As filed with the Securities and Exchange Commission on July 12, 2000
Registration No. 333-37746
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ImClone Systems Incorporated
(Exact name of registrant as specified in its charter)
Delaware 04-2834797
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
180 Varick Street
New York, NY 10014
Phone: (212) 645-1405
Facsimile: (212) 645-2054
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
-----------------------
John B. Landes, Esq.
Vice President, Legal and General Counsel
180 Varick Street
New York, NY 10014
Phone: (212) 645-1405
Facsimile: (212) 645-2054
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-----------------------
Copies to:
Richard A. Drucker, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Phone: (212) 450-4745
Facsimile: (212) 450-3475
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Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(c) under the Securities Act, please check the following
box and list the Securities Act registration number of the earlier effective
registration statement for the same offering. [ ]________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]__________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
===============================================================================
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The information in this prospectus is not complete and may be changed. The
selling holders may not may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
PROSPECTUS (SUBJECT TO COMPLETION)
DATED JULY 12, 2000
$240,000,000
IMCLONE SYSTEMS INCORPORATED
5 1/2% Convertible Subordinated Notes Due 2005
-----------------------
Holders of our 5 1/2% Convertible Subordinated Notes due 2005 may offer
for sale the notes and the shares of our common stock into which the notes are
convertible at various times at market prices prevailing at the time of sale or
at privately negotiated prices.
All selling holders must deliver this prospectus to purchasers at or prior
to the time of any sale of the notes or common stock issuable upon conversion
of the notes.
The Notes
o Aggregate principal
amount: $240,000,000
o Interest: 5 1/2% per year
o Conversion price: $110.18 per share, subject to conversion
rate adjustments
o Subordination: The notes are unsecured and subordinated to
all our existing and future senior
indebtedness
o Maturity: March 1, 2005
Conversion
o Holders can convert all or any portion of a note into our common
stock at any time prior to maturity
Redemption
o We have the option to redeem the notes:
(1) prior to March 6, 2003, if the closing price of our common stock
has exceeded 150% of the conversion price for at least 20
trading days in any consecutive 30-trading day period and
(2) on or after March 6, 2003
Repurchase
o We may be required to purchase all or part of the notes at 100% of
the outstanding principal amount being redeemed, plus accrued and
unpaid interest, in the event of a fundamental change
The notes and the common stock offered in this prospectus involve a high
degree of risk. Consider carefully the risk factors beginning on page 4.
-----------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy of this prospectus. Any contrary representation is a criminal offense.
July ___, 2000
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TABLE OF CONTENTS
Page
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Prospectus Summary...........................................................1
Risk Factors.................................................................4
Special Note Regarding Forward-looking Statements...........................15
Ratio of Earnings to Fixed Charges..........................................15
Use of Proceeds.............................................................15
Description of Notes........................................................16
Material United States Federal Income Tax Considerations....................28
Description of Capital Stock................................................35
Selling Holders.............................................................40
Plan of Distribution........................................................43
Legal Matters...............................................................45
Experts.....................................................................45
Where You Can Find More Information.........................................46
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In this prospectus, "ImClone," "we," "us" and "our" refer to ImClone
Systems Incorporated, "common stock" refers to ImClone's common stock, par
value $0.001 per share.
-----------------------
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PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information appearing elsewhere in this prospectus regarding our company, the
notes and the common stock into which the notes are convertible.
ImClone Systems Incorporated
We are a biopharmaceutical company engaged in the research and development
of novel cancer treatments. We focus on what we believe are three promising
strategies for treating cancer:
o growth factor inhibitors
o therapeutic cancer vaccines and
o angiogenesis inhibitors
IMC-C225
Our lead product candidate, IMC-C225, is a therapeutic monoclonal antibody
that inhibits stimulation of a receptor for growth factors upon which certain
solid tumors depend in order to grow. IMC-C225 has been shown in several Phase
I/II trials to have an acceptable safety profile, to be well tolerated and,
when administered with either radiation therapy or chemotherapy, to enhance
tumor reduction. IMC-C225 is currently in pivotal trials for treating head and
neck cancer and Phase II trials in colorectal and pancreatic cancer.
Upon the receipt of regulatory approval, we intend to market IMC-C225 in
the United States and Canada. We will rely on our development and marketing
partner, Merck KGaA, to market IMC-C225 outside the United States and Canada
and to pay us a royalty on all such sales. We are responsible for the
manufacture and supply of IMC- C225 for all clinical trials and eventual
commercial sales.
BEC2
Our next most advanced product candidate, BEC2, is a cancer vaccine. In
partnership with Merck KGaA, we are testing BEC2 for preventing recurrence or
progression of small-cell lung cancer in a Phase III pivotal trial. Upon the
receipt of regulatory approval, we intend to co-promote BEC2 with Merck KGaA in
North America. Merck KGaA will be responsible for developing and marketing BEC2
outside North America and will be obligated to pay us royalties on all such
sales. In addition, we intend to be the worldwide manufacturer of BEC2.
IMC-1C11
We are also developing inhibitors of angiogenesis, which could be used to
treat various kinds of cancer and other diseases. We have identified IMC-1C11
as our lead clinical candidate for angiogenesis inhibition. IMC-1C11 is an
antibody that binds selectively and with high affinity to KDR, a principal VEGF
receptor, thereby inhibiting angiogenesis. We filed an application with the FDA
in December 1999 in order to commence clinical trials of IMC- 1C11, which we
initiated in March 2000.
Research, diagnostic products and vaccines
In addition to the development of our lead product candidates, we continue
to conduct research, both independently and in collaboration with our academic
and corporate partners, in a number of areas related to our core focus of
growth factor inhibitors, cancer vaccines and angiogenesis inhibitors. We have
also developed diagnostic products and vaccines for certain infectious
diseases, and we have licensed the right to these products and vaccines to
corporate partners.
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The Notes
Notes....................... $240,000,000 aggregate principal amount of 5 1/2%
convertible subordinated notes due 2005.
Interest.................... 5 1/2% per annum on the principal amount, payable
semi-annually in arrears in cash on March 1 and
September 1 of each year, beginning September 1,
2000.
Conversion.................. Holders may convert all or any portion of a note
into common stock at any time on or before March
1, 2005 at a conversion price of $110.18 per
share, subject to conversion rate adjustments.
Subordination............... The notes will be subordinated to all of our
existing and future senior indebtedness.
As of June 1, 2000, we had approximately $3.8
million of senior indebtedness outstanding. We are
not prohibited from incurring debt, including
senior indebtedness, under the indenture.
Fundamental Change.......... If a fundamental change occurs on or before March
1, 2005, a holder of notes may require us to
purchase all or part of such holder's notes at a
redemption price equal to 100% of the outstanding
principal amount of the notes being redeemed, plus
accrued and unpaid interest.
Provisional Redemption...... We may redeem some or all of the notes at any time
prior to March 6, 2003, at a redemption price
equal to $1,000 per $1,000 aggregate principal
amount of notes plus accrued and unpaid interest
to the redemption date if the closing price of the
common stock has exceeded 150% of the conversion
price for at least 20 trading days in any
consecutive 30-trading day period.
If we redeem the notes under these circumstances,
we will make an additional payment on the redeemed
notes equal to $152.54 per $1,000 aggregate
principal amount of notes, minus the amount of any
interest we actually paid on the note prior to the
date the notice was mailed.
Non-Provisional Redemption.. On or after March 6, 2003, we may redeem some or
all of the notes at the redemption prices, plus
accrued and unpaid interest to but excluding the
non-provisional redemption date.
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Use of Proceeds............. We will not receive any proceeds from the sale by
the selling holders of the notes and the
underlying common stock.
Registration Rights......... We commit to use our reasonable efforts to have
the registration statement, of which this
prospectus is a part, declared effective and use
reasonable efforts to keep the shelf registration
statement effective until either of the following
has occurred:
o all securities covered by the registration
statement have been sold
o the expiration of the holding period applicable
to the notes and the underlying common stock
under Rule 144(k) under the Securities Act, or
any successor provision
Sinking Fund................ None
Nasdaq National Market
Symbol...................... IMCL
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RISK FACTORS
An investment in the notes or the shares of our common stock issuable upon
conversion of the notes offered by this prospectus involves a high degree of
risk. You should carefully consider the following factors as well as the other
information contained and incorporated by reference in this prospectus before
deciding to invest in the notes or the common stock. You should also consider
these risk factors when you read forward-looking statements elsewhere in this
prospectus.
Our lead product candidates are in development, and we cannot be certain
that any of our products will be commercialized.
Our lead product candidates are in clinical trials. Before we can market
and sell any of our product candidates, we will need to first demonstrate in
pivotal clinical trials that they are safe and effective and then obtain the
necessary approvals from the United States Food and Drug Administration and
similar foreign regulatory agencies. It is not assured that those clinical
trials will demonstrate that our products are safe and effective, or that we
can obtain the required regulatory approvals to market and sell them. With
respect to IMC-C225, there can be no assurance that, even if we were to
ultimately receive regulatory approval, we would be able to receive such
approval based on the results of our ongoing refractory Phase II clinical
trials. In addition, even if we successfully develop a product, there is no
assurance that we will be able to successfully manufacture or market that
product. If we are unable to successfully commercialize our lead products, our
liquidity and financial condition could be materially adversely affected.
We have been operating at a loss and expect to incur significant future
losses.
We have had significant operating losses and have not earned a profit in
any year since we formed ImClone. These operating losses and the failure to be
profitable have been mainly due to the significant amount of money that we have
had to spend on research and development. As of March 31, 2000, we had an
accumulated deficit of approximately $186 million. We expect to continue to
have significant operating losses as we continue to:
o expand our product development
o expand our clinical trials and
o initiate marketing efforts.
We may never market and sell any of our products or achieve profitability.
We may be unable to obtain the extensive government approvals required to
bring our products to market.
The research, pre-clinical development, clinical trials, manufacturing and
marketing of our products are all subject to extensive regulation by U.S. and
foreign governmental authorities. Although we intend to seek expedited approval
for certain of our products, including IMC-C225, there can be no assurance that
the FDA will grant us expedited review status for any of our potential filings.
Failure to receive regulatory approvals for our product candidates and
operations in our expected timeframes could have a material negative effect on
our liquidity and financial condition. The FDA and similar foreign regulatory
authorities regulate our clinical trials as well as our manufacturing and
marketing operations. They require us to comply with product-specific testing
and approval processes.
It may take many years and cost a significant amount of money to obtain
the required regulatory approvals for our products. Once we begin clinical
trials for a new biologic therapeutic or vaccine product, it may take five or
more years to receive the required FDA approval to commercialize that product
and begin to sell and market it to the public. It may also take several years
to develop a new in vitro diagnostic product, depending upon the clinical data
requirements or approval process specified by the FDA for the approval of the
product. The FDA may also request additional data, which could substantially
extend these approval processes.
We cannot be certain that any of our products will be shown to be safe and
effective or that we will ultimately receive FDA approval at the end of these
approval processes. In addition, even if granted, product approvals may be
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withdrawn or limited at a later time if products do not comply with regulatory
standards or if unexpected problems occur following initial marketing.
Since our product candidates are still in clinical trials, we have not yet
sought or received regulatory approval for the commercial sale of any of our
products or for any manufacturing techniques or facilities. We and our
licensees may experience long delays or excessive costs when we do attempt to
get necessary approvals or licenses. Future federal, state, local or foreign
legislative or administrative acts could also prevent or delay regulatory
approval of our products or the products of our licensees. We cannot be certain
that we or our corporate partners will be able to get the necessary approvals
for clinical testing, manufacturing or marketing of our products, or that we
will meet our expected timeframes for any such approvals.
If any of the following events occurred, it could delay or preclude us
from further developing, marketing or realizing the full commercial use of our
products and would consequently have a material adverse effect on our business,
financial condition and results of operations:
o failure to obtain or maintain requisite governmental approvals
o failure to obtain approvals of clinically intended use of our
products under development
o identification of serious and unanticipated adverse side effects from
our products under development
Manufacturers of drugs must also comply with applicable FDA good
manufacturing practice regulations. These regulations include requirements as
to quality control, quality assurance and the maintenance of records and
documentation. Manufacturing facilities are subject to ongoing periodic
inspection, which includes unannounced inspections, by the FDA and
corresponding state agencies, and must be licensed as part of the product
approval process before they can be used in commercial manufacturing. We and
our present or future suppliers may be unable to comply with the applicable
good manufacturing practice regulations and other FDA regulatory requirements.
Our success depends upon our ability to protect our intellectual property
and our proprietary technology.
The patent position of ImClone, like that of other biopharmaceutical
companies, is generally very uncertain and involves complex legal and factual
questions. Our success will depend, in part, on whether we can:
o obtain patents to protect our own products
o obtain licences to use certain technologies of third parties, which
may be protected by patents
o protect our trade secrets and know-how
o operate without infringing the intellectual property and proprietary
rights of others
We cannot be certain that patents will be issued as a result of any of our
pending applications. Nor can we be certain that any of our already issued
patents would protect or benefit us or give us adequate protection from
competing products. For example, issued patents may be circumvented or
challenged and declared invalid. In addition, many of the agreements which give
us licenses to the patents or patent applications of others, also require us to
meet specified milestone or diligence requirements in order to keep those
licenses. We cannot be certain that we will satisfy any of these requirements.
We know that others have filed patent applications in various countries
that relate to several areas in which we are developing products. Some of these
patent applications have already resulted in patents being issued and some are
still pending. The pending patent applications may also result in patents being
issued. Issued patents are entitled to a rebuttable presumption of validity
under the laws of the U.S. and certain other countries. These issued patents
may therefore limit our ability to develop commercial products. If we need
licenses to such patents to permit us to develop or market our products, we
cannot be certain that we would be able to get such licenses on acceptable
terms.
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Proprietary trade secrets and unpatented know-how are important to our
research and development activities. We cannot be certain that others will not
develop the same or similar technologies on their own. Although we have taken
steps, including entering into confidentiality agreements with our employees
and third parties, to protect our trade secrets and unpatented know-how and
keep them secret, third parties may still obtain such information.
We have an exclusive license to an issued U.S. patent for the murine form
of IMC-C225, our EGF receptor antibody product. We believe that this patent
covers IMC-C225 under the patent law doctrine of equivalents. Under this
doctrine, the subject matter of a claim is deemed to cover variations that do
substantially the same thing, in substantially the same way, to achieve the
same result, especially if the variation is known and routine. We believe, in
this instance, the doctrine of equivalents would extend protection to IMC-C225.
Our licensor of this patent did not obtain patent protection outside the U.S.
for this antibody.
While this patent covers only our antibody and would not block third
parties from obtaining patents covering other antibodies to the EGF receptor,
we are pursuing additional patent protection for the use of any antibody that
inhibits the EGF receptor in combination with chemotherapy or radiation
therapy, or when used to treat refractory patients. We have exclusively
licensed from Aventis, formerly Rhone-Poulenc Rorer, a family of patent
applications seeking to cover the use of antibodies to the EGF receptor in
conjunction with chemotherapeutic agents. A Canadian patent was issued in this
family, the patent examiner in Europe has indicated an intent to issue a
European patent and a Notice of Allowability has been issued in the U.S. We are
currently prosecuting additional patent applications in the U.S. and elsewhere.
We cannot be certain that patents will ever be issued in respect of these
patent applications or that we will have sufficient protection for IMC-C225.
We are aware of a U.S. patent issued to a third party that includes claims
covering the use, subject to certain restrictions, of antibodies to the EGF
receptor and cytotoxic factors to inhibit tumor growth. Our patent counsel,
Kenyon & Kenyon, has advised us that in its opinion, subject to the assumptions
and qualifications set forth in such opinion, no valid claim of this third
party patent is infringed by reason of our manufacture or sale, or medical
professionals' use, of IMC-C225 alone or in combination with chemotherapy or
radiation therapy and, therefore, in the event of litigation for infringement
of this third party patent, a court should find that no valid claim of this
third party patent is infringed. We have also received an opinion from our
special patent counsel, Hoffmann & Baron, LLP, that we do not infringe this
third party patent.
Based upon those opinions, as well as our review, in conjunction with our
special patent counsel, of other relevant patents, we believe that we will be
able to commercialize IMC-C225 alone and in combination with chemotherapy and
radiation therapy provided we successfully complete our clinical trials and
receive the necessary FDA approvals. Those opinions of counsel, however, are
not binding on any court or on the U.S. Patent and Trademark Office. In
addition, there can be no assurance that we will not in the future, in the U.S.
or any other country, be subject to patent infringement claims, patent
interference proceedings or adverse judgments in patent litigation.
The IMC-C225 monoclonal antibody is chimerized, meaning that it is made of
antibody fragments derived from more than one type of animal (specifically, in
the case of IMC-C225, mouse and human). Patents have been issued to other
biotechnology companies that cover the chimerization of antibodies. Therefore,
we may be required to obtain licenses under these patents, some of which have
already been obtained, before we can commercialize our own chimerized
monoclonal antibodies, including IMC-C225. We cannot be certain that we will be
able to obtain such licenses in the territories where we want to commercialize,
or how much such licenses would cost.
We are aware that other patents have been issued in the U.S. and in Europe
covering anti-idiotypic antibodies or their use for the treatment of tumors.
These patents, if valid, could be interpreted to cover our BEC2 monoclonal
antibody and certain uses of BEC2. Merck KGaA, our worldwide licensee of BEC2,
has informed us that it has obtained non-exclusive, worldwide licenses to these
patents in order to market BEC2 in its territory. We are entitled to co-promote
BEC2 in North America. However, we cannot be certain that we can obtain the
necessary licenses on commercially acceptable terms, if at all.
We have patents and have filed patent applications to protect our
proprietary rights to anti-angiogenic therapeutics, as well as the therapeutic
methods of treating angiogenic disease. We are aware that others have filed
patent applications that could affect our ability to commercialize some of our
anti-angiogenic therapeutics or therapeutic treatments.
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We are aware that third parties have filed patent applications in areas
that could affect our ability or that of our licensee, Abbott Laboratories, to
commercialize our diagnostic products. These areas could include target
amplification technology and signal amplification technology. Third party
patents have already been issued in the field of target amplification such as
polymerase chain reaction technology.
There has been significant litigation in the biopharmaceutical industry
over patents and other proprietary rights. The defense and prosecution of
intellectual property suits and related legal and administrative proceedings
can be both costly and time consuming. Litigation and interference proceedings
could result in a substantial expense to us and a significant diversion of
effort by our technical and management personnel. An adverse determination in
any such interference or litigation, particularly with respect to IMC-C225, to
which we may become a party could subject us to significant liabilities to
third parties or require us to seek licenses from third parties. If required,
the necessary licenses may not be available on acceptable terms or at all.
Adverse determinations in a judicial or administrative proceeding or failure to
obtain necessary licenses could prevent us, in whole or in part, from
commercializing our products, which could have a material adverse effect on our
business, financial condition and results of operations.
We currently have limited manufacturing capacity and will need to enter into
arrangements with third party manufacturers.
To date we have manufactured only small quantities of our products in the
laboratory and our pilot-scale manufacturing facility. In some cases, we have
produced enough for pre-clinical animal trials and early-stage clinical trials.
We can only be profitable if our products are manufactured in commercial
quantities, in compliance with regulatory requirements, and at acceptable
costs. However, it may be difficult for us to produce large enough quantities
for late-stage clinical trials or for more than one product candidate.
Production in commercial quantities will require us to expand our
manufacturing capabilities significantly and hire and train additional
personnel. We have limited experience in clinical-scale manufacturing and no
experience in commercial-scale manufacturing. To date, IMC-C225 has been
manufactured at a 2,000 liter scale. We expect that the commercial supply of
IMC-C225 will be manufactured at the 10,000 liter scale. There can be no
assurance, however, that we will be successful in scaling up the production
process. Therefore, we cannot be certain that we will be able to make the
transition to late-stage clinical or commercial production of IMC-C225 or any
other of our products successfully. In addition, we cannot be certain that our
production costs will not be higher than expected.
We have acquired land adjacent to our current facility in New Jersey on
which we are building a commercial-scale manufacturing plant for our products.
The cost of building such a facility will be high and the construction process
will take approximately two years. We have completed plans for, and have begun,
construction of the plant before we have received FDA approval for any of our
product candidates. If we do not obtain FDA approval for these product
candidates, the financing and other costs associated with the new manufacturing
facility could have an adverse effect on our liquidity and financial condition.
Alternatively, if any of our products are approved for sale, and we encounter
difficulty or delays in:
o completing the new manufacturing facility
o obtaining the required FDA approval of the facility or
o in manufacturing commercial quantities of our products.
Such difficulties or delays could have a material adverse effect on our
business, financial condition or results of operations.
If we obtain FDA approval of IMC-C225 prior to FDA approval of our
proposed manufacturing facility, we will need to obtain commercial-scale
quantities of IMC-C225 from one or more contract manufacturers in order to have
sufficient quantities of IMC-C225 for the product launch. In any event, we seek
arrangements with contract manufacturers to provide a second source, as well as
additional capacity, for the manufacture of our products. To date, we have
entered into an agreement with Boehringer Ingelheim Pharmaceuticals KG, more
commonly know as BI, under which BI manufactured IMC-C225 in relatively small
quantities to supplement the quantities of IMC-C225 that we produce and that we
and Merck KGaA use in clinical trials. In December 1999, we entered into a
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development and manufacturing services agreement with Lonza Biologies PLC, more
commonly known as Lonza. Under that agreement, Lonza is engaging in process
development and scale-up for the manufacture of IMC-C225. These steps are being
taken to assure that its process will produce bulk material that conforms with
our reference material.
Under our arrangements with Lonza, Lonza will manufacture six 5,000 liter
production runs under cGMP conditions of material that may be used for clinical
and/or commercial supply. We also have agreed in principle with Lonza to the
material terms of a three-year commercial supply agreement for which the
definitive agreement is being completed. We cannot be certain that we will be
able to enter into this agreement for commercial supply or any other agreements
with third party manufacturers, if required, on terms acceptable to us or at
all. Even if we are able to enter into such agreements, we cannot be certain
that we will be able to produce or obtain sufficient quantities for the
commercial sale of our products. Any delays in producing or obtaining
commercial quantities of our products could have a material adverse effect on
our business, financial condition and results of operations.
We are also dependent upon a sole supplier of a component of the media
used in the production of IMC-C225. If this supply were to cease, it could
hinder our ability to manufacture IMC-C225 in the quantities required.
Our business depends upon our corporate partners.
To date, we have earned almost all of our revenues from:
o the funding of research and development and
o license fees and royalties paid to us under agreements with our
corporate partners.
We expect this to continue over the next several years. License fees are
payable to us either when we first enter into an agreement or when and if we
reach agreed-upon research, regulatory and commercialization milestones. We do
not receive any of these payments at regular intervals. The amounts have
fluctuated in the past and we expect them to continue to fluctuate in the
future. In most cases, our corporate partners can terminate these arrangements,
including their payment obligations, on relatively short notice under specified
circumstances. We cannot be certain that we will continue to receive revenues
from these arrangements, or that we will enter into any new and similar
agreements. In addition, our corporate partners and their affiliates may be
developing their own products or technologies which may directly compete with
products that are the subject of their arrangements with us.
In December 1998, we entered into an agreement with Merck KGaA, a
German-based drug company, relating to the development, marketing and sale of
IMC-C225. Under this agreement:
o we have granted Merck KGaA exclusive rights, except in Japan, to
develop and market IMC-C225 outside of the United States and Canada
o we have agreed to supply Merck KGaA, and Merck KGaA has agreed to
purchase, IMC-C225 for the conduct of clinical trials and the
commercialization of the product outside the United States and Canada
o we will co-develop and co-market IMC-C225 in Japan with Merck KGaA
o we have granted Merck KGaA an exclusive license outside of the United
States and Canada to apply, without the right to sublicense, certain
of our patents to a humanized EGF receptor antibody on which Merck
KGaA has performed preclinical studies
In return, Merck KGaA has agreed to pay up-front fees and to make cash
payments and equity investments in our business if specific milestones are
achieved. Merck KGaA will also pay us royalties on any sales of IMC-C225
outside the United States and Canada. In addition, Merck KGaA has agreed to
provide a guaranty of our obligations under a credit agreement relating to the
construction of our new IMC-C225 manufacturing facility.
We have also granted Merck KGaA a license to develop and market BEC2
worldwide. We have retained the right to co-promote BEC2 with Merck KGaA within
North America and it is intended that we will be the bulk manufacturer of BEC2
for worldwide production. In return, Merck KGaA has agreed to pay up-front
fees, to make
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cash milestone payments and to make royalty payments to us on all sales of BEC2
outside North America. If Merck KGaA fails to either develop or market IMC-C225
and BEC2, the product rights would revert to us.
Merck KGaA can terminate its relationship with us, with respect to
IMC-C225, at its discretion on any milestone payment date. If Merck KGaA were
to terminate the agreement or we failed to meet certain requirements of the
agreement, we would lose one of our primary sources of funding and would have
to look elsewhere for financing. As well as losing future payments, if Merck
KGaA were to terminate the agreement because it determined that
commercialization of IMC-C225 was economically unfeasible, we would have to pay
back to Merck KGaA up to 50% of the cash-based milestone payments made to date
out of revenues.
In addition, any termination of the agreement due to either Merck KGaA's
failure to provide the guaranty on our credit agreement obligations with
respect to our new IMC-C225 manufacturing facility, or our failure to obtain
the necessary collateral license agreements, would require us to return all
milestone payments made to date. As of March 31, 2000, we have received $24
million in milestone payments. Finally, upon termination we would be required
to use our reasonable best efforts to have Merck KGaA released from its
guaranty of our credit agreement obligations with respect to our new IMC-C225
manufacturing facility. This release would probably cause the acceleration of
our credit obligations. Termination of the agreement with Merck KGaA relating
to IMC-C225 could therefore have a material adverse effect on our business,
financial condition and results of operations.
We will continue to need significant amounts of additional cash and we
cannot be sure that additional cash will be available to us.
At this time and for the foreseeable future, we will need to spend a
significant amount of money for, among others, the following purposes:
o ongoing pre-clinical and clinical trials of our product candidates
o research and development of new products
o establishing both clinical-scale and commercial-scale manufacturing
capability in our own facilities and/or in the facilities of others
o marketing our products if we receive necessary regulatory approvals
o payment of dividends on our convertible series A preferred stock
o payment of interest on the outstanding 5 1/2% convertible
subordinated notes due 2005
We believe that our existing cash on hand and the amounts expected to be
available under our credit facilities will be sufficient to fund us through at
least 2002. We are also entitled to certain milestone payments and to
reimbursement from our corporate partners for certain research and development
expenditures. However, we will only receive future milestone payments from our
corporate partners if we meet specified research and development milestones. We
have not yet achieved some of those milestones and we cannot be certain that we
will ever do so. Our IMC-C225 agreement with Merck KGaA is subject to
termination at Merck's discretion on certain dates and so we cannot be certain
of the level of future payments, if any, under this agreement. The cash
available from our existing corporate partners may be insufficient to meet our
needs. We may also need to seek additional capital through equity or debt
financings or from other sources. We cannot be certain that we will
successfully complete any such arrangements or financings. If adequate funds
are not available from our operations or from additional sources of financing,
we may have to either delay, reduce the scope of or eliminate one or more of
our research or development programs, which would materially and adversely
affect our business, financial condition and operations.
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Acceptance of our products in the marketplace is uncertain, and failure to
achieve market acceptance will harm our business.
Even if approved for marketing, our products may not achieve market
acceptance. The degree of market acceptance of our products will depend upon a
number of factors, including:
o the receipt of regulatory approvals
o the establishment and demonstration in the medical community of the
safety and clinical efficacy of our products and their potential
advantages over existing therapeutic products
o pricing and reimbursement policies of government and third-party
payors such as insurance companies, health maintenance organizations
and other plan administrators
Physicians, patients, payors and the medical community in general may be
unwilling to accept, utilize or recommend any of our products.
We need to establish our sales, marketing and distribution capability.
To date, we have had no experience in selling, marketing or distributing
new products. If we are successful in developing and obtaining regulatory
approval for our products under development, we will need to establish our
sales, marketing and distribution capability. Under our agreement with Merck
KGaA for IMC-C225, we have the exclusive right to market IMC-C225 in the United
States and Canada if it is approved for sale there. We also will co-develop and
co-market IMC-C225 with Merck KGaA in Japan. Under our agreement with Merck
KGaA for BEC2, we have the right to co-promote BEC2 in North America if it is
approved for sale there.
If and when we want to market a new product on our own, we will need
expertise in sales and marketing. We currently plan to build our own sales
force to market and sell IMC-C225 in the United States and Canada. However, we
cannot be certain that we will be able to hire and train qualified or
experienced sales and marketing personnel or that any marketing or sales
efforts by such personnel will be successful. If we are unable to recruit or
retain suitable sales and marketing personnel, it could have a material adverse
effect on our business, financial condition and results of operations.
Our quarterly operating results may fluctuate.
Our products are now in research and in various stages of development or
clinical studies. Accordingly, we do not sell or receive any revenues from the
sales of these products. At this time, most of our revenues come from payments
we receive from our corporate partners under license and research arrangements.
Our results of operations historically have fluctuated on a quarterly basis and
can be expected to continue to be subject to quarterly fluctuations. The level
of our revenues and results of operations at any given time is based primarily
on the following factors:
o the status of development of our various products
o the time at which we enter into research and license agreements with
corporate partners that provide for payments to us, and the timing
and accounting treatment of payments to us under those agreements
o whether or not we achieve specified research or commercialization
milestones
o timely payment by our corporate partners of amounts payable to us
o the addition or termination of research programs or funding support
o variations in the level of expenses related to our proprietary
products during any given period
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These factors may cause the price of our stock to fluctuate substantially.
We believe that quarterly comparisons of our financial results are not
necessarily meaningful and should not be relied upon as an indication of future
performance.
Our success depends upon our ability to attract and retain key personnel and
consultants.
Our ability to successfully develop marketable products and to maintain a
competitive position will depend in large part on our ability to attract and
retain highly qualified scientists and management personnel. We will also need
to develop and maintain relationships with leading research institutions and
consultants. Our success is also very dependent upon the principal members of
our management, scientific staff and scientific advisory board, many of whom
have a special expertise and would be difficult to replace. Competition for
such personnel and such relationships is intense, and we cannot be certain that
we will be able to continue to attract and retain such personnel and maintain
such relationships.
We may be unable to keep pace with technological change or with the advances
of our competitors.
The biopharmaceutical industry is subject to rapid and significant
technological change. We have many competitors, including major drug and
chemical companies, specialized biotechnology firms, universities and other
research institutions. These competitors may develop technologies and products
that are more effective than our products or which would make our technology
and products obsolete and non-competitive. Many of these competitors have
greater financial and technical resources and production and marketing
capabilities than we do. In addition, many of our competitors have much more
experience than we do in pre-clinical testing and human clinical trials of new
or improved drugs, as well as in obtaining FDA and other regulatory approvals.
We know that competitors are developing or manufacturing various products
that are used for the prevention, diagnosis or treatment of diseases that we
have targeted for product development. Some of these competitive products use
therapeutic approaches that compete directly with certain of our product
candidates. Our competitors may succeed in obtaining FDA approval for their
competitive products sooner than we do for ours. This could hurt our ability to
further develop and market our products. Also, if we do begin significant
commercial sales of our products, we will have to compete with the established
manufacturing and marketing capabilities of our competitors. Manufacturing and
marketing are areas in which we have limited or no experience.
We may have product liability exposure.
We could be exposed to product liability claims on our products as they
are new treatments for diseases, with limited, if any, past use on humans. We
cannot be certain that we would have enough money available to satisfy any
liability that might result from any such claims. We try to obtain
indemnification from our corporate partners against these types of claims but
cannot be certain that we are indemnified against all such claims or that our
corporate partners would honor any such indemnity obligations. Although we
carry product liability insurance, we cannot be certain that this coverage will
be adequate to protect us in the event of a successful product liability claim
or that the insurance will continue to be available on commercially reasonable
terms.
Health care insurers and other organizations may not pay for our products,
or may impose limits on reimbursements.
The continuing efforts of government and insurance companies, health
maintenance organizations and other payors of healthcare costs to contain or
reduce costs of health care may affect:
o our future revenues and profitability
o the future revenues and profitability of our potential customers,
suppliers and collaborative partners
o the availability of capital.
For example, in certain foreign markets, the pricing of prescription
pharmaceuticals is subject to government control. In the United States, given
recent federal and state government initiatives directed at lowering the total
cost of health care, the U.S. Congress and state legislatures will likely
continue to focus on health care reform, the cost of
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<PAGE>
prescription pharmaceuticals and on the reform of the Medicare and Medicaid
systems. While we cannot predict whether any such legislative or regulatory
proposals will be adopted, the announcement or adoption of such proposals could
have a material adverse effect on our business, financial condition and results
of operations.
Our ability to commercialize our products successfully will depend in part
on the extent to which appropriate reimbursement levels for the cost of our
products and related treatment are obtained by governmental authorities,
private health insurers and other organizations, such as HMOs. Third-party
payors are increasingly challenging the prices charged for medical products and
services. Also, the trend toward managed health care in the United States and
the concurrent growth of organizations such as HMOs, which could control or
significantly influence the purchase of health care services and products, as
well as legislative proposals to reform health care or reduce government
insurance programs, may result in either lower prices for our products or their
rejection. The cost containment measures that health care payors and providers
are instituting and the effect of any health care reform could materially
adversely affect our ability to operate profitably.
Events with respect to our share capital could cause the price of our common
stock to decline.
Sales of substantial amounts of our common stock in the open market, or
the availability of such shares for sale, could adversely affect the price of
our common stock. As of June 1, 2000, we had 31,306,511 shares of common stock
outstanding, excluding shares reserved for issuance upon the exercise of
outstanding stock options, warrants and preferred stock. The following
securities that may be exercised for, or are convertible into, shares of our
common stock were issued and outstanding as of June 1, 2000:
o Warrants. Various warrants to purchase 1,103,520 shares of our common
stock, all of which are currently exercisable, at an average exercise
price of approximately $3.03 per share (subject to adjustment in
certain circumstances).
o Options. Stock options to purchase 6,736,589 shares of our common
stock at an average exercise price of approximately $22.55 per share
(subject to adjustment in certain circumstances); of this total,
3,984,329 are currently exercisable at an average exercise price of
approximately $12.98 per share.
o Series A Preferred Stock. 300,000 shares of our series A preferred
stock are outstanding, of which 100,000 shares are currently
convertible into 249,610 shares of our common stock, at a conversion
price of $40.063 per share. These shares are held by Merck KGaA.
o Convertible Notes. An aggregate of $240,000,000 principal amount of 5
1/2% convertible subordinated notes due 2005 are currently
convertible into common stock at a conversion price of $110.18 per
share (subject to adjustment in certain circumstances).
The shares of our common stock that may be issued under the warrants and
options are either currently registered with the SEC, or will be registered
with the SEC before the shares are purchased by the holders of the warrants and
options.
Under our license agreement with Merck KGaA for IMC-C225, we are entitled
to receive from Merck KGaA up to $60 million upon our achievement of various
milestones in the development of IMC-C225. In connection with making the final
$30 million of these milestone payments, Merck KGaA is entitled to receive
milestone shares from us, which, if issued, will be shares of our common stock
(or other capital stock convertible into our common stock). The number of
milestone shares issued will be determined based on premiums to then-market
prices of our common stock at the time the milestones are achieved. As of June
1, 2000, Merck KGaA has not acquired any milestone shares convertible into
common stock.
We have granted Merck KGaA certain registration rights regarding the
shares of common stock that it may acquire upon conversion of the series A
preferred shares and upon receipt of milestone shares. Specifically, Merck KGaA
has the right to require us to register, at our expense, the number of shares
of common stock into which the shares of series A preferred stock are converted
according to their terms and the number of milestone shares that are issued.
Merck KGaA may also exercise rights to have such registrable common stock
registered at any time that we file a registration statement for other shares
of our common stock. Merck KGaA may exercise these rights at any time after
conversion of its shares of series A preferred stock into shares of common
stock or receipt of milestone
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shares. In December 1999, Merck KGaA converted 100,000 shares of series A
preferred stock into 800,000 shares of common stock.
The notes are subordinated.
The notes are unsecured and subordinated in right of payment to all of our
existing and future senior indebtedness. In the event of our bankruptcy,
liquidation or reorganization or upon acceleration of the notes due to an event
of default under the indenture and in certain other events, our assets will be
available to pay obligations on the notes only after all senior indebtedness
has been paid. As a result, there may not be sufficient assets remaining to pay
amounts due on any or all of the outstanding notes. We are not prohibited from
incurring debt, including senior indebtedness, under the indenture. If we were
to incur additional debt or liabilities, our ability to pay our obligations on
the notes could be adversely affected. As of June 1, 2000, we had approximately
$3.8 million of senior indebtedness outstanding. See "Description of
Notes--Subordination of Notes."
We may be unable to redeem the notes upon a fundamental change.
We may be unable to redeem the notes in the event of a fundamental change.
Upon a fundamental change, holders of the notes may require us to redeem all or
a portion of the notes. If a fundamental change were to occur, we may not have
enough funds to pay the redemption price for all tendered notes. In addition,
in certain situations, a fundamental change could result in an event of default
under our current forms of indebtedness. Any future credit agreements or other
agreements relating to our indebtedness may contain similar provisions, or
expressly prohibit the repurchase of the notes upon a fundamental change or may
provide that a fundamental change constitutes an event of default under that
agreement.
If a fundamental change occurs at a time when we are prohibited from
purchasing or redeeming notes, we could seek the consent of our lenders to
redeem the notes or could attempt to refinance this debt. If we do not obtain a
consent, we could not purchase or redeem the notes. Our failure to redeem
tendered notes would constitute an event of default under the indenture, which
might constitute a default under the terms of our other indebtedness. In such
circumstances, or if a fundamental change would constitute an event of default
under our senior indebtedness, the subordination provisions of the indenture
would restrict payments to the holders of notes.
The term "fundamental change" is limited to certain specified transactions
and may not include other events that might adversely affect our financial
condition or the market value of the notes or our common stock. Our obligation
to offer to redeem the notes upon a fundamental change would not necessarily
afford holders of the notes protection in the event of a highly leveraged
transaction, reorganization, merger or other similar transaction involving us.
See "Description of Notes--Redemption at Option of the Holder."
A public market for the notes may fail to develop or be sustained.
The initial purchasers of the notes, although they have advised us that
they intend to make a market in the notes, are not obligated to do so and may
discontinue this market making activity at any time without notice. In
addition, market making activity by the initial purchasers will be subject to
the limits imposed by the Securities Act and the Exchange Act. As a result, we
cannot assure you that any market for the notes will develop or, if one does
develop, that it will be maintained. If an active market for the notes fails to
develop or be sustained, the trading price of the notes could be materially
adversely affected.
Our stock price may continue to experience short-term fluctuations which may
significantly affect the trading price of the notes.
The market prices of securities of small capitalization biotechnology
companies, including ours, have historically been highly volatile. The market
has from time to time experienced significant price and volume fluctuations
unrelated to the operating performance of particular companies. In recent
years, the price of our common stock has fluctuated greatly. Fluctuations in
the trading price of our common stock will affect the trading price of the
notes. The market price of our common stock may continue to fluctuate
significantly in the future due to a variety of factors, including:
o the results of preclinical testing and clinical trials by us or our
competitors
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o the formation or termination of our corporate alliances
o determinations regarding our patent applications and those of others
o variations in our quarterly operating results
In addition, if any of the risks described in these "Risk Factors"
actually occurred, it could have a dramatic and adverse impact on the market
price of our common stock.
We have a significant amount of debt that we may be unable to service or
repay.
The annual interest payments on the convertible subordinated notes will be
$13.2 million, which we intend to fund from cash flow from operations. We will
need to generate substantial amounts of cash from our operations to fund
interest payments and to repay the principal amount of debt when it matures,
while at the same time funding capital expenditures and our other working
capital needs. If we do not have sufficient cash to repay our debts as they
become due, we may be unable to refinance our debt on reasonable terms or at
all. For example, the notes could be declared immediately due and payable if we
do not make timely payments. If we cannot meet out debt obligations from the
cash generated by our business, we may not be able to develop and sell new
products, respond to changing business or economic conditions adequately, make
acquisitions or otherwise fund our business.
The market for unrated debt is subject to disruptions, which could have an
adverse effect on the market price of the notes.
The notes have not been rated. As a result, holders of the notes have the
risks associated with an investment in unrated debt. Historically, the market
for unrated debt has been subject to disruptions that have caused substantial
volatility in the prices of such securities and greatly reduced liquidity for
the holders of such securities. If the notes are traded, they may trade at a
discount from their initial offering price, depending on, among other things,
prevailing interest rates, the markets for similar securities, general economic
conditions and our financial condition, results of operations and prospects.
The liquidity of, and trading markets for, the notes also may be adversely
affected by general declines in the market for unrated debt. Such declines may
adversely affect the liquidity of, and trading markets for, the notes,
independent of our financial performance or prospects. In addition, certain
regulatory restrictions prohibit certain types of financial institutions from
investing in unrated debt, which may further suppress demand for such
securities. We cannot assure the holders of the notes that the market for the
notes will not be subject to similar disruptions. Any such disruptions may have
an adverse effect on the holders of the notes.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this
prospectus are forward-looking statements concerning our operations, economic
performance and financial condition. These statements involve known and unknown
risks, uncertainties, and other factors that may cause our or our industry's
results, levels of activity, performance, or achievements to be materially
different from any future results, levels of activity, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, those listed under "Risk Factors" and elsewhere
in this prospectus or incorporated by reference in this prospectus.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "intend," "expect," "plan," "anticipate,"
"believe," "estimate," "predict," "potential," or "continue" or the negative of
such terms or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, events, levels
of activity, performance, or achievements. We do not assume responsibility for
the accuracy and completeness of the forward-looking statements. We do not
intend to update any of the forward-looking statements after the date of this
prospectus to conform them to actual results.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges was negative for all the periods
presented below because of the net losses incurred by ImClone. The dollar
amounts of the deficiencies are disclosed below in thousands:
<TABLE>
Three Months
Year Ended Ended
-------------------------------------------------------- ------------
March 31,
1999 1998 1997 1996 1995 2000
--------- --------- --------- --------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Deficiency of earnings available to
cover fixed charges (*)........... $(34,815) $(21,382) $(15,491) $(16,015) $(9,641) $(12,211)
</TABLE>
---------
(*) Earnings consist of net loss plus fixed charges less capitalized interest.
Fixed charges consist of interest expense, including amortization of debt
issuance costs and that portion of rental expense we believe to be
representative of interest.
USE OF PROCEEDS
We will not receive any proceeds from the sale by the selling holders of
the notes and the underlying common stock.
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DESCRIPTION OF NOTES
We issued the notes under an indenture dated as of February 29, 2000,
between ImClone and The Bank of New York, as trustee. The notes are covered by
a registration rights agreement. You may request a copy of the indenture and
the registration rights agreement relating to the notes from the trustee.
The following are summaries of material provisions of the notes, the
indenture and the registration rights agreement. It does not purport to be
complete. The summaries are qualified by reference to all the provisions of the
notes, the indenture and the registration rights agreement, including the
definitions of certain terms that are not defined in this prospectus. Wherever
particular provisions or defined terms of the indenture, the note or the
registration rights agreement are referred to, these provisions or defined
terms are incorporated in this prospectus by reference.
General
The notes:
o are general unsecured obligations of ImClone, subordinate in right of
payment to all of our existing and future senior indebtedness as
described under "--Subordination of Notes"
o are convertible into common stock as described under "Conversion of
Notes"
o are limited to $240,000,000 aggregate principal amount
o are issued only in denominations of $1,000 and multiples of $1,000
o will mature on March 1, 2005 unless earlier converted, redeemed at
our option or redeemed at the holder's option upon a fundamental
change
We are not subject to any financial covenants under the indenture. In
addition, we are not restricted under the indenture from paying dividends,
incurring debt (including senior indebtedness), or issuing or repurchasing our
securities.
Holders of notes are not afforded protection in the event of a highly
leveraged transaction or a change in control of ImClone under the indenture
except to the extent described below under "--Redemption at Option of the
Holder."
The notes bear interest at the annual rate of 5 1/2% from February 29,
2000. We pay interest in arrears on March 1 and September 1 of each year,
beginning September 1, 2000 to record holders at the close of business on the
preceding February 15 and August 15, as the case may be, except:
o that interest payable upon redemption will be paid to the person to
whom principal is payable, unless the redemption date is an interest
payment date and
o as set forth in the next sentence
In the case of any note, or portion of any note, which is converted into
our common stock during the period after any record date for any interest
payment but prior to the next interest payment date:
o if the note has been called for redemption on a redemption date that
occurs during this period, we will not be required to pay interest on
the interest payment date
o if the note is to be redeemed in connection with a fundamental change
on a redemption date that occurs during this period, we will not be
required to pay interest on the interest payment date or
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o if otherwise, any note not called for redemption that is submitted
for conversion during this period must also be accompanied by an
amount equal to the interest due on the interest payment date on the
converted principal amount, unless at the time of conversion there is
a default in the payment of interest on the notes.
See "--Conversion of Notes"
We maintain an office in New York, New York for the payment of interest,
which shall initially be an office or agency of the trustee.
We may pay interest either:
o by check mailed to a holder's address as it appears in the note
register, provided that a holder of notes with an aggregate principal
amount in excess of $2.0 million, shall be paid, at such holder's
written election, by wire transfer in immediately available funds or
o by transfer to an account maintained by such holder in the United
States
However, payments to The Depository Trust Company, New York, New York,
which we refer to as DTC, will be made by wire transfer of immediately
available funds to the account of DTC or its nominee. Interest will be
calculated on the basis of a 360-day year composed of twelve 30-day months.
Form, Denomination and Registration
The notes are issued:
o in fully registered form
o without interest coupons and
o in denominations of $1,000 principal amount and integral multiples of
$1,000
Global Note, Book-Entry Form
Notes sold to "qualified institutional buyers" as defined in Rule 144A
under the Securities Act, whom we refer to as QIBs, are evidenced by one or
more global notes. We have deposited the global note or notes with DTC and have
registered the global notes in the name of Cede & Co. as DTC's nominee. Except
as set forth below, a global note may be transferred, in whole or in part, only
to another nominee of DTC or to a successor of DTC or its nominee.
QIBs may hold their interests in a global note directly through DTC if
such holder is a participant in DTC, or indirectly through organizations which
are participants in DTC (called "participants"). Transfers between participants
will be effected in the ordinary way in accordance with DTC rules and will be
settled in clearing house funds. The laws of some states require that certain
persons take physical delivery of securities in definitive form. As a result,
the ability to transfer beneficial interests in the global note to such persons
may be limited.
QIBs who are not participants may beneficially own interests in a global
note held by DTC only through participants, or certain banks, brokers, dealers,
trust companies and other parties that clear through or maintain a custodial
relationship with a participant, either directly or indirectly (called
"indirect participants"). So long as Cede & Co., as the nominee of DTC, is the
registered owner of a global note, Cede & Co. for all purposes will be
considered the sole holder of such global note. Except as provided below,
owners of beneficial interests in a global note will:
o not be entitled to have certificates registered in their names
o not receive physical delivery of certificates in definitive
registered form and
o not be considered holders of the global note
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We will pay interest on and the redemption price of a global note to Cede
& Co., as the registered owner of the global note, by wire transfer of
immediately available funds on each interest payment date or the redemption or
repurchase date, as the case may be. Neither we, the trustee nor any paying
agent will be responsible or liable:
o for the records relating to, or payments made on account of,
beneficial ownership interests in a global note or
o for maintaining, supervising or reviewing any records relating to the
beneficial ownership interests
We have been informed that DTC's practice is to credit participants'
accounts on a payment date with payments in amounts proportionate to their
respective beneficial interests in the principal amount represented by a global
note as shown on the records of DTC, unless DTC has reason to believe that it
will not receive payment on that payment date. Payments by participants to
owners of beneficial interests in the principal amount represented by a global
note held through participants will be the responsibility of the participants,
as is now the case with securities held for the accounts of customers
registered in "street name."
Because DTC can only act on behalf of participants, who in turn act on
behalf of indirect participants, the ability of a person having a beneficial
interest in the principal amount represented by the global note to pledge such
interest to persons or entities that do not participate in the DTC system, or
otherwise take actions in respect of such interest, may be affected by the lack
of a physical certificate evidencing the interest.
Neither ImClone, nor any trustee, registrar, paying agent or conversion
agent will have any responsibility for the performance by DTC or its
participants or indirect participants of their respective obligations under the
rules and procedures governing their operations. DTC has advised us that it
will take any action permitted to be taken by a holder of notes, including the
presentation of notes for exchange, only at the direction of one or more
participants to whose account with DTC interests in the global note are
credited, and only in respect of the principal amount of the notes represented
by the global note as to which the participant or participants has or have
given such direction.
DTC has advised us that it is:
o a limited purpose trust company organized under the laws of the State
of New York
o a member of the Federal Reserve System
o a "clearing corporation" within the meaning of the Uniform Commercial
Code
o a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act
DTC was created to hold securities for its participants and to facilitate
the clearance and settlement of securities transactions between participants
through electronic book-entry changes to the accounts of its participants.
Participants include securities brokers, dealers, banks, trust companies and
clearing corporations and other organizations. Some of the participants or
their representatives, together with other entities, own DTC. Indirect access
to the DTC system is available to others such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
DTC has agreed to the foregoing procedures to facilitate transfers of
interests in a global note among participants. However, DTC is under no
obligation to perform or continue to perform these procedures, and may
discontinue these procedures at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
us within 90 days, we will issue notes in certificated form in exchange for
global notes.
Certificated Notes
Notes sold to investors that are institutional accredited investors are
issued in certificated form. In addition, QIBs may request that certificated
notes be issued in exchange for notes represented by a global note.
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Conversion of Notes
Holders of notes may convert their notes, in whole or in part, into common
stock through the final maturity date of the notes, subject to prior redemption
of the notes.
If we call notes for redemption, holders may convert the notes only until
the close of business on the business day prior to the redemption date unless
we fail to pay the redemption price.
If holders have submitted their notes for redemption upon a fundamental
change, then holders may only convert their notes upon the withdrawal of their
redemption election.
Holders may convert their notes in part so long as this part is $1,000 in
principal amount or an integral multiple of $1,000. If any notes not called for
redemption are converted after a record date for any interest payment date and
prior to the next interest payment date, the notes so converted must be
accompanied by an amount equal to the interest payable on the interest payment
date on the converted principal amount unless a default exists at the time of
conversion.
The initial conversion price for the notes is $110.18 per share of common
stock, subject to adjustment as described below. We will not issue fractional
shares of common stock upon conversion of notes. Instead, we will pay cash for
such fractional shares based upon the market price of the common stock on the
business day prior to the conversion date. Except as described below, holders
of notes will not receive any accrued interest or dividends upon conversion.
To convert a note into common stock a holder must:
o complete and manually sign the conversion notice on the back of the
note or a facsimile of the conversion notice and deliver this notice
to the conversion agent
o surrender the note to the conversion agent
o if required, furnish appropriate endorsements and transfer documents
o if required, pay all transfer or similar taxes
o if required, pay funds equal to interest payable on the next interest
payment date
The date the holder complies with these requirements is the conversion
date under the indenture.
We will adjust the conversion price if the following events occur:
(1) we issue common stock as a dividend or distribution on our common
stock
(2) we issue to all holders of common stock certain rights or
warrants to purchase our common stock
(3) we subdivide or combine our common stock
(4) we distribute to all common stock holders capital stock,
evidences of indebtedness or assets, including securities but excluding:
o rights or warrants listed in (2) above
o dividends or distributions listed in (1) above
o cash distributions listed in (5) below
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(5) we distribute cash to all holders of our common stock, excluding
any quarterly cash dividend on the common stock, to the extent that the
aggregate cash dividend per share of common stock in any quarter does not
exceed the greater of:
o the amount per share of common stock of the next preceding quarterly
cash dividend on the common stock to the extent that the preceding
quarterly dividend did not require an adjustment of the conversion
price pursuant to this clause (5), as adjusted to reflect
subdivisions or combinations of the common stock
o 3.75% of the average of the last reported sale price of the common
stock during the ten trading days immediately prior to the
declaration date of the dividend
excluding any dividend or distribution in connection with the liquidation,
dissolution or winding up of ImClone.
If an adjustment is required to be made under this clause (5) as a result
of a distribution that is a quarterly dividend, the adjustment would be
based upon the amount by which the distribution exceeds the amount of the
quarterly cash dividend permitted to be excluded pursuant to this clause
(5). If an adjustment is required to be made under this clause (5) as a
result of a distribution that is not a quarterly dividend, the adjustment
would be based upon the full amount of the distribution
(6) we make a payment in respect of a tender offer or exchange offer
for our common stock to the extent that the cash and value of any other
consideration included in the payment per share of common stock exceeds
the current market price per share of common stock on the trading day next
succeeding the last date on which tenders or exchanges may be made
pursuant to such tender or exchange offer and
(7) someone other than us makes a payment in respect of a tender
offer or exchange offer in which, as of the closing date of the offer, our
board of directors is not recommending rejection of the offer. The
adjustment referred to in this clause (7) will only be made if:
o the tender offer or exchange offer is for an amount that increases
the offeror's ownership of common stock to more than 25% of the total
shares of common stock outstanding and
o the cash and value of any other consideration included in the payment
per share of common stock exceeds the current market price per share
of common stock on the business day next succeeding the last date on
which tenders or exchanges may be made pursuant to the tender or
exchange offer
However, the adjustment referred to in this clause (7) will generally not
be made if, as of the closing of the offer, the offering documents
disclose a plan or an intention to cause us to engage in a consolidation
or merger of ImClone or a sale of all or substantially all of our assets.
In the event of:
o any reclassification of our common stock
o consolidation, merger or combination involving ImClone or
o a sale or conveyance to another person of all or substantially all of
the property and assets of ImClone
in which holders of common stock would be entitled to receive stock, other
securities, other property, assets or cash for their common stock, holders of
notes will generally be entitled thereafter to convert their notes into the
same type of consideration they would have been entitled to receive had the
notes been converted into common stock immediately prior to one of these types
of events.
You may in certain situations be deemed to have received a distribution
subject to United States federal income tax as a dividend in the event of any
taxable distribution to holders of common stock or in certain other situations
requiring a conversion price adjustment. See "Material United States Federal
Income Tax Considerations."
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We may from time to time reduce the conversion price for a period of at
least 20 days if our board of directors has made a determination that this
reduction would be in our best interests. Any such determination by our board
will be conclusive. We would give holders at least 15 days' notice of any
reduction in the conversion price. In addition, we may reduce the conversion
price if our board of directors deems it advisable to avoid or diminish any
income tax to holders of common stock resulting from any stock or rights
distribution. See "Material United States Federal Income Tax Considerations."
We will not be required to make an adjustment in the conversion price
unless the adjustment would require a change of at least 1% in the conversion
price. However, we will carry forward any adjustments that are less than one
percent of the conversion price. Except as described above in this section, we
will not adjust the conversion price for any issuance of our common stock or
convertible or exchangeable securities or rights to purchase our common stock
or convertible or exchangeable securities.
Optional Redemption by ImClone
Provisional Redemption
We may redeem some or all of the notes at any time prior to March 6, 2003,
at a redemption price equal to $1,000 per $1,000 aggregate principal amount of
notes plus accrued and unpaid interest to the redemption date if:
o the closing price of the common stock has exceeded 150% of the
conversion price for at least 20 trading days in any consecutive
30-trading day period and
o if the redemption would occur before March 1, 2002, the shelf
registration statement covering resale of the notes and the common
stock is effective and expected to remain effective and available for
use for the 30 days following the redemption date
We must mail the notice for redemption within five trading days of the
consecutive 30-trading day period. The provisional redemption date shall be not
less than 30 nor more than 60 days after the notice.
If we redeem the notes under these circumstances, we will make an
additional payment on the redeemed notes equal to $152.54 per $1,000 aggregate
principal amount of notes, minus the amount of any interest we actually paid on
the note prior to the date we mailed the notice. We must make these payments on
all notes called for redemption, including notes converted after the date we
mailed the notice.
Non-Provisional Redemption
The notes are not entitled to any sinking fund. At any time on or after
March 6, 2003, we may redeem some or all of the notes on at least 30 but not
more than 60 days' notice, at the following redemption prices (expressed in
percentages of the principal amount).
If redeemed during the 12-month period:
Redemption
Twelve-Month Period Price
------------------- ----------
Beginning on March 6, 2003 and ending February 29, 2004............... 102.20%
Beginning on March 1, 2004 and ending February 28, 2005............... 101.10
and 100% at March 1, 2005. In addition, we will pay interest on the notes being
redeemed, including those notes which are converted into our common stock after
the date the notice of the redemption is mailed and prior to the redemption
date. This interest will include interest accrued and unpaid to, but excluding,
the redemption date. If the redemption date is an interest payment date, we
will pay the interest to the holder of record on the corresponding record date,
which may or may not be the same person to whom we will pay the redemption
price.
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If less than all of the outstanding notes are to be redeemed, the trustee
shall select the notes to be redeemed in principal amounts of $1,000 or
integral multiples of $1,000 by lot, pro rata or by another method the trustee
considers fair and appropriate.
We may not redeem the notes if we have failed to pay any interest or
premium on the notes and such failure to pay is continuing.
Redemption at Option of the Holder
If a fundamental change occurs prior to March 1, 2005, holders may require
us to redeem their notes, in whole or in part, on a repurchase date that is 30
days after the date of our notice of the fundamental change. The notes will be
redeemable in multiples of $1,000 principal amount. We shall redeem the notes
at a price equal to 100% of the principal amount to be redeemed, plus accrued
interest to, but excluding, the repurchase date. If the repurchase date is an
interest payment date, we will pay interest to the record holder on the
relevant record date.
We will mail to all record holders a notice of the fundamental change
within 10 days after the occurrence of the fundamental change. We are also
required to deliver to the trustee a copy of the fundamental change notice and
issue a press release announcing the fundamental change. If holders elect to
redeem the notes, each such holder must deliver to us or our designated agent,
on or before the 30th day after the date of our fundamental change notice, the
redemption notice and any notes to be redeemed, duly endorsed for transfer. We
will promptly pay the redemption price for notes surrendered for redemption
following the repurchase date.
A "fundamental change" is any transaction or event in connection with
which all or substantially all of our common stock will be exchanged for,
converted into, acquired for or constitute solely the right to receive,
consideration, whether by means of an exchange offer, liquidation, tender
offer, consolidation, merger, combination, reclassification, recapitalization
or otherwise, which consideration is not all or substantially all common stock:
o listed on, or that will be listed on or immediately after the
transaction or event on a United States national securities exchange
or
o approved for quotation on the Nasdaq National Market or any similar
United States system of automated dissemination of quotations of
securities prices
We will comply with any applicable provisions of Rule 13e-4 and any other
tender offer rules under the Exchange Act in the event of a fundamental change.
These fundamental change redemption rights could discourage a potential
acquiror of ImClone. However, this fundamental change redemption feature is not
the result of management's knowledge of any specific effort to obtain control
of ImClone by means of a merger, tender offer or solicitation, or part of a
plan by management to adopt a series of anti-takeover provisions. The term
"fundamental change" is limited to certain specified transactions and may not
include other events that might adversely affect our financial condition. Our
obligation to offer to redeem the notes upon the occurrence of a fundamental
change would not necessarily afford the holders of notes protection in the
event of a highly leveraged transaction, reorganization, merger or similar
transaction involving ImClone.
We may be unable to redeem the notes in the event of a fundamental change.
If a fundamental change were to occur, we may not have enough funds to pay the
redemption price for all tendered notes. In addition, in certain situations, a
fundamental change could result in an event of default under our current forms
of indebtedness. Any future credit agreements or other agreements relating to
our indebtedness may contain similar provisions, or expressly prohibit the
repurchase of the notes upon a fundamental change or may provide that a
fundamental change constitutes an event of default under that agreement. If a
fundamental change occurs at a time when we are prohibited from purchasing or
redeeming notes, we could seek the consent of our lenders to redeem the notes
or could attempt to refinance this debt. If we were unable to obtain such a
consent, we would be unable to purchase or redeem the notes. Our failure to
redeem tendered notes would constitute an event of default under the indenture,
which might constitute a default under the terms of our other indebtedness. In
such circumstances, or if a fundamental change would constitute an event of
default under our senior indebtedness, the subordination provisions of the
indenture would restrict payments to the holders of notes.
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Subordination of Notes
Payment on the notes will, to the extent provided in the indenture, be
subordinated in right of payment to the prior payment in full of all of our
senior indebtedness.
Upon any distribution of our assets upon any dissolution, winding up,
liquidation or reorganization, the payment of the principal of, or premium, if
any, interest, and liquidated damages, if any, on, the notes will be
subordinated in right of payment to the prior payment in full in cash or other
payment satisfactory to the holders of all senior indebtedness. In the event of
any acceleration of the notes because of an event of default, the holders of
any outstanding senior indebtedness would be entitled to payment in full in
cash or other payment satisfactory to the holders of senior indebtedness of all
senior indebtedness obligations before the holders of the notes are entitled to
receive any payment or distribution. We are required under the indenture to
promptly notify holders of senior indebtedness, if payment of the notes is
accelerated because of an event of default.
We cannot make any payment on the notes if:
o a default in the payment of senior indebtedness occurs and is
continuing beyond any applicable period of grace (called a "payment
default") or
o a default other than a payment default on any designated senior
indebtedness occurs and is continuing that permits holders of
designated senior indebtedness to accelerate its maturity, or in the
case of a lease, a default occurs and is continuing that permits the
lessor to either terminate the lease or require us to make an
irrevocable offer to terminate the lease following an event of
default under the lease, and the trustee receives a notice of such
default (called a "payment blockage notice") from us or any other
person permitted to give such notice under the indenture (called a
"non-payment default")
We may resume payments and distributions on the notes:
o in case of a payment default, upon the date on which such default is
cured or waived or ceases to exist and
o in case of a non-payment default, the earlier of the date on which
such non-payment default is cured or waived or ceases to exist or 179
days after the date on which the payment blockage notice is received,
if the maturity of the designated senior indebtedness has not been
accelerated, or in the case of any lease, 179 days after notice is
received if we have not received notice that the lessor under such
lease has exercised its right to terminate the lease or require us to
make an irrevocable offer to terminate the lease following an event
of default under the lease
No new period of payment blockage may be commenced pursuant to a payment
blockage notice unless 365 days have elapsed since the initial effectiveness of
the immediately prior payment blockage notice. No non-payment default that
existed or was continuing on the date of delivery of any payment blockage
notice shall be the basis for any later payment blockage notice.
If the trustee or any holder of the notes receives any payment or
distribution of our assets in contravention of the subordination provisions on
the notes before all senior indebtedness is paid in full in cash or other
payment satisfactory to holders of senior indebtedness, then such payment or
distribution will be held in trust for the benefit of holders of senior
indebtedness or their representatives to the extent necessary to make payment
in full in cash or payment satisfactory to the holders of senior indebtedness
of all unpaid senior indebtedness.
In the event of our bankruptcy, dissolution or reorganization, holders of
senior indebtedness may receive more, ratably, and holders of the notes may
receive less, ratably, than our other creditors. This subordination will not
prevent the occurrence of any event of default under the indenture.
As of June 1, 2000, we had approximately $3.8 million of senior
indebtedness outstanding. We are not prohibited from incurring debt, including
senior indebtedness, under the indenture. We may from time to time incur
additional debt, including senior indebtedness. The indenture will not limit:
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o the amount of additional senior indebtedness, which ImClone can
create, incur, assume or guarantee or
o the amount of indebtedness or other liabilities any future subsidiary
can create, incur, assume or guarantee
We are obligated to pay reasonable compensation to the trustee and to
indemnify the trustee against certain losses, liabilities or expenses incurred
by the trustee in connection with its duties relating to the notes. The
trustee's claims for these payments will generally be senior to those of
noteholders in respect of all funds collected or held by the trustee.
Certain Definitions
"designated senior indebtedness" shall mean all indebtedness existing on
the date of this prospectus plus any senior indebtedness incurred after such
date.
"indebtedness" means:
(1) all indebtedness, obligations and other liabilities for borrowed
money, including overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements and any loans or advances
from banks, or evidenced by bonds, notes, notes or similar instruments,
other than any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with
the obtaining of materials or services
(2) obligations with respect to letters of credit, bank guarantees or
bankers' acceptances
(3) obligations in respect of capital leases and real or personal
property leases required in conformity with generally accepted accounting
principles to be accounted for as capitalized lease obligations on our
balance sheet
(4) all obligations and other liabilities under any lease or related
document, including purchase agreements, in connection with the lease of
real property which provides that we are contractually obligated to
purchase or cause a third party to purchase the leased property and
thereby guarantee a minimum residual value of the leased property to the
lessor and our obligations under the lease or related document to purchase
or to cause a third party to purchase the leased property
(5) all obligations with respect to an interest rate or other swap,
cap or collar agreement or foreign currency hedge, exchange or purchase
agreement
(6) all direct or indirect guaranties, our obligations or liabilities
to purchase, acquire or otherwise assure a creditor against loss in
respect of, indebtedness, obligations or liabilities of others of the type
described in (1) through (5) above
(7) any obligations described in (1) through (5) above secured by any
mortgage, pledge, lien or other encumbrance existing on property which is
owned or held by us and
(8) any deferrals, renewals, extensions, refundings, amendments,
modifications or supplements to (1) through (7) above
"senior indebtedness" means the principal, premium, if any, interest,
including any interest accruing after bankruptcy and rent or termination
payment on or other amounts due on our current or future indebtedness, whether
created, incurred, assumed, guaranteed or in effect guaranteed by us. However,
senior indebtedness does not include:
o indebtedness that expressly provides that it shall not be senior in
right of payment to the notes or expressly provides that it is on the
same basis or junior to the notes
o the notes
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Events of Default; Notice and Waiver
The following will be events of default under the indenture:
o we fail to pay principal or premium, if any, upon redemption or
otherwise on the notes, whether or not the payment is prohibited by
subordination provisions
o we fail for 30 days to pay any interest and liquidated damages, if
any, on the notes, whether or not the payment is prohibited by
subordination provisions of the indenture
o we fail to perform or observe any of the covenants in the indenture
for 60 days after notice
o certain events involving bankruptcy, insolvency or reorganization of
ImClone
The trustee may withhold notice to the holders of the notes of any
default, except defaults in payment of principal, premium, interest or
liquidated damages, if any, on the notes. However, the trustee must consider it
to be in the interest of the holders of the notes to withhold this notice.
If an event of default occurs and continues, the trustee or the holders of
at least 25% in principal amount of the outstanding notes may declare the
principal, premium, and accrued interest and liquidated damages, if any, on the
outstanding notes to be immediately due and payable. In case of certain events
of bankruptcy or insolvency involving ImClone, the principal, premium and
accrued interest and liquidated damages, if any, on the notes will
automatically become due and payable. Subject to certain limitations, the
holders of a majority of the principal amount of outstanding notes may waive
any default other than non-payment defaults. Payments of principal, premium, or
interest on the notes that are not made when due will accrue interest at the
annual rate of 5 1/2% from the required payment date.
The holders of a majority of the outstanding notes will have the right to
direct the time, method and place of any proceedings for any remedy available
to the trustee, subject to limitations specified in the indenture. No holder of
the notes may pursue any remedy under the indenture, except in the case of a
default in the payment of principal, premium or interest on the notes, unless:
o the holder has given the trustee written notice of an event of
default
o the holders of at least 25% in principal amount of outstanding notes
make a written request, and offer reasonable indemnity, to the
trustee to pursue the remedy
o the trustee does not receive an inconsistent direction from the
holders of a majority in principal amount of the notes
o the trustee fails to comply with the request within 60 days after
receipt
Modification of the Indenture
The consent of the holders of a majority in principal amount of the
outstanding notes is required to modify or amend the indenture. However, a
modification or amendment requires the consent of the holder of each
outstanding note if it would:
o extend the fixed maturity of any note
o reduce the rate or extend the time for payment of interest of any
note
o reduce the principal amount or premium of any note
o reduce any amount payable upon redemption of any note
o adversely change our obligation to redeem any note upon a fundamental
change
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o impair the right of a holder to institute suit for payment on any
note
o change the currency in which any note is payable
o impair the right of a holder to convert any note
o adversely modify the subordination provisions of the indenture
o reduce the percentage of notes required for consent to any
modification of the indenture
We are permitted to modify certain provisions of the indenture without the
consent of the holders of the notes.
Registration Rights of the Noteholders
Under a registration rights agreement, we are required to use our
reasonable efforts to cause the shelf registration statement, of which this
prospectus is a part, to become effective and to use reasonable efforts to keep
the shelf registration statement effective until the earlier of:
o all of the registrable securities have been sold pursuant to the
shelf registration statement
o the expiration of the holding period under Rule 144(k) under the
Securities Act, or any successor provision, subject to certain
permitted exceptions
When we use the term "registrable securities" in this section, we are
referring to the notes and the common stock issuable upon conversion of the
notes until the earliest of:
o the effective registration under the Securities Act and resale of the
securities in accordance with the registration statement
o the expiration of the holding period under Rule 144(k)
o the sale to the public pursuant to Rule 144 under the Securities Act,
or any similar provision then in force, but not Rule 144A
We may suspend the use of the prospectus under certain circumstances
relating to pending corporate developments, public filings with the Securities
and Exchange Commission and similar events. Any suspension period shall not:
o exceed 30 days in any 3-month period
o an aggregate of 90 days for all periods in any 12-month period
However, we will be permitted to suspend the use of the prospectus not to
exceed 60 days under certain circumstances, relating to possible acquisitions,
financings or similar transactions.
If the shelf registration statement is not timely filed or made effective
or if the prospectus is unavailable for periods in excess of those permitted
above, we will pay predetermined liquidated damages:
o on the notes at an annual rate equal to 0.5% of the principal amount
of the notes
o on the common stock at an annual rate equal to 0.5% of the conversion
price
A holder who elects to sell registrable securities pursuant to the shelf
registration statement will be required to:
o be named as a selling holder in the related prospectus
o deliver a prospectus to purchasers
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o be subject to the provisions of the registration rights agreement,
including indemnification provisions
Under the registration rights agreement we will
o pay all expenses of the shelf registration statement
o provide each registered holder copies of the prospectus
o notify holders when the shelf registration statement has become
effective
o take other actions as are required to permit unrestricted resales of
the registrable securities
The plan of distribution of the shelf registration statement will permit
resales of registrable securities by selling holders through brokers and
dealers. In order for a holder to be named in the prospectus, such holder must
have completed a questionnaire which can be obtained from Catherine M. Vaczy,
Assistant Vice President, Legal and Associate General Counsel, 180 Varick
Street, New York, New York 10014. This completed questionnaire should be
forwarded to us at least three business days prior to intended distribution.
Such holder should complete and deliver the questionnaire so that such holder
may be named as a selling holder in the prospectus.
Upon receipt of a completed questionnaire, together with any other
information we may reasonably request, we will, within five business days, file
any amendments to the shelf registration statement or supplements to the
related prospectus as are necessary to permit any holder to deliver a
prospectus to purchasers of registrable securities, subject to our right to
suspend the use of the prospectus.
If a holder does not complete and deliver a questionnaire or provide the
other information we may request, such holder will not be named as a selling
holder in the prospectus and will not be permitted to sell registrable
securities pursuant to the shelf registration statement.
The summary of the registration rights agreement is not complete. This
summary is subject to, and is qualified in its entirety by reference to, all
the provisions of the registration rights agreement. You can request a copy of
the registration rights agreement from us.
Information Concerning the Trustee
We have appointed The Bank of New York, the trustee under the indenture,
as:
o paying agent
o conversion agent
o note registrar and
o custodian for the notes
The trustee or its affiliates may provide banking and other services to us
in the ordinary course of their business. The indenture contains certain
limitations on the rights of the trustee, as long as it or any of its
affiliates remains our creditor, to obtain payment of claims in certain cases
or to realize on certain property received on any claim as security or
otherwise. The trustee and its affiliates will be permitted to engage in other
transactions with us. However, if the trustee or any affiliate continues to
have any conflicting interest and a default occurs with respect to the notes,
the trustee must eliminate such conflict or resign.
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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following are the material U.S. federal income tax considerations of
purchasing, owning and disposing of the notes and the underlying common stock
but this discussion is not intended to be a complete analysis of all the
relevant and potential tax considerations.
This discussion is based on laws, regulations, rulings and decisions now
in effect, all of which are subject to change or differing interpretation,
possibly with retroactive effect.
Except as specifically discussed below with regard to non-U.S. holders, as
defined below, this discussion applies only to beneficial owners that will hold
notes and common stock into which notes may be converted as "capital assets,"
within the meaning of the Internal Revenue Code of 1986, as amended, referred
to as the "Code," and who, for U.S. federal income tax purposes, are:
o individual citizens or residents of the U.S. for U.S. federal income
tax purposes
o corporations, partnerships or other entities created or organized in
or under the laws of the U.S. or of any political subdivision
thereof, unless, in the case of a partnership, Treasury Regulations
otherwise provide
o estates, the incomes of which are subject to U.S. federal income
taxation regardless of the source of such income or
o trusts subject to the primary supervision of a U.S. court and the
control of one or more U.S. persons,
referred to as "U.S. holders."
Beneficial owners of a note or common stock that are not U.S. holders,
referred to as "non-U.S. holders", are subject to special U.S. federal income
tax considerations, some of which are discussed below.
This discussion does not address tax considerations applicable to an
investor's particular circumstances or to investors that may be subject to
special tax rules, such as:
o banks
o holders subject to the alternative minimum tax
o S corporations
o tax-exempt organizations
o insurance companies
o foreign persons or entities (except to the extent specifically set
forth below)
o dealers in securities or currencies
o persons that will hold notes as a position in a hedging transaction,
"straddle" or "conversion transaction" for tax purposes or
o persons deemed to sell notes or common stock under the constructive
sale provisions of the Code
Investors considering the purchase of notes should consult their own tax
advisors with respect to the application of the United States federal income
tax laws to their particular situations as well as any tax consequences arising
under the federal estate or gift tax rules or under the laws of any state,
local or foreign taxing jurisdiction or under any applicable tax treaty.
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U.S. Holders
Taxation of Interest
Interest paid on the notes will be included in the income of a U.S. holder
as ordinary income at the time it is treated as received or accrued, in
accordance with such holder's regular method of accounting for U.S. federal
income tax purposes. Under Treasury Regulations, the possibility of an
additional payment under a note may be disregarded for purposes of determining
the amount of interest income to be recognized by the holder in respect of such
note, or the timing of such recognition, if the likelihood of the payment, as
of the date the notes are issued, is remote.
Holders may require us to redeem any and all of their notes in the event
of a fundamental change and we may redeem some or all of the notes pursuant to
the provisional redemption features of the notes. We intend to take the
position that:
o a "fundamental change" or a provisional redemption is remote under
the Treasury Regulations and
o we thus do not intend to treat the possibility of a "fundamental
change" or a provisional redemption as affecting the yield to
maturity of any note.
If any of these contingencies occurs, it would affect the amount and
timing of the income that must be recognized by a U.S. holder of notes.
Sale, Exchange or Redemption of the Notes
Upon the sale, exchange, other than a conversion or redemption of a note,
a U.S. holder generally will recognize gain or loss equal to the difference
between:
o the amount of cash proceeds and the fair market value of any property
received on the sale, exchange or redemption and
o such holder's adjusted tax basis in the note. A U.S. holder's
adjusted tax basis in a note generally will equal the cost of the
note to such holder, increased by any market discount previously
includible in income by such holder with respect to the notes, and
reduced by any amortizable bond premium used to offset interest
income on the notes
This gain or loss will be capital gain or loss and will be long-term
capital gain or loss if the U.S. holder's holding period in the note is more
than one year at the time of sale, exchange or redemption, except to the extent
such amount is attributable to accrued interest or market discount not
previously included in income, which will be taxable as ordinary income. See
"Market Discount and Bond Premium" below. Long-term capital gains recognized by
certain noncorporate U.S. holders, including individuals, will generally be
subject to a maximum stated rate of tax of 20%. The deductibility of capital
losses is subject to limitations.
Market Discount and Bond Premium
If a U.S. holder purchases a note after the original issue for an amount
less than its principal amount, the difference will be treated as market
discount.
Under the market discount rules, such holder will generally be required to
treat any principal payment on a note or any gain on the sale, exchange,
retirement or other disposition of a note, as ordinary income to the extent of
the market discount that has not previously been included in income and that is
treated as having accrued on such note at the time of such payment or
disposition. If a note with accrued market discount is converted into common
stock pursuant to the conversion feature, the amount of such accrued market
discount generally will be taxable as ordinary income upon the disposition of
the common stock. In addition, a U.S. holder may be required to defer, until
the maturity of the note or its earlier disposition in a taxable transaction,
the deduction of all or a portion of the interest expense on any indebtedness
incurred or continued to purchase or carry such note.
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Any market discount will be considered to accrue ratably during the period
from the date of acquisition to the maturity date of the note, unless a U.S.
holder elects to accrue on a constant interest method. A holder may elect to
include market discount in income currently as it accrues, on either a ratable
or constant interest method, in which case the rule described above regarding
deferral of interest deductions will not apply. This election to include market
discount in income currently, once made, applies to all market discount
obligations acquired by a U.S. holder on or after the first day of the first
taxable year to which the election applies and may not be revoked without the
consent of the IRS.
If a U.S. holder purchases a note for an amount in excess of its stated
principal amount, plus accrued interest, the holder generally will be
considered to have purchased the note with "amortizable bond premium." Such
holder generally may elect to amortize such premium from the purchase date to
the note's maturity date under a constant yield method. Amortizable bond
premium generally is treated as an offset to interest income on the note and
not as a separate deduction. Amortizable bond premium, however, will not
include any premium attributable to the value of the note's conversion feature.
Also, because the notes may be redeemed by us at a price in excess of their
principal amount, a U.S. holder may be required to amortize any premium based
on an earlier call date and the call price payable at that time. An election to
amortize amortizable bond premium on a constant yield method, once made,
generally applies to all debt obligations held or subsequently acquired by such
holder on or after the first day of the first taxable year to which the
election applies and may not be revoked without the consent of the IRS.
U.S. holders should consult their own tax advisors concerning the
existence and tax consequences of market discount and amortizable bond premium.
Conversion of the Notes
A U.S. holder generally will not recognize any income, gain or loss upon
conversion of a note into common stock except for:
o cash received in lieu of a fractional share of common stock and
o any cash received as an additional payment upon conversion of a note
after receipt of notice of a provisional redemption, to the extent
described below
Although the treatment of the additional payment that we will be required
to make if a U.S. holder converts notes after receiving notice of a provisional
redemption is unclear, such holder may be required to treat an amount equal to
interest that has accrued but has not been included in income as ordinary
interest income. Such holder will be required to recognize any gain to the
extent such additional payment exceeds any amount treated as interest. Any gain
so recognized will generally be capital gain.
A U.S. holder's tax basis in the common stock received on conversion of a
note will be the same as the holder's adjusted tax basis in the note at the
time of conversion, increased by the amount of any recognized gain and reduced
by the amount of any basis allocable to a fractional share interest for which
cash was received. The holding period for the common stock received on
conversion will generally include the holding period of the note converted.
Cash received in lieu of a fractional share of common stock upon
conversion will be treated as a payment in exchange for the fractional share of
common stock, which will result in capital gain or loss, measured by the
difference between the cash received for the fractional share and the holder's
adjusted tax basis in the fractional share.
Dividends
Any distributions made on the common stock after a conversion generally
will be included in the income of a U.S. holder as ordinary dividend income to
the extent of our current or accumulated earnings and profits. Distributions in
excess of our current and accumulated earnings and profits will be treated as a
return of capital to the extent of the U.S. holder's tax basis in the common
stock and thereafter as capital gain.
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Adjustments to Conversion Price
The conversion price of the notes is subject to adjustment under certain
circumstances. See "Description of Notes--Conversion of Notes". Certain
adjustments to the conversion price may be treated as a taxable distribution to
U.S. holders, resulting in ordinary income, subject to a possible
dividends-received deduction for corporate holders, to the extent of our
current or accumulated earnings and profits if, and to the extent that,
adjustments in the conver sion price increase such holder's proportionate
interest in our earnings and profits or assets.
Such adjustments may occur in limited circumstances, particularly
adjustments to reflect taxable dividends to holders of our common stock. In
such a case a constructive distribution would arise whether or not the holders
ever convert the notes. U.S. holders, therefore, could have taxable income as a
result of an event in which they received no cash or property. A holder's tax
basis in a note, however, generally will be increased by the amount of any
constructive dividend included in taxable income. Similarly, a failure to
adjust the conversion rate to reflect a stock dividend or other event
increasing the proportionate interest, of the holders of outstanding common
stock, in our earnings and profits or assets could, in some circumstances, give
rise to deemed dividend income to holders of our common stock.
Sale of Common Stock
Upon the sale or exchange of common stock a U.S. holder generally will
recognize gain or loss equal to the difference between
o the amount of cash and the fair market value of any property received
upon the sale or exchange and
o such U.S. holder's adjusted tax basis in the common stock.
Such gain or loss will be capital gain or loss and will be long-term
capital gain or loss if the U.S. holder's holding period in the common stock is
more than one year at the time of the sale or exchange, except to the extent of
any accrued market discount attributable to such stock, which will be taxable
as ordinary income, as described above under "Market Discount and Bond
Premium." The deductibility of capital losses is subject to limitations.
Special Tax Rules Applicable to Non-U.S. Holders
Non-U.S. holders should consult with their own tax advisors to determine
the effect of federal, state, local and foreign tax laws with regard to an
investment in the notes and common stock, including any reporting requirements.
In general, subject to the discussion below concerning backup withholding
and income effectively connected with a U.S. trade or business:
(a) Payments on the notes by us or any paying agent to a beneficial owner
of a note that is a non-U.S. holder will not be subject to U.S. federal
withholding tax, provided that, in the case of interest,
(i) the non-U.S. holder does not actually or constructively own 10%
or more of the total combined voting power of all classes of our stock
entitled to vote, including the stock into which the notes are convertible
(ii) the non-U.S. holder is not a "controlled foreign corporation"
actually or constructively related to us through stock ownership
(iii) the non-U.S. holder is not a bank receiving interest on a loan
entered into in the ordinary course of business and
(iv) the certification requirements discussed below are satisfied,
referred to as the "portfolio interest exemption"
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(b) A non-U.S. holder of a note or common stock will generally not be
subject to U.S. federal income tax or withholding tax on gains realized on the
sale, exchange, redemption or other disposition of such note or common stock,
including the receipt of cash in lieu of fractional shares upon conversion of a
note into common stock, unless
(i) the gain is effectively connected with non-U.S. holder's conduct
of a trade or business in the U.S. and, if certain U.S. income tax
treaties apply, is attributable to a U.S. permanent establishment
maintained by the non-U.S. holder or
(ii) in the case of common stock held by a person who holds more than
5% of such stock, we are or have been, at any time within the shorter of
the five-year period preceding such sale or other disposition or the
period such non-U.S. holder held the common stock, a U.S. real property
holding corporation for U.S. federal income tax purposes. We do not
believe that we are currently a U.S. real property holding corporation or
that we will become one in the future
(c) Interest on notes not excluded from U.S. withholding tax as described
in (a) above and dividends on common stock after conversion generally will be
subject to U.S. withholding tax at a 30% rate, except where an applicable tax
treaty provides for the reduction or elimination of such withholding tax. We
may be required to report annually to the IRS and to each non-U.S. holder the
amount of interest paid to, and the tax withheld, if any, with respect to each
non-U.S. holder, and
(d) No U.S. federal income tax or withholding tax will generally be
imposed upon the conversion of a note into common stock by a non-U.S. holder
except for the receipt of cash in lieu of fractional shares by non-U.S. holders
upon conversion of a note where any of the conditions described above in (b)
are satisfied.
To satisfy the certification requirements referred to in (a)(iv) above,
either
o the beneficial owner of a note must certify, under penalties of
perjury, to us or our paying agent that such owner is a non-U.S.
holder and must provide such owner's name and address, and U.S.
taxpayer identification number, if any, or
o a securities clearing organization, bank or other financial
institution that holds customer securities in the ordinary course of
its trade or business, known as a "Financial Institution," and that
holds the note on behalf of the beneficial owner thereof must
certify, under penalties of perjury, to us or our paying agent that
such certificate has been received from the beneficial owner and must
furnish the payor with a copy thereof.
Such requirement will be fulfilled if the beneficial owner of a note
certifies on IRS Form W-8 or successor form, under penalties of perjury, that
it is a non-U.S. holder and provides its name and address, or any Financial
Institution holding the note on behalf of the beneficial owner files a
statement with the withholding agent to the effect that it has received such a
statement from the beneficial owner and furnishes the withholding agent with a
copy of the statement.
Treasury Regulations effective for payments made after December 31, 2000,
will provide alternative methods for satisfying the certification requirements
described above and below, subject to certain transition rules. Non-U.S.
holders are urged to consult their own tax advisors regarding these new
regulations.
If a non-U.S. holder of a note or common stock is engaged in a trade or
business in the U.S. and if interest on the note, dividends on the common
stock, or gain realized on the sale, exchange or other disposition of the note
or common stock is effectively connected with the conduct of such trade or
business and, if certain tax treaties apply, is attributable to a U.S.
permanent establishment maintained by the non-U.S. holder in the U.S., the
non-U.S. holder will generally be exempt from U.S. withholding tax provided
that the certification requirements discussed below are met. However, the
non-U.S. holder will generally be subject to U.S. federal income tax on such
interest, dividends or gain on a net income basis in the same manner as if it
were a U.S. holder.
In lieu of the certificate described above, such non-U.S. holder will be
required to provide the payor with a properly executed IRS Form 4224 or
successor form in order to claim an exemption from withholding tax. In
addition, if such non-U.S. holder is a foreign corporation, it may be subject
to a branch profits tax equal to 30%, or
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a lower rate provided by an applicable treaty, of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments.
U.S. Federal Estate Tax
If interest on the notes qualifies for the portfolio interest exemption
with respect to a non-U.S. holder at the time of such holder's death, the notes
will not be included in the estate of the deceased non-U.S. holder for U.S.
federal estate tax purposes. Common stock held by an individual who at the time
of death is not a citizen or resident of the U.S., as specially defined for
U.S. federal estate tax purposes, will be included in such individual's estate
for U.S. federal estate tax purposes, unless an applicable estate tax treaty
otherwise applies.
Non-U.S. holders should consult with their tax advisors regarding U.S. and
foreign tax consequences with respect to the notes and common stock.
Backup Withholding and Information Reporting
Backup withholding of U.S. federal income tax at a rate of 31% may apply
to payments on a note or common stock to a U.S. holder who is not an "exempt
recipient" and who fails to provide certain identifying information, such as
the holder's taxpayer identification number, in the manner required. Generally,
individuals are not exempt recipients, whereas corporations and certain other
entities are exempt recipients. Payments made on a note or common stock must be
reported to the IRS unless the U.S. holder is an exempt recipient or otherwise
establishes an exemption.
In the case of interest payments on a note to a non-U.S. holder, backup
withholding and information reporting will not apply to payments for which
either requisite certification has been received or an exemption has otherwise
been established, provided that neither we nor a paying agent has actual
knowledge that the holder is a U.S. holder or that the conditions of any other
exemption are not in fact satisfied.
Dividends on the common stock paid to non-U.S. holders that are subject to
U.S. withholding tax, as described above, generally will be exempt from U.S.
backup withholding tax but will be subject to certain information reporting.
Payments of sales proceeds of a note or common stock to or through:
o a foreign office of a U.S. broker
o a foreign broker that is a "controlled foreign corporation" within
the meaning of the Code or
o a foreign person, if 50% or more of its gross income from all sources
for the three-year period ending with the close of its taxable year
preceding the payment was effectively connected with the conduct of a
trade or business within the U.S.
are currently subject to certain information reporting requirements, unless the
payee is an exempt recipient or such broker has evidence in its records that
the payee is a non-U.S. holder and has no actual knowledge that such evidence
is false and certain other conditions are met. Temporary Treasury Regulations
indicate that such payments are not currently subject to backup withholding.
Payments of the proceeds of a sale of a note or common stock to or through
the U.S. office of a broker are currently subject to information reporting and
backup withholding unless the payee certifies under penalties of perjury as to
his or her status as a non-U.S. holder and satisfies certain other
qualifications, and no agent of the broker who is responsible for receiving or
reviewing such statement has actual knowledge that it is incorrect, and
provides his or her name and address or the payee otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules from a payment to
a holder of a note or common stock may be allowed as a refund or credit against
such holder's U.S. federal income tax liability if the required information is
timely furnished to the IRS.
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Treasury regulations that apply to payments made after December 31, 2000
will modify current information reporting and backup withholding procedures and
requirements. These regulations provide certain presumptions regarding the
status of holders when payments to the holders cannot be reliably associated
with appropriate docu mentation provided to the payer. For payments made after
December 31, 2000, holders must provide certification, if applicable, that
conforms to the requirements of the regulations, subject to certain
transitional rules permitting certification in accordance with current Treasury
regulations until December 31, 2000.
Holders of a note or common stock should consult with their tax advisors
regarding the application of the backup withholding rules to their particular
situation, the availability of an exemption, the procedure for obtaining any
available exemption and the impact of these new regulations on payments made
with respect to notes or common stock after December 31, 2000.
The preceding discussion of certain U.S. federal income tax considerations
is for general information only and is not tax advice. Accordingly, prospective
investors should consult their own tax advisors as to the particular U.S.
federal, state, local, estate, gift and foreign tax consequences of purchasing,
holding and disposing of our notes and common stock, as well as the
consequences of any proposed change in applicable laws.
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DESCRIPTION OF CAPITAL STOCK
We have authorized capital stock of 120,000,000 shares of common stock,
par value $.001 per share, and 4,000,000 shares of preferred stock, par value
$1.00 per share. As of June 1, 2000, there were 31,306,511 shares of common
stock outstanding held of record by approximately 380 stockholders and there
were 300,000 shares of series A preferred stock outstanding, which are all held
by Merck KGaA.
The registrar and transfer agent for the common stock is Equiserve.
Our Common Stock
Holders of common stock are entitled to one vote per share on matters to
be voted upon by our stockholders. The common stock has no cumulative voting
rights. Therefore, the holders of more than 50% of the shares of the common
stock will have the ability to select all of our directors. Holders of shares
of common stock will be entitled to receive dividends when, as and if declared
by our board of directors. In the event of a liquidation, dissolution or
winding up of ImClone, holders of common stock have the right to share ratably
in all assets remaining after the payment of all liabilities, subject to
preference in liquidation of any outstanding preferred stock. Holders of common
stock have neither preemptive rights nor rights to convert their common stock
into any other securities and are not subject to future calls or assessments by
ImClone. There are no redemption or sinking fund provisions applicable to the
common stock. The rights, preferences and privileges of the holders of common
stock are subject to, and may be adversely affected by, the rights of the
holders of the series A preferred stock, as well as any additional preferred
stock that we may designate and issue in the future.
Our Preferred Stock
Our board of directors has the authority, without further shareholder
approval, to issue preferred stock in one or more series, and to:
o fix the rights, preferences, privileges and restrictions, including
the dividend, conversion, voting, redemption (including sinking fund
provisions) and
o to fix other rights, liquidation preferences and the number of shares
constituting any series and the designations of such series
The provisions of any preferred stock could adversely affect the voting
power of the holders of common stock and could, among other things, have the
effect of delaying, deferring or preventing a change in control of ImClone.
Series A Preferred Stock
In December 1997, in connection with an amendment to our research and
license agreement with Merck KGaA for BEC2, Merck KGaA purchased from us
400,000 shares of series A preferred stock for a total consideration of $40
million. 100,000 of these shares of series A preferred stock were converted
into 800,000 shares of common stock in December 1999. Holders of series A
preferred stock generally have no voting rights, except:
o that two-thirds of the outstanding shares must consent to changes in
the terms of the series A preferred stock
o in certain cases, if we default in the timely payment of dividends on
the series A preferred stock, the holders will have the right to
elect a nominee to our board of directors
o as otherwise required by law
The holders of the series A preferred stock are entitled to receive annual
cumulative dividends of $6.00 per share. Dividends on the outstanding series A
preferred stock accrue as of their issuance date and are payable in cash
annually on the earlier of
o December 31st or
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o at the time of conversion or redemption of the series A preferred
stock on which the dividend is to be paid
100,000 shares of series A preferred stock were converted in December
1999, an additional 100,000 shares became convertible into 249,610 shares of
common stock at a conversion price of $40.063 per share on January 1, 2000 and
an additional 100,000 preferred shares will become convertible, into a number
of shares of common stock based on the applicable conversion price on each of
January 1, 2001 and January 1, 2002.
The conversion prices for the series A preferred stock are as follows:
Period Series A Preferred Stock
Conversion Price
January 1, 2000- December 31, 2000 $40.063 per share
January 1, 2001 - December 31, 2001 Average of the closing prices for the
common stock for the five trading days
ending one trading day prior to December
31, 2000
January 1, 2002 - December 31, 2002 88% of the average of the closing prices
for the common stock for the five trading
days ending one trading day prior to
December 31, 2001 (the beneficial
conversion feature)
January 1, 2003 - Average of the closing prices for the
common stock for the five trading days
ending one trading day prior to the
receipt by us of the notice of conversion
The conversion price is subject to adjustment in the case of certain
dilutive events. In addition, if the average market price of the common stock
for the five consecutive trading days ending one trading day prior to any
trading day during which any series A preferred stock is outstanding exceeds
150% of the conversion price then in effect, we have the right, as long as such
price exceeds 150% of the conversion price, to require the holder of the series
A preferred stock to convert all its series A preferred stock as may then be
convertible. We may also redeem in whole or any part of the series A preferred
stock then outstanding at a redemption price of $120 per share, plus accrued
and unpaid dividends thereon.
In the event of our liquidation, dissolution or winding up, holders of the
series A preferred stock are entitled to receive in cash out of our assets
available for distribution to our stockholders an amount equal to the stated
value of $100 per share outstanding, plus accrued and unpaid dividends. Such
payments will be made before any amount will be paid to the holders of the
common stock or holders of other classes or series of our capital stock or if
the assets are insufficient to pay the full amount due to the holders of series
A preferred stock such holders will receive a pro rata portion thereof.
In accordance with the terms of the series A preferred stock, we are
required to recognize an assumed incremental yield of $5,455,000 (calculated at
the date of issuance and based on the beneficial conversion feature noted
above). This amount is being amortized as a preferred stock dividend over a
four-year period beginning with the day of issuance. The assumed incremental
yield and related amortization for the period after the December 1999
conversion of the series A preferred stock has been adjusted to reflect a
decrease in the aggregate assumed incremental yield of $709,000 as a result of
the conversion of 100,000 shares of series A preferred stock prior to the
period in which the beneficial conversion feature is available. Accrued
dividends of approximately $4,894,000 were paid in December 1999 with respect
to the 100,000 shares of series A preferred stock that were converted and the
300,000 shares of series A preferred stock that remained outstanding at
December 31, 1999. Additionally, we recognized an incremental yield
attributable to the beneficial conversion feature of $2,650,000 for the period
from the date of issuance through December 31, 1999. The unamortized assumed
incremental yield amounted to $2,096,000 at December 31, 1999.
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Milestone Shares
Under our license agreement with Merck KGaA for IMC-C225, we are entitled
to receive from Merck KGaA up to $60 million upon our achievement of various
milestones in the development of IMC-C225. In connection with making the final
$30 million of these milestone payments, Merck KGaA is entitled to receive
milestone shares from us, which, if issued, will be shares of our common stock
(or other capital stock convertible into our common stock).
Options and Warrants
Options
o In February 1986, our board of directors adopted an incentive stock
option plan and a non-qualified stock option plan (the "86 Plans")
o In February 1996, we adopted an additional incentive stock option
plan and non-qualified stock option plan (as amended, the "96 Plans")
o In May 1998, we adopted an additional non-qualified stock option plan
(as amended, the "98 Plan")
The 86 Plans, the 96 Plans and the 98 Plan provide for the granting of
options to purchase up to 10,000,000 shares of common stock to our key
employees, directors, consultants and advisors. Incentive stock options may not
be granted at a price less than the fair market value of the stock at the date
of grant and may not be granted to non-employees. Options may not be granted
under the 98 Plan to officers or directors. Options under all the plans, unless
earlier terminated, expire ten years from the date of grant. Certain options
granted under these plans vest over one-to-five-year periods.
At June 1, 2000, options to purchase 4,966,589 shares of common stock were
outstanding under the 86 Plans, the 96 Plans and the 98 Plan, and 1,175,673
shares were available for grant under the 96 Plans and the 98 Plan. Options may
no longer be granted under the 86 Plans pursuant to the terms of the 86 Plans.
In September 1998 and January 1999, we granted to both our Vice President
of Marketing and Vice President of Product and Process Development options to
purchase 60,000 shares of common stock each. These options were not granted
under any of the above mentioned incentive stock option or non-qualified stock
option plans. The terms of these options are substantially similar to those
granted under the 98 Plan.
In May 1999, our stockholders approved the grant of an option to our
President and Chief Executive Officer and Executive Vice President and Chief
Operating Officer to purchase 1,000,000 and 650,000 shares, respectively, of
common stock at a per share exercise price equal to $18.25, the last reported
sale price of the common stock on the date shareholder approval was obtained.
The options will vest no later than seven years from the grant date and
specified amounts are subject to earlier vesting if specified common stock
price thresholds are met. In December 1999, the Compensation and Stock Option
Committee amended the options, and the amendment was approved by our
shareholders, to provide that specified amounts are subject to immediate
vesting if specified common stock price thresholds are met. All common stock
price thresholds have now been met and the options are fully vested and
exercisable.
Warrants
As of June 1, 2000, a total of 1,103,520 shares of common stock were
issuable upon exercise of outstanding warrants. Such warrants have been issued
to our officers, directors, other employees, certain scientific advisory board
members, as well as certain investors and certain credit providers. The
warrants, all of which are currently exercisable, have exercise prices ranging
from $.0687 to $13.33 per share, with an average exercise price of
approximately $3.03. The warrants have standard anti-dilution provisions
including adjustments for stock splits, reverse stock splits and stock
dividends as well as adjustments for capital reorganizations.
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Registration Rights
We have granted Merck KGaA certain registration rights regarding the
shares of common stock that it may acquire upon conversion of the series A
preferred shares and upon receipt of milestone shares. Specifically, Merck KGaA
has the right to require us to register upon its request once during any
12-month period, up to a total of four times, at our expense, the number of
shares of common stock into which the shares of series A preferred stock are
converted according to their terms and the number of milestone shares that are
issued. Merck KGaA may also exercise rights to have such registrable common
stock registered at any time that we file a registration statement for other
shares of our common stock. Merck KGaA may exercise these rights at any time
after conversion of its shares of series A preferred stock into shares of
common stock or receipt of milestone shares.
As of June 1, 2000, Merck KGaA had converted 100,000 shares of series A
preferred stock into 800,000 shares of common stock. Merck KGaA has not
acquired any milestone shares.
Limitation of Liability
As permitted by the Delaware General Corporation Law, our certificate of
incorporation provides that our directors shall not be personally liable to us
or our stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability:
o for any breach of the director's duty of loyalty to ImClone or its
stockholders
o for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law
o under Section 174 of the Delaware General Corporation Law, relating
to prohibited dividends or distributions or the repurchase or
redemption of stock or
o for any transaction from which the director derives an improper
personal benefit
As a result of this provision, we and our stockholders may be unable to
obtain monetary damages from a director for breach of his duty of care.
Although stockholders may continue to seek injunctive or other equitable relief
for an alleged breach of fiduciary duty by a director, stockholders may not
have any effective remedy against the challenged conduct if equitable remedies
are unavailable.
We have obtained directors and officers liability insurance against claims
made in the aggregate amount of $13 million per loss and per year. In addition,
our by-laws provide for indemnification of all officers and directors against
liabilities or expenses incurred in connection with any action, suit or
proceeding if the director or officer acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, our best interests, unless the
action, suit or proceeding involved liability by the director or officer to us
and no court determines that such director or officer is entitled to
indemnification. Our by-laws also provide that expenses incurred by a director
or officer in defending any such action may be advanced by us if the director
or officer agrees to repay such amount if it is subsequently determined that he
is not entitled to indemnification.
We have been informed that, in the opinion of the SEC, indemnification of
directors, officers or persons controlling ImClone for liabilities arising
under the Securities Act of 1933 is against public policy and is therefore
unenforceable.
Business Combination Provisions
The business combination provision contained in Section 203 of the
Delaware General Corporation Law ("Section 203") defines an interested
stockholder as any person that
o owns, directly or indirectly 15% or more of the outstanding voting
stock of a corporation or
o is an affiliate or associate of a corporation and was the owner of
15% or more of the outstanding voting stock at any time within the
three-year period immediately prior to the date on which it is sought
to be
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determined whether such person is an interested stockholder, and the
affiliates and the associates of such person
Under Section 203, a resident domestic corporation may not engage in any
business combination with any interested stockholder for a period of three
years following the date such stockholder became an interested stockholder,
unless
o prior to such date the board of directors of the corporation approved
either the business combination or the transaction which resulted in
the stockholder becoming an interested stockholder
o upon consummation of the transaction which resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding, for
determining the number of shares outstanding, (a) shares owned by
persons who are directors and officers and (b) employee stock plans,
in certain instances) or
o on or subsequent to such date the business combination is approved by
the board of directors and authorized at an annual or special meeting
of stockholders by the affirmative vote of at least 66 2/3% of the
outstanding voting stock which is not owned by the interested
stockholder
The restrictions imposed by Section 203 will not apply to a corporation if
o the corporation's original certificate of incorporation contains a
provision expressly electing not to be governed by Section 203 and
o the corporation by the action of its stockholders holding a majority
of outstanding stock adopts an amendment to its certificate of
incorporation or by-laws expressly electing not to be governed by
Section 203
Such amendment will not be effective until 12 months after adoption and
shall not apply to any business combination between such corporation and any
person that became an interested stockholder of such corporation on or prior to
such adoption.
We have not elected out of the statute and therefore the restrictions
imposed by Section 203 will apply to us.
39
<PAGE>
SELLING HOLDERS
We originally issued the notes in a private placement. The notes were
resold by the initial purchasers to qualified institutional buyers within the
meaning of Rule 144A under the Securities Act and to a limited number of
institutional accredited investors in transactions exempt from registration
under the Securities Act. The notes and the underlying common stock that may be
offered pursuant to this prospectus will be offered by the selling holders,
which includes their transferees, pledgees or donees or their successors.
The selling holders may offer and sell the notes or the common stock into
which the notes are convertible from time to time to purchasers directly, or
through underwriters, brokers, dealers or agents, at market prices prevailing
at the time of sale or at negotiated prices. See "Plan of Distribution".
The following table sets forth information, as of July 10, 2000, with
respect to the selling holders and the respective principal amounts of notes
beneficially owned by each selling holder that may be offered pursuant to this
prospectus. The information is based on information provided by or on behalf of
the selling holders and, with regard to the beneficial holdings of the selling
holders, is accurate only to the extent beneficial holdings information was
disclosed to us by or on behalf of the selling holders. The selling holders and
holders listed in any supplement to this prospectus, and any transferors,
pledgees, donees or successors to these persons, may from time to time offer
and sell, pursuant to this prospectus and any subsequent prospectus supplement,
any and all of these securities. Any supplement to this prospectus may contain
certain additional or varied information about the selling holders and/or
additional holders, and any of their transferors, pledgees, donees or
successors, and the aggregate principal amount of the securities beneficially
owned by each person that they are offering. This information will be obtained
from the selling holders. Because the selling holders may offer all or some
portion of their securities, no estimate can currently be given as to the
amount of the notes or the common stock that will be held by the selling
holders upon termination of such sales. In addition, the selling holders
identified below may have sold, transferred or otherwise disposed of all or a
portion of their notes since the date on which they provided the information to
us in transactions exempt from the registration requirements of the Securities
Act.
<TABLE>
Principal Amount of Notes Common Stock
Beneficially Owned and Owned Prior to the Common Stock Offered
Name Offered Hereby Offering (1)(2) Hereby (1)(2)
---- -------------- --------------- -------------
<S> <C> <C> <C>
Amoco Corp. Master Trust................. $ 2,150,000 19,513 19,513
Argent Classic Convertible
Arbitrage Fund (Bermuda) L.P............. 3,000,000 27,228 27,228
Bear, Stearns & Co. Inc.................. 500,000 4,538 4,538
BNP Arbitrage SNC........................ 11,719,000 106,362 106,362
BNP Cooper Neff Convertible
Strategies Fund, L.P..................... 781,000 7,088 7,088
Chrysler Corporation Master
Retirement Trust......................... 4,380,000 39,753 39,753
Credit Suisse First Boston
Corporation.............................. 8,915,000 80,913 80,913
Delta Air Lines Master Trust (c/o
Oaktree Capital Management, LLC)......... 1,650,000 14,975 14,975
Delta Opportunity Fund, Ltd.............. 1,668,000 15,138 15,138
40
<PAGE>
Principal Amount of Notes Common Stock
Beneficially Owned and Owned Prior to the Common Stock Offered
Name Offered Hereby Offering (1)(2) Hereby (1)(2)
---- -------------- --------------- -------------
Delta Opportunity Fund
(Institutional), LLC..................... 1,332,000 12,089 12,089
Donaldson, Lufkin & Jenrette
Securities Corp.......................... 1,000,000 9,076 9,076
Fidelity Financial Trust:
Fidelity Convertible Securities Fund
(3)...................................... 15,800,000 143,401 143,401
ITG, Inc................................. 300,000 2,722 2,722
The Estate of James Campbell............. 950,000 8,622 8,622
JMG Capital Partners, LP................. 3,500,000 31,766 31,766
JMG Triton Offshore Fund Ltd............. 5,600,000 50,825 50,825
Merrill Lynch, Pierce Fenner & Smith
Incorporated............................. 1,525,000 13,840 13,840
Morgan Stanley Dean Witter
Convertible Securities Trust............. 2,500,000 22,690 22,690
Motion Picture Industry
Health Plan -
Active Member Fund....................... 510,000 4,628 4,628
Motion Picture Industry
Health Plan -
Retiree Member Fund...................... 255,000 2,314 2,314
OCM Convertible Limited Partnership...... 135,000 1,225 1,225
OCM Convertible Trust.................... 1,800,000 16,336 16,336
Partner Reinsurance Company Ltd.......... 925,000 8,395 8,395
Retail Clerks Pension Trust.............. 1,000,000 9,076 9,076
State Employees' Retirement Fund of
the State of Delaware.................... 2,220,000 20,148 20,148
State of Connecticut Combined
Investment Funds......................... 4,955,000 44,971 44,971
Tribeca Investments LLC.................. 11,124,000 100,962 100,962
UBS AG London Branch..................... 11,000,000 99,836 99,836
Vanguard Convertible Securities
Fund, Inc................................ 4,920,000 44,654 44,654
White River Securities LLC............... 500,000 4,538 4,538
</TABLE>
41
<PAGE>
-----------------
(1) Assumes a conversion price of $110.18 per share and a cash payment in
lieu of any fractional interest.
(2) Assumes that any holders of notes or any future transferee from any
such holder does not beneficially own any common stock other than
common stock into which the notes are convertible at the conversion
price of $110.18 per share.
(3) The entity is either an investment company or a portfolio of any
investment company registered under Section 8 of the Investment
Company Act of 1940, as amended, or a private investment account
advised by Fidelity Management & Research Company. Fidelity
Management & Research Company is a Massachusetts corporation, an
investment advisor registered under Section 203 of the Investment
Advisors Act of 1940, as amended, and is a wholly owned subsidiary of
FMR Corp., also a Massachusetts corporation.
Other than as may be stated in any prospectus supplement, none of the
selling holders has had any material relationship with us or our affiliates
within the past three years. All of the notes were "restricted securities"
under the Securities Act prior to this registration.
42
<PAGE>
PLAN OF DISTRIBUTION
The selling holders and their successors, which includes their
transferees, pledgees or donees or their successors, may sell the notes and the
underlying common stock directly to purchasers or through underwriters,
broker-dealers or agents. Underwriters, broker-dealers or agents may receive
compensation in the form of discounts, concessions or commissions from the
selling holders or the purchasers. These discounts, concessions or commissions
may be in excess of those customary in the types of transactions involved.
The notes and the underlying common stock may be sold in one or more
transactions:
o at fixed prices
o at prevailing market prices at the time of sale
o at prices related to such prevailing market prices
o at varying prices determined at the time of sale or
o at negotiated prices
Such sales may be effected in transactions in the following manner:
o on any national securities exchange or quotation service on which the
notes or the common stock may be listed or quoted at the time of sale
o in the over-the-counter market
o in transactions otherwise than on such exchanges or services or in
the over-the-counter market
o through the writing of options, whether such options are listed on an
options exchange or otherwise, or
o through the settlement of short sales
Selling holders may enter into hedging transactions with broker-dealers or
other financial institutions which may in turn engage in short sales of the
notes or the underlying common stock and deliver these securities to close out
such short positions, or loan or pledge the notes or the common stock into
which the notes are convertible to broker-dealers that in turn may sell these
securities.
The aggregate proceeds to the selling holders from the sale of the notes
or underlying common stock will be the purchase price of such notes or common
stock less any discounts and commissions. Each of the selling holders reserves
the right to accept and, together with their agents from time to time, to
reject, in whole or in part, any proposed purchase of notes or common stock to
be made directly or through agents. We will not receive any of the proceeds
from this offering.
Our outstanding common stock is listed for trading on The Nasdaq National
Market. We do not intend to list the notes for trading on any national
securities exchange or on The Nasdaq National Market and can give no assurance
about the development of any trading market for the notes.
In order to comply with the securities laws of some states, if applicable,
the notes and common stock into which the notes are convertible may be sold in
such jurisdictions only through registered or licensed brokers or dealers. In
addition, in some states the notes and the underlying common stock may not be
sold unless:
o they have been registered or qualified for sale or
o an exemption from registration or qualification requirements is
available and is complied with
43
<PAGE>
The selling holders and any underwriters, broker-dealers or agents that
participate in the sale of the notes and common stock into which the notes are
convertible may be "underwriters" within the meaning of Section 2(11) of the
Securities Act. Any discounts, commissions, concessions or profit they earn on
any resale of the shares may be underwriting discounts and commissions under
the Securities Act. Selling holders who are "underwriters" within the meaning
of Section 2(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act. The selling holders have
acknowledged that they understand their obligations to comply with the
provisions of the Exchange Act and the rules thereunder relating to stock
manipulation, particularly Regulation M, and have agreed that they will not
engage in any transaction in violation of such provisions.
In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this prospectus. A selling holder
may not sell any notes or common stock described herein and may not transfer,
devise or gift such securities by other means not described in this prospectus.
To the extent required,
o the specific notes or common stock to be sold
o the name of the selling holders
o the respective purchase prices and public offering prices
o the names of any agent, dealer or underwriter and
o any applicable commissions or discounts with respect to a particular
offer
will be set forth in an accompanying prospectus supplement or, if appropriate,
a post-effective amendment to the registration statement of which this
prospectus is a part.
We entered into a registration rights agreement for the benefit of holders
of the notes to register their notes and common stock under applicable federal
and state securities laws under certain circumstances and at certain times. The
registration rights agreement provides for cross-indemnification of the selling
holders and ImClone and their respective directors, officer and controlling
persons against certain liabilities in connection with the offer and sale of
the notes and common stock, including liabilities under the Securities Act.
We will pay substantially all of the expenses incurred by the selling
holders incident to the offering and sale of the notes and the common stock,
provided that each selling holder will be responsible for payment of
commission, concessions and discounts of underwriters, broker-dealers or
agents.
44
<PAGE>
LEGAL MATTERS
Certain legal matters relating to the notes and the underlying common
stock will be passed upon for ImClone by Davis Polk & Wardwell, New York, New
York.
EXPERTS
The statements in this prospectus in the second sentence of the seventh
paragraph under the caption "Risk Factors -- Our success depends upon our
ability to protect our intellectual property and our proprietary technology" on
matters of U.S. intellectual property law that refer to the opinion of Kenyon &
Kenyon, have been reviewed and approved by Kenyon & Kenyon, patent counsel for
ImClone, as experts in U.S. intellectual property law, and are included herein
in reliance upon such review and approval.
The statements in this prospectus in the third sentence of the seventh
paragraph under the caption "Risk Factors -- Our success depends upon our
ability to protect our intellectual property and our proprietary technology" on
matters of U.S. intellectual property law that refer to the opinion of Hoffmann
& Baron, LLP, have been reviewed and approved by Hoffmann & Baron, LLP, special
patent counsel for ImClone, as experts in U.S. intellectual property law, and
are included herein in reliance upon such review and approval.
The consolidated financial statements of ImClone Systems Incorporated and
subsidiary as of December 31, 1999 and 1998, and for each of the years in the
three-year period ended December 31, 1999, have been incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
45
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
materials that we have filed with the SEC at the following SEC public reference
rooms:
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661
Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms.
Our common stock is quoted on the Nasdaq National Market under the symbol
"IMCL," and our SEC filings can also be read at the following Nasdaq address:
Nasdaq Operations
1735 K Street, N.W.
Washington, D.C. 20006
Our SEC filings are also available to the public on the SEC's Internet
website at http://www.sec.gov.
We incorporate by reference into this prospectus the documents listed
below and any future filings we make with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended, including any
filings after the date of this prospectus, until either of the following has
occurred:
(1) all the notes have been sold or
(2) the holding period applicable to the notes and the underlying common
stock under Rule 144(k) under the Securities Act, or any successor
provision, has expired
The information incorporated by reference is an important part of this
prospectus. Any statement in a document incorporated by reference into this
prospectus will be deemed to be modified or superseded to the extent a
statement contained in (x) this prospectus or (y) any other subsequently filed
document that is incorporated by reference into this prospectus modifies or
supersedes such statement.
o Our annual report on form 10-K for our fiscal year ended December 31,
1999
o Our quarterly report on form 10-Q for the quarter ended March 31,
2000
o Our definitive proxy statement filed with the SEC, for the company's
annual meeting of stockholders, on April 25, 2000
o Our current report on form 8-K filed with the SEC on February 24,
2000
You may request a copy of these filings, at no cost, by writing to us at
the following address or telephoning us at (212) 645-1405 between the hours of
9:00 a.m. and 4:00 p.m., Eastern Standard time:
ImClone Systems Incorporated
Attention: Investor Relations
180 Varick Street
New York, New York 10014
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. The selling
holders are not making an offer of these securities in any state where the
offer is not permitted. You should not assume that the information in this
prospectus or any prospectus supplement is accurate as of any date other than
the date on the front of the document.
46
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale of the securities being registered
hereby. All amounts are estimates except the registration fee.
Amount to be
Paid
-----------------
Registration fee............................................. $ 63,360
Transfer agent and registrar fees............................ 5,000
Legal fees and expenses...................................... 48,000
Accounting fees and expenses................................. 15,000
Miscellaneous................................................ 28,640
---------
TOTAL..................................................... $ 160,000
=========
Item 15. Indemnification of Directors and Officers
Our Certificate of Incorporation and Bylaws set forth the extent to which
our officers and directors may be indemnified by us against any liabilities
which they may incur. The general effect of our such provisions is that, on the
terms and conditions set forth in our Certificate of Incorporation and Bylaws,
any person made a party or threatened to be made a party to an action, suit or
proceeding by reason of the fact that he or she is or was a director or
officer, or is or was serving as a director, officer, employee or agent of
another corporation or other enterprise at our request, shall be indemnified by
us against expenses (including attorneys' fees, judgments, fines and amounts
paid in settlement) reasonably incurred or suffered by him or her in connection
with such action, suit or proceeding, to the full extent permitted under the
laws of the State of Delaware; provided, however, that, subject to certain
limited exceptions, we shall indemnify any such person seeking indemnification
in connection with a proceeding initiated by such person only if such
proceeding was authorized by our Board of Directors. Our Certificate of
Incorporation gives our Board of Directors the authority to extend such
indemnification to our employees and other agents as well.
The general effect of the indemnification provisions contained in Section
145 of the General Corporation Law of the State of Delaware (the "DGCL") is as
follows: A director or officer who, by reason of such directorship or
officership, is involved in any action, suit or proceeding (other than an
action by or in the right of the corporation) may be indemnified by the
corporation against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, has no reasonable cause to believe that his or her conduct was
unlawful. A director or officer who, by reason of such directorship or
officership, is involved in any action or suit by or in the right of the
corporation may be indemnified by the corporation against expenses (including
attorneys' fees) actually and reasonably incurred by him or her in connection
with the defense or settlement of such action or suit if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation, except that no
indemnification may be made in respect of any claim, issue or matter as to
which he or she shall have been adjudged to be liable to the corporation unless
and only to the extent that a court of appropriate jurisdiction shall approve
such indemnification.
Our Certificate of Incorporation provides that, to the maximum extent
permitted under the DGCL, a director of ImClone shall not be personally liable
to us or to any stockholders for monetary damages for breach of fiduciary duty
as director or ImClone. Section 102(b)(7) of the DGCL permits a corporation to
include in its certificate of incorporation a provision that eliminates or
limits the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director;
provided, that such provision shall not eliminate or limit the liability of a
director (1) for any breach of the Director's duty of loyalty to the
corporation or its stockholders, (2)
II-1
<PAGE>
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (3) under Section 174 of the DGCL or (4) for any
transaction from which the director derived in improper personal benefit.
Item 16. Exhibits and Financial Statement Schedules
(a) The following exhibits are filed as part of this Registration
Statement:
Exhibit No. Document
----------- --------
4.1 Indenture, dated as of February 29, 2000, between the Registrant
and The Bank of New York, as trustee, including the form of 5 1/2%
Convertible Subordinated Note due 2005 attached as Exhibit A
thereto+
4.2 Registration Rights Agreement by and among the Registrant, Morgan
Stanley & Co. Incorporated and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as the initial purchasers, dated as of
February 29, 2000++
5.1 Opinion of Davis Polk & Wardwell
12.1 Computation of Ratio of Earnings to Fixed Charges++
23.1 Consent of KPMG LLP, Independent Certified Public Accountants
23.2 Consent of Davis Polk & Wardwell (included in Exhibit 5.1)
23.3 Consent of Kenyon & Kenyon
23.4 Consent of Hoffmann & Baron, LLP
24.1 Power of Attorney (included on the signature page of the
Registration Statement)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the indenture++
-------------------
+ Incorporated by reference to the registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999.
++ Previously filed.
II-2
<PAGE>
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act,
(b) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registrant statement,
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that clauses (a) and (b) do not apply if the information
required to be included in a post-effective amendment by such clauses is
contained in periodic reports filed with or furnished to the Securities and
Exchange Commission by the Registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 (the "Exchange Act") that are
incorporated by reference in the Registration Statement.
2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report
pursuant to Section 13(a) of Section 15(d) of the Exchange Act
that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as the indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions referenced in Item 15 of
this Registration Statement, or otherwise, the registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon
Rule 430A and
II-3
<PAGE>
contained in a form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this Registration Statement as
of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 12th day of July, 2000.
IMCLONE SYSTEMS INCORPORATED
By: /s/ John B. Landes
-------------------------
Name: John B. Landes
Title: Vice President,
Legal and General Counsel
II-5
<PAGE>
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
this amendment to the registration statement has been signed by the following
persons in the capacities indicated on July 12, 2000.
Robert F. Goldhammer* Chairman of the Board and
--------------------------------- Director
Robert F. Goldhammer
Samuel D. Waksal* President, Chief Executive Officer
--------------------------------- and Director
Samuel D. Waksal
Harlan W. Waksal* Executive Vice President,
--------------------------------- Chief Operating Officer and
Harlan W. Waksal Director
Carl Goldfischer* Vice President and Chief
--------------------------------- Financial Officer
Carl Goldfischer
Vincent T. DeVita, Jr.* Director
---------------------------------
Vincent T. DeVita, Jr.
Paul B. Kopperl* Director
---------------------------------
Paul B. Kopperl
William R. Miller* Director
---------------------------------
William R. Miller
David M. Kies* Director
---------------------------------
David M. Kies
John Mendelsohn* Director
---------------------------------
John Mendelsohn
Richard Barth* Director
---------------------------------
Richard Barth
Arnold J. Levine* Director
---------------------------------
Arnold J. Levine
* /s/ John B. Landes
----------------------------------------
John B. Landes
Attorney in fact
II-6
<PAGE>
EXHIBIT INDEX
Exhibit No. Document
----------- --------
4.1 Indenture, dated as of February 29, 2000, between the Registrant
and The Bank of New York, as trustee, including the form of 5 1/2%
Convertible Subordinated Note due 2005 attached as Exhibit A
thereto+
4.2 Registration Rights Agreement by and among the Registrant, Morgan
Stanley & Co. Incorporated and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, as the initial purchasers, dated as of
February 29, 2000++
5.1 Opinion of Davis Polk & Wardwell
12.1 Computation of Ratio of Earnings to Fixed Charges++
23.1 Consent of KPMG LLP, Independent Certified Public Accountants
23.2 Consent of Davis Polk & Wardwell (included in Exhibit 5.1)
23.3 Consent of Kenyon & Kenyon
23.4 Consent of Hoffmann & Baron, LLP
24.1 Power of Attorney (included on the signature page of the
Registration Statement)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act
as trustee under the indenture++
-------------------
+ Incorporated by reference to the registrant's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999.
++ Previously filed.
II-7
