive Plan will constitute an "unfunded" plan for incentive
and deferred compensation. Under the terms of the plan, a participant has only
rights which are no greater than those of a general creditor of the Company.
Assuming the presence of a quorum, the affirmative vote of the holders of a
majority of all the shares of the Company's common stock present in person or by
proxy at halfthe Annual Meeting is required for adoption of the then current market price.proposal concerning
the Annual Incentive Plan. The BoardAnnual Incentive Plan permits the Compensation
Committee to authorize the creation of Directors may redeem all of
the Rights at a price of $0.001 per Right at any time before any
persontrusts and deposit therein cash or group has acquired 15% ofother
property or make other arrangements, to meet the Company's stock without
meeting oneobligations under the
Annual Incentive Plan.
The Annual Incentive Plan became effective on January 1, 2003, subject to
the approval 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 availableAnnual Meeting.
New Plan Benefits. The amounts payable under the Annual Incentive Plan for
issuance unless this Proposal No.
3 is approved.
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 shares2003 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 fromreceived by each of (a) the approval of
this Proposal will have the same terms and rights as the existing common stock.
Holders of the common stockexecutive officers of the Company
do not presently have preemptive
rights nor will they as a result ofnamed in the approval of this Proposal.
29
The Board anticipates thatSummary Compensation Table above; (b) 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 controlexecutive officers 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 thegroup; and (c) Company or to make the removal of management more
difficult. Managementemployees who are not executive officers as
a group, 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."determinable .
THE BOARD RECOMMENDS A VOTE "FOR" THE 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 200,000,000ANNUAL INCENTIVE PLAN
(PROPOSAL NO. 3 ON YOUR PROXY CARD).
41
PROPOSAL NO. 4
RATIFICATION OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Audit Committee and the Board havehas selected KPMG LLP as the Company's independent
certified public accountants for the year ending December 31, 2002.2003. KPMG LLP has
served as the Company's auditor since 1988. The
ratification of the selection of independent
certified public accountants is to be voted upon at the meeting, and it is
intended that the persons named in the accompanying proxy will vote for KPMG
LLP. Representatives of KPMG LLP are expected to attend the meeting, to have an
opportunity to make a statement if they desire to do so and to be available to
respond to appropriate questions.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE SELECTION OF KPMG LLP TO ACT AS THE
COMPANY'S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER
31, 20022003 (PROPOSAL NO. 4 ON YOUR PROXY CARD).
30
STOCKHOLDER PROPOSALS
A stockholder proposal intended to be presented at the Company's Annual
Meeting of Stockholders to be held in 20032004 must be received by the Company on or
before January 23, 20031, 2004 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.
By Order of the Board of Directors
/s/ Daniel S. Lynch
Daniel S. LynchMichael J. Howerton
Michael J. Howerton
Secretary
New York, New York
April 29, 2002August 21, 2003
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.
3142
APPENDIX A
IMCLONE SYSTEMS INCORPORATED
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
ADOPTED AUGUST 14, 2003
I. Composition of the Committee
The Audit Committee (the "Committee") of the Board of Directors (the
"Board") of the Company shall be comprised of at least three directors, each of
whom (i) shall be "independent" under the rules of the Nasdaq Stock Market, Inc.
and the Sarbanes-Oxley Act of 2002 (the "2002 Act"), (ii) does not accept,
directly or indirectly, any consulting, advisory or other compensatory fee from
the Company other than in his or her capacity as a member of the Board or any
committee of the Board, and (iii) is not an affiliate of the Company and does
not own or control 10% or more of the Company's voting securities, or such lower
measurement as may be established by the Securities and Exchange Commission (the
"SEC"). All members of the Committee must be able to read and understand
fundamental financial statements, including a company's balance sheet, income
statement, and cash flow statement, and the Committee shall have at least one
member who is an Audit Committee "financial expert", as defined by the SEC for
purposes of the 2002 Act.
No director may serve as a member of the Committee if such director serves
on the audit committees of more than two other public companies unless the Board
of Directors determines that such service would not impair the ability of such
director to effectively serve on the Committee, and discloses this determination
in the Company's annual proxy statement. No member of the Committee may receive
any compensation from the Company other than (i) director's fees, which may be
received in cash, stock options or other in-kind consideration ordinarily
available to directors; (ii) a pension or other deferred compensation for prior
service that is not contingent on future service; and (iii) any other regular
benefits that other directors receive.
Committee members shall be appointed by the Board annually and may be
removed by the Board at any time. The Board shall designate the chairperson of
the Committee.
II. Purposes of the Committee
The purposes of the Committee are to:
1. assist Board oversight of (i) the integrity of the Company's
financial statements, (ii) the Company's procedures and processes for
compliance with legal and regulatory requirements, (iii) the independent
auditors' qualifications and independence, and (iv) the performance of the
independent auditors and the Company's internal audit function; and
2. prepare the required report pursuant to the rules of the SEC for
inclusion in the Company's annual proxy statement.
The function of the Committee is oversight. The management of the Company
is responsible for the preparation, presentation and integrity of the Company's
financial statements. Management and the internal auditing department are
responsible for applying and maintaining appropriate accounting and financial
reporting principles, policies and internal controls and procedures to meet the
objective of compliance with accounting standards and applicable laws and
regulations. The independent auditors are responsible for planning and carrying
out a complete, accurate and timely audit of the Company's annual financial
statements and review of the Company's quarterly Form 10-Q financial statements
prior to the filing of such quarterly report and other procedures. In fulfilling
their responsibilities hereunder, it is recognized that members of the Committee
are not full-time employees of the Company and are not, and do not represent
themselves to be, performing the functions of auditors or accountants. As such,
it is not the duty or responsibility of the Committee or its members to conduct
"field work" or other types of auditing or accounting reviews or procedures or
to set auditor independence standards.
A-1
The independent auditors for the Company are accountable to the Board and
the Committee, as representatives of the stockholders. The Committee is directly
responsible for the appointment, compensation and oversight of the work of the
independent auditors (including resolving disagreements between management and
the auditors regarding financial reporting). The Committee has the authority and
responsibility to appoint (subject to stockholder ratification), retain, oversee
and terminate the Company's independent auditors. The Company's independent
auditors shall report directly to the Committee.
The independent auditors shall submit to the Committee annually a formal
written statement (the "Auditors' Statement") describing: (i) the auditors'
internal quality-control procedures; (ii) any material issues raised by the most
recent internal quality-control review or peer review of the auditors, or by any
inquiry or investigation by governmental or professional authorities within the
preceding five years respecting one or more independent audits carried out by
the auditors, and any steps taken to deal with any such issues; and (iii) in
order to assess the auditors' independence all relationships between the
independent auditors and the Company, including each non-audit service provided
to the Company and the matters set forth in Independence Standards Board No. 1.
The independent auditors shall submit to the Committee annually a formal
written statement of the fees billed for audit services, audit-related services,
tax services and all other services.
III. Meetings of the Committee
The Committee shall meet in person or telephonically at least quarterly and
in addition at the discretion of Chairman or upon the request of a majority of
the members, or upon unanimous written consent as determined by the Committee or
its chairperson. The chairperson shall set meeting agendas. In addition, the
Committee shall meet once every fiscal quarter, or more frequently if
circumstances dictate, to discuss with management the annual audited financial
statements and quarterly financial statements, as applicable. The Committee
should meet separately periodically with management, including those responsible
for finance, control, and legal matters, the head of the internal auditing
department and the independent auditors to discuss any matters (such as the
adequacy and proper, timely functioning of the Company's control, reporting and
compliance systems or procedures) that the Committee or any of these persons or
firms believe should be discussed privately. The Committee may request any
officer or employee of the Company or the Company's outside counsel or
independent auditors to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee. Members of the Committee may
participate in a meeting of the Committee by means of conference call or similar
communications equipment by means of which all persons participating in the
meeting can hear each other.
IV. Duties and Powers of the Committee
To carry out its purposes, the Committee shall have the following duties
and powers:
1. with respect to the independent auditors,
(i) to appoint (subject to stockholder ratification), retain,
oversee and terminate the independent auditors including sole authority
to approve all audit engagement fees and terms;
(ii) to pre-approve all audit services, audit-related services, tax
services and all other services to be provided by the independent
auditors, which approval process shall include consideration of whether
such non-audit services are compatible with maintaining the independence
of the outside auditors;
(iii) to ensure that the independent auditors prepare and deliver
annually an Auditors' Statement (it being understood that the
independent auditors are responsible for the accuracy and completeness
of this Statement), and to discuss with the independent auditors any
relationships or services disclosed in the Auditors' Statement that may
impact the quality of audit services or the objectivity and independence
of the Company's independent auditors;
(iv) to obtain from the independent auditors in connection with any
audit a timely report relating to the Company's annual audited financial
statements describing all critical accounting
A-2
policies and practices used, all alternative treatments for policies and
practices related to material items within generally accepted accounting
principles that have been discussed with management, ramifications of
the use of such alternative disclosures and treatments, and the
treatment preferred by the independent auditors, and any material
written communications between the independent auditors and management,
such as any "management" letter or schedule of unadjusted differences;
(v) to review and evaluate the qualifications, performance and
independence of the lead partner or partners of the independent
auditors;
(vi) to discuss the timing and process for the rotation of the lead
audit partner and the reviewing partner, which must occur every five
years;
(vii) to take into account the opinions of management and the
Company's internal auditors, if any, in assessing the independent
auditors' qualifications, performance and independence; and
(viii) to instruct the independent auditors that the independent
auditors are ultimately accountable to the Board and the Committee, as
representatives of the stockholders.
2. with respect to the internal auditing department,
(i) to review annually the appointment and replacement of the head
of the internal auditing department;
(ii) to instruct the head of the internal auditing department that
he or she is expected to provide to the Committee summaries of and, as
appropriate, any significant reports to management prepared by the
internal auditing department and management's responses thereto; and
(iii) to review responsibilities, projects and staffing of the
internal auditing department.
3. with respect to financial reporting principles and policies and
internal audit controls and procedures,
(i) to advise management, the internal auditing department and the
independent auditors that they are expected to provide to the Committee
a timely analysis of significant financial reporting issues and
practices, including new developments, policies, or requirements
applicable to the Company;
(ii) to consider any reports or communications (and management's
and/or the internal audit department's responses thereto) submitted to
the Committee by the independent auditors required by or referred to in
SAS 61 (as codified by AU Section 380), as it may be modified or
supplemented, including reports and communications related to:
- deficiencies noted in the audit in the design or operation of
internal controls;
- consideration of fraud in a financial statement audit or otherwise;
- detection of illegal acts;
- the independent auditors' responsibility under generally accepted
auditing standards;
- any restriction on audit scope;
- significant accounting policies adopted or employed;
- any communications discussed with the independent auditors'
national office respecting auditing or accounting issues presented
by the engagement;
- management judgments and accounting estimates;
- any accounting adjustments arising from the audit that were noted
or proposed by the independent auditors but were passed (as
immaterial or otherwise);
A-3
- the responsibility of the independent auditors for other
information in documents containing audited financial statements;
- disagreements with management;
- consultation by management with other accountants;
- major issues discussed with management prior to retention of the
independent auditors;
- difficulties encountered with management in performing the audit;
- the independent auditors' judgments about the quality of the
Company's accounting principles;
- reviews of interim financial information conducted by the
independent auditors; and
- the responsibilities, budget and staffing of the Company's internal
audit function;
(iii) to meet with management, the independent auditors and, as
appropriate, the head of the internal auditing department:
- to review all related party transactions of the Company;
- to discuss the scope of the annual audit;
- to discuss the annual audited financial statements and quarterly
financial statements, including the Company's disclosures under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations";
- to discuss any significant matters arising from any audit,
including any audit problems or difficulties, whether raised by
management, the internal auditing department or the independent
auditors, relating to the Company's financial statements;
- to discuss any difficulties the independent auditors encountered in
the course of the audit, including any restrictions on their
activities or access to requested information and any significant
disagreements with management;
- to discuss any "management" or "internal control" letter issued, or
proposed to be issued, by the independent auditors to the Company;
- to review the form of opinion the independent auditors propose to
render to the Board and stockholders; and
- to discuss, as appropriate: (a) any major issues regarding
accounting principles and financial statement presentations,
including any significant changes in the Company's selection or
application of accounting principles, and major issues as to the
adequacy of the Company's internal controls and any special audit
steps adopted in light of material control deficiencies; (b)
analyses prepared by management, the independent auditors and/or
the head of the internal auditing department setting forth
significant financial reporting issues and judgments made in
connection with the preparation of the financial statements,
including analyses of the effects of alternative GAAP methods on
the financial statements; and (c) the effect of regulatory and
accounting initiatives, as well as off-balance sheet structures, on
the financial statements of the Company;
- to review the management and general counsel representation letters
to the independent auditors;
(iv) to inquire of the Company's chief executive officer, chief
financial officer, controller, vice president internal audit, general
counsel and any others it may select as to the existence of any
significant deficiencies in the design or operation of internal controls
that could adversely affect the Company's ability to record, process,
summarize and report financial data, any material weaknesses
A-4
in internal controls, and any fraud, whether or not material, that
involves management or other employees;
(v) to discuss guidelines and policies governing the process by
which senior management of the Company and the relevant departments of
the Company assess and manage the Company's major financial risk
exposures and the steps management has taken to monitor and control such
exposures;
(vi) to obtain from the independent auditors assurance that the
audit was conducted in a manner consistent with Section 10A of the
Securities Exchange Act of 1934, as amended, which sets forth certain
procedures to be followed in any audit of financial statements required
under the Securities Exchange Act of 1934;
(vii) to review and discuss with the Company's general counsel,
chief executive officer and chief financial officer any significant
legal, compliance or regulatory matters that may have a material effect
on the financial statements or the Company's business, financial
statements or compliance policies, including material notices to or
inquiries received from governmental agencies and any letters received
from outside law firms discussing such significant legal issues,
threatened or otherwise;
(viii) to review and discuss earnings press releases prior to being
made public;
(ix) to discuss the types of financial information and earnings
guidance provided, if any, and the types of presentations made, to
security analysts, portfolio managers, investment bankers (unless an
appropriate confidentiality agreement is in effect) and debt rating
agencies;
(x) to establish procedures and ensure the implementation of such
procedures for the receipt, retention and treatment of complaints or
suggestions received by the Company regarding accounting, internal
accounting controls or auditing matters, and for the confidential,
anonymous submission by Company employees of concerns regarding
questionable accounting or auditing matters and to review any
significant complaints or suggestions regarding material accounting,
internal accounting controls or auditing matters received pursuant to
such procedures; and
(xi) to establish hiring policies for employees or former employees
of the independent auditors, which policies shall provide that no former
employee of the independent auditors may become the chief executive
officer, controller, chief financial officer or chief accounting officer
(or serve in a similar capacity) if such person participated in any
capacity in the Company's audit within the one-year period preceding the
date of initiation of the audit.
4. with respect to reporting and recommendations,
(i) to prepare any report or other disclosure, including any
recommendation of the Committee, required by the rules of the SEC to be
included in the Company's annual proxy statement;
(ii) to review and reassess the adequacy of this Charter at least
annually and recommend any changes to the full Board;
(iii) to report its activities to the full Board on a regular basis
and to make such recommendations with respect to the above and other
matters as the Committee may deem necessary or appropriate; and
(iv) to prepare and review with the Board an annual performance
evaluation of the Committee, which evaluation must compare the
performance of the Committee with the requirements of this Charter and
which evaluation shall be conducted in such manner as the Committee
deems appropriate. The report to the Board may take the form of an oral
report by the chairperson of the Committee or any other member of the
Committee designated by the Committee to make this report.
A-5
V. Delegation to Subcommittee
The Committee may, in its discretion, delegate all or a portion of its
duties and responsibilities to a subcommittee of the Committee. The Committee
may, in its discretion, delegate to one or more of its members the authority to
pre-approve any audit or non-audit services to be performed by the independent
auditors, provided that any such approvals are presented to the Committee for
ratification at its next scheduled meeting.
VI. Resources and Authority of the Committee
The Committee shall have the resources and authority appropriate to
discharge its duties and responsibilities, including the authority to select,
retain, terminate, and approve the fees and other retention terms of special or
independent counsel, accountants or other experts and advisors, as it deems
necessary or appropriate, without seeking approval of the Board or management.
The Audit Committee shall notify the Board of any such action.
A-6
APPENDIX B
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 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
A-1B-1
"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 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 A-2national
B-2
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.
(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.
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 A-3Options,
B-3
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 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.
A-4B-4
(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
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 and approved by 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 A-5Company
B-5
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 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.
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.
A-6B-6
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
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 A-7upon
B-7
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 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.
A-8B-8
APPENDIX C
IMCLONE SYSTEMS INCORPORATED
ANNUAL INCENTIVE PLAN
1. Purposes. The purposes of this Plan are to provide an incentive to
executive officers and other selected key executives of the Company to
contribute to the growth, profitability and increased shareholder value of the
Company, to retain such executives and endeavor to qualify the compensation paid
under the Plan for tax deductibility under Section 162(m) of the Code.
2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below:
(a) "Award" shall mean a Performance Award.
(b) "Board" shall mean the Company's Board of Directors.
(c) "Change in Control" shall mean 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 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
C-1
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 to
Executive under this Agreement.
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 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.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor
provisions thereto.
(f) "Committee" shall mean a committee composed of at least two
members of the Board who qualify as "outside directors" within the meaning
of Section 162(m) of the Code.
(g) "Company" shall mean ImClone Systems, Inc. and any entity that
succeeds to all or substantially all of its business.
(h) "Effective Date" shall mean January 1, 2003.
(i) "Eligible Employee" shall mean each executive officer of the
Company, including those employed by subsidiaries, and other key executives
of the Company selected by the Committee.
(j) "GAAP" shall mean U.S. Generally Accepted Accounting Principles.
(k) "Participant" shall mean an Eligible Employee designated by the
Committee to participate in the Plan for a designated Performance Period.
(l) "Performance Award" shall mean the right of a Participant to
receive cash or other property following the completion of a Performance
Period based upon performance in respect of one or more of the Performance
Goals during such Performance Period, as specified in Section 5.
(m) "Performance Goals" shall mean or may be expressed in terms of any
of the following business criteria: revenue, earnings before interest,
taxes, depreciation and amortization ("EBITDA"), funds from operations,
funds from operations per share, operating income (loss), pre or after tax
income (loss), cash available for distribution, cash available for
distribution per share, cash and/or cash equivalents available for
operations, net earnings (loss), earnings (loss) per share, return on
equity, return on assets, share price performance, improvements in the
Company's attainment of expense levels, implementing or completion of
critical projects, including, without limitation, implementation of
strategic plan(s), improvement in investor relations, marketing and
manufacturing of key products, improvement in cash-flow (before or after
tax), development of critical projects or product development, or progress
relating to
C-2
research and development. A Performance Goal may be measured over a
Performance Period on a periodic, annual, cumulative or average basis and
may be established on a corporate-wide basis or established with respect to
one or more operating units, divisions, subsidiaries, acquired businesses,
minority investments, partnerships or joint ventures. Unless otherwise
determined by the Committee by no later than the earlier of the date that
is ninety days after the commencement of the Performance Period or the day
prior to the date on which twenty-five percent of the Performance Period
has elapsed, the Performance Goals will be determined by not accounting for
a change in GAAP during a Performance Period.
(n) "Performance Objective" shall mean the level or levels of
performance required to be attained with respect to specified Performance
Goals in order that a Participant shall become entitled to specified rights
in connection with a Performance Award.
(o) "Performance Period" shall mean the calendar year, or such other
shorter or longer period designated by the Committee, during which
performance will be measured in order to determine a Participant's
entitlement to receive payment of an Award.
(p) "Plan" shall mean this ImClone Systems Incorporated Annual
Incentive Plan, as amended from time to time.
3. Administration.
(a) Authority. The Plan shall be administered by the Committee. The
Committee is authorized, subject to the provisions of the Plan, in its sole
discretion, from time to time to select Participants; to grant Awards under the
Plan; to determine the type, terms and conditions of, and all other matters
relating to, Awards; to prescribe Award agreements (which need not be
identical); to establish, modify or rescind such rules and regulations as it
deems necessary for the proper administration of the Plan; and to make such
determinations and interpretations and to take such steps in connection with the
Plan or the Awards granted thereunder as it deems necessary or advisable. All
such actions by the Committee under the Plan or with respect to the Awards
granted thereunder shall be final and binding on all persons.
(b) Manner of Exercise of Committee Authority. The Committee may delegate
its responsibility with respect to the administration of the Plan to one or more
officers of the Company, to one or more members of the Committee or to one or
more members of the Board; provided, however, that the Committee may not
delegate its responsibility (i) to make Awards to executive officers of the
Company; (ii) to make Awards which are intended to constitute "qualified
performance-based compensation" under Section 162(m) of the Code; or (iii) to
certify the satisfaction of Performance Objectives pursuant to Section 5(e) in
accordance with Section 162(m) of the Code. The Committee may also appoint
agents to assist in the day-to-day administration of the Plan and may delegate
the authority to execute documents under the Plan to one or more members of the
Committee or to one or more officers of the Company.
(c) Limitation of Liability. The Committee may appoint agents to assist it
in administering the Plan. The Committee and each member thereof shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any officer or employee of the Company, the Company's
independent certified public accountants, consultants or any other agent
assisting in the administration of the Plan. Members of the Committee and any
officer or employee of the Company acting at the direction 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 and protected by the Company with respect
to any such action or determination.
4. Types of Awards. Subject to the provisions of the Plan, the Committee
has the discretion to grant to Participants Performance Awards described in
Section 5.
5. Performance Awards.
(a) Form of Award. The Committee is authorized to grant Performance Awards
pursuant to this Section 5. A Performance Award shall represent the conditional
right of the Participant to receive cash or other property based upon
achievement of one or more pre-established Performance Objectives during a
C-3
Performance Period, subject to the terms of this Section 5 and the other
applicable terms of the Plan. Performance Awards shall be subject to such
conditions, including deferral of settlement, risks of forfeiture, restrictions
on transferability and other terms and conditions as shall be specified by the
Committee.
(b) Performance Objectives. The Committee shall establish the Performance
Objective for each Performance Award, consisting of one or more business
criteria permitted as Performance Goals hereunder, one or more levels of
performance with respect to each such criteria, and the amount or amounts
payable or other rights that the Participant will be entitled to upon
achievement of such levels of performance. The Performance Objective shall be
established by the Committee prior to, or reasonably promptly following the
inception of, a Performance Period but, to the extent required by Section 162(m)
of the Code, by no later than the earlier of the date that is ninety days after
the commencement of the Performance Period or the day prior to the date on which
twenty-five percent of the Performance Period has elapsed.
(c) Additional Provisions Applicable to Performance Awards. More than one
Performance Goal may be incorporated in a Performance Objective, in which case
achievement with respect to each Performance Goal may be assessed individually
or in combination with each other. The Committee may, in connection with the
establishment of Performance Objectives for a Performance Period, establish a
matrix setting forth the relationship between performance on two or more
Performance Goals and the amount of the Performance Award payable for that
Performance Period. The level or levels of performance specified with respect to
a Performance Goal may be established in absolute terms, as objectives relative
to performance in prior periods, as an objective compared to the performance of
one or more comparable companies or an index covering multiple companies, or
otherwise as the Committee may determine. Performance Objectives shall be
objective and shall otherwise meet the requirements of Section 162(m) of the
Code. Performance Objectives may differ for Performance Awards granted to any
one Participant or to different Participants.
(d) Duration of the Performance Period. The Committee shall establish the
duration of each Performance Period at the time that it sets the Performance
Objectives applicable to that Performance Period. The Committee shall be
authorized to permit overlapping or consecutive Performance Periods.
(e) Certification. Following the completion of each Performance Period,
the Committee shall certify in writing, in accordance with the requirements of
Section 162(m) of the Code, whether the Performance Objective and other material
terms for paying amounts in respect of each Performance Award related to that
Performance Period have been achieved or met. Unless the Committee determines
otherwise, Performance Awards shall not be settled until the Committee has made
the certification specified under this Section 5(e).
(f) Adjustment. The Committee is authorized at any time during or after a
Performance Period to reduce or eliminate the Performance Award of any
Participant for any reason, including, without limitations changes in the
position or duties of any Participant with the Company during or after a
Performance Period, whether due to any termination of employment (including
death, disability, retirement, voluntary termination or termination with or
without cause) or otherwise. In addition, to the extent necessary to preserve
the intended economic effects of the Plan to the Company and the Participants,
the Committee shall adjust Performance Objectives, the Performance Awards or
both to take into account: (i) a change in corporate capitalization, (ii) a
corporate transaction, such as any merger of the Company or any subsidiary into
another corporation, any consolidation of the Company or any subsidiary into
another corporation, any separation of the Company or any subsidiary (including
a spinoff or the distribution of stock or property of the Company or any
subsidiary), any reorganization of the Company or any subsidiary or a large,
special and non-recurring dividend paid or distributed by the Company (whether
or not such reorganization comes within the definition of Section 368 of the
Code), (iii) any partial or complete liquidation of the Company or any
subsidiary or (iv) a change in accounting or other relevant rules or regulations
(any adjustment pursuant to this Clause (iv) shall be subject to the timing
requirements of the last sentence of Section 2(m) of the Plan); provided,
however, that no adjustment hereunder shall be authorized or made if and to the
extent that the Committee determines that such authority or the making of such
adjustment would cause the Performance Awards to fail to qualify as "qualified
performance-based compensation" under Section 162(m) of the Code.
(g) Timing of Payment. Except as provided below, any cash amounts payable
in respect of Performance Awards for a Performance Period will generally be paid
as soon as practicable following the
C-4
determination in respect thereof made pursuant to Section 5(e), and any non-cash
amounts or any other rights that the Participant is entitled to with respect to
a Performance Award for a Performance Period will be paid or vest in accordance
with the terms of the Performance Award.
(h) Deferral of Payments. Subject to such terms, conditions and
administrative guidelines as the Committee shall specify from time to time, a
Participant shall have the right to elect to defer receipt of part or all of any
payment due with respect to a Performance Award.
(i) Maximum Amount Payable Per Participant Under This Section 5. With
respect to Performance Awards to be settled in cash or property, a Participant
shall not be granted Performance Awards for all of the Performance Periods
commencing in a calendar year that permit the Participant in the aggregate to
earn a cash payment or payment in other property, in excess of $2,000,000.
(j) Change In Control. In the event of a Change in Control, any incomplete
Performance Periods applicable to Performance Awards under this Section 5 in
effect on the date the Change in Control occurs shall end on the date of such
change, and the Committee shall (i) determine the extent to which the
Performance Objectives with respect to such Performance Periods shall have been
met based on such audited or unaudited financial information then available as
it deems necessary, and (ii) cause to be paid to each Participant partial or
full Performance Awards with respect to the Performance Periods based on the
Committee's determination of the degree of attainment of the Performance
Objectives. Notwithstanding Section 5(f), in the event of a Change in Control,
the Committee shall not be authorized to reduce or eliminate the Performance
Award; provided, that, a Participant's Performance Award to which he or she
would otherwise be entitled shall be multiplied by a fraction, the numerator of
which is the number of days in the Performance Period prior to the Change in
Control and the denominator of which is the total number of days in the
Performance Period as originally specified. Any resulting amount hereunder due
to a Participant shall be paid in a cash lump sum no later than fifteen days
after a Change in Control, unless the Participant has previously elected to
defer receipt of such amounts notwithstanding a Change in Control.
6. General Provisions.
(a) Termination of Employment. In the event a Participant terminates
employment for any reason during a Performance Period or prior to the Award
payment, he or she (or his or her beneficiary, in the case of death) shall not
be entitled to receive any Award for such Performance Period unless the
Committee, in its sole and absolute discretion, elects to pay an Award to such
Participant.
(b) Death of the Participant. Subject to Section 6(a), in the event of the
death of a Participant, any payments hereunder due to such Participant shall be
paid to his or her beneficiary as designated in writing to the Committee or,
failing such designation, to his or her estate. No beneficiary designation shall
be effective unless it is in writing and received by the Committee prior to the
date of death of the Participant.
(c) Taxes. The Company is authorized to withhold from any Award granted,
any payment relating to an Award under the Plan, or any payroll or other payment
to a Participant, amounts of withholding and other taxes due in connection with
any transaction involving an Award, and to take such other action as the
Committee may deem advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax obligations
relating to any Award. This authority shall include authority for the Company to
withhold or receive other property and to make cash payments in respect thereof
in satisfaction of a Participant's tax obligations, either on a mandatory or
elective basis in the discretion of the Committee.
(d) Limitations on Rights Conferred under Plan and Beneficiaries. Neither
status as a Participant nor receipt or completion of a deferral election form
shall be construed as a commitment that any Award will become payable under the
Plan. Nothing contained in the Plan or in any documents related to the Plan or
to any Award shall confer upon any Eligible Employee or Participant any right to
continue as an Eligible Employee, Participant or in the employ of the Company or
constitute any contract or agreement of employment, or interfere in any way with
the right of the Company to reduce such person's compensation, to change the
position held by such person or to terminate the employment of such Eligible
Employee or Participant, with or without cause, but nothing contained in this
Plan or any document related thereto shall
C-5
affect any other contractual right of any Eligible Employee or Participant. No
benefit payable under, or interest in, this Plan shall be transferable by a
Participant except by will or the laws of descent and distribution or otherwise
be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge.
(e) Changes to the Plan and Awards. Notwithstanding anything herein to the
contrary, other than Section 5(j), the Board, or a committee designated by the
Board, may, at any time, terminate or, from time to time, amend, modify or
suspend the Plan and the terms and provisions of any Award theretofore granted
to any Participant which has not been settled (either by payment or deferral).
No Award may be granted during any suspension of the Plan or after its
termination. Any such amendment may be made without stockholder approval.
(f) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any amounts payable to a Participant pursuant to an Award, nothing
contained in the Plan (or in any documents related thereto), nor the creation or
adoption of the Plan, the grant of any Award, or the taking of any other action
pursuant to the Plan shall give any such Participant any rights that are greater
than those of a general creditor of the Company; provided, that, the Committee
may authorize the creation of trusts and deposit therein cash or other property
or make other arrangements, to meet the Company's obligations under the Plan.
Such trusts or other arrangements shall be consistent with the "unfunded" status
of the Plan unless the Committee otherwise determines with the consent of each
affected Participant. The trustee of such trusts may be authorized to dispose of
trust assets and reinvest the proceeds in alternative investments, subject to
such terms and conditions as the Committee may specify in accordance with
applicable law.
(g) Non-Exclusivity of the Plan. Neither the adoption of the Plan by the
Board (or a committee designated by the Board) nor submission of the Plan or
provisions thereof to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem necessary.
(h) Governing Law. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan, and any Award shall be determined in
accordance with the laws of the State of New York, without giving effect to
principles of conflicts of laws, and applicable Federal law.
(i) Exemption Under Section 162(m) of the Code. The Plan, and all Awards
issued thereunder, are intended to be exempt from the application of Section
162(m) of the Code, which restricts under certain circumstances the Federal
income tax deduction for compensation paid by a public company to named
executives in excess of $1 million per year. The Committee may, without
stockholder approval, amend the Plan retroactively or prospectively to the
extent it determines necessary in order to comply with any subsequent
clarification of Section 162(m) of the Code required to preserve the Company's
Federal income tax deduction for compensation paid pursuant to the Plan.
(j) Effective Date. The Plan is effective on the Effective Date, subject
to subsequent approval thereof by the Company's stockholders at the first annual
meeting of stockholders to occur after the Effective Date, and shall remain in
effect until it has been terminated pursuant to Section 6(e). If the Plan is not
approved by the stockholders at such annual meeting, the Plan and all interests
in the Plan awarded to Participants before the date of such annual meeting shall
be void ab initio and of no further force and effect. Unless the Company
determines to submit Section 5 of the Plan and the definition of "Performance
Goal" to the Company's stockholders at the first stockholder meeting that occurs
in the fifth year following the year in which the Plan was last approved by
stockholders (or any earlier meeting designated by the Board), in accordance
with the requirements of Section 162(m) of the Code, and such stockholder
approval is obtained, then no further Performance Awards shall be made under
Section 5 after the date of such annual meeting.
C-6
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.September 15, 2003.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
IMCLONE SYSTEMS INCORPORATED
PROXYIMCLONE SYSTEMS INCORPORATED
Dear Stockholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Company that require your immediate attention and approval. These are discussed
in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will 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, do not return
your proxy card by mail.
Your vote must be received prior to the Annual Meeting of Stockholders,
September 15, 2003.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
ImClone Systems Incorporated
DETACH HERE ZIMLC2
IMCLONE SYSTEMS INCORPORATED
PROXY FOR THE MEETING OF STOCKHOLDERS, MAY 23, 2002SEPTEMBER 15, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Samuel D. Waksal, Robert F. GoldhammerMichael J Howerton, David M. Kies 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 Stockcommon
stock of ImClone Systems Incorporated held of record by the undersigned on
April 16, 2002August 20, 2003 at the Annual Meeting of Stockholders to be held at 10:00 a.m.
on May 23,
2002 andSeptember 15, 2003 or any postponements or adjournments thereof.
PLEASE MARK, DATE, 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.SEPTEMBER 14, 2003.
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.
- -------------------------------------------------------------------------------
IF YOU CHOOSE TO VOTE BY MAIL, PLEASE MARK, DATE, AND SIGN ON REVERSE SIDE
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
- -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ---------------------------------- ------------------------------------------------------------------ --------------------------------------
- ---------------------------------- ------------------------------------------------------------------ --------------------------------------
- ---------------------------------- ------------------------------------------------------------------ --------------------------------------
IMCLONE SYSTEMS INCORPORATED
C/O EQUISERVE TRUST COMPANY N.A.
P.O. BOX 43068
PROVIDENCE, RI 02940
- ------------------------------------- --------------------------------------8694
EDISON, NJ 08818-8694
VOTER CONTROL NUMBER
YOUR VOTE BY TELEPHONEIS IMPORTANT. PLEASE VOTE VIAIMMEDIATELY.
VOTE-BY-INTERNET [COMPUTER LOGO]
1. LOG ON TO THE INTERNET - ------------------------------------- --------------------------------------
It's fast, convenient and immediate! It's fast and convenient! Your vote is
Call Toll-Free on a Touch-Tone Phone immediately confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683)
- ------------------------------------- --------------------------------------
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
3.2. ENTER YOUR VOTER CONTROL NUMBER 3.LISTED ABOVE AND FOLLOW THE EASY STEPS
OUTLINED ON THE SECURED WEBSITE.
OR
VOTE-BY-TELEPHONE [TELEPHONE LOGO]
1. CALL TOLL-FREE
1-877-PRX-VOTE (1-877-779-8683)
2. ENTER YOUR VOTER CONTROL NUMBER LOCATED ONLISTED ABOVE AND FOLLOW THE EASY RECORDED
INSTRUCTIONS.
IF YOU VOTE OVER THE INTERNET OR BY TELEPHONE, PLEASE DO NOT MAIL YOUR CARD.
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD LOCATED ON YOUR PROXY CARD
YOUR NAME ABOVE YOUR NAME.
4. FOLLOW THE RECORDED INSTRUCTIONS. 4. FOLLOW THE INSTRUCTIONS PROVIDED.
- ------------------------------------- --------------------------------------
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.
MAIL ZIMLC1
[X] PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
- --------------------------------------------------------------------------------
IMCLONE SYSTEMS INCORPORATED
- --------------------------------------------------------------------------------
1. Election of Directors.
Nominees:NOMINEES: (01) Andrew G. Bodnar, (02) Vincent T. DeVita, Jr., (03) Robert F. Goldhammer,John A.
Fazio, (04) Paul B. Kopperl, (05) David M. Kies (06)
Arnold J. Levine, (07) John Mendelsohn, (08)and (05) William R. Miller, (09)
Peter S. Ringrose, (10) Harlan W. Waksal, (11) Samuel D. Waksal
For all [ ] Withheld
nominees from all nomineesMiller.
FOR [ ] [ ] ---------------------------------------------WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
[ ]
------------------------------------------
For all nomineesnominee(s) except as notedwritten above
FOR AGAINST ABSTAIN
2. Approval of an amendment to the ImClone Systems Incorporated 2002 Stock 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. [ ] [ ] [ ]
Option Plan (the "2002 Option Plan") to increase the number of shares
authorized to be issued under the 2002 Option Plan.
3. Approval of the ImClone Systems Incorporated Annual Incentive Plan. [ ] [ ] [ ]
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, 2003.
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.
[ ]
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.
Please be sure to sign and date this Proxy.
Signature: Date:
------------------------------------ -------------------------------------------------------------------- -----------------------
Signature: Date:
------------------------------------ -------------------------------------------------------------------- -----------------------