UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 0-19612
IMCLONE SYSTEMS INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 04-2834797
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
180 VARICK STREET, NEW YORK, NY 10014
(Address of principal executive offices) (Zip Code)
(212) 645-1405
Registrant's telephone number, including area code
Not Applicable
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes__X__ No_____
Applicable only to corporate issuers:
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of August 12, 1997
----- ---------------------------------
Common Stock, par value $.001 24,105,055 Shares
<PAGE>
IMCLONE SYSTEMS INCORPORATED
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - June 30, 1997 (unaudited)
and December 31, 1996 1
Unaudited Statements of Operations - Three and six
months ended June 30, 1997 and 1996 2
Unaudited Statements of Cash Flows - Six
months ended June 30, 1997 and 1996 3
Notes to Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 5
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE>
Part 1 - FINANCIAL INFORMATION
Item 1 - Financial Statements
IMCLONE SYSTEMS INCORPORATED
Balance Sheets
(in thousands, except share data)
June 30, December 31,
Assets 1997 1996
---------- ------------
(unaudited)
Current assets:
Cash and cash equivalents ........................ $ 2,559 $ 2,734
Securities available for sale .................... 28,532 10,780
Prepaid expenses ................................. 450 122
Other current assets ............................. 1,294 479
--------- ---------
Total current assets ...................... 32,835 14,115
--------- ---------
Property and equipment:
Land ............................................ 340 340
Building and building improvements .............. 8,969 8,969
Leasehold improvements .......................... 4,832 4,832
Machinery and equipment ......................... 5,576 5,159
Furniture and fixtures .......................... 536 536
Construction in progress ........................ 627 320
--------- ---------
Total cost ................................ 20,880 20,156
Less accumulated depreciation and amortization . (10,418) (9,606)
--------- ---------
Property and equipment, net ............... 10,462 10,550
--------- ---------
Patent costs, net .................................. 1,048 977
Deferred financing costs, net ...................... 60 65
Amount due from officer and stockholder ............ 90 101
Other assets ....................................... 85 77
--------- ---------
$ 44,580 $ 25,885
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable ................................. $ 1,384 $ 1,059
Accrued expenses and other ....................... 731 1,366
Interest payable ................................. 191 238
Deferred revenue ................................. 208 --
Current portion of long-term liabilities ......... 3,380 3,858
--------- ---------
Total current liabilities ................. 5,894 6,521
--------- ---------
Long-term debt ..................................... 2,200 2,200
Other long-term liabilities, less current portion .. 435 575
--------- ---------
Total liabilities ......................... 8,529 9,296
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $1.00 par value;
authorized 4,000,000 shares;
none issued and outstanding .................... -- --
Common stock, $.001 par value;
authorized 45,000,000 shares;
issued 24,138,872 and 20,248,122 at
June 30, 1997 and December 31, 1996,
respectively; outstanding 24,088,055 and
20,233,699 at June 30, 1997 and
December 31, 1996, respectively ................ 24 20
Additional paid-in capital ......................... 145,912 118,760
Accumulated deficit ................................ (109,364) (101,973)
Treasury stock, at cost; 50,817 and 14,423 shares
at June 30, 1997 and December 31, 1996,
respectively ................................... (492) (169)
Unrealized loss on securities available for sale ... (29) (49)
--------- ---------
Total stockholders' equity ................ 36,051 16,589
--------- ---------
$ 44,580 $ 25,885
========= =========
See accompanying notes to financial statements.
Page 1
<PAGE>
IMCLONE SYSTEMS INCORPORATED
Statements of Operations
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Product development milestone revenues ............ $ 2,500 $ -- $ 2,500 $ --
Research and development funding from third
parties and other ............................ 696 75 771 150
-------- -------- -------- --------
Total revenues ...................... 3,196 75 3,271 150
-------- -------- -------- --------
Operating expenses:
Research and development .......................... 3,257 2,593 8,652 4,918
General and administrative ........................ 1,272 845 2,355 1,587
-------- -------- -------- --------
Total operating expenses ............. 4,529 3,438 11,007 6,505
-------- -------- -------- --------
Operating loss ....................................... (1,333) (3,363) (7,736) (6,355)
-------- -------- -------- --------
Other (income) expense:
Interest and other income ......................... (440) (261) (685) (454)
Interest and other expense ........................ 145 200 340 547
-------- -------- -------- --------
Net interest and other (income) expense (295) (61) (345) 93
-------- -------- -------- --------
Net loss before extraordinary item ................... (1,038) (3,302) (7,391) (6,448)
Extraordinary loss on extinguishment of debt ......... -- 1,267 -- 1,267
-------- -------- -------- --------
Net loss ............................................. $ (1,038) $ (4,569) $ (7,391) $ (7,715)
======== ======== ======== ========
Net loss per common share:
Loss before extraordinary loss on
extinguishment of debt ........................ $ (0.04) $ (0.17) $ (0.33) $ (0.34)
Extraordinary loss on extinguishment of debt .... -- (0.06) -- (0.07)
-------- -------- -------- --------
Net loss per common share ............. $ (0.04) $ (0.23) $ (0.33) $ (0.41)
======== ======== ======== ========
Weighted average shares outstanding .................. 24,033 19,595 22,702 18,730
======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
Page 2
<PAGE>
IMCLONE SYSTEMS INCORPORATED
Statements of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss .................................................................. $ (7,391) $ (7,715)
Adjustments to reconcile net loss to net cash used in operating activities:
Extraordinary loss on extinguishment of debt ............................ -- 1,267
Depreciation and amortization ........................................... 866 910
Discounted interest amortization ........................................ -- 156
Expense associated with issuance
of options and warrants ............................................. 2,634 --
Loss on sale of investments ............................................. 3 --
Changes in:
Prepaid expenses ..................................................... (328) (145)
Other current assets ................................................. (815) (285)
Due from officer ..................................................... 11 13
Other assets ......................................................... (8) --
Interest payable ..................................................... (47) (111)
Accounts payable ..................................................... 325 (75)
Accrued expenses and other ........................................... (635) (251)
Deferred revenue ..................................................... 208 --
-------- --------
Net cash used in operating activities ......................... (5,177) (6,236)
-------- --------
Cash flows from investing activities:
Acquisitions of property and equipment .................................. (436) (294)
Purchases of securities available for sale .............................. (54,777) (25,635)
Sales of securities available for sale .................................. 37,042 7,047
Additions to patents .................................................... (120) (44)
-------- --------
Net cash used in investing activities ......................... (18,291) (18,926)
======== ========
Cash flows from financing activities:
Net proceeds from issuance of common stock .............................. 23,162 13,560
Proceeds from exercise of stock options and warrants .................... 1,360 1,831
Purchase of treasury stock .............................................. (323) (19)
Payments of other liabilities ........................................... (906) (29)
-------- --------
Net cash provided by financing activities ..................... 23,293 15,343
-------- --------
Net decrease in cash and cash equivalents .................................. (175) (9,819)
Cash and cash equivalents at beginning of period ........................... 2,734 10,207
-------- --------
Cash and cash equivalents at end of period ................................. $ 2,559 $ 388
======== ========
</TABLE>
See accompanying notes to financial statements.
Page 3
<PAGE>
IMCLONE SYSTEMS INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(unaudited)
(1) Basis of Presentation
The financial statements of ImClone Systems Incorporated (the "Company") as
of June 30, 1997 and for the three and six months ended June 30, 1997 and 1996
are unaudited. In the opinion of management, these unaudited financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation. These financial statements
should be read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996, as filed with the Securities and Exchange Commission (the
"Commission").
Results for the interim periods are not necessarily indicative of results
for the full years.
(2) Related Party Transactions
As of June 30, 1997, a promissory note (the "new promissory note") in the
original principal amount of $110,000 given to the Company by its President and
CEO totaled $90,000. The new promissory note replaces an original promissory
note (the "original promissory note") which was due upon the earlier of on
demand by the Company or April 30, 1997, bore interest at the rate of 8%
compounded quarterly and covered miscellaneous cash advances made to the
President and CEO through the date of its issuance in March 1995. The new
promissory note was payable as to $15,000 no later than May 15, 1997 and as to
the remainder upon the earlier of on demand by the Company or December 31, 1997
and bears interest at the rate of 5% compounded quarterly. The new promissory
note covers the remaining balance of the original promissory note, interest
thereon and additional miscellaneous cash advances made since the date of the
original note totaling $15,000. As of August 12, 1997 the aggregate amount of
the new promissory note, including interest totaled approximately $88,000.
(3) Net Loss Per Share
Net loss per share is computed based on the weighted average number of
shares outstanding. Common stock equivalents are not included in the computation
of average shares outstanding because they are anti-dilutive.
(4) Reclassification
Certain amounts previously reported have been reclassified to conform to
current year presentation.
Page 4
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis by management is provided to identify
certain significant factors which affected the Company's financial position and
operating results during the period included in the accompanying financial
statements.
Results of Operations
Six Months Ended June 30, 1997 and 1996
Revenues
Revenues for the six-month periods ended June 30, 1997 and June 30, 1996
were $3,271,000 and $150,000, respectively. Revenues in both periods included
research and development support fees of $150,000 from the Company's corporate
partnership with the Wyeth/Lederle Vaccine division of American Home Products
Corporation ("American Home") in infectious disease vaccines. Revenues for the
six-month period ended June 30, 1997 also included milestone revenue of
$1,500,000 and contract research support of $417,000 from the Company's research
and license agreement with Merck KGaA ("Merck") in cancer vaccines.
Additionally, the six-month period ended June 30, 1997 included milestone
revenue of $1,000,000 and royalty fees of $204,000 from the Company's strategic
alliance with Abbott Laboratories ("Abbott") in diagnostics.
Operating: Research and Development
Total operating expenses for the six-month periods ended June 30, 1997 and
June 30, 1996 were $11,007,000 and $6,505,000, respectively. Research and
development expenses for the six-month periods ended June 30, 1997 and June 30,
1996 were $8,652,000 and $4,918,000, respectively. Such amounts for the
six-month periods ended June 30, 1997 and June 30, 1996 represented 79% and 76%,
respectively, of total operating expenses. The $3,734,000 increase in research
and development expenses for the six-month period ended June 30, 1997 was
primarily attributable to a one-time $2,233,000 non-cash compensation expense
recorded in connection with the extension of the term of an officer's warrant to
purchase 397,000 shares of the Company's common stock, $.001 par value (the
"Common Stock"). The increase is also attributable to costs associated with
additional staffing, contract manufacturing and testing, and expenditures in the
functional areas of product development, manufacturing and clinical and
regulatory affairs to support the manufacture of C225 for human clinical trials
as well as travel-related expenses to pursue strategic partnerships for C225
(and other product candidates). The remaining increase reflects growth in the
area of discovery research for future product candidates.
General and Administrative
General and administrative expenses include administrative personnel costs,
costs incurred in connection with pursuing arrangements with corporate partners
and technology licensors, and expenses associated with applying for patent
protection for the Company's technology and products. Such expenses for the
six-month periods ended June 30, 1997 and June 30, 1996 were $2,355,000 and
$1,587,000, respectively, an increase of $768,000 or 48%. The increase in
general and administrative expenses primarily reflects (i) $279,000 in non-cash
compensation expense recorded in connection with an option grant to an officer
and (ii) additional staffing to support the expanding research, clinical,
development and manufacturing efforts of the Company, particularly with its lead
therapeutic product candidate, C225. The Company expects general and
administrative expenses to increase in future periods to support planned
increases in research and development.
Page 5
<PAGE>
Interest and Other Income/Expense
Interest and other income was $685,000 for the six-month period ended June
30, 1997 compared to $454,000 for the six-month period ended June 30, 1996, an
increase of $231,000 or 51%. The increase was primarily attributable to the
increased interest income earned from higher cash balances in the Company's
investment portfolio resulting from the proceeds received from a public stock
offering completed in March 1997. Interest and other expense was $340,000 and
$547,000 for the six-month periods ended June 30, 1997 and June 30, 1996,
respectively, a decrease of $207,000 or 38%. Interest and other expense for both
periods primarily included interest on two outstanding Industrial Development
Revenue Bonds with an aggregate principal amount of $4,313,000 and interest
recorded on the liability to Pharmacia and UpJohn Inc. ("Pharmacia"), for the
reacquisition of the worldwide rights to Interleukin - 6 mutein ("IL-6m") as
well as clinical material manufactured and supplied by Pharmacia to the Company.
The decrease was primarily attributable to the May 1996 exchange of debt for
Company Common Stock with the Oracle Group and a Company Director.
Net Losses
The Company had net losses of $7,391,000 or $0.33 per share for the
six-month period ended June 30, 1997, compared with $7,715,000 or $0.41 per
share for the six-month period ended June 30, 1996. The decrease in the net loss
for the six-month period ended June 30, 1997 was primarily due to the fact that
the net loss for the six-month period ended June 30, 1996 included a $1,267,000
or $0.07 per share extraordinary loss on early extinguishment of debt. This
extraordinary loss resulted from the issuance of Company Common Stock in lieu of
cash repayment of a $2,500,000 loan due the Oracle Group and a $180,000
long-term note owed to a Company Director.
Three Months Ended June 30, 1997 and 1996
Revenues
Revenues for the three-month periods ended June 30, 1997 and June 30, 1996
were $3,196,000 and $75,000, respectively. Revenues in both periods included
research and development support fees of $75,000 from the Company's corporate
partnership with American Home in infectious disease vaccines. Revenues for the
three-month period ended June 30, 1997 also included milestone revenue of
$1,500,000 and contract research support of $417,000 from the Company's research
and license agreement with Merck in cancer vaccines. Additionally, the
three-month period ended June 30, 1997 included milestone revenue of $1,000,000
and royalty fees of $204,000 from the Company's strategic alliance with Abbott
in diagnostics.
Operating: Research and Development
Total operating expenses for the three-month periods ended June 30, 1997
and June 30, 1996 were $4,529,000 and $3,438,000, respectively. Research and
development expenses for the three-month periods ended June 30, 1997 and June
30, 1996 were $3,257,000 and $2,593,000, respectively. Such amounts for the
three-month periods ended June 30, 1997 and June 30, 1996 represented 72% and
75%, respectively, of total operating expenses. The $664,000 increase in
research and development expenses for the six-month period ended June 30, 1997
was primarily attributable to costs associated with additional staffing,
contract manufacturing and testing, and expenditures in the functional areas of
product development, manufacturing and clinical and regulatory affairs to
support the manufacture of C225 for human clinical trials as well as
travel-related expenses to pursue strategic partnerships for C225 (and other
product candidates). The remaining increase reflects growth in the area of
discovery research for future product candidates.
Page 6
<PAGE>
General and Administrative
General and administrative expenses include administrative personnel costs,
costs incurred in connection with pursuing arrangements with corporate partners
and technology licensors, and expenses associated with applying for patent
protection for the Company's technology and products. Such expenses for the
three-month periods ended June 30, 1997 and June 30, 1996 were $1,272,000 and
$845,000, respectively, an increase of $427,000 or 51%. The increase in general
and administrative expenses primarily reflects (i) $150,000 in non-cash
compensation expense recorded in connection with an option grant to an officer
and (ii) additional staffing to support the expanding research, clinical,
development and manufacturing efforts of the Company, particularly with its lead
therapeutic product candidate, C225. The Company expects general and
administrative expenses to increase in future periods to support planned
increases in research and development.
Interest and Other Income/Expense
Interest and other income was $440,000 for the three-month period ended
June 30, 1997 compared to $261,000 for the three-month period ended June 30,
1996, an increase of $179,000 or 69%. The increase was primarily attributable to
the increased interest income earned from higher cash balances in the Company's
investment portfolio resulting from the proceeds received from a public stock
offering completed in March 1997. Interest and other expense was $145,000 and
$200,000 for the three-month periods ended June 30, 1997 and June 30, 1996,
respectively, a decrease of $55,000 or 28%. Interest and other expense for both
periods primarily included interest on two outstanding Industrial Development
Revenue Bonds with an aggregate principal amount of $4,313,000 and interest
recorded on the liability to Pharmacia, for the reacquisition of the worldwide
rights to IL-6m as well as clinical material manufactured and supplied by
Pharmacia to the Company. The decrease was primarily attributable to the May
1996 exchange of debt for Company Common Stock with the Oracle Group and a
Company Director.
Net Losses
The Company had net losses of $1,038,000 or $0.04 per share for the
three-month period ended June 30, 1997, compared with $4,569,000 or $0.23 per
share for the three-month period ended June 30, 1996. The decrease in the net
loss for the three-month period ended June 30, 1997 was primarily due to the
fact that the net loss for the three-month period ended June 30, 1996 included a
$1,267,000 or $0.06 per share extraordinary loss on early extinguishment of
debt. This extraordinary loss resulted from the issuance of Company Common Stock
in lieu of cash repayment of a $2,500,000 loan due the Oracle Group and a
$180,000 long-term note owed to a Company Director.
Page 7
<PAGE>
Liquidity and Capital Resources
The Company's cash and cash equivalents and securities available for sale
totaled $28,950,000 at August 12, 1997; on June 30, 1997 such balances totaled
$31,091,000. The current balances in the Company's cash and cash equivalents and
securities available for sale primarily reflects the proceeds received from the
March 1997 public offering of 3,000,000 shares of Common Stock .
In May 1996, the Company extended its collaboration with Merck for the
development of a therapeutic cancer vaccine, BEC-2, for use in small-cell
carcinoma and in malignant melanoma. The collaboration continues a research and
license agreement between the two companies signed in December 1990. Under the
terms of the modified agreement, the Company could receive up to $11,700,000 in
license fees, research and development support and milestone payments in
addition to moneys previously received under the original agreement. Of such
$11,700,000, as of June 30, 1997, the Company earned $1,500,000 in milestone
payments, and research and support payments of $417,000 which is the first of
eight quarterly research and support payments totalling $4,700,000. In return,
Merck will receive marketing rights to BEC-2 for all therapeutic indications
outside North America. Formerly the rights of Merck were confined to Europe,
Australia and New Zealand. Merck will also share in the development costs for
the United States and Europe and will pay all development costs in other
territories. The Company will be entitled to royalties based upon product sales
outside of North America, if any.
In December 1996, the Company signed an agreement with Finova Technology
Finance, Inc. to finance the lease of laboratory and computer-related equipment
and make certain building and leasehold improvements to facilities involving
payments aggregating approximately $2,500,000. At July 31, 1997, the Company had
$1,799,000 available under this agreement.
In December 1996, the Company and Abbott modified their 1992 diagnostic
strategic alliance to provide for an exclusive sublicensing agreement with
Chiron Diagnostics ("Chiron") for the Company's patented DNA signal
amplification technology, AMPLIPROBE. Under the terms of the agreement, all
sales of Chiron branched DNA diagnostic probe technology in countries covered by
Company patents will be subject to a royalty to Abbott to be passed through to
the Company. Royalties on all Chiron sales of AMPLIPROBE are paid on a quarterly
basis by Abbott and recognized upon receipt by the Company.
In May 1997, a European patent was issued for the Company's proprietary
Repair Chain Reaction ("RCR") DNA probe technology which was licensed to Abbott
under the 1992 strategic alliance discussed in the preceding paragraph. The
issuance of the patent entitled the Company to receive two milestone payments
totaling $1,000,000 and royalty payments on sales in covered European countries
for products using the Company's RCR technology. Abbott will be entitled to
deduct from royalties otherwise due, 25% of such royalties due for a two-year
period and 50% thereafter until a total of $500,000 has been deducted. The
$1,000,000 in milestone payments and $75,000 in royalty payments covering 1995
and 1996 were received in June 1997.
The Company has expended and will continue to expend in the future
substantial funds to continue the research and development of its products,
conduct pre-clinical and clinical trials, establish clinical-scale and
commercial-scale manufacturing in its own facilities or in the facilities of
others, and market its products. In addition, $2,113,000 and $2,200,000,
respectively, in Industrial Development Revenue Bonds issued by the New York
Industrial Development Agency ("NYIDA") on behalf of the Company in 1986 and
1990 become due in December 1997 and May 2004, respectively. The Company has
granted a security interest in substantially all facility equipment located in
its New York City facility to secure the obligations of the Company to the NYIDA
relating to the 1986 and 1990 Industrial Development Revenue Bonds.
Page 8
<PAGE>
In July 1993, the Company entered into a termination agreement with
Erbamont, Inc., now a subsidiary of Pharmacia, to acquire the worldwide rights
to IL-6m, a blood cell growth factor, which had been licensed to Pharmacia
pursuant to a development and licensing agreement. In consideration of the
return of rights and the transfer of certain material and information, the
Company has paid $1,928,000 and has further obligations to Pharmacia. Such
obligations, including those to pay for IL-6m material manufactured and supplied
by Pharmacia, totaled $2,400,000 at March 31, 1996. In addition, the Company is
required to pay Pharmacia $2,700,000 in royalties on eventual sales of IL-6m, if
any. In March, 1996, the Company entered into a Repayment Agreement with
Pharmacia (the "Repayment Agreement") pursuant to which it agreed to pay the
$2,400,000 over 24 months commencing in March 1996, with interest only payable
during the first six months. At August 1, 1997 the remaining obligation to
Pharmacia totaled $835,000. In connection with the Repayment Agreement, the
Company signed a Confession of Judgment, which can be filed by Pharmacia with an
appropriate court in the case of default by the Company. Pursuant to a Security
Agreement entered into with Pharmacia, the Company pledged its interests in
patents related to IL-6m and to heparanase to secure its obligations under the
Repayment Agreement.
The Company's future working capital and capital requirements will depend
upon numerous factors, including the progress of the Company's research and
development programs, pre-clinical testing and clinical trials, the Company's
corporate partners fulfilling their obligations to the Company, the timing and
cost of seeking regulatory approvals, the level of resources that the Company
devotes to the development of manufacturing, marketing and sales capabilities,
technological advances, the status of competitors and the ability of the Company
to maintain existing and establish new collaborative arrangements with other
companies to provide funding to the Company to support these activities.
The Company expects to incur substantial funding requirements for the
expansion of operations, including (i) the expansion of the clinical trials of
C225 and the related manufacturing program to support these trials and (ii) in
an effort to develop new product candidates the expansion of research and
development activities including among other things, increased staffing, the
acquisition of equipment, and the consummation of new outside research
agreements. In addition, the entire $835,000 of outstanding debt to Pharmacia is
payable ratably throughout the period ending February 1998 and $2,113,000 of the
Industrial Development Revenue Bonds issued by the NYIDA becomes due in December
1997. The Company expects that its capital resources, including the ongoing
research support of its corporate partners will be sufficient to fund its
operations for approximately the next two years. However, the receipt of certain
of such ongoing research support is subject to attaining research and
development milestones, certain of which have not yet been achieved. These
milestones include, but are not limited to, receiving regulatory permission for
the filing of an Investigational New Drug ("IND") application for the initiation
of a small cell lung carcinoma clinical trial and reaching certain enrollment
levels for such trial relating to the BEC-2 cancer vaccine. No assurance can be
given that there will be no change in projected research support (including
research and development milestones) or expenses that would lead to the
Company's capital being consumed at a faster rate than currently expected. In
order to fund its capital needs beyond approximately the next two years, the
Company will require significant levels of additional capital and intends to
raise the necessary capital through additional arrangements with corporate
partners, equity or debt financings or from other sources. There is no assurance
that the Company will be successful in consummating any such arrangements with
corporate partners, financings or securing other sources.
The Company has entered into preliminary discussions with several major
pharmaceutical companies concerning the funding of research and development for
certain of its products in research. No assurance can be given that the Company
will be successful in pursuing any such alternatives. In addition, the Company
may seek to enter into a significant strategic partnership with a pharmaceutical
company for the development of its lead product candidate, C225. Such a
strategic alliance could include an up-front equity investment and technology
access fees plus milestone fees and revenue sharing. There can be no assurance
that the Company will be successful in achieving such an alliance, nor can the
Company predict the amount of funds which might be available to it if it entered
into such an alliance or the time at which such funds would be made available.
Page 9
<PAGE>
The Company has outfitted and purchased equipment for a certain property to
create a clinical-scale production facility that complies with current Good
Manufacturing Practices regulations. To be successful, the Company's products
must be manufactured in commercial quantities in compliance with regulatory
requirements and at acceptable costs. Although the Company has developed
products in the laboratory and in some cases has produced sufficient quantities
of materials for pre-clinical animal trials and early stage clinical trials,
production in late stage clinical or commercial quantities may create technical
challenges for the Company. If it commercializes its products, the Company may
adapt this facility for use as its commercial-scale manufacturing facility.
However, the Company has limited experience in clinical-scale manufacturing and
no experience in commercial-scale manufacturing, and no assurance can be given
that the Company will be able to make the transition to late stage clinical or
commercial production. The timing and any additional costs of adapting the
facility for commercial manufacturing will depend on several factors, including
the progress of products through clinical trials, and are not yet determinable.
Total capital expenditures made during the six months ended June 30, 1997
were $724,000 of which $567,000 related to the refurbishment and equipping of
the Company's manufacturing facility in New Jersey and $157,000 reflected
equipment and computer-related purchases for the corporate office and research
laboratories in New York.
Certain Factors Affecting Forward-Looking Statements--Safe Harbor Statement
Except for the historical information contained herein, this Management's
Discussion and Analysis of Financial Condition and Results of Operations and
other portions of this report contain forward-looking statements that involve
certain risks and uncertainties. The Company's actual operations, performance
and results could differ materially from those reflected in, or anticipated by,
these forward-looking statements. In evaluating the Company and its operations,
performance and results, investors should consider, among other things, the
scientific and business risks and uncertainties of new product development in
the biotechnology field, the risk of rapid and significant technological change,
the risk of development by one or more competitors of products which compete
with the Company's proposed products and the risks and uncertainties discussed
in the Company's public filings with the Commission, including the Company's
most recent Annual Report on Form 10-K under the captions "Business" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Recently Issued Accounting Standards
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Standards No. 128 (SFAS 128), "Earnings Per Share". SFAS 128
establishes standards for computing and presenting earnings per share. In
accordance with the effective date of SFAS 128, the Company will adopt SFAS 128
as of December 31, 1997. This statement is not expected to have a material
impact on the Company's financial statements.
Page 10
<PAGE>
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
(a) An annual meeting of stockholders was held on June 3, 1997 (the "Annual
Meeting").
(b) The directors elected at the Annual Meeting were Richard Barth, Jean
Carvais, Vincent T. DeVita, Jr., Robert F. Goldhammer, David M. Kies, Paul B.
Kopperl, William R. Miller, Harlan W. Waksal and Samuel D. Waksal. Such persons
are all of the directors of the Company whose term of office as a director
continued after the Annual Meeting.
(c) The matters voted upon at the Annual Meeting and the results of the
voting, including broker non-votes where applicable, are set forth below.
(i) Election of directors
Name In Favor Withheld Broker Non-Votes
- ---- -------- -------- ----------------
Richard Barth 20,671,171 778,505 N/A
Jean Carvais 20,671,671 778,005 N/A
Vincent T. DeVita, Jr 20,671,671 778,005 N/A
Robert F. Goldhammer 20,671,671 778,005 N/A
David M. Kies 20,761,371 778,305 N/A
Paul B. Kopperl 20,671,571 778,105 N/A
William R. Miller 20,671,671 778,005 N/A
Harlan W. Waksal 20,671,571 778,105 N/A
Samuel D. Waksal 20,671,271 778,405 N/A
(ii) The stockholders approved a proposal to amend the Company's 1996
Incentive Stock Option Plan (the "1996 ISO Plan"), generally to (i) increase the
total number of shares of Common Stock which may be issued pursuant to options
which may be granted under the 1996 ISO Plan from 1,500,000 to 3,000,000, which
number shall be reduced by the number of shares of Common Stock which have been
or may be issued pursuant to options granted under the Company's 1996
Non-Qualified Stock Option Plan (the "1996 Non-Qualified Plan"); and (ii) change
certain administration provisions of the 1996 ISO Plan. The stockholders voted
8,737,903 shares in favor, 4,057,048 shares against, 45,245 shares abstained
from voting and there were 8,609,480 broker non-votes.
(iii) The stockholders approved a proposal to amend the Company's 1996
Non-Qualified Stock Option Plan, generally to (i) increase the total number of
shares of Common Stock which may be issued pursuant to options which may be
granted under the 1996 Non-Qualified Plan from 1,500,000 to 3,000,000, which
number shall be reduced by the number of shares of Common Stock which have been
or may be issued pursuant to options granted under the 1996 ISO Plan; (ii)
change certain administration provisions of the 1996 Non-Qualified Plan and
(iii) clarify those persons eligible to participate in the 1996 Non-Qualified
Plan. The stockholders voted 8,975,273 shares in favor, 3,819,798 shares
against, 45,125 shares abstained from voting and there were 8,609,480 broker
non-votes.
(iv) The stockholders approved a proposal to amend the Company's
Certificate of Incorporation to increase the total number of shares of Common
Stock the Company is authorized to issue from 30,000,000 shares to 45,000,000
shares. The stockholders voted 19,145,871 shares in favor, 915,585 shares
against, 33,875 shares abstained from voting and there were 1,354,345 broker
non-votes.
(v) The stockholders ratified the appointment by the Board of Directors of
KPMG Peat Marwick LLP as the Company's independent certified public accountants
for the fiscal year ending December 31, 1997. The stockholders voted 21,310,356
shares in favor, 112,160 shares against, and 27,160 shares abstained from
voting. Broker non-votes were not applicable.
Page 11
<PAGE>
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
Exhibit No. Description
----------- -----------
3.1 Certificate of Incorporation and all amendments thereto
27.1 Financial Data Schedule
99.1 1996 Incentive Stock Option Plan, as amended
99.3 1996 Non-Qualified Stock Option Plan, as amended
(b) Reports on Form 8-K:
Date of Report Items Reported
-------------- --------------
April 14, 1997 Item 5
June 3, 1997 Item 5
Page 12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
IMCLONE SYSTEMS INCORPORATED
(Registrant)
Date: August 13, 1997 By /s/ Samuel D. Waksal
---------------------------
Samuel D. Waksal
President and Chief
Executive Officer
Date: August 13, 1997 By /s/ Carl S. Goldfischer
---------------------------
Carl S. Goldfischer
Vice President , Finance
and Chief Financial Officer
Page 13
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
IMCLONE SYSTEMS INCORPORATED
I, H. Kenneth Fish, the incorporator hereinafter named, for the purpose of
forming a corporation pursuant to the General Corporation Law of the State of
Delaware, do make this certificate, hereby declaring and certifying that this is
my act and deed and that the facts herein stated are true;
FIRST: The name of the corporation (the "Corporation") is IMCLONE SYSTEMS
INCORPORATED.
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 100 West 10th Street, Wilmington, County of New Castle; and
the name of its registered agent at such address is The Corporation Trust
Company.
THIRD: The purposes of the Corporation are to engage in research and
development, production, manufacturing and distribution of products based on
genetic engineering, including but not limited to such products based on
recombinant DNA techniques and monoclonal antibody techniques of production and
to provide consulting and other services as related to the foregoing business.
To acquire, hold, dispose of, buy, sell, underwrite, handle on commission
and otherwise deal in stocks, shares, bonds, notes and obligations of the
interests in corporations, joint-stock companies, trusts, associations, firms or
persons and all forms of public and municipal securities of this or any other
country, or any right or interest therein, and while owner thereof, to exercise
all rights, powers and privileges of ownership in the same manner and to the
same extent that an individual might;
To acquire, hold, use, dispose of buildings, plants, factories, mills,
machinery, works and all other real and personal property, tangible or
intangible, of whatever kind and wherever situated, or any right or interest
therein for the purposes of the foregoing businesses; patent rights and
privileges, inventions, formulae, trademarks and names, secret processes or any
right or interest therein; as a going business or otherwise, all or any part of
the assets of any corporation,
<PAGE>
joint-stock company, trust, association, firm or person, and in such cases to
assume all or any part of its or his liabilities.
To conduct any other lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is one million (1,000,000) shares of common stock
with a par value of five cents ($0.05) per share.
FIFTH: The name and the mailing address of the incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
H. Kenneth Fish Foley, Hoag & Eliot
One Post Office Square
Boston, Massachusetts 02109
SIXTH: The names and the mailing addresses of the initial directors are as
follows:
Harlan Waxsel 101 West 81st Street
Unit 712
New York, New York
Jack Waxsel 260 Hornwood Drive
Dayton, Ohio 45405
Salvatore Vernace Pomona Professional Plaza
Route 45
Pomona, New York 10970
SEVENTH: The original by-laws of the Corporation shall be adopted by the
incorporator Thereafter, the power to make, alter, or repeal the by-laws, and to
adopt any new by-law, shall be vested in the board of directors of the
Corporation.
EIGHTH: Elections of directors need not be by written ballot unless the
by-laws of the corporation shall so provide.
<PAGE>
NINTH: Each person who at any time is, or shall have been, a director or
officer of the Corporation, and is threatened to be or is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is, or
was, a director or officer of the Corporation, or served at the request of the
Corporation as a director, officer, employee, trustee, or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with any such action, suit or proceeding to the full extent provided by the
General Corporation Law of the State of Delaware. The foregoing Jack Waxsel
right of indemnification shall in no way be exclusive of any other rights of
indemnification to which any such director, officer, employee, or agent may be
entitled, under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise.
TENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
this Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders of this Corporation, as the case may be, and also on this
Corporation.
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 24th day of
April, 1984.
[Seal] /s/ H. Kenneth Fish
-----------------------------
H. Kenneth Fish, Incorporator
<PAGE>
CERTIFICATE OF CORRECTION FILED TO CORRECT A
CERTAIN ERROR IN THE CERTIFICATE OF INCORPORATION
OF IMCLONE SYSTEMS INCORPORATED FILED IN THE
OFFICE OF THE SECRETARY OF STATE OF DELAWARE ON
APRIL 26, 1984, AND RECORDED IN THE OFFICE OF THE
RECORDER OF DEEDS FOR NEW CASTLE COUNTY, DELAWARE,
ON APRIL 26, 1984
IMCLONE SYSTEMS INCORPORATED, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
1. The name of the corporation is IMCLONE SYSTEMS INCORPORATED.
2. That a Certificate of Incorporation was filed by the Secretary of State
of Delaware on April 26, 1984 and recorded in the office of the Recorder of
Deeds of New Castle County on April 26, 1984 and that said certificate requires
correction as permitted by subsection (F) of section 103 of The General
Corporation Law of the State of Delaware.
3. The inaccuracy or defect of said certificate to be corrected is as
follows:
The surname of two of the initial directors referred to in paragraph
SIXTH is Waksal rather than Waxsel.
4. Paragraph SIXTH of the certificate is corrected to read as follows:
SIXTH: The names and the mailing addresses of the initial directors are as
follows:
Harlan Waksal 101 West 81st Street
Unit 712
New York, New York
Jack Waksal 260 Hornwood Drive
Dayton, Ohio 45405
Salvatore Vernace Pomona Professional Plaza
Route 45
Pomona, New York 10970
<PAGE>
IN WITNESS WHEREOF, said IMCLONE SYSTEMS INCORPORATED has caused this
certificate to be signed by Jack Waksal and Salvatore Vernace, a majority of its
Directors, 26th day of April, 1984.
IMCLONE SYSTEMS INCORPORATED
/s/ Salvatore Vernace
-------------------------------------
Michael A. Stetl Notary Public
in and for the State of Ohio /s/ Jack Waksal
-------------------------------------
My Commission expires Dec. 4, 1985
/s/ Michael A. Stetl
- ------------------------------------
5/30/84
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
ImClone Systems Incorporated, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That the Board of Directors of said Corporation, by the unanimous
written consent of its members dated September 13, 1984 filed with the minutes
of the Board, adopted a resolution proposing and declaring advisable the
following amendment to the Certificate of Incorporation of said Corporation:
RESOLVED, that the Certificate of Incorporation of ImClone Systems
Incorporated be amended by changing the FOURTH Article so that as amended
said Article shall be and read as follows: "The total number of shares of
capital stock which the Corporation shall have authority to issue is two
million (2,000,000) shares of common stock with a par value of five cents
($0.05) per share.
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendment in accordance with the
provisions of section 228 of the General Corporation Law of the State of
Delaware and written notice of the adoption of the amendment has been given as
provided in section 228 of the General Corporation Law of the State of Delaware
to every stockholder entitled to such notice.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of sections 242 and 228 of the General Corporation Law of
the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, said ImClone Systems Incorporated has caused this
certificate to be signed by Harlan Waksal, its President, and attested by H.
Kenneth Fish, its Secretary, this 29th day of September, 1984
IMCLONE SYSTEMS INCORPORATED
By /s/ Harlan W. Waksal M.D.
--------------------------------------
Harlan Waksal, its President
ATTEST:
By /s/ H. Kenneth Fish
--------------------------------
H. Kenneth Fish, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
ImClone Systems Incorporated, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That the Board of Directors of said Corporation, by the unanimous
written consent of its members dated May 20, 1986 filed with the minutes of the
Board, adopted a resolution proposing and declaring advisable the following
amendment to the Certificate of Incorporation of said Corporation.
RESOLVED, that the Certificate of Incorporation of ImClone Systems
Incorporated be amended by changing the FOURTH Article so that as amended
said Article shall be and read as follows: "The total number of shares of
capital stock which the Corporation shall have authority to issue is seven
million (7,000,000) shares of common stock with a par value of five cents
($0.05) per share."
SECOND: That in lieu of a meeting and vote of stockholders, the
stockholders have given written consent to said amendment in accordance with the
provisions of section 228 of the General Corporation Law of the State of
Delaware and written notice of the adoption of the amendment has been given as
provided in section 228 of the General Corporation Law of the State of Delaware
to every stockholder entitled to such notice.
THIRD: That the aforesaid amendment was duly adopted in accordance with the
applicable provisions of sections 242 and 228 of the General Corporation Law of
the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, said ImClone Systems Incorporated has caused this
certificate to be signed by Harlan Waksal, its President, and attested by John
Landes, its Secretary, this 16th day of June 1986.
IMCLONE SYSTEMS INCORPORATED
By /s/ Harlan W. Waksal M.D.
--------------------------------------
Harlan Waksal, its President
ATTEST.
By /s/ John Landes
- ---------------------------------
John Landes, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
IMCLONE SYSTEMS INCORPORATED
The undersigned hereby certifies that the following amendment to the
Certificate of Incorporation of ImClone Systems Incorporated (the "Corporation")
has been duly adopted in accordance with the provisions of Sections 242 and 228
of the General Corporation Law of Delaware and that, pursuant to said Section
228, written notice of said adoption has been provided to those stockholders of
the Corporation who did not consent in writing to such adoption:
That the Certificate of Incorporation of the Corporation be, and it hereby
is, amended by addition thereto of a new Article ELEVENTH as follows:
ELEVENTH: To the maximum extent permitted by the General Corporation Law of
the State of Delaware, as the same exists or may hereafter be amended, no
director of this Corporation shall be personally liable to the Corporation
or to any of its stockholders for monetary damages arising out of such
director's breach of fiduciary duty as a director of the Corporation.
IN WITNESS WHEREOF, said ImClone Systems Incorporated has caused this
certificate to be signed by Harlan Waksal, its President, and attested by John
Landes, its Secretary, this 27 day of May, 1987.
ATTEST: IMCLONE SYSTEMS INCORPORATED
/s/ John B. Landes By /s/ Harlan W. Waksal M.D.
- ------------------------- --------------------------------------
John B. Landes, Secretary Harlan Waksal, its President
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
IMCLONE SYSTEMS INCORPORATED
Pursuant to Section 242 of
The Delaware General Corporation Law
We, Harlan W. Waksal, Executive Vice President, and John B. Landes,
Secretary, respectively, of ImClone Systems Incorporated, a corporation
organized and existing under and by virtue of the Delaware General Corporation
Law (the "Corporation"), do hereby certify as follows:
FIRST: That the Board of Directors of the Corporation duly adopted the
following amendment to the Certificate of Incorporation of the Corporation,
proposing and declaring such amendment to be advisable and directing that such
amendment be submitted to the stockholders of the Corporation for their
approval. The Amendment is that Article NINTH of the Certificate of
Incorporation of the Corporation be amended to read in its entirety as follows:
"NINTH (a) Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding"), by
reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended, against all
expense, liability and loss (including attorneys' fees, judgments, fines, excise
taxes or penalties under the Employee Retirement Income Security Act and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such person
in connection therewith, and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of his or her heirs, executors and administrators, provided,
however, that, except as provided in paragraph (b) hereof, the Corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the board of directors of the Corporation.
The right to indemnification conferred in this Article NINTH shall be a contract
right and shall include the
<PAGE>
right to be paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however, that, if the
Delaware General Corporation Law requires, the payment of such expenses incurred
by a director or officer in his or her capacity as a director or officer (and
not in any other capacity as a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Article NINTH or otherwise.
The provisions of this paragraph (a) shall apply to any member of any Committee
appointed by the Board of Directors as fully as though such person shall have
been an officer or director of the Corporation. The Corporation may, by action
of its Board of Directors, provide indemnification to employees and agents of
the Corporation with the same scope and effect as the foregoing indemnification
of directors and officers.
(b) If a claim under paragraph (a) of this Article is not paid in full by
the Corporation within thirty days after a written claim has been received by
the Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
(c) The Corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the Corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability, or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
(d) The provisions of this Article NINTH shall be in addition to and not in
limitation of any other rights, indemnities, or limitations of liability to
which any director or officer may be entitled, as a matter of law or under any
By-Law, agreement, vote of stockholders or otherwise."
<PAGE>
SECOND: That a special meeting of the stockholders of said Corporation was
duly called and held, upon notice in accordance with Section 222 of the Delaware
General Corporation Law, at which meeting the necessary number of shares as
required by statute were voted in favor of the Amendment.
THIRD: That the Amendment set forth in Article FIRST hereof was duly
adopted in accordance with the applicable provisions of Section 242 of the
Delaware General Corporation law.
IN WITNESS WHEREOF, we have signed this certificate this 28 day of March
1988.
/s/ Harlan W. Waksal
------------------------------
Harlan W. Waksal
Executive Vice President
Attest
/s/ John B. Landes
- ------------------------
John B Landes
Secretary
<PAGE>
CERTIFICATE 0F AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
IMCLONE SYSTEMS INCORPORATED
under section 242 or the General Corporation law
of the State of Delaware
The undersigned, being the Executive Vice President of IMCLONE SYSTEMS
INCORPORATED, a Delaware corporation (the "Corporation") DOES HEREBY CERTIFY as
follows:
FIRST: The Certificate of Incorporation of the Corporation is hereby
amended by deleting Article FOURTH in its entirety and inserting the following
in lieu thereof:
"FOURTH: (a) the total number of shares of capital stock which the
Corporation shall have the authority to issue shall be 16,000,000 shares, of
which 15,000,000 shares shall be Common Stock with a par value of one cent
($.0l) per share, and 1,000,000 shares shall be Preferred Stock with a par value
of one dollar ($1.00) per share.
A statement of the designations of the authorized classes of stock or of
any series thereof, and the voting powers, full or limited, or no voting powers,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, or of the authority of the
Board of Directors to fix by resolution or resolutions such designations and
other terms not fixed by the Certificate of Incorporation, is as follows:
1. The Board of Directors is authorized, subject to the limitations
prescribed by law and in accordance with the provisions hereof, to provide
for the issuance or Preferred Stock in one or more series, from time to
time and, by filing a certificate of designations pursuant to the General
Corporation Law, to establish the number of shares to be included in each
such series, and to fix the designation, voting powers, full or limited, or
no voting powers, preferences, and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions of
the shares of each such series. The authority of the Board or Directors
with respect to each such series shall include, but not be limited to, the
determination or fixing of the following:
(i) The distinctive designation and number of shares comprising
such series;
<PAGE>
(ii) The dividend rate of such series, the conditions and time
upon which such dividends shall be payable, the relation which such
dividends shall bear to the dividends payable on any other class or
classes of stock or series thereof, or any other series of the same
class, and whether such dividends shall be cumulative or
non-cumulative;
(iii) The conditions upon which the shares of such series shall
be subject to redemption by the Corporation and the times, prices and
other terms and provisions upon which the shares of the series may be
redeemed;
(iv) Whether or not the shares of the series shall be subject to
the operation of a retirement or sinking fund to be applied to the
purchase or redemption of such shares and, if such retirement or
sinking fund be established, the annual amount thereof and the terms
and provisions relative to the operation thereof;
(v) Whether or not the shares of the series shall be convertible
into or exchangeable for shares or any other class or classes, with or
without par value, or of any other series of the same class, and, it
provision is made for conversion or exchange, the times, prices,
rates, adjustments, and other terms and conditions of such conversion
or exchange;
(vi) Whether or not the shares of the series shall have voting
rights, in addition to the voting rights provided by law, and, if so,
subject to the limitation hereinafter set forth, the terms of such
voting rights;
(vii) The rights of the shares of the series in the event of
voluntary or involuntary liquidation, dissolution, or upon the
distribution of assets of the Corporation;
(viii) Any other powers, preferences and relative participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof, of the shares of such series, as the Board of
Directors may deem advisable and as shall not be inconsistent with the
provisions of this Certificate of Incorporation.
2. The holders of shares of the Preferred Stock of each series shall be
entitled to receive, when and as declared by the Board of Directors, out of
funds legally available for the payment of dividends, dividends at the rates
fixed by the Board of Directors for such series, and no more, before any
dividends, other than dividends payable in Common Stock, shall be declared and
paid, or set apart for payment, on the Common Stock with respect to the same
dividend period.
3. The holders of shares of the Preferred Stock of each series shall be
entitled upon liquidation or dissolution or upon the distribution of the assets
of the corporation to such preferences as provided in the resolution or
resolutions creating such series of Preferred Stock, and no more, before any
distribution or the assets of the Corporation shall be made to the holders
<PAGE>
of shares of the Common Stock. Whenever the holders of shares of the Preferred
Stock shall have been paid the full amounts to which they shall be entitled, the
holders of shares of the Common Stock shall be entitled to share ratably in all
assets of the corporation remaining.
4. At all meetings of the stockholders of the corporation, the holders of
shares of the Common Stock shall be entitled to one vote for each share of
Common Stock held by them. Except as otherwise provided by a resolution or
resolutions of the Board of Directors creating any series of Preferred Stock or
by the Delaware General Corporation Law, the holders of shares of the Common
Stock issued and outstanding shall have and possess the exclusive right to
notice of stockholders' meetings and the exclusive power to vote.
(b) A director shall be fully protected in relying in good faith upon the
books of account of the Corporation or statements prepared by any of its
officials as to the value and amount of the assets, liabilities and/or net
profits of the Corporation, or any other facts pertinent to the existence and
amount of surplus or other funds from which dividends might properly be declared
and paid.
(c) The Corporation shall be entitled to treat the person in whose name any
share, right or option is registered as the owner thereof, for all purposes, and
shall not be bound to recognize any equitable or other claim to or interest in
such share, right or option on the part of any other person, whether or not the
Corporation shall have notice thereof, save as may be expressly provided by the
laws of the state of Delaware.
SECOND: That such amendment was duly adopted by the Board of Directors of
the Corporation and by the Stockholders of the Corporation in accordance with
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this Certificate of Amendment to this Certificate of
Incorporation of the Corporation has been signed, and the statements made herein
affirmed as true under the penalties of perjury, this l2th day of June, 1991.
/s/ Harlan W. Waksal
-----------------------------
Harlan W. Waksal
Executive Vice President
ATTEST: /s/ John B. Landes
--------------------------
John B. Landes
<PAGE>
CERTIFICATE OF AMENDMENT
To
CERTIFICATE OF INCORPORATION
0F
IMCLONE SYSTEMS INCORPORATED
Under Section 242 of the General Corporation Law
of the State of Delaware
The undersigned, being the Executive Vice President of IMCLONE SYSTEMS
INCORPORATED, a Delaware corporation (the "Corporation") DOES HEREBY CERTIFY as
follows:
FIRST: The Certificate of Incorporation of the Corporation is hereby
amended by deleting the first paragraph of Article FOURTH in its entirety and
inserting the following in lieu thereof:
"FORTH: (a) The total number of shares of capital stock which the
corporation shall have the authority to issue in thirty million
(30,000,000) shares or Common Stock with a par Value of one tenth of one
cent ($.001) per share and four million (4,000,000} shares of Preferred
Stock with par value of one dollar ($1.00) per share."
SECOND: The Certificate of Incorporation of the Corporation is further
amended to add a new Article TWELFTH to read as follows;
"TWELFTH: Each outstanding share of Common Stock, par value $.01 per
share, is hereby re-classified and changed into one and one-half shares of
Common Stock, par value $.00l per share, and upon the filing of this
amendment to the Certificate of Incorporation, each outstanding share of
Common Stock, par value $.01 per share, shall be split up and converted
into one and one-half shares of Common Stock, par value $.00l per share."
THIRD: That such amendment was duly adopted by the Board of Directors of
the Corporation and by the Stockholders of the corporation in accordance with
Section 242 of the General Corporation Law of the State of Delaware.
<PAGE>
IN WITNESS HEREOF, this Certificate of Amendment to the Certificate of
Incorporation of the Corporation has been signed, and the statements made herein
affirmed as true under the penalties of perjury, this 16th day of' September,
1991.
/s/ Harlan W. Waksal
--------------------------
Harlan W. Waksal,
Executive Vice President
ATTEST: /s/ John B. Landes
----------------------------
John B. Landes, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
IMCLONE SYSTEMS INCORPORATED
Under Section 242 of the General Corporation Law
of the State of Delaware
The undersigned, being the Executive Vice President of IMCLONE SYSTEMS
INCORPORATED, a Delaware corporation (the "Corporation") DOES HEREBY CERTIFY as
follows:
FIRST: The Certificate of Incorporation of the Corporation is hereby
amended so that Article FOURTH (a) shall read in its entirety as follows:
"FOURTH: (a) The total number of shares of capital stock which the
Corporation shall have the authority to issue is forty-five million (45,000,000)
shares of Common Stock with a par value of one tenth of one cent ($.001) per
share and four million (4,000,000) shares of Preferred Stock with a par value of
one dollar ($1.00) per share."
SECOND: That such amendment was duly adopted by the Board of Directors of
the Corporation and by the Stockholders of the Corporation in accordance with
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, this Certificate of Amendment to the Certificate of
Incorporation of the Corporation has been signed, and the statements hereto
affirmed as true under the penalties of perjury, this 18 day of July, 1997.
/s/ Harlan W. Waksal
-------------------------------
Harlan W. Waksal
Executive Vice President
Attest: /s/ John B. Landes
--------------------------
John B. Landes
Exhibit 99.1
IMCLONE SYSTEMS INCORPORATED
1996 INCENTIVE STOCK OPTION PLAN, AS AMENDED(1)
ARTICLE 1
Purpose of Plan
1.1 General Purpose. The purpose of this Incentive Stock Option Plan (the
"Plan") is to promote the interests of ImClone Systems Incorporated, and any
subsidiaries of such company, as from time to time may be formed or acquired
(collectively, the "Company"), by affording key executives and employees an
opportunity to acquire a proprietary interest in the Company pursuant to stock
options issued by the Company, and thus to create in such employees increased
personal interest in its continued success.
1.2 Statutory Stock Option. Options granted under the Plan are intended to
be "incentive stock options" to which Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), applies.
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(1) This plan was adopted by the Board on February 25, 1996 and approved by the
stockholders on June 3, 1996; it was amended by the Board on April 3, 1997 and
such amendments were ratified by the stockholders on June 3, 1997.
1
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ARTICLE II
Shares Subject to Plan
2.1 Description of Shares. Subject to Article VII hereof, the stock to
which the Plan applies is shares of the Company's common stock, $.001 par value
("Common Stock"), either authorized but unissued or Treasury shares. The number
of shares of Common Stock to be issued or sold pursuant to options granted
hereunder shall not exceed 3,000,000 shares; provided, that such number shall be
reduced by the number of shares which have been sold under, or may be sold
pursuant to options granted from time to time under, the Company's 1996
Non-Qualified Stock Option Plan (the "Non-Qualified Plan"), to the same extent
as if such sales had been made or options had been granted pursuant to this
Plan.
2.2 Restoration of Unpurchased Shares. Any shares subject to an option
granted hereunder or under the Non-Qualified Plan that, for any reason, expires
or is terminated unexercised as to such shares may again be subject to an option
to be granted hereunder.
ARTICLE III
Administration; Committees; Amendments
3.1 Administration.. The Plan shall be administered by any of the
Compensation Committee, the Stock Option Committee (which is a subcommittee of
the Compensation Committee) (collectively, the "Committees") or the Company's
Board of Directors (the "Board"). The Committees shall be comprised of not less
than two persons who shall be appointed by the Board from among the members of
the Board. Members of the Committees shall not be eligible
2
<PAGE>
to become participants under the Plan while they are members of the Committees
or for a period of three months thereafter.
3.2 Duration; Removal; Etc. The members of the Committees shall serve at
the pleasure of the Board, which shall have the power at all times to remove
members from the Committees or to add members thereto. Vacancies in the
Committees, however caused, shall be filled by action of the Board.
3.3 Meetings; Actions of Committees. Each of the Committees and the Board
may select one of its members as its Chairman and shall hold its meetings at
such times and places as it may determine. All decisions or determinations of
each of the Committees and the Board shall be made by the majority vote or
decision of all of its members, whether present at a meeting or not; provided,
however, that any decision or determination reduced to writing and signed by all
of the members shall be as fully effective as if it had been made at a meeting
duly called and held. Each of the Committees and the Board may make such rules
and regulations for the conduct of its business not inconsistent herewith as it
may deem advisable.
3.4 Interpretation. The interpretation and construction by any of the
Committees or the Board of the provisions of the Plan or of the options granted
hereunder shall be final, unless in the case of the Committees otherwise
determined by the Board. No member of the Board or of the Committees shall be
liable for any action taken or determination made in good faith.
3.5 Amendments or Discontinuation. The Board may make such amendments,
changes, and additions to the Plan, or may discontinue and terminate the Plan,
as it may deem advisable from time to time; provided, however, that no action
shall affect or impair any options theretofore granted under the Plan, and
provided, further, however, that the affirmative vote of
3
<PAGE>
the owners of a majority of the outstanding shares of Common Stock present at a
meeting in person or by proxy and entitled to vote at the meeting shall be
necessary to effect any amendment to the Plan which would (a) increase the
number of shares of Common Stock subject to options granted under the Plan, or
(b) authorize the granting of options at a price below the minimum price
established by Section 5.3 hereof.
ARTICLE IV
Participants; Maximum Grant; Duration of Plan
4.1 Eligibility and Participation. Options shall be granted only to persons
("Participants") who at the time of granting are key executives or key employees
of the Company. Subject to the provisions of Section 4.3 hereof, the Committees
or the Board shall determine the key executives and key employees to be granted
options hereunder, the number of shares of Common Stock subject to such options,
the exercise prices of options, the terms thereof and any other provisions not
inconsistent with the Plan.
4.2 Guidelines for Participation. In selecting Participants and determining
the numbers of shares of Common Stock for which options are to be granted the
Committees or the Board shall consult with officers and directors of the
Company, and shall take into account the duties of the respective employees,
their present and potential contributions to the success of the Company, and
such other factors as any of the Committees or the Board shall deem relevant.
4.3 Maximum Grant. Notwithstanding anything to the contrary in the Plan,
the aggregate fair market value (determined as of the time the option is
granted) of the Common Stock for which any Participant may be granted options in
any calendar year (under all plans, including the
4
<PAGE>
Plan, providing for the grant of incentive stock options of the Company and its
parent and subsidiaries) shall not exceed $100,000.
4.4 Duration of Plan. All options under the Plan shall be granted within
ten years from the date the Plan is adopted, or the date the Plan is approved by
the shareholders of the Company, whichever is earlier.
ARTICLE V
Terms and Conditions of Options
5.1 Individual Stock Option Agreements. All stock options granted pursuant
to the Plan shall be evidenced by stock option agreements ("Stock Option
Agreements"), which need not be identical, between the Company and the
Participant in such form as any of the Committees or the Board shall from time
to time approve, subject to the terms of the Plan.
5.2 Number of Shares. Each Stock Option Agreement shall state the total
number of shares of Common Stock with respect to which the option is granted,
the terms and conditions of the option, and the exercise price or prices
thereof, it being understood that any of the Committees or the Board shall have
authority to prescribe in any Stock Option Agreement that the option evidenced
thereby may be exercisable in full or in part, as to any number of shares
subject thereto, at any time or from time to time during the term of the option,
or in such installments at such times during said term as any of the Committees
or the Board may determine; provided that no option granted pursuant to the Plan
shall be exercisable after the expiration of ten years from the date such option
is granted. A previously granted incentive stock option shall be treated as
outstanding until it is exercised in full or expires by reason of the lapse
5
<PAGE>
of time. Except as otherwise provided in any Stock Option Agreement, an option
may be exercised at any time or from time to time during the term of the option
as to any or all full (but no fractional) shares which have become purchasable
under such option. Any of the Committees or the Board shall have the right to
accelerate, in whole or in part, from time to time, conditionally or
unconditionally, the right to exercise any option granted hereunder.
5.3 Option Price. The price at which the shares of Common Stock subject to
each option granted under this Plan may be purchased (the "option price" or
"exercise price") shall be determined by any of the Committees or the Board,
which shall have authority at the time the option is granted to prescribe in any
Stock Option Agreement that the price per share, with the passage of
pre-determined periods of time, shall increase from the original price to higher
prices, but in no case shall the original exercise price of any option be less
than 100% of the fair market value of such shares on the date the option is
granted, as determined by any of the Committees or the Board in accordance with
applicable Treasury Regulations. Notwithstanding anything contained to the
contrary herein, no option shall be granted to any employee who, at the time the
option is granted, owns more than 10% of the total combined voting power of all
classes of stock of the Company or of its parent or subsidiary unless, at the
time option is granted, the exercise price of the option is at least 110% of the
fair market value of the shares of Common Stock subject to the option and such
option by its terms is not exercisable after the expiration of five years from
the date such option is granted. For purposes of determining the ownership of
stock of the Company, the rules of Section 424(d) of the Code shall be applied.
5.4 Method of Exercising Option; Full Payment. Subject to Section 6.1 and
6.2 hereof, options granted pursuant to the Plan may be exercised only if the
Participant was, at all
6
<PAGE>
times during the period beginning on the date the option was granted and ending
on the date of such exercise, an employee of the Company, a parent or subsidiary
of the Company, or a corporation or a parent or subsidiary of such corporation
issuing or assuming a stock option in respect of such option in a transaction to
which Section 424(a) of the Code applies. Options shall be exercised by written
notice to the Company, addressed to the Company at its principal place of
business. Such notice shall state the Participant's election to exercise the
option and the number of shares of Common Stock in respect of which it is being
exercised, and shall be signed by the Participant so exercising the option. Such
notice shall be accompanied by (a) the Stock Option Agreement (which, if not
exercised for all the shares thereto, shall be appropriately endorsed and
returned to the Participant; (b) payment of the full purchase price of such
shares, which payment shall be in cash, by check or in stock of the Company that
has been owned by the participant for at least six months, or notes of the
Company or, as agreed to by the Board, other consideration; and (c) such written
representations and other documents as may be desirable, in the opinion of the
Company's legal counsel, for purposes of compliance with state or Federal
securities or other laws. In the case of payment made in stock of the Company,
the stock shall be valued at its Fair Market Value (as hereinafter defined) on
the last business day prior to the date of exercise. The term "Fair Market
Value" for the Common Stock on any particular date shall mean the last reported
sale price of the Common Stock on the principal market on which the Common Stock
trades on such date or, if no trades of Common Stock are made or reported on
such date, then on the next preceding date on which the Common Stock traded. The
Company shall deliver a certificate or certificates representing shares of
Common Stock purchased pursuant to such notice to the purchaser as soon as
practicable after receipt of such notice, subject
7
<PAGE>
to Article VIII hereof. Any of the Committees or the Board may amend an already
outstanding Stock Option Agreement to add a provision permitted by clause (b) of
this Section 5.4, and no such amendment, by itself, shall be deemed to
constitute the grant of a new option for purposes of this Plan; provided that
this sentence shall not be determinative of whether any such amendment
constitutes a new grant for purposes of qualification as an Incentive Stock
Option.
5.5 Rights as a Shareholder. No Participant shall have any rights as a
shareholder with respect to shares of Common Stock subject to an option granted
under the Plan until the date of the issuance to such Participant of stock
certificates in respect of such shares. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
5.6 Other Provisions. Stock Option Agreements entered into pursuant to the
Plan may contain such other provisions (not inconsistent with the Plan) as any
of the Committees or the Board may deem necessary or desirable, including, but
not limited to, covenants on the part of the Participant not to compete, not to
sell Common Stock obtained from the exercise of options for specified periods of
time, and remedies available to the Company in the event of the breach of any
such covenant.
ARTICLE VI
Termination of Employment; Transferability
6.1 Termination of Employment. Except as otherwise provided in connection
with the grant of any option or the termination of any Participant, the right to
exercise any unexercised
8
<PAGE>
portion of any option granted under the Plan shall terminate immediately upon
termination of the employment relationship between the Participant and the
Company (or its parent or subsidiary, as the case may be), for any reason,
without regard to cause, other than by reason that the Participant dies or
becomes disabled (as defined in the Code). The option may not be exercised
thereafter, and the shares of Common Stock subject to the unexercised portion of
such option may again be subject to new options under the Plan.
6.2 Death or Disability of Participant. Except as otherwise permitted in
connection with the grant of any option or the death or disability of a
Participant, in the event a Participant dies or is disabled while in the employ
of the Company or of a parent or subsidiary of the Company, any options
theretofore granted to him shall be exercisable only within the next 12 months
immediately succeeding such death or disability and then only in the case of
death (a) by the person or persons to whom the Participant's rights under the
option shall pass by will or the laws of descent and distribution, and, in the
case of disability, by such Participant or his legal representative, and (b) if
and to the extent that he was entitled to exercise the option at the date of his
death.
6.3 Transferability. Options granted to a Participant under the Plan shall
not be transferable otherwise than by will, by the laws of descent and
distribution, or (if authorized in the applicable Stock Option Agreement)
pursuant to a qualified domestic relations order ("QDRO") as defined by the
Internal Revenue Code of 1986, as amended, or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder. During the
Participant's lifetime, options shall be exercised only by such Participant,
such Participant's
9
<PAGE>
guardian or legal representative, or (if authorized in the applicable Stock
Option Agreement) such Participant's transferee pursuant to a QDRO.
ARTICLE VII
Capital Adjustments
7.1 Capital Adjustments. If any change is made in the shares of Common
Stock subject to the Plan or subject to any option granted under the Plan
(through merger, consolidation, reorganization, recapitalization, stock
dividend, split-up, combination of shares, exchange of shares, issuance of
rights to subscribe, or change in capital structure), appropriate adjustments
shall be made by any of the Committees or the Board as to the maximum number of
shares subject to the Plan and the number of shares and price per share subject
to outstanding options as shall be equitable to prevent dilution or enlargement
of option rights; provided, however, that any such adjustment shall comply with
the rules of Section 424(a) of the Code and provided further that in no event
shall any adjustment be made that would cause any option granted hereunder to be
considered other than an incentive stock option. Any determination made by any
of the Committees or the Board under this Article VII shall be final, binding
and conclusive upon each Participant.
ARTICLE VIII
Legal Requirements, Etc.
8.1 Revenue Stamps. The Company shall be responsible and shall pay for any
transfer, revenue, or documentary stamps with respect to shares issued upon the
exercise of options granted under the Plan.
10
<PAGE>
8.2 Legal Requirements. The Company shall not be required to issue
certificates for shares upon the exercise of any option unless and until, in the
opinion of the Company's legal counsel, such issuance would not result in a
violation of any state or Federal securities or other law. Certificates for
shares, when issued, shall have, if required in the opinion of the Company's
legal counsel, the following legend, or statements of other restrictions,
endorsed thereon, and may not be immediately transferable:
The shares of Common Stock evidenced by this certificate have been issued
to the registered owner in reliance upon written representations that these
shares have been purchased for investment. These shares may not be sold,
transferred, or assigned unless, in the opinion of the Company and its
legal counsel, such sales, transfer, or assignment will not be in violation
of the Securities Act of 1933, as amended, applicable rules and regulations
of the Securities and Exchange Commission and any applicable state
Securities laws.
8.3 Private Offering. The options to be granted under the Plan are
available only to a limited number of present and future key executives and
employees of the Company and its subsidiaries who have knowledge of the
Company's financial condition, management, and affairs. Such options are not
intended to provide additional capital for the Company but are to encourage
stock ownership by the Company's key personnel. By the act of accepting an
option, in the absence of an effective registration statement under the
Securities Act of 1933, as amended, Participants shall agree that upon exercise
of such option, they will acquire the shares of Common Stock that are the
subject thereof for investment and not with any intention at such time to resell
or redistribute the same, and they shall confirm such agreement at the time of
exercise,
11
<PAGE>
but the neglect or failure to confirm the same in writing shall not be a
limitation of such agreement.
ARTICLE IX
General
9.1 Application of Funds. The proceeds received by the Company from the
sale of shares of Common Stock pursuant to the exercise of options therefor
shall be used for general corporate purposes.
9.2 Right of the Company to Terminate Employment. Nothing contained in the
Plan or in a Stock Option Agreement shall confer upon any Participant any right
to be continued in the employ of the Company or of any subsidiary of the
Company, or interfere in any way with the right of the Company, or such
subsidiary, to terminate his employment for any reason whatsoever, with or
without cause, at any time.
9.3 No Obligation to Exercise. The granting of an option hereunder shall
impose no obligation upon the Participant to exercise such option.
9.4 Effectiveness of Plan. The Plan shall become effective upon its
adoption by the shareholders of the Company. Options may be granted under the
Plan prior to the approval of the Plan by the Shareholders, but no such option
may be exercised prior to such approval.
9.5 Other Benefits. Participation in the Plan shall not preclude a
Participant from eligibility in any other stock benefit plan of the Company or
any old age benefit, insurance, pension, profit sharing, retirement, bonus or
other plan which the Company has adopted, or may, at any time, adopt for the
benefit of its parents' or its subsidiaries' executives and/or employees.
12
<PAGE>
9.6 Company Records. Records of the Company as to a Participant's period of
employment, termination of employment and the reason therefor, leaves of
absence, re-employment, and other matters will be conclusive for all purposes
hereunder.
9.7 Tax Requirement. The exercise or surrender of any option under this
Plan shall constitute a Participant's full and complete consent to whatever
action the Committee elects to satisfy the Federal and state withholding
requirements, if any, which the Committee in its discretion deems applicable to
such exercise.
9.8 Interpretations and Adjustments. To the extent permitted by law, an
interpretation of the Plan and a decision on any matter within any of the
Committees' or Board's discretion made in good faith is binding on all persons.
A misstatement or other mistake of fact shall be corrected when it becomes
known, and the person responsible shall make such adjustment on account thereof
as he considers equitable and practicable.
9.9 Information. The Company shall, upon request or as may be specifically
required hereunder, furnish or cause to be furnished, all of the information or
documentation which is necessary or required by any of the Committees or the
Board to perform its duties and functions under the Plan.
9.10 Notice of Disqualifying Disposition. If a Participant sells or
otherwise disposes of any share of Common Stock transferred to him pursuant to
the exercise of an option granted hereunder within two years from the date of
the granting of the option or within one year of the transfer of such shares to
him (i.e., a "disqualifying disposition"), the Participant, within ten days
thereafter, shall furnish to any of the Committees or the Board at the principal
offices of the Company, written notice of such sale or other disposition.
13
<PAGE>
9.11 Governing Law. The Plan and any and all options granted thereunder
shall be governed by, and construed and enforced in accordance with, the laws of
the State of New York from time to time in effect.
9.12 Certain Definitions.
9.12.1 "Parent". The term "parent" shall mean a "parent corporation"
as defined in Section 424(e) of the Code.
9.12.2 "Subsidiary". The term "subsidiary" shall mean a "subsidiary
corporation" as defined in Section 424(f) of the Code.
9.12.3 "Incentive Stock Option". The term "incentive stock option"
shall mean an option described in Section 422(b) of the code.
9.12.4 "Disabled." The term "disabled" shall have the definition set
forth in Section 22(a)(3) of the Code.
14
Exhibit 99.3
IMCLONE SYSTEMS INCORPORATED
1996 NON-QUALIFIED STOCK OPTION PLAN, AS AMENDED(1)
ARTICLE I
Purpose of Plan
1.1 General Purpose. The purpose of this Non-Qualified Stock Option Plan
(the "Plan") is to promote the interests of ImClone Systems Incorporated (the
"Company") by affording key consultants, advisors, directors and employees an
opportunity to acquire a proprietary interest in the Company pursuant to stock
options issued by the Company, and thus to create in such persons increased
personal interest in its continued success.
1.2 Statutory Stock Option. Options granted under the Plan are intended to
be "non-qualified" stock options under the Internal Revenue Code of 1986, as
amended (the "Code").
- ----------
(1) This plan was adopted by the Board on February 25, 1996 and approved by the
stockholders on June 3, 1996; it was amended by the Board on April 3, 1997 and
such amendments were ratified by the stockholders on June 3, 1997.
1
<PAGE>
ARTICLE II
Shares Subject to Plan
2.1 Description of Shares. Subject to Article VIII hereof, the stock to
which the Plan applies is shares of the Company's common stock, $.001 par value
("Common Stock"), either authorized but unissued or Treasury shares. The number
of shares of Common Stock to be issued or sold pursuant to options granted
hereunder shall not exceed 3,000,000 shares; provided, that such number shall be
reduced by the number of shares which have been sold under, or may be sold
pursuant to options granted from time to time under, the Company's 1996
Incentive Stock Option Plan (the "Incentive Stock Option Plan") to the same
extent as if such sales had been made or options had been granted pursuant to
this Plan.
2.2 Restoration of Unpurchased Shares. Any shares subject to an option
granted hereunder that, for any reason, expires or is terminated unexercised as
to such shares may again be subject to an option to be granted hereunder.
ARTICLE III
Administration; Committees; Amendments
3.1 Administration. The Plan shall be administered by any of the
Compensation Committee, the Stock Option Committee (which is a subcommittee of
the Compensation Committee) (collectively, the "Committees") or the Board of
Directors of the Company (the "Board"). The Committees shall be comprised of not
less than two persons who shall be appointed by the Board from among the members
of the Board. Members of the Committees and
2
<PAGE>
the Board shall be eligible to become participants under the Plans and may
receive discretionary and non-discretionary grants of options.
3.2 Duration; Removal; Etc. The members of the Committees shall serve at
the pleasure of the Board, which shall have the power at all times to remove
members from the Committees or to add members thereto. Vacancies in the
Committees, however caused, shall be filled by action of the Board.
3.3 Meetings; Actions of Committee. Each of the Committees may select one
of its members as its Chairman and shall hold its meetings at such times and
places as it may determine. All decisions or determinations of the Committees
and the Board shall be made by the majority vote or decision of all of its
members, whether present at a meeting or not; provided, however, that any
decision or determination reduced to writing and signed by all of the members
shall be as fully effective as if this had been made at a meeting duly called
and held. Each of the Committees and the Board may make such rules and
regulations for the conduct of its business not inconsistent herewith as it may
deem advisable.
3.4 Interpretation. The interpretation and construction by any of the
Committees or the Board of the provisions of the Plan or of the options granted
hereunder shall be final, unless in the case of the Committees otherwise
determined by the Board. No member of the Board or of the Committees shall be
liable for an action taken or determination made in good faith.
3.5 Amendments or Discontinuation. The Board may make such amendments,
changes, and additions to the Plan, or may discontinue and terminate the Plan,
as it may deem advisable from time to time; provided, however, that no action
shall affect or impair any options theretofore granted under the Plan, and
provided, further, however, that the affirmative vote of
3
<PAGE>
the owners of a majority of the outstanding shares of Common Stock present at a
meeting in person or by proxy and entitled to vote shall be necessary to effect
any amendment to the Plan which would increase the number of shares of Common
Stock subject to options granted under the Plan.
ARTICLE IV
Participants; Maximum Grant; Duration of Plan
4.1 Eligibility and Participation. Options shall be granted only to persons
("Participants") who at the time of granting are key consultants, advisors,
directors or employees of the Company. Any of the Committees or the Board shall
determine the key consultants, advisors, directors and employees to be granted
options hereunder, the number of shares of Common Stock subject to such options,
the exercise prices of options, the terms thereof and any other provisions not
inconsistent with the Plan.
4.2 Guidelines for Participation. In selecting Participants and determining
the numbers of shares of Common Stock for which options are to be granted, any
of the Committees or the Board shall consult with officers and directors of the
Company, and shall take into account the duties of the respective persons, their
present and potential contributions to the success of the Company, and such
other factors as any of the Committees or the Board shall deem relevant.
4.3 Duration of Plan. All options under the Plan shall be granted within
ten years from the date the Plan is approved by the shareholders of the Company.
4
<PAGE>
ARTICLE V
Terms and Conditions of Options
5.1 Individual Stock Option Agreements. All stock options granted pursuant
to the Plan shall be evidenced by stock option agreements ("Stock Option
Agreements"), which need not be identical, between the Company and the
Participant in such form as any of the Committees or the Board shall from time
to time approve, subject to the terms of the Plan.
5.2 Number of Shares. Each Stock Option Agreement shall state the total
number of shares of Common Stock with respect to which the option is granted,
the terms and conditions of the option, and the exercise price or prices
thereof, it being understood that any of the Committees or the Board shall,
subject to the terms of Article VII hereof, have authority to prescribe in any
Stock Option Agreement that the option evidenced thereby may be exercisable in
full or in part, as to any number of shares subject thereto, at any time or from
time to time during said term as any of the Committees or the Board may
determine; provided that no option granted pursuant to the Plan shall be
exercisable after the expiration of ten years from the date such option is
granted. Except as otherwise provided in any Stock Option Agreement, an option
may be exercised at any time or from time to time during the term of the option
as to any or all full (but no fractional) shares which have become purchasable
under such option. Subject to the terms of Article VII hereof, any of the
Committees or the Board shall have the right to accelerate, in whole or in part,
from time to time, conditionally or unconditionally, the right to exercise any
option granted hereunder.
5
<PAGE>
5.3 Option Price. Subject to the terms of Article VII hereof, the price at
which the shares of Common Stock subject to each option granted under this Plan
may be purchased (the "option price" or "exercise price") shall be determined by
any of the Committees or the Board, which shall have the authority at the time
the option is granted to prescribe in any Stock Option Agreement that the price
per share, with the passage of pre-determined periods of time, shall increase
from the original price to higher prices.
5.4 Method of Exercising Option; Full Payment. Subject to the terms of
Article VII hereof and Section 6.1 and Section 6.2 hereof, options granted
pursuant to the Plan may be exercised only if the Participant was, at all times
during the period beginning on the date the option was granted and ending on the
date of such exercise, a key consultant, advisor, director or employee of the
Company. Options shall be exercised by written notice to the Company, addressed
to the Company at its principal place of business. Such notice shall state the
Participant's election to exercise the option and the number of shares of Common
Stock in respect of which it is being exercised, and shall be signed by the
Participant so exercising the option. Such notice shall be accompanied by (a)
the Stock Option Agreement (which, if not exercised for all the shares subject
thereto, shall be appropriately endorsed and returned to the Participant); (b)
payment of the full purchase price of such shares, which payment shall be in
cash, by check or in stock of the Company that has been owned by the Participant
for at least six months, or notes of the Company or, as agreed to by the Board,
other consideration; and such written representations and other documents as may
be desirable, in the opinion of the Company's legal counsel, for purposes of
compliance with state or Federal securities or other laws. In the case of
payment made in stock of the Company, the stock shall be valued at its Fair
6
<PAGE>
Market Value (as hereinafter defined) on the last business day prior to the date
of exercise. The term "Fair Market Value" for the Common Stock on any particular
date shall mean the last reported sale price of the Common Stock on the
principal market on which the Common Stock trades on such date or, if no trades
of Common Stock are made or reported on such date, then on the next preceding
date on which the Common Stock traded. The Company shall deliver a certificate
or certificates representing shares of Common Stock purchased pursuant to such
notice to the purchaser as soon as practicable after receipt of such notice,
subject to Article IX hereof. Any of the Committees or the Board may amend an
already outstanding Stock Option Agreement to add a provision permitted by
clause (b) of this Section 5.4, and no such amendment, by itself, shall be
deemed to constitute the grant of a new option for purposes of this Plan.
5.5 Rights as a Shareholder. No Participant shall have any rights as a
shareholder with respect to shares of Common Stock subject to an option granted
under the Plan until the date of the issuance to such Participant of a stock
certificate in respect of such shares. No adjustment shall be made for dividends
or other rights for which the record date is prior to the date such stock
certificate is issued.
5.6 Other Provisions. Stock Option Agreements entered into pursuant to the
Plan may contain such other provisions (not inconsistent with the Plan) as any
of the Committees or the Board may deem necessary or desirable, including, but
not limited to, covenants on the part of the Participant not to compete, not to
sell Common Stock obtained from the exercise of options for specified periods of
time, and remedies available to the Company in the event of the breach of any
such covenant.
7
<PAGE>
ARTICLE VI
Termination; Transferability
6.1 Termination. Except as otherwise provided in connection with the grant
of any option or the termination of any Participant, the right to exercise any
unexercised portion of any option granted under the Plan shall terminate on the
date of termination of the relationship between the Participant and the Company,
for any reason, without regard to cause, other than by reason of death or
disability. The option may not be exercised thereafter, and the shares of Common
Stock subject to the unexercised portion of such option may again be subject to
new options under the Plan. Such restrictions shall not apply to the options
granted pursuant to Article VII which shall be exercisable in accordance with
the terms thereof.
6.2 Death or Disability of Participant. Except as otherwise permitted in
connection with the grant of any option or the death or disability of a
Participant, in the event a Participant dies or is disabled while he is a
consultant, advisor, director or employee of the Company, any options
theretofore granted to him shall be exercisable only within the next 12 months
immediately succeeding such death or disability and then only (a) in the case of
death, by the person or persons to whom the Participants rights under the option
shall pass by will or the laws of descent and distribution, and in the case of
disability, by such Participant or his legal representative, and (b) if and to
the extent that he was entitled to exercise the option at the date of his death
or disability. Such restrictions shall not apply to the options of Participating
Directors which shall be exercisable in accordance with the terms set forth in
Article VII hereof.
8
<PAGE>
6.3 Transferability. Options granted to a Participant under the Plan shall
not be transferable otherwise than by will, by the laws of descent and
distribution, or (if authorized in the applicable Stock Option Agreement)
pursuant to a qualified domestic relations order ("QDRO") as defined by the
Internal Revenue Code of 1986, as amended, or Title I of the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder. During the
Participant's lifetime, options shall be exercised only by such Participant,
such Participant's guardian or legal representative, or (if authorized in the
applicable Stock Option Agreement) such Participant's transferee pursuant to a
QDRO.
ARTICLE VII
Directors' Grants
7.1 Eligibility. Annually, on February 15 of each of the Company's Fiscal
Years, any Director of the Company who at the time is not a full-time employee
of the Company (a "Participating Director"), shall be granted an option for
2,500 shares of Common Stock. Each person who becomes a Participating Director
after the first day of the Company's fiscal year and within nine months of that
date shall be granted, on the date that person becomes a Participating Director,
an option for a number of shares of Common Stock determined by pro rating the
normal 2,500 share annual amount based on the period of time remaining in the
fiscal year in which such person becomes a Participating Director. No person who
owns 10% or more of the outstanding Common Stock of the Company (including
shares of Common Stock issuable upon exercise of outstanding options and
warrants), shall be granted options under this Article. Options under this
Article are non-discretionary.
9
<PAGE>
7.2 Options Terms. Options granted under this Article VII shall not be
exercisable until the date upon which the option holder has provided one year of
continuous service as a Participating Director following the date of grant of
such option. Options granted pursuant to this Article shall have an exercise
price equal to the Fair Market Value (as hereinafter defined) of the Common
Stock on the date of the grant. The term "Fair Market Value" for the Common
Stock on any particular date shall mean the last reported sale price of the
Common Stock on the principal market on which the Common Stock trades on such
date or, if no trades of Common Stock are made or reported on such date, then on
the next preceding date on which the Common Stock traded. Notwithstanding any
other provisions of this Plan, options granted under this Article shall remain
exercisable for ten years after the date of grant and the option holder (or his
legal representative or that of his estate) may continue to exercise an option
notwithstanding that the holder ceases to be a Participating Director.
7.3 Other Provisions. In all other respects, Options granted under this
Article VII shall be subject to the other provisions of the Plan, including but
not limited to those governing method of exercise, exercise payment, tax
withholding, and transferability. Notwithstanding any other provisions of this
Plan, the provisions of this Article VII may not be amended more than once every
six months, other than to comport with changes in the Code.
ARTICLE VIII
Capital Adjustments
8.1 Capital Adjustments. If any change is made in the shares of Common
Stock subject to the Plan or subject to any option granted under the Plan
(through merger, consolidation,
10
<PAGE>
reorganization, recapitalization, stock dividend, split-up, combination of
shares, exchange of shares, issuance of rights to subscribe, or change in
capital structure), appropriate adjustments shall be made by any of the
Committees or the Board as to the maximum number of shares subject to the Plan
and the number of shares and price per share subject to outstanding options as
shall be equitable to prevent dilution or enlargement of option rights. Any
determination made by any of the Committees or the Board under this Article VIII
shall be final, binding and conclusive upon each Participant.
ARTICLE IX
Legal Requirements, Etc.
9.1 Revenue Stamps. The Company shall be responsible and shall pay for any
transfer, revenue, or documentary stamps with respect to shares issued upon the
exercise of options granted under the Plan.
9.2 Legal Requirements. The Company shall not be required to issue
certificates for shares upon the exercise of any option unless and until, in the
opinion of the Company's legal counsel, such issuance would not result in a
violation of any state or Federal securities or other law. Certificates for
shares, when issued, shall have, if required in the opinion of the Company's
legal counsel, the following legend, or statements of other restrictions,
endorsed thereon, and may not immediately be transferable:
The shares of Common Stock evidenced by this certificate have been issued
to the registered owner in reliance upon written representations that these
shares have been purchased for investment. These shares may not be sold,
transferred, or assigned unless, in the opinion of the Company and its
legal counsel, such sale, transfer, or assignment will not be in violation
of the Securities Act of 1933, as
11
<PAGE>
amended, applicable rules and regulations of the Securities and Exchange
Commission and any applicable state securities laws.
9.3 Private Offering. The options to be granted under the Plan are
available only to a limited number of present and future key consultants,
advisors, directors and employees of the Company who have knowledge of the
Company's financial condition, management, and affairs. Such options are not
intended to provide additional capital for the Company, but are to encourage
stock ownership by the Company's key personnel. By the act of accepting an
option, in the absence of an effective registration statement under the
Securities Act of 1933, as amended, Participants shall agree that upon exercise
of such option, they will acquire the shares of Common Stock that are the
subject thereof for investment and not with any intention at such time to resell
or redistribute the same, and they shall confirm such agreement at the time of
exercise, but the neglect or failure to confirm the same in writing shall not be
a limitation of such agreement.
ARTICLE X
General
10.1 Application of Funds. The proceeds received by the Company from the
sale of shares of Common Stock pursuant to the exercise of options therefor
shall be used for general corporate purposes.
12
<PAGE>
10.2 Right of the Company to Terminate Relationship. Nothing contained in
the Plan or in a Stock Option Agreement shall confer upon any Participant any
right to be continued as a consultant, advisor, director or employee of the
Company, or interfere in any way with the right of the Company to terminate such
relationship for any reason whatsoever, with or without cause, at any time.
10.3 No Obligation to Exercise. The granting of an option hereunder shall
impose no obligation upon the Participant to exercise such option.
10.4 Effectiveness of Plan. The Plan shall become effective upon its
adoption by the Board. Options may be granted under the Plan prior to the
approval of the Plan by the Shareholders, but no such option may be exercised
prior to such approval.
10.5 Other Benefits. Participation in the Plan shall not preclude a
Participant from eligibility in any other stock benefit plan of the Company or
any old age benefit, insurance, pension, profit sharing, retirement, bonus or
other plan which the Company has adopted, or may, at any time, adopt.
10.6 Tax Requirements. The exercise or surrender of any option under this
Plan shall constitute a Participant's full and complete consent to whatever
action any of the Committees or the Board elect to satisfy the Federal and state
withholding requirements, if any, which the Committee in its discretion deems
applicable to such exercise.
10.7 Interpretations and Adjustments. To the extent permitted by Law, an
interpretation of the Plan and a decision on any matter within any of the
Committees' or the Board's discretion made in good faith is binding on all
persons. A misstatement or other mistake
13
<PAGE>
of fact shall be corrected when it becomes known, and the person responsible
shall make such adjustment on account thereof as he considers equitable and
practicable.
10.8 Information. The Company shall, upon request or as may be specifically
required hereunder, furnish or cause to be furnished, all of the information or
documentation which is necessary or required by any of the Committees or the
Board to perform its duties and functions under the Plan.
10.9 Governing Law. The Plan and any and all options granted thereunder
shall be governed by, and construed and enforced in accordance with, the laws of
the State of New York from time to time in effect.
10.10 Certain Definitions.
10.10.1 "Parent". The term "parent" shall mean a "parent corporation" as
defined in Section 424(e) of the Code.
10.10.2 "Subsidiary". The term "subsidiary" shall mean a "subsidiary
corporation" as defined in Section 424(f) of the Code.
10.10.3 "Disabled". The term "disabled" shall have the definition set forth
in Section 22(a) (3) of the Code.
14
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<ARTICLE> 5
<LEGEND>
Information taken from the June 30, 1997 Form 10-Q.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
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<SECURITIES> 28,532
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<CURRENT-ASSETS> 32,835
<PP&E> 20,880
<DEPRECIATION> (10,418)
<TOTAL-ASSETS> 44,580
<CURRENT-LIABILITIES> 3,781
<BONDS> 4,313
0
0
<COMMON> 24
<OTHER-SE> 36,027
<TOTAL-LIABILITY-AND-EQUITY> 44,580
<SALES> 0
<TOTAL-REVENUES> 3,196
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<TOTAL-COSTS> 4,529
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