<PAGE>
INFORMATION REQUIRED IN PROXY STATEMENT
------------------------
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
IMMUNEX CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
Calculation of Filing Fee:
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1) Amount previously paid:
------------------------------------------------------------------------
2) Form, schedule or registration statement no.:
------------------------------------------------------------------------
3) Filing party:
------------------------------------------------------------------------
4) Date filed:
------------------------------------------------------------------------
<PAGE>
IMMUNEX CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, APRIL 25, 1996
------------------------
To the Shareholders of Immunex Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of IMMUNEX
CORPORATION, a Washington corporation (the "Company"), will be held at the
Immunex Manufacturing and Development Center, 21511 23rd Drive Southeast,
Bothell, Washington, on Thursday, April 25, 1996 at 9:00 a.m. or at any
adjournment or postponement thereof (the "Annual Meeting") for the following
purposes:
1. To elect nine directors to serve until the Annual Meeting of Shareholders
next ensuing after their election and until their respective successors
are elected and shall qualify; and
2. To consider and transact such other business as may properly come before
the Annual Meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy Statement
accompanying this Notice.
The Company's Board of Directors has fixed the close of business on March
13, 1996 as the record date for the determination of shareholders entitled to
notice of, and to vote at, the Annual Meeting.
To ensure representation at the Annual Meeting, shareholders are urged to
mark, sign, date and return the enclosed Proxy as promptly as possible, even if
they plan to attend the Annual Meeting. A return envelope, which requires no
postage if mailed in the United States, is enclosed for this purpose. Any
shareholder attending the Annual Meeting may vote in person even if such
shareholder has returned a Proxy if the Proxy is revoked in the manner set forth
in the accompanying Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
Scott G. Hallquist
SECRETARY
Seattle, Washington
March 26, 1996
PLEASE NOTE THAT ATTENDANCE AT THE ANNUAL MEETING WILL BE LIMITED TO
SHAREHOLDERS OF THE COMPANY AS OF THE RECORD DATE (OR THEIR AUTHORIZED
REPRESENTATIVES) AND GUESTS OF THE COMPANY. TO OBTAIN AN ADMITTANCE TICKET AND
DIRECTIONS TO THE MANUFACTURING AND DEVELOPMENT CENTER, PLEASE MARK THE
APPROPRIATE BOX ON THE ENCLOSED PROXY AND AN ADMITTANCE TICKET AND A MAP WILL BE
SENT TO YOU. IF YOUR SHARES ARE HELD BY A BANK OR BROKER, YOU MAY OBTAIN AN
ADMITTANCE TICKET AND A MAP BY RETURNING THE REQUEST CARD PROVIDED TO YOU BY
YOUR BANK OR BROKER.
<PAGE>
IMMUNEX CORPORATION
------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited by the Board of Directors of Immunex
Corporation ("Immunex" or the "Company") for use at the Annual Meeting of
Shareholders to be held on Thursday, April 25, 1996 at 9:00 a.m. or at any
adjournment or postponement thereof (the "Annual Meeting") for the purposes set
forth herein and in the accompanying Notice of Annual Meeting of Shareholders.
The Annual Meeting will be held at the Immunex Manufacturing and Development
Center, 21511 23rd Drive Southeast, Bothell, Washington. The principal executive
offices of the Company are located at 51 University Street, Seattle, Washington
98101.
The Company intends to first give or mail to shareholders definitive copies
of this Proxy Statement and accompanying Proxy on or about March 26, 1996.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record at the close of business on March 13, 1996 of shares
of common stock of the Company (the "Common Stock") will be entitled to notice
of, and to vote at, the Annual Meeting. At that date, there were issued and
outstanding 39,601,899 shares of Common Stock.
REVOCABILITY OF PROXIES
Any shareholder giving a Proxy has the power to revoke it at any time before
it is exercised. A Proxy may be revoked either by (i) filing with the Secretary
of the Company prior to the Annual Meeting, at the Company's executive offices,
either a written revocation or a duly executed Proxy bearing a later date or
(ii) attending the Annual Meeting and voting in person, regardless of whether a
Proxy has previously been given. Presence at the Annual Meeting will not revoke
the shareholder's Proxy unless such shareholder votes in person.
QUORUM
A quorum for the Annual Meeting shall consist of the holders of a majority
of the outstanding shares of Common Stock entitled to vote at the Annual
Meeting, present in person or by proxy.
SOLICITATION OF PROXIES
The Company has retained MacKenzie Partners, Inc., 156 Fifth Avenue, New
York, New York, to aid in the solicitation of Proxies. It is estimated that the
cost of these services will be approximately $5,000, plus expenses. The cost of
soliciting Proxies will be borne by the Company. Proxies will be solicited by
personal interview, mail and telephone. In addition, the Company may reimburse
brokerage firms and other persons representing beneficial owners of shares of
Common Stock for their expenses in forwarding solicitation materials to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation,
personally or by telephone or telefax.
VOTING
Each shareholder will be entitled to one vote for each share of Common Stock
held. Directors will be elected by a plurality of the shares of Common Stock
present by proxy or in person at the Annual Meeting. Holders of Common Stock are
not entitled to cumulate votes in the election of directors. Abstention from
voting and broker nonvotes on the election of directors will have no impact on
the outcome of this proposal.
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The Company is not aware, as of the date hereof, of any matters to be voted
upon at the Annual Meeting other than as stated in the accompanying Notice of
Annual Meeting of Shareholders. The enclosed Proxy gives discretionary authority
to the persons named therein to vote the shares in their best judgment if any
other matters are properly brought before the Annual Meeting.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth as of December 31, 1995 certain information
regarding all shareholders known by the Company to be the beneficial owners of
more than 5% of the outstanding voting securities of the Company, based on
publicly available information. To the Company's knowledge, the beneficial
owners listed below have sole voting and investment power with respect to the
shares shown as beneficially owned.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP CLASS
- -------------------------------------------------------------- ------------------ ------------------ -----------
<S> <C> <C> <C>
American Cyanamid Company (1)................................. Common Stock 21,513,752 54.3%
One Cyanamid Plaza
Wayne, New Jersey 07470
Wellington Management Company................................. Common Stock 2,930,660 7.4%
75 State Street
Boston, Massachusetts 02109
</TABLE>
- ------------------------
(1) American Cyanamid Company ("Cyanamid") is a wholly owned subsidiary of
American Home Products Corporation ("American Home Products" or "AHP").
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth as of March 13, 1996, the number of
outstanding voting securities of the Company beneficially owned by (i) each
director and each nominee, (ii) each of the executive officers for whom
compensation is reported in this Proxy Statement and (iii) all current directors
and executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER TITLE OF CLASS OWNERSHIP CLASS
- ---------------------------------------- -------------- -------------------- ----------
<S> <C> <C> <C>
Steven Gillis........................... Common Stock 460,262(1) 1.2%
Scott G. Hallquist...................... Common Stock 49,928(2) *
Michael L. Kranda....................... Common Stock 47,837(2) *
Edward V. Fritzky....................... Common Stock 42,700(3) *
Douglas G. Southern..................... Common Stock 22,034(4) *
Douglas E. Williams..................... Common Stock 8,463(5) *
Kirby L. Cramer......................... Common Stock 5,000(6) *
Edith W. Martin......................... Common Stock 5,000(6) *
John E. Lyons........................... Common Stock 4,000(6) *
Richard L. Jackson...................... Common Stock 1,000 *
Joseph J. Carr.......................... Common Stock -- --
Robert A. Essner........................ Common Stock -- --
All current directors and executive
officers as a group (16 persons)....... Common Stock 646,224 1.6
</TABLE>
- ------------------------
* Less than 1% of the outstanding shares of Common Stock.
(1) Excludes 39,000 shares of Common Stock held by three trusts established by
Dr. Gillis for the benefit of his family. Dr. Gillis is not the trustee of
such trusts and disclaims beneficial ownership of such shares.
2
<PAGE>
(2) Includes 28,166 shares that are issuable upon exercise of stock options that
are currently exercisable or are exercisable within 60 days.
(3) Includes 40,500 shares that are issuable upon exercise of stock options that
are currently exercisable or are exercisable within 60 days.
(4) Includes 17,500 shares that are issuable upon exercise of stock options that
are currently exercisable or are exercisable within 60 days.
(5) Includes 7,400 shares that are issuable upon exercise of stock options that
are currently exercisable or are exercisable within 60 days.
(6) Includes 4,000 shares that are issuable upon exercise of stock options that
are currently exercisable or are exercisable within 60 days.
ELECTION OF DIRECTORS
A Board of Directors consisting of nine directors will be elected at the
Annual Meeting to hold office for a term of one year or until their successors
are elected and shall qualify.
Pursuant to the Amended and Restated Governance Agreement dated as of
December 15, 1992 (the "Governance Agreement"), AHP is entitled to designate
three Investor Directors (as defined below) and one Independent Director (as
defined below) for election to the Board of Directors. AHP has not yet
designated a candidate to serve as an Independent Director. However, AHP is
expected to
designate a director nominee for election by the Board of Directors, and may do
so at any time. See "Relationship With American Home Products Corporation and
American Cyanamid Company -- Governance Agreement -- Designation of Candidates
for Board of Directors." Proxies may not be voted for a greater number of
persons than the number of nominees named.
The Board of Directors has approved the nominees named below, who were
designated in accordance with the Governance Agreement. Unless otherwise
instructed, it is the intention of the persons named in the accompanying Proxy
to vote shares represented by properly executed Proxies for such nominees.
Although the Board of Directors anticipates that all the nominees will be
available to serve as directors of the Company, should any one or more of them
not accept the nomination, or otherwise be unwilling or unable to serve, it is
intended that the Proxies will be voted for the election of such substitute
nominees as may be designated in accordance with the Governance Agreement.
The following table sets forth the name and age of each nominee for election
as a director, the positions and offices held by the nominee with the Company
and the period during which the nominee has served as a director of the Company:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITIONS AND OFFICES WITH THE COMPANY SINCE
- ------------------------ --- -------------------------------------------------------- -----------
<S> <C> <C> <C>
Edward V. Fritzky 45 Chief Executive Officer; Chairman of the Board 1994
Michael L. Kranda 42 President; Chief Operating Officer; Director 1991
Joseph J. Carr 53 Director 1995
Kirby L. Cramer 59 Director 1987
Robert A. Essner 48 Director 1995
Richard L. Jackson 56 Director 1995
John E. Lyons 70 Director 1993
Edith W. Martin 50 Director 1993
Douglas E. Williams 37 Nominee --
</TABLE>
Mr. Fritzky was named the Company's Chief Executive Officer and Chairman of
the Board in January 1994. Mr. Fritzky served as President of Lederle
Laboratories ("Lederle"), a division of Cyanamid, from 1992 to 1994 and as Vice
President of Lederle from 1989 to 1992. Prior to joining
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<PAGE>
Lederle, Mr. Fritzky was an executive of Searle Pharmaceuticals, Inc.
("Searle"), a subsidiary of Monsanto Company. During his tenure at Searle, Mr.
Fritzky was Vice President, Marketing, and later President and General Manager
of Searle Canada, Inc. and Lorex Pharmaceuticals, a joint venture company.
Mr. Kranda has been a director of the Company since 1991. He has been
employed by the Company since July 1985, initially as Director, Corporate
Development. From January 1986 to July 1988, he served as General Manager of
Immunology Ventures, the Company's partnership with Eastman Kodak Company. In
July 1988, Mr. Kranda was elected Executive Vice President and Chief Operating
Officer of the Company. In October 1990, he was elected President, retaining the
office of Chief Operating Officer. Mr. Kranda previously served as President of
Immunex Manufacturing Corporation, the Company's wholly owned manufacturing
subsidiary. Mr. Kranda also serves as a director of the Woodland Park Zoological
Society and the Washington Research Foundation, both private nonprofit entities.
Mr. Carr was elected as a director of the Company in January 1995. He joined
American Home Products, a leading manufacturer of pharmaceutical, healthcare,
animal health, agricultural and food products, in 1982, and served in various
executive capacities prior to being named Vice President in 1989. In April 1991,
Mr. Carr was appointed Group Vice President of AHP, and in May 1993, was
appointed Senior Vice President.
Mr. Cramer has been a director of the Company since 1987. Mr. Cramer is
Chairman Emeritus of Hazleton Laboratories Corporation. He is a Trustee Emeritus
and former President of the University of Virginia's Colgate Darden Graduate
School of Business Administration. Mr. Cramer is currently Chairman of the
Advisory Board of the School of Business Administration of the University of
Washington. He also serves on the board of directors of Advanced Technology
Laboratories, Inc., Applied Bioscience International, Commerce Bancorporation,
International Technology Corp., Landec Corporation, Unilab, Inc., The Commerce
Bank of Washington, Northwestern Trust Company and other privately held
companies. Mr. Cramer is the Chair of the Compensation Committee and the Stock
Option Plan Administration Committee.
Mr. Essner was elected as a director of the Company in January 1995. He
joined American Home Products in 1989 as Senior Vice President, Sales and
Marketing, of its Wyeth-Ayerst Laboratories division ("Wyeth-Ayerst"). In 1991,
he was appointed Executive Vice President, and in March 1993, he was appointed
President, of Wyeth-Ayerst. Prior to joining AHP, Mr. Essner was employed by
Sandoz Pharmaceuticals Corporation for 13 years, most recently as Chief
Operating Officer.
Dr. Jackson was elected as a director of the Company in July 1995. He joined
American Home Products in 1993 as Vice President, Discovery Research of its
Wyeth-Ayerst division. Prior to joining AHP, Dr. Jackson was employed by the
Marion Merrell Dow Research Institute for eight years, most recently as Vice
President, Research Sciences.
Mr. Lyons has been a director of the Company since 1993. Mr. Lyons retired
as Vice Chairman of the Board of Merck & Company ("Merck") in 1991. He joined
Merck in 1950 as a Research Chemist and held a number of senior marketing and
sales positions in the Merck, Sharp & Dohme division of Merck, serving as its
President from 1975 to 1985. He was appointed Corporate Senior Vice President of
Merck in 1982, Executive Vice President in 1985, and Vice Chairman of the Board
in 1988. Mr. Lyons also serves on the board of directors of Synaptic
Pharmaceutical Company and Matrix Pharmaceutical Company.
Dr. Martin has been a director of the Company since 1993. Dr. Martin is the
Information Services and Chief Technology Officer of Eastman Kodak Company, a
position she has held since February 1996. Between September 1994 and February
1996, Dr. Martin was the Executive Vice President and Chief Technology Officer
of the Student Loan Marketing Association ("Sallie Mae"). Prior to joining
Sallie Mae, Dr. Martin had been Vice President and Chief Information Officer of
the International Telecommunications Satellite Organization ("INTELSAT") since
1992. Prior to joining INTELSAT,
4
<PAGE>
Dr. Martin was Vice President, High Technology Center, The Boeing Company. Dr.
Martin also serves on the board of directors of Medtronic, Inc. and
International Resources, Inc. Dr. Martin is the Chair of the Audit Committee.
Dr. Williams joined the Company in 1988. He served as Vice President of
Research and Development from 1992 until September 1994, when he was appointed
to his current position of Senior Vice President, Discovery Research. Dr.
Williams was elected an executive officer of the Company in February 1995. He
received a Ph.D. in physiology from the State University of New York at Buffalo,
Roswell Park Memorial Institute Division.
INFORMATION ON COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
During the last fiscal year there were eight meetings of the Company's Board
of Directors. All incumbent directors attended at least 75% of the Board
meetings held and at least 75% of the Committee meetings held of which they were
a member.
In accordance with the Governance Agreement, the Board of Directors
maintains an Audit Committee, a Compensation Committee, a Nominating Committee
and a Stock Option Plan Administration Committee.
The Audit Committee, currently composed of Messrs. Cramer and Lyons and Dr.
Martin, is responsible, among other things, for recommending the selection of
certified public accountants to the Board of Directors, reviewing the scope and
results of the audits, approving nonaudit services performed by the certified
public accountants and reviewing the Company's accounting policies and
procedures and system of internal controls. During the past year, there were
three Audit Committee meetings.
The Compensation Committee, currently composed of Messrs. Carr, Cramer and
Lyons and Dr. Martin, is responsible, among other things, for recommending to
the Board of Directors the adoption and amendment of all employee benefit plans
and arrangements and the engagement of, terms of any employment agreements and
arrangements with, and terminations of, all corporate officers of the Company.
During the past year, there were two Compensation Committee meetings.
The Nominating Committee, currently composed of Messrs. Carr and Kranda, is
responsible for the nomination of directors and the solicitation of shareholder
proxies. Under the Governance Agreement, designation of directors for nomination
is to be made exclusively by Immunex and AHP. During the past year, there was
one Nominating Committee meeting.
The Stock Option Plan Administration Committee, currently composed of
Messrs. Carr, Cramer, Essner and Lyons and Drs. Jackson and Martin, is
responsible, among other things, for recommending to the Board of Directors the
adoption and amendment of all stock option plans of the Company and for
administering such plans. During the past year, there were three Stock Option
Plan Administration Committee meetings.
COMPENSATION OF DIRECTORS
Each Independent Director is entitled to receive $6,000 per quarter and
$1,000 per quarter for serving as the Chair of a Committee. In addition, each
Independent Director is entitled to receive $1,000 for each Board of Directors
and each Committee meeting attended in person and $500 for each such meeting
attended telephonically. In November 1995, the Board of Directors formed a
Special Committee, composed of the Independent Directors and the Management
Directors (as defined below) to consider AHP's offer to purchase all outstanding
shares of Common Stock not already held by AHP. In the course of the Special
Committee's deliberations, nine Special Committee meetings were held, and the
Independent Directors participated in numerous other telephone conferences and
reviewed extensive business and legal information. In connection with their
service on the Special Committee, Dr. Martin and Mr. Lyons each received
aggregate compensation of $45,000 and Mr. Cramer received
5
<PAGE>
$46,500. See "Relationship with American Home Products Corporation and American
Cyanamid Company -- Background." Management Directors and Investor Directors
receive no additional compensation for attending Board or Committee meetings.
Under the Company's Stock Option Plan for Nonemployee Directors, each
Independent Director receives a one-time grant of an option to purchase 10,000
shares of Common Stock on the day such director is initially elected or
appointed to the Board of Directors. Such options vest at a rate of 20% per year
over a five-year period.
6
<PAGE>
RELATIONSHIP WITH AMERICAN HOME PRODUCTS CORPORATION AND
AMERICAN CYANAMID COMPANY
BACKGROUND
On June 1, 1993, the Company's predecessor ("Predecessor Immunex") was
merged (the "Merger") into Lederle Oncology Corporation, a previously
nondistinct operating unit of Cyanamid, pursuant to an Amended and Restated
Agreement and Plan of Merger dated as of December 15, 1992 among Predecessor
Immunex, Cyanamid and certain other parties thereto (the "Merger Agreement").
Each share of Common Stock of Predecessor Immunex outstanding immediately prior
to the effective time of the Merger (the "Effective Time") was converted
pursuant to the Merger into the right to receive $21 in cash and one share of
Common Stock of the newly formed entity, the Company. Cyanamid contributed $350
million in cash and certain assets and contractual obligations of its oncology
business in the United States and Canada (the "Lederle Oncology Business") to
Lederle Oncology Corporation just prior to the Effective Time. Cyanamid received
53.5% of the Company's Common Stock outstanding immediately following the
Effective Time, on a fully diluted basis.
Simultaneously with entering into the Merger Agreement, Predecessor Immunex
and Cyanamid entered into the Governance Agreement, which sets forth, among
other things, certain agreements of the parties relating to (i) the corporate
governance of the Company, including the composition of its Board of Directors,
(ii) rights of Cyanamid to purchase additional shares of the Company's Common
Stock from the Company upon the occurrence of certain events, (iii) future
acquisitions and dispositions of the Company's securities by Cyanamid, (iv)
rights of members of the Company's Board of Directors designated by Cyanamid to
approve certain corporate actions, (v) the requirement that a supermajority of
the members of the Company's Board of Directors approve certain corporate
actions, and (vi) payments to be made by Cyanamid to the Company in the event
that the products of the Lederle Oncology Business and certain other new
products of Immunex do not achieve specified revenue targets. In addition,
pursuant to the Merger Agreement, Immunex, Cyanamid and certain of their
respective subsidiaries entered into certain agreements at the closing of the
Merger relating to cooperation in research and development, supply and
manufacture of certain products, and other matters.
In November 1994, all the outstanding shares of common stock of Cyanamid
were acquired by AHP. Cyanamid is currently a wholly owned subsidiary of AHP.
Pursuant to an agreement dated September 20, 1994 between the Company and AHP,
AHP agreed not to take any action to cause Cyanamid or its subsidiaries to
violate any of their obligations to the Company. AHP also agreed that if it
causes the separate existence of Cyanamid or any of Cyanamid's subsidiaries
having obligations to the Company to cease, or causes such entity to transfer
all or substantially all of its assets, AHP will make appropriate provision so
that any successor to such entity or transferee of such assets that is an
affiliate of AHP will be bound by and required to perform its obligations to the
Company. In addition, AHP agreed it will not take any action to cause Cyanamid
or its subsidiaries to violate their obligations to Immunex. AHP also agreed,
among other things, to be bound by the Standstill Provisions of the Governance
Agreement to the extent such provisions apply to Cyanamid. See "-- Governance
Agreement -- Standstill Provisions." All references to AHP in this Proxy
Statement include AHP and its subsidiaries, divisions or affiliates that have
assumed the obligations of Cyanamid.
On November 1, 1995, AHP presented Immunex with an offer to acquire the
remaining shares of Immunex stock not held by AHP for $14.50 per share. The
Company's Board of Directors formed a Special Committee to consider the offer,
comprising all directors other than the Investor Directors. The Special
Committee retained Alex. Brown & Sons Incorporated as its financial advisor.
After considering the offer and the recommendations of its financial and legal
advisors, the Special Committee informed AHP on November 13, 1995 that it had
decided to reject AHP's offer as being inadequate.
7
<PAGE>
GOVERNANCE AGREEMENT
DESIGNATION OF CANDIDATES FOR BOARD OF DIRECTORS
The Company's Board of Directors following the 1996 Annual Meeting of
Shareholders will consist of nine directors. Pursuant to the Governance
Agreement, three directors are designated for election by the Company (the
"Management Directors"), three are designated for election by AHP (the "Investor
Directors"), three independent directors are designated for election by
agreement of the Company and AHP, and AHP has the right to designate a fourth
independent director for election (the "Independent Directors").
At all times during the term of the Governance Agreement, the number of
directors that AHP and the management of Immunex have the right to designate
will be determined by the percentage interest of Immunex beneficially owned by
AHP. If AHP's interest is: (i) below 20%, AHP will have no right to designate
any directors, and the management of Immunex will have the right to designate
six Management Directors; (ii) 20% or above but less than 35%, AHP will have the
right to designate one Investor Director, and the management of Immunex will
have the right to designate five Management Directors; (iii) 35% or above but
less than 45%, AHP will have the right to designate two Investor Directors, and
the management of Immunex will have the right to designate four Management
Directors; (iv) 45% or above but less than 65%, AHP will have the right to
designate three Investor Directors, and the management of Immunex will have the
right to designate three Management Directors; and (v) 65% or above, AHP will
have the right to designate four Investor Directors, by adding an additional
Investor Director to the Board of Directors, and the management of Immunex will
have the right to designate three Management Directors.
In the event that AHP's interest is such that there are more Investor
Directors or Management Directors on the Board of Directors than AHP or the
management of Immunex, as the case may be, has the right to designate, AHP or
the management of Immunex, as the case may be, will promptly cause to resign,
and take all other action reasonably necessary to cause the prompt removal of,
that number of Investor Directors or Management Directors, as the case may be,
as required to make the remaining number of Investor Directors or Management
Directors conform with the formula described in the preceding paragraph.
With certain exceptions, AHP and the Management Directors will have the
right to designate replacements for directors designated pursuant to the
Governance Agreement by AHP or the Management Directors, respectively, at the
termination of such director's term or upon death, resignation, retirement,
disqualification, removal from office or other cause. The Board of Directors
will elect each person so designated upon nomination by the Nominating
Committee, which consists of an equal number of directors designated by each of
Immunex and AHP. No individual who is an officer, director, partner or principal
shareholder of any competitor of Immunex or any of its subsidiaries (other than
AHP and its affiliates) may be designated to serve as a director of Immunex.
In any election of directors or any meeting of the shareholders of Immunex
called expressly for the removal of directors, AHP and its affiliates will vote
their shares of Common Stock for all nominees in proportion to the votes cast by
the other shareholders of Immunex, except that AHP and its affiliates may cast
any or all of their votes, in their sole discretion, (i) in favor of any nominee
designated by AHP pursuant to the Governance Agreement and (ii) in connection
with any election contest to which Rule 14a-11 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") applies. With certain limited
exceptions, in all other matters submitted to a vote of shareholders of Immunex,
AHP may vote any or all of its shares in its sole discretion.
CERTAIN APPROVAL RIGHTS
So long as AHP has the right to designate at least two Investor Directors to
the Board of Directors, the approval of at least one of the Investor Directors
will be required for the Board of Directors to approve and authorize certain
corporate actions. Such actions include, without limitation, the following: (i)
the entry by Immunex or any of its subsidiaries into any merger or consolidation
8
<PAGE>
or the acquisition by Immunex or any of its subsidiaries of any business or
assets that would constitute more than 10% of the fair market value of the total
assets of Immunex and its subsidiaries; (ii) the sale, lease, pledge, grant of a
security interest in, license, transfer or other disposal by Immunex or any of
its subsidiaries of more than 10% of the fair market value of the total assets
of Immunex and its subsidiaries; (iii) with certain exceptions, the issuance of
any debt or equity securities or other capital stock of Immunex or any of its
subsidiaries; (iv) a reclassification, split, redemption or other acquisition of
any of the debt or equity securities of Immunex or any of its subsidiaries
(subject to certain exceptions); (v) any amendment to the Articles of
Incorporation or Bylaws of Immunex or any change in the size or composition of
the Board of Directors or committee thereof, except in accordance with the
Governance Agreement; (vi) the establishment of any committee of the Board of
Directors not specifically described in the Governance Agreement; (vii) any
change in accounting policies or procedures of Immunex or any of its
subsidiaries; (viii) the payment or discharge of any claim, liability or
obligation other than in the ordinary course of business, except where such
claim, liability or obligation does not exceed $350,000; (ix) the commencement
or termination of any suit, litigation or proceeding with respect to patent
rights, and any other suit, litigation or proceeding that involves a claim,
liability or obligation in excess of $350,000 or that is material to Immunex's
business or assets; (x) any (a) incurrence of indebtedness for borrowed money
other than as provided for in Immunex's annual operating plans (the "Annual
Operating Plans") provided to AHP or its affiliates from time to time or (b)
capital expenditure by Immunex or any of its subsidiaries that is greater than
both (1) $350,000 and (2) the amount provided for such expenditure in the Annual
Operating Plans; (xi) the institution by Immunex or any of its subsidiaries of
any shareholder rights plan or similar plan or device; (xii) the acquisition by
Immunex or any of its subsidiaries of technology or products under any license
or similar arrangement if the payments under all such licenses that are not
contingent upon sales of licensed technology or products would exceed $500,000
during any year; or (xiii) the dissolution of Immunex or any of its
subsidiaries, the adoption of a plan of liquidation for Immunex or any of its
subsidiaries or any action by Immunex or any of its subsidiaries to commence any
bankruptcy or similar proceeding.
The approval of seven directors (or, if the Board of Directors consists of
more than nine persons, that number of directors representing 70% of the total
number of directors, rounded up to the nearest whole number), including, in the
case of clause (iv) below, two Independent Directors, will be required for the
Board of Directors to approve any of the following: (i) the employment of the
chief executive officer, chief operating officer, chief financial officer or
chief scientific officer of Immunex (each, a "Senior Officer"); (ii) Annual
Operating Plans for Immunex and its subsidiaries, which shall include all
material capital expenditures and borrowing plans applicable to the year in
question; (iii) Immunex's five-year product development and facility plans; and
(iv) amendment of the Governance Agreement or provisions of Immunex's Articles
of Incorporation or Bylaws implementing the provisions of the Governance
Agreement.
The approval of six directors, which six directors must include each of the
Independent Directors, will be required to approve and authorize the termination
of any Senior Officer.
SUBSCRIPTION RIGHTS OF AMERICAN HOME PRODUCTS
So long as AHP has the right to designate at least one Investor Director,
prior to any issuance of securities by Immunex, AHP must be offered the right to
purchase a pro rata share of such new securities. The foregoing right does not
apply, however, to securities issued upon exercise of outstanding options or
warrants and to certain other issuances specified in the Governance Agreement.
So long as AHP has the right to designate at least one Investor Director,
AHP has the option to purchase from Immunex on a quarterly basis additional
shares of Common Stock or other voting stock of Immunex to the extent necessary
to permit AHP to maintain the percentage of shares of Common Stock or other
voting stock of Immunex, as the case may be, owned by AHP and its affiliates as
of the
9
<PAGE>
immediately preceding quarter. The per share purchase price of such shares of
Common Stock or other voting stock of Immunex, as the case may be, will be equal
to the fair market value of such shares on the date of AHP's purchase.
STANDSTILL PROVISIONS
AHP has agreed, until June 1, 1998 (the "Standstill Period"), subject to
certain exceptions, not to directly or indirectly purchase or otherwise acquire,
or propose or offer to purchase or otherwise acquire, any equity securities of
Immunex, whether by tender offer, market purchase, private negotiated purchase,
Business Combination (as defined in the Governance Agreement and described
below) or otherwise if, immediately after such purchase or acquisition, AHP's
beneficial interest in Immunex would exceed 53.5% on a fully diluted basis.
The prohibitions on AHP's acquisition of equity securities of Immunex do not
apply during any period in which AHP or any of its affiliates beneficially owns,
in the aggregate, less than 5% of the then-outstanding shares of Common Stock
(assuming exercise or conversion of any rights, options or warrants to purchase
Common Stock held by AHP and its affiliates, but assuming no other exercise or
conversion of outstanding rights, options or warrants to purchase Common Stock).
In addition, such prohibitions do not apply with respect to any of the
following: (i) any Permitted Acquisition Transaction (as defined in the
Governance Agreement and described below) that is disclosed to the Board of
Directors promptly after the decision has been made to propose such transaction;
(ii) any issuance of securities pursuant to AHP's subscription rights set forth
in the Governance Agreement; (iii) open-market purchases made by AHP from time
to time of equity securities of Immunex if (a) immediately after any such market
purchases, AHP's beneficial interest in Immunex would not exceed 70% and (b)
AHP's intention to make such market purchases is disclosed to the Board of
Directors and shareholders of Immunex at least two trading days prior to any
such purchases and such purchases are completed within 30 days of such notice;
and (iv) any cash tender offer by AHP or any affiliate of AHP if, immediately
after such tender offer, AHP's beneficial interest in Immunex would not exceed
70%.
AHP has agreed that, during the Standstill Period, it will not, and will not
permit its subsidiaries to: (i) after submitting a definitive proposal for a
Permitted Acquisition Transaction to the Board of Directors, make any public
announcement with respect to such transaction without the prior approval of the
Board of Directors, except as required by law; (ii) make or participate in any
"solicitation" of "proxies" (as such terms are used in the proxy rules of the
Securities and Exchange Commission (the "Commission")) to vote or seek to
advise, encourage or influence any person or entity with respect to the voting
of any shares of capital stock of Immunex; or (iii) deposit any shares of Common
Stock into a voting trust or subject any shares of Common Stock to any
arrangement or agreement with respect to the voting of such securities or form,
join or in any way participate in any "group" (within the meaning of Section
13(d)(3) of the Exchange Act) with respect to any shares of Common Stock.
A "Permitted Acquisition Transaction," as defined in the Governance
Agreement, means either (i) a cash tender offer for all outstanding Common Stock
that is conditioned upon approval by at least a majority of the shareholders of
Immunex other than AHP and its affiliates (the "Unaffiliated Shareholders") or
(ii) a Business Combination that is conditioned upon approval by at least a
majority of the Unaffiliated Shareholders, and that satisfies all the following
conditions: (a) the Board of Directors receives an opinion from a nationally
recognized independent investment banking firm selected by the Board of
Directors (excluding the Investor Directors) that the price and other financial
terms of the transaction are fair from a financial point of view to the
Unaffiliated Shareholders; (b) the Board of Directors, in accordance with the
Governance Agreement, concludes that the price and other terms of the
transaction are fair to and in the best interests of the Unaffiliated
Shareholders and recommends that the Unaffiliated Shareholders accept the tender
offer or otherwise approve the transaction; and (c) neither such investment
banking firm's opinion nor such recommendation of the
10
<PAGE>
Board of Directors is withdrawn prior to the consummation of the transaction. In
addition, a merger following the consummation of a tender offer described in
clause (i) of this paragraph that offers the same consideration as such tender
offer is deemed to be a Permitted Acquisition Transaction.
The term "Business Combination," as defined in the Governance Agreement,
means any one of the following transactions: (i) any merger or consolidation of
Immunex or any subsidiary of Immunex with (a) AHP or (b) any corporation (other
than Immunex) which is, or after such merger or consolidation would be, an
affiliate or associate of AHP; (ii) any tender or exchange offer by AHP or any
affiliate or associate of AHP for any equity securities of Immunex or any of its
subsidiaries; (iii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition by Immunex (in one transaction or a series of transactions) to
or with AHP or any affiliate or associate of AHP (other than Immunex) of more
than 10% of the fair market value of the total assets of Immunex and its
subsidiaries; (iv) the issuance, exchange or transfer, other than pursuant to
AHP's subscription rights under the Governance Agreement, by Immunex or any of
its subsidiaries (in one transaction or a series of transactions) of any
securities of Immunex or any subsidiary thereof to AHP or any affiliate or
associate of AHP (other than Immunex) in exchange for cash, securities or other
consideration (or a combination thereof) having an aggregate fair market value
equal to or in excess of 10% of the fair market value of the total assets of
Immunex and its subsidiaries; (v) the adoption of any plan or proposal for the
liquidation or dissolution of Immunex proposed by or on behalf of AHP or any
affiliate or associate of AHP (other than Immunex); or (vi) any reclassification
of securities (including any reverse stock split), recapitalization of Immunex,
any merger or consolidation of Immunex with any subsidiary thereof, or any other
transaction to which Immunex is a party (whether or not with or into or
otherwise involving AHP or any affiliate or associate of AHP) that has the
effect, directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities of Immunex
or any subsidiary thereof which is directly or indirectly owned by AHP or any
affiliate or associate of AHP (other than Immunex).
MATERIAL TRANSACTIONS WITH AMERICAN HOME PRODUCTS
Immunex may not enter into any contract, agreement or transaction with AHP
or any of its affiliates that is material to Immunex's business, taken as a
whole, unless two-thirds of the members of the Board of Directors, excluding the
Investor Directors and including at least two Independent Directors, approve
such contract, agreement or transaction.
TRANSFER OF IMMUNEX COMMON STOCK BY AMERICAN HOME PRODUCTS
AHP has agreed that, during the Standstill Period, it will not, and will not
permit any entity that is directly or indirectly wholly owned by AHP to,
transfer any shares of Common Stock, except (i) pursuant to a registered
underwritten public offering in accordance with the registration rights
provisions of the Governance Agreement, (ii) in accordance with the volume and
manner of sale limitations of Rule 144 promulgated under the Securities Act of
1933, as amended (the "Securities Act"), or (iii) to any wholly owned subsidiary
of AHP. During the Standstill Period, AHP may not transfer any interest in any
Common Stock to any purchaser or group (within the meaning of Section 13(d)(3)
of the Exchange Act) of purchasers if, after giving effect to such sale, such
purchaser or group of purchasers would, to AHP's knowledge, own, or have the
right to acquire, 5% or more of the then-outstanding shares of Common Stock.
Other than through a block trade in an underwritten offering, AHP may not,
directly or through any of its subsidiaries, transfer any interest in shares of
Common Stock in excess of 1% per day of the then-outstanding shares of Common
Stock.
Notwithstanding the foregoing paragraph, after June 1, 1996, AHP and its
wholly owned subsidiaries may transfer (an "Acquisition Sale") all (but not less
than all) the shares of Common Stock beneficially owned by them to any other
person other than an affiliate of AHP, provided that such other person has
offered to acquire all outstanding shares of Common Stock on the same terms and
conditions as such Acquisition Sale. In addition, if AHP intends to engage in an
Acquisition Sale it is required to notify Immunex of such intent and, for three
months subsequent to such notice, Immunex will have the opportunity to present
to AHP a potential buyer willing to purchase all (but not less than
11
<PAGE>
all) the shares of Common Stock beneficially owned by AHP and its wholly owned
subsidiaries. In the event that a potential buyer is presented, AHP may not
consummate an Acquisition Sale on terms less favorable to AHP than those
proposed by such potential buyer.
During the Standstill Period, AHP may not sell, transfer or otherwise
dispose of any of the capital stock of any wholly owned subsidiary of AHP that
owns Common Stock, except to another wholly owned subsidiary of AHP.
REGISTRATION RIGHTS
The holders of at least 25% of the Registrable Securities (as defined in the
Governance Agreement) (the "Initiating Holders") may request that Immunex file a
registration statement under the Securities Act covering the registration of any
or all Registrable Securities held by such Initiating Holders. Immunex will not
be obligated to effect more than two such registrations. The Governance
Agreement, however, does not limit the number of registrations on Form S-3 that
may be requested and obtained if Immunex is eligible to use Form S-3, provided
that the estimated aggregate offering price to the public exceeds $25 million
and the other provisions of the Governance Agreement are satisfied.
Subject to certain conditions, if Immunex proposes to file a registration
statement under the Securities Act on any form (other than on Form S-4 or S-8)
that also would permit the registration of Registrable Securities, and such
filing is to be on behalf of Immunex or selling holders of its securities for
the general registration of shares of Common Stock for cash, Immunex must give
notice thereof to the holders of the registration rights and permit such holders
to include Registrable Securities in the registration.
AHP's registration rights are subject to certain conditions set forth in the
Governance Agreement. In addition, the Governance Agreement sets forth specific
procedures relating to such registration rights and detailed obligations of the
parties with respect thereto. All expenses incident to the performance by
Immunex of its obligations with respect to the registration of AHP's shares of
Common Stock will be borne by Immunex, except that the Initiating Holders will
pay all expenses incident to the second registration. In addition, the holders
of Registrable Securities will bear and pay the underwriting commissions and
discounts applicable to securities offered for their account in connection with
any registrations, filings and qualifications made pursuant to the Governance
Agreement, as well as related counsel fees. Immunex and the holders of
Registrable Securities each have agreed to indemnify the other, in certain
instances, with respect to liabilities incurred in connection with such
registrations.
GUARANTY PAYMENTS BY AMERICAN HOME PRODUCTS
Until December 31, 1997, AHP has agreed to make certain payments to Immunex
if revenues from products of the Lederle Oncology Business and certain other
products of Immunex do not achieve certain annual targets. The targets for 1995
through 1997 are listed below as "Target Revenue." Payments are required for any
calendar year in which Target Revenue exceeds the "Actual Revenue," i.e., the
sum of Immunex's net sales of Cyanamid Oncology Products, New Oncology Products
and Additional Products plus certain other revenues related to Additional
Products (as such terms are described below).
The payment for any year in which Target Revenue is not realized equals (i)
the amount by which Target Revenue for the calendar year exceeded Actual Revenue
for such year (a "Revenue Shortfall") reduced by (ii) the total of the following
costs for such year ("Avoided Costs"): (a) variable manufacturing costs
(including packaging and similar costs); (b) variable distribution costs; (c)
commissions; (d) royalties and similar fees paid to third parties; and (e) all
costs for advertising, promotion, marketing, distribution or selling of any
Product (as described below) that were contemplated in the Annual Operating Plan
for such year and that were not incurred because any approval required for such
Product or any new label indication therefor was not received by the date
contemplated by such Annual Operating Plan ("Avoided Introductory Costs").
Notwithstanding the foregoing, the Revenue
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<PAGE>
Shortfall may not exceed the difference between the Target Revenue and the Base
Revenue set forth below and AHP's payment obligation may not exceed the amounts
set forth below as "AHP's Maximum Obligation." Immunex recorded a receivable
from AHP of $45,288,000 for the Revenue Shortfall for 1995. AHP paid this amount
on March 7 1996.
<TABLE>
<CAPTION>
1996 1997
------ ------
(IN MILLIONS)
<S> <C> <C>
Target Revenue.................................. $190.5 $216.5
Base Revenue.................................... 103.0 122.7
Maximum Revenue Shortfall....................... 87.5 93.8
AHP's Maximum Obligation........................ 56.0 60.0
</TABLE>
For purposes of calculating AHP's payment obligations, Avoided Costs may not
exceed 15% of any Revenue Shortfall in 1995 and 20% of any Revenue Shortfall in
each of 1996 and 1997; provided, however, that in the event total Avoided Costs
exceed such ceilings, AHP may reduce its Revenue Shortfall obligation by the
amount of such excess that constitutes Avoided Introductory Costs. AHP may
reduce its Revenue Shortfall obligation for 1997 by any amount by which Actual
Revenue exceeded Target Revenue in any prior calendar year.
Subject to certain conditions, AHP may discharge its Revenue Shortfall
obligation otherwise than by payment of the applicable cash amount under the
Governance Agreement if such alternative consideration provides Immunex with
equivalent value.
The term "Cyanamid Oncology Products" is defined in the Governance Agreement
to mean NOVANTRONE mitoxantrone, methotrexate injectable, leucovorin calcium,
thiotepa, AMICAR aminocaproic acid, LEVOPROME methotrimeprazine and Cyanamid's
generic anticancer products that are the subject of filings seeking regulatory
approval. The term "New Oncology Products" means all oncology products useful
(to the extent useful) in the diagnosis or treatment of cancerous or
precancerous, transitional or neoplastic diseases or conditions in humans
resulting from research conducted by AHP, the Company, or research jointly
sponsored by AHP and the Company, or any such product with respect to which AHP
or the Company (except for any such product that is acquired solely through the
Company's own efforts) is the licensee or distributor (to the extent of such
license or distribution rights) or is otherwise subsequently acquired by AHP or
the Company, including, without limitation: (i) cytotoxics (including
photosensitizers) and cytokine modulators; (ii) small molecule hematopoietic
stimulators; (iii) cytokines and cytokine receptors; (iv) MDR reversal agents;
(v) anti-tumor monoclonal antibody conjugates; (vi) RAS pathway antagonists; and
(vii) receptors other than TNFR. New Oncology Products will exclude such
products to the extent that the Company or AHP cannot grant license rights to
the other due to preexisting agreements entered into prior to December 15, 1992.
Should either party, however, have those rights returned to it, such product
will immediately become a New Oncology Product. For purposes of determining
Actual Revenues only, New Oncology Products will exclude any product of Immunex
that was marketed, clinically tested or in preclinical testing as of the
Effective Time. The term "Additional Products" is defined in the Governance
Agreement to mean such additional products designated (on an annual basis) by
AHP, with the concurrence of the Board of Directors, that are not Cyanamid
Oncology Products, New Oncology Products or Copromoted Products from which sales
or corporation revenues are to be included in Immunex's consolidated income
statements by reason of the fact that the Annual Operating Plan of Immunex
forecasts a Revenue Shortfall in respect of Cyanamid Oncology Products, New
Oncology Products and Copromoted Products. The term "Products" is defined in the
Governance Agreement to mean, in the aggregate, Cyanamid Oncology Products, New
Oncology Products and Additional Products.
TERMINATION
The Governance Agreement will terminate at the earlier of (i) such time as
AHP and its affiliates beneficially own 95% of all classes and series of Common
Stock and (ii) such time as AHP and its affiliates no longer own any such
shares.
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RESEARCH AND DEVELOPMENT AGREEMENT
In connection with the Merger, Cyanamid and Immunex entered into a Research
and Development Agreement (the "Research and Development Agreement") under
which, among other things, the parties collaborate in the research and
development and commercialization of New Oncology Products. Cyanamid and Immunex
formed a Collaboration Committee, which is responsible for planning, supervising
and coordinating the collaborative development and commercialization of New
Oncology Products. During the years 1993 through 1997, Immunex agreed to
contribute certain amounts in support of Cyanamid's oncology research and
development programs, within certain limits. During 1995, Immunex contributed
$15,800,000. Pursuant to the Research and Development Agreement, Immunex is
forecasted to pay the amounts shown below as Immunex Contribution during the
years 1996 through 1997. To the extent that actual Cyanamid oncology research
and development expenses for any year exceed the Total Oncology Research and
Development Budget Amount forecasted to be paid as shown below, Immunex will
also pay 50% of such excess, provided that any such excess greater than 3% of
the Total Oncology Research and Development Budget Amount shown below is
approved by the Board of Directors.
<TABLE>
<CAPTION>
1996 1997
----- -----
(IN MILLIONS)
<S> <C> <C>
Total Oncology Research and Development Budget
Amount........................................... $69.6 $76.6
Immunex Contribution.............................. 26.1 38.3
</TABLE>
The Research and Development Agreement provides that Immunex will contribute
50% of the funding budgeted for Cyanamid's oncology discovery research program
after 1997. Immunex and AHP each will bear development costs relating to each
New Oncology Product to the extent such costs relate to approval to sell such
product in the United States, its territories and possessions and Canada, in the
case of Immunex (the "Immunex Territory"), or in all other countries of the
world, in the case of Cyanamid (the "Cyanamid Territory").
Cyanamid granted to Immunex a royalty-free exclusive license under all
patents and technology owned or controlled by Cyanamid relating to New Oncology
Products to make, have made, use and sell all New Oncology Products in the
Immunex Territory, subject to Cyanamid's retained right to make, have made and
use New Oncology Products in the Immunex Territory. In addition, Cyanamid and
Immunex each granted to the other a royalty-free exclusive license to their
respective portions of any jointly owned technology to make, have made, use and
sell such technology in the Cyanamid Territory or the Immunex Territory, as the
case may be. Immunex and Cyanamid agreed to cooperate in preparing, filing,
maintaining and defending all such patents and in protecting all such
technology, in each case relating to the New Oncology Products. In the event
that a New Oncology Product is to be manufactured by Cyanamid for Immunex or by
Immunex for Cyanamid, the manufacturing party will supply the reasonable
clinical and commercial requirements of the other party for such product under a
supply agreement to be entered into by Immunex and AHP, at a cost that will
reimburse the manufacturing party for its manufacturing and (within certain
limits) process development costs (including an allocation for general and
administrative costs) allocable to such product, plus, with respect to
commercial requirements, a reasonable profit. To the extent Immunex develops
products or technology other than New Oncology Products and determines not to
market such products or technology itself, Immunex will offer to AHP exclusive
marketing rights to any such products or technology before offering any
marketing rights to third parties.
If AHP were to own less than 50% of the Common Stock, AHP would have the
right to terminate the Research and Development Agreement on 60 days' notice.
ONCOLOGY PRODUCT LICENSE AGREEMENT
In connection with the Merger, Cyanamid and Immunex entered into an Oncology
Product License Agreement under which Immunex granted to Cyanamid and certain of
its subsidiaries an exclusive license under the patents and know-how acquired by
Immunex to make, have made and use Contributed Lederle Products other than
Distributed Products (the "Assigned Products"), thereby
14
<PAGE>
permitting Cyanamid to manufacture the Assigned Products in the Immunex
Territory for supply to Immunex and for ultimate sale by Cyanamid and its
sublicensees in the Cyanamid Territory. AHP pays to Immunex a royalty equal to
5% of the net sales by AHP of the Assigned Products manufactured in the Immunex
Territory and sold in the Cyanamid Territory. Immunex and AHP have agreed to
cooperate in preparing, filing, maintaining and defending all patents, and in
protecting all technology, relating to Assigned Products. Immunex recognized
revenue under this agreement of $2,546,000 during 1995.
IMMUNEX NEW ONCOLOGY PRODUCT LICENSE AGREEMENT
Cyanamid and Immunex entered into an Immunex New Oncology Product License
Agreement under which Immunex granted to Cyanamid a co-exclusive license to
make, have made, use and sell in the Cyanamid Territory New Oncology Products
resulting from the research and development efforts of Immunex ("Immunex New
Oncology Products"). AHP pays to Immunex a royalty equal to 5% of the net sales
of Immunex New Oncology Products in the Cyanamid Territory by AHP. Immunex and
AHP cooperate in preparing, filing, maintaining and defending all patents, and
in protecting all technology, in each case relating to the Immunex New Oncology
Products covered by the Immunex New Oncology Product License Agreement. In the
event that an Immunex New Oncology Product is to be manufactured by Immunex for
AHP or by AHP for Immunex, the manufacturing party has agreed to supply the
reasonable clinical and commercial requirements of the other party for such
product under a supply agreement to be entered into by Immunex and AHP, at a
price that will reimburse the manufacturing party for its manufacturing and
process development costs (including an allocation for general and
administrative costs) allocable to such product, plus, with respect to
commercial requirements, a reasonable profit. Immunex recognized revenue under
this agreement of $651,000 during 1995.
TRADEMARK LICENSE AGREEMENT
Cyanamid and Immunex entered into a United States Trademark License
Agreement under which Cyanamid granted to Immunex an exclusive license in the
United States to use certain trademarks in connection with the marketing,
distribution and sale of the Cyanamid Oncology Products in the Immunex
Territory. In consideration for the grant of such license, Immunex agreed to pay
AHP a royalty equal to 2% of the net sales by Immunex of products in the Immunex
Territory that are sold using the trademarks. The royalties incurred by Immunex
during 1995 totaled $267,000.
SUPPLY AGREEMENT, TOLL MANUFACTURING AGREEMENT AND METHOTREXATE DISTRIBUTORSHIP
AGREEMENT
In connection with the Merger, Cyanamid and Immunex entered into a Supply
Agreement, under which Cyanamid agreed to supply the reasonable commercial
requirements of Immunex, subject to specific maximum quantities, for AMICAR
aminocaproic acid, oral formulations of leucovorin calcium (currently marketed
forms only) and thiotepa (currently marketed forms only) at a price equal to
125% of Cyanamid's manufacturing costs (including reasonable overhead charges
and certain other costs) for such products. In addition, Lederle Parenterals,
Inc. ("LPI"), a subsidiary of Cyanamid that operates a pharmaceutical
manufacturing facility in Carolina, Puerto Rico, and Immunex Carolina
Corporation ("ICC"), a subsidiary of Immunex that manufactured pharmaceuticals
in Puerto Rico in 1994, entered into a Toll Manufacturing Agreement under which
LPI toll converts raw materials provided by ICC into injectable formulations of
NOVANTRONE mitoxantrone, leucovorin calcium, AMICAR aminocaproic acid and
LEVOPROME methotrimeprazine at a price equal to 125% of LPI's costs relating to
such toll conversion. ICC was dissolved in December 1994 and its rights under
the Supply Agreement were assigned to Immunex. LPI and Immunex also entered into
a Methotrexate Distributorship Agreement whereby LPI supplies methotrexate to
Immunex at prices that are adjusted annually. Immunex and ICC purchased
inventory at a cost of $9,536,000 from AHP and LPI under these agreements during
1995.
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<PAGE>
SERVICES AGREEMENT
Cyanamid and Immunex entered into a United States Services Agreement (the
"Services Agreement") under which Cyanamid may provide certain medical support,
government sales, sales, education, pricing and contract administration, market
research, industry affairs, advertising and sales promotion, warehousing,
distribution, credit and collections, legal and merger transition services to
Immunex. As Immunex progressively assumes responsibility for such services,
Immunex will have the right to terminate its obligations under the Services
Agreement, on a function-by-function basis, on 12 months' notice to AHP. Immunex
incurred costs totaling $968,000 under the terms of the Services Agreement
during 1995.
DISTRIBUTORSHIP AGREEMENT FOR CANADA
Cyanamid Canada, Inc. ("Cyanamid Canada") and Immunex entered into a
distributorship agreement under which Immunex appointed Cyanamid Canada as its
distributor in Canada for certain products. Immunex agreed to supply the
products to Cyanamid Canada at established prices that are subject to annual
adjustment. Immunex sold $1,631,000 of inventory to Cyanamid Canada during 1995.
LOAN AGREEMENT
Immunex and Cyanamid Agricultural de Puerto Rico, Inc. ("CAPRI"), a Cyanamid
subsidiary, entered into a Loan Agreement in September 1993 (as amended, the
"Loan Agreement"). Pursuant to the Loan Agreement, CAPRI agreed to lend Immunex
up to the lesser of $50 million and 110% of the amount receivable by Immunex
from AHP under the revenue guaranty for working capital purposes on a revolving
credit basis. Interest accrues on outstanding balances at LIBOR plus 1% and is
payable on maturity of individual borrowings. Unless extended by mutual
agreement, the Loan Agreement expires on March 31, 1996. As of December 31,
1994, Immunex had borrowed $34 million under the Loan Agreement. This amount was
repaid in March 1995, and no additional borrowings have been made.
TAXANE AGREEMENT
In 1994, Cyanamid and Immunex entered into a Taxane Agreement, pursuant to
which Immunex agreed to purchase bulk paclitaxel from Cyanamid that is supplied
to Cyanamid by Hauser Chemical Research, Inc. The bulk is being purchased for
use in developing paclitaxel products for marketing in the United States and
Canada. Immunex also agreed to share with Cyanamid certain costs of formulation
development, clinical studies, and research and development of new taxane
derivatives. In 1995, Immunex paid AHP $2,434,000 under the Taxane Agreement.
TACE AGREEMENT
In December 1995, Immunex and AHP entered into a License Agreement and a
Research Collaboration, Development and License Agreement relating to tumor
necrosis factor converting enzyme ("TACE Agreements"). Pursuant to the TACE
Agreements, Immunex granted AHP a worldwide exclusive license under Immunex
intellectual property relating to TACE, and agreed to collaborate with AHP in
developing TACE inhibitors, in consideration of certain fixed payments for
research services, and contingent additional payments that are payable upon
achievement of specified research and clinical milestone events. In 1995,
Immunex recognized $2,000,000 in revenue under the TACE Agreements.
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<PAGE>
EXECUTIVE OFFICERS
The following individuals are executive officers of the Company who will
serve in the capacities noted until April 25, 1996, or until the election and
qualification of their successors. Each officer named below is expected to be
reelected at the Company's Board of Directors meeting to be held on April 25,
1996.
<TABLE>
<CAPTION>
OFFICER
NAME AGE POSITIONS AND OFFICES WITH THE COMPANY SINCE
- ---------------------- --- --------------------------------------------------- -------
<S> <C> <C> <C>
Edward V. Fritzky 45 Chief Executive Officer 1994
Michael L. Kranda 42 President; Chief Operating Officer 1988
Scott G. Hallquist 42 Senior Vice President; General Counsel; Secretary 1987
Peggy V. Phillips 42 Senior Vice President, Pharmaceutical Development 1995
Douglas G. Southern 53 Senior Vice President; Chief Financial Officer; 1991
Treasurer
Leonard R. Stevens 46 Senior Vice President, Strategic and New Product 1993
Planning
Douglas E. Williams 37 Senior Vice President, Discovery Research 1995
</TABLE>
For the biographical summaries of Messrs. Fritzky and Kranda and Dr.
Williams, see "Election of Directors."
Mr. Hallquist has been employed by the Company since June 1986, initially as
Director, Legal Affairs. He was elected to serve as Secretary in May 1987 and as
Vice President and General Counsel in January 1989. Mr. Hallquist was elected
Senior Vice President in October 1990, retaining the offices of General Counsel
and Secretary. Prior to joining the Company, he was employed by E.I. du Pont de
Nemours and Company as patent counsel. Mr. Hallquist is a director of Qual-Med
Washington Health Plan, Inc., a health maintenance organization and subsidiary
of Health Systems International, Inc. Mr. Hallquist received an M.B.A. and a
J.D. from the University of North Carolina in 1981.
Ms. Phillips joined the Company in 1986, was named Senior Vice President,
Pharmaceutical Development in September 1994, and was elected an executive
officer of the Company in February 1995. From 1991 until its dissolution in
January 1995, Ms. Phillips had served as Senior Vice President and Chief
Operating Officer of IRDCO, the Company's wholly owned research and development
corporation. Ms. Phillips received an M.S. in microbiology from the University
of Idaho.
Mr. Southern has been Senior Vice President, Chief Financial Officer and
Treasurer of the Company since January 1991. Prior to joining the Company, Mr.
Southern was employed as Senior Vice President, Chief Financial Officer,
Treasurer and Secretary of Pay 'N Pak Stores, Inc. ("Pay 'N Pak"), a retail firm
headquartered in Seattle, Washington. Mr. Southern resigned from Pay 'N Pak in
June 1990. Pay 'N Pak filed for protection under Chapter 11 of the Federal
Bankruptcy Code on September 21, 1991.
Mr. Stevens joined the Company in July 1993 as Senior Vice President,
Strategic and New Product Planning, and was elected an executive officer in
1994. Mr. Stevens had been employed by Lederle Laboratories since December 1989,
where he served in several capacities, including Director of Medical Education
and Programs, Director of Professional Education and Director of Oncology
Marketing, prior to being appointed as Vice President and General Manager of
Oncology in June 1992. Mr. Stevens received an M.B.A. from the University of
Pittsburgh in 1977.
17
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth certain information as to (i) the Company's
Chief Executive Officer and (ii) the Company's four other most highly
compensated executive officers for services rendered in all capacities for the
Company during the fiscal years ended December 31, 1993, 1994 and 1995 (the
"named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
----------------------------------------- SHARES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS (#) COMPENSATION (1)
- ---------------------------------------- ---- ---------- --------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Edward V. Fritzky....................... 1995 $375,000 $175,782 -- 2,500 $ 19,245
Chief Executive Officer 1994 $306,674 $ 79,219 $154,882 125,000 $368,601
Michael L. Kranda....................... 1995 $301,752 $141,443 -- 22,500 $ 19,843
President; Chief Operating 1994 $288,768 $ 75,797 -- 0 $ 19,325
Officer 1993 $275,016 $ 88,000 -- 40,000 $ 13,866
Scott G. Hallquist...................... 1995 $248,063 $116,280 -- 22,500 $ 16,644
Senior Vice President; 1994 $236,250 $ 67,922 -- 0 $ 17,258
General Counsel; Secretary 1993 $225,000 $101,250 -- 40,000 $ 11,609
Douglas G. Southern..................... 1995 $190,095 $ 94,219 -- 17,500 $ 10,222
Senior Vice President; Chief 1994 $155,820 $ 44,798 -- 0 $ 9,638
Financial Officer; Treasurer 1993 $148,400 $ 43,778 -- 30,000 $ 3,550
Douglas E. Williams..................... 1995 $186,404 $ 93,750 -- 6,000 $ 7,646
Senior Vice President, 1994 $131,250 $ 34,500 -- 10,000 $ 5,729
Discovery Research 1993 $107,000 $ 26,216 -- 9,000 $ 4,606
</TABLE>
- ------------------------
(1) Consists of matching contributions to a 401(k) savings plan of $18,169,
$18,877, $15,799, $9,563 and $6,994, payment of excess life insurance
premiums of $563, $453, $374, $301 and $300, and payment of long-term
disability premiums of $513, $513, $471, $358 and $352 for Messrs. Fritzky,
Kranda, Hallquist and Southern and Dr. Williams, respectively, in 1995.
18
<PAGE>
OPTION GRANTS
The following table sets forth certain information regarding options granted
during the fiscal year ended December 31, 1995 to the Company's Chief Executive
Officer and the other named executive officers.
OPTION GRANTS IN 1995 FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE VALUE
--------------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK
SHARES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM(3)
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION ------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) (1) DATE (2) 5% 10%
- ---------------------------------------- ----------- ------------- -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Edward V. Fritzky....................... 2,500 1% $15.00 2/02/05 $ 23,584 $ 59,765
Michael L. Kranda....................... 2,500 5% $15.00 2/02/05 $ 23,584 $ 59,765
20,000 $15.00 2/02/05 $188,668 $478,123
Scott G. Hallquist...................... 2,500 5% $15.00 2/02/05 $ 23,584 $ 59,765
20,000 $15.00 2/02/05 $188,668 $478,123
Douglas G. Southern..................... 2,500 4% $15.00 2/02/05 $ 23,584 $ 59,765
15,000 $15.00 2/02/05 $141,501 $358,592
Douglas E. Williams..................... 1,500 1% $15.00 2/02/05 $ 14,150 $ 35,859
4,500 $15.00 2/02/05 $ 42,450 $107,578
</TABLE>
- ------------------------
(1) The exercise price of the options is equal to the fair market value of the
underlying Common Stock on the date of grant.
(2) Each of Messrs. Kranda, Hallquist and Southern and Dr. Williams received two
grants of employee stock options on February 2, 1995. The first grant was
made pursuant to the Company's long-term incentive compensation plan and
represents the smaller of the two grants indicated in the table. These
options vest on a five-year schedule, becoming fully exercisable on February
2, 2000, provided the holder remains employed by the Company. The second and
larger grant indicated in the table for each of the foregoing named officers
represents Retention Options, which vest on a three-year schedule, becoming
fully exercisable on February 2, 1998, provided the holder remains employed
by the Company.
(3) Future value of current year grants assuming appreciation of 5% and 10% per
year over the 10-year option period. The actual value realized may be
greater or less than the potential realizable values set forth in the table.
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth certain information as of December 31, 1995
regarding options held by the Company's Chief Executive Officer and the other
named executive officers. None of such officers exercised any options during the
fiscal year ended December 31, 1995.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE- MONEY OPTIONS AT
YEAR-END (#) FISCAL YEAR-END ($)
--------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------- ----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Edward V. Fritzky....................... 25,000 102,500 $27,500 $113,750
Michael L. Kranda....................... 16,000 46,500 0 $ 33,750
Scott G. Hallquist...................... 16,000 46,500 0 $ 33,750
Douglas G. Southern..................... 12,000 35,500 0 $ 26,250
Douglas E. Williams..................... 5,600 19,400 $ 5,500 $ 31,000
</TABLE>
19
<PAGE>
EMPLOYMENT AGREEMENTS
In November 1995, Immunex entered into new Employment Agreements with each
of Messrs. Fritzky, Kranda, Hallquist, Southern and Stevens, Ms. Phillips and
Dr. Williams. These agreements, which were approved by the Board of Directors
following the November 2, 1995 offer by AHP to acquire all of the shares of the
Company not owned by it, are intended to motivate and retain the Company's
officers during and after any transaction involving a change of control of the
Company. The Employment Agreements with Messrs. Fritzky, Hallquist and Kranda,
which replaced existing agreements, are effective for a term of three years. The
agreements with the other officers become effective only if an acquisition of
Immunex by AHP or a third party is completed prior to December 31, 1996. Each
Employment Agreement provides that the executive's position, authority, duties
and responsibilities will be maintained at levels at least commensurate with the
levels enjoyed by the employee as of its effective date, and that the
executive's salary, bonus and benefits will be continued through the term of the
agreement. If the employment of the executive is terminated by the Company
without Cause or by the executive for Good Reason (each as defined in the
Employment Agreement), the executive will be entitled to receive his or her base
salary, annual incentive bonus, continued participation in the Company's
medical, dental and insurance programs, and certain other benefits until the
second anniversary of the date the executive's employment with the Company is
terminated.
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION COMMITTEE AND
THE STOCK OPTION PLAN ADMINISTRATION COMMITTEE
The Company's compensation policy as established by its Board of Directors
is intended to provide competitive compensation to all employees, giving
consideration to the relative contribution and performance of each employee on
an individual basis. It is the Company's policy to compensate its executive
officers at levels consistent with industry norms, primarily in the form of base
salary, together with incentive bonuses. In addition, it is the Company's policy
of granting stock options to each of its executive officers based on individual
and Company performance and in amounts consistent with industry norms, so as to
align their interests with shareholder value. The biotechnology industry is
extremely competitive with respect to recruitment and retention of qualified
personnel; accordingly, the Company's management employs independently published
surveys of biotechnology industry compensation levels to ensure that the
Company's compensation practices are comparable to other biotechnology
companies. This enables Immunex to attract and retain key employees.
Determining the compensation levels of the Company's executive officers is
the responsibility of the Board of Directors, through its Compensation
Committee, which has overall responsibility for the Company's compensation
policies for senior management, and its Stock Option Plan Administration
Committee, which is responsible for administering the Company's stock option
plans. The Compensation Committee makes recommendations to the Board of
Directors as to the salaries of, and incentive bonuses awarded to, the Company's
Chief Executive Officer and other executive officers. The Stock Option Plan
Administration Committee determines the number and terms of options granted to
the Company's Chief Executive Officer, other executive officers and all other
employees.
Executive compensation consists of three major components: base salary,
annual incentive bonus and stock options. Base salaries of the Chief Executive
Officer and other executive officers are subjectively determined, based on
annual surveys of similar positions at other biotechnology companies (described
below as the Comparison Group), together with assessments of individual
performance and the Company's achievement of predetermined operating goals that
are established annually by the Board of Directors (the goals for 1995 are
described below). The Compensation Committee does not assign relative weights to
the factors on which base salaries are based. Assessments of individual
performance include subjective evaluations of the value of individual executives
to the Company. The surveys employed include some, but not all, of the companies
included in the Nasdaq Pharmaceutical Index, which is one of the indices used in
the Company's performance graph that appears elsewhere in this Proxy Statement.
20
<PAGE>
The Company's Compensation Committee meets in December of each year to
determine the annual salary component of executive compensation to be paid in
the following calendar year, and the amount of cash incentive bonus compensation
to be awarded executives for performance in the current year. The salaries paid
to executives in 1995 were determined by reference to 1994 compensation survey
data, adjusted upwards for inflation during the term between July 1994 and
December 1994. The survey data considered by the Compensation Committee in
determining executive salaries included salary information provided by 47
biotechnology companies having more than 300 employees (the "Comparison Group"),
as well as a subgroup of the 18 largest biotechnology companies (the "Comparison
Subgroup"). The Compensation Committee believes each of the Comparison Group and
the Comparison Subgroup were representative of industry norms in late 1994, and
each are weighted approximately equally by the Compensation Committee. The
Comparison Subgroup consisted of Amgen, Inc., Biogen, Inc., Genentech, Inc.,
Chiron Corporation, Centocor, Inc., Genetics Institute, Genzyme Corporation and
Synergen Corporation, and biotechnology affiliates or subsidiaries of Baxter
Healthcare, Bayer AG, Berlex Biosciences, Boehringer Mannheim, Bristol-Myers
Squibb Company, Hoffman-La Roche, Inc., American Home Products Corporation
(Lederle Praxis), Novo Nordisk, Scios Nova and Syntex Corporation. In the case
of Mr. Fritzky, the Compensation Committee established a base salary for 1995 of
$375,000, which represented approximately 76% of average compensation for chief
executive officers in the Comparison Subgroup and 101% of the average
compensation for chief executive officers in the Comparison Group. The
Compensation Committee established 1995 base salaries for the Company's other
executive officers ranging from 81% to 119% of the average compensation for
executives performing similar functions in companies included in the Comparison
Subgroup and 100% to 135% of the average compensation for executives performing
similar functions in companies included in the Comparison Group.
Under the Company's compensation plans, annual incentive bonuses are
calculated as a percentage of base salary and are based in part on achievement
of corporate operating goals and in part on individual contributions toward
achieving such goals. The Chief Executive Officer and each of the other named
executive officers are eligible for a team bonus of up to 25% of base salary,
based on the achievement of corporate operating goals, and an additional
individual bonus of up to 12.5% of base salary based on individual contributions
toward achievement of corporate operating goals and subjective evaluation of
individual performance. Individual bonuses in excess of 12.5% of base salary
have been awarded under circumstances determined by the Compensation Committee
to merit special recognition. Corporate operating goals are established at the
beginning of each year and approved by the Board of Directors. Achievement of
corporate operating goals provides the Compensation Committee and the Board of
Directors with a basis for the award of incentive bonuses.
For 1995, the Board of Directors elected to award Mr. Fritzky and the other
named executive officers a team bonus of 125% of the amount for which each
officer was eligible (i.e., 125% of 25% of base salary). The Board of Directors'
decision took into account that the Company had met or substantially exceeded
all but one of its corporate operating goals. These goals (which were not
assigned relative weights and are not listed in order of relative importance)
were: (i) reduction of operating losses by 50%; (ii) generation of $1.5 million
in revenue through contract development and manufacturing services; (iii)
approval of THIOPLEX-REGISTERED TRADEMARK- by the Food and Drug Administration
(the "FDA"); (iv) approval of a new indication in acute myelogenous leukemia for
LEUKINE-REGISTERED TRADEMARK-; (v) approval of LEUKINE for use in patients with
chemotherapy-induced neutropenia ("CIN"); (vi) approval of an abbreviated new
drug application for etoposide by the FDA; (vii) completion of a PIXY321 pivotal
trial accrual goal; (viii) focus of discovery and development efforts in
scientifically and commercially relevant areas; (ix) development of an
integrated licensing strategy and implementation process; and (x) development of
a systematic approach to individual and management development. Although the
goal related to approval of LEUKINE for CIN was not achieved, the Compensation
Committee took into account that the delay in the LEUKINE approval was
attributable to a change in approval standards by the FDA's Biological Response
Modifiers Advisory Committee that contravened a prior FDA agreement with the
Company. The Compensation Committee's determination of the team bonus and
individual bonuses took into account that the Company exceeded by $5 million its
goal to reduce
21
<PAGE>
operating losses and exceeded by $4.5 million its goal to generate revenue by
contract development and manufacturing services. It also considered the
discovery and licensing of products and technologies valued at over $50 million
in future revenues, the Company's development of promising Phase II data for
TNFR-Fc and the Company's progress with respect to three products in the
pre-development stage.
The Board of Directors also elected to award Mr. Fritzky and the other named
executive officers individual bonuses of up to 125% of 12.5% of base salary.
Thus, each of Mr. Fritzky and the other named executive officers received
individual bonuses equal to 15.6% of their 1995 base salaries, in addition to
the team bonuses discussed above.
To qualify compensation for deductibility for federal income tax purposes,
it is the Company's policy to meet the requirements for exclusion from the limit
on deductions imposed by Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), by paying performance-based compensation if possible. With
respect to cases in which it is not possible to meet the requirements for
exclusion from Section 162(m) of the Code, the Company intends to minimize any
award of compensation in excess of the limit.
Options to purchase shares of Immunex stock were granted to the named
executive officers, as well as to other employees, under two programs during
1995. The first option grant was undertaken pursuant to the Company's long-term
incentive performance award program, initially implemented in 1993, wherein
employees are eligible to receive a grant of stock options dependent upon
individual performance and position held. Under this program and in recognition
of his contribution to the Company in 1994, Mr. Fritzky received a grant to
purchase 2,500 shares of stock; the other named executive officers received
grants of between 1,500 and 2,500 shares. No stock options with respect to 1995
have been granted to officers or other employees under the long-term incentive
performance award program.
The second grant of stock options made in 1995 was a special retention and
incentive grant intended to replace certain stock options granted in 1993.
Following the 1993 merger of Lederle Oncology Corporation and the Company,
Immunex employees received grants of stock options at the then current market
price of the Company's Common Stock. Following these grants, the market price of
Immunex Common Stock declined substantially. As a result, the stock options held
by Immunex employees were exercisable only at prices significantly higher than
the current market price of the Company's Common Stock. The Company's
compensation consultant, Towers Perrin, conducted a comparative study of the
Company's compensation practices that indicated the 1993 options did not provide
adequate incentives to retain valuable and experienced employees. In performing
this study, Towers Perrin relied on data from 31 biotechnology companies
participating in their 1994 Biotechnology Long Term Incentive Plan Survey. The
participating companies represented those companies in similar areas of research
and development which compete with Immunex for the same type of personnel. The
Company has experienced increased employee turnover in 1994 and 1995 as
experienced employees have been recruited by existing competitors or newly
formed biotechnology companies.
Accordingly, the Board of Directors approved grants of nonqualified stock
options ("Retention Options") to holders of options granted in 1993 at exercise
prices of $31.50 and $27.25 per share. The Retention Options were granted under
the Amended 1993 Stock Option Plan (the "1993 Plan") and provide for the
purchase at an exercise price of $15.00 per share of that number of shares of
Common Stock of the Company equal to 50% of the options held at an exercise
price of $31.50 and $27.25 per share. Each Retention Option is governed by all
the terms and conditions of the 1993 Plan except that the Retention Options
fully vest over a three-year period, rather than five years.
22
<PAGE>
COMPENSATION COMMITTEE
Joseph J. Carr
Kirby L. Cramer
John E. Lyons
Edith W. Martin
STOCK OPTION PLAN ADMINISTRATION COMMITTEE
Joseph J. Carr
Kirby L. Cramer
Robert A. Essner
Richard L. Jackson
John E. Lyons
Edith W. Martin
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN(1)
AMONG THE COMPANY, NASDAQ COMPOSITE INDEX AND NASDAQ PHARMACEUTICAL INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
IMMUNEX NASDAQ COMPOSITE NASDAQ PHARMACEUTICAL
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 165.73 160.56 265.74
1992 143.36 186.87 221.14
1993 81.71 214.51 197.11
1994 74.80 209.69 148.38
1995 82.97 296.30 271.03
</TABLE>
- ------------------------
(1) Assumes $100 invested at the close of trading on December 31, 1990 in the
Common Stock, in the Nasdaq Composite Index and in the Nasdaq Pharmaceutical
Index.
NOTE: Stock price performance shown above for the Common Stock is historical and
not necessarily indicative of future price performance.
23
<PAGE>
SECTION 16 REPORTING
Section 16(a) of the Exchange Act requires the Company's officers, directors
and persons who own more than 10% of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership with the
Commission. Officers, directors and greater than 10% shareholders are required
by Commission regulation to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no forms were
required for those persons, the Company believes that during 1995 all filing
requirements applicable to its officers, directors and greater than 10%
beneficial owners were complied with by such persons.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Ernst & Young LLP, certified public
accountants, to act as independent auditor of the Company for the fiscal year
ending December 31, 1996. Ernst & Young LLP has been auditor of the Company
since the Company's inception.
A representative of Ernst & Young LLP is expected to be present at the
Annual Meeting, with the opportunity to make a statement, if the representative
so desires, and is expected to be available to respond to appropriate questions
from shareholders.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS FOR
1997 ANNUAL MEETING
Under the Commission's proxy rules, shareholder proposals that meet certain
conditions may be included in the Company's Proxy Statement and Proxy for a
particular annual meeting. Proposals of shareholders that are intended to be
presented by such shareholders at the Company's 1997 Annual Meeting must be
received by the Company no later than November 23, 1996 to be considered for
inclusion in the Proxy Statement and form of Proxy relating to that meeting.
Receipt by the Company of any such proposal from a qualified shareholder in a
timely manner will not guarantee its inclusion in the Company's proxy material
because there are other requirements in the proxy rules for such inclusion.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, any matters for action at the Annual Meeting other than the matters
specifically referred to in this Proxy Statement. If other matters properly come
before the Annual Meeting, it is intended that the holders of the Proxies will
act with respect thereto in accordance with their best judgment.
Copies of the 1995 Annual Report of the Company are being mailed to
shareholders, together with this Proxy Statement, form of Proxy and Notice of
Annual Meeting of Shareholders. Additional copies may be obtained from the
Secretary of the Company, 51 University Street, Seattle, Washington 98101.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 1995, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, IS INCLUDED IN
THE COMPANY'S 1995 ANNUAL REPORT TO SHAREHOLDERS.
BY ORDER OF THE BOARD OF DIRECTORS
Scott G. Hallquist
SECRETARY
Seattle, Washington
March 26, 1996
24
<PAGE>
IMMUNEX CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS--APRIL 25, 1996
The undersigned hereby appoint(s) Edward V. Fritzky and Michael L. Kranda
and each of them as proxies, with full power of substitution, to
P represent and vote as designated all shares of Common Stock of Immunex
R Corporation held of record by the undersigned on March 13, 1996 at the
O Annual Meeting of Shareholders of the Company to be held at the Immunex
X Manufacturing and Development Center, 21511 23rd Drive Southeast,
Y Bothell, Washington, at 9:00 a.m. on Thursday, April 25, 1996, with
authority to vote upon the following matters and with discretionary
authority as to any other matters that may properly come before the
meeting or any adjournment or postponement thereof.
IMPORTANT--PLEASE DATE AND SIGN ON THE OTHER SIDE.
See Reverse
Side
<PAGE>
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER IN
THE SPACES PROVIDED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR ALL
NOMINEES" IN ITEM 1.
Please mark your votes as indicated in this example
/X/
The Board of Directors recommends a vote "FOR all nominees" in Item 1.
FOR all WITHHOLD AUTHORITY
nominees to vote for all nominees
1. Election of the nine nominees to / / / /
serve as directors for the ensuing
year and until their successors are
elected and qualify: Joseph J.
Carr, Kirby L. Cramer, Robert A.
Essner, Edward V. Fritzky, Richard
L. Jackson, Michael L. Kranda,
John E. Lyons, Edith W. Martin
and Douglas E. Williams.
WITHHOLD for the following only* (Write the name of the nominee(s) in the space
below.)
____________________________________________________________________________
Unless otherwise directed, all votes will be apportioned equally among these
persons for whom authority is given to vote.
Please send me an admittance ticket to the Annual Meeting. / /
Please sign exactly as your name appears hereon. Attorneys, trustees, executors
and other fiduciaries acting in a representative capacity should sign their
names and give their titles. An authorized person should sign on behalf of
corporations, partnerships, associations, etc. and give his or her title. If
your shares are held by two or more persons, each person must sign. Receipt of
the notice of meeting and proxy statement is hereby acknowledged.
Signature(s) ____________________________________ Date ____________________
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, trustee, executor or other fiduciary acting in a
representative capacity, please give full title as such.
