1998 Employee Stock Purchase Plan - ImClone Systems Inc.
IMCLONE SYSTEMS INCORPORATED
1998 EMPLOYEE STOCK PURCHASE PLAN, AS AMENDED(1)
The following constitutes the provisions of the 1998 Employee Stock
Purchase Plan of ImClone Systems Incorporated.
The purpose of the Plan is to provide employees of the Company and its
Affiliates with an opportunity to purchase Common Stock of the Company.
It is the intention of the Company that the Options granted under the
Plan be considered options issued under an 'Employee Stock Purchase
Plan' as that term is defined under Section 423(b) of the Code. The
provisions of the Plan shall, accordingly, be construed so as to extend
and limit participation in a manner consistent with the requirements of
that section of the Code.
(a) 'AFFILIATE' as used in the Plan means any parent corporation or
subsidiary corporation of the Company, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.
(b) 'BOARD' shall mean the Board of Directors of the Company, or a
committee of the Board of Directors named by the Board to administer
(c) 'CODE' shall mean the Internal Revenue Code of 1986, as amended.
(d) 'COMMON STOCK' shall mean the Common Stock, $0.001 par value, of the
(e) 'COMPANY' shall mean ImClone Systems Incorporated, a Delaware
(f) 'COMPENSATION' shall mean all compensation that is taxable income for
federal income tax purposes, including, payments for overtime, shift
premium, incentive compensation, incentive payments, bonuses,
commissions and other compensation.
(g) 'CONTINUOUS STATUS AS AN EMPLOYEE' shall mean the absence of any
interruption or termination of service as an employee of the Company or
any Affiliate. Continuous Status as an Employee shall not be considered
interrupted in the case of a leave of absence agreed to in writing by
the Company or any Affiliate, provided that such leave is for a period
of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute.
(1) This Plan was amended by the Board on March 29, 1999.
(h) 'CONTRIBUTIONS' shall mean all amounts credited to the account of a
participant pursuant to the Plan.
(i) 'EXERCISE DATE' shall mean the last day of each Offering Period of the
(j) 'OFFERING DATE' shall mean the first business day of an Offering Period
under the Plan.
(k) 'OFFERING PERIOD' shall mean any of the three month periods commencing
on each of July 1, October 1, January 1 and April 1 of each year (or
such other periods as may be determined by the Board which shall comply
with Section 423(b)(7) of the Code); provided that the initial offering
period shall commence at a time to be determined by the Board.
(l) 'OPTION' shall mean an option granted under Section 6 of this Plan.
(m) 'PLAN' shall mean this ImClone Systems Incorporated 1998 Employee Stock
(a) Options may be granted only to employees of the Company or any
Affiliate. An employee of the Company or any Affiliate shall be
eligible to participate in the Plan upon commencement of employment
with the Company; provided, that no employee of the Company or any
Affiliate shall be eligible to be granted an Option under the Plan,
unless, on the Offering Date of such Offering Period, such employee's
customary employment with the Company or such Affiliate is at least
twenty (20) hours per week and at least five (5) months per calendar
(b) No employee shall be eligible for the grant of an Option under the Plan
if, immediately after any such grant, such employee owns stock
possessing five percent (5%) or more of the total combined voting power
or value of all classes of stock of the Company or of any Affiliate.
For purposes of this subparagraph 3(b), the rules of Section 424(d) of
the Code shall apply in determining the stock ownership of any
employee, and stock which such employee may purchase under all
outstanding rights and options shall be treated as stock owned by such
(c) An eligible employee may be granted an Option under the Plan only if
such Option, together with any other options granted under 'employee
stock purchase plans' of the Company and any Affiliates, as specified
by Section 423(b)(8) of the Code, do not permit such employee's rights
to purchase stock of the Company or any Affiliate to accrue at a rate
which exceeds twenty-five thousand dollars ($25,000) of fair market
value of such stock (determined at the time such Options are granted)
for each calendar year in which such Options are outstanding at any
time. Any Option granted under the Plan shall be deemed to be modified
to the extent necessary to satisfy this paragraph 3(c).
(d) Officers of the Company shall be eligible to participate in the Plan;
provided, however, that the Board may provide in an Offering Period
that certain employees who are highly compensated employees within the
meaning of Section 423(b)(4)(D) of the Code shall not be eligible to
4. OFFERING PERIODS.
The Plan shall be implemented by a series of Offering Periods, with a
new Offering Period commencing on July 1, October 1, January l and
April 1 of each year (or such other periods as may be determined by the
Board which shall comply with Section 423(b)(7) of the Code); provided
that the initial Offering Period shall commence at a time to be
determined by the Board. The Plan shall continue until terminated in
accordance with paragraph 17 or paragraph 21 hereof. In addition,
employees shall not be entitled to enroll in the Plan or exercise any
Options granted under the Plan during any period in which the Company
has restricted the purchase or sale of its securities by its employees.
5. PARTICIPATION; CONTRIBUTIONS.
(a) An eligible employee may become a participant in the Plan by completing
an enrollment form ('Enrollment Form') provided by the Company and
filing it with the Company prior to the applicable Offering Date,
unless a later time for filing the Enrollment Form is set by the Board
for all eligible employees with respect to a given Offering Period. The
Enrollment Form shall set forth the percentage of the participant's
Compensation (which shall be a whole percentage not less than 1% and
not more than 15%) to be paid as Contributions pursuant to the Plan.
(b) Payroll deductions shall commence on the first payroll following the
Offering Date and shall end on the last payroll paid on or prior to
the Exercise Date of the Offering Period to which the Enrollment Form
is applicable, unless sooner terminated by the participant as provided
in paragraph 8. All payroll deductions made by a participant shall be
credited to such participant in an account under the Plan. A
participant may not make payments into such account.
(c) A participant may discontinue his or her participation in the Plan as
provided in paragraph 8.
(d) Notwithstanding the foregoing, to the extent necessary to comply with
Section 423(b)(8) of the Code and paragraph 3(c) herein, a
participant's payroll deductions may be decreased to 0% at such time
during any Offering Period which is scheduled to end during the current
calendar year that the aggregate of all payroll deductions accumulated
with respect to such Offering Period and any other Offering Period
ending within the same calendar year equals $21,250. Payroll deductions
shall recommence at the rate provided in such participant's Enrollment
Form at the beginning of the first Offering
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in paragraph 8.
6. GRANT OF OPTION.
(a) On the Offering Date of each Offering Period, each eligible employee
participating in such Offering Period shall be granted an Option to
purchase on the Exercise Date of such Offering Period a number of
shares of Common Stock determined by dividing such employee's
Contributions accumulated prior to such Exercise Date and retained in
the participant's account as of the Exercise Date by 85% of the fair
market value of a share of the Common Stock on the Exercise Date;
provided however, that such purchase shall be subject to the
limitations set forth in Sections 3(b), 3 (c), 3(d) and 10 hereof. The
fair market value of a share of the Common Stock shall be determined as
provided in Section 6(b) below.
(b) The fair market value of the Common Stock on a given date shall be
determined by the Board in its discretion; provided that (i) if the
Common Stock is listed on a stock exchange, the fair market value per
share shall be the closing price on such exchange on such date as
reported in the Wall Street Journal (or, (A) if not so reported, as
otherwise reported by the exchange, and (B) if not reported on such
date, then on the last prior date on which a sale of the Common Stock
was reported); or (ii) if not listed on an exchange but traded on the
National Association of Securities Dealers Automated Quotation
('Nasdaq') National Market, the fair market value per share shall be
the last reported sale price on such date as reported in the Wall
Street Journal (or (A) if not so reported, as otherwise reported by the
Nasdaq National Market and (B) if not reported on such date, then on
the last prior date on which a sale of the Common Stock was reported)
or (iii) if traded on Nasdaq SmallCap and not the National Market the
fair market value per share shall be the mean of the closing bid and
asked price per share of the Common Stock on such date, as reported in
the Wall Street Journal (or, (A) if not so reported, as otherwise
reported by Nasdaq, and (B) if not so reported on such date, then on
the last prior date on which a sale of the Common Stock was reported);
or (iv) if the Common Stock is otherwise publicly traded, but not
listed on a stock exchange or traded on Nasdaq, the fair market value
per share shall be determined in good faith by the Board in its
7. EXERCISE OF OPTION.
(a) Unless a participant withdraws from the Plan as provided in paragraph
8, such participant's Option for the purchase of shares of Common Stock
will be exercised automatically on the Exercise Date of the Offering
Period and the maximum number of full shares of Common Stock subject to
the Option will be purchased for such participant at the applicable
purchase price with the accumulated Contributions in such participant's
account. If a fractional number of shares of Common Stock results, then
such number shall be rounded down to the next whole number and the
excess Contributions shall be carried forward to the next Exercise
Date, unless such participant withdraws the Contributions pursuant to
paragraph 8(a) or is no longer eligible to participate in the Plan, in
which case such amount shall be distributed to the participant without
shares purchased upon exercise of an Option hereunder shall be deemed
to be transferred to the participant on the Exercise Date. During a
participant's lifetime, a participant's Option to purchase shares
hereunder is exercisable only by such participant.
(b) Shares shall not be issued with respect to an Option unless the
exercise of such Option and the issuance and delivery of such shares of
Common Stock pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation,
the Securities Act of 1933, as amended, the Securities Exchange Act of
1934, as amended, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the shares of Common
Stock may then be listed, and shall be further subject to the approval
of counsel for the Company with respect to such compliance. As a
condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of
any such exercise that the shares of Common Stock are being purchased
only for investment and without any present intention to sell or
distribute such shares of Common Stock if, in the opinion of counsel
for the Company, such a representation is required by any of the
aforementioned applicable provisions of law.
8. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A participant may withdraw all but not less than all the Contributions
credited to his or her account under the Plan at any time prior to the
Exercise Date of the Offering Period by written notice to the Company.
All of the participant's Contributions credited to such participant's
account will be paid to such participant promptly after receipt of such
participant's notice of withdrawal and such participant's Option for
the current Offering Period will be automatically terminated, and no
further Contributions for the purchase of shares of Common Stock will
be made during the Offering Period.
(b) Upon termination of the participant's Continuous Status as an Employee,
prior to the Exercise Date of the Offering Period for any reason,
including retirement or death, the Contributions credited to such
participant's account will be returned to such participant or, in the
case of his or her death, to the person or persons entitled thereto
under paragraph 12, and his or her Option will be automatically
(c) In the event an employee fails to remain in Continuous Status as an
Employee of the Company for at least 20 hours per week during the
Offering Period in which the employee is a participant, such
participant will be deemed to have elected to withdraw from the Plan
and the Contributions credited to such participant's account will be
returned to such participant and the Option terminated.
(d) A participant's withdrawal from an Offering Period will not have any
effect upon his or her eligibility to participate in a succeeding
Offering Period or in any similar plan which may hereafter be adopted
by the Company.
No interest shall accrue on the Contributions of a participant in the
The maximum number of shares of Common Stock which shall be made
available for sale under the Plan shall be 500,000 shares subject to
adjustment upon changes in capitalization of the Company as provided in
paragraph 16. Shares sold under the Plan may be newly issued shares or
shares reacquired in private transactions or open market purchases, but
all shares sold under the Plan regardless of source shall be counted
against the 500,000 share limitation. If the total number of shares of
Common Stock which would otherwise be subject to Options granted
pursuant to Section 6(a) hereof on the Offering Date of an Offering
Period exceeds the number of shares of Common Stock then available
under the Plan (after deduction of all shares of Common Stock for which
Options have been exercised or are then outstanding), the Company shall
make a pro rata allocation of the shares of Common Stock remaining
available for Option grant in as uniform a manner as shall be
reasonably practicable and as it shall determine to be equitable. Any
amounts remaining in an employee's account not applied to the purchase
of Common Stock pursuant to this Section 10 shall be refunded on or
promptly after the Exercise Date. In such event, the Company shall give
written notice of such reduction of the number of shares of Common
Stock subject to the Option to each employee affected thereby and shall
similarly reduce the rate of Contributions, if necessary.
The Board shall supervise and administer the Plan and shall have full
power to adopt, amend and rescind any rules deemed desirable and
appropriate for the administration of the Plan and not inconsistent
with the Plan, to construe and interpret the Plan, and to make all
other determinations necessary or advisable for the administration of
12. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who is to
receive any shares of Common Stock and cash, if any, from the
participant's account under the Plan in the event of such participant's
death subsequent to the end of the Offering Period but prior to
delivery of such participant's shares of Common Stock and cash. In
addition, a participant may file a written designation of a beneficiary
who is to receive any cash from the participant's account under the
Plan in the event of such participant's death prior to the Exercise
Date of the Offering Period. If a participant is married and the
designated beneficiary is not the spouse, spousal consent shall be
required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant (and
his or her spouse, if any) at any time by written notice. In the event
of the death of a participant and in the
absence of a beneficiary validly designated under the Plan who is
living at the time of such participant's death, the Company shall
deliver such shares of Common Stock and/or cash to the executor or
administrator of the estate of the participant, or if no such executor
or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such shares and/or cash to
the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the
Company, then to such other person as the Company may designate.
Neither Contributions credited to a participant's account nor any
rights with regard to the exercise of an Option or to receive shares
under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way other than by will, the laws of descent and
distribution or as provided in paragraph 12 hereof by the participant.
Any such attempt at assignment, transfer, pledge or other disposition
shall be without effect, except that the Company may treat such act as
an election to withdraw Contributions in accordance with paragraph 8.
14. USE OF FUNDS.
All Contributions received or held by the Company under the Plan may be
used by the Company for any corporate purpose, and the Company shall
not be obligated to segregate such Contributions.
Individual accounts will be maintained for each participant in the
Plan. Statements of account will be given to participants, the per
share purchase price, the number of shares purchased and the remaining
cash balance, if any.
16. ADJUSTMENTS UPON CHANGES IN STOCK.
If any change is made in the shares of Common Stock subject to the Plan
or subject to any Option granted under the Plan (through merger,
consolidation, reorganization, distribution of substantially all of the
assets of the Company, spin-off of a subsidiary's voting securities to
the Company's shareholders, recapitalization, stock dividend, split-up,
combination of shares, exchange of shares, issuance of rights to
subscribe, or change in capital structure), appropriate adjustments
shall be made by the Board as to the maximum number of shares subject
to the Plan and the number of shares and price per share subject to
outstanding Options as shall be equitable to prevent dilution or
enlargement of Option rights. Any determination made by the Board
hereunder shall be final, binding and conclusive upon each participant.
7. AMENDMENT OR TERMINATION.
The Board may at any time terminate or amend the Plan. Except as
provided in paragraph 16, no such termination may affect Options
previously granted, nor may an amendment make any change in any Option
therefore granted which adversely affects the rights of any
participant. In addition, to the extent necessary to comply with
Section 423 of the Code (or any successor rule or provision or any
applicable law or regulation), the Company shall obtain stockholder
approval in such a manner and to such a degree as so required.
All notices or other communications by a participant to the Company
under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt
19. RIGHT TO TERMINATE EMPLOYMENT.
Nothing in the Plan or in any agreement entered into pursuant to the
Plan shall confer upon any participant the right to continue in the
employment of the Company or any Affiliate, or affect any right which
the Company or any Affiliate may have to terminate the employment of
20. RIGHTS AS A STOCKHOLDER.
Neither the granting of an Option nor a deduction from payroll shall
constitute a participant the owner of shares covered by an Option. No
participant shall have any right as a stockholder unless and until an
Option has been exercised, and the shares of Common Stock underlying
the Option have been registered in the Company's share register.
21. TERM OF PLAN.
The Plan shall become effective upon its adoption by each of the Board
and the stockholders and shall continue in effect for a term of ten
(10) years unless sooner terminated earlier under paragraph 17.
22. APPLICABLE LAW.
This Plan shall be governed in accordance with the laws of Delaware.