SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-12477
AMGEN INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3540776
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1840 DeHavilland Drive, Thousand Oaks, California 91320-1789
- ---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (805) 447-1000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
As of September 30, 1996, the registrant had 264,453,836 shares of
Common Stock, $.0001 par value, outstanding.
<PAGE>
AMGEN INC.
INDEX
Page No.
PART I FINANCIAL INFORMATION
Item 1.Financial Statements .......................3
Condensed Consolidated Statements of
Operations - three and nine months
ended September 30, 1996 and 1995 ...............4
Condensed Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 ........5
Condensed Consolidated Statements of
Cash Flows - nine months ended
September 30, 1996 and 1995 .................6 - 7
Notes to Condensed Consolidated Financial
Statements ......................................8
Item 2.Management's Discussion and Analysis
of Financial Condition and Results of
Operations ................................13
PART II OTHER INFORMATION
Item 1.Legal Proceedings .........................19
Item 6.Exhibits and Reports on Form 8-K ..........19
Signatures........................................20
Index to Exhibits.................................21
2
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The information in this report for the three and nine months
ended September 30, 1996 and 1995 is unaudited but includes all
adjustments (consisting only of normal recurring accruals) which
Amgen Inc. ("Amgen" or the "Company") considers necessary for a fair
presentation of the results of operations for those periods.
The condensed consolidated financial statements should be read
in conjunction with the Company's financial statements and the notes
thereto contained in the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
Interim results are not necessarily indicative of results for
the full fiscal year.
3
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AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
-------- -------- -------- --------
Revenues:
Product sales .............. $533.3 $460.6 $1,529.1 $1,334.4
Corporate partner revenues . 23.1 23.8 86.9 65.1
Royalty income ............. 10.6 8.9 30.3 26.9
------ ------ -------- --------
Total revenues ............ 567.0 493.3 1,646.3 1,426.4
------ ------ -------- --------
Operating expenses:
Cost of sales .............. 73.1 64.1 208.3 207.1
Research and development ... 130.4 105.5 384.6 327.7
Marketing and selling ...... 76.4 69.1 222.5 197.8
General and administrative . 42.1 37.6 119.1 106.8
Loss of affiliates, net .... 11.3 15.2 39.5 41.2
------ ------ -------- --------
Total operating expenses .. 333.3 291.5 974.0 880.6
------ ------ -------- --------
Operating income ............ 233.7 201.8 672.3 545.8
------ ------ -------- --------
Other income (expense):
Interest and other income .. 16.8 15.4 48.0 46.7
Interest expense, net ...... (1.2) (3.6) (5.2) (11.2)
------ ------ -------- --------
Total other income
(expense) ................ 15.6 11.8 42.8 35.5
------ ------ -------- --------
Income before income taxes .. 249.3 213.6 715.1 581.3
Provision for income taxes .. 69.8 67.8 213.3 189.2
------ ------ -------- --------
Net income .................. $179.5 $145.8 $ 501.8 $ 392.1
====== ====== ======== ========
Earnings per share:
Primary .................... $.64 $0.52 $1.78 $1.40
Fully diluted .............. $.64 $0.51 $1.78 $1.38
Shares used in calculation of:
Primary earnings per share . 279.4 281.8 281.3 280.2
Fully diluted earnings per
share ..................... 280.8 283.2 282.3 283.8
See accompanying notes.
4
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AMGEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
September 30, December 31,
1996 1995
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents ................ $ 227.0 $ 66.7
Marketable securities .................... 767.1 983.6
Trade receivables, net ................... 207.2 199.3
Inventories .............................. 91.0 88.8
Other current assets ..................... 113.7 115.7
-------- --------
Total current assets ................... 1,406.0 1,454.1
Property, plant and equipment at cost, net 831.6 743.8
Investments in affiliated companies....... 106.4 95.7
Other assets.............................. 205.2 139.2
-------- --------
$2,549.2 $2,432.8
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ......................... $ 41.7 $ 54.4
Commercial paper ......................... - 69.7
Accrued liabilities ...................... 405.1 459.7
Current portion of long term debt ........ 118.2 -
-------- --------
Total current liabilities .............. 565.0 583.8
Long-term debt............................. 59.0 177.2
Put warrants............................... 157.4 -
Contingencies
Stockholders' equity:
Common stock and additional paid-in
capital; $.0001 par value; 750.0 shares
authorized; outstanding - 264.5 shares
in 1996 and 265.7 shares in 1995 ........ 963.2 864.8
Retained earnings ........................ 804.6 807.0
-------- --------
Total stockholders' equity ............. 1,767.8 1,671.8
-------- --------
$2,549.2 $2,432.8
======== ========
See accompanying notes.
5
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AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
September 30,
1996 1995
---------- ----------
Cash flows from operating activities:
Net income .............................. $ 501.8 $ 392.1
Depreciation and amortization ........... 79.9 64.3
Loss of affiliates, net ................. 39.5 41.2
Cash provided by (used in):
Trade receivables, net ................. (7.9) (10.6)
Inventories ............................ (2.2) 12.2
Other current assets ................... 2.0 (11.0)
Accounts payable ....................... (12.7) 16.7
Accrued liabilities .................... (54.6) 43.3
--------- ---------
Net cash provided by operating
activities .......................... 545.8 548.2
--------- ---------
Cash flows from investing activities:
Purchases of property, plant and
equipment .............................. (167.6) (106.8)
Proceeds from maturities of marketable
securities ............................. 135.2 79.8
Proceeds from sales of marketable
securities ............................. 603.6 894.1
Purchases of marketable securities ...... (522.3) (1,335.2)
Increase in investments in affiliated
companies .............................. (10.2) (0.4)
Increase in other assets ................ (66.0) (13.0)
--------- ---------
Net cash used in investing activities . $ (27.3) $ (481.5)
--------- ---------
See accompanying notes.
(Continued on next page)
6
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AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In millions)
(Unaudited)
Nine Months Ended
September 30,
1996 1995
---------- ----------
Cash flows from financing activities:
Decrease in commercial paper ............ $ (69.7) $ (0.2)
Repayment of long-term debt ............. - (6.2)
Net proceeds from issuance of common
stock upon the exercise of stock
options ............................... 76.8 84.6
Tax benefit related to stock options .... 21.5 23.6
Repurchases of common stock ............. (346.8) (199.9)
Other ................................... (40.0) (34.9)
--------- ---------
Net cash used in financing activities . (358.2) (133.0)
--------- ---------
Increase (decrease) in cash and cash
equivalents ............................. 160.3 (66.3)
Cash and cash equivalents at beginning of
period .................................. 66.7 211.3
--------- ---------
Cash and cash equivalents at end of period $ 227.0 $ 145.0
========= =========
See accompanying notes.
7
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AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1996
1. Summary of significant accounting policies
Business
Amgen Inc. ("Amgen" or the "Company") is a global biotechnology
company that develops, manufactures and markets human therapeutics
based on advanced cellular and molecular biology.
Principles of consolidation
The condensed consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries as well as
affiliated companies for which the Company has a controlling
financial interest and exercises control over their operations
("majority controlled affiliates"). All material intercompany
transactions and balances have been eliminated in consolidation.
Investments in affiliated companies which are 50% or less owned and
where the Company exercises significant influence over operations are
accounted for using the equity method. All other equity investments
are accounted for under the cost method. The caption "Loss of
affiliates, net" includes Amgen's equity in the operating results of
affiliated companies and the minority interest others hold in the
operating results of Amgen's majority controlled affiliates.
Inventories
Inventories are stated at the lower of cost or market. Cost is
determined in a manner which approximates the first-in, first-out
(FIFO) method. Inventories are shown net of applicable reserves and
allowances. Inventories consist of the following (in millions):
September 30, December 31,
1996 1995
------ ------
Raw materials ......... $14.2 $11.8
Work in process ....... 48.9 45.9
Finished goods ........ 27.9 31.1
----- -----
$91.0 $88.8
===== =====
Product sales
Product sales consist of two products, EPOGEN(R) (Epoetin alfa)
and NEUPOGEN(R) (Filgrastim).
Quarterly NEUPOGEN(R) sales volume in the United States is
influenced by a number of factors including underlying demand,
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seasonal changes in cancer chemotherapy administration, and
wholesaler inventory management practices. Wholesaler inventory
reductions have tended to reduce domestic NEUPOGEN(R) sales in the
first quarter of each year.
The Company has the exclusive right to sell Epoetin alfa for
dialysis, diagnostics and all non-human uses in the United States.
The Company sells Epoetin alfa under the brand name EPOGEN(R). Amgen
has granted to Ortho Pharmaceutical Corporation, a subsidiary of
Johnson & Johnson ("Johnson & Johnson"), a license relating to
Epoetin alfa for sales in the United States for all human uses except
dialysis and diagnostics. Pursuant to this license, Amgen does not
recognize product sales it makes into the exclusive market of Johnson
& Johnson and does recognize the product sales made by Johnson &
Johnson into Amgen's exclusive market. These sales amounts, and
adjustments thereto, are derived from third-party data on shipments
to end users and their usage (see Note 4, "Contingencies - Johnson &
Johnson arbitrations").
Income taxes
Income taxes are accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109 (Note 3).
Stock option and purchase plans
The Company's stock options and purchase plans are accounted for
under Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees".
Earnings per share
Earnings per share are computed in accordance with the treasury
stock method. Primary and fully diluted earnings per share are based
upon the weighted average number of common shares and dilutive common
stock equivalents during the period in which they were outstanding.
Common stock equivalents are outstanding options under the Company's
stock option plans and put warrants on the Company's common stock.
Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results may
differ from those estimates.
Basis of presentation
The financial information for the three and nine months ended
September 30, 1996 and 1995 is unaudited but includes all adjustments
(consisting only of normal recurring accruals) which the Company
considers necessary for a fair presentation of the results of
operations for these periods. Interim results are not necessarily
indicative of results for the full fiscal year.
9
<PAGE>
2. Debt
During the first quarter of 1996, the Company paid off all
outstanding commercial paper.
As of September 30, 1996, $150 million was available under the
Company's line of credit for borrowing and to support the Company's
commercial paper program. No borrowings on this line of credit were
outstanding at September 30, 1996.
Long-term debt consists of the following (in millions):
September 30, December 31,
1996 1995
------ ------
Medium Term Notes .......... $109.0 $109.0
Promissory notes ........... 68.2 68.2
------ ------
177.2 177.2
Less current portion ....... (118.2) -
------ ------
$ 59.0 $177.2
====== ======
The Company has registered $200 million of unsecured medium term
debt securities ("Medium Term Notes") of which $109.0 million were
outstanding at September 30, 1996. These Medium Term Notes bear
interest at fixed rates averaging 5.8% and mature in one to seven
years.
3. Income taxes
The provision for income taxes consists of the following (in
millions):
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------ ------ ------ ------
Federal (including
U.S. possessions) .. $64.9 $63.6 $195.0 $173.8
State ................. 4.9 4.2 18.3 15.4
----- ----- ------ ------
$69.8 $67.8 $213.3 $189.2
===== ===== ====== ======
The current period reduction in the tax rate is primarily due to
a favorable ruling received from the Puerto Rican government.
10
<PAGE>
4. Contingencies
Johnson & Johnson arbitrations
In September 1985, the Company granted Johnson & Johnson a
license relating to certain patented technology and know-how of the
Company to sell a genetically engineered form of recombinant human
erythropoietin, called Epoetin alfa, throughout the United States for
all human uses except dialysis and diagnostics. Johnson & Johnson
sells Epoetin alfa under the brand name PROCRIT(R).
A number of disputes have arisen between Amgen and Johnson &
Johnson as to their respective rights and obligations under the
various agreements between them, including the agreement granting the
license (the "License Agreement"). These disputes have been the
subject of arbitration proceedings before Judicial Arbitration and
Mediation Services, Inc. in Chicago, Illinois commencing in January
1989. A dispute that has not yet been resolved and is the subject of
the current arbitration proceeding relates to the audit methodology
currently employed by the Company for Epoetin alfa sales. The
Company and Johnson & Johnson are required to compensate each other
for Epoetin alfa sales which either party makes into the other
party's exclusive market. The Company has established and is
employing an audit methodology to assign the proceeds of sales of
EPOGEN(R) and PROCRIT(R) in Amgen's and Johnson & Johnson's
respective exclusive markets. Based upon this audit methodology, the
Company is seeking payment of approximately $15 million (excluding
interest) from Johnson & Johnson for the period 1991 through 1994.
Johnson & Johnson has disputed this methodology and is proposing an
alternative methodology for adoption by the arbitrator pursuant to
which it is seeking payment of approximately $450 million (including
interest through June 1996) for the period 1989 through 1994. If, as
a result of the arbitration proceeding, a methodology different from
that currently employed by the Company is instituted to assign the
proceeds of sales between the parties, it may yield results that are
different from the results of the audit methodology currently
employed by the Company. As a result of the arbitration, it is
possible that the Company would recognize a different level of
EPOGEN(R) sales than are currently being recognized. As a result of
the arbitration, the Company may be required to pay additional
compensation to Johnson & Johnson for sales during prior periods, or
Johnson & Johnson may be required to pay compensation to the Company
for such prior period sales. While it is impossible to predict
accurately or determine the outcome of these proceedings, based
primarily upon the merits of its claims and based upon certain
liabilities established due to the inherent uncertainty of any
arbitrated result, the Company believes that the outcome of these
proceedings will not have a material adverse effect on its financial
statements. A trial commenced in March 1996 regarding the audit
methodologies and compensation for sales by Johnson & Johnson into
Amgen's exclusive market and sales by Amgen into Johnson & Johnson's
exclusive market.
The Company has filed a demand in the arbitration to terminate
Johnson & Johnson's rights under the License Agreement and to recover
damages for breach of the License Agreement. A hearing on this
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demand will be scheduled following the adjudication of the audit
methodologies for Epoetin alfa sales. On October 27, 1995, the
Company filed a complaint in the Circuit Court of Cook County,
Illinois, which is now pending in the United States District Court
for the Northern District of Illinois, seeking an order compelling
Johnson & Johnson to arbitrate the Company's claim for termination
before the arbitrator. The Company is unable to predict at this time
the outcome of the demand for termination or when it will be
resolved.
On October 2, 1995, Johnson & Johnson filed a demand for a
separate arbitration proceeding against the Company before the
American Arbitration Association ("AAA") in Chicago, Illinois.
Johnson & Johnson alleges in this demand that the Company has
breached the License Agreement. The demand also includes allegations
of various antitrust violations. In this demand, Johnson & Johnson
seeks an injunction, declaratory relief, unspecified compensatory
damages, punitive damages and costs. The Company has filed a motion
to stay the arbitration pending the outcome of the existing
arbitration proceedings before Judicial Arbitration and Mediation
Services, Inc. discussed above. The Company has also filed an answer
and counterclaim denying that AAA has jurisdiction to hear or decide
the claims stated in the demand, denying the allegations in the
demand and counterclaiming for certain unpaid invoices.
Synergen ANTRIL(TM) litigation
Several lawsuits have been filed against the Company's wholly
owned subsidiary, Amgen Boulder Inc. (formerly Synergen, Inc.),
alleging misrepresentations in connection with Synergen's research
and development of ANTRIL(TM) for the treatment of sepsis. One suit,
filed by a limited partner of a partnership with which Amgen Boulder
Inc. is affiliated, has been certified as a class action. That suit
seeks rescission of certain payments made by the limited partners to
the partnership (or unspecified damages not less than $52 million)
and treble damages based on a variety of allegations relating to
state and federal law claims. The plaintiffs in that suit also have
filed a second amended complaint alleging violations of federal
securities laws. Two broker-dealers who acted as market makers in
Synergen options have also filed a suit claiming in excess of $3.2
million in trading losses. On August 6, 1996, the District Court for
the State of Colorado dismissed without prejudice for failure to
prosecute an action brought by three Synergen stockholders that
alleged violations of state securities laws, fraud and
misrepresentation and sought an unspecified amount of compensatory
damages and punitive damages.
While it is not possible to predict accurately or determine the
eventual outcome of the Johnson & Johnson arbitration proceedings,
the Synergen litigation or various other legal proceedings (including
patent disputes) involving Amgen, the Company believes that the
outcome of these proceedings will not have a material adverse effect
on its financial statements.
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5. Stockholders' equity
During the nine months ended September 30, 1996, the Company
repurchased 6.1 million shares of its common stock at a total cost of
$346.8 million under its common stock repurchase program. The Board
of Directors has authorized the Company to repurchase up to $450
million of shares during 1996. Stock repurchased under the program
is retired.
In connection with the Company's stock repurchase program, put
warrants were sold to an independent third party during the third
quarter of 1996. Each put warrant entitles the holder to sell one
share of Amgen Inc. common stock to the Company at a specified price.
On September 30, 1996, 2.7 million put warrants were outstanding with
exercise prices ranging from $52.00 to $58.80 per share. The put
warrants are exercisable only at maturity and expire at various dates
between April 1997 and August 1997. In the event the put warrants
are exercised, the Company may elect to pay the holder in cash the
difference between the exercise price and the market price of the
Company's shares, in lieu of repurchasing the stock. The maximum
potential repurchase obligation of $157.4 million has been
reclassified from stockholders' equity to put warrants as of
September 30, 1996. In the event that the put warrants expire
unexercised, the liability associated with these instruments is
extinguished.
Additionally, during the third quarter of 1996, the Company
purchased call options from an independent third party. Each call
option entitles the Company to buy one share of Amgen Inc. common
stock at a specified price. At September 30, 1996, 1.3 million call
options were outstanding, with exercise prices ranging from $58.00 to
$61.90 per share. The call options are exercisable only at maturity
and expire at various dates between April 1997 and August 1997. In
the event the call options are exercised, the Company may elect to
receive cash for the difference between the exercise price and the
market price of the Company's shares, in lieu of repurchasing the
stock. The premiums received from the sale of the put warrants
offset in full the cost of the call options.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
Cash provided by operating activities has been and is expected
to continue to be the Company's primary source of funds. During the
nine months ended September 30, 1996, operations provided $545.8
million of cash compared with $548.2 million during the same period
last year. The Company had cash, cash equivalents and marketable
securities of $994.1 million at September 30, 1996, compared with
$1,050.3 million at December 31, 1995.
Capital expenditures totaled $167.6 million for the nine months
ended September 30, 1996, compared with $106.8 million for the same
period a year ago. Over the next few years, the Company expects to
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spend approximately $200 million to $300 million per year on capital
projects and equipment to expand the Company's global operations.
In April 1996, the Company invested $48 million in a corporate
partner, Regeneron Pharmaceuticals, Inc., and acquired 3.0 million
shares of common stock along with warrants to purchase an additional
0.7 million shares.
The Company receives cash from the exercise of employee stock
options. During the nine months ended September 30, 1996, stock
options and their related tax benefits provided $98.3 million of cash
compared with $108.2 million for the period last year. Proceeds from
the exercise of stock options and their related tax benefits will
vary from period to period based upon, among other factors,
fluctuations in the market value of the Company's stock relative to
the exercise price of such options.
The Company has a stock repurchase program to offset the
dilutive effect of its employee benefit stock option and stock
purchase plans. During the nine months ended September 30, 1996, the
Company purchased 6.1 million shares of its common stock at a cost of
$346.8 million compared with 5.6 million shares purchased at a cost
of $199.9 million during the same period last year. The Company
expects to repurchase $400 million to $450 million of its stock under
the program in 1996. To partially hedge the cost of its stock
repurchase program, the Company issued put warrants and purchased
call options in the third quarter of 1996. See Note 5 to the
Condensed Consolidated Financial Statements.
To provide for financial flexibility and increased liquidity,
the Company has established several sources of debt financing. The
Company has a shelf registration under which it could issue up to
$200 million of Medium Term Notes. At September 30, 1996, $109.0
million of Medium Term Notes were outstanding which mature in one to
seven years. The Company has a commercial paper program which
provides for short-term borrowings up to an aggregate face amount of
$200 million. As of September 30, 1996, the Company had no
outstanding commercial paper. The Company also has a $150 million
revolving line of credit. No borrowings on this line of credit were
outstanding at September 30, 1996.
The Company invests its cash in accordance with a policy that
seeks to maximize returns while ensuring both liquidity and minimal
risk of principal loss. The policy limits investments to certain
types of instruments issued by institutions with investment grade
credit ratings, and places restrictions on maturities and
concentration by type and issuer. The majority of the Company's
portfolio is composed of fixed income investments which are subject
to the risk of market interest rate fluctuations, and all of the
Company's investments are subject to risks associated with the
ability of the issuers to perform their obligations under the
instruments.
The Company has a program to manage certain portions of its
exposure to fluctuations in foreign currency exchange rates arising
from international operations. The Company generally hedges the
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<PAGE>
receivables and payables with foreign currency forward contracts,
which typically mature within six months. The Company uses foreign
currency option and forward contracts which generally expire within
12 months to hedge certain anticipated future sales and expenses. At
September 30, 1996, outstanding option and forward contracts totaled
$7.5 million and $60.2 million, respectively.
The Company believes that existing funds, cash generated from
operations, and existing sources of debt financing are adequate to
fund its working capital and capital expenditure requirements for the
foreseeable future, as well as to support its stock repurchase
program. However, the Company may raise additional capital from time
to time to take advantage of favorable conditions in the markets or
in connection with the Company's corporate development activities.
Results of Operations
Product sales
Product sales increased 15.8% and 14.6% for the three and nine
months ended September 30, 1996, respectively, compared with the same
periods last year.
NEUPOGEN(R) (Filgrastim)
Worldwide NEUPOGEN(R) sales were $258.8 million and
$746.3 million for the three and nine months ended September 30,
1996, respectively. These amounts represent increases of 12.4% and
8.2%, respectively, over the same periods last year.
Domestic sales of NEUPOGEN(R) were $186.8 million and $533.7
million for the three and nine months ended September 30, 1996,
respectively. These amounts represent increases of $23.1 million and
$46.9 million, or 14.1% and 9.6%, respectively, over the same periods
last year. The increases are primarily due to growth in demand and a
price increase which was in line with the Consumer Price Index. In
1995, wholesalers accelerated their purchasing because of the timing
of the July 4 holiday. As a result, approximately $7 million of
sales were shifted from the third quarter of 1995 into the second
quarter of 1995. Such accelerated wholesaler purchasing did not
occur in 1996.
Quarterly NEUPOGEN(R) sales volume in the United States is
influenced by a number of factors including underlying demand,
seasonal change in cancer chemotherapy administration, and wholesaler
inventory management practices. Wholesaler inventory reductions have
tended to reduce domestic NEUPOGEN(R) sales in the first quarter of
each year.
The ongoing and intensifying cost containment pressures in the
health care marketplace, including use of guidelines in patient care,
have contributed to the slowing of growth in domestic NEUPOGEN(R)
usage over the past several years. These pressures are expected to
continue to influence such growth for the foreseeable future.
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International sales of NEUPOGEN(R), primarily in Europe, were
$72.0 million and $212.6 million for the three and nine months ended
September 30, 1996, respectively. These amounts represent increases
of $5.4 million and $9.8 million, or 8.1% and 4.8% respectively, over
the same periods last year. Unit demand accounted for most of this
increase but demand benefited in part from the timing of shipments to
certain end users. The impact of foreign currency was slightly
negative.
The Company's overall share of the colony stimulating factor
market in the European Union ("EU") has continued to decrease since
the introduction in 1994 of a competing granulocyte colony
stimulating factor product. The Company does not expect the
competitive intensity to subside in the near future. In addition,
increasing government cost control measures have slowed the growth of
the colony stimulating factor market in the EU.
EPOGEN(R) (Epoetin alfa)
EPOGEN(R) sales were $274.5 million and $782.8 million for the
three and nine months ended September 30, 1996, respectively. The
amounts represent increases of $44.2 million and $138.0 million or
19.2% and 21.4%, respectively, over the same periods last year.
These increases were primarily due to a continued increase in the
U.S. dialysis patient population and the administration of higher
doses.
Increases in both the U.S. dialysis patient population and
dosing is expected to continue to drive EPOGEN(R) sales. However,
the Company believes that as more dialysis patients' hematocrits
reach target levels, dosing increases will diminish.
Corporate partner revenues
Corporate partner revenues decreased $0.7 million, or 2.9% and
increased $21.8 million, or 33.5% during the three and nine months
ended September 30, 1996, respectively, compared with the same periods
last year. The nine month period increase was primarily due to a
$15 million payment received from Yamanouchi Pharmaceutical Co., Ltd.
under a licensing agreement in June 1996. In connection with this
agreement, the Company has licensed the rights to develop,
manufacture and commercialize the Company's proprietary Consensus
Interferon in specified geographic areas of the world. The Company
will receive milestone payments as well as royalties on future
product sales.
Cost of sales
Cost of sales as a percentage of product sales was 13.7% and
13.6% for the three and nine months ended September 30, 1996,
respectively, compared with 13.9% and 15.5% for the same periods last
year. These improvements reflect efficiencies from the fill-and-
finish facility in Puerto Rico. As a result of continued
efficiencies in Puerto Rico in 1996, cost of sales as a percentage of
product sales is expected to range from 13%-14%.
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Research and development
During the three and nine months ended September 30, 1996,
research and development expenses increased $24.9 million and
$56.9 million, or 23.6% and 17.4%, respectively, compared with the
same periods last year. These increases were primarily due to staff-
related expenses and external costs for clinical and preclinical
activities necessary to support the ongoing product development
activities. Annual research and development expenses are expected to
increase at a rate exceeding the Company's product sales growth rate
due to planned increases in internal efforts on development of
product candidates and discovery.
Marketing and selling
Marketing and selling expenses increased $7.3 million and
$24.7 million, or 10.6% and 12.5%, respectively, during the three and
nine months ended September 30, 1996 compared with the same periods
last year. These increases primarily reflect market research
activities and efforts to increase the number of patients receiving
NEUPOGEN(R) and to bring more patients receiving EPOGEN(R) within the
target hematocrit range. In 1996, marketing and selling expenses
combined with general and administrative expenses are expected to
have an aggregate annual growth rate lower than the anticipated
annual product sales growth rate.
General and administrative
General and administrative expenses increased $4.5 million and
$12.3 million, or 12.0% and 11.5%, respectively, during the three and
nine months ended September 30, 1996 compared with the same periods
last year. These increases were primarily due to higher staff-
related expenses. In 1996, general and administrative expenses
combined with marketing and selling expenses are expected to have an
aggregate annual growth rate lower than the anticipated annual
product sales growth rate.
Interest and other income
Interest and other income increased $1.4 million and
$1.3 million, or 9.1% and 2.8%, respectively, during the three and
nine months ended September 30, 1996 compared with the same periods
last year. These increases resulted from fluctuations in interest
rates and cash balances compared with the same period a year ago.
Interest and other income is expected to continue to vary from period
to period primarily due to changes in cash balances, timing of
capital gains/losses, and fluctuations in interest rates.
Income taxes
The Company's effective tax rate for the three and nine months
ended September 30, 1996 was 28.0% and 29.8% compared with 31.7% and
32.5%, respectively, for the same periods last year. The decrease in
the current tax rate is primarily due to a favorable ruling received
from the Puerto Rican government. However, the federal government
also enacted legislation during the current quarter which, beginning
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in 1998, limits the tax benefits it grants that relate to Puerto
Rican operations. The Company's effective tax rate will rise in 1998
due to this legislation.
Financial Outlook
Worldwide NEUPOGEN(R) sales for 1996 are expected to grow at a
rate lower than the 1995 growth rate. Future NEUPOGEN(R) sales
increases are dependent primarily upon further penetration of
existing markets, the timing and nature of additional indications for
which the product may be approved and the effects of competitive
products. NEUPOGEN(R) usage is expected to continue to be affected
by cost containment pressures on health care providers worldwide. In
addition, international NEUPOGEN(R) sales will continue to be subject
to competition, government cost containment measures, and changes in
foreign currency exchange rates.
EPOGEN(R) sales for 1996 are also expected to grow at a rate
lower than the 1995 growth rate. The Company anticipates that
increases in both the U.S. dialysis patient population and dosing
will continue to drive EPOGEN(R) sales. The Company believes that as
more dialysis patients' hematocrits reach target levels, the
contribution of dosing to sales increases will diminish. Patients
receiving treatment for end stage renal disease are covered primarily
under medical programs provided by the federal government.
Therefore, EPOGEN(R) sales may also be affected by future changes in
reimbursement rates or the basis for reimbursement by the federal
government.
The Company anticipates that total product sales and earnings
will grow at double digit rates in 1996, but these growth rates are
expected to be lower than 1995 growth rates. Estimates of future
product sales and earnings, however, are necessarily speculative in
nature and are difficult to predict with accuracy.
Except for the historical information contained herein, the
matters discussed herein are by their nature forward-looking. For
reasons stated, or for various unanticipated reasons, actual results
may differ materially. Amgen operates in a rapidly changing
environment that involves a number of risks, some of which are beyond
the Company's control. Future operating results and matters which
may affect the Company's stock price may be affected by a number of
factors, certain of which are discussed elsewhere herein and are
discussed in the sections appearing under the heading "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Factors That May Affect Future Results" in the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996,
which sections are incorporated herein by reference and filed
herewith.
Legal Matters
The Company is engaged in arbitration proceedings with one of
its licensees and various legal proceedings relating to Synergen.
For a discussion of these matters see Note 4 to the Condensed
Consolidated Financial Statements.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is engaged in arbitration proceedings with one of
its licensees. For a complete discussion of these matters see Note 4
to the Condensed Consolidated Financial Statements - "Contingencies -
Johnson & Johnson arbitrations." Other legal proceedings are also
reported in Note 4 to the Condensed Consolidated Financial Statements
and in the Company's Form 10-K for the year ended December 31, 1995,
with material developments or new proceedings since that report
described in the Company's Form 10-Q for the quarters ended March 31,
1996 and June 30, 1996 and below. While it is not possible to
predict accurately or to determine the eventual outcome of these
matters, the Company believes that the outcome of these legal
proceedings will not have a material adverse effect on the financial
statements of the Company.
Synergen ANTRIL(TM) litigation
Several lawsuits have been filed against the Company's wholly
owned subsidiary, Amgen Boulder Inc. (formerly Synergen, Inc.),
alleging misrepresentations in connection with Synergen's research
and development of ANTRIL (TM) for the treatment of sepsis. On
August 6, 1996, the District Court for the State of Colorado
dismissed one of these lawsuits without prejudice for failure to
prosecute an action brought by three Synergen stockholders that
alleged violations of state securities laws, fraud and
misrepresentation and sought an unspecified amount to compensatory
damages and punitive damages.
Genentech Litigation
On October 16, 1996, Genentech, Inc. filed suit in the United
States District Court for the Northern District of California seeking
an unspecified amount of compensatory damages, treble damages and
injunctive relief on its U.S. Patents 4,704,362, 5,221,619 and
4,342,832 relating to vectors for expressing cloned genes and the
methods for such expression. Genentech, Inc. alleges that Amgen has
infringed its patents by manufacturing and selling NEUPOGEN(R). As
of October 31, 1996, Amgen had not been served with this lawsuit.
Item 6. Exhibits and Reports on Form 8-K
(a) Reference is made to the Index to Exhibits included herein.
(b) No reports on Form 8-K were filed during the three months
ended September 30, 1996.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Amgen Inc.
(Registrant)
Date: 11/05/96 By:/s/ Robert S. Attiyeh
- ------------------ ------------------------------------
Robert S. Attiyeh
Senior Vice President, Finance
and Corporate Development, and
Chief Financial Officer
Date: 11/05/96 By:/s/ Larry A. May
- ------------------ ------------------------------------
Larry A. May
Vice President, Corporate
Controller and Chief
Accounting Officer
20
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AMGEN INC.
INDEX TO EXHIBITS
Exhibit No. Description
3.1 Restated Certificate of Incorporation. (6)
3.2 Certificate of Amendment to Restated Certificate of
Incorporation, effective as of July 24, 1991. (11)
3.3 Amended and Restated Bylaws. (22)
4.1 Indenture dated January 1, 1992 between the Company and
Citibank N.A., as trustee. (12)
4.2 Forms of Commercial Paper Master Note Certificates. (15)
*10.1 Company's Amended and Restated 1991 Equity Incentive
Plan.
*10.2 Company's Amended and Restated 1984 Stock Option Plan.
10.3 Shareholder's Agreement of Kirin-Amgen, Inc., dated May
11, 1984, between the Company and Kirin Brewery Company,
Limited (with certain confidential information deleted
therefrom). (1)
10.4 Amendment Nos. 1, 2, and 3, dated March 19, 1985, July
29, 1985 and December 19, 1985, respectively, to the
Shareholder's Agreement of Kirin-Amgen, Inc., dated May
11, 1984 (with certain confidential information deleted
therefrom). (3)
10.5 Product License Agreement, dated September 30, 1985, and
Technology License Agreement, dated, September 30, 1985
between the Company and Ortho Pharmaceutical Corporation
(with certain confidential information deleted
therefrom). (2)
10.6 Product License Agreement, dated September 30, 1985, and
Technology License Agreement, dated September 30, 1985
between Kirin-Amgen, Inc. and Ortho Pharmaceutical
Corporation (with certain confidential information
deleted therefrom). (3)
*10.7 Company's Amended and Restated Employee Stock Purchase
Plan.
10.8 Research, Development Technology Disclosure and License
Agreement PPO, dated January 20, 1986, by and between
the Company and Kirin Brewery Co., Ltd. (4)
10.9 Amendment Nos. 4 and 5, dated October 16, 1986
(effective July 1, 1986) and December 6, 1986 (effective
July 1, 1986), respectively, to the Shareholders
Agreement of Kirin-Amgen, Inc. dated May 11, 1984 (with
certain confidential information deleted therefrom). (5)
10.10 Assignment and License Agreement, dated October 16,
1986, between the Company and Kirin-Amgen, Inc. (with
certain confidential information deleted therefrom). (5)
10.11 G-CSF European License Agreement, dated December 30,
1986, between Kirin-Amgen, Inc. and the Company (with
certain confidential information deleted therefrom). (5)
10.12 Research and Development Technology Disclosure and
License Agreement: GM-CSF, dated March 31, 1987, between
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Kirin Brewery Company, Limited and the Company (with
certain confidential information deleted therefrom). (5)
*10.13 Company's Amended and Restated 1987 Directors' Stock
Option Plan.
*10.14 Company's Amended and Restated 1988 Stock Option Plan.
10.15 Company's Amended and Restated Retirement and Savings
Plan. (22)
10.16 Amendment, dated June 30, 1988, to Research,
Development, Technology Disclosure and License
Agreement: GM-CSF dated March 31, 1987, between Kirin
Brewery Company, Limited and the Company. (6)
10.17 Agreement on G-CSF in the EU, dated September 26, 1988,
between Amgen Inc. and F. Hoffmann-La Roche & Co.
Limited Company (with certain confidential information
deleted therefrom). (8)
10.18 Supplementary Agreement to Agreement dated January 4,
1989 to Agreement on G-CSF in the EU, dated September
26, 1988, between the Company and F. Hoffmann-La Roche &
Co. Limited Company, (with certain confidential
information deleted therefrom). (8)
10.19 Agreement on G-CSF in Certain European Countries, dated
January 1, 1989, between Amgen Inc. and F. Hoffmann-La
Roche & Co. Limited Company (with certain confidential
information deleted therefrom). (8)
10.20 Rights Agreement, dated January 24, 1989, between Amgen
Inc. and American Stock Transfer and Trust Company,
Rights Agent. (7)
10.21 First Amendment to Rights Agreement, dated January 22,
1991, between Amgen Inc. and American Stock Transfer and
Trust Company, Rights Agent. (9)
10.22 Second Amendment to Rights Agreement, dated April 2,
1991, between Amgen Inc. and American Stock Transfer and
Trust Company, Rights Agent. (10)
10.23 Agency Agreement, dated November 21, 1991, between Amgen
Manufacturing, Inc. and Citicorp Financial Services
Corporation. (13)
10.24 Agency Agreement, dated May 21, 1992, between Amgen
Manufacturing, Inc. and Citicorp Financial Services
Corporation. (13)
10.25 Guaranty, dated July 29, 1992, by the Company in favor
of Merck Sharp & Dohme Quimica de Puerto Rico, Inc. (14)
10.26 936 Promissory Note No. 01, dated December 11, 1991,
issued by Amgen Manufacturing, Inc. (13)
10.27 936 Promissory Note No. 02, dated December 11, 1991,
issued by Amgen Manufacturing, Inc. (13)
10.28 936 Promissory Note No. 001, dated July 29, 1992, issued
by Amgen Manufacturing, Inc. (13)
10.29 936 Promissory Note No. 002, dated July 29, 1992, issued
by Amgen Manufacturing, Inc. (13)
10.30 Guaranty, dated November 21, 1991, by the Company in
favor of Citicorp Financial Services Corporation. (13)
10.31 Partnership Purchase Agreement, dated March 12, 1993,
between the Company, Amgen Clinical Partners, L.P.,
Amgen Development Corporation, the Class A limited
partners and the Class B limited partner. (14)
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10.32 Amgen Supplemental Retirement Plan dated June 1, 1993.
(16)
10.33 Promissory Note of Mr. Kevin W. Sharer, dated June 4,
1993. (16)
10.34 Promissory Note of Mr. Larry A. May, dated February 24,
1993. (17)
10.35 Amgen Performance Based Management Incentive Plan. (17)
10.36 Agreement and Plan of Merger, dated as of November 17,
1994, among Amgen Inc., Amgen Acquisition Subsidiary,
Inc. and Synergen, Inc. (18)
10.37 Third Amendment to Rights Agreement, dated as of
February 21, 1995, between Amgen Inc. and American Stock
Transfer Trust and Trust Company (19)
10.38 Credit Agreement, dated as of June 23, 1995, among Amgen
Inc., the Borrowing Subsidiaries named therein, the
Banks named therein, Swiss Bank Corporation and ABN AMRO
Bank N.V., as Issuing Banks, and Swiss Bank Corporation,
as Administrative Agent. (20)
10.39 Promissory Note of Mr. George A. Vandeman, dated
December 15, 1995. (21)
10.40 Promissory Note of Mr. George A. Vandeman, dated
December 15, 1995. (21)
10.41 Promissory Note of Mr. Stan Benson, dated March 19,
1996. (21)
*10.42 Amendment No. 1 to the Company's Amended and Restated
Retirement and Savings Plan.
*11 Computation of per share earnings.
*27 Financial Data Schedule.
*99 Sections appearing under the heading "Management's
Discussion and Analysis of Financial Condition and
Results of Operations--Factors That May Affect Future
Results" in the Company's quarterly report on Form 10-Q
for the quarter ended March 31, 1996.
- ----------------
* Filed herewith.
(1) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended March 31, 1984 on June 26, 1984 and incorporated
herein by reference.
(2) Filed as an exhibit to Quarterly Report on Form 10-Q for the
quarter ended September 30, 1985 on November 14, 1985 and
incorporated herein by reference.
(3) Filed as an exhibit to Quarterly Report on Form 10-Q for the
quarter ended December 31, 1985 on February 3, 1986 and
incorporated herein by reference.
(4) Filed as an exhibit to Amendment No. 1 to Form S-1 Registration
Statement (Registration No. 33-3069) on March 11, 1986 and
incorporated herein by reference.
(5) Filed as an exhibit to the Form 10-K Annual Report for the year
ended March 31, 1987 on May 18, 1987 and incorporated herein by
reference.
(6) Filed as an exhibit to Form 8 amending the Quarterly Report on
Form 10-Q for the quarter ended June 30, 1988 on August 25, 1988
and incorporated herein by reference.
(7) Filed as an exhibit to the Form 8-K Current Report dated January
24, 1989 and incorporated herein by reference.
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(8) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended March 31, 1989 on June 28, 1989 and incorporated
herein by reference.
(9) Filed as an exhibit to the Form 8-K Current Report dated January
22, 1991 and incorporated herein by reference.
(10) Filed as an exhibit to the Form 8-K Current Report dated April
12, 1991 and incorporated herein by reference.
(11) Filed as an exhibit to the Form 8-K Current Report dated July
24, 1991 and incorporated herein by reference.
(12) Filed as an exhibit to Form S-3 Registration Statement dated
December 19, 1991 and incorporated herein by reference.
(13) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1992 on March 30, 1993 and incorporated
herein by reference.
(14) Filed as an exhibit to the Form 8-A dated March 31, 1993 and
incorporated herein by reference.
(15) Filed as an exhibit to the Form 10-Q for the quarter ended March
31, 1993 on May 17, 1993 and incorporated herein by reference.
(16) Filed as an exhibit to the Form 10-Q for the quarter ended
September 30, 1993 on November 12, 1993 and incorporated herein
by reference.
(17) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1993 on March 25, 1994 and incorporated
herein by reference.
(18) Filed as an exhibit to the Form 8-K Current Report dated
November 18, 1994 on December 2, 1994 and incorporated herein by
reference.
(19) Filed as an exhibit to the Form 8-K Current Report dated
February 21, 1995 on March 7, 1995 and incorporated herein by
reference.
(20) Filed as an exhibit to the Form 10-Q for the quarter ended
June 30, 1995 on August 11, 1995 and incorporated herein by
reference.
(21) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1995 on March 29, 1996 and incorporated
herein by reference.
(22) Filed as an exhibit to the Form 10-Q for the quarter ended
June 30, 1996 on August 12, 1996 and incorporated herein by
reference.
24
<PAGE>
EXHIBIT
AMGEN INC.
AMENDED AND RESTATED 1991 EQUITY INCENTIVE PLAN
1. PURPOSE.
(a) The purpose of the Amended and Restated 1991 Equity
Incentive Plan (the "Plan") is to provide a means by which employees
or directors of and consultants to Amgen Inc., a Delaware corporation
(the "Company"), and its Affiliates, as defined in subparagraph 1(b),
directly or indirectly through trusts created for the benefit of
their families, may be given an opportunity to benefit from increases
in value of the stock of the Company through the granting of (i)
incentive stock options, (ii) nonqualified stock options, (iii) stock
bonuses, and (iv) rights to purchase restricted stock, all as defined
below.
(b) The word "Affiliate" as used in the Plan means any
parent corporation or subsidiary corporation of the Company, as those
terms are defined in Sections 424(e) and (f), respectively, of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of persons now employed by or serving as directors or
consultants to the Company, to secure and retain the services of
persons capable of filling such positions, and to provide incentives
for such persons to exert maximum efforts for the success of the
Company.
(d) The Company intends that the rights issued under the
Plan ("Stock Awards") shall, in the discretion of the Board of
Directors of the Company (the "Board") or any committee to which
responsibility for administration of the Plan has been delegated
pursuant to subparagraph 2(c), be either (i) stock options granted
pursuant to paragraph 5 hereof, including incentive stock options as
that term is used in Section 422 of the Code ("Incentive Stock
Options"), or options which do not qualify as Incentive Stock Options
("Nonqualified Stock Options") (together hereinafter referred to as
"Options"), or (ii) stock bonuses or rights to purchase restricted
stock granted pursuant to paragraph 6 hereof.
(e) The word "Trust" as used in the Plan shall mean a
trust created for the benefit of the employee, director or
consultant, his or her spouse, or members of their immediate family.
The word optionee shall mean the person to whom the option is granted
or the employee, director or consultant for whose benefit the option
is granted to a Trust, as the context shall require.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and
until the Board delegates administration to a committee, as provided
in subparagraph 2(c).
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<PAGE>
(b) The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the
persons eligible under the Plan shall be granted Stock Awards; when
and how Stock Awards shall be granted; whether a Stock Award will be
an Incentive Stock Option, a Nonqualified Stock Option, a stock
bonus, a right to purchase restricted stock, or a combination of the
foregoing; the provisions of each Stock Award granted (which need not
be identical), including the time or times when a person shall be
permitted to purchase or receive stock pursuant to a Stock Award; and
the number of shares with respect to which Stock Awards shall be
granted to each such person.
(2) To construe and interpret the Plan and Stock
Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of
this power, may correct any defect, omission or inconsistency in the
Plan or in any Stock Award, in a manner and to the extent it shall
deem necessary or expedient to make the Plan fully effective.
(3) To amend the Plan as provided in paragraph 13.
(4) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the
best interests of the Company.
(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than two (2) members of the Board
(the "Committee"). One or more of these members may be non-employee
directors and outside directors, if required and as defined by the
provisions of subparagraphs 2(d) and 2(e). If administration is
delegated to a Committee, the Committee shall have, in connection
with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent
with the provisions of the Plan, as may be adopted from time to time
by the Board. Notwithstanding anything else in this subparagraph
2(c) to the contrary, at any time the Board or the Committee may
delegate to a committee of one or more members of the Board the
authority to grant or amend options to all employees, directors or
consultants or any portion or class thereof.
(d) The term "non-employee director" shall mean a member
of the Board who (i) is not currently an officer of the Company or a
parent or subsidiary of the Company (as defined in Rule 16a-1(f)
promulgated by the Securities and Exchange Commission under Section
16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) or an employee of the Company or a parent or subsidiary of the
Company; (ii) does not receive compensation from the Company or a
parent or subsidiary of the Company for services rendered in any
capacity other than as a member of the Board (including a consultant)
in an amount required to be disclosed to the Company's stockholders
under Rule 404 of Regulation S-K promulgated by the Securities and
Exchange Commission ("Rule 404"); (iii) does not possess an interest
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in any other transaction required to be disclosed under Rule 404; or
(iv) is not engaged in a business relationship required to be
disclosed under Rule 404, as all of these provisions are interpreted
by the Securities and Exchange Commission under Rule 16b-3
promulgated under the Exchange Act.
(e) The term "outside director," as used in this Plan,
shall mean an administrator of the Plan, whether a member of the
Board or of any Committee to which responsibility for administration
of the Plan has been delegated pursuant to subparagraph 2(c), who is
considered to be an "outside director" in accordance with the rules,
regulations or interpretations of Section 162(m) of the Code.
(f) Any requirement that an administrator of the Plan be a
"non-employee director" or "outside director" shall not apply if the
Board or the Committee expressly declares that such requirement shall
not apply.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 11 relating to
adjustments upon changes in stock, the stock that may be issued
pursuant to Stock Awards granted under the Plan shall not exceed in
the aggregate Forty Eight Million (48,000,000) shares of the
Company's $.0001 par value common stock (the "Common Stock"). If any
Stock Award granted under the Plan shall for any reason expire or
otherwise terminate without having been exercised in full, the Common
Stock not purchased under such Stock Award shall again become
available for the Plan. Shares repurchased by the Company pursuant
to any repurchase rights reserved by the Company pursuant to the Plan
shall not be available for subsequent issuance under the Plan.
(b) The Common Stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
(c) An Incentive Stock Option may be granted to an
eligible person under the Plan only if the aggregate fair market
value (determined at the time the Incentive Stock Option is granted)
of the Common Stock with respect to which incentive stock options (as
defined by the Code) are exercisable for the first time by such
optionee during any calendar year under all such plans of the Company
and its Affiliates does not exceed one hundred thousand dollars
($100,000). If it is determined that an entire Option or any portion
thereof does not qualify for treatment as an Incentive Stock Option
by reason of exceeding such maximum, such Option or the applicable
portion shall be considered a Nonqualified Stock Option.
4. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to
employees (including officers) of the Company or its Affiliates. A
director of the Company shall not be eligible to receive Incentive
Stock Options unless such director is also an employee of the Company
or any Affiliate. Stock Awards other than Incentive Stock Options
may be granted to employees (including officers) or directors of or
consultants to the Company or any Affiliate or to Trusts of any such
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employee, director or consultant.
(b) A director shall in no event be eligible for the
benefits of the Plan unless and until such director is expressly
declared eligible to participate in the Plan by action of the Board
or the Committee, and only if, at any time discretion is exercised by
the Board or the Committee in the selection of a director as a person
to whom Stock Awards may be granted, or in the determination of the
number of shares which may be covered by Stock Awards granted to a
director, the Plan complies with the requirements of Rule 16b-3
promulgated under the Exchange Act, as from time to time in effect.
The Board shall otherwise comply with the requirements of Rule 16b-3
promulgated under the Exchange Act, as from time to time in effect.
Notwithstanding the foregoing, the restrictions set forth in this
subparagraph 4(b) shall not apply if the Board or Committee expressly
declares that such restrictions shall not apply.
(c) No person shall be eligible for the grant of an
Incentive Stock Option under the Plan if, at the time of grant, such
person owns (or is deemed to own pursuant to Section 424(d) of the
Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of
any of its Affiliates unless the exercise price of such Incentive
Stock Option is at least one hundred and ten percent (110%) of the
fair market value of the Common Stock at the date of grant and the
Incentive Stock Option is not exercisable after the expiration of
five (5) years from the date of grant.
(d) Stock Awards shall be limited to a maximum of 500,000
shares of Common Stock per person per calendar year, which reflects
the Company's two for one stock split in August 1995.
5. TERMS OF STOCK OPTIONS.
Each Option shall be in such form and shall contain such
terms and conditions as the Board or the Committee shall deem
appropriate. The provisions of separate Options need not be
identical, but each Option shall include (through incorporation of
provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) No Option shall be exercisable after the expiration of
ten (10) years from the date it was granted.
(b) The exercise price of each Incentive Stock Option and
each Nonqualified Stock Option shall be not less than one hundred
percent (100%) of the fair market value of the Common Stock subject
to the Option on the date the Option is granted.
(c) The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either: (i) in cash at the time the Option
is exercised; or (ii) at the discretion of the Board or the
Committee, either at the time of grant or exercise of the Option (A)
by delivery to the Company of shares of Common Stock of the Company
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that have been held for the period required to avoid a charge to the
Company's reported earnings and valued at the fair market value on
the date of exercise, (B) according to a deferred payment or other
arrangement with the person to whom the Option is granted or to whom
the Option is transferred pursuant to subparagraph 5(d), or (C) in
any other form of legal consideration that may be acceptable to the
Board or the Committee in their discretion; including but not limited
to payment of the purchase price pursuant to a program developed
under Regulation T as promulgated by the Federal Reserve Board which
results in the receipt of cash (or a check) by the Company before
Common Stock is issued or the receipt of irrevocable instruction to
pay the aggregate exercise price of the Company from the sales
proceeds before Common Stock is issued.
In the case of any deferred payment arrangement, interest shall
be payable at least annually and shall be charged at not less than
the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any amounts
other than amounts stated to be interest under the deferred payment
arrangement.
(d) An Option granted to a natural person shall be
exercisable during the lifetime of such person only by such person,
provided that such person during such person's lifetime may designate
a Trust to be such person's beneficiary with respect to any Incentive
Stock Options granted after February 25, 1992 and with respect to any
Nonqualified Stock Options, and such beneficiary shall, after the
death of the person to whom the Option was granted, have all the
rights that such person has while living, including the right to
exercise the Option. In the absence of such designation, after the
death of the person to whom the Option is granted, the Option shall
be exercisable by the person or persons to whom the optionee's rights
under such Option pass by will or by the laws of descent and
distribution.
(e) The total number of shares of Common Stock subject to
an Option may, but need not, be allotted in periodic installments
(which may, but need not, be equal). From time to time during each
of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that
period, and may be exercised with respect to some or all of the
shares allotted to such period and/or any prior period as to which
the Option was not fully exercised. During the remainder of the term
of the Option (if its term extends beyond the end of the installment
periods), the Option may be exercised from time to time with respect
to any shares then remaining subject to the Option. The provisions
of this subparagraph 5(e) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be
exercised.
(f) The Company may require any optionee, or any person to
whom an Option is transferred under subparagraph 5(d), as a condition
of exercising any such Option: (i) to give written assurances
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satisfactory to the Company as to the optionee's knowledge and
experience in financial and business matters and/or to employ a
purchaser representative who has such knowledge and experience in
financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser's representative,
the merits and risks of exercising the Option; and (ii) to give
written assurances satisfactory to the Company stating that such
person is acquiring the Common Stock subject to the Option for such
person's own account and not with any present intention of selling or
otherwise distributing the Common Stock. These requirements, and any
assurances given pursuant to such requirements, shall be inoperative
if: (x) the issuance of the shares upon the exercise of the Option
has been registered under a then currently effective registration
statement under the Securities Act of 1933, as amended (the
"Securities Act"); or (y) as to any particular requirement, a
determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then
applicable securities law.
(g) An Option shall terminate three (3) months after
termination of the optionee's employment or relationship as a
consultant or director with the Company or an Affiliate, unless: (i)
such termination is due to such person's permanent and total
disability, within the meaning of Section 422(c)(6) of the Code, in
which case the Option may, but need not, provide that it may be
exercised at any time within one (1) year following such termination
of employment or relationship as a consultant or director; (ii) the
optionee dies while in the employ of or while serving as a consultant
or director to the Company or an Affiliate, or within not more than
three (3) months after termination of such employment or relationship
as a consultant or director, in which case the Option may, but need
not, provide that it may be exercised at any time within eighteen
(18) months following the death of the optionee by the person or
persons to whom the optionee's rights under such Option pass by will
or by the laws of descent and distribution; or (iii) the Option by
its term specifies either (A) that it shall terminate sooner than
three (3) months after termination of the optionee's employment or
relationship as a consultant or director with the Company or an
Affiliate; or (B) that it may be exercised more than three (3) months
after termination of the optionee's employment or relationship as a
consultant or director with the Company or an Affiliate. This
subparagraph 5(g) shall not be construed to extend the term of any
Option or to permit anyone to exercise the Option after expiration of
its term, nor shall it be construed to increase the number of shares
as to which any Option is exercisable from the amount exercisable on
the date of termination of the optionee's employment or relationship
as a consultant or director.
(h) The Option may, but need not, include a provision
whereby the optionee may elect at any time during the term of his or
her employment or relationship as a consultant or director with the
Company or any Affiliate to exercise the Option as to any part or all
of the shares subject to the Option prior to the stated vesting dates
of the Option. Any shares so purchased from any unvested installment
or Option may be subject to a repurchase right in favor of the
Company or to any other restriction the Board or the Committee
determines to be appropriate.
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(i) To the extent provided by the terms of an Option, each
optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the
following means or by a combination of such means: (i) tendering a
cash payment; (ii) authorizing the Company to withhold from the
shares of the Common Stock otherwise issuable to the optionee as a
result of the exercise of the Option a number of shares having a fair
market value less than or equal to the amount of the withholding tax
obligation; or (iii) delivering to the Company owned and unencumbered
shares of the Common Stock having a fair market value less than or
equal to the amount of the withholding tax obligation.
(j) Without in any way limiting the authority of the Board
or Committee to make or not to make grants of Options hereunder, the
Board or Committee shall have the authority (but not an obligation)
to include as part of any Option agreement a provision entitling the
optionee to a further Option (a "Re-Load Option") in the event the
optionee exercises the Option evidenced by the Option agreement, in
whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option
agreement. Any such Re-Load Option (i) shall be for a number of
shares equal to the number of shares surrendered as part or all of
the exercise price of such Option; (ii) shall have an expiration date
which is the same as the expiration date of the Option the exercise
of which gave rise to such Re-Load Option; and (iii) shall have an
exercise price which is equal to one hundred percent (100%) of the
fair market value of the Common Stock subject to the Re-Load Option
on the date of exercise of the original Option or, in the case of a
Re-Load Option which is an Incentive Stock Option and which is
granted to a 10% stockholder (as defined in subparagraph 4(c)), shall
have an exercise price which is equal to one hundred and ten percent
(110%) of the fair market value of the Common Stock subject to the
Re-Load Option on the date of exercise of the original Option.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonqualified Stock Option, as the Board or Committee may designate at
the time of the grant of the original Option, provided, however, that
the designation of any Re-Load Option as an Incentive Stock Option
shall be subject to the one hundred thousand dollars ($100,000)
annual limitation on exercisability of Incentive Stock Options
described in subparagraph 3(c) of the Plan and in Section 422(d) of
the Code. There shall be no Re-Load Options on a Re-Load Option.
Any such Re-Load Option shall be subject to the availability of
sufficient shares under subparagraph 3(a) and shall be subject to
such other terms and conditions as the Board or Committee may
determine.
6. TERMS OF STOCK BONUSES AND PURCHASES OF
RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as
the Board or the Committee shall deem appropriate. The terms and
conditions of stock bonus or restricted stock purchase agreements may
change from time to time, and the terms and conditions of separate
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agreements need not be identical, but each stock bonus or restricted
stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the
substance of each of the following provisions as appropriate:
(a) The purchase price under each stock purchase agreement
shall be such amount as the Board or Committee shall determine and
designate in such agreement. Notwithstanding the foregoing, the
Board or the Committee may determine that eligible participants in
the Plan may be awarded stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or
for its benefit.
(b) No rights under a stock bonus or restricted stock
purchase agreement shall be assignable by any participant under the
Plan, either voluntarily or by operation of law, except where such
assignment is required by law or expressly authorized by the terms of
the applicable stock bonus or restricted stock purchase agreement.
(c) The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the
time of purchase; (ii) at the discretion of the Board or the
Committee, according to a deferred payment or other arrangement with
the person to whom the Common Stock is sold; or (iii) in any other
form of legal consideration that may be acceptable to the Board or
the Committee in their discretion; including but not limited to
payment of the purchase price pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which
results in the receipt of cash (or a check) by the Company before
Common Stock is issued or the receipt of irrevocable instruction to
pay the aggregate exercise price of the Company from the sales
proceeds before Common Stock is issued. Notwithstanding the
foregoing, the Board or the Committee to which administration of the
Plan has been delegated may award Common Stock pursuant to a stock
bonus agreement in consideration for past services actually rendered
to the Company or for its benefit.
(d) Shares of Common Stock sold or awarded under the Plan
may, but need not, be subject to a repurchase option in favor of the
Company in accordance with a vesting schedule to be determined by the
Board or the Committee.
(e) In the event a person ceases to be an employee of or
ceases to serve as a director or consultant to the Company or an
Affiliate, the Company may repurchase or otherwise reacquire any or
all of the shares of Common Stock held by that person which have not
vested as of the date of termination under the terms of the stock
bonus or restricted stock purchase agreement between the Company and
such person.
7. CANCELLATION AND RE-GRANT OF OPTIONS.
The Board or the Committee shall have the authority to
effect, at any time and from time to time, with the consent of the
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affected holders of Options, (i) the repricing of any outstanding
Options under the Plan and/or (ii) the cancellation of any
outstanding Options under the Plan and the grant in substitution
therefor of new Options under the Plan covering the same or different
numbers of shares of Common Stock, but having an exercise price per
share not less than one hundred percent (100%) of the fair market
value per share of Common Stock on the new grant date or, in the case
of a 10% stockholder (as defined in subparagraph 4(c)), not less than
one hundred and ten percent (110%) of the fair market value per share
of Common Stock on the new grant date.
8. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards granted under the
Plan, the Company shall keep available at all times the number of
shares of Common Stock required to satisfy such Stock Awards up to
the number of shares of Common Stock authorized under the Plan.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority
as may be required to issue and sell shares of Common Stock under the
Stock Awards granted under the Plan; provided, however, that this
undertaking shall not require the Company to register under the
Securities Act either the Plan, any Stock Award granted under the
Plan or any Common Stock issued or issuable pursuant to any such
Stock Award. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority
that counsel for the Company deems necessary for the lawful issuance
and sale of Common Stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell Common
Stock upon exercise of such Stock Awards unless and until such
authority is obtained.
9. USE OF PROCEEDS FROM COMMON STOCK.
Proceeds from the sale of Common Stock pursuant to Stock
Awards granted under the Plan shall constitute general funds of the
Company.
10. MISCELLANEOUS.
(a) The Board or Committee shall have the power to
accelerate the time during which a Stock Award may be exercised or
the time during which a Stock Award or any part thereof will vest,
notwithstanding the provisions in the Stock Award stating the time
during which it may be exercised or the time during which it will
vest. Each Option providing for vesting pursuant to subparagraph
5(e) shall also provide that if the employee's employment or a
director's or consultant's affiliation with the Company is terminated
by reason of death or disability (within the meaning of Title II or
XVI of the Social Security Act and as determined by the Social
Security Administration), the vesting schedule of Options granted to
such employee, director or consultant or to the Trusts of such
employee, director or consultant shall be accelerated by twelve
months for each
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full year the employee has been employed by or the director or
consultant has been affiliated with the Company. Options granted
under the Plan that are outstanding on February 25, 1992, shall be
amended to include the accelerated vesting upon death provided for in
the preceding sentence of this paragraph 10(a) and Options granted
under the Plan that are outstanding on June 18, 1996, shall be
amended to include the accelerated vesting upon disability provided
for in the preceding sentence of this paragraph 10(a).
(b) Neither an optionee nor any person to whom an Option
is transferred under the provisions of the Plan shall be deemed to be
the holder of, or to have any of the rights of a holder with respect
to, any shares subject to such Option unless and until such person
has satisfied all requirements for exercise of the Option pursuant to
its terms.
(c) Nothing in the Plan or any instrument executed or
Stock Award granted pursuant thereto shall confer upon any eligible
employee, consultant, director, optionee or holder of Stock Awards
under the Plan any right to continue in the employ of the Company or
any Affiliate or to continue acting as a consultant or director or
shall affect the right of the Company or any Affiliate to terminate
the employment or consulting relationship or directorship of any
eligible employee, consultant, director, optionee or holder of Stock
Awards under the Plan with or without cause. In the event that a
holder of Stock Awards under the Plan is permitted or otherwise
entitled to take a leave of absence, the Company shall have the
unilateral right to (i) determine whether such leave of absence will
be treated as a termination of employment or relationship as
consultant or director for purposes hereof, and (ii) suspend or
otherwise delay the time or times at which exercisability or vesting
would otherwise occur with respect to any outstanding Stock Awards
under the Plan.
11. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
If any change is made in the Common Stock subject to the
Plan, or subject to any Stock Award granted under the Plan (through
merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding
Stock Awards will be appropriately adjusted in the class(es) and
maximum number of shares subject to the Plan, the maximum number of
shares which may be granted to a participant in a calendar year, and
the class(es) and number of shares and price per share of stock
subject to outstanding Stock Awards. Such adjustment shall be made
by the Board or the Committee, the determination of which shall be
final, binding and conclusive. (The conversion of any convertible
securities of the Company shall not be treated as a "transaction not
involving the receipt of consideration".)
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12. CHANGE OF CONTROL.
(a) Notwithstanding anything to the contrary in this Plan,
in the event of a Change in Control (as hereinafter defined), then,
to the extent permitted by applicable law: (i) the time during which
Stock Awards become vested shall automatically be accelerated so that
the unvested portions of all Stock Awards shall be vested prior to
the Change in Control and (ii) the time during which the Options may
be exercised shall automatically be accelerated to prior to the
Change in Control. Upon and following the acceleration of the
vesting and exercise periods, at the election of the holder of the
Stock Award, the Stock Award may be: (x) exercised (with respect to
Options) or, if the surviving or acquiring corporation agrees to
assume the Stock Awards or substitute similar stock awards, (y)
assumed; or (z) replaced with substitute stock awards. Options not
exercised, substituted or assumed prior to or upon the Change in
Control shall be terminated.
(b) For purposes of the Plan, a "Change of Control" shall
be deemed to have occurred at any of the following times:
(i) Upon the acquisition (other than from the
Company) by any person, entity or "group," within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act (excluding, for this
purpose, the Company or its affiliates, or any employee benefit plan
of the Company or its affiliates which acquires beneficial ownership
of voting securities of the Company), of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of
fifty percent (50%) or more of either the then outstanding shares of
Common Stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the
election of directors; or
(ii) At the time individuals who, as of April 2,
1991, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to April 2, 1991, whose
election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or nomination
of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)
shall be, for purposes of the Plan, considered as though such person
were a member of the Incumbent Board; or
(iii) Immediately prior to the consummation by the
Company of a reorganization, merger, consolidation, (in each case,
with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or
consolidated company's then
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outstanding voting securities) or a liquidation or dissolution of the
Company or of the sale of all or substantially all of the assets of
the Company; or
(iv) The occurrence of any other event which the
Incumbent Board in its sole discretion determines constitutes a
Change of Control.
13. QUALIFIED DOMESTIC RELATIONS ORDERS
(a) Anything in the Plan to the contrary notwithstanding,
rights under Stock Awards may be assigned to an Alternate Payee to
the extent that a QDRO so provides. (The terms "Alternate Payee" and
"QDRO" are defined in subsection (c) below.) The assignment of a
Stock Award to an Alternate Payee pursuant to a QDRO shall not be
treated as having caused a new grant. The transfer of an Incentive
Stock Option to an Alternate Payee may, however, cause it to fail to
qualify as an Incentive Stock Option. If a Stock Award is assigned
to an Alternate Payee, the Alternate Payee generally has the same
rights as the grantee under the terms of the Plan; provided however,
that (1) the Stock Award shall be subject to the same vesting terms
and exercise period as if the Stock Award were still held by the
grantee, (2) an Alternate Payee may not transfer a Stock Award and
(3) an Alternate Payee is ineligible for Re-Load Options.
(b) In the event of the Plan administrator's receipt of a
domestic relations order or other notice of adverse claim by an
Alternate Payee of a grantee of a Stock Award, transfer of the
proceeds of the exercise of such Stock Award, whether in the form of
cash, stock or other property, may be suspended. Such proceeds shall
thereafter be transferred pursuant to the terms of a QDRO or other
agreement between the grantee and Alternate Payee. A grantee's
ability to exercise a Stock Award may be barred if the Plan
administrator receives a court order directing the Plan administrator
not to permit exercise.
(c) The word "QDRO" as used in the Plan shall mean a court
order (1) that creates or recognizes the right of the spouse, former
spouse or child (an "Alternate Payee") of an individual who is
granted a Stock Award to an interest in such Stock Award relating to
marital property rights or support obligations and (2) that the
administrator of the Plan determines would be a "qualified domestic
relations order," as that term is defined in section 414(p) of the
Code and section 206(d) of the Employee Retirement Income Security
Act ("ERISA"), but for the fact that the Plan is not a plan described
in section 3(3) of ERISA.
14. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may
amend the Plan. However, except as provided in paragraph 11 relating
to adjustments upon changes in the Common Stock, no amendment shall
be effective unless approved by the stockholders of the Company
within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
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(i) Increase the number of shares reserved for Stock
Awards under the Plan;
(ii) Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires
stockholder approval in order for the Plan to satisfy the
requirements of Section 422(b) of the Code); or
(iii) Modify the Plan in any other way if such
modification requires stockholder approval in order for the Plan to
satisfy the requirements of Section 422(b) of the Code.
(b) The Board may in its sole discretion submit any other
amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the
requirements of Section 162(m) of the Code and the regulations
promulgated thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of
compensation to certain executive officers.
(c) It is expressly contemplated that the Board may amend
the Plan in any respect the Board deems necessary or advisable to
provide optionees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations
promulgated thereunder relating to employee Incentive Stock Options
and/or to bring the Plan and/or Options granted under it into
compliance therewith.
(d) Rights and obligations under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment
of the Plan, unless: (i) the Company requests the consent of the
person to whom the Stock Award was granted; and (ii) such person
consents in writing.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on December
31, 2000. No Stock Awards may be granted under the Plan while the
Plan is suspended or after it is terminated.
(b) Rights and obligations under any Stock Awards granted
while the Plan is in effect shall not be impaired by suspension or
termination of the Plan, except with the consent of the person to
whom the Stock Award was granted.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board.
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EXHIBIT
AMGEN INC.
AMENDED AND RESTATED 1984 STOCK OPTION PLAN
1. PURPOSE.
(a) The purpose of the Plan is to provide a means by
which selected employees, directors (if declared eligible under
paragraph 4) and consultants to Amgen Inc., a Delaware corporation
(the "Company"), and its Affiliates, as defined in subparagraph
1(b), directly or indirectly through trusts for the benefit of their
families, may be given an opportunity to purchase stock of the
Company.
(b) The word "Affiliate" as used in the Plan means any
parent corporation or subsidiary corporation of the Company, as
those terms are defined in Sections 424(e) and (f), respectively, of
the Internal Revenue Code of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain
the services of persons now holding positions with the Company, to
secure and retain the services of persons capable of filling such
positions, and to provide incentives for such persons to exert
maximum efforts for the success of the Company.
(d) The Company intends that the options issued under the
Plan shall, in the discretion of the Board of Directors of the
Company (the "Board") or any committee to which responsibility for
administration of the Plan has been delegated pursuant to
subparagraph 2(c), be either incentive stock options as that term is
used in Section 422 of the Code ("Incentive Stock Options"), or
options which do not qualify as Incentive Stock Options
("Nonqualified Stock Options"). (Note: Certain Nonqualified Stock
Options granted under prior versions of the Plan are labeled
"Nonincentive Stock Options".) All options shall be separately
designated Incentive Stock Options or Nonqualified Stock Options at
the time of grant, and in such form as issued pursuant to paragraph
5, and a separate certificate or certificates shall be issued for
shares purchased on exercise of each type of option.
(e) The word "Trust" as used in the Plan shall mean a
trust created for the benefit of the employee, director or
consultant, his or her spouse, or members of their immediate family.
The word optionee shall mean the person to whom the option is granted
or the employee, director or consultant for whose benefit the option
is granted to a Trust, as the context shall require.
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2. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless
and until the Board delegates administration to a committee, as
provided in subparagraph 2(c).
(b) The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the
persons eligible under the Plan shall be granted options; when and
how the option shall be granted; whether the option will be an
Incentive Stock Option or a Nonqualified Stock Option; the
provisions of each option granted (which need not be identical),
including the time or times during the term of each option within
which all or portions of such option may be exercised; and the
number of shares for which an option shall be granted to each such
person.
(2) To construe and interpret the Plan and options
granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of
this power, may correct any defect, omission or inconsistency in the
Plan or in any option agreement, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(3) To amend the Plan as provided in paragraph 10.
(4) Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient to
promote the best interests of the Company.
(c) The Board may delegate administration of the Plan to
a committee composed of not fewer than two (2) members of the Board
(the "Committee"). One or more of these members may be a "Non-
Employee Director" (a director who (i) is not currently an officer
of the Company or a parent or subsidiary of the Company (as defined
in Rule 16a-1(f) promulgated by the Securities and Exchange
Commission under Section 16 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) or an employee of the Company or a
parent or subsidiary of the Company; (ii) does not receive
compensation from the Company or a parent or subsidiary of the
Company for services rendered in any capacity other than as a member
of the Board (including a consultant) in an amount required to be
disclosed to the Company's stockholders under Rule 404 of Regulation
S-K promulgated by the Securities and Exchange Commission ("Rule
404"); (iii) does not possess an interest in any other transaction
required to be disclosed under Rule 404; or (iv) is not engaged in a
business relationship required to be disclosed under Rule 404, as
all of these provisions are interpreted by the Securities and
Exchange Commission under Rule 16b-3 promulgated under the Exchange
Act.) If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
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theretofore possessed by the Board, subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as
may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the
administration of the Plan. Notwithstanding anything else in this
subparagraph 2(c) to the contrary, at any time the Board or the
Committee may delegate to a committee of one or more members of the
Board the authority to grant or amend options to all employees,
directors or consultants or any portion or class thereof.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 9 relating to
adjustments upon changes in stock, the stock that may be sold
pursuant to options granted under the Plan shall not exceed in the
aggregate twenty million four hundred thousand (20,400,000) shares
of the Company's $.0001 par value common stock (the "Common Stock").
If any option granted under the Plan shall for any reason expire or
otherwise terminate without having been exercised in full, the
Common Stock not purchased under such option shall again become
available for the Plan.
(b) The Common Stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
(c) An Incentive Stock Option may be granted to an
eligible person under the Plan only if the aggregate fair market
value (determined as of the times the respective Incentive Stock
Options are granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by such
optionee during any calendar year under all such plans of the
Company and its Affiliates does not exceed one hundred thousand
dollars ($100,000). Should it be determined that any portion of an
Incentive Stock Option granted under the Plan does not qualify for
treatment as an Incentive Stock Option by reason of exceeding such
maximum, such option shall be considered a Nonqualified Stock Option
to the extent, but only to the extent, of such excess. Should it be
determined that an entire option does not qualify for treatment as
an Incentive Stock Option, such option shall, in its entirety, be
considered a Nonqualified Stock Option.
4. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to
employees of the Company or its Affiliates, and a director or
officer of the Company shall not be eligible to receive Incentive
Stock Options unless such director or officer is also an employee of
the Company or any Affiliate. Nonqualified Stock Options may be
granted to employees or directors of, or consultants to, the Company
or its Affiliates or to Trusts of any such employee, director or
consultant.
(b) A director shall in no event be eligible for the
benefits of the Plan unless and until such director is expressly
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declared eligible to participate in the Plan by action of the Board
or the Committee, and only if, at any time discretion is exercised
by the Board in the selection of a director as a person to whom
options may be granted, or in the determination of the number of
shares which may be covered by options granted to a director, the
Plan complies with the requirements of Rule 16b-3 promulgated under
the Exchange Act. The Board shall otherwise comply with the
requirements of Rule 16b-3 promulgated under the Exchange Act, as
from time to time in effect, unless the Board expressly decides not
to so comply with respect to one or more specified options with the
concurrence of the affected optionee or optionees
(c) No person shall be eligible for the grant of an
Incentive Stock Option under the Plan if, at the time of grant, such
person owns (or is deemed to own pursuant to Section 424(d) of the
Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of
any of its Affiliates unless the exercise price of such Incentive
Stock Option is at least one hundred ten percent (110%) of the fair
market value of the Common Stock at the date of grant and the term
of the Incentive Stock Option does not exceed five (5) years from
the date of grant.
5. OPTION PROVISIONS.
Each option shall be in such form and shall contain such
terms and conditions as the Board or the Committee shall deem
appropriate. The provisions of separate options need not be
identical, but each option shall include (through incorporation of
provisions hereof by reference in the option or otherwise) the
substance of each of the following provisions:
(a) The term of any option shall not be greater than ten
(10) years from the date it was granted.
(b) The exercise price of each Incentive Stock Option
shall be not less than one hundred percent (100%) of the fair market
value of the Common Stock subject to the option on the date the
option is granted. The exercise price of each Nonqualified Stock
Option shall be not less than eighty-five percent (85%) of the fair
market value of the Common Stock subject to the option on the date
the option is granted.
(c) The purchase price of Common Stock acquired pursuant
to an option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash at the time the option
is exercised, or (ii) at the discretion of the Board or the
Committee, either at the time of grant or exercise of the option (A)
by delivery to the Company of other Common Stock of the Company, (B)
according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use
of other Common Stock of the Company) with the person to whom the
option is granted or to whom the option is transferred pursuant to
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subparagraph 5(d), or (C) in any other form of legal consideration
that may be acceptable to the Board or the Committee in their
discretion; including but not limited to payment of the purchase
price pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board which results in the
receipt of cash (or a check) by the Company before Common Stock is
issued or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds
before Common Stock is issued.
In the case of any deferred payment arrangement, interest shall
be payable at least annually and shall be charged at not less than
the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any
amounts other than amounts stated to be interest under the deferred
payment arrangement.
(d) An option granted to a natural person shall be
exercisable during the lifetime of such person only by such person,
provided that such person during such person's lifetime may
designate a Trust to be such person's beneficiary with respect to
any Incentive Stock Options granted after February 25, 1992 and with
respect to any Nonqualified Stock Options, and such beneficiary
shall, after the death of the person to whom the option was granted,
have all the rights that such person has while living, including the
right to exercise the option. In the absence of such designation,
after the death of the person to whom the option is granted, the
option shall be exercisable by the person or persons to whom the
optionee's rights under such option pass by will or by the laws of
descent and distribution..
(e) The total number of shares of Common Stock subject to
an option may, but need not, be allotted in periodic installments
(which may, but need not, be equal). From time to time during each
of such installment periods, the option may be exercised with
respect to some or all of the shares allotted to that period, and/or
with respect to some or all of the shares allotted to any prior
period as to which the option was not fully exercised. During the
remainder of the term of the option (if its term extends beyond the
end of the installment periods), the option may be exercised from
time to time with respect to any shares then remaining subject to
the option. The provisions of this subparagraph 5(e) are subject to
any option provisions governing the minimum number of shares as to
which an option may be exercised.
(f) The Company may require any optionee, or any person
to whom an option is transferred under subparagraph 5(d), as a
condition of exercising any such option: (1) to give written
assurances satisfactory to the Company as to the optionee's
knowledge and experience in financial and business matters and/or to
employ a purchaser representative who has such knowledge and
experience in financial and business matters, and that he or she is
capable of evaluating, alone or together with the purchaser's representative,
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the merits and risks of exercising the option; and (2) to give
written assurances satisfactory to the Company stating that such
person is acquiring the Common Stock subject to the option for such
person's own account and not with any present intention of selling
or otherwise distributing the Common Stock. These requirements, and
any assurances given pursuant to such requirements, shall be
inoperative if (i) the issuance of the shares upon the exercise of
the option has been registered under a then currently effective
registration statement under the Securities Act of 1933, as amended
(the "Securities Act"); or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then
applicable federal securities laws.
(g) An option shall terminate three (3) months after
termination of the optionee's employment or relationship as a
director or consultant with the Company or an Affiliate, unless (i)
such termination is due to such person's permanent and total
disability, within the meaning of Section 422(c)(6) of the Code, in
which case the option may, but need not, provide that it may be
exercised at any time within one (1) year following such termination
of employment or relationship as a director or consultant; or (ii)
the optionee dies while in the employ of or while serving as a
director or consultant to the Company or an Affiliate, or within not
more than three (3) months after termination of such employment or
relationship as a director or consultant, in which case the option
may, but need not, provide that it may be exercised at any time
within eighteen (18) months following the death of the optionee by
the person or persons to whom the optionee's rights under such
option pass by will or by the laws of descent and distribution;
(iii) the option by its terms specifies that it shall terminate
sooner than three (3) months after termination of the optionee's
employment or relationship as a director or consultant; or (iv) that
it may be exercised more than three (3) months after termination of
the optionee's employment or relationship as a director or
consultant with the Company or an Affiliate. This subparagraph 5(g)
shall not be construed to extend the term of any option or to permit
anyone to exercise the option after expiration of its term, nor
shall it be construed to increase the number of shares as to which
any option is exercisable from the amount exercisable on the date of
termination of the optionee's employment or relationship as a
consultant.
(h) The option may, but need not, include a provision
whereby the optionee may elect at any time during the term of his or
her employment or relationship as a director or consultant with the
Company or any Affiliate to exercise the option as to any part or
all of the shares subject to the option prior to the stated vesting
date of the option or of any installment or installments specified
in the option. Any shares so purchased from any unvested
installment or option may be subject to a repurchase right in favor
of the Company or to any other restriction the Board or the
Committee determines to be appropriate.
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(i) To the extent provided by the terms of an option, the
optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such option by any of the
following means or by a combination of such means: (1) tendering a
cash payment; (2) authorizing the Company to withhold from the
shares of the Common Stock otherwise issuable to the participant as
a result of the exercise of the stock option a number of shares
having a fair market value less than or equal to the amount of the
withholding tax obligation; or (3) delivering to the Company owned
and unencumbered shares of the Common Stock having a fair market
value less than or equal to the amount of the withholding tax
obligation.
(j) Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options
hereunder, the Board or Committee shall have the authority (but not
an obligation) to include as part of any Option agreement, (and all
outstanding Nonqualified Stock Options, to the extent there are
unvested options on June 30, 1991, shall be amended to include), a
provision entitling the optionee to a further Option (a "Re-Load
Option") in the event the optionee exercises the Option evidenced by
the Option agreement, in whole or in part, by surrendering other
shares of Common Stock in accordance with this Plan and the terms
and conditions of the Option agreement. Any such Re-Load Option (i)
shall be for a number of shares equal to the number of shares
surrendered as part or all of the exercise price of such Option (or
surrendered for shares which were unvested on June 30, 1991 in the
case of an amended Nonqualified Stock Option); (ii) shall have an
expiration date which is the same as the expiration date of the
Option the exercise of which gave rise to such Re-Load Option; (iii)
shall have an exercise price which is equal to one hundred percent
(100%) of the fair market value of the Common Stock subject to the
Re-Load Option on the date of exercise of the original Option or, in
the case of a Re-Load Option which is an Incentive Stock Option and
which is granted to a 10% stockholder (as defined in subparagraph
4(c)), shall have an exercise price which is equal to one hundred
and ten percent (110%) of the fair market value of the Common Stock
subject to the Re-Load Option on the date of exercise of the
original Option; and (iv) shall be granted under the Amgen Inc. 1988
Stock Option Plan, if sufficient shares are available under
subparagraph 3(a) of that Plan, and if sufficient shares of Common
Stock are not so available, shall be granted under the Amgen Inc.
1991 Equity Incentive Plan to the extent shares of Common Stock are
available under that Plan.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonqualified Stock Option, as the Board or Committee may designate
at the time of the grant of the original Option, except that all Re-
Load Options on unvested shares (as of June 30, 1991) of
Nonqualified Stock Options shall be Nonqualified Stock Options,
provided, however, that the designation of any Re-Load Option as an
Incentive Stock Option shall be subject to the one hundred thousand
dollars ($100,000) annual limitation on exercisability of Incentive
Stock Options described in subparagraph 3(c) of the Plan and in
Section 422(d) of the Code. There shall be no Re-Load Options on a
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Re-Load Option. Any such Re-Load Option shall be subject to the
availability of sufficient shares under the Amgen Inc. 1988 Stock
Option Plan or under the Amgen Inc. 1991 Equity Incentive Plan and
shall be subject to such other terms and conditions as the Board or
Committee may determine.
6. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the
Plan, the Company shall keep available at all times the number of
shares of Common Stock required to satisfy such options.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of stock upon
exercise of the options granted under the Plan; provided, however,
that this undertaking shall not require the Company to register
under the Securities Act of 1933, as amended either the Plan, any
option granted under the Plan, or any Common Stock issued or
issuable pursuant to any such option. If, after reasonable efforts,
the Company is unable to obtain from any such regulatory commission
or agency the authority that counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue
and sell Common Stock upon exercise of such options unless and until
such authority is obtained.
7. USE OF PROCEEDS FROM COMMON STOCK.
Proceeds from the sale of Common Stock pursuant to options
granted under the Plan shall constitute general funds of the
Company.
8. MISCELLANEOUS.
(a) The Board or the Committee shall have the power to
accelerate the time during which an option may be exercised or the
time during which an option or any part thereof will vest pursuant to
subparagraph 5(e), notwithstanding the provisions in the option
stating the time during which it may be exercised or the time during
which it will vest. Each option providing for vesting pursuant to
subparagraph 5(e) shall also provide that if the employee, director
or consultant should die during the term of his or her employment
with the Company or his or her affiliation with the Company as a
director or consultant, the vesting schedule of options granted to
such employee, director or consultant or to the Trusts of such
employee, director or consultant shall be accelerated by twelve
months for each full year the employee has been employed by or the
director or consultant has been affiliated with the Company. Options
granted under the Plan that are outstanding on February 25, 1992,
shall be amended to include the accelerated vesting provided for in
the preceding sentence of this Paragraph 8(a) (without including the
references to directors).
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(b) Neither an optionee nor any person to whom an option
is transferred under subparagraph 5(d) shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to,
any shares subject to such option unless and until such person has
satisfied all requirements for exercise of the option pursuant to
its terms.
(c) Throughout the term of any option granted pursuant to
the Plan, the Company shall make available to the holder of such
option, not later than one hundred twenty (120) days after the close
of each of the Company's fiscal years during the option term, upon
request, such financial and other information regarding the Company
as comprises the annual report to the shareholders of the Company
provided for in the bylaws of the Company.
(d) Nothing in the Plan or any instrument executed or
option granted pursuant thereto shall confer upon any eligible
participant or optionee any right to continue in the employ of the
Company or any Affiliate or shall affect the right of the Company or
any Affiliate to terminate the employment of any eligible
participant or optionee with or without cause.
9. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
(a) If any change is made in the Common Stock subject to
the Plan, or subject to any option granted under the Plan (through
merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding
options will be appropriately adjusted in the class(es) and the
maximum number of shares subject to the Plan and the class(es) and
the number of shares and price per share of Common Stock subject to
outstanding options. Such adjustments shall be made by the Board or
the Committee, the determination of which shall be final, binding
and conclusive. (The conversion of any convertible securities of
the Company shall not be treated as a "transaction not involving the
receipt of consideration by the Company".)
(b) Notwithstanding anything to the contrary in this Plan,
in the event of a Change in Control (as hereinafter defined), then,
to the extent permitted by applicable law: (i) the time during which
options become vested shall automatically be accelerated so that the
unvested portions of all options shall be vested prior to the Change
in Control and (ii) the time during which the options may be
exercised shall automatically be accelerated to prior to the Change
of Control. Upon or after the acceleration of the vesting and
exercise periods, at the election of the holders of the options, the
options may be: (x) exercised or, if the surviving or acquiring
corporation agrees to assume the options or substitute similar
options, (y) assumed; or (z) replaced with substitute options.
Options not exercised, substituted or assumed prior to or upon the
Change in Control shall be terminated.
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(c) For purposes of the Plan, a "Change of Control" shall
be deemed to have occurred at any of the following times:
(i) Upon the acquisition (other than from the
Company) by any person, entity or "group," within the meaning of
Section 13(d) (3) or 14(d) (2) of the Exchange Act (excluding, for
this purpose, the Company or its affiliates, or any employee benefit
plan of the Company or its affiliates which acquires beneficial
ownership of voting securities of the Company), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifty percent (50%) or more of either the then
outstanding shares of Common Stock or the combined voting power of
the Company's then outstanding voting securities entitled to vote
generally in the election of directors; or
(ii) At the time individuals who, as of October 23,
1995, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to October 23, 1995, whose
election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or nomination
of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in
Rule 14A-11 of Regulation 14A promulgated under the Exchange Act)
shall be, for purposes of the Plan, considered as though such person
were a member of the Incumbent Board; or
(iii) Immediately prior to the consummation by the
Company of a reorganization, merger, consolidation, (in each case,
with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities) or a
liquidation or dissolution of the Company or of the sale of all or
substantially all of the assets of the Company; or
(iv) The occurrence of any other event which the
Incumbent Board in its sole discretion determines constitutes a
Change of Control.
10. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may
amend the Plan. However, except as provided in paragraph 9 relating
to adjustments upon changes in the Common Stock, no amendment shall
be effective unless approved by the stockholders of the Company
within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
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(i) Increase the number of shares reserved for
options under the Plan;
(ii) Materially modify the requirements as to
eligibility for participation in the Plan;
(iii) Materially increase the benefits accruing to
participants under the Plan; or
(iv) Require stockholder approval in order to comply
with the requirements of Rule 16b-3.
(b) It is expressly contemplated that the Board may amend
the Plan in any respect the Board deems necessary or advisable to
provide optionees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to
bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.
(c) Rights and obligations under any option granted
before amendment of the Plan shall not be impaired by any amendment
of the Plan, unless (i) the Company requests the consent of the
person to whom the option was granted, and (ii) such person consents
in writing.
11. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on March
16, 1994. No options may be granted under the Plan while the Plan
is suspended or after it is terminated.
(b) Rights and obligations under any option granted while
the Plan is in effect shall not be impaired by suspension or
termination of the Plan, except with the consent of the person to
whom the option was granted.
12. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the
Board.
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EXHIBIT
AMGEN INC.
AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
(a) The purpose of the Amgen Inc. Employee Stock Purchase
Plan (the "Plan") is to provide a means by which employees of Amgen
Inc., a Delaware corporation (the "Company"), and its Affiliates, as
defined in subparagraph 1(b), which are designated as provided in
subparagraph 2(b), may be given an opportunity to purchase stock of
the Company.
(b) The word "Affiliate" as used in the Plan means any
parent corporation or subsidiary corporation of the Company, as those
terms are defined in Sections 424(e) and (f), respectively, of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of its employees, to secure and retain the services of new
employees, and to provide incentives for such persons to exert
maximum efforts for the success of the Company.
(d) The Company intends that the rights to purchase stock
of the Company granted under the Plan be considered options issued
under an "employee stock purchase plan" as that term is defined in
Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of
Directors (the "Board") of the Company unless and until the Board
delegates administration to a Committee, as provided in subparagraph
2(c). Whether or not the Board has delegated administration, the
Board shall have the final power to determine all questions of policy
and expediency that may arise in the administration of the Plan.
(b) The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase
stock of the Company shall be granted and the provisions of each
offering of such rights (which need not be identical).
(ii) To designate from time to time which Affiliates
of the Company shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights
granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of
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this power, may correct any defect, omission or inconsistency in the
Plan, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient to
promote the best interests of the Company.
(c) The Board may delegate administration of the Plan to a
Committee composed of not fewer than two (2) members of the Board
(the "Committee"). If administration is delegated to a Committee,
the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, subject,
however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board
may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to
adjustments upon changes in stock, the stock that may be sold
pursuant to rights granted under the Plan shall not exceed in the
aggregate six million (6,000,000)(*1) shares of the Company's $.0001
par value common stock (the "Common Stock"). If any right granted
under the Plan shall for any reason terminate without having been
exercised, the Common Stock not purchased under such right shall
again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares
or reacquired shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
The Board or the Committee may from time to time grant or
provide for the grant of rights to purchase Common Stock of the
Company under the Plan to eligible employees (an "Offering") on a
date or dates (the "Offering Date(s)") selected by the Board or the
Committee. Each Offering shall be in such form and shall contain
such terms and conditions as the Board or the Committee shall deem
appropriate. If an employee has more than one right outstanding
under the Plan, unless he or she otherwise indicates in agreements or
notices delivered hereunder: (1) each agreement or notice delivered
by that employee will be deemed to apply to all of his or her rights
under the Plan, and (2) a right with a lower exercise price (or an
earlier-granted right, if two rights have identical exercise prices),
will be exercised to the fullest possible extent before a right with
a higher exercise price (or a later-granted right, if two rights have
identical exercise prices) will be exercised. The provisions of
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separate Offerings need not be identical, but each Offering shall
include (through incorporation of the provisions of this Plan by
reference in the Offering or otherwise) the substance of the
provisions contained in paragraphs 5 through 8, inclusive.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company
or, as the Board or the Committee may designate as provided in
subparagraph 2(b), to employees of any Affiliate of the Company.
Except as provided in subparagraph 5(b), an employee of the Company
or any Affiliate shall not be eligible to be granted rights under the
Plan, unless, on the Offering Date, such employee has been in the
employ of the Company or any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but
in no event shall the required period of continuous employment be
equal to or greater than two (2) years. In addition, unless
otherwise determined by the Board or the Committee and set forth in
the terms of the applicable Offering, no employee of the Company or
any Affiliate shall be eligible to be granted rights under the Plan,
unless, on the Offering Date, such employee's customary employment
with the Company or such Affiliate is at least twenty (20) hours per
week and at least five (5) months per calendar year.
(b) The Board or the Committee may provide that, each
person who, during the course of an Offering, first becomes an
eligible employee of the Company or designated Affiliate will, on a
date or dates specified in the Offering which coincides with the day
on which such person becomes an eligible employee or occurs
thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall
have the same characteristics as any rights originally granted under
that Offering, as described herein, except that:
(i) the date on which such right is granted shall
be the "Offering Date" of such right for all purposes, including
determination of the exercise price of such right, provided, however,
that if the fair market value of the Common Stock on the date on
which such right is granted is less than the fair market value of the
Common Stock on the first day of the Offering, then, solely for the
purpose of determining the exercise price of such right, the first
day of the Offering shall be the "Offering Date" for such right;
(ii) the Purchase Period (as defined below) for such
right shall begin on its Offering Date and end coincident with the
end of such Offering; and
(iii) the Board or the Committee may provide that if
such person first becomes an eligible employee within a specified
period of time before the end of the Purchase Period (as defined
below) for such Offering, he or she will not receive any right under
that Offering.
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(c) No employee shall be eligible for the grant of any
rights under the Plan if, immediately after any such rights are
granted, such employee owns stock possessing five percent (5%) or
more of the total combined voting power or value of all classes of
stock of the Company or of any Affiliate. For purposes of this
subparagraph 5(c), the rules of Section 424(d) of the Code shall
apply in determining the stock ownership of any employee, and stock
which such employee may purchase under all outstanding rights and
options shall be treated as stock owned by such employee.
(d) An eligible employee may be granted rights under the
Plan only if such rights, together with any other rights granted
under "employee stock purchase plans" of the Company and any
Affiliates, as specified by Section 423(b)(8) of the Code, do not
permit such employee's rights to purchase stock of the Company or any
Affiliate to accrue at a rate which exceeds twenty-five thousand
dollars ($25,000) of fair market value of such stock (determined at
the time such rights are granted) for each calendar year in which
such rights are outstanding at any time.
(e) Officers of the Company shall be eligible to
participate in Offerings under the Plan, provided, however, that the
Board may provide in an Offering that certain employees who are
highly compensated employees within the meaning of Section
423(b)(4)(D) of the Code shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee,
pursuant to an Offering made under the Plan, shall be granted the
right to purchase up to the number of shares of Common Stock of the
Company purchasable with a percentage designated by the Board or the
Committee not exceeding fifteen percent (15%) of such employee's
Earnings (as defined in Section 7(a)) during the period which begins
on the Offering Date (or such later date as the Board or the
Committee determines for a particular Offering) and ends on the date
stated in the Offering, which date shall be no more than twenty-seven
(27) months after the Offering Date (the "Purchase Period"). In
connection with each Offering made under this Plan, the Board or the
Committee shall specify a maximum number of shares which may be
purchased by any employee as well as a maximum aggregate number of
shares which may be purchased by all eligible employees pursuant to
such Offering. In addition, in connection with each Offering which
contains more than one Exercise Date (as defined in the Offering),
the Board or the Committee may specify a maximum aggregate number of
shares which may be purchased by all eligible employees on any given
Exercise Date under the Offering. If the aggregate purchase of
shares upon exercise of rights granted under the Offering would
exceed any such maximum aggregate number, the Board or the Committee
shall make a pro rata allocation of the shares available in as nearly
a uniform manner as shall be practicable and as it shall deem to be
equitable.
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(b) The purchase price of stock acquired pursuant to
rights granted under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of
the fair market value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of
the fair market value of the stock on the Exercise Date.
(c) Each eligible employee shall have the same rights and
privileges under the Plan, except as allowed under Section 423(b)(5)
of the Code.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in an
Offering by delivering a participation agreement to the Company
within the time specified in the Offering, in such form as the
Company provides. Each such agreement shall authorize payroll
deductions of up to the maximum percentage specified by the Board or
the Committee of such employee's Earnings during the Purchase Period.
"Earnings" is defined as the total compensation paid to an employee,
including all salary, wages (including amounts elected to be deferred
by the employee, that would otherwise have been paid, under any cash
or deferred arrangement established by the Company), overtime pay,
commissions, bonuses, and other remuneration paid directly to the
employee, but excluding profit sharing, the cost of employee benefits
paid for by the Company, education or tuition reimbursements, imputed
income arising under any Company group insurance or benefit program,
traveling expenses, business and moving expense reimbursements,
income received in connection with stock options, contributions made
by the Company under any employee benefit plan, and similar items of
compensation, or such other inclusions or exclusions as the Board or
Committee may determine for one or more specified Offerings. The
payroll deductions made for each participant shall be credited to an
account for such participant under the Plan and shall be deposited
with the general funds of the Company. A participant may reduce
(including to zero), increase or begin such payroll deductions after
the beginning of any Purchase Period only as provided for in the
Offering. A participant may make additional payments into his or her
account only if specifically provided for in the Offering and only if
the participant has not had the maximum amount withheld during the
Purchase Period.
(b) At any time during a Purchase Period a participant may
terminate his or her payroll deductions under the Plan and withdraw
from the Offering by delivering to the Company a notice of withdrawal
in such form as the Company provides. Such withdrawal may be elected
at any time prior to the end of the Purchase Period except as
provided by the Board or the Committee in the Offering. Upon such
withdrawal from the Offering by a participant, the Company shall
distribute to such participant all of his or her accumulated payroll
deductions
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(reduced to the extent, if any, such deductions have been used to
acquire stock for the participant) under the Offering, without
interest, and such participant's interest in that Offering shall be
automatically terminated. A participant's withdrawal from an
Offering will have no effect upon such participant's eligibility to
participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement
in order to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan
shall terminate immediately upon cessation of any participating
employee's employment with the Company or an Affiliate, for any
reason, and the Company shall distribute to such terminated employee
all of his or her accumulated payroll deductions (reduced to the
extent, if any, such deductions have been used to acquire stock for
the terminated employee), under the Offering, without interest.
(d) Rights granted under the Plan shall not be
transferable, and shall be exercisable only by the person to whom
such rights are granted.
8. EXERCISE.
(a) On each exercise date, as defined in the relevant
Offering (an "Exercise Date"), each participant's accumulated payroll
deductions and other additional payments specifically provided for in
the Offering (without any increase for interest) will be applied to
the purchase of whole shares of stock of the Company, up to the
maximum number of shares permitted pursuant to the terms of the Plan
and the applicable Offering, at the purchase price specified in the
Offering. No fractional shares shall be issued upon the exercise of
rights granted under the Plan. The amount, if any, of accumulated
payroll deductions remaining in each participant's account after the
purchase of shares which is less than the amount required to purchase
one share of stock on the final Exercise Date of an Offering shall be
held in each such participant's account for the purchase of shares
under the next Offering under the Plan, unless such participant
withdraws from such next Offering, as provided in subparagraph 7(b),
or is no longer eligible to be granted rights under the Plan, as
provided in paragraph 5, in which case such amount shall be
distributed to the participant after said final Exercise Date,
without interest. The amount, if any, of accumulated payroll
deductions remaining in any participant's account after the purchase
of shares which is equal to the amount required to purchase whole
shares of stock on the final Exercise Date of an Offering shall be
distributed in full to the participant after such Exercise Date,
without interest.
(b) No rights granted under the Plan may be exercised to
any extent unless the Plan (including rights granted thereunder) is
covered by an effective registration statement pursuant to the
Securities Act of 1933, as amended (the "Securities Act"). If on an
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Exercise Date of any Offering hereunder the Plan is not so
registered, no rights granted under the Plan or any Offering shall be
exercised on said Exercise Date and the Exercise Date shall be
delayed until the Plan is subject to such an effective registration
statement, except that the Exercise Date shall not be delayed more
than two (2) months and the Exercise Date shall in no event be more
than twenty-seven (27) months from the Offering Date. If on the
Exercise Date of any Offering hereunder, as delayed to the maximum
extent permissible, the Plan is not registered, no rights granted
under the Plan or any Offering shall be exercised and all payroll
deductions accumulated during the purchase period (reduced to the
extent, if any, such deductions have been used to acquire stock)
shall be distributed to the participants, without interest.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan,
the Company shall keep available at all times the number of shares of
stock required to satisfy such rights.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority
as may be required to issue and sell shares of stock upon exercise of
the rights granted under the Plan. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell
stock upon exercise of such rights unless and until such authority is
obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted
under the Plan shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or
have any of the rights of a holder with respect to, any shares
subject to rights granted under the Plan unless and until
certificates representing such shares have been issued or such shares
have been credited to an account held by a bank, broker or other
nominee of the participant.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the
Plan, or subject to any rights granted under the Plan (through
merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of shares,
change in
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corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan and outstanding rights will
be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and
price per share of stock subject to outstanding rights. Such
adjustments shall be made by the Board or the Committee, the
determination of which shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall not be
treated as a "transaction not involving the receipt of consideration
by the Company".)
(b) In the event of: (1) a dissolution or liquidation of
the Company; (2) a merger or consolidation in which the Company is
not the surviving corporation; (3) a reverse merger in which the
Company is the surviving corporation but the shares of the Company's
Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise; or (4) any other capital
reorganization in which more than fifty percent (50%) of the shares
of the Company entitled to vote are exchanged, then, as determined by
the Board in its sole discretion (i) any surviving corporation may
assume outstanding rights or substitute similar rights for those
under the Plan, (ii) such rights may continue in full force and
effect, or (iii) participants' accumulated payroll deductions may be
used to purchase Common Stock immediately prior to the transaction
described above and the participants' rights under the ongoing
Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may
amend the Plan. However, except as provided in paragraph 12 relating
to adjustments upon changes in stock, no amendment shall be effective
unless approved by the stockholders of the Company within twelve (12)
months before or after the adoption of the amendment, where the
amendment will:
(i) Increase the number of shares reserved for
rights under the Plan;
(ii) Modify the provisions as to eligibility for
participation in the Plan (to the extent such modification requires
stockholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code); or
(iii) Modify the Plan in any other way if such
modification requires stockholder approval in order for the Plan to
obtain employee stock purchase plan treatment under Section 423 of
the Code.
It is expressly contemplated that the Board may amend the Plan
in any respect the Board deems necessary or advisable to provide
eligible employees with the maximum benefits provided or to be provided
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under the provisions of the Code and the regulations promulgated thereunder
relating to employee stock purchase plans and/or to bring the Plan
and/or rights granted under it into compliance therewith.
(b) Rights and obligations under any rights granted before
amendment of the Plan shall not be impaired by any amendment of the
Plan, except with the consent of the person to whom such rights were
granted or except as necessary to comply with any laws or
governmental regulation.
14. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate ten (10)
years from the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No rights may
be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any rights granted while
the Plan is in effect shall not be altered or impaired by suspension
or termination of the Plan, except with the consent of the person to
whom such rights were granted or except as necessary to comply with
any laws or governmental regulation.
15. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board.
(*1) As adjusted for the two-for-one split of the Company's Common
Stock effected in the form of a 100% stock dividend, payable on
August 15, 1995 to stockholders of record on August 1, 1995.
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EXHIBIT
AMGEN INC.
AMENDED AND RESTATED 1987 DIRECTORS' STOCK OPTION PLAN
1. PURPOSE.
(a) The purpose of the 1987 Directors' Stock Option Plan (the
"Plan") is to provide a means by which each director of AMGEN INC.
(the "Company") and its Affiliates, as defined in subparagraph 1(b),
who is not otherwise an employee of the Company or any Affiliate
(each such person being hereafter referred to as a "Non-Employee
Director") may be given an opportunity to purchase stock of the
Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms
are defined in Sections 424(e) and (f), respectively, of the Internal
Revenue Code of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of persons now serving as Non-Employee Directors of the
Company, to secure and retain the services of persons capable of
serving in such capacity, and to provide incentives for such persons
to exert maximum efforts for the success of the Company.
(d) The Company intends that the options issued under the Plan
not be incentive stock options as that term is used in Section 422 of
the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors
(the "Board") of the Company unless and until the Board delegates
administration to a committee, as provided in subparagraph 2(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To construe and interpret the Plan and options granted
under it, and to establish, amend and revoke rules and regulations
for its administration. The Board, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan or in
any option agreement, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective.
(2) To amend the Plan as provided in paragraph 11.
(3) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best
interests of the Company.
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(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than two (2) members of the Board
(the "Committee"). If administration is delegated to a Committee,
the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, subject,
however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board
the administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 10 relating to
adjustments upon changes in stock, the stock that may be sold
pursuant to options granted under the Plan shall not exceed in the
aggregate one million eight hundred thousand (1,800,000) shares of
the Company's common stock. If any option granted under the Plan
shall for any reason expire or otherwise terminate without having
been exercised in full, the stock not purchased under such option
shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
4. ELIGIBILITY.
Options shall be granted only to Non-Employee Directors of the
Company, or an affiliate of such Non-Employee Directors.
5. NON-DISCRETIONARY GRANTS.
(a) On January 27 of each year commencing January 27, 1992,
each person who is at that time a Non-Employee Director of the
Company, or an affiliate of such Non-Employee Director, shall
automatically be granted under the Plan, without further action by
the Company, the Board, or the Company's stockholders, an option to
purchase three thousand five hundred (3,500) shares of common stock
of the Company on the terms and conditions set forth herein. The
number of shares to be granted hereunder shall not be adjusted as
provided for in subparagraph 10(a), but, however, shall be adjusted
by multiplying by a fraction, the numerator of which is forty dollars
($40.00) per share and the denominator of which is the fair market
value of the common stock of the Company on the date of grant. The
number of shares granted pursuant to this subparagraph 5(a) shall be
rounded to the nearest one hundred (100) shares (rounding up if 50
shares); notwithstanding the foregoing, the number of shares that
shall be granted pursuant to this subparagraph 5(a) shall not be less
than two thousand (2,000) nor shall it exceed five thousand (5,000)
shares. The option shall be on the terms and conditions set forth
herein and should the date of grant set forth above be a Saturday,
Sunday or legal holiday, such grant shall be made on the next
business day.
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(b) Each person who, after January 27 of any year commencing
January 27, 1991 and prior to November 1 of any year, becomes a Non-
Employee Director, or an affiliate of such Non-Employee Director,
shall, upon the date he or such affiliate becomes a Non-Employee
Director, automatically be granted under the Plan, without further
action by the Company, the Board, or the Company's stockholders, an
option to purchase three thousand five hundred (3,500) shares of
common stock of the Company on the terms and conditions set forth
herein. The number of shares to be granted hereunder shall not be
adjusted as provided for in subparagraph 10(a), but, however, shall
be adjusted by multiplying by a fraction, the numerator of which is
forty dollars ($40.00) per share and the denominator of which is the
fair market value of the common stock of the Company on the date of
grant. The number of shares granted pursuant to this subparagraph
5(b) shall be rounded to the nearest one hundred (100) shares
(rounding up if 50 shares); notwithstanding the foregoing, the number
of shares that shall be granted pursuant to this subparagraph 5(b)
shall not be less than two thousand (2,000) nor shall it exceed five
thousand (5,000) shares. The option shall be on the terms and
conditions set forth herein and should the date of grant set forth
above be a Saturday, Sunday or legal holiday, such grant shall be
made on the next business day.
6. OPTION PROVISIONS.
Each option shall be in such form and shall contain such terms
and conditions as the Board or the Committee shall deem appropriate.
The provisions of separate options need not be identical, but each
option shall include (through incorporation of provisions hereof by
reference in the option or otherwise) the substance of each of the
following provisions:
(a) The term of each option shall be ten (10) years from the
date it was granted.
(b) The exercise price of each option shall be one hundred
percent (100%) of the fair market value of the stock subject to such
option on the date such option is granted.
(c) The purchase price of stock acquired pursuant to an option
shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the option is exercised
or (ii) by delivery to the Company of shares of common stock that
have been held for the period required to avoid a charge to the
Company's reported earnings and valued at their fair market value on
the date of exercise. Options granted under the Plan that are
outstanding on April 2, 1991, shall be amended to include the right
to exercise with common stock of the Company as provided for in this
subparagraph 6(c).
(d) An option granted to a natural person shall be exercisable
during the lifetime of such person only by such person, provided that
such person during such person's lifetime may designate an affiliate
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of such person to be such person's beneficiary with respect to the
Option, and such beneficiary shall, after the death of the person to
whom the Option was granted, have all of the rights that such person
had while living, including the right to exercise the Option. In the
absence of such designation, after the death of the person to whom
the Option is granted, the Option shall be exercisable by the person
or persons to whom the optionee's rights under such Option pass by
will or by the laws of descent and distribution.
(e) An option shall not vest with respect to each optionee (i)
unless the optionee, or the affiliate of such optionee, as the case
may be, has, at the date of grant, provided three (3) years of prior
continuous service as a Non-Employee Director, or (ii) until the date
upon which such optionee or the affiliate of such optionee, as the
case may be, has provided one year of continuous service as a Non-
Employee Director following the date of grant of such option,
whereupon such option shall become fully exercisable in accordance
with its terms, provided that, if the optionee, or the affiliate of
such optionee, as the case may be, has, at the date of grant,
provided three (3) years of prior continuous service as a Non-
Employee Director, such option shall not become exercisable for six
(6) months after the date of grant (even though such option shall be
fully vested as of the date of grant).
(f) The Company may require any optionee, or any person to whom
an option is transferred under subparagraph 6(d), as a condition of
exercising any such option: (1) to give written assurances
satisfactory to the Company as to the optionee's knowledge and
experience in financial and business matters; and (2) to give written
assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise
distributing the stock. These requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (i) the
issuance of the shares upon the exercise of the option has been
registered under a then currently effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"),
or (ii), as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws.
(g) Subject to the last sentence of this subparagraph 6(g),
each option granted after April 2, 1991, under the Plan shall include
and all outstanding options under the Plan on April 2, 1991 shall be
amended to include a provision entitling the optionee to a further
option (a "Reload Option") in the event the optionee exercises the
option evidenced by the option grant, in whole or in part, by
surrendering other shares of common stock of the Company in
accordance with the Plan and the terms of the option grant. Any such
Reload Option (i) shall be for a number of shares equal to the number
of shares surrendered as part or all of the exercise price of the
original option; (ii) shall have an expiration date which is the same
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as the expiration date of the original option; and (iii) shall have
an exercise price which is equal to one hundred percent (100%) of the
fair market value of the common stock subject to the Reload Option on
the date of exercise of the original option. Any such Reload Option
shall be subject to the availability of sufficient shares under
subparagraph 3(a). There shall be no Reload Option on a Reload
Option.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the
Company shall keep available at all times the number of shares of
stock required to satisfy such options.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority
as may be required to issue and sell shares of stock upon exercise of
the options granted under the Plan; provided, however, that this
undertaking shall not require the Company to register under the
Securities Act either the Plan, any option granted under the Plan, or
any stock issued or issuable pursuant to any such option. If the
Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell
stock upon exercise of such options unless and until such authority
is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted
under the Plan shall constitute general funds of the Company.
9. MISCELLANEOUS.
(a) Neither an optionee nor any person to whom an option is
transferred under subparagraph 6(d) shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any
shares subject to such option unless and until such person has
satisfied all requirements for exercise of the option pursuant to its
terms.
(b) Throughout the term of any option granted pursuant to the
Plan, the Company shall make available to the holder of such option,
not later than one hundred twenty (120) days after the close of each
of the Company's fiscal years during the option term, upon request,
such financial and other information regarding the Company as
comprises the annual report to the stockholders of the Company
provided for in the by-laws of the Company and such other information
regarding the Company as the holder of such option may reasonably request.
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10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any option granted under the Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend,
dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in
corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan and outstanding options will
be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and
price per share of stock subject to outstanding options; provided,
that the minimum and maximum number of shares of common stock to be
granted as provided for in subparagraphs 5(a) and 5(b) shall not be
adjusted for any stock split, combination of shares or common stock
dividend. Such adjustments shall be made by the Board, the
determination of which shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall not be
treated as a "transaction not involving the receipt of consideration
by the Company".)
(b) Notwithstanding anything to the contrary in this Plan, in
the event of a Change in Control (as hereinafter defined), then, to
the extent permitted by applicable law: (i) the time during which
options become vested shall automatically be accelerated so that the
unvested portions of all options shall be vested prior to the Change
in Control and (ii) the time during which the options may be
exercised shall automatically be accelerated to prior to the Change
of Control. Upon or after the acceleration of the vesting and
exercise periods, at the election of the holders of the options, the
options may be: (x) exercised or, if the surviving or acquiring
corporation agrees to assume the options or substitute similar
options, (y) assumed; or (z) replaced with substitute options.
Options not exercised, substituted or assumed prior to or upon the
Change in Control shall be terminated.
(c) For purposes of the Plan, a "Change of Control" shall
be deemed to have occurred at any of the following times:
(i) Upon the acquisition (other than from the
Company) by any person, entity or "group," within the meaning of
Section 13(d) (3) or 14(d) (2) of the Securities Exchange Act of 1934
as amended (the "Exchange Act") (excluding, for this purpose, the
Company or its affiliates, or any employee benefit plan of the
Company or its affiliates which acquires beneficial ownership of
voting securities of the Company), of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of
fifty percent (50%) or more of either the then outstanding shares of
Common Stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the
election of directors; or
(ii) At the time individuals who, as of October 23,
1995, constitute the Board (the "Incumbent Board") cease for any
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reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to October 23, 1995, whose
election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or nomination
of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)
shall be, for purposes of the Plan, considered as though such person
were a member of the Incumbent Board; or
(iii) Immediately prior to the consummation by the
Company of a reorganization, merger, consolidation, (in each case,
with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities) or a
liquidation or dissolution of the Company or of the sale of all or
substantially all of the assets of the Company.
11. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the
Plan and/or some or all outstanding options granted under the Plan;
provided, however, that the Board shall not amend the Plan more than
once every six months with respect to the provisions of the Plan
relating to the amount, price, and timing of grants, other than to
comply with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.
(b) Rights and obligations under any option granted before
amendment of the Plan shall not be impaired by any amendment of the
Plan, except with the consent of the person to whom the option was
granted.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate ten (10) years
from the date the Plan is adopted by the Board. No options may be
granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any option granted while the
Plan is in effect shall not be impaired by suspension or termination
of the Plan, except with the consent of the person to whom the option
was granted.
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13. EFFECTIVE DATE OF PLAN.
The Plan became effective as of January 27, 1987. No options
granted under the Plan as the result of the amendments on July 24,
1990 and April 2, 1991 shall be exercisable unless and until said
amendment is approved by the stockholders of the Company, and to the
extent required or necessary under applicable law, amendments made on
April 2, 1991 shall not be effective until approved by the
stockholders of the Company.
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EXHIBIT
AMGEN INC.
AMENDED AND RESTATED 1988 STOCK OPTION PLAN
1. PURPOSE.
(a) The purpose of the Plan is to provide a means by which
selected employees and directors (if declared eligible under
paragraph 4) of and consultants to Amgen Inc., a Delaware corporation
(the "Company"), and its Affiliates, as defined in subparagraph 1(b),
directly or indirectly through trusts for the benefit of their
families, may be given an opportunity to purchase stock of the
Company.
(b) The word "Affiliate" as used in the Plan means any
parent corporation or subsidiary corporation of the Company, as those
terms are defined in Sections 424(e) and (f), respectively, of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of persons now holding positions with the Company, to secure
and retain the services of persons capable of filling such positions,
and to provide incentives for such persons to exert maximum efforts
for the success of the Company.
(d) The Company intends that the options issued under the
Plan shall, in the discretion of the Board of Directors of the
Company (the "Board") or any committee to which responsibility for
administration of the Plan has been delegated pursuant to
subparagraph 2(c), be either incentive stock options as that term is
used in Section 422 of the Code ("Incentive Stock Options"), or
options which do not qualify as Incentive Stock Options
("Nonqualified Stock Options"). All options shall be separately
designated Incentive Stock Options or Nonqualified Stock Options at
the time of grant, and in such form as issued pursuant to paragraph
5, and a separate certificate or certificates shall be issued for
shares purchased on exercise of each type of option. An option
designated as a Nonqualified Stock Option shall not be treated as an
Incentive Stock Option.
The word "Trust" as used in the Plan shall mean a
trust created for the benefit of the employee, director or
consultant, his or her spouse, or members of their immediate family.
The word optionee shall mean the person to whom the option is granted
or the employee, director or consultant for whose benefit the option
is granted to a Trust, as the context shall require.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and
until the Board delegates administration to a committee, as provided
in subparagraph 2(c).
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(b) The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the
persons eligible under the Plan shall be granted options; when and
how the option shall be granted; whether the option will be an
Incentive Stock Option or a Nonqualified Stock Option; the provisions
of each option granted (which need not be identical), including the
time or times during the term of each option within which all or
portions of such option may be exercised; and the number of shares
for which an option shall be granted to each such person.
(2) To construe and interpret the Plan and options
granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of
this power, may correct any defect, omission or inconsistency in the
Plan or in any option agreement, in a manner and to the extent it
shall deem necessary or expedient to make the Plan fully effective.
(3) To amend the Plan as provided in paragraph 11.
(4) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the
best interests of the Company.
(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than two (2) members of the Board
(the "Committee"). One or more of these members may be Non-Employee
Directors, as defined by the provisions of subparagraph 2(d). If
administration is delegated to a Committee, the Committee shall have,
in connection with the administration of the Plan, the powers
theretofore possessed by the Board, subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may
be adopted from time to time by the Board. The Board may abolish the
Committee at any time and revest in the Board the administration of
the Plan. Notwithstanding anything to the contrary in this
subparagraph 2(c), at any time the Board or the Committee may
delegate to a committee of one or more members of the Board the
authority to grant or amend options to all employees, directors or
consultants or any portion or class thereof.
(d) The term "Non-Employee Director" shall mean a member
of the Board who (i) is not currently an officer of the Company or a
parent or subsidiary of the Company (as defined in Rule 16a-1(f)
promulgated by the Securities and Exchange Commission under Section
16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) or an employee of the Company or a parent or subsidiary of the
Company; (ii) does not receive compensation from the Company or a
parent or subsidiary of the Company for services rendered in any
capacity other than as a member of the Board (including a consultant)
in an amount required to be disclosed to the Company's stockholders
under Rule 404 of Regulation S-K promulgated by the Securities and
Exchange Commission ("Rule 404"); (iii) does not possess an interest
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in any other transaction required to be disclosed under Rule 404; or
(iv) is not engaged in a business relationship required to be
disclosed under Rule 404, as all of these provisions are interpreted
by the Securities and Exchange Commission under Rule 16b-3
promulgated under the Exchange Act.
(e) Any requirement that an administrator of the Plan be a
"Non-Employee Director" shall not apply if the Board or the Committee
expressly declares that such requirement shall not apply.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 9 relating to
adjustments upon changes in stock, the stock that may be sold
pursuant to options granted under the Plan shall not exceed in the
aggregate Thirty Six Million (36,000,000) shares of the Company's
$.0001 par value common stock (the "Common Stock"). If any option
granted under the Plan shall for any reason expire or otherwise
terminate without having been exercised in full, the Common Stock not
purchased under such option shall again become available for the
Plan.
(b) The Common Stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
(c) An Incentive Stock Option may be granted to an
eligible person under the Plan only if the aggregate fair market
value (determined as of the times the respective Incentive Stock
Options are granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by such
optionee during any calendar year under all such plans of the Company
and its Affiliates does not exceed one hundred thousand dollars
($100,000). Should it be determined that any portion of an Incentive
Stock Option granted under the Plan does not qualify for treatment as
an Incentive Stock Option by reason of exceeding such maximum, such
option shall be considered a Nonqualified Stock Option to the extent,
but only to the extent, of such excess. Should it be determined that
an entire option does not qualify for treatment as an Incentive Stock
Option, such option shall, in its entirety, be considered a
Nonqualified Stock Option.
4. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to
employees of the Company or its Affiliates, and a director or officer
of the Company shall not be eligible to receive Incentive Stock
Options unless such director or officer is also an employee of the
Company or any Affiliate. Nonqualified Stock Options may be granted
only to employees or directors of, or consultants to, the Company or
its Affiliates (including officers who so qualify) or to Trusts of
any such employee, director or consultant.
(b) A director shall in no event be eligible for the
benefits of the Plan unless and until such director is expressly
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declared eligible to participate in the Plan by action of the Board
or the Committee, and only if, at any time discretion is exercised by
the Board or the Committee in the selection of a director as a person
to whom options may be granted, or in the determination of the number
of shares which may be covered by options granted to a director, the
Plan complies with the requirements of Rule 16b-3 promulgated under
the Exchange Act, as from time to time in effect. The Board shall
otherwise comply with the requirements of Rule 16b-3 promulgated
under the Exchange Act, as from time to time in effect, unless the
Board expressly decides not to so comply with respect to one or more
specified options with the concurrence of the affected optionee or
optionees.
(c) No person shall be eligible for the grant of an
Incentive Stock Option under the Plan if, at the time of grant, such
person owns (or is deemed to own pursuant to Section 424(d) of the
Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of
any of its Affiliates unless the exercise price of such Incentive
Stock Option is at least one hundred and ten percent (110%) of the
fair market value of the Common Stock at the date of grant and the
term of the Incentive Stock Option does not exceed five (5) years
from the date of grant.
5. OPTION PROVISIONS.
Each option shall be in such form and shall contain such
terms and conditions as the Board or the Committee shall deem
appropriate. The provisions of separate options need not be
identical, but each option shall include (through incorporation of
provisions hereof by reference in the option or otherwise) the
substance of each of the following provisions:
(a) No option shall be exercisable after the expiration of
ten (10) years from the date it was granted.
(b) The exercise price of each Incentive Stock Option
shall be not less than one hundred percent (100%) of the fair market
value of the Common Stock subject to the option on the date the
option is granted. The exercise price of each Nonqualified Stock
Option shall be not less than eighty-five percent (85%) of the fair
market value of the Common Stock subject to the option on the date
the option is granted.
(c) The purchase price of Common Stock acquired pursuant
to an option shall be paid, to the extent permitted by applicable
statutes and regulations, either: (i) in cash at the time the option
is exercised; or (ii) at the discretion of the Board or the
Committee, either at the time of grant or exercise of the option (A)
by delivery to the Company of other Common Stock of the Company, (B)
according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use of
other Common Stock of the Company) with the person to whom the option
is granted or
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to whom the option is transferred pursuant to subparagraph 5(d), or
(C) in any other form of legal consideration that may be acceptable
to the Board or the Committee in their discretion; including but not
limited to payment of the purchase price pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve
Board which results in the receipt of cash (or a check) by the
Company before Common Stock is issued or the receipt of irrevocable
instructions to pay the aggregate exercise price to the Company from
the sales proceeds before Common Stock is issued.
In the case of any deferred payment arrangement, interest shall
be payable at least annually and shall be charged at not less than
the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any amounts
other than amounts stated to be interest under the deferred payment
arrangement.
(d) An option granted to a natural person shall be
exercisable during the lifetime of such person only by such person,
provided that such person during such person's lifetime may designate
a Trust to be such person's beneficiary with respect to any Incentive
Stock Options granted after February 25, 1992 and with respect to any
Nonqualified Stock Options, and such beneficiary shall, after the
death of the person to whom the option was granted, have all the
rights that such person has while living, including the right to
exercise the option. In the absence of such designation, after the
death of the person to whom the option is granted, the option shall
be exercisable by the person or persons to whom the optionee's rights
under such option pass by will or by the laws of descent and
distribution.
(e) The total number of shares of Common Stock subject to
an option may, but need not, be allotted in periodic installments
(which may, but need not, be equal). From time to time during each
of such installment periods, the option may be exercised with respect
to some or all of the shares allotted to that period, and/or with
respect to some or all of the shares allotted to any prior period as
to which the option was not fully exercised. During the remainder of
the term of the option (if its term extends beyond the end of the
installment periods), the option may be exercised from time to time
with respect to any shares then remaining subject to the option. The
provisions of this subparagraph 5(e) are subject to any option
provisions governing the minimum number of shares as to which an
option may be exercised.
(f) The Company may require any optionee, or any person to
whom an option is transferred under subparagraph 5(d), as a condition
of exercising any such option: (1) to give written assurances
satisfactory to the Company as to the optionee's knowledge and
experience in financial and business matters and/or to employ a
purchaser representative who has such knowledge and experience in
financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser's representative,
the merits and risks of exercising the option; and (2) to give
written assurances satisfactory to the Company stating that such person
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is acquiring the Common Stock subject to the option for such person's
own account and not with any present intention of selling or
otherwise distributing the Common Stock. These requirements, and any
assurances given pursuant to such requirements, shall be inoperative
if: (i) the issuance of the shares upon the exercise of the option
has been registered under a then currently effective registration
statement under the Securities Act of 1933, as amended (the
"Securities Act"); or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then
applicable securities law.
(g) An option shall terminate three (3) months after
termination of the optionee's employment or relationship as a
director or consultant with the Company or an Affiliate, unless: (i)
such termination is due to such person's permanent and total
disability, within the meaning of Section 422(c)(6) of the Code, in
which case the option may, but need not, provide that it may be
exercised at any time within one (1) year following such termination
of employment or relationship as a director or consultant; (ii) the
optionee dies while in the employ of or while serving as a director
or consultant to the Company or an Affiliate, or within not more than
three (3) months after termination of such employment or relationship
as a director or consultant, in which case the option may, but need
not, provide that it may be exercised at any time within eighteen
(18) months following the death of the optionee by the person or
persons to whom the optionee's rights under such option pass by will
or by the laws of descent and distribution; or (iii) the option by
its terms specifies either (A) that it shall terminate sooner than
three (3) months after termination of the optionee's employment or
relationship as a director or consultant, or (B) that it may be
exercised more than three (3) months after termination of the
optionee's employment or relationship as a director or consultant
with the Company or an Affiliate. This subparagraph 5(g) shall not
be construed to extend the term of any option or to permit anyone to
exercise the option after expiration of its term, nor shall it be
construed to increase the number of shares as to which any option is
exercisable from the amount exercisable on the date of termination of
the optionee's employment or relationship as a director or
consultant.
(h) The option may, but need not, include a provision
whereby the optionee may elect at any time during the term of his or
her employment or relationship as a director or consultant with the
Company or any Affiliate to exercise the option as to any part or all
of the shares subject to the option prior to the stated vesting date
of the option or of any installment or installments specified in the
option. Any shares so purchased from any unvested installment or
option may be subject to a repurchase right in favor of the Company
or to any other restriction the Board or the Committee determines to
be appropriate.
(i) To the extent provided by the terms of an option, the
optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such option by any of the
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following means or by a combination of such means: (1) tendering a
cash payment; (2) authorizing the Company to withhold from the shares
of Common Stock otherwise issuable to the participant as a result of
the exercise of the stock option a number of shares having a fair
market value less than or equal to the amount of the withholding tax
obligation; or (3) delivering to the Company owned and unencumbered
shares of Common Stock having a fair market value less than or equal
to the amount of the withholding tax obligation.
(j) Without in any way limiting the authority of the Board
or Committee to make or not to make grants of Options hereunder, the
Board or Committee shall have the authority (but not an obligation)
to include as part of any Option agreement (and all outstanding
Nonqualified Stock Options, to the extent there are unvested options
on June 30, 1991, shall be amended to include), a provision entitling
the optionee to a further Option (a "Re-Load Option") in the event
the optionee exercises the Option evidenced by the Option agreement,
in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option
agreement. Any such Re-Load Option (i) shall be for a number of
shares equal to the number of shares surrendered as part or all of
the exercise price of such Option (or surrendered for shares which
were unvested on June 30, 1991 in the case of an amended Nonqualified
Stock Option); (ii) shall have an expiration date which is the same
as the expiration date of the Option the exercise of which gave rise
to such Re-Load Option; (iii) shall have an exercise price which is
equal to one hundred percent (100%) of the fair market value of the
Common Stock subject to the Re-Load Option on the date of exercise of
the original Option or, in the case of a Re-Load Option which is an
Incentive Stock Option and which is granted to a 10% stockholder (as
defined in subparagraph 4(c)), shall have an exercise price which is
equal to one hundred and ten percent (110%) of the fair market value
of the Common Stock subject to the Re-Load Option on the date of
exercise of the original Option; and (iv) shall be granted under this
Plan, if sufficient shares are available under subparagraph 3(a) of
the Plan, and if sufficient shares of Common Stock are not so
available, shall be granted under the Amgen Inc. 1991 Equity
Incentive Plan to the extent shares of Common Stock are available
under that Plan.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonqualified Stock Option, as the Board or Committee may designate at
the time of the grant of the original Option, except that all Re-Load
Options on unvested shares (as of June 30, 1991) of Nonqualified
Stock Options shall be Nonqualified Stock Options, provided, however,
that the designation of any Re-Load Option as an Incentive Stock
Option shall be subject to the one hundred thousand dollars
($100,000) annual limitation on exercisability of Incentive Stock
Options described in subparagraph 3(c) of the Plan and in Section
422(d) of the Code. There shall be no Re-Load Options on a Re-Load
Option. Any such Re-Load Option shall be subject to the availability
of sufficient shares under subparagraph 3(a) of this Plan or under
the Amgen Inc. 1991 Equity Incentive Plan and shall be subject to
such other terms and conditions as the Board or Committee may
determine.
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6. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the
Plan, the Company shall keep available at all times the number of
shares of stock required to satisfy such options.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority
as may be required to issue and sell shares of stock upon exercise of
the options granted under the Plan; provided, however, that this
undertaking shall not require the Company to register under the
Securities Act of 1933, as amended, either the Plan, any option
granted under the Plan, or any Common Stock issued or issuable
pursuant to any such option. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell
stock upon exercise of such options unless and until such authority
is obtained.
7. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to options
granted under the Plan shall constitute general funds of the Company.
8. MISCELLANEOUS.
(a) The Board or Committee shall have the power to
accelerate the time during which an option may be exercised or the
time during which an option or any part thereof will vest,
notwithstanding the provisions in the option stating the time during
which it may be exercised or the time during which it will vest.
Each option providing for vesting pursuant to subparagraph 5(e) shall
also provide that if the employee's employment or a director's or
consultant's affiliation with the Company is terminated by reason of
death or disability (within the meaning of Title II or XVI of the
Social Security Act and as determined by the Social Security
Administration), the vesting schedule of options granted to such
employee, director or consultant or to the Trusts of such employee,
director or consultant shall be accelerated by twelve months for each
full year the employee has been employed by or the director or
consultant has been affiliated with the Company. Options granted
under the Plan that are outstanding on February 25, 1992, shall be
amended to include the accelerated vesting upon death provided for in
the preceding sentence of this paragraph 8(a) and options granted
under the Plan that are outstanding on June 18, 1996, shall be
amended to include the accelerated vesting upon disability provided
for in the preceding sentence of this paragraph 8(a) (without
including references to directors).
(b) Neither an optionee nor any person to whom an option
is transferred under subparagraph 5(d) shall be deemed to be the holder
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of, or to have any of the rights of a holder with respect to, any
shares subject to such option unless and until such person has
satisfied all requirements for exercise of the option pursuant to its
terms.
(c) Throughout the term of any option granted pursuant to
the Plan, the Company shall make available to the holder of such
option, not later than one hundred twenty (120) days after the close
of each of the Company's fiscal years during the option term, upon
request, such financial and other information regarding the Company
as comprises the annual report to the shareholders of the Company
provided for in the bylaws of the Company.
(d) Nothing in the Plan or any instrument executed or
option granted pursuant thereto shall confer upon any eligible
participant or optionee any right to continue in the employ of the
Company or any Affiliate or to continue acting as a consultant or
shall affect the right of the Company or any Affiliate to terminate
the employment or consulting relationship of any eligible participant
or optionee with or without cause. In the event that an optionee is
permitted or otherwise entitled to take a leave of absence, the
Company shall have the unilateral right to (i) determine whether such
leave of absence will be treated as a termination of employment or
relationship as director or consultant for purposes of paragraph 5(g)
hereof and corresponding provisions of any outstanding options, and
(ii) suspend or otherwise delay the time or times at which the shares
subject to the option would otherwise vest.
9. CANCELLATION AND RE-GRANT OF OPTIONS.
The Board or the Committee shall have the authority to
effect, at any time and from time to time, with the consent of the
affected option holders, (i) the repricing of any or all outstanding
options under the Plan and/or (ii) the cancellation of any or all
outstanding options under the Plan and the grant in substitution
therefor new options under the Plan covering the same or different
numbers of shares of Common Stock but having an option price per
share not less than eighty-five percent (85%) of the fair market
value in the case of a Nonqualified Stock Option, one hundred percent
(100%) of the fair market value in the case of an Incentive Stock
Option or, in the case of a 10% stockholder (as defined in
subparagraph 4(c)), not less than one hundred and ten percent (110%)
of the fair market value per share of Common Stock on the new grant
date.
10. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
(a) If any change is made in the Common Stock subject to
the Plan, or subject to any option granted under the Plan (through
merger, consolidation, reorganization, recapitalization, stock
dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding
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options will be appropriately adjusted in the class(es) and the
maximum number of shares subject to the Plan and the class(es) and
the number of shares and price per share of Common Stock subject to
outstanding options. Such adjustments shall be made by the Board or
the Committee, the determination of which shall be final, binding and
conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a "transaction not involving the
receipt of consideration by the Company".)
(b) Notwithstanding anything to the contrary in this Plan,
in the event of a Change in Control (as hereinafter defined), then,
to the extent permitted by applicable law: (i) the time during which
options become vested shall automatically be accelerated so that the
unvested portions of all options shall be vested prior to the Change
in Control and (ii) the time during which the options may be
exercised shall automatically be accelerated to prior to the Change
of Control. Upon or after the acceleration of the vesting and
exercise periods, at the election of the holders of the options, the
options may be: (x) exercised or, if the surviving or acquiring
corporation agrees to assume the options or substitute similar
options, (y) assumed; or (z) replaced with substitute options.
Options not exercised, substituted or assumed prior to or upon the
Change in Control shall be terminated.
(c) For purposes of the Plan, a "Change of Control" shall
be deemed to have occurred at any of the following times:
(i) Upon the acquisition (other than from the
Company) by any person, entity or "group," within the meaning of
Section 13(d) (3) or 14(d) (2) of the Exchange Act (excluding, for
this purpose, the Company or its affiliates, or any employee benefit
plan of the Company or its affiliates which acquires beneficial
ownership of voting securities of the Company), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifty percent (50%) or more of either the then
outstanding shares of Common Stock or the combined voting power of
the Company's then outstanding voting securities entitled to vote
generally in the election of directors; or
(ii) At the time individuals who, as of October 23,
1995, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to October 23, 1995, whose
election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or nomination
of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14a promulgated under the Exchange Act)
shall be, for purposes of the Plan, considered as though such person
were a member of the Incumbent Board; or
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(iii) Immediately prior to the consummation by the
Company of a reorganization, merger, consolidation, (in each case,
with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities) or a
liquidation or dissolution of the Company or of the sale of all or
substantially all of the assets of the Company; or
(iv) The occurrence of any other event which the
Incumbent Board in its sole discretion determines constitutes a
Change of Control.
11. QUALIFIED DOMESTIC RELATIONS ORDERS.
(a) Anything in the Plan to the contrary notwithstanding,
rights under options may be assigned to an Alternate Payee to the
extent that a QDRO so provides. (The terms "Alternate Payee" and
"QDRO" are defined in Subsection (c) below.) The assignment of an
option to an Alternate Payee pursuant to a QDRO shall not be treated
as having caused a new grant. The transfer of an Incentive Stock
Option to an Alternate Payee may, however, cause it to fail to
qualify as an Incentive Stock Option. If an option is assigned to an
Alternate Payee, the Alternate Payee generally has the same rights as
the grantee under the terms of the Plan; provided however, that (1)
the option shall be subject to the same vesting terms and exercise
period as if the option were still held by the grantee, (2) an
Alternate Payee may not transfer an option and (3) an Alternate Payee
is ineligible for Re-Load Options.
(b) In the event of the Plan administrator's receipt of a
domestic relations order or other notice of adverse claim by an
Alternate Payee of a grantee of an option, transfer of the proceeds
of the exercise of such option, whether in the form of cash, stock or
other property, may be suspended. Such proceeds shall thereafter be
transferred pursuant to the terms of a QDRO or other agreement
between the grantee and Alternate Payee. A grantee's ability to
exercise an option may be barred if the Plan administrator receives a
court order directing the Plan administrator not to permit exercise.
(c) The word "QDRO" as used in the Plan shall mean a court
order (1) that creates or recognizes the right of the spouse, former
spouse or child (an "Alternate Payee") of an individual who is
granted an option to an interest in such option relating to marital
property rights or support obligations and (2) that the administrator
of the Plan determines would be a "qualified domestic relations
order," as that term is defined in section 414(p) of the Code and
section 206(d) of the Employee Retirement Income Security Act
("ERISA"), but for the fact that the Plan is not a plan described in
section 3(3) of ERISA.
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12. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may
amend the Plan. However, except as provided in paragraph 10 relating
to adjustments upon changes in the Common Stock, no amendment shall
be effective unless approved by the stockholders of the Company
within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for
options under the Plan;
(ii) Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires
stockholder approval in order for the Plan to satisfy the
requirements of Section 422(b) of the Code); or
(iii) Modify the Plan in any other way if such
modification requires stockholder approval in order for the Plan to
satisfy the requirements of Section 422(b) of the Code.
(b) It is expressly contemplated that the Board may amend
the Plan in any respect the Board deems necessary or advisable to
provide optionees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to
bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.
(c) Rights and obligations under any option granted before
amendment of the Plan shall not be impaired by any amendment of the
Plan, unless: (i) the Company requests the consent of the person to
whom the option was granted; and (ii) such person consents in
writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate on March
14, 1998. No options may be granted under the Plan while the Plan is
suspended or after it is terminated.
(b) Rights and obligations under any option granted while
the Plan is in effect shall not be impaired by suspension or
termination of the Plan, except with the consent of the person to
whom the option was granted.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board.
12
<PAGE>
EXHIBIT
FIRST AMENDMENT TO THE
AMGEN RETIREMENT AND SAVINGS PLAN
AS AMENDED AND RESTATED EFFECTIVE APRIL 1, 1996
The Amgen Retirement and Savings Plan (as amended and restated
effective April 1, 1996) (the "Plan") is hereby amended, effective as
of October 22, 1996, in the following respects:
1. Section 6.9 of the Plan is amended to read in its entirety as
follows:
6.9 Transfers Among Investment Funds. A Participant may
elect to reapportion the values of his or her Accounts among
Investment Funds by properly following procedures prescribed by
the Company. The Company's procedures by which a Participant
may elect to transfer amounts into or out of the Company Stock
Fund shall be drafted to provide notice to Participants if such
an election would cause a Participant to have a purchase or sale
of Company Stock which is not exempt from potential short-swing
trading profits liability under Section 16(b) of the Exchange
Act by virtue of the application of Rule 16b-3 (promulgated
under Section 16 of the Exchange Act) as in effect from time to
time. As of the effective date of this amended and restated
Plan, such liability may arise if such election is made by a
Participant (or successor in interest) who is an officer,
director, or greater than 10% stockholder of the Company (within
the meaning of Section 16 of the Exchange Act and the rules
promulgated thereunder) within six months following the date of
the most recent election made under any employee benefit plan
sponsored by the Company or an Affiliate if (a) both elections
involved either an intra-plan transfer involving a fund invested
in the Company's equity securities or a cash distribution from
the employee benefit plan to the Participant (or successor in
interest) funded by a volitional disposition of the Company's
equity securities, (b) the prior election involved an
acquisition of the Company's equity securities if the current
election involves a disposition of the Company's equity
securities, or vice versa, and (c) both elections are made at
the volition of the Participant (or successor in interest) not
in connection with the Participant's death, disability,
retirement, termination of employment, or an election which is
required to be made available under a provision of the Code.
Such a volitional election (considering without regard as to
whether or not any similar elections have occurred within six
months of such an election) shall be described as a
"Discretionary Transaction." Prior to July 1, 1996,
Participants may not elect to transfer amounts to the Company
Stock Fund. On and after July 1, 1996, transfers into the
Company Stock Fund shall be limited so that, after any such
transfer, no more than 50% of the value of the Participant's
aggregate Account is invested in the Company Stock Fund. For
purposes of carrying out Investment Fund transfers, the value of
the Accounts shall be determined as of the Valuation Date
immediately preceding the Participant's transfer election.
1
<PAGE>
2. Section 8.6(d) of the Plan is amended to read in its entirety as
follows:
(d) The Company shall establish procedures to notify
a Participant (or successor in interest) if any election
regarding the form or timing of distribution of benefits from
the Plan involving the Company Stock Fund constitutes a
Discretionary Transaction (as defined in Section 6.9) which may
trigger short-swing trading profits liability for the
Participant (or successor in interest) under Section 16(b) of
the Exchange Act. In such an event, the person making the
election shall be provided with a reasonable opportunity to
modify, delay, or revoke such an election.
3. Section 10.4 of the Plan is amended to read in its entirety as
follows:
10.4 Source of Loans. If a Participant requests and is
granted a loan, a Loan Account shall be established for the
Participant. The Loan Account shall be held by the Trustee as
part of the Loan Fund. The amount of the loan shall be
transferred to the Participant's Loan Account from the
Participant's other Accounts and shall be disbursed from the
Loan Account. Transfers from the Company Stock Fund shall be
made in accordance with the requirements for exemption under
Section 16(b) of the Exchange Act if such a transfer would cause
the Participant to incur short-swing trading profits liability
under Section 16(b) of the Exchange Act. The promissory note
executed by the Participant shall be held by the Trustee (or by
the Company as agent of the Trustee) and the promissory note
shall be treated as an investment of the Participant's Loan
Account.
4. Section 11.6 of the Plan is amended to read in its entirety as
follows:
11.6 Source of Withdrawals. Withdrawals shall be paid from
the affected Accounts. If more than one Account is available to
pay the withdrawal because the Participant elected to invest in
more than one Investment Fund, the withdrawal shall be made from
the subaccount(s) designated by the Participant, subject to such
ordering and timing restrictions as the Company may adopt.
5. Section 11.8 of the Plan is amended to read in its entirety as
follows:
11.8 Limitations on Withdrawals. A Participant shall not
be permitted to make more than one withdrawal under this Article
in any period of six consecutive months; provided, however, that
withdrawals made at the same time shall be considered a single
withdrawal. The timing of withdrawals from the Company Stock
Fund shall be limited when necessary to avoid liability from the
short-swing trading profits provisions of Section 16(b) of the
Exchange Act.
2
<PAGE>
To record this First Amendment to the Plan as set forth herein, the
Company has caused its authorized officer to execute this document
this 22nd of October , 1996.
AMGEN INC.
By: /s/ George A. Vandeman
Title: Senior Vice President,
General Counsel and
Secretary
3
<PAGE>
EXHIBIT 11
AMGEN INC.
COMPUTATION OF PER SHARE EARNINGS
PRIMARY COMPUTATION
(In millions, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------- ------- ------- -------
Net income ................. $179.5 $145.8 $501.8 $392.1
====== ====== ====== ======
Applicable common and common
stock equivalent shares:
Weighted average shares of
common stock outstanding
during the period ......... 264.4 265.1 265.1 264.8
Incremental number of shares
outstanding during the
period resulting from the
assumed exercises of stock
options and puts warrants . 15.0 16.7 16.2 15.4
------ ------ ------ ------
Weighted average shares of
common stock and common
stock equivalents
outstanding during the
period .................... 279.4 281.8 281.3 280.2
====== ====== ====== ======
Earnings per common share
primary ................... $ .64 $ .52 $ 1.78 $ 1.40
====== ====== ====== ======
<PAGE>
EXHIBIT 11
AMGEN INC.
COMPUTATION OF PER SHARE EARNINGS
FULLY DILUTED COMPUTATION
(In millions, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------- ------- ------- -------
Net income ................. $179.5 $145.8 $501.8 $392.1
====== ====== ====== ======
Applicable common and common
stock equivalent shares:
Weighted average shares of
common stock outstanding
during the period ......... 264.4 265.1 265.1 264.8
Incremental number of shares
outstanding during the
period resulting from the
assumed exercises of stock
options and puts warrants . 16.4 18.1 17.2 19.0
------ ------ ------ ------
Weighted average shares of
common stock and common
stock equivalents
outstanding during the
period .................... 280.8 283.2 282.3 283.8
====== ====== ====== ======
Earnings per common share
fully diluted ............. $ .64 $ .51 $ 1.78 $ 1.38
====== ====== ====== ======
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 227
<SECURITIES> 767
<RECEIVABLES> 207
<ALLOWANCES> 0
<INVENTORY> 91
<CURRENT-ASSETS> 1,406
<PP&E> 832
<DEPRECIATION> 80
<TOTAL-ASSETS> 2,549
<CURRENT-LIABILITIES> 565
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,768
<TOTAL-LIABILITY-AND-EQUITY> 2,549
<SALES> 1,529
<TOTAL-REVENUES> 1,646
<CGS> 208
<TOTAL-COSTS> 974
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 715
<INCOME-TAX> 213
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 502
<EPS-PRIMARY> 1.78
<EPS-DILUTED> 1.78
</TABLE>
Factors That May Affect Future Results
Amgen operates in a rapidly changing environment that involves a
number of risks, some of which are beyond the Company's control. The
following discussion highlights some of these risks and others are
discussed elsewhere herein and in other documents filed by the
Company with the Securities and Exchange Commission.
Period to period fluctuations
The Company's operating results may fluctuate for a number of
reasons. The forecasting of revenue is inherently uncertain for a
variety of reasons. Because the Company plans its operating
expenses, many of which are relatively fixed in the short term, on
the basis that revenues will continue to grow, even a relatively
small revenue shortfall may cause a period's results to be below
expectations. Such a revenue shortfall could arise from any number
of factors, including lower than expected demand, wholesalers' buying
patterns, product pricing strategies, fluctuations in foreign
currency exchange rates, changes in government or private
reimbursement, transit interruptions, overall economic conditions or
natural disasters (including earthquakes).
See "Results of Operations - Product sales - NEUPOGEN(R)
(Filgrastim)" for a discussion regarding quarterly NEUPOGEN(R) sales.
The Company's stock price, like that of other biotechnology
companies, is subject to significant volatility. If revenues or
earnings in any quarter fail to meet the investment community's
expectations, there could be an immediate impact on the Company's
stock price. The stock price may also be affected by, among other
things, clinical trial results and other product development related
announcements by Amgen or its competitors, regulatory matters,
intellectual property and legal matters, or broader industry and
market trends unrelated to the Company's performance.
Rapid growth
In light of management's views of the potential for future
growth of the Company's business, the Company has adopted an
aggressive growth plan that includes substantial and increased
investments in research and development and investments in facilities
that will be required to support significant growth. This plan
carries with it a number of risks, including a higher level of
operating expenses, the difficulty of attracting and assimilating a
large number of new employees, and the complexities associated with
managing a larger and faster growing organization.
Product development
The Company intends to continue to develop product candidates.
Successful product development in the biotechnology industry is
highly uncertain and only a small minority of research and
development programs ultimately result in commercially successful
drugs. Product development is dependent on numerous factors, many of
which are beyond the Company's control. Product candidates that
appear promising in the early phases of development may fail to reach
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<PAGE>
market for numerous reasons. They may be found to be ineffective or
to have harmful side effects in clinical or preclinical testing, fail
to receive necessary regulatory approvals, be uneconomic because of
manufacturing costs or other factors, or be precluded from
commercialization by the proprietary rights of others. Success in
preclinical and early clinical trials does not ensure that large
scale clinical trials will be successful. Clinical results are
frequently susceptible to varying interpretations which may delay,
limit or prevent further clinical development or regulatory
approvals. The length of time necessary to complete clinical trials
and receive approval for product marketing by regulatory authorities
varies significantly by product and indication and is often difficult
to predict.
Regulatory approvals
The success of current products and future product candidates of
the Company will depend in part upon maintaining and obtaining
regulatory approval to market products. Domestic and foreign
statutes and regulations govern matters relating to the Company's
products and product candidates and the research and development
activities associated with them. The Company's product candidates
may prove to have undesirable side effects that may interrupt or
delay clinical studies and could ultimately prevent or limit their
commercial use. The Company or regulatory authorities may suspend or
terminate clinical trials at any time if the participants in such
trials are believed to be exposed to unacceptable health risks. Even
if regulatory approval is obtained, a marketed product and its
manufacturer are subject to continued review. Later discovery of
previously unknown problems with a product or manufacturer may result
in restrictions on such product or manufacturer, including withdrawal
of the product from the market. Failure to obtain necessary
approvals, or the restriction, suspension, or revocation of any
approvals, or the failure to comply with regulatory requirements
could have a material adverse effect on the Company.
Reimbursement
The success of the Company's products partially depends upon the
extent to which a consumer is willing to pay the price or able to
obtain reimbursement for the cost of these products from government
health administration authorities, private health insurers, and other
organizations. Significant uncertainties exist as to the
reimbursement status of newly approved therapeutic products, and
current reimbursement policies for existing products may change. It
is possible that changes in reimbursement or failure to obtain
reimbursement may reduce the demand for or the price of the Company's
products.
Several factors could influence the pricing or reimbursement for
the Company's products including: (1) third-party payors continuing
to challenge the prices charged for medical services and products,
(2) the trend towards managed care in the United States, (3) the
growth of organizations which could control or significantly
influence the purchase of health care services and products, and (4)
legislative proposals to reform health care or reduce government
insurance programs. NEUPOGEN(R) usage has been and is expected to
2
<PAGE>
continue to be affected by cost containment pressures on health care
providers worldwide. In addition, patients receiving EPOGEN(R) in
connection with treatment for end stage renal disease are covered
primarily under medical programs provided by the federal government.
Therefore, EPOGEN(R) sales may also be affected by future changes in
reimbursement rates or the basis for reimbursement by the federal
government.
Competition
Substantial competition exists in the biotechnology industry
from pharmaceutical and biotechnology companies which may have
technical or competitive advantages. The Company competes with these
companies in the development of technologies and processes and
sometimes competes with them in acquiring technology from academic
institutions, government agencies, and other private and public
research organizations. There can be no assurance that the Company
will be able to produce or acquire rights to products that have
commercial potential. Even if the Company achieves product
commercialization, there can be no assurance that one or more of the
Company's competitors may not: (1) achieve product commercialization
earlier than the Company, (2) receive patent protection that
dominates or adversely affects the Company's activities, or (3) have
significantly greater marketing capabilities.
The field of biotechnology has undergone rapid and significant
technological change. The Company expects that the technology
associated with the Company's research and development will continue
to develop rapidly, and the Company's future success will depend in
large part on its ability to maintain a competitive position with
respect to this technology. Rapid technological development by the
Company or others may result in some of the Company's product
candidates, products, or processes becoming obsolete before the
Company recovers a significant portion of the research, development,
manufacturing, and commercialization expenses it incurs. This could
have a material adverse effect on the Company.
Intellectual property and legal matters
The patent positions of pharmaceutical and biotechnology
companies can be highly uncertain and involve complex legal and
factual questions. Accordingly the breadth of claims allowed in such
companies' patents cannot be predicted. Patent disputes are frequent
and can preclude commercialization of products. The Company is and
may in the future be involved in material patent litigation. Such
litigation, if decided adversely, could subject the Company to
significant liabilities and cause the Company to obtain third party
licenses or cease using the technology or product in dispute.
The Company is involved in arbitration proceedings with Ortho
Pharmaceutical Corporation, a subsidiary of Johnson & Johnson
("Johnson & Johnson"), relating to a license granted by the Company
to Johnson & Johnson for sales of Epoetin alfa in the United States
for all human uses except dialysis and diagnostics. See Note 4 to
the Condensed Consolidated Financial Statements - "Contingencies -
Johnson and Johnson arbitrations." While it is impossible to predict
accurately or determine the outcome of these proceedings, based
3
<PAGE>
primarily upon the merits of its claims and based upon certain
liabilities established due to the inherent uncertainty of any
arbitrated result, the Company believes that the outcome of these
proceedings will not have a material adverse effect on its financial
statements. However, it is possible that an adverse decision could,
depending on its magnitude, have a material adverse effect on the
financial statements.
4
<PAGE>
