As filed with the Securities and Exchange Commission on March 22, 2002
Registration No. 333-81832
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMGEN INC.
(Exact name of registrant as specified in its charter)
-----------------
Delaware 2836 95-3540776
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
-----------------
One Amgen Center Drive
Thousand Oaks, California 91320-1799
(805) 447-1000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
-----------------
Steven M. Odre, Esq.
Senior Vice President, General Counsel and Secretary
One Amgen Center Drive
Thousand Oaks, California 91320-1799
(805) 447-1000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-----------------
Copies to:
Gary Olson, Esq. Barry G. Pea, Esq. Stephen F. Arcano, Esq.
Charles K. Ruck, Esq. Executive Vice President, Skadden, Arps, Slate,
Latham & Watkins General Counsel and Secretary Meagher & Flom LLP
633 West Fifth Street, Suite 4000 Immunex Corporation Four Times Square
Los Angeles, California 90071 51 University Street New York, NY 10036
(213) 485-1234 Seattle, Washington 98101 (212) 735-3000
(206) 587-0430
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effectiveness of this registration statement and the
satisfaction or waiver of all other conditions under the merger agreement
described herein.
If the securities being registered on this form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, 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 filed to register additional securities for an offering
pursuant to Rule 462(b) 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 this form is a post-effective amendment filed pursuant to Rule 462(d)
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. [_]
-----------------
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 that specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
================================================================================
[Logo of Amgen] [Logo of Immunex]
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
Amgen Inc. and Immunex Corporation have agreed to the acquisition of Immunex
by Amgen under the terms of a merger agreement. We are proposing the merger
because we believe it will benefit the stockholders of both companies by
creating more stockholder value than either company could create individually
and allowing stockholders to participate in a larger, more diversified company.
We also believe that the merger will enhance Amgen's position as a
biotechnology leader with a diverse portfolio of therapeutic drugs.
When the merger is completed, Immunex shareholders will receive 0.44 of a
share of Amgen common stock and $4.50 in cash for each share of Immunex common
stock that they own. We estimate that Amgen will issue approximately 242.3
million shares of common stock in the merger and that immediately after the
merger Immunex shareholders will hold approximately 18.7% of the
then-outstanding shares of Amgen common stock, based on the number of shares of
Amgen and Immunex common stock outstanding on March 19, 2002. Amgen common
stock is traded on the Nasdaq National Market under the trading symbol "AMGN."
On March 19, 2002, Amgen common stock closed at $62.31 per share as reported on
the Nasdaq National Market. Amgen stockholders will continue to own their
existing shares which will not be affected by the merger. After the merger,
Immunex will be a wholly-owned subsidiary of Amgen.
The merger cannot be completed unless the Amgen stockholders approve the
issuance of shares of Amgen common stock in the merger and the Immunex
shareholders approve the merger agreement. The obligations of Amgen and Immunex
to complete the merger are also subject to the satisfaction or waiver of
several conditions, including receiving clearance from regulatory agencies.
More information about Amgen, Immunex and the merger is contained in this joint
proxy statement/prospectus. Stockholders of both companies are also being asked
to vote upon various proposals unrelated to the merger, such as the election of
directors and ratification of the selection of independent auditors. We
encourage you to read this joint proxy statement/prospectus, including the
section entitled "Risks Relating to the Merger" beginning on page I-16 before
voting.
The board of directors of Amgen has unanimously approved the merger
agreement and the issuance of shares of Amgen common stock in the merger, and
the board of directors of Immunex has unanimously adopted the merger agreement.
The Amgen board of directors unanimously recommends that Amgen stockholders
vote "FOR" the proposal to approve the issuance of shares of Amgen common stock
in the merger. The Immunex board of directors unanimously recommends that
Immunex shareholders vote "FOR" the proposal to approve the merger agreement.
The proposals are being presented to the respective stockholders of each
company at their annual meetings. The dates, times and places of the meetings
are as follows:
For Amgen stockholders: For Immunex shareholders:
May 16, 2002, 10:30 a.m., P.T. May 16, 2002, 12:00 p.m., P.T.
Beverly Hilton Hotel Benaroya Hall, Nordstrom Recital Hall
9876 Wilshire Boulevard 200 University Street
Los Angeles, California Seattle, Washington
Your vote is very important. Whether or not you plan to attend your
respective company's annual meeting, please take the time to vote by completing
and mailing to us the enclosed proxy card or by submitting your voting
instructions over the Internet or by telephone if that option is available to
you.
Sincerely,
/s/ Kevin W. Sharer /s/ Edward V. Fritzky
Kevin W. Sharer Edward V. Fritzky
Chairman of the Board, Chairman of the Board,
Chief Executive Officer and President Chief Executive Officer and President
Amgen Inc. Immunex Corporation
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities to be issued under
this joint proxy statement/prospectus or determined if this joint proxy
statement/prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
This joint proxy statement/prospectus is dated March 22, 2002, and is first
being mailed to Amgen and Immunex stockholders on or about March 26, 2002.
[LOGO] AMGEN
AMGEN INC.
-----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 16, 2002
-----------------
To the stockholders of Amgen Inc.:
We will hold an annual meeting of stockholders of Amgen Inc. at the Beverly
Hilton Hotel, 9876 Wilshire Boulevard, Los Angeles, California, on May 16,
2002, at 10:30 a.m., P.T., for the following purposes:
1. To consider and vote upon a proposal to approve the issuance of shares
of Amgen common stock, par value $0.0001 per share, pursuant to the
Amended and Restated Agreement and Plan of Merger, dated as of December
16, 2001, by and among Amgen, AMS Acquisition Inc., which is a
wholly-owned subsidiary of Amgen, and Immunex Corporation;
2. To elect three directors to a three-year term of office expiring at the
2005 annual meeting of stockholders;
3. To ratify the selection of Ernst & Young LLP as independent auditors of
Amgen for the year ending December 31, 2002;
4. To approve a new executive incentive plan, designed to provide for fully
deductible compensation under Section 162(m) of the Internal Revenue
Code; and
5. To transact any other business as may properly come before the annual
meeting or any adjournments or postponements of the annual meeting.
These items of business are described in the attached joint proxy
statement/prospectus. Only Amgen stockholders of record at the close of
business on March 19, 2002, the record date for the annual meeting, are
entitled to notice of and to vote at the annual meeting and any adjournments or
postponements of the annual meeting.
The board of directors of Amgen recommends that you vote "FOR" approval of
the issuance of Amgen common stock pursuant to the merger agreement, election
of the three nominees for directors, ratification of the selection of
independent auditors and approval of the executive incentive plan.
Your vote is important. It is important that your shares be represented and
voted whether or not you plan to attend the annual meeting in person. You may
vote by completing and mailing the enclosed proxy card. If your shares are held
in "street name," which means shares held of record by a broker, bank or other
nominee, you may be entitled to vote over the Internet or by telephone.
Submitting a proxy over the Internet, by telephone or by mailing a proxy card
will ensure your shares are represented at the annual meeting. Please review
the instructions in this joint proxy statement/prospectus and the proxy card or
the information forwarded by your bank, broker or other holder of record
regarding each of these options.
By Order of the Board of Directors,
/s/ Steven M. Odre
Steven M. Odre
Secretary
March 22, 2002
Please note that attendance at the annual meeting will be limited to
stockholders as of the record date, or their authorized representatives, and
guests of Amgen.
[LOGO] IMMUNEX
IMMUNEX CORPORATION
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 16, 2002
-----------------
To the shareholders of Immunex Corporation:
We will hold an annual meeting of shareholders of Immunex Corporation on May
16, 2002, at the Benaroya Hall, Nordstrom Recital Hall, 200 University Street,
Seattle, Washington, at 12:00 p.m., P.T., for the following purposes:
1. To consider and vote upon a proposal to approve the Amended and Restated
Agreement and Plan of Merger, dated as of December 16, 2001, by and
among Amgen Inc., AMS Acquisition Inc., which is a wholly-owned
subsidiary of Amgen, and Immunex. In the merger contemplated by the
merger agreement:
. AMS Acquisition will merge with and into Immunex, with Immunex
surviving the merger as a wholly-owned subsidiary of Amgen; and
. each outstanding share of Immunex common stock will be converted into
0.44 of a share of Amgen common stock and $4.50 in cash, except that
shares held by any Immunex shareholders who validly exercise
dissenters' rights will be subject to appraisal in accordance with
Washington law;
2. To elect nine directors;
3. To ratify the selection of Ernst & Young LLP as independent auditors of
Immunex for the year ending December 31, 2002; and
4. To transact any other business as may properly come before the annual
meeting or any adjournments or postponements of the annual meeting.
These items of business are described in the attached joint proxy
statement/prospectus. Only Immunex shareholders of record at the close of
business on March 19, 2002, the record date for the annual meeting, are
entitled to notice of and to vote at the annual meeting and any adjournments or
postponements of the annual meeting.
The board of directors of Immunex unanimously recommends that you vote "FOR"
approval of the merger agreement, election of the nine nominees for directors
and ratification of the selection of independent auditors.
Your vote is important. It is important that your shares be represented and
voted whether or not you plan to attend the annual meeting in person. You may
vote by completing and mailing the enclosed proxy card. If your shares are held
in "street name," which means shares held of record by a broker, bank or other
nominee, you may be entitled to vote over the Internet or by telephone. Please
see the specific voting instructions in the section of this joint proxy
statement/prospectus entitled "The Immunex Annual Meeting--Voting; Proxies;
Revocation--Voting by Proxy." Submitting a proxy over the Internet, by
telephone or by mailing a proxy card will ensure your shares are represented at
the annual meeting. Please review the instructions in this joint proxy
statement/prospectus, the proxy card or the information forwarded by your bank,
broker or other holder of record regarding each of these options.
Under Washington law, Immunex shareholders will have the opportunity to
assert dissenters' rights of appraisal in connection with the merger. These
rights are described in greater detail within the attached joint proxy
statement/prospectus.
Please do not send any certificates representing your Immunex common stock
at this time.
By Order of the Board of Directors,
Barry G. Pea
Secretary
March 22, 2002
Please note that attendance at the annual meeting will be limited to
shareholders as of the record date, or their authorized representatives, and
guests of Immunex.
ADDITIONAL INFORMATION
This joint proxy statement/prospectus incorporates important business and
financial information about Amgen and Immunex from other documents that are not
included in or delivered with this joint proxy statement/prospectus. For a
listing of the documents incorporated by reference into this joint proxy
statement/prospectus, please see the section entitled "Where You Can Find More
Information" beginning on page VI-2.
Amgen will provide you with copies of this information relating to Amgen,
without charge, upon written or oral request to:
Amgen Inc.
Mail stop 27-5-C
One Amgen Center Drive
Thousand Oaks, California 91320-1799
(800) 842-6436
Attn: Investor Relations
In addition, you may obtain copies of the information relating to Amgen,
without charge, by sending an e-mail to investor.relations@Amgen.com.
Furthermore, you may obtain copies of some of this information by making a
request through the Amgen investor relations Web site,
http://www.Amgen.com/investor/litRequest.html.
Immunex will provide you with copies of this information relating to
Immunex, without charge, upon written or oral request to:
Immunex Corporation
51 University Street
Seattle, Washington 98101-2936
(206) 389-4363
Attn: Investor Relations
In addition, you may obtain copies of the information relating to Immunex,
without charge, by sending an e-mail to ImmunexIR@immunex.com. Furthermore, you
may obtain copies of some of this information by making a request through the
Immunex investor relations Web site, http://www.Immunex.com/investor_fs2.html.
In order for you to receive timely delivery of the documents in advance of
the Amgen and Immunex annual meetings, Amgen or Immunex, respectively, should
receive your request no later than May 9, 2002.
TABLE OF CONTENTS
Page
----
CHAPTER ONE--THE MERGER
QUESTIONS AND ANSWERS ABOUT THE MERGER................................................... I-1
SUMMARY.................................................................................. I-4
The Companies.......................................................................... I-4
The Merger............................................................................. I-4
Recommendations of the Amgen and Immunex Boards of Directors........................... I-4
Stockholders and Shareholders Entitled to Vote; Vote Required.......................... I-5
Shareholder Voting Agreement........................................................... I-5
Opinions of Financial Advisors......................................................... I-5
Ownership of Amgen After the Merger.................................................... I-6
Share Ownership of Directors and Executive Officers of Amgen and Immunex............... I-6
Interests of Directors and Executive Officers of Immunex in the Merger................. I-6
Listing of Amgen Common Stock and Delisting of Immunex Common Stock.................... I-6
Dissenters' Rights of Appraisal........................................................ I-6
Conditions to Completion of the Merger................................................. I-7
No Solicitation by Immunex............................................................. I-7
Termination of the Merger Agreement.................................................... I-7
Termination Fee and Expenses........................................................... I-8
Immunex Stock Options and Employee Stock Purchase Plan................................. I-8
Material United States Federal Income Tax Consequences of the Merger................... I-8
Accounting Treatment................................................................... I-9
Regulatory Approvals................................................................... I-9
Litigation Related to the Merger....................................................... I-9
Other Amgen Annual Meeting Proposals................................................... I-9
Other Immunex Annual Meeting Proposals................................................. I-10
Summary Selected Historical Financial Data............................................. I-11
Summary Unaudited Pro Forma Condensed Combining Financial Data......................... I-13
Comparative Per Share Information...................................................... I-14
Comparative Per Share Market Price Data................................................ I-15
RISKS RELATING TO THE MERGER............................................................. I-16
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS............................... I-18
THE MERGER............................................................................... I-19
General................................................................................ I-19
Background of the Merger............................................................... I-19
Reasons for the Merger--Amgen.......................................................... I-23
Reasons for the Merger--Immunex........................................................ I-26
Opinion of Financial Advisor--Amgen.................................................... I-29
Opinion of Financial Advisor--Immunex.................................................. I-38
Regulatory Approvals Required for the Merger........................................... I-45
Material United States Federal Income Tax Consequences................................. I-46
Accounting Treatment................................................................... I-49
Listing of Amgen Common Stock.......................................................... I-49
Delisting and Deregistration of Immunex Common Stock................................... I-49
Restrictions on Sales of Shares of Amgen Common Stock Received in the Merger........... I-49
Interests of Directors, Executive Officers and Shareholders of Immunex in the Merger... I-50
Management and Operations Following the Merger......................................... I-56
Litigation Related to the Merger....................................................... I-57
i
Page
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THE MERGER AGREEMENT..................................................................... I-59
Structure of the Merger................................................................ I-59
Completion and Effectiveness of the Merger............................................. I-59
Merger Consideration................................................................... I-59
Fractional Shares...................................................................... I-59
Exchange of Immunex Stock Certificates for Amgen Stock Certificates.................... I-60
Distributions with Respect to Unexchanged Shares....................................... I-60
Transfers of Ownership and Lost Stock Certificates..................................... I-60
Conditions to Completion of the Merger................................................. I-60
Representations and Warranties......................................................... I-62
Immunex Prohibited from Soliciting Other Offers........................................ I-63
Conduct of Business Before Completion of the Merger.................................... I-65
Restructure of Transaction............................................................. I-68
Regulatory Filings; Antitrust Matters; Obtaining Regulatory Approvals.................. I-68
Employee Benefit Matters............................................................... I-69
Indemnification and Insurance.......................................................... I-70
Termination of the Merger Agreement.................................................... I-70
Termination Fee........................................................................ I-71
Expenses............................................................................... I-72
Amendments, Extensions and Waivers..................................................... I-73
SHAREHOLDER VOTING AGREEMENT............................................................. I-74
STOCKHOLDERS' RIGHTS AGREEMENT........................................................... I-76
Standstill Provisions.................................................................. I-76
Voting of Amgen Common Stock........................................................... I-76
Lock-Up of Shares of Amgen Common Stock Acquired in the Merger......................... I-77
Volume Limitations on Sales of Amgen Common Stock...................................... I-77
Registration Rights.................................................................... I-77
OTHER AGREEMENTS WITH WYETH.............................................................. I-80
Amended and Restated Promotion Agreement............................................... I-80
Agreement Regarding Governance and Commercial Matters.................................. I-81
UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS............................. I-82
DESCRIPTION OF AMGEN CAPITAL STOCK....................................................... I-89
General................................................................................ I-89
Preferred Stock........................................................................ I-89
Common Stock........................................................................... I-89
Transfer Agent......................................................................... I-89
COMPARISON OF STOCKHOLDER RIGHTS AND CORPORATE GOVERNANCE MATTERS........................ I-90
DISSENTERS' RIGHTS....................................................................... I-106
ii
Page
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CHAPTER TWO--THE AMGEN ANNUAL MEETING
Date, Time, Place and Purpose of the Amgen Annual Meeting......................... II-1
Recommendation of the Amgen Board of Directors.................................... II-1
Record Date; Outstanding Shares; Shares Entitled to Vote.......................... II-1
Quorum and Vote Required.......................................................... II-1
Voting; Proxies; Revocation....................................................... II-2
Abstentions and Broker Non-Votes.................................................. II-3
Proxy Solicitation................................................................ II-3
Other Business; Adjournments...................................................... II-4
Assistance........................................................................ II-4
CHAPTER THREE--THE IMMUNEX ANNUAL MEETING
Date, Time, Place and Purpose of the Immunex Annual Meeting....................... III-1
Recommendation of the Immunex Board of Directors.................................. III-1
Record Date; Outstanding Shares; Shares Entitled to Vote.......................... III-1
Quorum and Vote Required.......................................................... III-1
Voting; Proxies; Revocation....................................................... III-2
Abstentions and Broker Non-Votes.................................................. III-3
Proxy Solicitation................................................................ III-3
Other Business; Adjournments...................................................... III-4
Assistance........................................................................ III-4
CHAPTER FOUR--OTHER AMGEN ANNUAL MEETING PROPOSALS
Proposal 2--Election of Directors................................................. IV-1
Proposal 3--Ratification of Selection of Independent Auditors..................... IV-5
Proposal 4--Approval of Executive Incentive Plan.................................. IV-6
CHAPTER FIVE--OTHER IMMUNEX ANNUAL MEETING PROPOSALS
Proposal 2--Election of Directors................................................. V-1
Proposal 3--Ratification of Selection of Independent Auditors..................... V-5
CHAPTER SIX--ADDITIONAL INFORMATION
Legal Matters..................................................................... VI-1
Experts........................................................................... VI-1
Stockholder Proposals............................................................. VI-1
Where You Can Find More Information............................................... VI-2
ANNEX A AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
ANNEX B SHAREHOLDER VOTING AGREEMENT
ANNEX C STOCKHOLDERS' RIGHTS AGREEMENT
ANNEX D OPINION OF GOLDMAN, SACHS & CO.
ANNEX E OPINION OF MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
ANNEX F DISSENTERS' RIGHTS UNDER CHAPTER 23B.13 OF THE WASHINGTON BUSINESS
CORPORATION ACT
ANNEX G AMGEN INC. EXECUTIVE INCENTIVE PLAN
iii
CHAPTER ONE--THE MERGER
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: Why am I receiving this joint proxy statement/prospectus?
A: Amgen and Immunex have agreed to the acquisition of Immunex by Amgen under
the terms of a merger agreement that is described in this joint proxy
statement/prospectus. A copy of the merger agreement is attached to this
joint proxy statement/prospectus as Annex A.
In order to complete the merger, Amgen stockholders must vote to approve the
issuance of shares of Amgen common stock in the merger and Immunex
shareholders must vote to approve the merger agreement.
Amgen and Immunex will hold separate annual meetings of their respective
stockholders to obtain these approvals. This joint proxy
statement/prospectus contains important information about the merger and the
annual meetings of the respective stockholders of Amgen and Immunex, and you
should read it carefully. The enclosed voting materials allow you to vote
your shares without attending your respective annual meeting.
Your vote is important. We encourage you to vote as soon as possible.
Q: Why are Amgen and Immunex proposing the merger?
A: We believe that the merger will provide substantial strategic and financial
benefits to the stockholders of both companies. We believe that the
combination will create a stronger and more competitive biotechnology
company that is capable of creating more stockholder value than either Amgen
or Immunex could on its own. We believe that the merger will allow
stockholders of both companies to participate in a larger, more diversified
company. We also believe the merger will enhance Amgen's position as a
biotechnology leader with a diverse portfolio of therapeutic drugs. To
review the reasons for the merger in greater detail, see pages I-23 and I-26.
Q: What will happen in the merger?
A: A wholly-owned subsidiary of Amgen will merge with and into Immunex. As a
result of the merger, Immunex will become a wholly-owned subsidiary of
Amgen, and Immunex shareholders will receive 0.44 of a share of Amgen common
stock and $4.50 in cash for each share of Immunex common stock they own,
except that shares held by Immunex shareholders who validly exercise
dissenters' rights will be subject to appraisal in accordance with
Washington law. Based on the number of shares of Amgen and Immunex common
stock outstanding on March 19, 2002, the record date for the annual
meetings, we estimate that Amgen will issue approximately 242.3 million
shares of common stock in the merger and that immediately after the merger
the former Immunex shareholders, in the aggregate, will own approximately
18.7% of the then-outstanding shares of Amgen common stock.
Example: If you currently own 100 shares of Immunex common stock, then as a
result of the merger you will receive 44 shares of Amgen common stock and
$450 in cash.
Q: Where and when are the annual meetings?
A: The Amgen annual meeting will take place at the Beverly Hilton Hotel, 9876
Wilshire Boulevard, Los Angeles, California, on May 16, 2002, at 10:30 a.m.,
P.T.
The Immunex annual meeting will take place at the Benaroya Hall, Nordstrom
Recital Hall, 200 University Street, Seattle, Washington, on May 16, 2002,
at 12 p.m., P.T.
Q: What vote of Amgen stockholders is required to approve the issuance of Amgen
common stock in the merger?
A: The affirmative vote of the holders of a majority of the shares of Amgen
common
I-1
stock present or represented by proxy and voted at the Amgen annual meeting
is required to approve the issuance of Amgen common stock to the Immunex
shareholders in the merger.
Q: What vote of Immunex shareholders is required to approve the merger
agreement?
A: The affirmative vote of the holders of a majority of the outstanding shares
of Immunex common stock entitled to vote at the annual meeting is required
to approve the merger agreement. As of the record date for the annual
meeting of Immunex shareholders, Wyeth (formerly American Home Products
Corporation) beneficially owned 233,378,088 shares of Immunex common stock,
representing approximately 41% of the outstanding shares of Immunex common
stock. Wyeth has agreed to vote all of these shares in favor of approval of
the merger agreement.
Q: How does my company's board of directors recommend that I vote?
A: The Amgen board of directors unanimously recommends that Amgen stockholders
vote "FOR" the proposal to approve the issuance of shares of Amgen common
stock to the Immunex shareholders in the merger. For a more complete
description of the recommendation of the Amgen board of directors, see page
II-1.
The Immunex board of directors unanimously recommends that Immunex
shareholders vote "FOR" the proposal to approve the merger agreement. For a
more complete description of the recommendation of the Immunex board of
directors, see page III-1.
Q: How do I cast my vote?
A: If you are a holder of record, you may vote in person at your annual meeting
or by submitting a proxy for your annual meeting. You can submit your proxy
by completing, signing, dating and returning the enclosed proxy card in the
accompanying pre-addressed postage paid envelope. In the case of Immunex
shareholders, the failure to cast your vote will have the same effect as
voting against the merger agreement.
If you hold your shares in "street name," which means your shares are held
of record by a broker, bank or nominee, you must provide the record holder
of your shares with instructions on how to vote your shares. Please refer to
the voting instruction card used by your broker, bank or nominee to see if
you may submit voting instructions using the Internet or telephone.
Q: Can I change my vote after I have delivered my proxy?
A: Yes. If you are a record holder, you can change your vote at any time before
your proxy is voted at your annual meeting by:
. delivering to the respective Secretary of Amgen or Immunex, as
appropriate, a signed notice of revocation;
. granting a new, later-dated proxy, and if it is a written proxy, it must
be signed and delivered to the respective Secretary of Amgen or Immunex,
as appropriate; or
. attending your annual meeting and voting in person, however, your
attendance alone will not revoke your proxy.
If your shares are held in a street name account, you must contact your
broker, bank or other nominee to change your vote.
Q: Should I send in my Immunex stock certificates now?
A: No. After the merger is completed, you will receive written instructions
from the exchange agent on how to exchange your Immunex stock certificates
for the merger consideration. Please do not send in your Immunex stock
certificates with your proxy.
Q: What should I do if I receive more than one set of voting materials?
A: You may receive more than one set of voting materials, including multiple
copies of this joint proxy statement/prospectus and multiple proxy cards or
voting instruction cards. For example, if you hold your shares in more than
one
I-2
brokerage account, you will receive a separate voting instruction card for
each brokerage account in which you hold shares. If you are a holder of
record and your shares are registered in more than one name, you will
receive more than one proxy card. In addition, if you are a stockholder of
Amgen and a shareholder of Immunex, you will receive one or more separate
proxy cards or voting instruction cards for each company. Please complete,
sign, date and return each proxy card and voting instruction card that you
receive.
Q: When do you expect the merger to be completed?
A: We are working to complete the merger as quickly as practicable. We
currently expect that the merger could be completed as early as June 2002.
However, we cannot predict the exact timing of the completion of the merger
because the merger is subject to United States and foreign regulatory
approvals and other conditions. There may be a substantial period of time
between the approval of the respective merger proposals by stockholders at
the annual meetings and the effectiveness of the merger.
Q: As an Immunex shareholder, why am I electing directors and ratifying the
selection of independent auditors when I am being asked to approve the
merger agreement?
A: Washington law requires Immunex to hold a meeting of its shareholders each
year. Notwithstanding the fact that the merger could be completed as early
as June 2002, Immunex has determined to observe this requirement and hold an
annual meeting of its shareholders to elect directors and ratify the
selection of Ernst & Young LLP. The directors elected at the Immunex annual
meeting will preside over any business matters presented to the Immunex
board of directors following the Immunex annual meeting through the closing
of the merger. Effective upon the closing of the merger, these individuals
will no longer be Immunex directors, although Edward V. Fritzky, the
Chairman of the Board, Chief Executive Officer and President of Immunex,
will be appointed to the Amgen board of directors. Ernst & Young LLP will
not continue to conduct independent audits of Immunex following the merger.
Q: What rights do I have to seek a valuation of my shares?
A: If you are an Amgen stockholder, under applicable Delaware law, you will not
have dissenters' rights of appraisal in connection with the issuance of
Amgen common stock in the merger.
If you are an Immunex shareholder, under applicable Washington law, you may
assert dissenters' rights and receive a cash payment for the fair value of
your shares, but only if you comply with all requirements of Washington law
as set forth in Annex F of this joint proxy statement/prospectus. Pursuant
to your dissenters' rights under Washington law, you may seek a
determination by a Washington court of the fair value of your shares. The
fair value determined by the court may be more than, less than or equal to
the value of the consideration to be paid in the merger. For a more complete
description of your dissenters' rights, see page I-106.
Q: Who can help answer my questions?
A: If you have any questions about the merger or how to submit your proxy, or
if you need additional copies of this joint proxy statement/prospectus or
the enclosed proxy card or voting instructions, you should contact:
. if you are an Amgen stockholder:
Georgeson Shareholder Communications, Inc.
17 State Street
10th Floor
New York, NY 10004
(800) 223-2064
. if you are an Immunex shareholder:
MacKenzie Partners, Inc.
105 Madison Avenue
14th Floor
New York, NY 10016
(800) 322-2885 or (212) 929-5500
I-3
SUMMARY
The following is a summary of information contained in this joint proxy
statement/prospectus. This summary may not contain all of the information about
the merger that is important to you. For a more complete description of the
merger, we encourage you to read carefully this entire joint proxy
statement/prospectus, including the attached annexes. In addition, we encourage
you to read the information incorporated by reference into this joint proxy
statement/prospectus, which includes important business and financial
information about Amgen and Immunex which we have filed with the Securities and
Exchange Commission, or the SEC. You may obtain the information incorporated by
reference into this joint proxy statement/prospectus without charge by
following the instructions in the section entitled "Where You Can Find More
Information."
The Companies
Amgen Inc.
One Amgen Center Drive
Thousand Oaks, California 91320-1799
(805) 447-1000
Amgen is a global biotechnology company that discovers, develops,
manufactures and markets human therapeutics based on advances in cellular and
molecular biology.
AMS Acquisition Inc. is a newly-formed, wholly-owned subsidiary of Amgen
that was formed solely for the purpose of effecting the merger. AMS Acquisition
has not conducted and will not conduct any business during any period of its
existence.
Immunex Corporation
51 University Street
Seattle, Washington 98101-2936
(206) 587-0430
Immunex is a biopharmaceutical company dedicated to developing immune system
science to protect human health. Applying its scientific expertise in the
fields of immunology, cytokine biology, vascular biology, antibody-based
therapeutics and small molecule research, Immunex works to discover new targets
and new therapeutics for treating rheumatoid arthritis, asthma and other
inflammatory diseases, as well as cancer and cardiovascular diseases. The
products of Immunex include ENBREL(R) (etanercept), LEUKINE(R) (sargramostim,
GM-CSF) and NOVANTRONE(R) (mitoxantrone for injection concentrate), which had
sales of $761.9 million, $108.4 million and $71.2 million, respectively, for
Immunex in 2001. Immunex employs approximately 1,950 people.
The Merger (see page I-19)
Amgen and Immunex have agreed to the acquisition of Immunex by Amgen under
the terms of the merger agreement that is described in this joint proxy
statement/prospectus. We have attached the merger agreement as Annex A to this
joint proxy statement/prospectus. We encourage you to read the merger agreement
in its entirety.
Under the terms of the merger agreement, AMS Acquisition will merge with and
into Immunex, with Immunex surviving the merger as a wholly-owned subsidiary of
Amgen. If you are an Immunex shareholder and do not validly exercise
dissenters' rights under Washington law, then, upon completion of the merger,
each of your shares of Immunex common stock will be converted into 0.44 of a
share of Amgen common stock and $4.50 in cash. We refer to the share and cash
consideration to be paid to the Immunex shareholders by Amgen as the merger
consideration. Amgen stockholders will continue to own their existing shares
which will not be affected by the merger.
Recommendations of the Amgen and Immunex Boards of Directors (see pages II-1
and III-1)
Amgen
The Amgen board of directors believes that the merger is fair to and in the
best interests of Amgen and its stockholders, and unanimously recommends that
Amgen stockholders vote "FOR" approval of the issuance of Amgen common stock in
the merger.
I-4
Immunex
The Immunex board of directors believes that the merger agreement and the
transactions contemplated by the merger agreement, including the merger, are
fair to and in the best interests of Immunex and its shareholders, and
unanimously recommends that Immunex shareholders vote "FOR" approval of the
merger agreement.
Stockholders and Shareholders Entitled to Vote; Vote Required (see pages II-1
and III-1)
Amgen Stockholders
You can vote at the Amgen annual meeting if you owned Amgen common stock at
the close of business on March 19, 2002, the record date for the Amgen annual
meeting. On that date, there were 1,050,895,693 shares of Amgen common stock
outstanding and entitled to vote. You can cast one vote for each share of Amgen
common stock that you owned on that date. Stockholder approval of the issuance
of shares of Amgen common stock in the merger is required under the regulations
of the Nasdaq National Market, which requires the affirmative vote of the
holders of a majority of the shares of Amgen common stock present or
represented by proxy and voted at the Amgen annual meeting. The approval of the
issuance of shares of Amgen common stock in the merger is not conditioned upon
the approval of any other proposal to be acted upon at the Amgen annual meeting.
Immunex Shareholders
You can vote at the Immunex annual meeting if you owned Immunex common stock
at the close of business on March 19, 2002, the record date for the Immunex
annual meeting. On that date, there were 550,722,083 shares of Immunex common
stock outstanding and entitled to vote. You can cast one vote for each share of
Immunex common stock that you owned on that date. Approval of the merger
agreement requires the affirmative vote of the holders of a majority of the
outstanding shares of Immunex common stock entitled to vote, and is not
conditioned upon the approval of any other proposal to be acted upon at the
Immunex annual meeting.
Shareholder Voting Agreement (see page I-74)
Amgen has entered into a shareholder voting agreement with Wyeth and two of
its subsidiaries, MDP Holdings, Inc. and Lederle Parenterals, Inc., pursuant to
which these companies agreed, among other things, to vote all of the shares of
Immunex common stock beneficially owned by them in favor of the approval of the
merger agreement. As of the record date, these companies beneficially owned
233,378,088 shares of Immunex common stock, representing approximately 41% of
the outstanding shares of Immunex common stock on that date.
Opinions of Financial Advisors (see pages I-29 and I-38)
Amgen
On December 16, 2001, Goldman, Sachs & Co., financial advisor to Amgen,
delivered to the Amgen board of directors its oral opinion, which was
subsequently confirmed by delivery of a written opinion dated December 16,
2001, that, as of that date, and based upon and subject to the considerations
described in its opinion and based upon such other matters as Goldman Sachs
considered relevant, the merger consideration to be paid by Amgen for each
outstanding share of Immunex common stock pursuant to the merger agreement was
fair from a financial point of view to Amgen. The full text of Goldman Sachs'
written opinion is attached to this joint proxy statement/prospectus as Annex
D. We encourage you to read this opinion carefully in its entirety for a
description of the procedures followed, assumptions made, matters considered
and limitations on the review undertaken. Goldman Sachs' opinion is directed to
the Amgen board of directors and does not constitute a recommendation to any
stockholder as to any matters relating to the merger.
Immunex
On December 16, 2001, Merrill Lynch, Pierce, Fenner & Smith Incorporated,
financial advisor to Immunex, delivered to the Immunex board of directors its
oral opinion, which was subsequently confirmed by delivery of a written
I-5
opinion dated December 16, 2001, that, as of that date, and based upon and
subject to the factors and assumptions set forth in the opinion, the merger
consideration to be received by the holders of the shares of Immunex common
stock pursuant to the merger was fair to these holders, from a financial point
of view. The full text of Merrill Lynch's written opinion is attached to this
joint proxy statement/prospectus as Annex E. We encourage you to read this
opinion carefully in its entirety for a description of the procedures followed,
assumptions made, matters considered and limitations on the review undertaken.
Merrill Lynch's opinion is directed to the Immunex board of directors and does
not constitute a recommendation to any shareholder as to any matters relating
to the merger.
Ownership of Amgen After the Merger
Amgen expects to issue approximately 242.3 million shares of Amgen common
stock in the merger. Based on the number of shares of Amgen and Immunex common
stock outstanding on the record date, after completion of the merger, former
Immunex shareholders will own approximately 18.7% of the then-outstanding
shares of Amgen common stock.
Share Ownership of Directors and Executive Officers of Amgen and Immunex
At the close of business on the record date for the Amgen annual meeting,
directors and executive officers of Amgen and their affiliates beneficially
owned and were entitled to vote approximately 12,126,508 shares of Amgen common
stock, collectively representing approximately 1.2% of the shares of Amgen
common stock outstanding on that date. This amount excludes approximately
1,453,000 shares of Amgen common stock held by the spouses of certain directors
of Amgen; these directors disclaim beneficial ownership of such shares.
At the close of business on the record date for the Immunex annual meeting,
directors and executive officers of Immunex and their affiliates beneficially
owned and were entitled to vote approximately 288,733 shares of Immunex common
stock (excluding shares owned by Wyeth or its affiliates), collectively
representing less than 1% of the shares of Immunex common stock outstanding on
that date. As of the record date for the Immunex annual meeting, Wyeth, which
has designated two directors of Immunex in accordance with the terms of a
governance agreement with Immunex, beneficially owned a total of 223,378,088
shares of Immunex common stock, or approximately 41% of the shares of Immunex
common stock outstanding on that date.
Interests of Directors and Executive Officers of Immunex in the Merger (see
page I-50)
When considering the Immunex board of directors' recommendation that the
Immunex shareholders vote in favor of the approval of the merger agreement,
Immunex shareholders should be aware that some directors and executive officers
of Immunex have interests in the merger that may be different from, or in
addition to, the interests of Immunex shareholders.
The Immunex board of directors knew about these additional interests, and
considered them, among other matters, when it adopted the merger agreement.
Listing of Amgen Common Stock and Delisting of Immunex Common Stock (see page
I-49)
Application will be made to have the shares of Amgen common stock issued in
the merger approved for listing on the Nasdaq National Market, where Amgen
common stock currently is traded under the symbol "AMGN." If the merger is
completed, Immunex common stock will no longer be listed on the Nasdaq National
Market and will be deregistered under the Securities Exchange Act of 1934, and
Immunex will no longer file periodic reports with the SEC.
Dissenters' Rights of Appraisal (see page I-106)
Amgen Stockholders
Under applicable Delaware law, Amgen stockholders will not have dissenters'
rights of appraisal in connection with the issuance of Amgen common stock in
the merger.
I-6
Immunex Shareholders
Under applicable Washington law, Immunex shareholders have the right to
dissent from the merger and to receive payment in cash for the appraised fair
value of their shares of Immunex common stock. The appraised value of their
shares of Immunex common stock may be more than, less than or equal to the
value of the merger consideration. Each Immunex shareholder seeking to preserve
statutory dissenters' rights must:
. deliver to Immunex before the annual meeting written notice of such
shareholder's intent to exercise its dissenters' rights with respect to
its shares of Immunex common stock if the merger is completed;
. not vote such shareholder's shares in favor of approval of the merger
agreement; and
. follow the statutory procedures for perfecting dissenters' rights under
Washington law, which are described in the section entitled "Dissenters'
Rights--Appraisal Procedures."
Merely voting against the merger agreement will not preserve your
dissenters' rights. Chapter 23B.13 of the Washington Business Corporation Act
is reprinted in its entirety and attached to this joint proxy
statement/prospectus as Annex F. Failure by an Immunex shareholder to precisely
comply with all procedures required by Washington law may result in the loss of
dissenters' rights for that shareholder.
Conditions to Completion of the Merger (see page I-60)
Completion of the merger depends on a number of conditions being met,
including:
. receipt of the required approvals from Amgen and Immunex stockholders;
. absence of breaches of the representations and warranties in the merger
agreement which result in a material adverse effect on the representing
party;
. material performance of each party's obligations under the merger
agreement;
. absence of certain types of governmental orders or proceedings;
. receipt of opinions by Amgen and Immunex from their respective tax
counsel that the merger will qualify as a reorganization under the
Internal Revenue Code;
. receipt of material regulatory approvals, including the expiration or
termination of the waiting periods under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976; and
. effectiveness of specific agreements between Amgen and Wyeth.
Where legally permissible, a party may elect to waive a condition to its
obligation to complete the merger even though that condition has not been
satisfied.
No Solicitation by Immunex (see page I-63)
The merger agreement contains restrictions on the ability of Immunex to
solicit or engage in discussions or negotiations with a third party with
respect to a proposal to acquire a significant interest in Immunex.
Notwithstanding these restrictions, the merger agreement provides that under
specified circumstances, if Immunex receives an acquisition proposal from a
third party that is superior to the merger, Immunex may furnish nonpublic
information to that third party and engage in negotiations regarding an
acquisition proposal with that third party. Even if Immunex receives a proposal
from a third party that is superior to the merger, it is obligated to hold a
shareholders meeting to consider the merger.
Termination of the Merger Agreement (see page I-70)
Immunex and Amgen, by action of their respective boards of directors, may
mutually agree to terminate the merger agreement and abandon the
I-7
merger at any time prior to completion of the merger, whether before or after
Immunex shareholders have approved the merger agreement and Amgen stockholders
have approved the issuance of shares of Amgen common stock in the merger.
In addition, either company could decide, without the consent of the other,
to terminate the merger agreement in a number of situations, including:
. the merger is not completed by September 30, 2002 (which date may be
extended to December 31, 2002 under some circumstances);
. a court or governmental authority permanently prohibits completion of
the merger;
. the required approval of Amgen or Immunex stockholders is not obtained
at the annual meetings;
. the board of directors of the other party withdraws or adversely
modifies its recommendation of the merger; or
. the other party breaches its representations, warranties or covenants in
the merger agreement, which results in a failure of one of the
conditions to the completion of the merger being satisfied.
Termination Fee and Expenses (see pages I-71 and I-72)
If the merger agreement is terminated, either Amgen or Immunex, in specified
circumstances, may be required to pay a termination fee of $475 million to the
other party or reimburse up to $15 million of the other party's expenses.
Immunex Stock Options and Employee Stock Purchase Plan (see page I-69)
In general, upon completion of the merger, options to purchase shares of
Immunex common stock will be converted into options to purchase shares of Amgen
common stock and assumed by Amgen. The conversion ratios and exercise prices
will be determined pursuant to the merger agreement. In addition, some
converted options will become fully vested and exercisable at the effective
time of the merger. Amgen has agreed to assume the Immunex stock option plans
at the effective time of the merger.
Each outstanding purchase right under the Immunex employee stock purchase
plan will be assumed by Amgen and converted into a right to purchase Amgen
common stock in accordance with the merger agreement and the employee stock
purchase plan. Amgen has agreed to assume the Immunex employee stock purchase
plan at the effective time of the merger.
Material United States Federal Income Tax Consequences of the Merger (see page
I-46)
It is expected that the merger will qualify as a reorganization under
Section 368(a) of the Internal Revenue Code, and Amgen and Immunex are required
to receive opinions from their respective counsel to the effect that the merger
will so qualify. If these opinions are not rendered, Amgen and Immunex will not
consummate the merger unless approvals from Amgen stockholders and Immunex
shareholders are obtained with appropriate disclosure. If the merger qualifies
as a reorganization under Section 368(a) of the Internal Revenue Code, then, in
general, Immunex shareholders will recognize gain, but not loss, equal to the
lesser of:
. the amount of cash they receive in the merger; or
. the amount equal to the excess, if any, of the sum of the amount of cash
and the fair market value of Amgen common stock they receive in the
merger over the adjusted tax basis of their Immunex common stock.
No gain or loss will be recognized by Amgen, AMS Acquisition, Immunex or
stockholders of Amgen as a result of the merger.
Tax matters are very complicated and the tax consequences of the merger to
you will depend on
I-8
the facts of your own situation. We encourage you to consult your tax advisor
for a full understanding of the tax consequences of the merger to you.
Accounting Treatment (see page I-49)
Amgen will account for the merger under the purchase method of accounting
for business combinations under United States generally accepted accounting
principles.
Regulatory Approvals (see page I-45)
Under the Hart-Scott-Rodino Antitrust Improvements Act, we cannot complete
the merger until we have notified the Antitrust Division of the U.S. Department
of Justice and the U.S. Federal Trade Commission of the merger and filed the
necessary report forms and until the required waiting period has ended. Amgen
and Immunex submitted the required filings on January 7, 2002. On February 6,
2002, Amgen and Immunex received a request for additional information from the
U.S. Federal Trade Commission. The waiting period has been extended while
representatives of the U.S. Federal Trade Commission conduct their review.
Amgen made a filing relating to the merger with the German Federal Cartel
Office on March 20, 2002, which Immunex joined.
We also may be required to obtain additional regulatory approvals from
various state and foreign authorities. While we expect to obtain all required
regulatory approvals, we cannot assure you that these regulatory approvals will
be obtained or that the granting of these regulatory approvals will not involve
the imposition of conditions on the completion of the merger or require changes
to the terms of the merger. These conditions or changes could result in the
conditions to the merger not being satisfied.
Litigation Related to the Merger (see page I-57)
As of the date of this joint proxy statement/prospectus, Immunex is aware of
three purported class action lawsuits that have been filed against Immunex and
its officers and/or directors in connection with the merger. Wyeth is also a
defendant in these lawsuits. Among other things, these lawsuits seek to prevent
the closing of the merger.
While these cases are in their early stages, Immunex believes, and Wyeth has
advised Immunex that it also believes, that these cases are without merit. The
parities intend to contest the lawsuits vigorously.
As of the date of this joint proxy statement/prospectus, Amgen is aware of
one stockholder lawsuit that has been filed against the Amgen board of
directors and nominally against Amgen in connection with Amgen's acquisition of
Immunex. Among other things, this lawsuit seeks to prevent the closing of the
merger. While this case is in its early stages, Amgen believes that it is
without merit and intends to contest it vigorously.
Other Amgen Annual Meeting Proposals (see page IV-1)
At the Amgen annual meeting, Amgen is also asking its stockholders to:
. elect three directors to the Amgen board of directors;
. ratify the selection of Ernst & Young LLP as independent auditors of
Amgen;
. approve a new executive incentive plan; and
. transact any other business as may properly come before the Amgen annual
meeting or any adjournments or postponements of the annual meeting.
Approval by Amgen stockholders of these other Amgen annual meeting proposals
is not a condition to completion of the merger. Approval of the issurance of
the shares of Amgen common stock in the merger is not a condition to approval
of the other annual meeting proposals.
The Amgen board of directors recommends that you vote "FOR" each of the
nominee directors and the proposals.
I-9
Other Immunex Annual Meeting Proposals (see page V-1)
At the Immunex annual meeting, Immunex is also asking its shareholders to:
. elect nine directors to the Immunex board of directors;
. ratify the selection of Ernst & Young LLP as independent auditors of
Immunex; and
. transact any other business as may properly come before the Immunex
annual meeting or any adjournments or postponements of the annual
meeting.
Approval by Immunex shareholders of these other Immunex annual meeting
proposals is not a condition to completion of the merger. Approval of the
merger agreement is not a condition to approval of the other annual meeting
proposals. These matters are being presented to Immunex shareholders to comply
with the requirements of Washington law. The directors elected at the Immunex
annual meeting will preside over any business matters presented to the Immunex
board of directors following the Immunex annual meeting through the closing of
the merger. Effective upon the closing of the merger, these individuals will no
longer be Immunex directors, although Mr. Fritzky will be appointed to the
Amgen board of directors. Ernst & Young LLP will not continue to conduct
independent audits of Immunex following the merger.
The Immunex board of directors recommends that you vote "FOR" each of the
nominee directors and the proposals.
I-10
Summary Selected Historical Financial Data
We are providing the following information to aid you in your analysis of
the financial aspects of the merger. We derived this information from the
audited financial statements of Amgen and Immunex for the years ended December
31, 1997 through 2001. This information is only a summary, and you should read
it together with our historical financial statements and related notes
contained in the annual reports and other information that we have filed with
the SEC and incorporated by reference into this joint proxy
statement/prospectus. See "Where You Can Find More Information."
Amgen Inc.
Summary Selected Historical Consolidated Financial Data
(In millions, except per share data)
Year Ended December 31,
-----------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
Consolidated Statement of Operations Data:
Revenues:
Product sales (1)........................... $3,511.0 $3,202.2 $3,042.8 $2,514.4 $2,219.8
Other revenues.............................. 504.7 427.2 297.3 203.8 181.2
Total revenues (1)...................... 4,015.7 3,629.4 3,340.1 2,718.2 2,401.0
Research and development expenses.............. 865.0 845.0 822.8 663.3 630.8
Selling, general and administrative expenses... 970.7 826.9 654.3 515.4 483.8
Other items, net (2)........................... 203.1 (18.8) (49.0) (23.0) 157.0
Net income..................................... 1,119.7 1,138.5 1,096.4 863.2 644.3
Diluted earnings per share (1)(2).............. 1.03 1.05 1.02 0.82 0.59
Cash dividends per share....................... -- -- -- -- --
At December 31,
-------------------------------------------
2001 2000 1999 1998 1997
------- -------- -------- -------- --------
Consolidated Balance Sheet Data:
Total assets.................... 6,443.1 $5,399.6 $4,077.6 $3,672.2 $3,110.2
Long-term debt.................. 223.0 223.0 223.0 223.0 229.0
Stockholders' equity............ 5,217.2 4,314.5 3,023.5 2,562.2 2,139.3
--------
(1) Due to Year 2000 contingency planning in the fourth quarter of 1999, Amgen
offered extended payment terms on limited shipments of EPOGEN(R) (Epoetin
alfa) and NEUPOGEN(R) (Filgrastim) to certain wholesalers. These Year 2000
related sales totaled $45 million, or $0.02 per share, in 1999.
(2) The amount in 2001 is primarily related to the costs of terminating
collaboration agreements with various third parties. The amount in 2000
includes a write-off of acquired in-process research and development of
$30.1 million, a charitable contribution of $25 million to the Amgen
Foundation, and a $73.9 million benefit related to a legal proceeding. The
amounts in other years are comprised of benefits and expenses also related
to this legal proceeding. For a discussion of the amounts in 2001, 2000,
and 1999, see Notes 4 and 11 to the Consolidated Financial Statements in
Amgen's Annual Report on Form 10-K for the year ended December 31, 2001. In
2001, the amount in other items, net combined with an inventory write-off
of $39.5 million recorded in cost of sales decreased earnings per share by
$0.15. Other items, net increased/(decreased) earnings per share by $0.00
in 2000, $0.03 in 1999, $0.01 in 1998, and ($0.09) in 1997.
I-11
Immunex Corporation
Summary Selected Historical Consolidated Financial Data
(In millions, except per share data)
Year Ended December 31,
--------------------------------------
2001 2000 1999 1998 1997
-------- -------- ------ ------ ------
Consolidated Statement of Operations Data:
Revenues:
Product sales............................... $ 959.6 $ 828.8 $519.3 $169.9 $149.7
Other revenues.............................. 27.2 33.0 22.4 73.6 35.6
Total revenues.......................... 986.8 861.8 541.7 243.5 185.3
Research and development expenses.............. 204.6 166.7 126.7 120.0 109.3
Selling, general and administrative expenses... 423.0 344.4 216.7 93.8 71.3
Other items, net............................... 5.6 -- -- -- --
Net income (loss).............................. 170.0 154.4 44.3 1.0 (15.8)
Diluted earnings (loss) per share.............. 0.30 0.28 0.08 0.00 (0.03)
Cash dividends per share....................... -- -- -- -- --
At December 31,
--------------------------------------
2001 2000 1999 1998 1997
-------- -------- ------ ------ ------
Consolidated Balance Sheet Data:
Total assets................................... $2,295.3 $2,039.4 $941.2 $325.3 $227.3
Long-term obligations.......................... 0.8 0.8 450.8 2.3 5.6
Shareholders' equity........................... 2,063.7 1,838.1 355.3 247.5 176.2
I-12
Summary Unaudited Pro Forma Condensed Combining Financial Data
The table below presents selected financial data from the Amgen and Immunex
unaudited pro forma condensed combining statement of operations for the year
ended December 31, 2001 and from the unaudited pro forma condensed combining
balance sheet as of December 31, 2001 included in this joint proxy
statement/prospectus. The unaudited pro forma condensed combining statement of
operations is presented as if the merger had occurred on January 1, 2001. The
unaudited pro forma condensed combining balance sheet presents the combined
financial position of Amgen and Immunex as of December 31, 2001 assuming that
the acquisition had occurred as of that date. The unaudited pro forma condensed
combining financial data are based on the estimates and assumptions set forth
in the notes to such statements, which are preliminary and have been made
solely for the purposes of developing such pro forma information. The unaudited
pro forma condensed combining financial data are not necessarily indicative of
the financial position or operating results that would have been achieved had
the transaction been consummated as of the dates indicated, nor are they
necessarily indicative of future financial position or operating results. This
information should be read in conjunction with the unaudited pro forma
condensed combining financial statements and related notes and the historical
financial statements and related notes of Amgen and Immunex included in or
incorporated by reference into this joint proxy statement/prospectus.
Pro Forma
Year Ended
December 31, 2001
--------------------
(In millions, except
per share data)
Statement of Operations Data:
Total revenues.................................... $5,002.5
Net income........................................ 906.2
Earnings per share:
Basic......................................... $ 0.70
Diluted....................................... $ 0.68
Shares used in calculation of earnings per share:
Basic......................................... 1,285.4
Diluted....................................... 1,335.3
Pro Forma
as of
December 31, 2001
-----------------
Balance Sheet Data:
Total assets...................................................... $24,708.4
Long-term debt.................................................... 2,702.7
Stockholders' equity.............................................. 17,981.6
I-13
Comparative Per Share Information
The following table presents (a) the unaudited basic and diluted earnings
per share and book value per share data for each of Amgen and Immunex on a
historical basis, (b) the unaudited basic and diluted earnings per share and
book value per share data for the combined company on a pro forma basis and (c)
the unaudited basic and diluted earnings per share and book value per share
data for Immunex on an equivalent pro forma basis. The unaudited pro forma
combined financial data are not necessarily indicative of the financial
position had the transaction occurred on December 31, 2001 or operating results
that would have been achieved had the transaction been in effect as of the
beginning of the period presented and should not be construed as representative
of future financial position or operating results. Neither Amgen nor Immunex
declared any cash dividends for the period presented below. The pro forma
combined net income, pro forma stockholders' equity and the pro forma number of
shares of Amgen common stock outstanding used in determining the amounts
presented below have been derived from unaudited pro forma financial statements
included in this joint proxy statement/prospectus.
This information is only a summary and should be read in conjunction with
the selected historical financial data of Amgen and Immunex, the Amgen and
Immunex unaudited pro forma condensed combining financial statements, and the
separate historical financial statements of Amgen and Immunex and related notes
included in or incorporated by reference into this joint proxy
statement/prospectus.
Year Ended
December 31, 2001
-----------------
Historical--Amgen:
Earnings per share:
Basic.......................... $ 1.07
Diluted........................ 1.03
Book value per share (1)........... 4.99
Historical--Immunex:
Earnings per share:
Basic.......................... $ 0.31
Diluted........................ 0.30
Book value per share (1)........... 3.78
Pro forma combined--Amgen and Immunex:
Earnings per share:
Basic.......................... $ 0.70
Diluted........................ 0.68
Book value per share (2)........... 13.99
Equivalent pro forma--Immunex:
Earnings per share: (3)
Basic.......................... $ 0.31
Diluted........................ 0.30
Book value per share (3)........... 6.16
--------
(1) The historical book value per share is calculated by dividing stockholders'
equity by the number of shares outstanding as of December 31, 2001.
(2) The pro forma combined book value per share is computed by dividing pro
forma stockholders' equity by the pro forma number of Amgen shares that
would have been outstanding as of December 31, 2001.
(3) The equivalent pro forma Immunex amounts are calculated by multiplying the
pro forma combined per share amounts by the exchange ratio of 0.44 of a
share of Amgen common stock for each share of Immunex common stock.
I-14
Comparative Per Share Market Price Data
Amgen common stock trades on the Nasdaq National Market under the symbol
"AMGN." Immunex common stock trades on the Nasdaq National Market under the
symbol "IMNX." The table below sets forth, for the periods indicated, the range
of high and low per share sales prices for Amgen common stock and Immunex
common stock as reported on the Nasdaq National Market.
Amgen Immunex
Common Stock Common Stock
------------- -------------
High Low High Low
------ ------ ------ ------
Fiscal Year 2000
First quarter.......................... $76.50 $51.06 $83.60 $27.75
Second quarter......................... 70.88 50.00 69.88 24.19
Third quarter.......................... 80.44 64.13 67.13 39.50
Fourth quarter......................... 72.63 51.39 49.88 33.06
Fiscal Year 2001
First quarter.......................... $75.06 $45.44 $46.38 $10.75
Second quarter......................... 70.60 50.31 18.99 11.81
Third quarter.......................... 66.25 53.46 19.67 13.85
Fourth quarter......................... 69.00 55.15 29.58 18.62
Fiscal Year 2002
First quarter (through March 21, 2002). $62.94 $53.28 $31.31 $26.65
On December 14, 2001, the last trading day before we announced the merger,
the closing price of Amgen common stock on the Nasdaq National Market was
$56.03 per share and the closing price of Immunex common stock on the Nasdaq
National Market was $25.62 per share. Based on the exchange ratio (i.e., 0.44
of a share of Amgen common stock for each outstanding share of Immunex common
stock), the closing price of Amgen common stock on December 14, 2001, and the
cash consideration of $4.50 per share, the pro forma equivalent per share value
of Immunex common stock on December 14, 2001 was approximately $29.15 per
share. On March 21, 2002, the last trading day prior to the date of this joint
proxy statement/prospectus, the closing price of Amgen common stock on the
Nasdaq National Market was $62.24, the closing price of Immunex common stock on
the Nasdaq National Market was $31.31 and the pro forma equivalent per share
value of Immunex common stock, based on the merger consideration, was
approximately $31.89 per share. Neither Amgen nor Immunex has ever declared or
paid cash dividends on its common stock. The policies of Amgen and Immunex are
to retain earnings for use in their respective businesses.
The market value of the shares of Amgen common stock that will be issued in
exchange for shares of Immunex common stock upon the completion of the merger
will not be known at the time Immunex shareholders vote on the approval of the
merger agreement, or at the time Amgen stockholders vote on the approval of the
issuance of shares of Amgen common stock in the merger, because the merger will
not be completed by then.
The above table shows only historical comparisons. Because the market prices
of Amgen common stock and Immunex common stock will likely fluctuate prior to
the merger, these comparisons may not provide meaningful information to Amgen
stockholders in determining whether to approve the issuance of shares of Amgen
common stock in the merger or to Immunex shareholders in determining whether to
approve the merger agreement. Amgen and Immunex stockholders are encouraged to
obtain current market quotations for Amgen and Immunex common stock and to
review carefully the other information contained in this joint proxy
statement/prospectus or incorporated by reference into this joint proxy
statement/prospectus in considering whether to approve their respective
proposal. See the section entitled "Where You Can Find More Information."
I-15
RISKS RELATING TO THE MERGER
In addition to the other information included in this joint proxy
statement/prospectus, including the matters addressed in "Cautionary Statement
Concerning Forward-Looking Statements," you should carefully consider the
following risks before deciding whether to vote for approval of the merger
agreement, in the case of Immunex shareholders, or for approval of the issuance
of shares of Amgen common stock in the merger, in the case of Amgen
stockholders. In addition, you should read and consider the risks associated
with each of the businesses of Amgen and Immunex because these risks will also
affect the combined company. These risks can be found in our respective Annual
Reports on Form 10-K for the year ended December 31, 2001, which are filed with
the SEC and incorporated by reference into this joint proxy
statement/prospectus. Additional risks and uncertainties not presently known to
Amgen and Immunex or that are not currently believed to be important to you
also may adversely affect the merger and Amgen following the merger.
The value of Amgen common stock to be received in the merger will fluctuate.
In the merger, Immunex shareholders will receive 0.44 of a share of Amgen
common stock and $4.50 in cash for each share of Immunex common stock they own.
As a result of Immunex shareholders receiving a portion of the merger
consideration in shares of Amgen common stock, the value of the merger
consideration to be received by Immunex shareholders will depend on the market
price of Amgen common stock at the time the merger is completed. The market
price of Amgen common stock at the closing of the merger will likely vary from
its market prices at the date of this joint proxy statement/prospectus and at
the date of the Amgen and Immunex annual meetings. These variations may be
caused by a number of factors, including changes in the businesses, operations
or prospects of Amgen or Immunex, the timing of the merger, regulatory
considerations and general market and economic conditions. The merger
consideration will not be adjusted for any increase or decrease in the market
price of Amgen common stock or Immunex common stock. Accordingly, if the market
value of Amgen common stock declines prior to the time the merger is completed,
the value of the merger consideration to be received by Immunex shareholders
will decline. In addition, because the date that the merger is completed will
be later than the date of the annual meetings, Amgen and Immunex stockholders
will not know the exact value of the Amgen common stock that will be issued in
the merger at the time they vote on the merger proposals. We encourage you to
obtain current market quotations for Amgen and Immunex shares before you vote
your shares.
Amgen may not realize all of the anticipated benefits of the merger.
The success of the merger will depend, in part, on the ability of Amgen to
realize the anticipated synergies, cost savings and growth opportunities from
integrating the businesses of Immunex with the businesses of Amgen. Amgen's
success in realizing these benefits and the timing of this realization depend
upon the successful integration of the operations of Immunex. The integration
of two independent companies is a complex, costly and time-consuming process.
The difficulties of combining the operations of the companies include, among
others:
. consolidating research and development and manufacturing operations;
. retaining key employees;
. consolidating corporate and administrative infrastructures;
. coordinating sales and marketing functions;
. preserving the research and development, distribution, marketing,
promotion and other important relationships of Amgen and Immunex;
. minimizing the diversion of management's attention from ongoing business
concerns; and
. coordinating geographically separate organizations.
I-16
We cannot assure you that the integration of Immunex with Amgen will result in
the realization of the full benefits anticipated by us to result from the
merger.
Amgen and Immunex may be required to comply with material restrictions or
conditions in order to obtain the regulatory approvals required to complete the
merger.
The merger is subject to review by the Antitrust Division of the U.S.
Department of Justice and the U.S. Federal Trade Commission under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. Under this statute, Amgen
and Immunex are required to make pre-merger notification filings and to await
the expiration or early termination of the statutory waiting period prior to
completing the merger. The merger is also subject to review by the German
Federal Cartel Office under the Act against Restraints of Competition (Gesetz
gegen Wettbewerbsbeschrankungen). The merger may also be subject to review by
the governmental authorities of various other jurisdictions. The governmental
entities from whom approvals are required may attempt to condition their
approval of the merger, or of the transfer to Amgen of licenses and other
entitlements, on the satisfaction of certain regulatory conditions that may
have the effect of imposing additional costs on Amgen or otherwise
substantially reducing the benefits to Amgen if the merger is completed. These
conditions could include a complete or partial license, divestiture, spin-off
or the holding separate of assets or businesses. In order to facilitate
clearance from the U.S. Federal Trade Commission, Immunex intends to divest the
product LEUKINE, which had sales for Immunex of $108.4 million in 2001. Amgen
and Immunex have not yet obtained any of the regulatory approvals required to
complete the merger.
Amgen's marketing of ENBREL will be dependent in part upon Wyeth.
Under the amended and restated promotion agreement, Amgen and Wyeth will
jointly market and sell ENBREL in the United States and Canada. An ENBREL
management committee comprised of an equal number of representatives from Amgen
and Wyeth will be responsible for overseeing the marketing and sales of ENBREL
including strategic planning, approval of an annual marketing plan, product
pricing and establishing an ENBREL brand team. The ENBREL brand team, with
equal representation from each of Amgen and Wyeth, will prepare and implement
the annual marketing plan and will be responsible for all sales activities. If
Wyeth fails to market ENBREL effectively or Amgen and Wyeth fail to coordinate
their efforts effectively, Amgen's sales of ENBREL may not reach their full
potential or may decline.
I-17
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This joint proxy statement/prospectus and the other documents incorporated
by reference into this joint proxy statement/prospectus may contain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 with respect to the financial condition, results
of operations, business strategies, operating efficiencies or synergies,
competitive positions, growth opportunities for existing products, plans and
objectives of management, and markets for the stock of Amgen and Immunex and
other matters. Statements in this joint proxy statement/prospectus and the
other documents incorporated by reference that are not historical facts are
hereby identified as "forward-looking statements" for the purpose of the safe
harbor provided by Section 21E of the Securities Exchange Act of 1934 and
Section 27A of the Securities Act of 1933. These forward-looking statements,
including, without limitation, those relating to future business prospects,
revenues and income, in each case relating to Amgen or Immunex, respectively,
wherever they occur in this joint proxy statement/prospectus or the other
documents incorporated by reference, are necessarily estimates reflecting the
best judgment of the respective management of Amgen and Immunex and involve a
number of risks and uncertainties that could cause actual results to differ
materially from those suggested by the forward-looking statements. These
forward-looking statements should, therefore, be considered in light of various
important factors, including those set forth in this joint proxy
statement/prospectus and incorporated by reference into this joint proxy
statement/prospectus. In addition to the risk factors identified elsewhere,
important factors that could cause actual results to differ materially from
estimates or projections contained in the forward-looking statements include
without limitation:
. the ability to integrate the operations of Amgen and Immunex, including
their respective research and development operations, personnel, product
lines and technology;
. the ability to achieve the anticipated synergies and cost savings;
. timing and success of product development and market acceptance of
developed products;
. regulatory approvals and restrictions;
. reimbursement from third party payors;
. guidelines and recommendations in the health care and patient
communities;
. intellectual property positions and litigation;
. competition in the pharmaceutical and biotechnology industries and in
the specific markets in which Amgen and Immunex, respectively, operate;
. unanticipated manufacturing disruptions, delays in regulatory approvals
of new manufacturing facilities or the inability to meet demand for
products;
. fluctuations in operating results; and
. management of rapid growth.
Words such as "estimate," "project," "plan," "intend," "expect,"
"anticipate," "believe" and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are found at
various places throughout this joint proxy statement/prospectus and the other
documents incorporated by reference. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
of this joint proxy statement/prospectus, or in the case of documents
incorporated by reference, as of the date of those documents. Neither Amgen nor
Immunex undertakes any obligation to publicly update or release any revisions
to these forward-looking statements to reflect events or circumstances after
the date of this joint proxy statement/prospectus or to reflect the occurrence
of unanticipated events, except as required by law.
I-18
THE MERGER
The following is a description of the material aspects of the merger. While
we believe that the following description covers the material terms of the
merger, the description may not contain all of the information that is
important to you. We encourage you to read carefully this entire joint proxy
statement/prospectus, including the merger agreement attached to this joint
proxy statement/prospectus as Annex A, for a more complete understanding of the
merger.
General
Each of the Amgen board of directors and the Immunex board of directors has
unanimously approved the merger agreement. At the effective time of the merger,
AMS Acquisition will be merged with and into Immunex, and Immunex will become a
wholly-owned subsidiary of Amgen. Immunex shareholders will receive 0.44 of a
share of Amgen common stock and $4.50 in cash for each share of Immunex common
stock they own. The cash portion of the merger consideration is expected to be
paid out of Amgen's existing funds, cash provided by operating activities,
additional borrowings or a combination of these sources.
Background of the Merger
The management of each of Amgen and Immunex continually reviews its
company's respective position in light of the changing competitive environment
of the biotechnology industry with the objective of determining what strategic
alternatives are available to enhance stockholder value. While each of the
companies believes that it has positive future prospects on a stand-alone
basis, from time to time the management of each of Amgen and Immunex has had
conversations with other companies to explore opportunities to improve the
competitive position of Amgen or Immunex, respectively, including potential
acquisitions or dispositions of assets, joint ventures or other strategic
transactions.
In early 2000, Kevin W. Sharer, Chairman, Chief Executive Officer and
President of Amgen, and Edward V. Fritzky, Chairman, Chief Executive Officer
and President of Immunex, met during a biotechnology industry conference in San
Francisco, California and discussed their general interest in exploring
possible strategic or other transactions involving their two companies. The
discussions were followed by telephone calls later in 2000 and early 2001, but
they did not lead to substantive negotiations at that time.
In February 2001, Immunex engaged Merrill Lynch to assist Immunex in
reviewing strategic alternatives that might be available to it to enhance
shareholder value, including possible business combination transactions.
Merrill Lynch's engagement was later memorialized in writing pursuant to a
letter dated August 1, 2001.
In June 2001, Mr. Sharer contacted Mr. Fritzky to raise the possibility of a
combination of Amgen and Immunex. On several occasions between June and
September 2001, Messrs. Sharer and Fritzky discussed the possibility of a
transaction between their two companies.
In connection with the initial discussions, Amgen began consulting with
financial and legal advisors about issues relating to a possible transaction
with Immunex. Amgen retained Goldman, Sachs & Co., Bear, Stearns & Co. and,
later, Salomon Smith Barney as its financial advisors. Consultations with these
advisors continued throughout the remaining acquisition discussions.
In mid-year 2001, Immunex began preliminary discussions with a third party
regarding a potential business combination transaction. These preliminary
discussions continued during the summer of 2001, but were suspended in the fall
of 2001.
Between early October 2001 and mid-November 2001, executives of Amgen and
Immunex had several communications relating to a possible transaction. Mr.
Fritzky discussed these communications from time to time with Robert Essner,
Chief Executive Officer and President of Wyeth. On October 29, 2001, Amgen sent
Immunex a letter proposing that Amgen would be willing to pursue a transaction
based on an exchange ratio of between 0.47 to 0.50 of a share of Amgen common
stock for each share of Immunex common stock, subject to Amgen's satisfactory
completion of due diligence.
I-19
Mr. Sharer also contacted Mr. Essner to ascertain whether Wyeth would
consider a disposition of its interest in Immunex. Mr. Essner indicated that
Wyeth would be supportive if the Immunex board of directors determined to
pursue a transaction with Amgen at a satisfactory valuation and if other
necessary commercial matters could be agreed upon by the parties. Mr. Sharer
indicated that, as a condition to Amgen entering into an acquisition agreement
with Immunex, Amgen would require Wyeth to agree to vote in favor of the
transaction. Over the next several weeks, Messrs. Sharer and Essner had
periodic conversations to discuss a possible transaction, as did Mr. Fritzky
and Mr. Essner.
On November 1, 2001, during a telephone conversation between Messrs. Fritzky
and Sharer, Mr. Fritzky indicated that Immunex would not be interested in
pursuing a transaction with Amgen unless the value of the consideration were at
a level above that proposed by Amgen in the October 29, 2001 letter, with a
meaningful portion of the consideration paid in cash.
In order to understand better the position of Wyeth on various matters
relating to a possible transaction, in early November 2001, representatives of
Amgen and Wyeth had initial discussions relating to the existing commercial
relationship between Immunex and Wyeth and the need for changes to such
relationship in connection with a possible transaction. The parties also
discussed the need for an agreement defining various rights and obligations of
Wyeth upon its becoming a stockholder of Amgen following a possible
transaction. In mid-November 2001, Amgen delivered to Wyeth a term sheet
outlining proposed terms for various agreements to be entered into between
Amgen and Wyeth in connection with a possible transaction. Wyeth delivered to
Amgen a counterproposal to this term sheet in late November. At that time,
Amgen and Wyeth did not reach agreement on significant issues, including their
respective co-promotion rights with respect to ENBREL upon completion of a
possible transaction.
In order to further explore a possible transaction, Amgen and Immunex
executed a confidentiality and standstill agreement relating to a possible
transaction on November 14, 2001. On November 28, 2001, Amgen and Wyeth
executed a similar agreement relating to a possible transaction.
On November 15, 2001, in response to the issues raised by Mr. Fritzky on
November 1, 2001, Amgen sent a letter to Immunex outlining the terms upon which
Amgen proposed to acquire Immunex. This letter proposed, subject to customary
conditions including satisfactory completion of due diligence review,
consideration equal to the value of 0.52 of a share of Amgen common stock for
each share of Immunex common stock. The letter also stated that Amgen was
willing to pay up to 15% of the total consideration in cash, with the remainder
of the consideration payable by means of an exchange of shares of Amgen common
stock for shares of Immunex common stock.
Between November 15, 2001 and November 26, 2001, representatives of Amgen
and Immunex met or spoke on several occasions to discuss Amgen's November 15,
2001 letter. However, during this time, the parties did not reach agreement on
several significant terms raised in the letter, including the amount and form
of consideration.
Despite lack of agreement regarding significant terms of a possible
transaction, Amgen's legal counsel delivered to Immunex and its legal advisors
a proposed form of merger agreement between Amgen and Immunex on November 26,
2001 in order to begin negotiating more ancillary terms of a possible
transaction. Thereafter, Amgen's legal counsel delivered to Wyeth and its legal
counsel proposed forms of a voting agreement between Amgen and Wyeth, which
provided for an agreement by Wyeth to vote in favor of the proposed transaction
and against alternative transactions, a stockholders' rights agreement, which
provided for various rights and restrictions of Wyeth upon its becoming a
stockholder of Amgen following the merger, and an agreement relating to certain
governance and commercial matters. See "Shareholder Voting Agreement,"
"Stockholders' Rights Agreement" and "Other Agreements with Wyeth."
From November 26, 2001 through December 16, 2001, representatives and legal
advisors of Amgen, Immunex and Wyeth engaged in extensive negotiations both in
person and by telephone regarding each of these agreements. During this period,
representatives of Amgen and Immunex also engaged in extensive discussions
I-20
related to retention and severance arrangements for employees of Immunex. In
addition, Amgen and Wyeth negotiated the terms of amendments to various
existing commercial arrangements between Immunex and Wyeth, including the terms
of an amended and restated promotion agreement. See "Other Agreements with
Wyeth."
Notwithstanding that the parties had not yet reached agreement on
significant issues related to a proposed transaction, including the amount and
form of merger consideration and the roles of executive management following a
proposed transaction, Amgen and Immunex each made available to the other party
data rooms containing legal and business due diligence materials beginning on
December 1, 2001. From December 1, 2001 through December 15, 2001, the parties
reviewed these materials and conducted their on-site due diligence. During this
period, representatives of Amgen and Immunex also met to discuss business
integration issues and employee retention matters.
On December 5, 2001, the Immunex board of directors held a special meeting
at which it was briefed on the status of discussions between Amgen and Immunex
and reviewed the possible transaction. Prior to the meeting, Immunex directors
were provided with draft agreements and other materials regarding the possible
transaction. At the meeting:
. Representatives of Merrill Lynch made a preliminary financial
presentation setting forth Merrill Lynch's financial analyses relating
to the possible transaction, which was similar to the final presentation
made at the December 16, 2001 special meeting of the Immunex board of
directors;
. Representatives of Skadden, Arps, Slate, Meagher & Flom LLP reviewed
matters including the proposed terms of the merger agreement and the
voting agreement and other agreements to be entered into among Amgen,
Wyeth and certain subsidiaries of Wyeth, and the status of open issues;
and
. Immunex management reviewed the status of the negotiations of the
proposed transaction, indicating that the parties had not reached
agreement on significant issues, discussed with the board of directors
the strategic rationale for the possible transaction and the challenges
in trying to manage Immunex during the pendency of a transaction, as
well as employee retention and severance arrangements intended to retain
and to give incentives to Immunex employees during the pendency of the
merger agreement and following the merger.
At the conclusion of the December 5, 2001 meeting, the Immunex board of
directors authorized Immunex management to continue discussions with Amgen
regarding a possible transaction.
At a regular meeting of the Amgen board of directors on December 11, 2001,
the Amgen board extensively reviewed the proposed transaction. Prior to the
meeting, the Amgen board was provided with summaries of each of the transaction
documents between Amgen and Immunex and Wyeth. At the meeting:
. Amgen management reviewed the status of the negotiations of the proposed
transaction, indicating that the parties had not reached agreement on
significant issues, including the amount and form of consideration to be
paid to Immunex shareholders and the commercial arrangements with Wyeth;
. Representatives of Goldman Sachs discussed financial analyses relating
to the proposed transaction;
. Representatives of Latham & Watkins reviewed legal matters including the
proposed terms of, and open issues under, the merger agreement, the
voting agreement, the stockholders' rights agreement, the amended and
restated promotion agreement and other agreements to be entered into
among Amgen, Wyeth and certain subsidiaries of Wyeth;
. Amgen management reviewed with the board the strategic rationale for,
and the potential benefits and risks of, the proposed transaction, as
well as possible alternative transactions; and
. Amgen management reported on the status and results of Amgen's due
diligence review of Immunex.
On December 13, 2001, several national news organizations, including CNBC,
began reporting rumors of a possible transaction between Amgen and Immunex.
These market rumors continued until the announcement of the transaction on
December 17, 2001.
On December 13, 2001 and December 14, 2001, Mr. Sharer and senior officers
of Amgen met with Mr. Essner and senior officers of Wyeth at Wyeth's
headquarters in New Jersey to attempt to reach agreement on the outstanding
issues related to the commercial arrangements between Amgen and Wyeth.
I-21
On December 14, 2001, the Immunex board of directors held a special
telephonic meeting to discuss the status of discussions with Amgen and the
market rumors regarding a possible transaction. At this meeting, Mr. Fritzky
updated the Immunex board of directors regarding developments since the
December 5, 2001 meeting of the Immunex board of directors. Representatives of
Skadden, Arps reviewed significant open issues in the merger agreement,
including the amount of cash consideration and the exchange ratio for the stock
portion of the consideration, termination rights and termination fees, as well
as issues relating to the voting agreement proposed by Amgen and the other
agreements proposed to be entered into among Amgen, Wyeth and certain
subsidiaries of Wyeth. The Immunex board of directors also discussed the status
of employee retention and severance arrangements.
A special telephonic meeting of the Amgen board of directors was held on the
morning of December 16, 2001 to consider approval of the merger agreement, the
agreements with Wyeth and the transactions contemplated by these agreements.
Prior to the meeting, the Amgen board was provided with substantially final
drafts of all of the transaction documents as well as a summary of the
revisions of these documents since the December 11, 2001 meeting. At the
meeting:
. Amgen's senior management updated the Amgen board of directors on the
final results of Amgen's due diligence review;
. Representatives of Latham & Watkins updated the Amgen board of directors
on the significant revisions to the merger agreement and other
transaction documents since the December 11, 2001 board meeting; and
. Representatives of Goldman Sachs made a financial presentation to the
Amgen board of directors and delivered Goldman Sachs' oral opinion that,
as of that date, and based upon and subject to the considerations to be
described in its written opinion and based upon such other matters as
Goldman Sachs considered relevant, the merger consideration to be paid
by Amgen for each outstanding share of Immunex common stock pursuant to
the merger agreement was fair to Amgen from a financial point of view.
Following a lengthy discussion, the Amgen board of directors unanimously
approved the merger agreement, the proposed merger, the issuance of shares in
the merger and each of the transaction documents to be executed by Amgen in
connection with the proposed transaction and unanimously resolved to recommend
that the Amgen stockholders vote to approve the issuance of shares of Amgen
common stock in the merger.
A special meeting of the Immunex board of directors was held on December 16,
2001 to consider adoption of the merger agreement and approval of the
transactions contemplated by the merger agreement. Prior to the meeting, the
Immunex board of directors was provided with materials, including substantially
final drafts of the merger agreement and related documents. At this meeting:
. Mr. Fritzky updated the Immunex board of directors on developments since
the December 14, 2001 meeting of the Immunex board of directors, and
reviewed strategic considerations in connection with the proposed
transaction;
. Representatives of Merrill Lynch made a financial presentation and
presented the fairness opinion of Merrill Lynch discussed in "Opinion of
Financial Advisor--Immunex";
. Representatives of Skadden, Arps reviewed legal matters, including the
terms of the proposed merger agreement and voting agreement, including
changes negotiated since the December 5, 2001 meeting of the Immunex
board of directors, and the principal terms of the other agreements to
be entered into among Amgen, Wyeth and certain of subsidiaries of Wyeth;
and
. Management of Immunex reviewed the due diligence that had been conducted
on Amgen.
During a recess in the Immunex board of directors meeting, representatives
of management and Skadden, Arps reviewed for the compensation committee of the
Immunex board of directors the severance and retention arrangements and
amendments to stock option plans that management recommended be considered in
connection with the proposed transaction, as well as the proposed employment
arrangement between Mr. Fritzky and
I-22
Amgen. Following discussion, the severance and retention and option plan
amendments were approved by the compensation committee and recommended to the
Immunex board of directors for approval. When the board of directors meeting
resumed, following lengthy discussion, the Immunex board of directors
unanimously adopted the merger agreement and approved the transactions
contemplated thereby, including the merger and unanimously resolved to
recommend that Immunex shareholders vote in favor of approval of the merger
agreement. The Immunex board of directors also approved the severance and
retention arrangements and amendments to the stock option plans of Immunex
described under "The Merger--Interests of Directors, Executive Officers and
Shareholders of Immunex in the Merger," which had been approved by the
compensation committee of the Immunex board of directors earlier that day.
The merger agreement, the shareholder voting agreement, the stockholders'
rights agreement, the amended and restated promotion agreement and the
agreement regarding governance and commercial matters were executed by the
parties on the evening of December 16, 2001.
On December 17, 2001, Amgen and Immunex issued a joint press release
announcing the execution of the merger agreement.
On March 11, 2002, Amgen and Immunex entered into the amended and restated
agreement and plan of merger, dated as of December 16, 2001.
Reasons for the Merger--Amgen
The Amgen board of directors believes that the acquisition of Immunex will
enhance Amgen's position as a biotechnology leader with a diverse portfolio of
therapeutic drugs. The Amgen board of directors has unanimously approved the
merger agreement and the transactions contemplated by the merger agreement and
recommends that Amgen stockholders vote "FOR" approval of the issuance of Amgen
common stock in the merger.
In reaching its decision to approve the merger agreement, the Amgen board of
directors consulted with senior members of Amgen's management team regarding
the strategic and operational aspects of the merger and the results of the due
diligence efforts undertaken by management and Amgen's legal advisors. In
addition, the Amgen board of directors held discussions with representatives of
Goldman Sachs and Amgen's other financial advisors regarding the past and
current business operations, financial condition and future prospects of
Immunex. The Amgen board of directors also consulted with Goldman Sachs as to
the fairness, from a financial point of view to Amgen, of the merger
consideration to be paid by Amgen. The Amgen board of directors also consulted
with Amgen's internal counsel and with representatives of Latham & Watkins
regarding legal due diligence matters and the terms of the merger agreement and
related agreements. Amgen management and the Amgen board of directors also
retained L.E.K. Consulting LLC to provide consulting services to Amgen. In
reaching its decision to approve the merger agreement, the Amgen board of
directors considered a variety of factors, a number of which are summarized
below:
. Strengthened Strategic Position. The Amgen board of directors
considered that the merger would further enhance Amgen's role as a
global biotechnology leader with the benefits of increased size, product
base, product pipeline and employees. The Amgen board of directors
determined that the combination of the leading Immunex product, ENBREL,
with Amgen's existing drug portfolio, will enhance Amgen's position in
the inflammation therapeutic area, which will complement Amgen's
nephrology and oncology businesses. The Amgen board of directors
concluded that the acquisition of Immunex would strengthen and diversify
Amgen's product base and product pipeline in key therapeutic areas and
enhance Amgen's strategic position within the biotechnology market.
. Synergies. The Amgen board of directors reviewed the potential
strategic and other benefits of the merger, including the complementary
nature of the businesses of Immunex and Amgen and the opportunity for
significant cost savings. The Amgen board of directors noted that,
although no
I-23
assurances can be given that any particular level of synergies will be
achieved, Amgen's management anticipates cost synergies of more than
$200 million in 2003, and more than $250 million in 2004. Amgen's
ability to achieve these goals is subject to various factors, a number
of which will be beyond its control, including economic conditions and
unanticipated changes in business conditions, and, therefore, there can
be no assurance that these results will be achieved. See "Cautionary
Statement Concerning Forward-Looking Statements."
. ENBREL and Complementary Technology Base. The Amgen board of directors
considered the performance and future prospects of ENBREL and
management's belief that the acquisition will accelerate ENBREL
achieving its full market potential. The Amgen board of directors also
considered the scientific expertise of the research, development and
manufacturing personnel of Immunex and the proven ability of Immunex to
develop successful drugs, and concluded that the merger will
substantially enhance Amgen's discovery research capabilities in
proteins and antibodies.
. Positioned for Long-Term Growth. The Amgen board of directors
considered the fact that the acquisition of Immunex would likely
accelerate Amgen's future revenue and earnings growth, which would add
stockholder value. The Amgen board of directors concluded that the
acquisition of Immunex would improve Amgen's prospects for long-term
growth by creating a larger biotechnology company with increased revenue
and improved future earnings.
. Strategic Alternatives. The Amgen board of directors reviewed other
possible acquisition candidates and determined that the acquisition of
Immunex was a strategic fit and presented a unique opportunity to
enhance and expand Amgen's business, product line and position for
future growth.
. Integration of Immunex. The Amgen board of directors considered the
fact that the combination of the businesses of Amgen and Immunex would
be challenging. However, after consultation with Amgen management, the
Amgen board of directors determined that the operations of Immunex could
be integrated with those of Amgen in an efficient manner.
. Terms of the Merger Agreement. The Amgen board of directors, with the
assistance of counsel, considered the general terms of the merger
agreement, including:
- Fixed Exchange Ratio. The Amgen board of directors considered the
fact that the fixed exchange ratio provides certainty as to the
number of shares of Amgen common stock to be issued to Immunex
shareholders and the percentage of the total shares of Amgen common
stock that current Immunex shareholders will own after the merger.
The Amgen board of directors also considered the premium that the
merger consideration implied.
- No Solicitation; Termination Fee. The Amgen board of directors
reviewed the provisions of the merger agreement that limit the
ability of Immunex to solicit other acquisition offers. The Amgen
board of directors also considered the provisions that require the
payment of a $475 million termination fee by Amgen or Immunex if the
merger agreement is terminated due to specified reasons. The Amgen
board of directors believed that these provisions were reasonable
under the circumstances.
- Conditions to Consummation. The Amgen board of directors reviewed
with counsel the conditions to consummation of the merger, in
particular the likelihood of obtaining the necessary regulatory
approvals and stockholder approvals, and the likelihood that the
merger would be completed. While the Amgen board of directors
believes that these approvals will be obtained in a timely fashion,
the Amgen board of directors also noted that Amgen is not required to
agree to any divestitures or other actions that would reasonably be
expected to have a material adverse effect on Amgen after giving
effect to the merger.
. Opinion of Financial Advisor. The Amgen board of directors considered
the opinion of Goldman Sachs that, as of the date of its opinion, and
based upon and subject to the considerations described in the opinion
and based on such other matters as Goldman Sachs considered relevant,
the merger
I-24
consideration to be paid by Amgen for each outstanding share of Immunex
common stock pursuant to the merger agreement was fair from a financial
point of view to Amgen. See "Opinion of Financial Advisor--Amgen."
. Tax Treatment. The Amgen board of directors also considered the
expected qualification of the merger as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code resulting in the
common stock portion of the merger consideration being received by
Immunex shareholders free of federal income tax.
. Voting Agreement. The Amgen board of directors also discussed the terms
of the shareholder voting agreement between Amgen and Wyeth and two of
its subsidiaries. The Amgen board of directors noted that these
companies, which as of the record date for the Immunex annual meeting
beneficially owned approximately 41% of the outstanding shares of
Immunex common stock, have agreed to vote for approval of the merger
agreement.
. Wyeth Agreements. The Amgen board of directors also considered the
terms and conditions of the stockholders' rights agreement, the
agreement regarding governance and commercial matters and the amended
and restated promotion agreement with Wyeth and certain of its
subsidiaries. After consultation with senior management, the Amgen board
of directors concluded that these agreements would increase the
likelihood of a continued commercial relationship between Wyeth and
Immunex after the merger and enable Amgen to obtain the benefits of this
relationship.
In addition, the Amgen board of directors also identified and considered a
variety of potentially negative factors in its deliberations concerning the
merger, including:
. the risk that the potential benefits sought in the merger might not be
fully realized;
. the possibility that the merger might not be completed, or that
completion might be unduly delayed;
. the effect of public announcement of the merger on Amgen's stock price;
. the projected dilution of Amgen's earnings per share as a result of the
issuance of the shares in the merger, and the estimated time period for
the merger to be accretive to Amgen's earnings per share;
. the risk that management's efforts to integrate Immunex will disrupt
Amgen's operations;
. the substantial charges to be incurred in connection with the merger,
including costs of integrating the businesses of Amgen and Immunex and
transaction expenses arising from the merger;
. the risk that despite the efforts of the combined company, key
management and research and development personnel might not remain
employed by Amgen; and
. various other risks associated with the merger and the businesses of
Amgen, Immunex and the combined company described in the section
entitled "Risks Relating to the Merger" and in the documents
incorporated by reference into this joint proxy statement/prospectus.
The Amgen board of directors concluded, however, that these negative factors
could be managed or mitigated by Amgen or were unlikely to have a material
impact on the merger or Amgen, and that, overall, the potentially negative
factors associated with the merger were outweighed by the potential benefits of
the merger.
The above discussion of the factors considered by the Amgen board of
directors is not intended to be exhaustive, but does set forth the principal
factors considered by the Amgen board of directors. The Amgen board of
directors collectively reached the unanimous conclusion to approve the merger
agreement in light of the various factors described above and other factors
that each member of the Amgen board of directors felt were appropriate. In view
of the wide variety of factors considered by the Amgen board of directors in
connection with its evaluation of the merger and the complexity of these
matters, the Amgen board of directors did not consider it
I-25
practical, and did not attempt, to quantify, rank or otherwise assign relative
weights to the specific factors it considered in reaching its decision. Rather,
the Amgen board of directors made its recommendation based on the totality of
information presented to and the investigation conducted by it. In considering
the factors discussed above, individual directors may have given different
weights to different factors.
The Amgen board of directors unanimously recommends that Amgen stockholders
vote "FOR" approval of the issuance of Amgen common stock in the merger.
Reasons for the Merger--Immunex
While Immunex has excellent growth potential and prospects for its future as
a stand-alone entity, Immunex believes that there are substantial benefits to
Immunex shareholders that can be obtained as a result of the merger. A
combination with Amgen will permit shareholders to receive a substantial equity
interest in a leading biotechnology company, with greater product and revenue
diversity, technological resources and financial strength than Immunex has on
its own. At the same time, Immunex shareholders will receive a fixed cash
component of the merger consideration. At a meeting held on December 16, 2001,
the Immunex board of directors adopted the merger agreement and resolved to
recommend that Immunex shareholders vote "FOR" the approval of the merger
agreement.
In making its determination to adopt the merger agreement, the Immunex board
of directors consulted with senior members of the Immunex management team
regarding various matters, including the strategic and operational aspects of
the merger and the results of the due diligence efforts undertaken by
management and advisors of Immunex. In addition, the Immunex board of directors
consulted with representatives of Merrill Lynch regarding financial matters,
and with internal counsel and representatives of Skadden, Arps regarding legal
matters. In the course of reaching its determination, the Immunex board of
directors considered a variety of factors, including the following material
factors:
. Strategic Benefits of the Merger. The Immunex board of directors
considered the strategic benefits of the merger, including the following:
- Greater Revenue Diversification. After the merger, Amgen will have a
significantly larger revenue base than Immunex, with revenues driven
not only by sales of ENBREL, but also by sales of Amgen's current
product offerings of EPOGEN(R) (Epoetin alfa), NEUPOGEN(R)
(Filgrastim) and ARANESP(R) (darbepoetin alfa). Following the merger,
Amgen will also have a portfolio of leading products and a strong
pipeline of new products in development which the Immunex board of
directors believes should allow the combined company to pursue
multiple new products to maintain revenue diversity. The Immunex
board of directors concluded that the financial risk of dependence on
fewer products will be diminished as a result of the combined
company's greater revenue diversification.
- Enhanced Research and Development Capabilities. The Immunex board of
directors believes that following the merger, Amgen will be at the
forefront of biotechnology research and development. The research and
development budget of the combined company will increase
significantly from the research and development budgets of either
Immunex or Amgen on a stand-alone basis. The Immunex board of
directors believes that by efficiently organizing key research and
development functions and pooling both companies' expertise, and
having access to a broader array of research and development
possibilities, the combined company should be in a position to commit
substantial resources to the most promising product opportunities.
- Enhanced Biologics Manufacturing. The Immunex board of directors
considered that after the merger Amgen would have greater biologics
manufacturing capabilities than either Amgen or Immunex alone and
believes that the manufacturing expertise of Amgen will assist in the
scale-up of ENBREL production.
I-26
- Synergies and Cost Savings. The Immunex board of directors reviewed
the opportunity for cost savings and operation synergies that would
result from the merger. Cost savings are expected from avoiding
hiring and other costs that Immunex and Amgen would otherwise need to
incur in the future and eliminating redundant functions which would
exist in Amgen following the merger. Operating synergies are expected
from enhanced marketing efforts by the combined sales force and the
opportunity to accelerate research and development and product
commercialization. The Immunex board of directors considered that
these operational synergies could also be expected to make the
combined company more attractive to other companies in the industry
seeking a partner with development, production and marketing
capabilities.
. Attractive Financial Terms. The Immunex board of directors believes
that the merger consideration values Immunex common stock at a
financially attractive level and appropriately compensates Immunex
shareholders in light of the current position and prospects of Immunex.
In reaching this determination, the Immunex board of directors
considered, among other things, various facts and analyses with respect
to the financial terms of the proposed merger including the following:
- information concerning the financial performance and financial
condition, business and prospects of Immunex and Amgen, as well as
conditions in the biotechnology industry generally;
- information concerning the recent and historical stock price
performance of Immunex common stock and Amgen common stock, as well
as the views articulated by Wall Street equity analysts regarding
such stocks;
- that the value implied by the merger consideration as of the date the
merger agreement was entered into was at a premium to the one-week,
one-month, six-month and twelve-month average trading prices for
Immunex common stock;
- the value of the exchange ratio provided for in the merger agreement
relative to the then-current market prices and historical trading
prices of Immunex and Amgen shares over the past year. In this
regard, the Immunex board of directors noted that at then-current
market prices, the merger consideration represents a premium of (a)
14% to the price of Immunex common stock on December 14, 2001, the
last trading day prior to the execution of the merger agreement, (b)
34% to the price of Immunex common stock on December 12, 2001, the
last trading day before rumors of a possible business combination
transaction between Immunex and Amgen were reported, (c) 68% to the
six-month average trading price, and (d) 47% to the 12-month average
trading price, of Immunex common stock from December 12, 2001;
- comparisons of historical financial and operational measures for
Immunex and Amgen including revenues and earnings, and the fact that
Immunex shareholders would hold a percentage of the outstanding stock
of Amgen in excess of the percentage of Amgen's earnings contributed
by Immunex in the near term; and
- the fixed nature of the exchange ratio for the stock portion of the
merger consideration and that, therefore, an increase or decrease in
the market value of Amgen common stock will increase or decrease from
current levels the market value of the stock portion of the merger
consideration to be received by the Immunex shareholders at the time
of the closing of the merger.
. Alternatives to the Merger. The Immunex board of directors considered,
as possible alternatives to the merger, continuing to pursue execution
of the business strategy of Immunex as an independent entity or the
possibility of pursuing a business combination with a company other than
Amgen.
- The Immunex board of directors considered the risks and potential
rewards associated with continuing to execute the strategic plan of
Immunex as an independent entity, including, the risks associated
with the dependence on one product as the primary source for revenues
and the reward of existing Immunex shareholders obtaining all of the
increase in the value of Immunex from increased sales of ENBREL in
the United Sates and Canada, and concluded that the likelihood of
increasing shareholder value was greater pursuant to the merger than
the likelihood of doing so on a stand-alone basis.
I-27
- The Immunex board of directors also considered the possibility of
seeking to engage in a business combination or other strategic
transaction with a company other than Amgen, and concluded that a
transaction with Amgen is more feasible and expected to yield greater
benefits to shareholders than other likely alternatives.
. Larger Capitalization and Greater Liquidity. The Immunex board of
directors considered that the market capitalization of Amgen following
the merger would be approximately $73 billion, based on market prices of
Amgen and Immunex common stock as of December 14, 2001. The Immunex
board of directors also considered that only approximately 59% of the
market capitalization of Immunex at the time the merger was announced
was held by shareholders other than Wyeth. The Immunex board of
directors determined that the larger market capitalization and public
float of Amgen following the merger and resultant increases in liquidity
should be beneficial to Immunex shareholders.
. Opinion of Financial Advisor. The Immunex board of directors reviewed
the analyses and presentations prepared by Merrill Lynch, and Merrill
Lynch's opinion to the effect that the consideration to be received by
the Immunex shareholders in the merger was fair to the Immunex
shareholders from a financial point of view. See "Opinion of Financial
Advisor--Immunex."
. Tax Treatment. The Immunex board of directors considered the expected
qualification of the merger as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code resulting in the common
stock portion of the merger consideration being received by Immunex
shareholders free of federal income tax.
. Terms of the Merger Agreement. The Immunex board of directors, with the
assistance of counsel, considered the terms and conditions of the merger
agreement, including:
- restrictions on the conduct of business by Immunex between signing of
the merger agreement and the effective time of the merger;
- the potential effect of the terms of the merger agreement on possible
third-party proposals to acquire Immunex after execution of the
merger agreement, including that if any third party made a superior
proposal, the Immunex board of directors could provide information to
and engage in negotiations with such third party, subject to the
terms and conditions of the merger agreement;
- that Immunex must hold its shareholders meeting and allow
shareholders to vote on the merger agreement even if a third party
makes a superior proposal; and
- that the termination payment provisions of the merger agreement could
have the effect of discouraging alternative proposals for a business
combination with Immunex, but would not preclude bona fide
alternative proposals, and that the size of the termination fee was
reasonable in light of the size and benefits of the transaction.
. Voting Agreement. The Immunex board of directors also reviewed the
terms of the shareholder voting agreement among Amgen, Wyeth and certain
Wyeth subsidiaries providing for, among other things, Wyeth and its
subsidiaries to vote their shares of Immunex common stock, which as of
the record date represented approximately 41% of the outstanding Immunex
shares, in favor of the merger proposal at the Immunex annual meeting.
. Employee Matters. The Immunex board of directors considered the terms
of the merger agreement and other arrangements with respect to Immunex
management and employees intended to maintain the organization of
Immunex and preserve the value of Immunex prior to and following the
merger, including:
- the role that the senior operating management of Immunex is expected
to play in Amgen and the fact that Mr. Fritzky will be appointed to
the Amgen board of directors;
I-28
- provision of Immunex employees with benefits that in the aggregate
are no less favorable than those provided to these employees prior to
the merger for a period of at least two years after completion of the
merger; and
- the existence of severance and retention arrangements of Immunex.
In its review of the proposed merger, the Immunex board of directors
identified and considered a variety of potentially negative factors or risks,
including:
. the risks described under the section entitled "Risks Relating to the
Merger";
. that, while the merger is expected to be completed, there can be no
assurance that all conditions to the parties' obligations to complete
the merger, such as obtaining necessary regulatory approvals, will be
satisfied, and as a result, it is possible that the merger may not be
completed even if approved by shareholders (see "The Merger
Agreement--Conditions to the Completion of the Merger");
. the possibility that if the market price of Amgen common stock declines,
as a result of the fixed nature of the exchange ratio for the stock
portion of the merger consideration, the value of the merger
consideration to be received by the Immunex shareholders at the time of
the closing of the merger would decline;
. the possibility of disruption to the operations of Immunex and a loss of
key employees as a result of the merger; and
. the possibility that the benefits anticipated in connection with the
merger might not be realized by Amgen.
In addition to the factors considered that are described above, in coming to
its determination, the Immunex board of directors was aware of the interests
that some executive officers and directors of Immunex may have with respect to
the merger in addition to their interests as shareholders of Immunex generally.
See "Interests of Directors, Executive Officers and Shareholders of Immunex in
the Merger." The Immunex board of directors was also aware of the agreement
regarding governance and commercial matters, the stockholders' rights
agreement, and the amended and restated promotion agreement, each between
Amgen, Wyeth and subsidiaries of Wyeth. See "Stockholders' Rights Agreement"
and "Other Agreements with Wyeth."
In view of the wide variety of factors considered in connection with its
evaluation of the merger and the complexity of these matters, the Immunex board
of directors did not find it useful to and did not attempt to quantify, rank or
otherwise assign relative weights to these factors. The Immunex board of
directors conducted an overall analysis of the factors described above, and
overall considered the factors to be favorable to and to support its
determination. In considering the factors described above, individual members
of the Immunex board of directors may have given different weight to different
factors.
The Immunex board of directors unanimously recommends that Immunex
shareholders vote "FOR" approval of the merger agreement.
Opinion of Financial Advisor--Amgen
On December 16, 2001, Goldman, Sachs & Co., financial advisor to Amgen,
delivered to the Amgen board of directors its oral opinion, subsequently
confirmed by delivery of a written opinion dated December 16, 2001, that, as of
that date, and based upon and subject to the considerations described in its
opinion and based upon such other matters as Goldman Sachs considered relevant,
the merger consideration to be paid by Amgen for each outstanding share of
Immunex common stock pursuant to the merger agreement was fair from a financial
point of view to Amgen.
I-29
For purposes of the opinion and this description of the opinion, merger
consideration means the right to receive, with respect to each outstanding
share of Immunex common stock:
. 0.44 shares of Amgen common stock; and
. $4.50 in cash.
The full text of the written opinion of Goldman Sachs, which sets forth the
assumptions made, procedures followed, matters considered, and limitations on
the review undertaken in connection with the opinion, is contained in Annex D.
Goldman Sachs provided its opinion for the information and assistance of
Amgen's board of directors in connection with its consideration of the
transaction contemplated by the merger agreement. Goldman Sachs' opinion is not
a recommendation as to how any holder of Amgen common stock should vote with
respect to the transaction. We encourage you to read the opinion in its
entirety.
In connection with its opinion, Goldman Sachs reviewed, among other things:
. the merger agreement;
. the shareholder voting agreement, dated as of December 16, 2001, by and
among Amgen, Wyeth, MDP Holdings, Inc. and Lederle Parenterals, Inc.;
. annual reports to stockholders and annual reports on Form 10-K of Amgen
and Immunex for the five years ended December 31, 2000;
. selected interim reports to stockholders and quarterly reports on Form
10-Q of Amgen and Immunex;
. other communications from Amgen and Immunex to their respective
stockholders; and
. financial analyses and forecasts for Amgen, Immunex and the combined
company on a pro forma basis prepared by the management of Amgen,
including certain cost savings and operating synergies projected by the
management of Amgen to result from the transaction contemplated by the
merger agreement.
Goldman Sachs also held discussions with members of the senior management of
Amgen regarding their assessment of the strategic rationale for, and the
potential benefits of, the transaction contemplated by the merger agreement and
the past and current business operations, financial condition and future
prospects of Amgen, including the future prospects of the combined companies.
Goldman Sachs also held discussions with senior management of Amgen and with
L.E.K. Consulting LLC regarding discussions they had with the senior management
of Immunex regarding the past and current business operations, financial
condition and future prospects of Immunex.
In addition, Goldman Sachs:
. reviewed the reported price and trading activity for Amgen common stock
and Immunex common stock;
. compared financial and stock market information for Amgen and Immunex
with similar information for other selected companies, the securities of
which are publicly traded;
. reviewed the financial terms of selected recent business combinations in
the biotechnology industry specifically and other industries generally;
and
. performed such other studies and analyses as Goldman Sachs considered
appropriate.
Goldman Sachs relied upon the accuracy and completeness of all of the
financial, accounting and other information discussed with or reviewed by it
and assumed the accuracy and completeness of this information for purposes of
rendering its opinion. In that regard, Goldman Sachs assumed, with the consent
of Amgen's board of directors, that the financial forecasts prepared by the
management of Amgen, including the forecasts relating to the cost savings and
operating synergies referred to above, were reasonably prepared on a basis
reflecting the best currently available estimates and judgments of Amgen, and
that the cost savings and operating synergies would be realized in the amounts
and time periods contemplated thereby. In addition, Goldman Sachs did not
I-30
make an independent evaluation or appraisal of the assets and liabilities of
Amgen or Immunex or any of their respective subsidiaries, and Goldman Sachs was
not furnished with any such evaluations or appraisals. Goldman Sachs also
assumed that all material governmental, regulatory or other consents and
approvals necessary for the consummation of the transaction contemplated by the
merger agreement would be obtained without any adverse effect on Amgen or
Immunex or on the contemplated benefits of the transaction contemplated by the
merger agreement.
The following is a summary of the material financial analyses presented by
Goldman Sachs to the Amgen board of directors in connection with providing its
opinion to the Amgen board. In order to more fully understand the financial
analyses used by Goldman Sachs, the tables must be read together with the full
text of each summary. The tables alone are not a complete description of
Goldman Sachs' financial analysis.
Except as otherwise noted, the following quantitative information, to the
extent that it is based on market data, is based on market data as it existed
on or before December 16, 2001, and is not necessarily indicative of current
market conditions.
This summary includes information presented in tabular format. These tables
should be read together with the text of each summary.
Analysis of Transaction Premium and Multiples
Goldman Sachs reviewed the premiums, multiples and other information derived
from the 0.52 exchange ratio implied by the merger consideration provided in
the merger agreement on the date of its opinion. The 0.52 exchange ratio
represents the sum of (1) the 0.44 shares of Amgen common stock that each
outstanding share of Immunex common stock will be exchanged for under the
merger agreement and (2) the 0.08 shares of Amgen common stock that $4.50 would
buy based on the closing price of Amgen common stock of $56.03 on December 14,
2001. Based on the closing price of Immunex common stock of $25.62 and the
closing price of Amgen common stock of $56.03 on December 14, 2001, Goldman
Sachs calculated an implied offer price of $29.15 per share, representing an
implied premium of 13.8% over the closing price of Immunex common stock on
December 14, 2001. Goldman Sachs then calculated the implied premium based on
the implied offer price of $29.15 using the closing prices of Immunex common
stock on December 14, 2001, and on other selected dates and over selected
periods.
The results of these calculations are as follows:
Closing Immunex Price Implied Premium Based on $29.15
Trading Period ($/Share) Implied Offer Price (%)
-------------- --------------------- -------------------------------
December 14, 2001......... $25.62 13.8%
1 Week Average (a)........ 25.19 15.7
1 Month Average (b)....... 26.11 11.7
2 Month Average (c)....... 25.17 15.8
3 Month Average (d)....... 23.27 25.3
6 Month Average (e)....... 19.72 47.8
9 Month Average (f)....... 18.39 58.5
1 Year Average (g)........ 22.23 31.1
52-Week High.............. 49.88 (41.5)
52-Week Low............... 10.75 171.2
--------
(a) 1 week represents trading days from 12/10/2001 through 12/14/2001.
(b) 1 month represents trading days from 11/14/2001 through 12/14/2001.
(c) 2 months represents trading days from 10/14/2001 through 12/14/2001.
(d) 3 months represents trading days from 9/14/2001 through 12/14/2001.
(e) 6 months represents trading days from 6/14/2001 through 12/14/2001.
(f) 9 months represents trading days from 3/14/2001 through 12/14/2001.
(g) 1 year represents trading days from 12/14/2000 through 12/14/2001.
I-31
Goldman Sachs also reviewed the historical trading prices of Immunex common
stock and Amgen common stock in order to compare prices for Immunex common
stock implied by those historical trading prices, using the 0.52 exchange ratio
implied by the merger consideration provided in the merger agreement and based
on the closing price of Amgen common stock on December 14, 2001. Specifically,
Goldman Sachs multiplied the implied 0.52 exchange ratio by the daily closing
prices of Amgen common stock on December 14, 2001 and on other selected dates
and over selected periods to determine the implied price for Immunex common
stock on such dates and over such periods. Goldman Sachs then compared the
implied price for Immunex common stock to the historical trading price of
Immunex common stock for the corresponding period and derived an implied
premium. These analyses indicated the following implied prices for Immunex
common stock and implied premiums for these dates or periods:
Implied Immunex Price
Based on 0.52x
Trading Period Exchange Ratio Implied Premium (%)
-------------- --------------------- -------------------
December 14, 2001..................... $29.15 13.8%
1 Week Average (a).................... 32.24 28.0
1 Month Average (b)................... 32.84 25.8
2 Month Average (c)................... 31.65 25.7
3 Month Average (d)................... 31.29 34.4
6 Month Average (e)................... 31.67 60.6
9 Month Average (f)................... 31.77 72.7
1 Year Average (g).................... 32.56 46.5
52-Week High.......................... 39.06 (21.7)
52-Week Low........................... 23.64 119.9
--------
(a) 1 week represents trading days from 12/10/2001 through 12/14/2001.
(b) 1 month represents trading days from 11/14/2001 through 12/14/2001.
(c) 2 months represents trading days from 10/14/2001 through 12/14/2001.
(d) 3 months represents trading days from 9/14/2001 through 12/14/2001.
(e) 6 months represents trading days from 6/14/2001 through 12/14/2001.
(f) 9 months represents trading days from 3/14/2001 through 12/14/2001.
(g) 1 year represents trading days from 12/14/2000 through 12/14/2001.
Based on an Amgen closing price of $56.03 on December 14, 2001 and using the
implied Immunex price per share of $29.15, Goldman Sachs calculated that the
fully diluted equity consideration in the merger would be $16.90 billion,
assuming exercise of outstanding options that are in-the-money, based on the
implied offer price. Goldman Sachs also determined that the enterprise value
would be $15.88 billion, based on the implied offer price and approximately
$1.02 billion of non-restricted cash and no debt as of September 30, 2001.
Using Amgen management estimates for fiscal years 2001 through 2003, Goldman
Sachs derived the following transaction multiples:
. enterprise value as a multiple of estimated 2001, 2002 and 2003 sales;
. enterprise value as a multiple of estimated 2001, 2002 and 2003 earnings
before interest and taxes, or EBIT; and
. equity consideration on a fully-diluted basis as a multiple of estimated
2001, 2002 and 2003 net income.
I-32
The results of these analyses are as follows:
Implied Transaction
Multiple at Implied Offer
Enterprise Value/Sales Price of $29.15 per Share
---------------------- -------------------------
2001 (estimated)...................................... 15.6x
2002 (estimated)...................................... 12.9x
2003 (estimated)...................................... 8.0x
Enterprise Value/EBIT
---------------------
2001 (estimated)...................................... 140.5x
2002 (estimated)...................................... 139.7x
2003 (estimated)...................................... 42.7x
Diluted Equity Consideration/Net Income
---------------------------------------
2001 (estimated)...................................... 92.1x
2002 (estimated)...................................... 168.7x
2003 (estimated)...................................... 60.3x
Historical Stock Trading Analysis
Goldman Sachs reviewed and compared the historical daily trading prices of
Immunex common stock during the period from December 14, 1999 to December 14,
2001 with the following: (1) a Profitable Biotech Index, comprised of the
common stock of Amgen, Biogen Inc., Chiron Corporation, Genentech Inc., Genzyme
Corporation, IDEC Pharmaceuticals Corp., MedImmune, Inc. and QLT, Inc., and (2)
a Near-Profitable Biotech Index, comprised of the common stock of Cell
Therapeutics, Inc., Cephalon, Inc., Corixa Corporation, Gilead Sciences, Inc.,
ImClone Systems Incorporated, Intermune Inc., Supergen Inc., Tanox Inc., Titan
Pharmaceuticals Inc. and Vertex Pharmaceuticals, Inc.
The analysis indicated that for the period from December 14, 1999 to March
1, 2001, the Immunex common stock initially performed comparably to the above
indices; but, since early April 2000, Immunex common stock has been
underperforming the Near-Profitable Index and since early January 2001, Immunex
common stock has been underperforming both the Profitable Biotech Index and the
Near-Profitable Index.
Goldman Sachs also reviewed and compared the historical daily trading prices
of Amgen common stock during the period from December 14, 1999 to December 14,
2001 with the following: (1) a Profitable Biotech Index, comprised of the
common stock of Immunex, Biogen Inc., Chiron Corporation, Genentech Inc.,
Genzyme Corporation, IDEC Pharmaceuticals Corp., MedImmune, Inc. and QLT, Inc.,
and (2) the Near-Profitable Biotech Index. The analysis indicated that, for the
period from December 14, 1999 to December 14, 2001, Amgen common stock
underperformed the Near-Profitable Biotech Index, but performed comparably to
the Profitable Biotech Index.
Selected Public Companies Analysis
Goldman Sachs reviewed and compared selected financial information relating
to Amgen and Immunex to corresponding financial information, ratios and public
market multiples for comparable companies whose securities are publicly traded.
Goldman Sachs calculated various financial multiples and ratios for Amgen and
Immunex based on the closing price of Amgen and Immunex common stock on
December 10, 2001. These financial multiples and ratios were compared with
those of the companies included the Profitable Biotech Index (including both
Amgen and Immunex) and Near-Profitable Biotech Index used in the historical
stock trading analyses. Where applicable, the financial multiples and ratios
for Amgen and Immunex and the selected companies were calculated using (1) the
closing prices of their common stock on December 10, 2001 and (2) their
respective equity market capitalizations.
I-33
Goldman Sachs' analyses of the selected companies compared, among other
things, the following to the results for Amgen and Immunex:
. market price on December 10, 2001 as a percentage of the 52-week high;
. cash balance as of latest public filings;
. ratio of market price as of December 10, 2001 to 2002 and 2003 estimated
earnings; and
. ratio of market price as of December 10, 2001 to 2002 and 2003 estimated
earnings, relative to Institutional Broker Estimate System's, or IBES,
estimates of long-term growth rates.
The results of these analyses are summarized as follows:
Near-Profitable Biotech
Profitable Biotech Index Index (a)
----------------------- ---------------------- Amgen Immunex
Range Median Range Median Actual Actual
--------- ------ -------- ------ ------ -------
Market Price as a % of
52-Week High 47.7-94.9% 76.2% 18.3-100% 61.3% 87.4% 49.4%
----------------------------------------------------------------------------------------
Cash (in millions) $154-2,523 $632 $42-441 $242 $2,429 $1,016(b)
----------------------------------------------------------------------------------------
Market Price to
Estimated 2002
Earnings 28.7-81.0x 42.7x * * 45.4x 81.0x
----------------------------------------------------------------------------------------
Market Price to
Estimated 2003
Earnings 16.5-60.0x 34.3x * * 37.5x 59.3x
----------------------------------------------------------------------------------------
Estimated 2002 Market
Price to Earnings/
IBES Growth Rates 0.6-2.4x 1.8x * * 2.4x 2.0x
--------
(a) Also includes COR Therapeutics, Inc. and Ilex Oncology, Inc. statistics.
(b) Excludes restricted cash.
* Data not meaningful.
Discounted Cash Flow Analysis
Goldman Sachs performed an analysis to compare the present value per share
of Immunex common stock, using discounted cash flow methodologies, to the value
per share implied by the merger consideration provided in the merger agreement
on the date of its opinion. Using Amgen management's projections for Immunex,
Goldman Sachs performed this analysis on a stand-alone basis. Goldman Sachs
analyzed the business of Immunex based on the following models: (1) the Immunex
base case scenario, which involved Amgen management's projections of future
revenue growth and earnings for the fiscal years 2002 through 2011, without any
cost savings or operating synergies; and (2) the Immunex synergies scenario,
which was based on the projections of future revenue growth and earnings used
in the Immunex base case scenario, but took into account certain cost savings
and operating synergies projected by the management of Amgen to result from the
transactions contemplated by the merger agreement.
In its analysis of both the Immunex base case and synergies scenarios,
Goldman Sachs applied discount rates ranging from 10.0% to 14.0% and terminal
value multiples of estimated 2011 price to earnings ranging from 20.0x to
40.0x. The range for discount rates and terminal value multiples were chosen by
Goldman Sachs based upon its prior experience in analyzing cost of capital
ranges that could be applicable. Based on these discount rates and terminal
value multiples, Goldman Sachs derived theoretical equity reference ranges per
share ranging from $13.27 to $32.64 for the Immunex base case scenario and
$17.96 to $42.82 for the Immunex synergies scenario.
I-34
Goldman Sachs noted that the implied value of $29.15 per share derived on
the date of its opinion from the merger consideration provided in the merger
agreement was within the range of share valuations for Immunex on a stand-alone
basis implied by the range of values derived from the discounted cash flow
analysis of the Immunex base case scenario and the Immunex synergies scenario.
Goldman Sachs also performed an analysis of the present value per share of
Amgen common stock using discounted cash flow methodologies. Using Amgen
management projections as provided by Amgen management for the fiscal years
2002 through 2011, Goldman Sachs performed this analysis for Amgen on a
stand-alone basis. Goldman Sachs analyzed three elements of the business based
on the following models: (1) the Amgen base case scenario, which involved Amgen
management's projections of future revenue growth and earnings for the fiscal
years 2002 through 2011; (2) the Amgen marketed products scenario, which was
based on projections for revenues and growth from approved products and
products currently being marketed by Amgen, and no contribution from Amgen's
pipeline scenario; and (3) the Amgen pipeline products scenario, which was
based on projections for revenues and growth for new compounds in development,
excluding any products currently being marketed.
In its analysis of the Amgen base case scenario and the Amgen marketed
products scenario, Goldman Sachs applied discount rates ranging from 10.0% to
12.0% and terminal value multiples of estimated 2011 price to earnings ranging
from 15.0x to 25.0x. In its analysis of the Amgen pipeline products scenario,
Goldman Sachs applied discount rates ranging from 12.0% to 14.0% and terminal
value multiples of estimated 2011 price to earnings ranging from 20.0x to
40.0x. The various ranges for discount rates and terminal value multiples were
chosen by Goldman Sachs based upon its prior experience in analyzing cost of
capital ranges that could be applicable. Based on these discount rates and
terminal value multiples, Goldman Sachs derived theoretical equity reference
ranges per share ranging from $37.22 to $58.32 for the Amgen base case
scenario, $30.30 to $46.78 for the Amgen marketed products scenario and $4.87
to $8.45 for the pipeline products scenario.
Pro Forma Merger Analysis
Goldman Sachs prepared pro forma analyses of the financial impact of the
merger on Amgen and Immunex on a stand-alone basis for the six fiscal years
ending December 31, 2006 using projections for fiscal years 2001 through 2006
prepared by Amgen's management. For the fiscal years 2001 through 2006, Goldman
Sachs compared, among other financial items, fully diluted earnings per share
for the combined company on a pro forma basis, both with and without taking
into account certain cost savings and operating synergies projected by the
management of Amgen to result from the transaction contemplated by the merger
agreement. The pro forma analysis was calculated based on pro forma cash
earnings per share, which excludes the impact of non-cash charges associated
with identifiable intangible asset amortization. Goldman Sachs' analysis
indicated that the proposed merger, when taking the cost savings and operating
synergies into account but excluding identifiable intangible asset
amortization, would be dilutive to the combined company's fully diluted
earnings per share in estimated years 2002 and 2003 and accretive to the
combined company's fully diluted earnings per share in estimated years 2004,
2005 and 2006 assuming a closing date for the merger in June 2002. Further,
Goldman Sachs' analysis indicated that if none of the cost savings and
operating synergies projected by the management of Amgen to result from the
transaction were realized and all identifiable intangible asset amortization is
excluded, the proposed merger would be dilutive to the combined company's fully
diluted earnings per share in each of the estimated years 2002, 2003, 2004,
2005 and 2006 assuming a closing date for the merger in June 2002.
Contribution Analysis
Goldman Sachs conducted a contribution analysis of Immunex relative to the
pro forma combined entity resulting from the merger using discounted cash flow
methodologies. Using management projections provided by Amgen's management and
assuming all cost savings and operating synergies included in the discounted
cash flow analysis of Immunex, Goldman Sachs derived theoretical equity value
contribution percentages for Immunex assuming a discount rate of 11.0% and
terminal value multiples of 2011 price to earnings for Immunex ranging from
20.0x to 40.0x and for Amgen ranging from 15.0x to 25.0x. Based on this
discount rate and these
I-35
terminal value multiples, Goldman Sachs calculated theoretical equity reference
range contribution percentages ranging from 22.9% to 27.6%.
Goldman Sachs also reviewed the historical and estimated future operating
and financial information, including, among other things, revenue and net
income, for Amgen, Immunex and the pro forma combined entity resulting from the
merger based on Amgen's management projections. A contribution analysis
demonstrates the parties' respective historical and projected contributions, on
a percentage basis, to certain income statement items of the combined company
and compares those contributions to the parties' stockholders' relative equity
interests in the combined company following the merger. Goldman Sachs analyzed
the relative income statement contribution of (1) Immunex, (2) Amgen and (3)
the synergies projected to result from the transaction contemplated by the
merger agreement, to the combined company on a pro forma basis based on
financial data and on the assumptions provided to Goldman Sachs by Amgen's
management for estimated years 2001 through 2006. Goldman Sachs calculated the
relative contributions of Immunex, Amgen and the projected synergies to the
combined company in terms of, among other things, (1) sales, (2) earnings
before interest and taxes, or EBIT, (3) net income, (4) enterprise value, based
on the closing price of Immunex common stock of $25.62 and the closing price of
Amgen common stock of $56.03 on December 14, 2001, Immunex non-restricted cash
of approximately $1.02 billion and no debt as of September 30, 2001 and net
cash of Amgen of approximately $2.11 billion as of September 30, 2001, (5)
fully diluted equity market capitalization, based on the closing market price
of Immunex common stock of $25.62 and Amgen's closing market price of $56.03 on
December 14, 2001, and (6) implied pro forma ownership, based on Amgen's
closing market price of $56.03 and the implied offer price for Immunex common
stock of $29.15 on December 14, 2001. The results of these analyses for 2001
and 2006 are as follows:
% Contribution
-------- -------------- ------------
Sales (a) Amgen(a) Immunex(a)(b) Synergies(a)
--------- -------- -------------- ------------
FY2001 (estimated)........................ 79.6% 20.4% 0.0%
FY2006 (estimated)........................ 69.1% 30.9% 0.0%
EBIT
----
FY2001 (estimated)........................ 93.8% 6.2% 0.0%
FY2006 (estimated)........................ 74.4% 17.9% 7.7%
Net Income (b)
--------------
FY2001 (estimated)........................ 87.3% 12.7% 0.0%
FY2006 (estimated)........................ 76.3% 16.4% 7.3%
Enterprise Value
----------------
81.2% 18.8%
Equity Market Capitalization
----------------------------
80.6% 19.4%
Implied Pro Forma Ownership (c)
-------------------------------
78.3% 21.7%
--------
(a) Includes all sales of ENBREL in the United States and Canada.
(b) Assumes divestiture of LEUKINE in June 2002.
(c) Implied ownership based on total transaction value. Actual pro forma
ownership of Immunex shareholders would be 19.0% based on 15% cash
consideration and 85% stock consideration.
Selected Transactions Analysis
Using the implied value of $29.15 per share for Immunex common stock derived
from the merger consideration provided in the merger agreement and the closing
price of Amgen common stock on December 14, 2001, Goldman Sachs calculated (1)
the premium represented by the implied offer price in relation to the closing
I-36
price of Immunex common stock on December 14, 2001, the last trading day prior
to the announcement of the execution of the merger agreement, and (2) the 2001
estimated sales multiple. The premium was calculated to be 13.8% and the 2001
estimated sales multiple was 15.6x.
Goldman Sachs compared the results with publicly available information for
42 pending and completed merger and acquisition transactions involving
consideration greater than $100 million during 1990 through 2001 in the
biotechnology industry. In addition, Goldman Sachs compared the results with
publicly available information for 18 biotechnology product-driven transactions
for the same time period. The results of the analyses are as follows:
Biotechnology M&A Transactions of Greater Than $100mm,
January 1990 to December 14, 2001 Mean Median
--------------------------------- ---- ------
Premium One Trading Day Prior to Announcement..... 36.6% 32.7%
Premium Four Weeks Prior to Announcement.......... 52.5% 50.9%
LTM Sales Multiple................................ 32.7x 14.9x
Selected Biotechnology Product Transactions,
January 1990 to December 14, 2001
---------------------------------
Premium One Trading Day Prior to Announcement..... 35.4% 28.0%
Premium to Four Weeks Prior to Announcement....... 44.2% 39.9%
LTM Sales Multiple................................ 19.3x 12.4x
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary described above, without considering
the analyses as a whole, could create an incomplete view of the processes
underlying Goldman Sachs' opinion. In arriving at its fairness determination,
Goldman Sachs considered the results of all the analyses and did not attribute
any particular weight to any factor or analysis considered by it; rather,
Goldman Sachs made its determination as to fairness on the basis of its
experience and professional judgment after considering the results of all the
analyses. No company used in the above analyses as a comparison is directly
comparable to Amgen or Immunex, and no transaction used is directly comparable
to the proposed transaction contemplated by the merger agreement.
Goldman Sachs prepared these analyses solely for purposes of providing an
opinion to the Amgen board of directors as to the fairness of the merger
consideration to Amgen from a financial point of view. The analyses do not
purport to be appraisals or to necessarily reflect the prices at which the
business or securities actually may be sold. Analyses based upon forecasts of
future results are not necessarily indicative of actual future results, which
may be significantly more or less favorable than suggested by these analyses.
Because these analyses are inherently subject to uncertainty and are based upon
numerous factors or events beyond the control of the parties or their
respective advisors, none of Amgen, Immunex or Goldman Sachs assumes
responsibility if future results are materially different from those forecast.
As described above, the opinion of Goldman Sachs to the Amgen board of
directors was one of many factors taken into consideration by the Amgen board
in making its determination to approve the merger agreement. The foregoing
summary does not purport to be a complete description of the analyses performed
by Goldman Sachs.
Goldman Sachs, as part of its investment banking business, is continually
engaged in performing financial analyses with respect to businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities as private placements as well as for estate, corporate and
other purposes. Goldman Sachs is familiar with Amgen having provided investment
banking services to Amgen from time to time, including having acted as its
financial advisor in connection with its stock repurchase program and having
acted as its financial advisor in connection with, and having participated in
certain of the negotiations leading to, the merger agreement.
Amgen selected Goldman Sachs as its financial advisor because Goldman Sachs
is an internationally recognized investment banking firm that has substantial
experience in transactions similar to the transaction
I-37
contemplated by the merger agreement. In addition, Goldman Sachs provides a
full range of financial advisory and securities services and, in the course of
its normal trading activities, may from time to time effect transactions and
hold positions in securities, including derivative securities, of Amgen and
Immunex for its own account and for the accounts of customers.
Pursuant to a letter agreement, dated August 6, 2001, Amgen engaged Goldman
Sachs to act as its financial advisor in connection with a potential
transaction involving Immunex. Pursuant to this letter agreement, Amgen agreed
to pay Goldman Sachs a customary transaction fee, the principal portion of
which is payable upon completion of the merger. Amgen has also agreed to
reimburse Goldman Sachs for its reasonable out-of-pocket expenses, including
attorneys' fees and disbursements, and to indemnify Goldman Sachs against
certain liabilities, including certain liabilities under the federal securities
laws.
Opinion of Financial Advisor--Immunex
Immunex retained Merrill Lynch, Pierce, Fenner & Smith Incorporated to act
as its financial advisor in connection with the proposed merger. On December
16, 2001, Merrill Lynch delivered to the Immunex board of directors its oral
opinion, subsequently confirmed by delivery of a written opinion dated December
16, 2001, that, as of that date, and based upon and subject to the factors and
assumptions set forth in the opinion, the merger consideration to be received
by the holders of the shares of Immunex common stock pursuant to the merger was
fair to such holders, from a financial point of view.
The full text of Merrill Lynch's opinion, dated December 16, 2001, which
sets forth the assumptions made, matters considered, and qualifications and
limitations on the review undertaken by Merrill Lynch, is attached as Annex E
to this document and is incorporated into this document by reference. The
summary of Merrill Lynch's opinion set forth below is qualified in its entirety
by reference to the full text of the opinion. Immunex shareholders are
encouraged to read the opinion carefully in its entirety.
Merrill Lynch's opinion was prepared for, and addressed to, the Immunex
board of directors for the information of such directors, and is directed only
to the fairness, from a financial point of view, of the merger consideration to
the Immunex shareholders. The opinion does not address any other aspect of the
merger, including the merits of the underlying decision by Immunex to engage in
the merger. Furthermore, the opinion does not constitute, nor should it be
construed as constituting, a recommendation to Immunex shareholders as to how
such shareholders should vote as to any matter relating to the merger.
In preparing its opinion for the Immunex board of directors, Merrill Lynch
performed a variety of financial and comparative analyses, including, but not
limited to, those described below. The summary set forth below does not purport
to be a complete description of the analyses underlying Merrill Lynch's opinion
or the presentation made by Merrill Lynch to the Immunex board of directors.
The preparation of a fairness opinion is a complex analytical process involving
various determinations as to the most appropriate and relevant methods of
financial analysis and the application of those methods to particular
circumstances and, therefore, a fairness opinion is not readily susceptible to
partial analysis or summary description. In arriving at its opinion, Merrill
Lynch did not attribute any particular weight to any analysis or factor
considered by it, but rather made qualitative judgments as to the significance
and relevance of each analysis and factor. Accordingly, Merrill Lynch believes
that its analyses must be considered as a whole and that selecting portions of
its analyses and factors, or focusing on information presented in tabular
format, without considering all of the analyses and factors or the narrative
description of the analyses, would create a misleading or incomplete view of
the process underlying its opinion.
In performing its analyses, Merrill Lynch made numerous assumptions with
respect to industry performance, general business, economic, market and
financial conditions and other matters, many of which are beyond the control of
Merrill Lynch, Immunex or Amgen. Any estimates contained in the analyses
performed by Merrill Lynch are not necessarily indicative of actual values or
future results, which may be significantly more or
I-38
less favorable than results suggested by such analyses. Additionally, estimates
of the value of businesses or securities do not purport to be appraisals or to
reflect the prices at which such businesses or securities might actually be
sold. Accordingly, such analyses and estimates are inherently subject to
substantial uncertainty. In addition, as described above, Merrill Lynch's
opinion was among several factors taken into consideration by the Immunex board
of directors in making its determination to approve the merger agreement.
Consequently, Merrill Lynch's analyses should not be viewed as determinative of
the decision of the Immunex board of directors or the management of Immunex
with respect to the fairness of the merger consideration set forth in the
merger agreement.
In arriving at its opinion, Merrill Lynch, among other things, did the
following:
. reviewed certain publicly available business and financial information
relating to Immunex and Amgen;
. reviewed certain information with respect to Amgen, including financial
forecasts, relating to the business, earnings, cash flow, assets and
prospects of Amgen, furnished to Merrill Lynch by Amgen;
. reviewed certain information with respect to Immunex, including
financial forecasts, relating to the business, earnings, cash flow,
assets and prospects of Immunex, furnished to Merrill Lynch by Immunex;
. conducted discussions with members of senior management of Immunex and
Amgen concerning their respective businesses and prospects before and
after giving effect to the merger and the potential synergies expected
to result from the merger;
. reviewed the historical market prices, trading activity and valuation
multiples for Immunex common stock and Amgen common stock and compared
them with those of certain publicly traded companies which Merrill Lynch
deemed to be reasonably similar to Immunex and Amgen, respectively;
. compared the results of operations of Immunex and Amgen with those of
certain companies which Merrill Lynch deemed to be reasonably similar to
Immunex and Amgen, respectively;
. compared the proposed financial terms of the transactions contemplated
by the merger agreement with the financial terms of certain other
mergers and acquisitions which Merrill Lynch deemed to be relevant;
. reviewed the potential pro forma impact of the merger;
. reviewed the merger agreement, the shareholder voting agreement, the
stockholders' rights agreement and the agreement regarding governance
and commercial matters; and
. reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as Merrill
Lynch deemed necessary, including Merrill Lynch's assessment of general
economic, market and monetary conditions.
In preparing its opinion, Merrill Lynch assumed and relied on the accuracy
and completeness of all information supplied or otherwise made available to
Merrill Lynch by Immunex and Amgen, and did not assume any responsibility for
independently verifying such information. Merrill Lynch did not undertake an
independent appraisal of any of the assets and liabilities of Immunex or Amgen,
and was not furnished with any such evaluation or appraisal. In addition,
Merrill Lynch did not assume any obligation to conduct any physical inspection
of the properties or facilities of Immunex or Amgen. With respect to the
financial forecasts furnished to or discussed with Merrill Lynch by Immunex and
Amgen, Merrill Lynch assumed that they have been reasonably prepared and
reflect the best currently available estimates and judgments of Immunex or
Amgen's management as to the expected future financial performance of Immunex
or Amgen, as the case may be. Merrill Lynch further assumes that the merger
will qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986 and that all conditions to the merger will be
satisfied.
I-39
Merrill Lynch's opinion is necessarily based upon market, economic and other
conditions as they existed on, and on the information made available to Merrill
Lynch as of, the date of the opinion. Merrill Lynch assumed that in the course
of obtaining the necessary regulatory or other consents or approvals
(contractual or otherwise) for the consummation of the merger, no restrictions,
including divestiture requirements or amendments or modifications, will be
imposed that will have a material adverse effect on the contemplated benefits
of the merger.
In connection with the preparation of its fairness opinion, Merrill Lynch
was not authorized by Immunex or the Immunex board of directors to solicit, and
did not solicit, third party indications of interest for acquisition of all or
any part of Immunex.
The following is a summary of the material analyses performed by Merrill
Lynch in connection with its opinion to the Immunex board of directors dated
December 16, 2001. Some of the financial analyses summarized below include
information presented in tabular format. In order to understand fully Merrill
Lynch's financial analyses, the tables must be read together with the text of
the summary. The tables alone do not constitute a complete description of the
financial analyses. Considering the data set forth below without considering
the full narrative description of the financial analyses, including the
methodologies and assumptions underlying the analyses, could create a
misleading or incomplete view of Merrill Lynch's financial analyses.
Immunex Financial Analysis
The per share prices set forth in this "Immunex Financial Analysis" section
compare to the merger's implied offer price of $32.83, based on 0.44 shares of
Amgen common stock and $4.50 in cash for each share of Immunex common stock,
and based on the per share closing price of Amgen common stock on December 12,
2001 (the day prior to the appearance of media reports of a possible
transaction between Immunex and Amgen). The per share prices also compare to
the merger's implied offer price of $29.15, based on the per share closing
price of Amgen common stock on December 14, 2001 (the day after reports of the
merger became public and the last trading day prior to the announcement of the
merger).
Historical Trading. Merrill Lynch reviewed the historical closing prices of
Immunex common stock for the six-month and twelve-month periods prior to
December 12, 2001. Merrill Lynch focused on the six-month trading range because
unlike the twelve-month range, the six-month trading range was not influenced
by stock prices of Immunex that were prior to the announcement by Immunex of
disappointing clinical studies of ENBREL for congestive heart failure and
NUVANCE(TM) (IL-4 receptor) for asthma. The ranges of closing prices for both
periods are set forth below:
Historical
Common Stock
Prices
-------------
Low High
------ ------
Last Six Months.................................. $14.02 $27.69
Last Twelve Months............................... $11.63 $46.25
Securities Research Analysts' Future Price Targets. Merrill Lynch reviewed
and analyzed projected twelve-month price targets for Immunex common stock
based on publicly available research analysts' estimates. These targets were
then discounted to present value at eighteen percent (18%), which is the
midpoint of the range of the cost of capital of Immunex estimated by Merrill
Lynch:
Present Value
Range
-------------
Low High
------ ------
Twelve-Month Price Target...................... $16.10 $25.42
I-40
Selected Comparable Companies. Merrill Lynch compared financial and stock
market data of Immunex to corresponding data of the following selected publicly
traded companies, which are referred to in this summary as the Large-Cap
Biotech Group:
. Amgen . Genzyme General Corporation
. Biogen, Inc. . IDEC Pharmaceuticals Corporation
. Chiron Corporation . MedImmune, Inc.
. Genentech, Inc. . Serono S.A.
These comparable companies were chosen because they are publicly traded
companies with operations that for purposes of this analysis may be considered
reasonably similar to the operations of Immunex. For each of these comparable
companies, Merrill Lynch compared the price per share of Immunex common stock
as a multiple of the estimated earnings per share, or the PE Ratio, and the PE
Ratio as a multiple of the five year projected growth rate of earnings, or the
PEG Ratio, of Immunex to corresponding projected PE Ratios and PEG Ratios of
the Large-Cap Biotech Group. All multiples were based on closing stock prices
on December 14, 2001, with the exception of Immunex and Amgen, which were based
on stock prices on December 12, 2001. Estimated financial data for the selected
companies were based on publicly available research analysts' estimates.
Merrill Lynch then applied a range of multiples, with 2003 PE Ratios of 40.0x
to 55.0x and 2002 PEG Ratios of 1.7x to 2.1x, to a range of financial forecasts
for Immunex based on estimates of the management of Immunex and based on
publicly available research analysts' estimates. The results of such comparison
are presented below:
2003 PE Ratio 2002 PEG
------------- -------------
Low High Low High
------ ------ ------ ------
Implied Valuation Range........................ $14.40 $30.25 $13.60 $25.20
None of the selected companies is identical to Immunex. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of the selected companies and other factors that could affect
the public trading value of Immunex and the selected companies.
Selected Transactions. Using publicly available information, Merrill Lynch
reviewed the multiples implied by the purchase prices paid, or proposed to be
paid at the time of announcement, of the following twelve healthcare industry
acquisitions, including proposed acquisitions, that Merrill Lynch deemed
relevant in its evaluation of the fairness of the merger consideration to the
Immunex shareholders:
Target Acquiror
------ --------
Aviron MedImmune, Inc.
DuPont Pharmaceuticals Company Bristol-Myers Squibb Company
ALZA Corporation Johnson & Johnson
Knoll, Inc. Abbott Laboratories
BioChem Pharma Inc. Shire Pharmaceuticals Group plc
Dura Pharmaceuticals, Inc. Elan Corp. plc
Jones Pharma Incorporated King Pharmaceuticals, Inc.
Roberts Pharmaceutical Corporation Shire Pharmaceuticals Group plc
Centocor, Inc. Johnson & Johnson
ALZA Corporation Abbott Laboratories
Agouron Pharmaceuticals, Inc. Warner-Lambert Company
R.P. Scherer Corporation Cardinal Health, Inc.
For each of these selected transactions, Merrill Lynch compared the price
per share as a multiple of corresponding projected one-year and two-year
forward earnings per share and the offer value as a multiple of projected net
income, where appropriate, of the respective targets. Estimated financial data
for the respective
I-41
targets were based on publicly available research analysts' estimates. Merrill
Lynch then applied a range of multiples, with two-year forward PE Ratios of
40.0x to 45.0x, to a range of financial forecasts for Immunex, based on
estimates of the management of Immunex and based on publicly available research
analysts' estimates. The results of such comparison are presented below:
Two-Year
Forward PE
-------------
Low High
------ ------
Implied Valuation Range............................... $14.40 $24.75
No company or transaction used in the Selected Transactions analysis is
identical to Immunex or the proposed merger. Accordingly, an analysis of the
results of the Selected Transactions analysis involved complex considerations
of the companies and transactions involved and other factors that could affect
acquisition value of the companies and Immunex.
Discounted Cash Flow. Merrill Lynch performed a discounted cash flow
analysis of the projected after-tax unlevered free cash flows that Immunex
could produce over the fiscal years 2002 through 2004 based on estimates of the
management of Immunex and based on publicly available research analysts'
estimates. Merrill Lynch calculated implied equity values per share of Immunex
common stock, by utilizing discount rates between 16.0%-20.0%, and between
27.5%-32.5% to assess the more aggressive of the internal forecasts, and
terminal value multiples of estimated 2005 after-tax EBIT ranging from 35.0x to
45.0x:
Discounted Cash
Flow
---------------
Low High
------ ------
Implied Valuation Range............................... $18.80 $43.98
Amgen Financial Analysis
Shares of Amgen common stock closed at a price per share of $64.39 on
December 12, 2001, and at a price of $56.03 on December 14, 2001.
Historical Trading. Merrill Lynch reviewed the historical closing prices of
Amgen common stock for the six-month and twelve-month periods prior to December
12, 2001. The ranges of closing prices for both periods are set forth below:
Historical
Common Stock
Prices
-------------
Low High
------ ------
Last Six Months......................................... $54.01 $68.49
Last Twelve Months...................................... $51.51 $74.19
Securities Research Analysts' Future Price Targets. Merrill Lynch reviewed
and analyzed projected twelve-month price targets for Amgen common stock based
on publicly available research analysts' estimates. These targets were then
discounted to present value at thirteen percent (13%), which is the cost of
capital of Amgen estimated by Merrill Lynch:
Present Value
Range
-------------
Low High
------ ------
Twelve Month Price Target.............................. $60.18 $79.65
I-42
Selected Comparable Companies. Based on comparisons with selected multiples
for the Large-Cap Biotech Group (see discussion under "--Immunex Financial
Analysis--Selected Comparable Companies," for the purposes of this analysis,
substitute "Amgen" for "Immunex," and "Immunex" for "Amgen," where
appropriate), Merrill Lynch calculated the implied equity reference range for
Amgen to be approximately $53.50 to $65.00 per share, based on 2002 PE Ratios
ranging from 38.0x to 46.0x and 2002 PEG Ratios ranging from 1.9x to 2.3x.
Discounted Cash Flow. Merrill Lynch performed a discounted cash flow
analysis of the projected after-tax unlevered free cash flows that Amgen could
produce over the fiscal years 2002 through 2004 based on estimates of the
management of Amgen. Merrill Lynch calculated implied equity values per share
of Amgen common stock, by utilizing discount rates ranging from 12.0% to 14.0%
and terminal value multiples of estimated 2005 after-tax EBIT ranging from
30.0x to 40.0x. This analysis indicated an implied equity reference range for
Amgen of approximately $54.00 to $73.00 per share.
Relative Valuation Analysis
The implied exchange ratios set forth in this "Relative Valuation Analysis"
section compare to an imputed 100% stock exchange ratio of approximately 0.52x.
Implied Historical Exchange Ratio. Merrill Lynch compared the exchange
ratio to the relative daily closing stock prices of Immunex and Amgen for the
six-month and twelve-month periods prior to December 12, 2001. The following
table presents the ranges of the implied exchange ratios resulting from this
analysis:
Implied Historical
Exchange Ratio
------------------
Low High
----- -----
Last Six Months....................................... 0.22x 0.48x
Last Twelve Months.................................... 0.21x 0.73x
Relative Comparable Companies. Merrill Lynch compared the implied per share
equity reference ranges for Immunex and Amgen (see "--Immunex Financial
Analysis--Selected Comparable Companies" and "--Amgen Financial
Analysis--Selected Comparable Companies") in order to derive an implied
exchange ratio reference range for Immunex and Amgen. The results of this
analysis are set forth below:
PE Ratio PEG
----------- -----------
Low High Low High
----- ----- ----- -----
Implied Exchange Ratio........................... 0.22x 0.56x 0.21x 0.47x
Relative Discounted Cash Flow. After performing the respective discounted
cash flow analysis calculations with respect to Immunex and Amgen, Merrill
Lynch compared the implied per share equity reference ranges for Immunex and
Amgen in order to derive an implied exchange ratio reference range for Immunex
and Amgen. This analysis indicated the following implied exchange ratio
reference range:
Discounted
Cash Flow
-----------
Low High
----- -----
Implied Exchange Ratio................................ 0.26x 0.81x
Relative Contribution. Merrill Lynch performed an analysis of the relative
contributions by each of Immunex and Amgen to the net income of the pro forma
combined company (assuming a 100% stock transaction). In doing so, Merrill
Lynch reviewed the estimated 2002, 2003, 2004 and 2005 contribution to net
income of Immunex and Amgen, based on, in the case of Amgen, forecasts provided
by the management of Amgen, and, in the case of Immunex, a range of forecasts
based on estimates of the management of Immunex
I-43
and based on publicly available research analysts' estimates, and compared the
results to the implied ownership of Amgen in the pro forma combined company.
Summarized below are the results of Merrill Lynch's calculations of the implied
exchange ratios based upon these estimated contributions of each of Immunex and
Amgen to the pro forma combined company for each of the years indicated:
Relative Contribution
-----------------------------------------------
Year 2002 Year 2003 Year 2004 Year 2005
----------- ----------- ----------- -----------
Implied Exchange Ratio....... 0.15x-0.22x 0.22x-0.34x 0.33x-0.54x 0.37x-0.79x
Pro Forma Analysis
Merrill Lynch performed an analysis of the potential pro forma financial
impact of the merger on the earnings per share of Amgen for the years 2002,
2003, 2004 and 2005, based on, in the case of Amgen, forecasts provided by the
management of Amgen, and, in the case of Immunex, a range of forecasts based on
estimates of the management of Immunex and based on publicly available research
analysts' estimates. In performing this analysis, Merrill Lynch assumed, among
other things:
. receipt by the Immunex shareholders of 0.44 shares of Amgen common stock
and $4.50 cash for each share of Immunex common stock held;
. completion of the merger on or before June 30, 2002;
. realization of the pre-tax synergies of approximately $200 to $300
million, phased in over time, expected by the management of Amgen to
result from cost-reduction initiatives; and
. calculation of pro forma earnings per share before amortization of
identifiable intangibles.
The results of this analysis indicate that, including the impact of the cost
savings and related expenses and synergies expected to result from the merger,
the merger would be highly accretive to Immunex shareholders out to 2004 in all
cases and out to 2005 in most cases. In terms of the pro forma impact to the
per share earnings of Amgen, the merger would be dilutive to Amgen stockholders
in the first two years, and in most cases accretive or modestly dilutive in
2004 and 2005.
Merrill Lynch also analyzed the potential pro forma financial impact of the
merger on the compound annual growth rates for revenues and earnings per share
of Amgen from 2002 to 2005, based on, in the case of Amgen, forecasts provided
by the management of Amgen, and, in the case of Immunex, a range of forecasts
based on estimates of the management of Immunex and based on publicly available
research analysts' estimates. Subject to the assumptions set forth in the first
paragraph of this section, the results of this analysis indicate that the
merger would be substantially additive to the growth rate of Amgen's projected
revenue and earnings per share over the next several years.
Miscellaneous
Pursuant to the terms of Merrill Lynch's engagement, Immunex has agreed to
pay Merrill Lynch for its financial advisory services in connection with the
merger a fee of $30 million, a significant portion of which is contingent upon
the closing of the merger. Immunex also has agreed to reimburse Merrill Lynch
for reasonable out-of-pocket expenses incurred by Merrill Lynch in performing
its services and to indemnify Merrill Lynch and related persons and entities
against liabilities, including liabilities under the federal securities laws,
arising out of Merrill Lynch's engagement.
Immunex retained Merrill Lynch based upon Merrill Lynch's experience and
expertise. Merrill Lynch is an internationally recognized investment banking
and advisory firm. Merrill Lynch, as part of its investment banking business,
is regularly engaged in the valuation of businesses and securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for corporate and other purposes.
I-44
Merrill Lynch has, in the past, provided financial advisory and financing
services to Immunex and Amgen and has received fees for the rendering of such
services. Merrill Lynch is currently providing financial advisory services in
connection with the intended divestiture of LEUKINE. In addition, in the
ordinary course of its business, Merrill Lynch and its affiliates may actively
trade shares of Immunex common stock and other securities of Immunex, as well
as shares of Amgen common stock and other securities of Amgen, for their own
account and for the account of customers and, accordingly, may at any time hold
a long or short position in these securities.
Regulatory Approvals Required for the Merger
The merger is subject to review by the Antitrust Division of the U.S.
Department of Justice and the U.S. Federal Trade Commission under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. Under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, Amgen and Immunex are
required to make pre-merger notification filings and to await the expiration or
early termination of the statutory waiting period prior to completing the
merger. On January 7, 2002, Amgen and Immunex each filed a Premerger
Notification and Report Form with the Antitrust Division of the U.S. Department
of Justice and the U.S. Federal Trade Commission. On February 6, 2002, Amgen
and Immunex received a request for additional information from the U.S. Federal
Trade Commission. The waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 has been extended while representatives of the U.S.
Federal Trade Commission conduct their review.
The merger is subject to review by the German Federal Cartel Office under
the Act against Restraints of Competition (Gesetz gegen
Wettbewerbsbeschrankungen). Amgen made a filing relating to the merger with the
German Federal Cartel Office on March 20, 2002, which Immunex joined. The
merger may also be subject to review by the governmental authorities of various
other jurisdictions. Amgen and Immunex have not yet obtained any of the
governmental or regulatory approvals required to complete the merger.
There can be no assurance that the governmental reviewing authorities will
terminate the applicable statutory waiting periods or clear the merger at all
or without restrictions or conditions that would have a materially adverse
effect on the combined company if the merger is completed. These restrictions
and conditions could include the grant of a complete or partial license,
divestiture, spin-off or the holding separate of assets or businesses. Under
the terms of the merger agreement, neither Amgen nor Immunex is required to
commit to any divestitures, licenses or hold separate or similar arrangements
with respect to its assets or conduct of business arrangements if such
divestiture, license, holding separate or arrangement is not conditioned upon
the consummation of the merger or would have a material adverse effect on Amgen
after giving effect to the merger. Either Amgen or Immunex may refuse to
complete the merger if any such restrictions or conditions are required by
governmental authorities as a condition to approving the merger. No additional
stockholder approval is expected to be required or sought for any decision by
Amgen or Immunex, after the annual meetings, to agree to any terms and
conditions necessary to resolve any regulatory objections to the merger, and
stockholder approval will not be sought unless additional stockholder approval
is required to approve the terms and conditions under applicable law. In
connection with the transaction, Immunex intends to divest the product LEUKINE
in order to facilitate clearance from the U.S. Federal Trade Commission.
In addition, during or after the statutory waiting periods and clearance of
the merger, and even after completion of the merger, either the Antitrust
Division of the U.S. Department of Justice, the U.S. Federal Trade Commission
or the German Federal Cartel Office could challenge, seek to block or block the
merger under the antitrust laws, as it deems necessary or desirable in the
public interest. Other competition agencies with jurisdiction over the merger
could also initiate action to challenge or block the merger. In addition, in
some jurisdictions, a competitor, customer or other third party could initiate
a private action under the antitrust laws challenging or seeking to enjoin the
merger, before or after it is completed. Amgen and Immunex cannot be sure that
a challenge to the merger will not be made or that, if a challenge is made,
Amgen and Immunex will prevail.
I-45
Material United States Federal Income Tax Consequences
The following general discussion summarizes the material United States
federal income tax consequences of the merger to Amgen, Amgen stockholders,
Immunex and to United States holders of Immunex common stock who hold their
Immunex common stock as a capital asset. It does not address all of the United
States federal income tax consequences that may be relevant to particular
shareholders in light of their individual circumstances or to shareholders who
are subject to special rules, including, without limitation:
. financial institutions;
. tax-exempt organizations;
. insurance companies;
. dealers in securities or foreign currencies;
. foreign holders;
. persons who hold such shares as a hedge against currency risk, or as
part of a constructive sale or conversion transaction; or
. holders who acquired their shares upon the exercise of employee stock
options or otherwise as compensation.
No ruling has been or will be sought from the Internal Revenue Service as to
the United States federal income tax consequences of the merger, and the
following summary is not binding on the Internal Revenue Service or the courts.
It is based upon the Internal Revenue Code, laws, regulations, rulings and
decisions in effect as of the date of this proxy statement/prospectus, all of
which are subject to change, possibly with retroactive effect. This summary
does not address tax consequences under state, local and foreign laws.
For purposes of this discussion, we use the term "United States holder" to
mean:
. a citizen or resident of the United States;
. a corporation, partnership or other entity created or organized under
the laws of the United States or any of its political subdivisions;
. a trust that (x) is subject to the supervision of a court within the
United States and the control of one or more United States persons or
(y) has a valid election in effect under applicable United States
Treasury regulations to be treated as a United States person; or
. an estate that is subject to United States federal income tax on its
income regardless of its source.
Holders of Immunex common stock are strongly encouraged to consult their tax
advisors as to the specific tax consequences to them of the merger, including
the applicability and effect of federal, state, local and foreign income and
other tax laws.
Exchange of Immunex Common Stock for a Combination of Amgen Common Stock and
Cash.
The consummation of the merger is conditioned on (i) the receipt by Amgen of
an opinion from Latham & Watkins, counsel to Amgen, dated the date of the
effective time of the merger, to the effect that the merger will be treated as
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code and (ii) the receipt by Immunex of an opinion from Skadden, Arps, Slate,
Meagher & Flom LLP, counsel to Immunex, dated the date of the effective time of
the merger, to the effect that the merger will be treated as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code. Neither
Amgen nor Immunex may waive these conditions to the merger after Amgen
stockholders and Immunex shareholders have approved the merger unless further
Amgen stockholder and Immunex shareholder approvals are obtained with
appropriate disclosure. The opinions will be based on representations contained
in representation letters provided by Amgen and Immunex, all
I-46
of which must continue to be true and accurate in all respects as of the
effective time of the merger, and on certain customary factual assumptions. The
opinions will not be binding on the Internal Revenue Service or the courts.
Assuming that the merger is treated as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code:
. An Immunex shareholder will recognize gain equal to the lesser of (A)
the cash received by the shareholder in the merger or (B) an amount
equal to the excess, if any, of (i) the sum of the amount of cash and
the fair market value of the Amgen common stock received by the
shareholder in the merger over (ii) the shareholder's adjusted tax basis
in the Immunex common stock exchanged by the shareholder in the merger.
For this purpose, an Immunex shareholder must calculate gain or loss
separately for each identifiable block of Immunex common stock exchanged
by the shareholder in the merger and cannot utilize a loss realized on
one block of Immunex common stock to offset a gain realized on another
block of Immunex common stock;
. Except as discussed below under "Tax Character of Cash Consideration,"
the gain recognized by an Immunex shareholder in the merger will be
treated as capital gain;
. An Immunex shareholder will not recognize any loss in the merger
(except, possibly, in connection with cash received instead of a
fractional share, as discussed below);
. The aggregate tax basis of the shares of Amgen common stock received by
an Immunex shareholder (before reduction for the basis in any fractional
share of Amgen common stock for which cash is received) in exchange for
Immunex common stock in the merger will be the same as the aggregate tax
basis of the shareholder's Immunex common stock, decreased by the amount
of cash received by the shareholder in the merger (excluding any cash
received instead of a fractional share) and increased by the amount of
gain recognized by the shareholder in the merger (including any portion
of the gain that is treated as a dividend but excluding any gain
recognized as a result of cash received instead of a fractional share);
. An Immunex shareholder's holding period with respect to the shares of
Amgen common stock received in the merger will include the holding
period of the Immunex common stock exchanged for Amgen common stock;
. Amgen will not recognize gain or loss in the merger; and
. Amgen stockholders will not recognize gain or loss in the merger.
Tax Character of Cash Consideration
In the case of most Immunex shareholders having no direct or indirect
control over Amgen's corporate affairs, any gain will be treated as capital
gain for United States federal income tax purposes. However, there are
circumstances under which all or a part of any gain that an Immunex shareholder
recognizes in the merger could be treated as a distribution of a dividend
instead of capital gain to the extent of the shareholder's ratable share of the
undistributed accumulated earnings and profits of the corporation. Due to the
inherently factual nature of this determination, Immunex shareholders are
encouraged to consult their tax advisors to determine whether any cash received
in exchange for their Immunex stock in the merger will be treated as a
distribution of a dividend.
Cash Received Instead of a Fractional Share
Amgen will not issue any fractional shares of Amgen common stock in the
merger. Instead, each holder of Immunex common stock exchanged in the merger
who would otherwise be entitled to receive a fraction of a share of Amgen
common stock will receive cash, without interest, in lieu of a fractional
share. An Immunex shareholder who receives cash instead of a fractional share
of Amgen common stock will generally recognize capital gain or loss based on
the difference between the amount of the cash received instead of a fractional
share and the shareholder's tax basis in such fractional share.
I-47
Tax Consequences of Dissenters' Rights
An Immunex shareholder who dissents to the merger will generally recognize
capital gain or loss in an aggregate amount equal to the difference between the
amount of cash received and the shareholder's tax basis in the dissenting
shares. To the extent Amgen is required to file information returns with
respect to amounts paid to an Immunex shareholder who dissents to the merger,
Amgen intends to report such payments as taxable income to the Immunex
shareholder when paid to the holder. However, there is no authority directly on
point, and it is possible that a shareholder will be required to recognize gain
or loss at the effective time of the merger, and in advance of the receipt of
any cash payment, in an amount generally equal to the trading price of Immunex
common stock at the effective time of the merger. In this event, capital gain
or loss would also be recognized by the shareholder at the time the appraised
fair cash value is received, to the extent that such payment exceeds or is less
than the amount realized at the effective time of the merger, and a portion of
such payment may be characterized as interest income.
Capital Gain
Any capital gain recognized by an individual holder of Immunex common stock
in connection with the transfer of his or her Immunex common stock in the
merger will be subject to a maximum United States federal income tax rate of
20% if the individual's holding period for his or her Immunex common stock is
more than 12 months at the effective time of the merger.
Restructure of Transaction
Each of Amgen and Immunex has agreed that it will not take any action that
would disqualify the merger, and to use its reasonable best efforts to take any
action to qualify the merger, as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code. If tax counsel to either Amgen or Immunex
is unable to render its opinion that the merger qualifies as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, the parties
have agreed to restructure the transaction such that tax counsel to Amgen and
Immunex are able to render their opinions. No such restructuring of the
transaction shall (a) result in any change in the merger consideration, (b) be
materially adverse to the interests of Amgen, Immunex, AMS Acquisition, Amgen
stockholders or Immunex shareholders, or (c) unreasonably impede or delay
consummation of the merger. If the transaction is restructured in such a
manner, the material tax consequences of the merger would be the same as those
described in this summary.
Backup Withholding
Noncorporate holders of Immunex common stock may be subject to backup
withholding on any cash payments received in the merger. An Immunex shareholder
will not be subject to backup withholding, however, if the holder (a) furnishes
a correct taxpayer identification number and certifies that such holder is not
subject to backup withholding on the substitute Internal Revenue Service Form
W-9 or successor form included in the letter of transmittal to be delivered to
such holder following the completion of the merger; (b) provides a
certification of foreign status on Internal Revenue Service Form W-8BEN or a
successor form; or (c) is otherwise exempt from backup withholding.
Any amounts withheld under the backup withholding rules will be allowed as a
refund or credit against a holder's United States federal income tax liability,
provided the holder furnishes the required information to the Internal Revenue
Service.
Tax matters are very complicated, and the tax consequences of the merger to
an Immunex shareholder will depend on such holder's particular tax situation.
Immunex shareholders are encouraged to consult their tax advisors regarding the
specific tax consequences of the merger, including tax return reporting
requirements, the applicability of federal, state, local and foreign tax laws
and the effect of any proposed change in the tax laws.
I-48
Accounting Treatment
In accordance with accounting principles generally accepted in the United
States, Amgen will account for the merger using the purchase method of
accounting. Under this method of accounting, Amgen will record the cash
consideration, the market value (based on an average of the closing prices of
Amgen common stock for a range of trading days from two days before and after
December 17, 2001, the announcement date) of its common stock issued in the
merger, the fair value of Amgen options issued in exchange for the options to
purchase shares of Immunex common stock and the amount of direct transaction
costs associated with the merger as the estimated purchase price of acquiring
Immunex. Amgen will allocate the estimated purchase price to the net tangible
and amortizable intangible assets acquired (primarily developed technology,
core technology and in-process research and development), based on their
respective fair values at the date of the completion of the merger. Any excess
of the estimated purchase price over the fair value of net assets acquired will
be accounted for as goodwill.
Amortizable intangible assets, currently estimated at $6,570,700,000, will
generally be amortized over useful lives of 15 years. In-process research and
development, which is currently estimated at $2,389,200,000, will be expensed
during the fiscal quarter in which the merger is completed. In accordance with
the Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets," goodwill resulting from the business combination of
$9,399,300,000, will not be amortized but instead will be tested for impairment
at least annually (more frequently if certain indicators are present).
In the event that Amgen's management determines that the value of goodwill
has become impaired, the combined company will incur an accounting charge for
the amount of impairment during the fiscal quarter in which the determination
is made. The amounts listed in the above paragraph are only preliminary
estimates, however, actual amounts may differ from these estimates.
Listing of Amgen Common Stock
Amgen will use reasonable best efforts to:
. cause the shares of Amgen common stock to be issued in the merger to be
approved for listing on the Nasdaq National Market upon the completion
of the merger; and
. cause the shares of Amgen common stock to be issued upon the exercise of
converted Immunex stock options to be approved for listing on the Nasdaq
National Market.
Delisting and Deregistration of Immunex Common Stock
If the merger is completed, Immunex common stock will be delisted from the
Nasdaq National Market and deregistered under the Securities Exchange Act of
1934, and Immunex will no longer file periodic reports with the SEC.
Restrictions on Sales of Shares of Amgen Common Stock Received in the Merger
The shares of Amgen common stock to be issued in the merger will be
registered under the Securities Act of 1933 and will be freely transferable,
except for shares of Amgen common stock issued to any person who is deemed to
be an "affiliate" of Immunex under the Securities Act of 1933 prior to the
merger. Persons who may be deemed to be "affiliates" of Immunex prior to the
merger include individuals or entities that control, are controlled by, or are
under common control with Immunex prior to the merger, and may include officers
and directors, as well as significant shareholders of Immunex prior to the
merger. Affiliates of Immunex prior to the merger may not sell any of the
shares of Amgen common stock received by them in the merger except pursuant to:
. an effective registration statement under the Securities Act of 1933
covering the resale of those shares;
. an exemption under paragraph (d) of Rule 145 under the Securities Act of
1933; or
. any other applicable exemption under the Securities Act of 1933.
Amgen's registration statement on Form S-4, of which this joint proxy
statement/prospectus is a part, does not cover the resale of shares of Amgen
common stock to be received by affiliates of Immunex in the merger.
I-49
Interests of Directors, Executive Officers and Shareholders of Immunex in the
Merger
In considering the recommendation of the Immunex board of directors that
Immunex shareholders vote in favor of approval of the merger agreement, Immunex
shareholders should be aware that some Immunex executive officers and directors
may have interests in the merger that may be different from, or in addition to,
their interests as shareholders of Immunex.
These interests relate to or arise from, among other things:
. the continued indemnification of current directors and officers of
Immunex under the merger agreement and providing these individuals with
directors' and officers' insurance;
. the retention of some of the officers and directors of Immunex as
officers of Amgen or, in the case of Mr. Fritzky, as a director of, and
special advisor to, Amgen;
. the execution of an employment agreement between Amgen and Mr. Fritzky;
. the potential receipt of severance and retention payments; and
. the conversion, acceleration, and cancellation and reissuance of stock
options.
Amgen has also entered into four agreements with Wyeth and some of its
subsidiaries. The Immunex board of directors was aware of these interests and
considered them, among other matters, in making its recommendation.
Indemnification; Directors' and Officers' Insurance
Under the merger agreement, Amgen has agreed to indemnify all directors,
officers and employees of Immunex and its subsidiaries to the fullest extent
permitted by law for all acts or omissions prior to the merger by such
individuals in such capacities. Amgen has also agreed to provide, for six years
after the merger, directors' and officers' liability insurance in respect of
acts or omissions occurring prior to the merger covering each person currently
covered by the directors' and officers' liability insurance policy of Immunex
on terms and in amounts no less favorable than those of the policies of
Immunex, provided that Amgen will not be required to pay an annual premium for
the insurance in excess of 200% of the estimated premium for the 2002 fiscal
year. Amgen has agreed to cause to be maintained charter and bylaw provisions
with respect to indemnification and advancement of expenses that are at least
as favorable to the intended beneficiaries as those contained in charter and
bylaws of Immunex as in effect on the date the merger agreement was signed.
Amgen has also agreed to honor all indemnification agreements entered into by
Immunex or any of its subsidiaries.
Management Positions
Amgen expects that Edward V. Fritzky, Chairman of the Board, Chief Executive
Officer and President of Immunex, Peggy V. Phillips, a director, Executive Vice
President and Chief Operating Officer of Immunex, and Douglas E. Williams, a
director, Executive Vice President and Chief Technology Officer of Immunex,
will play significant roles in Amgen following the merger. Mr. Fritzky has
entered into an employment agreement with Amgen described below, and under the
merger agreement, Amgen has agreed to take all action necessary so that
following the merger, Mr. Fritzky will be appointed to the Amgen board of
directors. If Amgen has multiple classes of directors at the time of the
merger, Mr. Fritzky will be appointed to the class of directors with the
longest remaining term, provided that Amgen will not be required to request
that an incumbent director switch classes. Ms. Phillips is expected to be
appointed as an Executive Vice President of Amgen, reporting directly to Kevin
W. Sharer, Chairman of the Board, Chief Executive Officer and President of
Amgen. Mr. Williams is expected to be appointed as a Senior Vice President of
Amgen, reporting to Roger Perlmutter, Executive Vice President, Research &
Development of Amgen. It is expected that Ms. Phillips and Mr. Williams will
also be appointed to the management executive committee of Amgen.
I-50
Employment Agreement with Chief Executive Officer
Because Mr. Fritzky possesses intimate knowledge of the business and affairs
of Immunex, Amgen determined that it was important to retain his services
following the merger to assist in the integration of Amgen and Immunex. As a
result, Mr. Fritzky and Amgen have entered into a part-time employment
agreement which will become effective upon the consummation of the merger.
Pursuant to the agreement, Mr. Fritzky will serve as a special advisor to Amgen
for a period of two years following the merger, and will report directly to
Amgen's Chief Executive Officer. Additionally, Amgen has agreed that, following
the merger it will take all action necessary to cause Mr. Fritzky to be elected
to the Amgen board of directors. Mr. Fritzky will not be required to provide
services to Amgen for more than twenty hours a month. During the term of his
employment agreement, Mr. Fritzky will be entitled to:
. receive a base salary of $500,000 per year;
. participate in all of the employee benefit plans and arrangements
(including any life, death, disability, accident, health, employee stock
purchase and qualified or non-qualified retirement and savings plan)
made available to senior executives of Amgen, except that Mr. Fritzky
will not be eligible to participate in Amgen's performance based
Management Incentive Plan;
. receive perquisites, including financial counseling and tax planning
services, that are the same as or substantially equal to the perquisites
received by Mr. Fritzky prior to the merger; and
. reimbursement for office space and office support services up to
$250,000 per year.
Amgen will contribute, at the effective time of the merger, a retention
bonus of $1,000,000 to a deferred compensation account established for Mr.
Fritzky under Amgen's deferred compensation plan. Mr. Fritzky's retention bonus
account will vest with respect to $500,000 on the first anniversary of the
merger and $250,000 on each of the eighteen month anniversary of the merger and
the second anniversary of the merger. In addition, at the time of the merger,
Amgen will grant Mr. Fritzky an option to purchase 450,000 shares of Amgen
common stock, one-third of which will be vested on the date of grant and an
additional one-third of which will vest on each of the first and second
anniversaries of the date of grant. Amgen has also agreed to issue Mr. Fritzky
100,000 shares of restricted Amgen common stock upon the closing of the merger,
34,000 shares of which will be vested on the date of issuance and the remainder
of which will vest in equal installments on the first and second anniversaries
of the date of issuance.
In consideration of Mr. Fritzky's waiver of any right to payment pursuant to
the Immunex Corporation Leadership Continuity Policy, Amgen has agreed to make
a lump sum payment to Mr. Fritzky at the time of the merger in an amount equal
to three times the sum of:
. Mr. Fritzky's base salary immediately prior to the consummation of the
merger;
. Mr. Fritzky's target annual incentive compensation in effect immediately
prior to the consummation of the merger; and
. the value of contributions made on Mr. Fritzky's behalf to the qualified
and non-qualified defined contribution plans of Immunex in the year
prior to the year in which the merger occurs.
Assuming current salary and bonus levels remain in effect, if the merger is
consummated on June 30, 2002, the approximate value of this payment due to Mr.
Fritzky, not including any payments that may be made with respect to any excise
tax, would be $5.4 million.
In the event that Mr. Fritzky's employment is terminated for any reason
during the term of his employment agreement, Mr. Fritzky will be entitled to:
. continued participation in Amgen's employee benefit plans and
arrangements and continued receipt of perquisites for three years
following termination, except in the event of a termination by Amgen for
"cause" or by Mr. Fritzky without "good reason";
I-51
. outplacement services for twelve months, except in the event of Mr.
Fritzky's death; and
. all accrued salary and incurred expenses and amounts due under benefit
plans and arrangements.
In the event that Mr. Fritzky's employment is terminated by Amgen without
"cause" or by Mr. Fritzky for "good reason," Mr. Fritzky will be entitled to
all of the benefits described above, plus:
. Mr. Fritzky will receive a lump sum payment in an amount equal to all
base salary due through the remainder of the term of the employment
agreement;
. Mr. Fritzky's retention bonus account will fully vest and be paid out;
. Mr. Fritzky's restricted stock will fully vest; and
. all of Mr. Fritzky's options for Amgen common stock will fully vest and
become immediately exercisable.
Mr. Fritzky must execute a release in favor of Amgen as a condition to
the receipt of these severance benefits.
Pursuant to the employment agreement, Amgen is required, if necessary, to
make an additional "gross-up payment" to Mr. Fritzky to offset fully the effect
of any excise tax imposed by Section 4999 of the Internal Revenue Code on any
excess parachute payment, whether made to Mr. Fritzky pursuant to the
employment agreement or otherwise. In general, Section 4999 imposes an excise
tax on the recipient of any excess parachute payment equal to 20% of such
payment. A "parachute payment" is any payment that is contingent on a change in
control. Excess parachute payments consist of the excess of parachute payments
over an individual's average taxable compensation received by him from the
employer during the five taxable years (or if less, the entire period of
employment) preceding the year in which the change in control occurs. The
merger will constitute a change of control of Immunex under the employment
agreement and Section 4999.
Mr. Fritzky has agreed to be bound by Amgen's standard proprietary
information agreement and arbitration agreement.
Severance Agreements
Each of the executive officers of Immunex, other than Mr. Fritzky, and two
non-executive officer employees of Immunex is a party to a severance agreement
with Immunex which provides for certain benefits in the event that the
executive or employee experiences a qualifying termination. A qualifying
termination is a termination of employment during the two-year period following
a change in control either by Immunex or its successor for reasons other than
"cause" or by the executive or employee for "good reason." In the event of a
qualifying termination, the executive officers and non-executive officer
employees will be entitled to receive:
. a lump sum cash payment equal to three times the sum of (a) the higher
of the executive's or employee's base salary in effect on the date of
termination of employment or in effect prior to an event constituting
"good reason," (b) the higher of the executive's or employee's target
annual incentive compensation in effect on the date of termination of
employment or in effect prior to an event constituting "good reason" and
(c) the higher of the value of contributions made to the qualified and
non-qualified defined contribution plans of Immunex on the executive's
or employee's behalf for the year prior to the year in which the date of
termination occurs or for the year prior to the year in which an event
constituting "good reason" occurs;
. continued life, dental, accident and health insurance benefits and
continued perquisites (including financial counseling) for three years
following termination; and
. outplacement services for twelve months.
In addition, a "gross-up" payment to compensate these executive officers and
non-executive officer employees for any "golden parachute" excise tax under
Section 4999 of the Internal Revenue Code is also provided. In consideration
for the right to payments as described above, each of these persons waived any
right to payment
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pursuant to the leadership continuity policy referred to on page I-55. In
addition, each executive officer and non-executive officer employee must
execute a release as a condition to the receipt of these benefits.
For purposes of the severance agreements, "good reason" includes:
. the assignment of inconsistent duties or a reduction in the nature or
status of the executive's or employee's responsibilities (including, for
executive officers, the failure to be an executive officer of a public
company immediately following a change in control);
. a reduction in the executive's or employee's annual base pay, annual
incentive opportunity or long term incentive opportunity;
. relocation of the executive's or employee's principal place of
employment or principal place of performance of duties by more than 50
miles; or
. a termination of employment by the executive or employee for any reason
within 60 days after the first anniversary of the change in control.
For purposes of the severance agreements, "cause" means the executive's or
employee's willful and continued failure to substantially perform his or her
duties or his or her willful engaging in conduct which is demonstrably and
materially injurious to Immunex.
The merger will constitute a change in control under the severance
agreements and Section 4999. Assuming current salary and bonus information
remains in effect, that the merger is consummated on June 30, 2002 and a
qualifying termination occurs immediately thereafter, the approximate value of
the cash severance payments due under the severance agreements to each of the
executive officers, not including any payments that may be made with respect to
any excise tax, would be: Ms. Phillips, $2.6 million; Mr. Williams, $1.9
million; David A. Mann (Executive Vice President, Chief Financial Officer,
Treasurer), $1.7 million; and Barry G. Pea (Executive Vice President, General
Counsel, Secretary), $1.7 million.
Immunex Retention Plan
The Immunex Corporation Retention Plan provides for conditional retention
awards to all employees of Immunex who regularly work at least 20 hours per
week, including the executive officers other than Mr. Fritzky. Each executive
officer of Immunex who remains employed by Immunex through the effective time
of the merger will receive a lump sum cash payment in an amount equal to the
executive's base salary and target annual bonus. On the first anniversary of
the effective time of the merger, each executive officer who is still employed
by Amgen will receive a lump sum cash payment on such first anniversary equal
to 1.5 times the executive's annual base salary and target annual bonus. If the
executive's employment is terminated by the acquiring company without "cause"
or by the executive for "good reason" (each, as defined in the executive
severance agreement, except with respect to ceasing to be an executive officer
of a public company), after the first month following the effective time but
prior to the first anniversary of the effective time of the merger, the
executive will be entitled to a pro rata portion of the retention payment the
executive would have received on the first anniversary of the effective time,
prorated based on the amount of time the executive was employed during the
year. Amounts payable under an individual severance agreement to any executive
officer who terminates his or her employment during the 60-day period following
the first anniversary of the closing of the merger for reasons that would not
otherwise constitute "good reason," will be offset by the amount of the
retention payment paid to the executive officer on the first anniversary of the
closing.
Assuming current salary and bonus information remains in effect, that the
merger is consummated on June 30, 2002 and each of the executive officers
becomes entitled to all payments under the retention plan, the approximate
value of the cash payments due to each of the executive officers, not including
any payments that may be made with respect to any excise tax, would be: Ms.
Phillips, $2.0 million; Mr. Williams, $1.5 million; Mr. Mann, $1.4 million; and
Mr. Pea, $1.4 million.
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Cash payments made to employees other than executive officers may be made
under the retention plan immediately following the merger, on one or more of
the nine-month anniversary of the merger, the first anniversary of the merger,
the 18-month anniversary of the merger or the second anniversary of the merger,
provided that the employee remains employed on the respective payment date, and
the amount of each payment, if any, may vary from three months to 18 months of
base salary, wages and incentive bonus. Each eligible employee must execute an
arbitration agreement as a condition to the receipt of these benefits.
Stock Option Plans
Amgen has agreed to assume the Immunex stock option plans at the effective
time of the merger. Under the merger agreement, each outstanding option to
purchase shares of Immunex common stock will be assumed by Amgen at the
effective time of the merger and (except for converted options and Mr.
Fritzky's incentive stock options, described in the next two paragraphs) will
thereafter constitute an option to acquire the number (rounded down to the
nearest whole number) of shares of Amgen common stock determined by multiplying
the number of shares of Immunex common stock subject to the option immediately
prior to the merger by 0.52. The per share exercise price for the Amgen common
stock issuable upon conversion of these Immunex options will be equal to the
quotient determined by dividing the exercise price per share of Immunex common
stock that otherwise could have been purchased under the Immunex stock option
by 0.52 (rounded up to the nearest whole cent). Each of these options will be
subject to the same terms and conditions as were in effect for the related
option immediately prior to the merger, except that each option, other than the
options discussed below, that was outstanding on the date of the merger
agreement will fully vest and become exercisable as to all shares of Amgen
common stock subject thereto. At the effective time of the merger, the number
and kind of shares of stock issuable under the Immunex stock option plans will
be adjusted and converted into shares of Amgen common stock.
At the effective time of the merger, in order to increase the retention of
Immunex employees, each option to purchase shares of Immunex common stock with
an exercise price greater than the higher of $40 or the closing price of a
share of Immunex common stock on the last trading day prior to the merger will
be converted into an option to purchase that number of whole shares of Amgen
common stock equal to 40% of the number of shares subject to the related
converted option (rounded down to the nearest whole number of shares) at an
exercise price per share equal to the fair market value of a share of Amgen
common stock on the date on which the converted option is granted (which shall
be as of the close of market on the date of the effective time of the merger).
The options for Amgen common stock granted with respect to these converted
options will be subject to the same terms and conditions (including vesting
schedule) as were in effect for the related converted option immediately prior
to the merger.
Mr. Fritzky currently holds an option for 140,000 shares of Immunex common
stock which is intended to qualify as an incentive stock option under Section
422 of the Internal Revenue Code. This option will be converted into an option
to purchase shares of Amgen common stock in a manner which preserves the
option's status as an incentive stock option.
If an Immunex executive's or employee's employment is terminated by the
acquiring company without "cause" or by the executive or employee for "good
reason" (each as defined in the Immunex stock option plans) within fifteen
months following the merger, each converted option discussed above and each
option which was granted after the date of the merger agreement will fully vest
and the post-termination exercise period for such option will be extended from
three months to one year.
Options held by non-employee directors of Immunex as of the merger will be
treated in the same manner as other options, except that in the event that the
non-employee director's service as a director of Immunex or Amgen is terminated
immediately prior to, on or in the fifteen months following the merger, the
options held by the director, to the extent not then vested, will fully vest
and the post-termination exercise period for the options will be extended from
three months to one year.
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Amgen has agreed to assume the Immunex Corporation 1999 Employee Stock
Purchase Plan at the effective time of the merger. Under the merger agreement,
each outstanding purchase right under the Immunex employee stock purchase plan
will be assumed by Amgen and will be converted into a right to purchase shares
of Amgen common stock at the effective time of the merger. Each purchase right
so assumed and converted will continue to have the same terms and conditions as
in effect immediately prior to the merger, except that the purchase price of
shares of Amgen common stock and the number of shares of Amgen common stock to
be issued upon the exercise of such purchase rights will be adjusted in a
manner which preserves the tax treatment of such purchase rights as options to
which Section 421(a) of the Internal Revenue Code applies. In addition to the
foregoing, the number and kind of shares issuable under the Immunex employee
stock purchase plan will be converted into shares of Amgen common stock in
accordance with the provisions of the Immunex employee stock purchase plan.
Performance Pay Plan
The Immunex Corporation Performance Pay Plan provides for the payment of
annual bonuses to employees of Immunex, including its executive officers, under
terms specified in the plan. Prior to the closing of the merger, the Immunex
compensation committee intends to determine whether the payment of a pro rata
portion of an employee's target bonus under the plan for the year in which the
merger occurs is appropriate.
Deferred Compensation Plan
The Immunex Non-Qualified Deferred Compensation Plan will permit continued
deferral of account balances following the consummation of the merger.
Leadership Continuity Policy
Certain non-executive officer employees of Immunex are eligible to receive
severance benefits under the leadership continuity policy in the event of a
qualifying termination of their employment on or within two years following a
change in control of Immunex. Mr. Fritzky and the other executive officers of
Immunex have waived their rights to receive benefits under the leadership
continuity policy. A qualifying termination under the leadership continuity
policy is substantially similar to a qualifying termination under the severance
agreements, except that covered employees may not terminate their employment
for any reason during the 60-day period following a change in control and have
such termination deemed to be for "good reason."
The leadership continuity policy provides that in the event of a qualifying
termination, a covered employee will be entitled to receive:
. a lump sum cash severance payment equal to (a) the sum of (i) the
covered employee's annual base salary immediately prior to termination
without regard to any reduction which constitutes good reason, (ii) the
covered employee's target annual incentive compensation with respect to
the year in which a change in control occurs and (iii) contributions
made on the covered employee's behalf to the defined contribution plan
of Immunex with respect to the year immediately preceding the year in
which the change in control occurs, (b) multiplied by one or two,
depending on the covered employee's position;
. continued life, disability, dental, accident and health insurance
benefits and continued perquisites (including financial counseling) for
one or two years; and
. outplacement services for twelve months.
Each eligible employee must execute a release as a condition to the receipt of
benefits under the leadership continuity policy. The merger will constitute a
change in control under the leadership continuity policy.
Employee Severance Plan
The Immunex Corporation Employee Severance Plan provides severance benefits
to employees of Immunex who are not entitled to benefits under the leadership
continuity policy or individual severance agreements. None of the executive
officers of Immunex is entitled to benefits under the employee severance plan.
In the event that an employee experiences a qualifying termination in the two
years following a change in control of Immunex, the
I-55
employee will be entitled to certain severance benefits the amount of which is
based on job position and years of service. A qualifying termination is deemed
to occur if the employee is terminated for reasons other than "cause" (as
defined in the employee severance plan) or terminates employment for "good
reason." With respect to the employee severance plan, "good reason" means a
reduction in the employee's annual base salary or wages, other than as part of
a general reduction applicable to substantially all employees of Immunex, or
the relocation of the employee's principal place of employment by more than 50
miles. Each eligible employee must execute a release as a condition to the
receipt of these benefits. Eligible employees who fail to execute a release
will receive a reduced severance benefit under the plan. The merger will
constitute a change in control of Immunex under the employee severance plan.
Agreements with Wyeth
Two directors on the Immunex board of directors have been designated by
Wyeth under the term of the governance agreement among Immunex, Wyeth and
American Cyanamid Company, a wholly-owned subsidiary of Wyeth. In connection
with the merger agreement, Amgen has entered into agreements with Wyeth and
some of its subsidiaries. The agreements include:
. a shareholder voting agreement which provides for Wyeth and two of its
subsidiaries to vote in favor of the merger and against any alternative
transaction;
. a stockholders' rights agreement which relates to the status of Wyeth
and two of its subsidiaries as significant stockholders of Amgen
following the merger and provides Wyeth with certain registration rights;
. an amended and restated promotion agreement relating to the promotion of
ENBREL in the United States and Canada; and
. an agreement regarding governance and commercial matters which relates
to, among other things:
- the rights of Wyeth to complete the development of and sell
identified products under development by Immunex and the rights to
market and promote those products developed by Immunex under an
existing product rights agreement;
- Amgen's agreement to make a specified payment to Wyeth for the
termination of the product rights described above;
- Amgen's agreement not to sue Wyeth for patent infringement under any
of Amgen's patents or any patents that come under its control for
activities related to ENBREL anywhere in the world outside of the
United States and Canada; and
- Amgen's grant to Wyeth of an option to acquire an exclusive
sublicense under a license agreement between Amgen and a third party.
Each of these agreements is further described in this joint proxy
statement/prospectus under the following headings "Shareholder Voting
Agreement," "Stockholders' Rights Agreement," "Other Agreements with
Wyeth--Amended and Restated Promotion Agreement" and "Other Agreements with
Wyeth--Agreement Regarding Governance and Commercial Matters." These
descriptions may not contain all of the information about these agreements that
is important to you. We encourage you to read each agreement carefully in its
entirety. The shareholder voting agreement and stockholders' rights agreement
are attached to this joint proxy statement/prospectus as Annexes B and C,
respectively. The amended and restated promotion agreement and the agreement
regarding governance and commercial matters are exhibits to the registration
statement of which this joint proxy statement/prospectus is a part and have
been filed with the SEC.
Management and Operations Following the Merger
Amgen intends to undertake a comprehensive review of the business,
operations, capitalization and management of Immunex with a view to optimizing
development of its potential in conjunction with Amgen's business.
I-56
Amgen's current directors and officers are expected to retain their
positions with Amgen following the merger, including Kevin W. Sharer retaining
the positions of Chairman of the Board, Chief Executive Officer and President.
As described above, at the time the merger is completed, Mr. Fritzky will be
appointed to serve as a director of Amgen and serve as a special advisor to
Amgen. Ms. Phillips is expected to be appointed as an Executive Vice President
and officer of Amgen and Mr. Williams is expected to be appointed as a Senior
Vice President and officer of Amgen.
Litigation Related to the Merger
Litigation--Amgen
On March 14, 2002, a stockholder derivative lawsuit was filed by Linda
Blatchly against all members of the Amgen board of directors and nominally
against Amgen in the Ventura County Superior Court of California. The complaint
alleges, among other things, that, subsequent to the filing of the Annual
Report of Immunex on Form 10-K on March 8, 2002 which contained disclosure
regarding the lease for the new Immunex facility in Seattle, the Amgen board of
directors breached their fiduciary duties to Amgen by refusing to renegotiate
or terminate the acquisition of Immunex, failing to disclose the true value of
the financial condition of Immunex and seeking to acquire Immunex without
conducting adequate due diligence.
The plaintiff seeks relief:
. declaring that the members of the Amgen board of directors have breached
and are breaching their fiduciary and other duties to Amgen and the
Amgen stockholders;
. enjoining, preliminarily and permanently, defendants from proceeding
with the acquisition as planned;
. requiring an independent evaluation as to (a) the true worth of Immunex,
and (b) if it is determined that the acquisition of Immunex is in the
best interests of Amgen, requiring an adjustment of the merger
consideration;
. granting compensatory damages against the defendants in favor of Amgen;
. awarding plaintiff the costs of the action including attorneys' fees; and
. granting such other and further relief as the court may deem just and
proper.
While this case is in its early stages, Amgen believes that the case is
without merit and intends to contest it vigorously.
Litigation--Immunex
On December 14, 2001, a lawsuit was filed by David Osher against Immunex,
all members of the Immunex board of directors (Edward V. Fritzky, Kirby L.
Cramer, Robert J. Herbold, John E. Lyons, Joseph M. Mahady, Edith W. Martin,
Peggy V. Phillips, Lawrence V. Stein and Douglas E. Williams) and Wyeth in the
King County Superior Court of Washington. The suit is denominated as a class
action purportedly on behalf of a class of Immunex shareholders. The complaint
alleges that Wyeth and the Immunex board of directors breached their fiduciary
duties owed to Immunex shareholders by stalling the merger discussions as a
result of positions taken by Wyeth in the negotiations relating to its control
of Immunex and its marketing rights in future Immunex products. The complaint
further alleges that Wyeth and the Immunex board of directors are favoring
their own interests and not acting in good faith toward the plaintiff and other
members of the purported class. The plaintiff seeks relief:
. ordering the action to be maintained as a class action and certifying
plaintiff as the Class representative;
. enjoining, preliminarily and permanently, defendants from proceeding
with, or closing, the merger or any transaction that improperly favors
the interests of Wyeth;
I-57
. rescinding and setting aside the merger in the event that it is
consummated;
. awarding plaintiff the costs of the action including attorneys' and
experts' fees; and
. granting such other and further relief as the court may deem just and
proper.
On December 18, 2001, a lawsuit was filed by Adele Brody against Immunex,
Messrs. Fritzky, Williams, Mann and Pea, Ms. Phillips, and the marital
community of each named individual in the King County Superior Court of
Washington. The suit is denominated as a class action purportedly on behalf of
a class of Immunex shareholders. The complaint alleges, among other things,
that the defendants breached their fiduciary duty to the purported class by
failing to take all reasonable steps to assure the maximization of shareholder
value, including the implementation of a bidding mechanism to foster a fair
auction of Immunex to the highest bidder, or the exploration of strategic
alternatives which would return a greater value to plaintiff and the other
members of the purported class. The complaint further alleges that defendants
are continuing to breach their fiduciary duties in order to entrench themselves
in office and to receive the benefits of negotiating only with Amgen. The
plaintiff seeks relief:
. ordering the action to be maintained as a class action and certifying
plaintiff as the class representative;
. enjoining, preliminarily and permanently, Amgen's offer for the
acquisition of Immunex stock owned by plaintiff and the other members of
the purported class;
. rescinding the transaction and granting rescissionary damages in the
event that the merger is consummated;
. directing defendants to pay plaintiff and the other members of the
purported class damages and to account for all profits and any special
benefits obtained by defendants;
. awarding plaintiff the costs of the action including attorneys' and
experts' fees; and
. granting such other and further relief as the court may deem just and
proper.
On December 20, 2001, a lawsuit was filed by Edwin Weiner against Immunex,
Messrs. Fritzky, Williams, Mann and Pea, Ms. Phillips, and the marital
community of each named individual in the King County Superior Court of
Washington. The allegations and the relief requested in the Weiner complaint
are substantially identical to those in the Brody complaint described above.
On March 13, 2002, the court in the Osher action granted defendants' motion
for a protective order staying discovery until forty days after plaintiff
serves an amended complaint.
On March 19, 2002, amended complaints were filed in the Brody and Weiner
actions, dropping as defendants Messrs. Mann and Pea, and the marital community
of each; adding as defendants Messrs. Cramer, Herbold, Lyons, Mahady and Stein
and Dr. Martin, and the marital community of each, and Wyeth; and adding
allegations of nondisclosure in the registration statement on Form S-4 filed
with the SEC on January 31, 2002.
While these cases are in their early stages, Immunex believes that the cases
are without merit and intends to contest them vigorously. Wyeth has advised
Immunex that it also believes the cases are without merit and it intends to
contest them vigorously.
I-58
THE MERGER AGREEMENT
The following summary describes certain material provisions of the merger
agreement, which is included in this joint proxy statement/prospectus as Annex
A and is incorporated by reference into this joint proxy statement/prospectus.
This summary may not contain all of the information about the merger agreement
that is important to you. We encourage you to read the merger agreement
carefully in its entirety.
Structure of the Merger
The merger agreement provides for the merger of AMS Acquisition Inc., a
newly-formed, wholly-owned subsidiary of Amgen, with and into Immunex. As a
result of the merger, Immunex will become a wholly-owned subsidiary of Amgen.
Completion and Effectiveness of the Merger
The closing of the merger will occur on the first business day after all of
the conditions to completion of the merger contained in the merger agreement
are satisfied or waived unless the parties agree otherwise in writing (see the
section entitled "Conditions to Completion of the Merger" below). The merger
will become effective upon the filing of articles of merger with the Secretary
of State of the State of Washington.
We are working to complete the merger quickly. We currently expect that the
merger could be completed as early as June 2002. However, because completion of
the merger is subject to regulatory approvals and other conditions, we cannot
predict the actual timing.
Merger Consideration
Upon completion of the merger, each share of Immunex common stock
outstanding immediately prior to the effective time of the merger will be
cancelled and extinguished and automatically converted into 0.44 of a share of
Amgen common stock and $4.50 in cash upon surrender of the certificate
representing that share of Immunex common stock in the manner provided in the
merger agreement. However, shares held by Immunex shareholders who validly
exercise dissenters' rights will be subject to appraisal in accordance with
Washington law. Upon completion of the merger, each outstanding option to
purchase Immunex common stock will be converted into an option to purchase
Amgen common stock, as described further in the section entitled "Employee
Benefit Matters--Immunex Stock Options."
The exchange ratio in the merger (0.44 of a share of Amgen common stock for
each share of Immunex common stock) and the cash consideration will be adjusted
to reflect the effect of any stock split, reverse stock split, stock dividend,
reorganization, recapitalization, reclassification or other like change with
respect to Amgen common stock or Immunex common stock having a record date on
or after the date of the merger agreement and prior to completion of the merger.
Upon completion of the merger, each share of Immunex common stock held by
Amgen or any direct or indirect wholly-owned subsidiaries of Amgen immediately
prior to the merger will be automatically cancelled and extinguished, and none
of Amgen or any of its direct or indirect subsidiaries will receive any
securities of Amgen or other consideration in exchange for those shares.
Fractional Shares
Amgen will not issue any fractional shares of Amgen common stock in the
merger. Instead, each holder of Immunex common stock exchanged in the merger
who would otherwise be entitled to receive a fraction of a share of Amgen
common stock will receive cash, without interest, in lieu of a fractional share.
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Exchange of Immunex Stock Certificates for Amgen Stock Certificates
Promptly following completion of the merger, Mellon Investor Services LLC,
the exchange agent for the merger, will mail to each record holder of Immunex
common stock a letter of transmittal and instructions for surrendering the
record holder's stock certificates in exchange for a statement indicating
book-entry ownership of Amgen common stock or, if requested, a certificate
representing Amgen common stock. Only those holders of Immunex common stock who
properly surrender their Immunex stock certificates in accordance with the
exchange agent's instructions will receive (a) a statement indicating
book-entry ownership of Amgen common stock or, if requested, a certificate
representing Amgen common stock, (b) the cash consideration, (c) cash in lieu
of any fractional share of Amgen common stock, and (d) dividends or other
distributions, if any, on Amgen common stock to which they are entitled under
the terms of the merger agreement. After the effective time of the merger, each
certificate representing shares of Immunex common stock that has not been
surrendered will represent only the right to receive upon surrender of that
certificate each of the items listed in the preceding sentence. The surrendered
certificates representing Immunex common stock will be cancelled. Following
completion of the merger, Immunex will not register any transfers of Immunex
common stock outstanding on its stock transfer books prior to the merger.
Holders of Immunex common stock should not send in their Immunex stock
certificates until they receive a letter of transmittal from the exchange
agent, with instructions for the surrender of Immunex stock certificates.
Distributions with Respect to Unexchanged Shares
Holders of Immunex common stock are not entitled to receive any dividends or
other distributions on Amgen common stock until the merger is completed. After
the merger is completed, holders of Immunex common stock certificates will be
entitled to dividends and other distributions declared or made after completion
of the merger with respect to the number of whole shares of Amgen common stock
which they are entitled to receive upon exchange of their Immunex stock
certificates, but they will not be paid any dividends or other distributions on
the Amgen common stock until they surrender their Immunex stock certificates to
the exchange agent in accordance with the exchange agent instructions.
Transfers of Ownership and Lost Stock Certificates
Amgen only will issue (a) a statement indicating book-entry ownership of
Amgen common stock or, if requested, an Amgen stock certificate, (b) the cash
consideration, (c) cash in lieu of a fractional share and (d) any dividends or
distributions on Amgen common stock that may be applicable in a name other than
the name in which a surrendered Immunex stock certificate is registered if the
person requesting such exchange presents to the exchange agent all documents
required by the exchange agent to show and effect the unrecorded transfer of
ownership and to show that such person paid any applicable stock transfer
taxes. If an Immunex stock certificate is lost, stolen or destroyed, the holder
of such certificate may need to execute an affidavit or post a bond prior to
receiving each of the items listed in the preceding sentence.
Conditions to Completion of the Merger
The obligations of Amgen and Immunex to complete the merger are subject to
the satisfaction or waiver, if legally permissible, of the following conditions:
. the registration statement of which this joint proxy
statement/prospectus is a part must be declared effective by the SEC and
no stop order suspending its effectiveness may be issued by the SEC and
no proceedings for that purpose may be initiated or threatened by the
SEC;
. the approval of the merger agreement by Immunex shareholders and the
approval of the issuance of shares of Amgen common stock in the merger
by Amgen stockholders;
. the absence of any legal prohibition having the effect of preventing or
prohibiting completion of the merger;
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. the expiration or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976;
. the receipt of all other governmental and regulatory consents, approvals
and authorizations required to complete the merger, unless not obtaining
those consents or approvals would not reasonably be expected to have a
material adverse effect, as described below, on the combined company;
. the approval for listing on the Nasdaq National Market of the shares of
Amgen common stock to be issued in the merger;
. the absence of any litigation by any governmental entity (a) seeking to
prohibit or interfere with the merger or the ownership or operation by
Amgen of any portion of the business or assets of Amgen or Immunex or to
compel Amgen to dispose of or hold separate any portion of the business
or assets of Immunex or Amgen, or (b) seeking divestiture of any shares
of Immunex common stock or seeking to impose limitations on the ability
of Amgen to exercise effectively full rights of ownership of the shares
of Immunex common stock, including the right to vote any securities on
any matters properly presented to shareholders, in each case, which
would, or would reasonably be expected to, have a material adverse
effect on the combined company;
. the representations and warranties of the other party, disregarding all
qualifications and exceptions relating to materiality or material
adverse effect, being accurate on the date of the merger agreement and
the date the merger is completed as if they were made on that date
(except to the extent that the representations and warranties speak as
of another date), except where the failure of such representations and
warranties to be accurate would not reasonably be expected to have a
material adverse effect on the representing party, and the receipt of a
certificate of an executive officer of the other party to that effect;
. the other party having performed or complied with its agreements and
covenants in the merger agreement in all material respects, and the
receipt of a certificate of an executive officer of the other party to
that effect; and
. the receipt of an opinion from the party's counsel that the merger will
qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code.
Amgen's obligations to complete the merger are also subject to each of the
stockholders' rights agreement, the amended and restated promotion agreement
and the agreement regarding governance and commercial matters by and among
Amgen and the various other parties to each agreement, being in full force and
effect, and the absence of any written notice from an authorized officer of
Wyeth of, and the absence of any public announcement by Wyeth of, Wyeth's
intention to repudiate any of these agreements. These agreements are further
described in this joint proxy statement/prospectus under the headings
"Stockholders' Rights Agreement," "Other Agreements with Wyeth--Amended and
Restated Promotion Agreement" and "Other Agreements with Wyeth--Agreement
Regarding Governance and Commercial Matters."
"Material adverse effect," when used in reference to Amgen or Immunex, means
any change affecting, or condition having an effect on, the referenced company
that is, or would reasonably be expected to be, materially adverse to the
business, financial condition or results of operations of the referenced
company and its subsidiaries, taken as a whole. However, any change or
condition will not be deemed to have a material adverse effect if it results
from or arises out of:
. changes or developments in the biotechnology industry generally, which
changes or developments do not disproportionately affect the referenced
company relative to other participants in the biotechnology industry in
any material respect;
. changes or developments in financial or securities markets or the
economy in general, which changes do not disproportionately affect the
referenced company in any material respect;
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. any change in the referenced company's stock price or trading volume, in
and of itself; or
. the announcement of the transactions contemplated by the merger
agreement.
Representations and Warranties
The merger agreement contains customary representations and warranties of
Amgen and Immunex relating to, among other things:
. corporate organization and qualification;
. subsidiaries;
. charter documents and corporate books and records;
. capital structure;
. absence of conflicts and required filings and consents;
. corporate authority and board approval;
. required permits and compliance with laws;
. SEC filings and the financial statements contained in those filings;
. absence of certain changes or events since December 31, 2000;
. tax treatment of the merger;
. litigation;
. environmental matters;
. intellectual property;
. compliance with regulatory laws;
. opinions of financial advisors;
. stockholder vote required to complete the merger; and
. brokers.
The merger agreement also contains the following additional representations
and warranties of Immunex:
. applicability of state takeover laws;
. employee benefit plans;
. taxes;
. validity and absence of breaches of material contracts;
. labor and other employment matters;
. insurance; and
. properties.
The merger agreement also contains additional representations and warranties
of Amgen relating to the ownership and activities of AMS Acquisition Inc. and
the funds necessary to pay the merger consideration upon completion of the
merger.
The representations and warranties contained in the merger agreement are
subject to materiality and knowledge qualifications in many respects, and
expire at the completion of the merger.
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Immunex Prohibited from Soliciting Other Offers
Under the terms of the merger agreement, subject to specific exceptions
described below, Immunex has agreed that neither it nor any of its subsidiaries
will, and that it will use its reasonable best efforts to cause its and their
representatives not to, directly or indirectly:
. solicit, initiate, encourage, knowingly facilitate or induce any inquiry
with respect to, or the making, submission or announcement of, any
acquisition proposal;
. participate in any discussions or negotiations regarding, or furnish to
any person any nonpublic information with respect to, or take any other
action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, any acquisition
proposal;
. engage in discussions with any person with respect to any acquisition
proposal, except to notify such person as to the existence of the no
solicitation provisions of the merger agreement;
. approve, endorse or recommend any acquisition proposal; or
. enter into any letter of intent or similar document or any agreement,
commitment or understanding contemplating or otherwise relating to any
acquisition proposal or a transaction contemplated thereby.
Under the merger agreement, Immunex agreed to cease all existing discussions
or negotiations as of December 16, 2001 with any parties with respect to any
acquisition proposal.
Immunex is obligated to notify Amgen promptly in writing upon receipt of any
type of acquisition proposal or any request for nonpublic information or
inquiry it reasonably believes could lead to an acquisition proposal. The
notice must include the material terms and conditions of the acquisition
proposal, request or inquiry, the identity of the person or group making the
acquisition proposal, request or inquiry and all related written materials
provided in connection with the acquisition proposal, request or inquiry.
Immunex also must provide Amgen with all information as is reasonably necessary
to keep Amgen informed in all material respects of the status and details of
any acquisition proposal, request or inquiry.
Notwithstanding the prohibitions contained in the merger agreement, if
Immunex receives an acquisition proposal which constitutes a superior proposal
or which the Immunex board of directors in good faith concludes proposes
consideration that is more favorable to the Immunex shareholders than the
transactions contemplated by the merger agreement and which could reasonably be
expected to result in a superior proposal in all other respects, Immunex may,
after notifying Amgen, take the following actions:
. furnish nonpublic information to the third party making the acquisition
proposal, provided it:
(a) supplies to Amgen a copy of the information furnished concurrently
with its delivery of the information to the third party; and
(b) enters into a confidentiality agreement with the third party
containing customary limitations on the use and disclosure of the
non-public information furnished to the third party and customary
standstill provisions; and
. engage in negotiations with the third party with respect to the
acquisition proposal.
For a period of not less than five business days after Amgen's receipt from
Immunex of notice of a superior proposal, Immunex is required, if requested by
Amgen, to negotiate in good faith with Amgen to revise the merger agreement so
that the acquisition proposal that constituted a superior proposal no longer
constitutes a superior proposal.
Amgen and Immunex have agreed to call, hold and convene a meeting of their
respective stockholders promptly after the registration statement of which this
joint proxy statement/prospectus forms a part is declared effective by the SEC.
The Amgen board of directors also agreed to recommend to Amgen stockholders the
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approval of the issuance of shares of Amgen common stock in the merger and to
use its reasonable best efforts to obtain the required stockholder approval for
the issuance of shares. The Immunex board of directors agreed to recommend the
approval of the merger agreement to its shareholders and to use its reasonable
best efforts to obtain the required shareholder approval for the merger
agreement. However, in response to the receipt of a superior proposal that has
not been withdrawn and continues to constitute a superior proposal, the Immunex
board of directors may withhold or withdraw its recommendation and, in the case
of a superior proposal that is a tender or exchange offer made directly to the
Immunex shareholders, may recommend that the Immunex shareholders accept the
tender or exchange offer, if both of the following conditions are met:
. the Immunex shareholders meeting has not occurred; and
. the Immunex board of directors has concluded in good faith, following
the receipt of advice of its outside legal counsel, that, in light of
the superior proposal, the failure of the Immunex board of directors to
change its recommendation would result in a breach of its fiduciary
obligations to its shareholders under applicable law.
Regardless of whether Immunex has received an acquisition proposal or
changed its recommendation, Immunex is obligated under the terms of the merger
agreement to call, give notice of, convene and hold a meeting of its
shareholders to consider and vote upon the merger agreement. However, if
Immunex changes its recommendation of the merger agreement to the Immunex
shareholders as discussed in the previous paragraph, Immunex must submit the
merger agreement to a vote of Immunex shareholders with no recommendation as
permitted by Washington law. Immunex may not submit to the vote of its
shareholders any acquisition proposal (whether or not a superior proposal) or
propose to do so.
No provision of the merger agreement restricts Immunex from complying with
Rules 14d-9 or 14e-2 under the Securities Exchange Act of 1934 or restricts
Immunex or Amgen from making such other disclosures as may be required by
federal securities laws or applicable State of Washington fiduciary duties laws.
An "acquisition proposal" means any offer or proposal made by a person other
than Amgen concerning any:
. merger, consolidation, business combination, or similar transaction
involving Immunex or any significant subsidiary of Immunex pursuant to
which the shareholders of Immunex immediately prior to such transaction
would own less than 80% of any class of equity securities of the entity
surviving or resulting from such transaction (or the ultimate parent
entity thereof);
. sale or other disposition directly or indirectly of assets of Immunex or
its subsidiaries representing 20% or more of the consolidated assets of
Immunex and its subsidiaries;
. issuance, sale or other disposition of securities (or options, rights or
warrants to purchase, or securities convertible into or exchangeable
for, such securities) in each case by Immunex representing 20% or more
of the voting power of Immunex; or
. transaction in which any person would acquire beneficial ownership, or
the right to acquire beneficial ownership or any group would have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 20% or more of the outstanding voting capital stock of
Immunex.
A "superior proposal" means any bona fide offer or proposal (on its most
recently amended or modified terms, if amended or modified) made by a person
other than Amgen that:
. concerns any:
(a) merger, tender offer, exchange offer, business combination or similar
transaction involving Immunex or any of its subsidiaries pursuant to
which:
- shareholders of Immunex immediately prior to the transaction
would own less than 50% of the voting power of the entity
surviving or resulting from the transaction (or the ultimate
parent entity thereof); and
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- shareholders of Immunex other than Wyeth would own less than 30%
of the voting power of the entity surviving or resulting from the
transaction (or the ultimate parent entity thereof); or
(b) sale or other disposition directly or indirectly of assets of Immunex
or any of its subsidiaries representing 67% or more of the
consolidated assets of Immunex and its subsidiaries;
. is on terms which the Immunex board of directors in good faith concludes
(following receipt of the advice of its financial advisors and outside
counsel) are more favorable to the Immunex shareholders (in their
capacities as shareholders) than the transactions contemplated by the
merger agreement (including any revisions thereto); and
. is, in the good faith judgment of Immunex, reasonably likely to be
completed and financed.
Conduct of Business Before Completion of the Merger
General Restrictions on Operations
Amgen and Immunex have agreed to restrictions on their respective activities
until either the completion of the merger or the termination of the merger
agreement. In general, Amgen is required to conduct its business such that its
primary business will involve biotechnology or pharmaceuticals. Immunex is
required to conduct its businesses in the usual and ordinary course consistent
with past practice and to use its reasonable best efforts to keep available the
services of the current officers, key employees and consultants of Immunex and
its subsidiaries and to preserve the current relationships of Immunex and its
subsidiaries with their customers, suppliers and other persons with which
Immunex and its subsidiaries have significant business relations as is
reasonably necessary in order to preserve substantially intact its business
organization.
Additional Restrictions on Amgen's Interim Operations
In addition, Amgen has also agreed that, without the written consent of
Immunex, it will not and will not permit any of its subsidiaries to:
. amend or otherwise change its certificate of incorporation in a manner
that adversely affects the rights of holders of Amgen common stock
(including holders of the Amgen common stock issuable in the merger),
except to increase the authorized number of shares of Amgen capital
stock;
. issue any shares of Amgen common stock if, following such issuance,
there would be an insufficient number of shares of Amgen common stock to
pay the merger consideration and to be reserved for issuance in
connection with the transactions contemplated by the merger agreement;
. declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock property or otherwise, with respect to any Amgen
capital stock;
. take any action (including any acquisition or entering into any business
combination) that is intended or could reasonably be expected to result
in any of the conditions to the merger not being satisfied; and
. authorize or enter into any agreement or otherwise make any commitment
to do any of the foregoing.
Additional Restrictions on the Interim Operations of Immunex
Subject to specified exceptions, Immunex has also agreed that, without the
written consent of Amgen, it will not and will not permit any of its
subsidiaries to:
. amend or otherwise change its articles or certificate of incorporation
or bylaws or equivalent organizational documents;
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. issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize
the issuance, sale, pledge, disposition, grant, transfer or encumbrance
of any shares of capital stock, or securities convertible into its
capital stock, other than:
(a) issuances of Immunex common stock under its employee stock purchase
plan or upon exercise of stock options outstanding on December 16,
2001 or granted in accordance with (b) below;
(b) subject to specified conditions, grants of stock options (1) up to an
aggregate of 1,100,000 shares of Immunex common stock to newly-hired
employees and up to an aggregate of 4,400,000 shares of Immunex
common stock to existing employees and non-employee directors, (2)
that are replacement options, as described below in the section
entitled "Employee Benefit Matters--Immunex Stock Options," and (3)
under existing contractual relationships;
(c) issuances of equity securities under the governance agreement between
Immunex and Wyeth; and
(d) issuances by subsidiaries of Immunex of shares of their capital stock
to Immunex or any wholly-owned subsidiary of Immunex;
. sell, pledge, dispose of, transfer, lease, license, or encumber, or
authorize the sale, pledge, disposition, transfer, lease, license, or
encumbrance of, any material property or assets (other than intellectual
property), other than:
(a) sales, pledges, dispositions, transfers, leases, licenses or
encumbrances pursuant to existing contracts;
(b) sales, pledges, dispositions, transfers, leases, licenses or
encumbrances of property or assets in the ordinary course of business
but not to exceed an aggregate value of $100 million;
(c) sales or dispositions of inventory and other tangible current assets;
and
(d) dispositions in connection with obtaining regulatory approval as
contemplated by the merger agreement;
. sell, pledge, dispose of, transfer, lease, license, abandon, fail to
maintain or encumber, or authorize the sale, pledge, disposition,
transfer, lease, license, abandonment, failure to maintain or
encumbrance of,
(a) any intellectual property (other than intellectual property that
protects or enhances the value of ENBREL), except sales, pledges,
dispositions, transfers, leases, licenses or abandonments in the
ordinary course of business which will not materially impair the
conduct of the business of Immunex and in connection with obtaining
regulatory approval as contemplated by the merger agreement; or
(b) any intellectual property which protects ENBREL, except pursuant to
agreements entered into for clinical studies involving ENBREL in the
ordinary course of business and material transfer agreements relating
to ENBREL entered into in the ordinary course of business;
. enter into any material commitment or transaction outside the ordinary
course of business consistent with past practice other than transactions
between a wholly-owned subsidiary of Immunex and Immunex or another
wholly-owned subsidiary of Immunex;
. declare or pay dividends (other than dividends paid by wholly-owned
subsidiaries of Immunex to Immunex or to other wholly-owned subsidiaries
of Immunex) or enter into any agreement with respect to the voting of
Immunex capital stock;
. reclassify, combine, split or subdivide any of its capital stock or
issue or authorize the issuance of any other securities in respect of,
in lieu of, or in substitution for, shares of Immunex capital stock;
. redeem or purchase any shares of its capital stock or other securities;
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. incur any indebtedness, except for indebtedness under the existing
credit facilities of Immunex or replacement credit facilities in an
aggregate amount not materially larger than the existing credit
facilities;
. terminate, cancel, or agree to any material and adverse change in, any
material contract of Immunex other than in the ordinary course of
business consistent with past practice;
. make or authorize any capital expenditure materially in excess of the
budget of Immunex as disclosed to Amgen prior to December 16, 2001;
. make or authorize any material loan to any person (other than a
subsidiary of Immunex) outside the ordinary course of business;
. except as may be required by contractual commitments or corporate
policies with respect to severance or termination pay in existence on
the date of the merger agreement:
(a) increase the compensation or benefits of directors, officers or
employees (except for increases in accordance with past practices and
methodologies in salaries or wages of officers and/or employees of
Immunex and its subsidiaries);
(b) grant any severance or termination pay to, or enter into any
employment or severance agreement with, any director, officer or
other employee of Immunex or any of its subsidiaries (other than with
respect to newly appointed directors and newly hired employees in
accordance with past practices);
(c) establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy
or arrangement for the benefit of any director, officer, consultant
or employee, except to the extent required by applicable law; or
(d) take any affirmative action to amend or waive any performance or
vesting criteria or accelerate vesting, exercisability or funding
under any Immunex benefit plan or stock option;
. make any material change in accounting policies or procedures, other
than in the ordinary course of business consistent with past practice or
except as required by generally accepted accounting principles or by a
governmental entity;
. except in the ordinary course of business consistent with past practice,
make any material tax election or settle or compromise any material
liability for taxes, change any annual tax accounting period, change any
method of tax accounting, file any amended material tax return, enter
into any closing agreement relating to any material tax, surrender any
right to claim a material tax refund, or consent to any extension or
waiver of the statute of limitations period applicable to any material
tax claim or assessment;
. subject to specified exceptions, modify or terminate, or waive, release
or assign any material rights or claims with respect to any
confidentiality or standstill agreement to which Immunex is a party and
which relates to a business combination involving Immunex;
. write up, write down or write off the book value of any assets, other
than in the ordinary course of business or otherwise not in excess of
$50 million;
. subject to specified exceptions, take any action to render inapplicable,
or to exempt any third party from, the provisions of Chapter 23B.19 of
the Washington Business Corporation Act or any other state takeover law
or state law that purports to limit or restrict business combinations or
the ability to acquire or vote shares;
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. acquire any assets (not including intellectual property), operations,
business or securities or engage in, or agree to engage in, any merger,
consolidation or other business combination, except:
(a) in connection with capital expenditures permitted under the merger
agreement and except for acquisitions of inventory and other assets
(not including intellectual property) in the ordinary course of
business; or
(b) for acquisitions of businesses or assets (not including intellectual
property) or business combinations having or involving aggregate
consideration not in excess of $50 million, which, in the case of
clauses (a) and (b), would not be reasonably expected to result in
any of the conditions to the merger not being satisfied;
. take any action that is intended or would reasonably be expected to
result in any of the conditions to the merger not being satisfied;
. adopt a shareholder rights agreement, or "poison pill";
. acquire any intellectual property, except in the ordinary course of
business consistent with past practice (including in size and nature); or
. authorize or enter into any agreement or otherwise make any commitment
to do any of the foregoing.
Restructure of Transaction
Each of Amgen and Immunex has agreed that it will not take any action that
would disqualify the merger, and to use its reasonable best efforts to take any
action to qualify the merger, as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code. If tax counsel to either Amgen or Immunex
is unable to render its opinion that the merger qualifies as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, the parties
have agreed to restructure the transaction such that tax counsel to Amgen and
Immunex are able to render their opinions. No such restructuring of the
transaction shall (a) result in any change in the merger consideration, (b) be
materially adverse to the interests of Amgen, Immunex, AMS Acquisition, Amgen
stockholders, or Immunex shareholders, or (c) unreasonably impede or delay
consummation of the merger. If the transaction is restructured in such a
manner, the material tax consequences of the merger would be the same as those
described in section entitled "The Merger--Material United States Federal
Income Tax Consequences."
Regulatory Filings; Antitrust Matters; Obtaining Regulatory Approvals
Amgen and Immunex have agreed to use their reasonable best efforts to:
. take all appropriate action and do all things necessary under applicable
law or otherwise to consummate the merger as promptly as practicable;
. obtain from any governmental entities any consents, licenses, permits,
waivers, approvals, authorizations or orders required to be obtained or
made by either party, to avoid any action or proceeding by any
governmental entity related to the merger agreement and to prevent a
material adverse effect on Immunex from occurring prior to or after the
closing or a material adverse effect on Amgen from occurring after the
effective time of the merger;
. make all necessary filings with respect to the merger agreement required
under applicable federal and state securities laws, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and antitrust and
competition laws of any other applicable jurisdiction and any other
applicable law; and
. avoid the entry of, or have terminated, any decree, order or judgment
that would restrain, prevent or delay the merger, including defending
through litigation any claim asserted in any court.
In furtherance of the foregoing, Amgen and Immunex have agreed to use their
reasonable best efforts to avoid or eliminate each and every impediment under
any antitrust, competition or trade regulation law that may
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be asserted by any governmental entity with respect to the merger so as to
enable the closing to occur as soon as reasonably possible, including
implementing, contesting or resisting any litigation before any court or
quasi-judicial administrative tribunal seeking to restrain or enjoin the
merger. However, neither Amgen nor Immunex is required to commit to any
divestitures, licenses or hold separate or similar arrangements with respect to
its assets or conduct of business arrangements, whether as a condition to
obtaining any approval from a governmental entity or any other person or for
any other reason, if such divestiture, license, holding separate or arrangement
is not conditioned upon the consummation of the merger or would have a material
adverse effect on Amgen after giving effect to the merger.
Employee Benefit Matters
Immunex Stock Options
Amgen has agreed to assume the Immunex stock option plans at the effective
time of the merger. Under the merger agreement, each outstanding option to
purchase shares of Immunex common stock will be assumed by Amgen at the
effective time of the merger and (except for converted options described in the
next paragraph and Mr. Fritzky's incentive stock option described in the
section "The Merger--Interests of Directors, Executive Officers and
Shareholders of Immunex in the Merger") will thereafter constitute an option to
acquire the number (rounded down to the nearest whole number) of shares of
Amgen common stock determined by multiplying the number of shares of Immunex
common stock subject to the option immediately prior to the merger by 0.52. The
per share exercise price for the Amgen common stock issuable upon conversion of
these Immunex options will be equal to the quotient determined by dividing the
exercise price per share of Immunex common stock that otherwise could have been
purchased under the Immunex stock option by 0.52. Each of these options will be
subject to the same terms and conditions as were in effect for the related
option immediately prior to the merger, except that each option, other than the
options discussed below, that was outstanding on the date of the merger
agreement will fully vest and become exercisable as to all shares of Amgen
common stock subject thereto. At the effective time of the merger, the number
and kind of shares issuable under the Immunex stock option plans will be
converted into shares of Amgen common stock.
At the effective time of the merger, each option to purchase shares of
Immunex common stock with an exercise price greater than the higher of $40 or
the closing price of a share of Immunex common stock on the last trading day
prior to the merger will be converted into an option to purchase that number of
whole shares of Amgen common stock equal to 40% of the number of shares subject
to the related converted option (rounded down to the nearest whole number of
shares) at an exercise price per share equal to the fair market value of a
share of Amgen common stock on the date on which the converted option is
granted (which shall be as of the close of market on the date of the effective
time of the merger). The options for Amgen common stock granted with respect to
these converted options will be subject to the same terms and conditions
(including vesting schedule) as were in effect for the related converted option
immediately prior to the merger.
Immunex Employee Stock Purchase Plan
Amgen has agreed to assume the Immunex employee stock purchase plan at the
effective time of the merger. Each outstanding purchase right under the Immunex
employee stock purchase plan will be assumed by Amgen and converted into a
right to purchase Amgen common stock. Each purchase right so assumed and
converted by Amgen will continue to have the same terms and conditions set
forth in the employee stock purchase plan of Immunex and the other documents
governing the outstanding purchase rights under the plan, except that the
purchase price of shares of Amgen common stock and the number of shares of
Amgen common stock to be issued upon the exercise of the purchase rights will
be adjusted in a manner which preserves the tax treatment of such purchase
rights as options to which Section 421(a) of the Internal Revenue Code applies.
In addition to the foregoing, the number and kind of shares issuable under the
Immunex employee stock purchase plan will be converted into shares of Amgen
common stock in accordance with the provisions of the Immunex employee stock
purchase plan.
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Immunex Employees
For a period of at least two years following the effective time of the
merger, Amgen has agreed to provide employee benefits (excluding equity based
benefits) to employees and former employees of Immunex that are no less
favorable in the aggregate than those provided to employees of Immunex as of
December 16, 2001. Amgen also agreed to give continuing Immunex employees
credit for prior service with Immunex for purposes of (a) determining vesting
and entitlement to certain benefits under Amgen's benefit plans and (b)
satisfying any waiting periods, evidence of insurability requirements or the
application of any pre-existing condition limitations. However, service credit
will not be given where such crediting would result in a duplication of
benefits. Amgen has also agreed to waive pre-existing condition limitations to
the same extent waived under the applicable Immunex benefit plan. Continuing
Immunex employees will also be given credit for amounts paid under a
corresponding benefit plan during the same period for purposes of applying
deductibles, co-payments and out-of-pocket maximums.
Indemnification and Insurance
Amgen has agreed to cause to be maintained in effect provisions of the
articles of incorporation and bylaws of Immunex with respect to indemnification
and advancement of expenses that are at least as favorable to the intended
beneficiaries as those contained in the existing articles of incorporation and
bylaws of Immunex. Amgen has also agreed to indemnify, and provide advancement
of expenses to, all past and present directors, officers and employees of
Immunex and its subsidiaries to the fullest extent permitted by law for acts or
omissions occurring at or prior to the effective time of the merger in their
capacities as such. Amgen will honor all indemnification agreements entered
into by Immunex or any of its subsidiaries.
For six years from the effective time of the merger, Amgen will maintain for
the benefit of the current directors and officers of Immunex an insurance and
indemnification policy that provides coverage for acts or omissions occurring
prior to the effective time of the merger covering each person currently
covered by the officers' and directors' liability insurance policies of Immunex
on terms with respect to coverage and in amounts no less favorable than those
of the policies of Immunex in effect as of December 16, 2001. However, Amgen is
not required to pay an annual premium for the insurance in excess of 200% of
the estimated premium for the 2002 fiscal year.
Termination of the Merger Agreement
Termination by Amgen or Immunex
Either Immunex or Amgen, by action of their respective boards of directors,
may terminate the merger agreement and abandon the merger at any time prior to
completion of the merger, whether before or after approval of the merger
agreement by Immunex shareholders or the approval of the issuance of shares of
Amgen common stock to Immunex shareholders by Amgen stockholders:
. by mutual written consent of Amgen and Immunex;
. if the merger is not completed by September 30, 2002 (which may, from
time to time, be extended by either party up to and including December
31, 2002 in the event all conditions to effect the merger other than one
or more of the regulatory conditions have been or are capable of being
satisfied at the time of each such extension and the regulatory
conditions have been or are reasonably capable of being satisfied on or
prior to December 31, 2002), except that this right to terminate the
merger agreement is not available to any party whose failure to fulfill
any obligation under the merger agreement has been the cause of the
failure of the merger to close;
. if any governmental entity issues an order, decree or ruling or taken
any other action permanently restraining, enjoining or otherwise
prohibiting the merger, and such order, decree, ruling or other action
has become final and nonappealable; or
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. if (a) the Immunex shareholders do not approve the merger agreement at a
duly convened shareholders meeting at which the vote to approve the
merger agreement was taken, or (b) the Amgen stockholders do not approve
the issuance of Amgen common stock to Immunex shareholders in the merger
at a duly convened stockholders meeting at which the vote to approve the
share issuance was taken.
Termination by Amgen
Amgen, by action of the Amgen board of directors, may terminate the merger
agreement and abandon the merger at any time prior to completion of the merger,
whether before or after approval of the merger agreement by Immunex
shareholders or the approval of the issuance of shares of Amgen common stock to
Immunex shareholders by Amgen stockholders:
. if (a) the Immunex board of directors withdraws or adversely modifies
its recommendation (or resolves to do so) of the merger agreement; (b)
the Immunex board of directors approves or recommends (or resolves to do
so) to the Immunex shareholders an acquisition proposal other than the
merger agreement; or (c) Immunex fails to call or hold its shareholders
meeting by September 25, 2002; or
. if there has been a breach by Immunex of any representation, warranty,
covenant or agreement contained in the merger agreement which (a) would
result in a failure of a closing condition relating to the accuracy of
the representations and warranties of Immunex or the performance by
Immunex of its obligations under the merger agreement and (b) cannot be
cured prior to September 30, 2002 (as that date may be extended).
However, Amgen is required to give Immunex written notice, delivered at
least twenty days prior to such termination, stating Amgen's intention
to terminate the merger agreement and the basis for the termination.
Termination by Immunex
Immunex, by action of the Immunex board of directors, may terminate the
merger agreement and abandon the merger at any time prior to completion of the
merger, whether before or after approval of the merger agreement by Immunex
shareholders or the approval of the issuance of shares of Amgen common stock to
Immunex shareholders by Amgen stockholders:
. if (a) the Amgen board of directors withdraws or adversely modifies its
recommendation (or resolves to do so) of the issuance of shares of Amgen
common stock to Immunex shareholders in the merger; or (b) Amgen fails
to call or hold its stockholders meeting by September 25, 2002; or
. if there has been a breach by Amgen of any representation, warranty,
covenant or agreement contained in the merger agreement which (a) would
result in a failure of a closing condition relating to the accuracy of
the representations and warranties of Amgen or the performance by Amgen
of its obligations under the merger agreement and (b) cannot be cured
prior to September 30, 2002 (as that date may be extended). However,
Immunex is required to give Amgen written notice, delivered at least
twenty days prior to such termination, stating the intention of Immunex
to terminate the merger agreement and the basis for the termination.
Termination Fee
Each of Amgen and Immunex have agreed to pay to the other a termination fee
of $475 million within two business days of the occurrence of a triggering
event in relation to it as described below.
Termination Fee to be Paid by Amgen
Amgen has agreed to pay Immunex a termination fee of $475 million if:
. the Amgen board of directors withdraws or adversely modifies its
recommendation of the issuance of Amgen common stock to Immunex
shareholders in the merger and, thereafter, the merger agreement is
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terminated by Amgen or Immunex because the Amgen stockholders did not
approve the issuance of Amgen common stock to Immunex shareholders in
the merger; or
. the merger agreement is terminated by Immunex because Amgen failed to
call or hold its stockholders meeting by September 25, 2002.
Termination Fee to be Paid by Immunex
Immunex has agreed to pay Amgen a termination fee of $475 million if:
. the merger agreement is terminated by Amgen because the Immunex board of
directors withdraws or adversely modifies its recommendation (or
resolves to do so) of the merger agreement and has done so in such a
manner that Immunex cannot submit the merger agreement to a vote of the
Immunex shareholders pursuant to Chapter 23B.11.030(2) of the Washington
Business Corporation Act;
. the merger agreement is terminated by Amgen because the Immunex board of
directors approved or recommended (or resolves to do so) to the Immunex
shareholders an acquisition proposal other than the merger agreement;
. the merger agreement is terminated by Amgen because Immunex failed to
call or hold its shareholders meeting by September 25, 2002;
. the Immunex board of directors has withdrawn or adversely modified its
recommendation of the merger agreement prior to the shareholders meeting
of Immunex and the merger agreement is terminated by Amgen because
Immunex shareholders did not approve the merger agreement; or
. the merger agreement is terminated by Amgen or Immunex because the
Immunex shareholders did not approve the merger agreement and, at any
time after December 16, 2001 and before the vote at the Immunex
shareholders meeting, an acquisition proposal has been publicly
announced and not bona fide withdrawn and Immunex enters into a
definitive agreement with respect to a competing transaction or
completes a competing transaction, in either case, within twelve months
following the termination of the merger agreement.
A "competing transaction" means any (a) merger, consolidation, business
combination or similar transaction involving Immunex or any significant
subsidiary of Immunex pursuant to which the Immunex shareholders immediately
prior to such transaction would own less than 70% of any class of equity
securities of the entity surviving or resulting from such transaction (or the
ultimate parent entity thereof), (b) sale or other disposition directly or
indirectly of assets of Immunex or its subsidiaries representing 30% or more of
the consolidated assets of Immunex and its subsidiaries, (c) issuance, sale, or
other disposition of securities (or options, rights or warrants to purchase, or
securities convertible into or exchangeable for, such securities) in each case
by Immunex to any person or "group" (as defined in Rule 13d-5(b)(1) under the
Securities Exchange Act of 1934) representing 30% or more of the voting power
of Immunex or (d) transaction in which any person would acquire beneficial
ownership, or the right to acquire beneficial ownership or any group would have
been formed which beneficially owns or has the right to acquire beneficial
ownership of, 30% or more of the outstanding voting capital stock of Immunex
(other than any shares beneficially owned by Wyeth or its subsidiaries).
Except as described in the sections entitled "Termination Fee" and
"Expenses," neither party will have any liability to the other upon termination
of the merger agreement, unless it breaches its obligations with respect to
confidentiality under the merger agreement or willfully and materially breaches
its representations, warranties, covenants or agreements under the merger
agreement.
Expenses
If the merger agreement is terminated by either Amgen or Immunex because of
a breach by the other party of any of its representations, warranties,
covenants or agreements contained in the merger agreement, the
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breaching party will pay the other party's reasonable out-of-pocket expenses up
to an amount equal to $15 million. Amgen and Immunex have agreed to each pay
one-half of the expenses related to printing, filing and mailing this joint
proxy statement/prospectus and all SEC and other regulatory filing fees
incurred in connection with the registration statement of which this joint
proxy statement/prospectus is a part. Except as described in the previous two
sentences, all expenses incurred by Amgen and Immunex in connection with the
merger will be borne solely and entirely by the party which has incurred the
expense.
Amendments, Extensions and Waivers
Amendments
The merger agreement may be amended by action of the Amgen board of
directors and the Immunex board of directors at any time prior to the effective
time of the merger. However, after approval of the merger agreement by the
Immunex shareholders, no amendment may be made without further shareholder
approval which, by law or in accordance with the rules of the Nasdaq National
Market, requires further approval by the Immunex shareholders. All amendments
to the merger agreement must be in writing signed by each party.
Extensions and Waivers
At any time prior to the effective time of the merger, any party to the
merger agreement may:
. extend the time for the performance of any of the obligations or other
acts of any other party to the merger agreement;
. waive any inaccuracies in the representations and warranties of any
other party contained in the merger agreement or in any document
delivered pursuant the merger agreement; and
. waive compliance by any other party with any of the agreements or
conditions contained in the merger agreement.
However, after any approval of the transactions contemplated by the merger
agreement by the Immunex shareholders, there may not be, without further
approval of the Immunex shareholders, any extension or waiver of the merger
agreement or any portion of the merger agreement which, by law or in accordance
with the rules of the Nasdaq National Market, requires further approval by the
Immunex shareholders. All extensions and waivers must be in writing and signed
by the party against whom the extension or waiver is to be effective.
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SHAREHOLDER VOTING AGREEMENT
The following summary describes certain material provisions of the
shareholder voting agreement, which is attached to this joint proxy
statement/prospectus as Annex B and is incorporated by reference into this
joint proxy statement/prospectus. This summary may not contain all of the
information about the shareholder voting agreement that is important to you. We
encourage you to read the shareholder voting agreement carefully in its
entirety.
Concurrently with the execution and delivery of the merger agreement, Amgen
entered into a shareholder voting agreement with Wyeth (formerly American Home
Products Corporation) and two of its wholly-owned subsidiaries, MDP Holdings,
Inc. and Lederle Parenterals, Inc. These Immunex shareholders are referred to
as the "Wyeth entities" in this summary of the shareholder voting agreement and
in the summary of the stockholders' rights agreement below. As of the record
date for the Immunex annual meeting, the Wyeth entities beneficially owned
223,378,088 shares of Immunex common stock, representing approximately 41% of
the outstanding shares of Immunex common stock.
Under the shareholder voting agreement, the Wyeth entities agreed to vote
their shares of Immunex common stock:
. in favor of the approval of the terms of the merger agreement;
. against any action, proposal, transaction or agreement that would result
in a breach in any respect of any covenant, representation or warranty
or any other obligation or agreement of Immunex contained in the merger
agreement or of any of the Wyeth entities contained in the shareholder
voting agreement; and
. except with the written consent of Amgen, against the following actions
or proposals (other than the merger with Amgen):
(a) any acquisition proposal;
(b) any change in the persons who constitute the Immunex board of
directors that is not approved in advance by at least a majority of
the persons who were directors of the Immunex on December 16, 2001
(or their successors who were so approved);
(c) any material change in the present capitalization of Immunex or any
amendment of the articles of incorporation or bylaws of Immunex;
(d) any other material change in the corporate structure or business of
Immunex; or
(e) any other action or proposal involving Immunex or any of its
subsidiaries that is intended, or could reasonably be expected, to
prevent, delay or adversely affect the transactions contemplated by
the merger agreement.
However, the shareholder voting agreement does not limit or affect any
actions taken by any member of the Immunex board of directors nominated by, or
appointed at the request of, Wyeth solely in his or her capacity as a director
of Immunex. The Wyeth entities have given Amgen an irrevocable proxy to vote
their shares of Immunex common stock on the matters set forth above.
The shareholder voting agreement prohibits any Wyeth entity from
transferring any shares of Immunex common stock, except to other Wyeth entities
or to any wholly-owned subsidiary of Wyeth that agrees in writing to be bound
by the terms of the shareholder voting agreement. However, with the consent of
Amgen (which consent will not be unreasonably withheld), the Wyeth entities may
pledge or encumber any of their shares of Immunex common stock so long as the
pledge or encumbrance would not impair their ability to perform their
obligations under the shareholder voting agreement.
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Each Wyeth entity also agreed:
. it will not participate in a solicitation of proxies or powers of
attorney or similar rights to vote, or seek to advise or influence any
person with respect to the voting of, any shares of Immunex common stock
in connection with any vote or other action on any matter, other than to
recommend that the Immunex shareholders vote in favor of the merger
agreement;
. it will not act in concert with any person to, deposit any shares of
Immunex common stock in a voting trust or subject any shares of Immunex
common stock to any arrangement with any person with respect to the
voting of such shares of Immunex common stock, except as permitted by
the shareholder voting agreement; and
. it will not enter into or conduct any discussions or negotiations with,
or encourage or respond to any inquiries by, or provide any information
to, any person, other than Amgen, relating to any acquisition proposal;
however, in connection with superior proposals as to which Amgen has
received written notice from Immunex, Wyeth may provide information and
engage in discussions to the same extent as Immunex is permitted under
the merger agreement.
Amgen agreed to take all actions necessary to ensure that each Wyeth entity
will receive the cash portion of the merger consideration payable to such Wyeth
entity immediately after the effective time of the merger.
The shareholder voting agreement terminates upon the earliest to occur of:
. the mutual consent of Amgen and Wyeth;
. the completion of the merger;
. the date the merger agreement is terminated;
. the date of any modification, waiver or amendment to the merger
agreement in a manner that reduces either the merger exchange ratio or
the cash consideration payable in the merger; and
. December 31, 2002.
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STOCKHOLDERS' RIGHTS AGREEMENT
The following summary describes certain material provisions of the
stockholders' rights agreement, which is attached to this joint proxy
statement/prospectus as Annex C and is incorporated by reference into this
joint proxy statement/prospectus. This summary may not contain all of the
information about the stockholders' rights agreement that is important to you.
We encourage you to read the stockholders' rights agreement carefully in its
entirety.
In connection with the execution and delivery of the merger agreement, Amgen
entered into a stockholders' rights agreement with the Wyeth entities dated as
of the date of the merger agreement.
Standstill Provisions
Under the stockholders' rights agreement, the Wyeth entities agreed that
until December 16, 2006, the Wyeth entities may not:
. acquire or propose to acquire any securities of Amgen or its
subsidiaries or any assets of Amgen or its subsidiaries or make any
public announcement with respect to any of the foregoing;
. participate in any way in any solicitation of proxies to vote, or seek
to advise or influence any person with respect to the voting of, any
securities of Amgen or make any public announcement with respect to any
of the foregoing;
. form or in any way participate in a group in connection with any of the
foregoing;
. otherwise act to seek to control or influence Amgen's management, board
of directors or policies;
. request Amgen to amend or waive the standstill provisions of the
stockholders' rights agreement or take any action which would reasonably
be expected to require Amgen to make a public announcement regarding the
possibility of a business combination or merger or make any public
announcement with respect to any of the restrictions in this clause; or
. advise, assist or encourage, or direct any person to advise, assist or
encourage any other persons, in connection with any of the foregoing.
The above restrictions do not apply to:
. purchases by Wyeth of Amgen common stock for employee benefit or other
plans not to exceed 1% of the outstanding shares of Amgen common stock;
or
. securities held by a company that Wyeth acquires in the future, if the
fair market value of the securities represents less than 20% of the
assets of that company. However, Wyeth must use commercially reasonable
efforts to divest those securities within 18 months of the consummation
of the acquisition.
Voting of Amgen Common Stock
Under the stockholders' rights agreement, the Wyeth entities agreed that,
until the Wyeth entities beneficially own in the aggregate less than 2% of the
outstanding shares of Amgen common stock, the Wyeth entities must cause all
shares of Amgen common stock beneficially owned by them to be voted:
. with respect to the election of directors, in favor of those individuals
nominated by the Amgen board of directors or a nominating committee of
the Amgen board of directors;
. on all proposals of any other Amgen stockholder, in accordance with the
recommendation of the Amgen board of directors; and
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. on all other matters that come before Amgen stockholders for a vote, in
proportion to the votes cast by the other Amgen stockholders.
Lock-Up of Shares of Amgen Common Stock Acquired in the Merger
Under the stockholders' rights agreement, the Wyeth entities and Amgen
agreed that for 90 days following the closing of the merger, none of the Wyeth
entities may transfer any shares of Amgen common stock other than transfers:
. to a wholly-owned subsidiary of Wyeth;
. pursuant to a third party tender offer or exchange offer which was not
induced by a Wyeth entity and (a) which is approved by the Amgen board
of directors or (b) in circumstances in which it is reasonably likely
that Wyeth entities would be, as a result of not tendering or
exchanging, forced to receive consideration that is different than the
consideration available to those stockholders who did tender or exchange;
. arising as a result of a merger or similar transaction involving Amgen;
or
. in the form of a pledge in connection with bona fide financings (other
than derivative transactions) with a financial institution, provided the
pledgee agrees to the applicable restrictions set forth in stockholders'
rights agreement.
Volume Limitations on Sales of Amgen Common Stock
The Wyeth entities and their affiliates may not transfer more than 20
million shares of Amgen common stock (including common stock underlying
derivative transactions) in any calendar quarter, excluding shares of Amgen
common stock transferred pursuant to underwritten syndicated offerings.
In addition, the aggregate number of shares of Amgen common stock underlying
derivative transactions effected in any calendar week by the Wyeth entities may
not exceed 20% of the aggregate trading volume of Amgen common stock on the
Nasdaq National Market in the immediately preceding calendar week.
Registration Rights
Shelf Registration
Amgen will prepare and file with the SEC immediately after the closing of
the merger a registration statement registering the resale of Amgen common
stock from time to time by the Wyeth entities or any other permitted holders of
the Amgen common stock received by the Wyeth entities in the merger. Amgen has
agreed to use its commercially reasonable efforts to:
. cause the shelf registration statement to be declared effective within
90 days after the closing of the merger; and
. keep the shelf registration statement continuously effective until the
earlier of (a) the first anniversary of the closing of the merger and
(b) the sale of all of the securities included in the shelf registration
statement.
The Wyeth entities, or any other permitted holders of the Amgen common stock
received by the Wyeth entities in the merger, may request Amgen to effect an
underwritten syndicated offering by supplement or amendment to the shelf
registration statement. In this case, Amgen and the requesting party or parties
will enter into an underwriting agreement in customary form with the
underwriters for the offering which will be underwritten by two co-managing
underwriters with the requesting holders selecting one co-managing underwriter
and Amgen selecting the second co-managing underwriter. In some circumstances,
Amgen may delay an offering for a limited period of time.
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Amgen is only obligated to effect two offerings under the shelf registration
statement and each of these offerings must include at least 5 million shares of
Amgen common stock. In addition, these underwritten offerings will be subject
to cutback if either of the co-managing underwriters reasonably advises Amgen
that the number of shares of Amgen common stock requested to be included in the
offering exceeds the number that can be sold in the offering at a price
reasonably related to the then current market value of Amgen common stock.
Demand Registration Rights
Beginning on the first anniversary of the closing of the merger, and until
the fourth anniversary of the closing of the merger, the Wyeth entities, or any
other permitted holders of the Amgen common stock received by the Wyeth
entities in the merger, may request that Amgen file a registration statement
covering the registration of a minimum of 5 million shares of Amgen common
stock held by these holders in an underwritten offering. Amgen has agreed to
use its commercially reasonable efforts to cause to be registered all the
shares that the requesting party or parties have requested to be registered.
Offerings pursuant to demand registrations will be underwritten by two
co-managing underwriters with the requesting holders selecting one co-managing
underwriter and Amgen selecting the second co-managing underwriter. Amgen is
obligated to effect up to four demand registrations, less the number of
underwritten offerings effected under the shelf registration statement. These
offerings will be subject to customary cutbacks if either of the co-managing
underwriters reasonably advises Amgen that the shares of Amgen common stock
requested to be included in the offering exceeds the number that can be sold in
the offering at a price reasonably related to the then current market value of
Amgen common stock. In certain circumstances, Amgen may delay an offering for a
limited period of time. Furthermore, the Amgen board of directors may delay the
filing of a demand registration statement if the filing would likely materially
interfere with a potential contemplated material financing, acquisition,
corporation reorganization, corporate development or merger or other
transaction involving Amgen.
If Amgen files a demand registration statement registering an underwritten
offering of Amgen common stock on behalf of any Wyeth entity, or any other
permitted holders of the Amgen common stock received by the Wyeth entities in
the merger, Amgen may include in the registration statement shares of Amgen
common stock for its own account. Amgen's right to so include shares for its
own account is subject to cutback if either of the co-managing underwriters
reasonably advises Wyeth that the number of shares of Amgen common stock
requested to be included in the offering exceeds the number that can be sold in
the offering at a price reasonably related to the then current market value of
Amgen common stock.
Piggy Back Registration Rights
If Amgen files a registration statement registering an underwritten offering
of Amgen common stock on its behalf or on behalf of other holders of Amgen
common stock, the Wyeth entities, or any other permitted holders of the Amgen
common stock received by the Wyeth entities in the merger, have the right to
request that Amgen include their Amgen common stock in the registration
statement. This right to include Amgen common stock is subject to customary
cutbacks if the managing underwriter, to be selected by Amgen, advises Amgen
that the number of securities requested to be included in the offering exceeds
the number that can be sold in the offering at a price reasonably related to
the then current market value of Amgen common stock. Furthermore, Amgen may
decide for any reason not to proceed with the proposed registration and may, at
its election, give written notice of the determination to the parties
requesting inclusion in the registration, and, thereupon, Amgen will be
relieved of its obligation to register any shares of Amgen common stock in
connection with that registration statement.
Expenses of Registration; Indemnification
All expenses incurred in connection with each shelf registration and demand
registration will be borne by the Wyeth entities or any other permitted holders
participating in the registration. The Wyeth entities and other
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permitted holders will also bear the underwriting commissions and discounts
applicable to the securities offered for their account. In connection with the
exercise of the Wyeth entities of their piggy-back registration rights, the
Wyeth entities will bear the underwriting commissions and discounts applicable
to the securities offered for their account and Amgen will pay all other
expenses.
Amgen and the Wyeth entities have agreed to indemnify each other for third
party claims arising out of securities law violations under customary
circumstances.
Termination
Except with respect to the standstill provisions and the voting provisions,
which will terminate as described above, the stockholders' rights agreement and
the obligations of the parties under it will terminate on the first date on
which the Wyeth entities, and any of their subsidiaries or affiliates,
beneficially own, in the aggregate, less than 5 million shares of Amgen common
stock.
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OTHER AGREEMENTS WITH WYETH
The following summaries describe certain material provisions of the amended
and restated promotion agreement and the agreement regarding governance and
commercial matters, which were filed as exhibits to the registration statement
of which this joint proxy statement/prospectus forms a part and which are
incorporated by reference into this joint proxy statement/prospectus. These
summaries may not contain all of the information about these agreements that is
important to you. We encourage you to read each agreement carefully in its
entirety.
Amended and Restated Promotion Agreement
Concurrently with the execution of the merger agreement, Amgen entered into
an agreement with Wyeth to amend and restate an existing long-term promotion
agreement between Wyeth and Immunex. The principal operative terms of the
amendment and restatement of the promotion agreement will become effective at
the effective time of the merger. For a description of the existing promotion
agreement between Immunex and Wyeth, see "Relationship with Wyeth--ENBREL
Promotion Agreement" on page V-14.
Under the amended and restated promotion agreement, Wyeth and Immunex will
jointly market and sell ENBREL to all appropriate customer segments in the
United States and Canada for all approved indications other than oncology. The
rights to promote ENBREL in the United States and Canada for oncology
indications are reserved to Immunex.
Under the amended and restated promotion agreement, an ENBREL management
committee comprised of an equal number of representatives from Immunex and from
Wyeth will be responsible for overseeing the marketing and sales of ENBREL
including strategic planning, approval of an annual marketing plan, product
pricing and establishing an ENBREL brand team. The ENBREL brand team, with
equal representation from each party, will prepare and implement the annual
marketing plan and will be responsible for all sales activities. The agreement
provides that each of Immunex and Wyeth will:
. have primary tactical execution responsibility for specific activities
identified within the agreement or as directed by the management
committee;
. be required to maintain a minimum level of financial commitment to
promotion and marketing and a minimum number of sales personnel for
ENBREL as established from time to time by the management committee; and
. pay a defined percentage of all marketing and sales expenses approved by
the management committee.
The amended and restated promotion agreement further provides that Immunex
will:
. record all product sales of ENBREL in the United States and Canada made
under the agreement;
. pay Wyeth a percentage of the annual gross profits of ENBREL in the
United States and Canada attributable to all indications for ENBREL,
other than oncology indications, on a scale that increases as gross
profits increase;
. retain a majority percentage of these nononcology gross profits in the
United States and Canada on an annual basis;
. be entitled to keep all of the gross profits attributable to any future
United States or Canadian oncology indications for ENBREL; and
. pay Wyeth specified residual royalties on a declining scale based on net
sales of ENBREL in the United States and Canada in the three years
following the expiration or termination of Wyeth's detailing and
promotion of ENBREL.
If Wyeth sells or distributes a biologic product in the United States and
Canada that is directly competitive with ENBREL, as defined in the amended and
restated promotion agreement, and subject to several exclusions,
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Wyeth will give Immunex prior written notice and, upon the request of Immunex,
the parties will attempt in good faith to either establish mutually acceptable
terms under which Immunex will co-promote this competitive biologic product or
establish other terms for a commercial relationship with Wyeth, or negotiate an
adjustment to the gross profits allocated to Wyeth under the amended and
restated promotion agreement. If Immunex is unable to establish acceptable
terms with Wyeth within 90 days of the request of Immunex, Immunex will have
the option to reacquire from Wyeth all marketing rights to ENBREL in the United
States and Canada and terminate the amended and restated promotion agreement,
subject to the payment by Immunex of a substantial amount to Wyeth over a
defined period. If Wyeth obtains a biologic product that is directly
competitive with ENBREL through the acquisition of another company and Immunex
reacquires the marketing rights to ENBREL in the United States and Canada,
Wyeth's primary field sales force that had detailed ENBREL in the relevant
territory within the United States and Canada for a specified period will not
sell, detail or otherwise distribute the competitive biologic product for a
specified period in the United States and Canada.
Wyeth has agreed to reimburse Immunex for a defined percentage of the
clinical and regulatory expenses it incurs in connection with the filing and
approval of any new indications for ENBREL in the United States and Canada,
excluding oncology and rheumatoid arthritis indications. Wyeth's reimbursement
of these clinical and regulatory expenses is in addition to another existing
cost-sharing arrangement between Immunex and Wyeth for development costs
related to ENBREL. The additional Wyeth reimbursement for clinical and
regulatory expenses under this agreement, a portion of which is payable upon
regulatory filing of any new indication and the remainder of which will be
payable upon regulatory approval of any new indication, if any, applies for
that part of the United States and Canadian clinical and regulatory expenses
for ENBREL for which Immunex would otherwise be financially responsible under
the cost-sharing provisions in the other cost-sharing agreement. Wyeth has also
agreed to reimburse Immunex under this agreement for a defined percentage of
specified patent expenses related to ENBREL, including any up-front license
fees and milestones, as well as patent litigation and interference expenses.
Subject to specified limitations, Wyeth will also be responsible for a
defined percentage of the liabilities, costs and expenses associated with the
manufacture, use or sale of ENBREL in the United States or Canada.
Agreement Regarding Governance and Commercial Matters
Amgen has also entered into an agreement regarding governance and commercial
matters with Wyeth and its wholly-owned subsidiary, American Cyanamid Company,
that provides, among other things, that:
. if Wyeth exercises its rights under an existing product rights agreement
between Wyeth and Immunex to acquire all of the rights of Immunex to one
or more specified products under development by Immunex, or the rights
to market or promote those products, Wyeth's rights will terminate at
the effective time of the merger. Upon such a termination, Amgen must
reimburse Wyeth for any amounts paid to Immunex in conjunction with its
exercise of those rights;
. the product rights agreement will be amended as of the effective time of
the merger to terminate the rights described above in exchange for a
specified payment to Wyeth;
. Amgen has agreed not to sue Wyeth or its affiliates under any of Amgen's
patents or any patents that come under Amgen's control for infringement
for developing, making, using, marketing, distributing, importing or
selling ENBREL anywhere in the world outside of the United States and
Canada; and
. Amgen granted to Wyeth an exclusive option to acquire, subject to the
approval of a third party, an exclusive sublicense under a license
agreement between Amgen and a third party. Wyeth may exercise this
option at any time on or before December 31, 2002. If exercised, in
addition to all upfront payments, milestone payments, and royalties
payable under the sublicense agreement, Wyeth will pay to Amgen
reimbursement in an amount not to exceed a defined cap for amounts paid
to the third party in 2002 to maintain the license agreement.
For a description of the existing governance agreement between Immunex, Wyeth
and American Cyanamid Company, see "Relationship with Wyeth--Governance
Agreement" on page V-8.
I-81
UNAUDITED PRO FORMA CONDENSED COMBINING FINANCIAL STATEMENTS
The following unaudited pro forma condensed combining balance sheet as of
December 31, 2001 and the unaudited pro forma condensed combining statement of
operations for the year ended December 31, 2001 have been prepared to
illustrate the effect of the merger as though the merger had occurred on
December 31, 2001 in the pro forma balance sheet and as of January 1, 2001 in
the pro forma statement of operations. The pro forma information is based upon
the historical consolidated financial statements of Amgen and the historical
consolidated financial statements of Immunex, giving effect to the merger under
the purchase method of accounting and the assumptions, estimates and
adjustments described in the notes to the unaudited pro forma condensed
combining financial statements. The assumptions, estimates and adjustments are
preliminary and have been made solely for purposes of developing such pro forma
information.
The unaudited pro forma condensed combining financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the consolidated financial position or consolidated results of operations that
would have been reported had the merger occurred on the dates indicated, nor do
they represent a forecast of the consolidated financial position at any future
date or the consolidated results of operations for any future period.
Furthermore, no effect has been given in the unaudited pro forma condensed
combining statement of operations for synergistic benefits that may be realized
through the combination of the two companies or costs that may be incurred in
integrating their operations. The unaudited pro forma condensed combining
financial statements should be read in conjunction with the historical
consolidated financial statements, including the notes thereto, and
management's discussion and analysis of financial condition and results of
operations of Amgen and Immunex covering those periods incorporated by
reference into this joint proxy statement/prospectus.
I-82
Pro Forma Condensed Combining Statement of Operations for the Year Ended
December 31, 2001
(In millions, except per share data)
(Unaudited)
Pro forma Pro forma
Amgen Immunex Adjustments Combined
-------- ------- ----------- ---------
Revenues:
Product sales........................................... $3,511.0 $959.6 $ -- $4,470.6
Corporate partner revenues.............................. 252.0 0.7 -- 252.7
Royalty income.......................................... 252.7 26.5 -- 279.2
-------- ------ ------- --------
Total revenues...................................... 4,015.7 986.8 -- 5,002.5
-------- ------ ------- --------
Operating expenses:
Cost of sales........................................... 443.0 256.2 25.2 (3) 724.4
Research and development................................ 865.0 204.6 31.5 (3) 1,101.1
Selling, general and administrative..................... 970.7 423.0 25.4 (3) 1,419.1
Amortization of acquired identifiable intangible assets. -- -- 438.0 (1) 438.0
Loss of affiliates, net................................. 2.7 -- -- 2.7
Other items, net........................................ 203.1 5.6 -- 208.7
-------- ------ ------- --------
Total operating expenses............................ 2,484.5 889.4 520.1 3,894.0
-------- ------ ------- --------
Operating income........................................... 1531.2 97.4 (520.1) 1,108.5
Other income (expense):
Interest and other income............................... 168.7 115.1 -- 283.8
Interest expense, net................................... (13.6) -- (45.4)(2) (59.0)
-------- ------ ------- --------
Total other income.................................. 155.1 115.1 (45.4) 224.8
-------- ------ ------- --------
Income before income taxes................................. 1,686.3 212.5 (565.5) 1,333.3
Provision for income taxes................................. 566.6 42.5 (182.0)(4) 427.1
-------- ------ ------- --------
Net income................................................. $1,119.7 $170.0 $(383.5) $ 906.2
======== ====== ======= ========
Earnings per share:
Basic................................................... $ 1.07 $ 0.31 $ 0.70
Diluted................................................. $ 1.03 $ 0.30 $ 0.68
Shares used in calculation of earnings per share (5):
Basic................................................... 1,045.5 542.9 1,285.4
Diluted................................................. 1,084.4 569.1 1,335.3
I-83
Pro Forma Condensed Combining Balance Sheet as of December 31, 2001
(In millions)
(Unaudited)
Pro forma Pro forma
Amgen Immunex Adjustments Combined
-------- -------- ----------- ---------
Assets
Current assets:
Cash and cash equivalents................... $ 689.1 $ 198.8 $ 2,478.9 (3) $ 887.9
(2,478.9)(3)
Marketable securities....................... 1,973.1 659.0 -- 2,632.1
Trade receivables, net...................... 497.2 121.8 -- 619.0
Inventories................................. 355.6 34.4 -- 390.0
Other current assets........................ 343.6 23.2 -- 366.8
-------- -------- --------- ---------
Total current assets.................... 3,858.6 1,037.2 -- 4,895.8
Property, plant and equipment at cost, net..... 1,946.1 200.4 -- 2,146.5
Acquired identifiable intangible assets........ -- -- 6,570.7 (1) 6,570.7
Acquired in-process research and development... -- -- 2,389.2 (2) --
(2,389.2)(2)
Goodwill....................................... -- -- 9,399.3 (1) 9,399.3
Restricted cash and investments................ -- 765.0 -- 765.0
Other assets................................... 638.4 292.7 -- 931.1
-------- -------- --------- ---------
$6,443.1 $2,295.3 $15,970.0 $24,708.4
======== ======== ========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable............................ $ 136.7 $ 107.0 $ -- $ 243.7
Accounts payable--Wyeth..................... -- 84.3 -- 84.3
Commercial paper............................ 99.9 -- -- 99.9
Accrued liabilities......................... 766.3 39.5 195.0 (5) 1,000.8
-------- -------- --------- ---------
Total current liabilities............... 1,002.9 230.8 195.0 1,428.7
Deferred tax liability......................... -- -- 2,595.4 (4) 2,595.4
Long-term debt................................. 223.0 0.8 2,478.9 (3) 2,702.7
Stockholders' equity:
Common stock and additional paid-in capital. 3,474.1 2,153.2 (2,153.2)(6) 18,627.7
15,153.6 (6)
Retained earnings/(accumulated deficit)..... 1,686.8 (114.9) 114.9 (6) (702.4)
(2,389.2)(2)
Accumulated other comprehensive income...... 56.3 25.4 (25.4)(6) 56.3
-------- -------- --------- ---------
Total stockholders' equity.............. 5,217.2 2,063.7 10,700.7 17,981.6
-------- -------- --------- ---------
$6,443.1 $2,295.3 $15,970.0 $24,708.4
======== ======== ========= =========
Pro forma common shares outstanding (7).......................................... 1,285.7
I-84
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINING FINANCIAL STATEMENTS
Note 1--Basis of Presentation
On December 16, 2001, Amgen signed a definitive agreement to acquire Immunex
in a transaction to be accounted for as a purchase under accounting principles
generally accepted in the United States. The transaction is expected to qualify
as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code. Under the terms of the merger agreement, each share of Immunex
common stock outstanding at the closing of the merger, other than shares as to
which dissenters' rights have been validly exercised, will be converted into
0.44 of a share of Amgen common stock and $4.50 cash. In addition, except for
"converted options" described below, at the closing of the merger each option
outstanding to purchase a share of Immunex common stock will be assumed by
Amgen and will thereafter constitute an option to acquire the number of shares
of Amgen common stock determined by multiplying the number of shares of Immunex
common stock subject to the option immediately prior to the merger by 0.52,
with an exercise price equal to the exercise price of the assumed Immunex
option divided by 0.52. Each of these options will be subject to the same terms
and conditions that were in effect for the related Immunex options, except that
each option that was outstanding on December 16, 2001, will fully vest and
become immediately exercisable for shares of Amgen common stock. Options
granted subsequent to December 16, 2001 will retain their original vesting
provisions. Each option outstanding at the close with an exercise price greater
than the higher of $40 or the closing price of a share of Immunex common stock
on the last trading day prior to the merger (the "converted options") will be
cancelled and converted into an option to purchase that number of shares of
Amgen common stock equal to 40% of the number of shares subject to the related
converted option at an exercise price per share equal to the fair market value
of a share of Amgen common stock on the date on which the new option is granted
(which shall be as of the close of market on the date of the effective time of
the merger) and otherwise subject to the terms and conditions, including the
vesting schedule, that were applicable to the related converted option.
As of December 31, 2001, there were approximately 545,300,000 shares of
Immunex common stock outstanding and approximately 50,800,000 Immunex shares
issuable upon exercise of outstanding options. Based upon these amounts and the
terms outlined above, if the merger had been consummated on December 31, 2001,
Immunex shareholders would have received a total of approximately 239,900,000
shares of Amgen common stock, and holders of Immunex options would have
received options to purchase approximately 26,300,000 shares of Amgen common
stock, under which the right to purchase approximately 24,100,000 shares of
Amgen common stock would have been fully vested and immediately exercisable.
The exact number of shares to be issued and options assumed will depend upon
the number of related Immunex shares and options, respectively, outstanding at
the closing of the merger. In addition, Amgen will pay Wyeth a payment
specified in the agreement regarding governance and commercial matters, at the
closing of the merger, for the termination of certain Immunex product rights in
favor of Wyeth.
The purchase price of the acquisition is approximately $17.7 billion
estimated as follows (in millions):
Value of Amgen shares issued........... $14,041.9
Cash consideration (including payment
to Wyeth)............................ 2,478.9
Value of Amgen options issued.......... 1,111.7
Transaction costs...................... 30.0
---------
Total.................................. $17,662.5
=========
The value of the Amgen shares used in determining the purchase price was
$58.525 per share based on the average of the closing prices of Amgen common
stock for a range of four trading days, two days prior to and two days
subsequent to the announcement of the merger. The fair values of the options
issued were also determined based on the $58.525 stock price using the
Black-Scholes method assuming an expected weighted average life of 2.4 years,
weighted average risk-free rate of 3.2%, volatility of 50%, and no expected
dividends.
I-85
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINING FINANCIAL STATEMENTS--(Continued)
The allocation of the purchase price as of December 31, 2001 is summarized
below (in millions):
Current assets.................................................................................... $ 1,037.2
Property plant and equipment...................................................................... 200.4
In-process research and development............................................................... 2,389.2
Identifiable intangible assets (including developed technology and core technology of $4,778.2 and
$1,598.3, respectively)......................................................................... 6,570.7
Goodwill.......................................................................................... 9,399.3
Other assets...................................................................................... 1,057.7
Current liabilities............................................................................... (395.8)
Deferred tax liability............................................................................ (2,595.4)
Other long-term liabilities....................................................................... (0.8)
---------
Net assets........................................................................................ $17,662.5
=========
The allocation of the purchase price is preliminary. The final determination
of the purchase price allocation will be based on the fair values of assets
acquired, including the fair values of in-process research and development and
other identifiable intangibles, and the fair values of liabilities assumed as
of the date that the acquisition is consummated. The excess of the purchase
price over the fair values of assets and liabilities acquired is allocated to
goodwill. The purchase price allocation will remain preliminary until Amgen
completes a third party valuation of significant identifiable intangible assets
acquired (including in-process research and development), evaluates
restructuring plans to be undertaken following the consummation of the merger,
and determines the fair values of other assets and liabilities acquired. The
final determination of the purchase price allocation is expected to be
completed as soon as practicable after the consummation of the merger. The
final amounts allocated to assets and liabilities acquired could differ
significantly from the amounts presented in the unaudited pro forma condensed
combining financial statements.
The amount allocated to in-process research and development represents an
estimate of the fair value of purchased in-process technology for research
projects that, as of the date of the expected closing date of the merger, will
not have reached technological feasibility and have no alternative future use.
The values of these research projects will be determined based on analyses
using cash flows to be generated by the products that result from the
in-process projects. These cash flows will be estimated by forecasting total
revenues expected from these products and then deducting appropriate operating
expenses, cash flow adjustments and contributory asset returns to establish a
forecast of net cash flows arising from the in-process technology. These cash
flows will be substantially reduced to take into account the time value of
money and the risks associated with the inherent difficulties and uncertainties
given the projected stage of development of these projects at closing. For
purposes of the pro forma balance sheet as of December 31, 2001, $2,389,200,000
of the total purchase price has been allocated to in-process research and
development--including the estimated value of projected new indications of
ENBREL ($985,100,000) and approximately 10 additional research and development
programs that are in various stages of development, but are not expected to
have reached technological feasibility as of the closing date and have no
alternative future use. The amounts allocated to in-process research and
development will be charged to the statement of operations in the period the
acquisition is consummated.
The total estimated amounts of goodwill and identifiable intangible assets
are approximately $9,399,300,000 and $6,570,700,000, respectively. The useful
life of identifiable intangible assets, primarily ENBREL, is approximately 15
years. The values of identifiable intangible assets will be determined using a
discounted cash flow model with appropriate discount rates. The amount of
identifiable intangible assets, the estimated useful lives and acquired
in-process research and development will be determined upon completion of a
third party valuation, and therefore, may differ significantly from the amounts
presented in these unaudited
I-86
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINING FINANCIAL STATEMENTS--(Continued)
pro forma condensed combining financial statements. To the extent the amounts
and estimated useful lives are different than those presented above, the
unaudited pro forma condensed combining financial statements could change
significantly.
In connection with this transaction, Immunex intends to divest the product
LEUKINE, which had revenues for Immunex of $108,400,000 for the year ended
December 31, 2001. For antitrust reasons, information regarding the results of
operations and financial position attributable to LEUKINE is not reviewable by
Amgen, and therefore, has not been excluded from the pro forma condensed
combining financial statements presented.
Note 2--Pro Forma Adjustments
Pro Forma Condensed Combining Statement of Operations
1) Reflects amortization of identifiable intangible assets based on the
estimated fair values and estimated useful lives assigned to these assets at
the date of acquisition.
2) Reflects higher interest expense and amortization of debt issuance costs
from the issuance of 30-year zero coupon senior convertible notes. In 2002,
Amgen raised approximately $2,800,000,000 from issuance of 30-year
zero-coupon senior convertible notes with a yield to maturity of 1.125%.
Solely for the purposes of presenting the pro forma condensed combining
financial statements, Amgen has reflected $2,478,900,000 of these
borrowings, net of debt issuance costs, which is equal to the estimated cash
portion of the merger consideration.
3) Reflects compensation expense payable to Immunex employees under the Immunex
Corporation Retention Plan. Because these expenses will have a continuing
impact over a two year period subsequent to the acquisition date, they are
reflected in the pro forma condensed combining statements of operations.
4) Reflects the tax effect of the pro forma adjustments, including amortization
of identifiable intangible assets. The Immunex historical pre-tax income and
the pro forma adjustments have been tax effected at Amgen's marginal tax
rate of 39.5%.
5) Pro forma basic earnings per share is calculated by dividing the pro forma
net income by the pro forma weighted average shares outstanding. Pro forma
diluted earnings per share is calculated by dividing the pro forma net
income by the pro forma weighted average shares outstanding and dilutive
potential weighted shares outstanding. The potential dilutive impact from
the issuance of convertible notes has been excluded from the calculation of
pro forma diluted earnings per share because its effect would be
anti-dilutive. A reconciliation of the shares used to calculate Amgen's
historical basic and diluted earnings per share to shares used to calculate
the pro forma basic and diluted earnings per share follows (in millions):
Year ended
December 31, 2001
-----------------
Shares used to calculate Amgen's historical basic earnings
per share................................................ 1,045.5
Shares issued in acquisition of Immunex.................... 239.9
-----------------
Shares used to calculate pro forma basic earnings per share 1,285.4
=================
Year ended
December 31, 2001
-----------------
Shares used to calculate Amgen's historical diluted
earnings per share....................................... 1,084.4
Shares issued in acquisition of Immunex.................... 239.9
Impact of dilutive Amgen options issued in acquisition of
Immunex.................................................. 11.0
-----------------
Shares used to calculate pro forma diluted earnings per
share.................................................... 1,335.3
=================
I-87
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINING FINANCIAL STATEMENTS--(Continued)
Pro forma Condensed Combining Balance Sheet
1) To record the estimated fair values of identifiable intangible assets and
goodwill arising from the acquisition.
2) To reflect the estimated fair value of in-process research and development.
Because this expense is directly attributable to the acquisition and will
not have a continuing impact, it is not reflected in the pro forma condensed
combining statements of operations. However, this item will be recorded as
an expense in the period that the acquisition is completed.
3) To reflect the issuance of 30-year zero coupon senior convertible notes. In
2002, Amgen raised approximately $2,800,000.000 from the issuance of 30-year
zero-coupon senior convertible notes with a yield to maturity of 1.125%.
Solely for the purposes of presenting the pro forma condensed combining
financial statements, Amgen has reflected approximately $2,478,900,000 of
these borrowings, net of debt issuance costs, which is equal to the
estimated cash portion of the merger consideration.
4) To provide deferred taxes arising from the differences between the bases of
identifiable intangible assets for financial statement and income tax
purposes.
5) To record the estimated transaction costs of $30,000,000 and to adjust
liabilities for estimated costs of $165,000,000 in accordance with EITF 95-3.
6) To eliminate historical shareholders' equity accounts of Immunex, and to
record the issuance of Amgen common stock and options as part of the
purchase price.
7) The pro forma common shares outstanding as of December 31, 2001 is
calculated as follows (in millions):
Historical Amgen common shares outstanding as of December 31, 2001... 1,045.8
Shares issued in acquisition of Immunex.............................. 239.9
-------
Pro forma common shares outstanding as of December 31, 2001.......... 1,285.7
=======
I-88
DESCRIPTION OF AMGEN CAPITAL STOCK
The following is a summary of the material terms of Amgen's capital stock.
Because it is only a summary, it does not contain all the information that may
be important to you. Accordingly, you should read carefully the more detailed
provisions of the restated certificate of incorporation of Amgen, as amended,
the amended and restated bylaws of Amgen and the Amended and Restated Rights
Agreement between Amgen and American Stock Transfer & Trust Company, each of
which has been filed with the SEC, as well as applicable Delaware law. See
"Comparison of Stockholder Rights and Corporate Governance Matters."
General
As of the date of this joint proxy statement/prospectus, Amgen's authorized
capital stock consists of:
. 2,750,000,000 shares of common stock, par value $0.0001 per share, and
. 5,000,000 shares of preferred stock, par value $0.0001 per share.
As of the record date for the Amgen annual meeting, 1,050,895,693 shares of
Amgen common stock were issued and outstanding and no shares of Amgen preferred
stock were issued and outstanding.
Preferred Stock
The Amgen board of directors is authorized to determine the dividend rights,
dividend rate, conversion rights, voting rights, rights and terms of
redemption, liquidation preferences and sinking fund terms on any series of
preferred stock, the number of shares constituting any series of preferred
stock, and the designation of any series of preferred stock. In connection with
Amgen's stockholder rights agreement, the Amgen board of directors has
designated 687,500 shares of preferred stock as "Series A Junior Participating
Preferred Stock." See "Comparison of Stockholder Rights and Corporate
Governance Matters--Shareholder or Stockholder Rights Plan."
Common Stock
Holders of Amgen common stock are entitled to one vote for each share held
of record on all matters submitted to a vote of holders of Amgen common stock.
Subject to preferences that may be applicable to any outstanding preferred
stock, holders of Amgen common stock are entitled to dividends as may be
declared from time to time by the Amgen board of directors out of funds legally
available for that purpose. Amgen has not paid any dividends on the Amgen
common stock since its inception. Holders of Amgen common stock have no
preemptive, redemption, conversion or sinking fund rights. Upon a liquidation,
dissolution or winding up of Amgen, the holders of Amgen common stock are
entitled to share equally and ratably in the assets of Amgen, if any, remaining
after the payment of all debts and liabilities of Amgen and the liquidation
preference of any outstanding Amgen preferred stock. All issued and outstanding
shares of Amgen common stock are validly issued, fully paid and nonassessable.
Transfer Agent
The transfer agent and registrar of the Amgen common stock is American Stock
Transfer & Trust Company.
I-89
COMPARISON OF STOCKHOLDER RIGHTS AND CORPORATE GOVERNANCE MATTERS
Amgen is incorporated under the laws of the State of Delaware, while Immunex
is incorporated under the laws of the State of Washington. Before the
completion of the merger, the rights of holders of Immunex common stock are
governed by the Washington Business Corporation Act, or the WBCA, the restated
articles of incorporation of Immunex and the amended and restated bylaws of
Immunex. After the completion of the merger, Immunex shareholders will become
stockholders of Amgen, and their rights will be governed by the Delaware
General Corporation Law, or the DGCL, the restated certificate of incorporation
of Amgen, as amended, the amended and restated bylaws of Amgen and the Amended
and Restated Rights Agreement between Amgen and American Stock Transfer & Trust
Company.
While there are substantial similarities between the WBCA and the DGCL as
well as between the charters and bylaws of Amgen and Immunex, a number of
differences do exist. The following is a summary of the material differences
between the rights of Amgen stockholders and the rights of Immunex
shareholders. While we believe that this summary covers the material
differences between the two, this summary may not contain all of the
information that is important to you. This summary is not intended to be a
complete discussion of the respective rights of Amgen and Immunex stockholders
and it is qualified in its entirety by reference to the DGCL, the WBCA, and the
various documents of Amgen and Immunex we refer to in this summary. You should
carefully read this entire joint proxy statement/prospectus and the other
documents we refer to in this joint proxy statement/prospectus for a more
complete understanding of the differences between being a stockholder of Amgen
and being a shareholder of Immunex. Amgen and Immunex have filed with the SEC
their respective documents referred to herein and will send copies of these
documents to you upon your request. See the section entitled "Where You Can
Find More Information."
--------------------------------------------------------------------------------------------
Immunex Amgen
--------------------------------------------------------------------------------------------
Authorized The authorized capital stock of Immunex The total authorized capital stock of
Capital Stock consists of 1,200,000,000 shares of common Amgen consists of 2,750,000,000 shares
stock, par value of $.01 per share and of common stock, par value $0.0001 per
30,000,000 shares of preferred stock, par value share and 5,000,000 shares of preferred
of $.01 per share. No shares of preferred stock stock, par value $0.0001 per share. No
are outstanding. shares of preferred stock are outstanding.
Number of Washington law provides that the board of Delaware law provides that the board of
Directors directors of a Washington corporation must directors of a Delaware corporation must
consist of one or more directors with the consist of one or more directors as fixed
number specified in or fixed in accordance with by the corporation's certificate of
the articles of incorporation or bylaws. The incorporation or bylaws. Amgen's bylaws
Immunex bylaws provide that the number of provide that the number of directors of
directors will be fixed from time to time by the Amgen will be fixed from time to time by
Immunex board of directors subject to the Amgen's board of directors. The number
governance agreement among Immunex of directors of Amgen currently is fixed at
Corporation, Wyeth and American Cyanamid thirteen.
Company, a wholly-owned subsidiary of
Wyeth. The Immunex board of directors
currently consists of nine directors.
Cumulative Under Washington law, unless a corporation's Delaware law allows for a corporation's
Voting articles of incorporation provide otherwise, certificate of incorporation to permit
shareholders are permitted to cumulate their stockholders to cumulate their votes for
votes for directors. The articles of directors. However, the certificate of
incorporation of Immunex provide that there is incorporation of Amgen does not so
to be no cumulative voting. provide, and accordingly, holders of
I-90
------------------------------------------------------------------------------------------------
Immunex Amgen
------------------------------------------------------------------------------------------------
Amgen common stock have no cumulative
voting rights in connection with the election
of directors.
Election of Pursuant to the governance agreement, Amgen stockholders' rights with respect to
Directors by Wyeth has the right to designate directors the election of directors are not subject to the
Wyeth based on the percentage of outstanding provisions of any governance agreement.
voting stock or common stock controlled by
Wyeth and its affiliates. If Wyeth controls:
. less than 20% of Immunex outstanding
common stock, Wyeth will have no
right to designate any directors,
Immunex will have the right to
designate six directors and at least four
directors will be independent;
. 20% or above but less than 35%, Wyeth
will have the right to designate one
director, Immunex will have the right to
designate three directors and at least
four directors will be independent;
. 35% or above but less than 45%, Wyeth
will have the right to designate two
directors, Immunex will have the right
to designate three directors (currently,
Wyeth has the right to elect two
directors) and at least four directors will
be independent;
. 45% or above but less than 65%, Wyeth
will have the right to designate three
directors, and Immunex will have the
right to designate three directors and at
least three directors will be
independent; and
. 65% or above, Wyeth will have the
right to designate four directors, and
Immunex will have the right to
designate three directors and at least
three directors will be independent.
I-91
-------------------------------------------------------------------------------------------------
Immunex Amgen
-------------------------------------------------------------------------------------------------
Classification of Immunex does not have a classified board. Delaware law permits, but does not require,
Board of The Immunex bylaws provide that directors a Delaware corporation to provide in its
Directors will be elected at the annual meeting of certificate of incorporation for the board of
shareholders. Under Washington law, all directors to be classified into up to three
directors hold office until the next annual classes of directors with staggered terms of
meeting of shareholders following their office, with only one class of directors to be
election. elected each year for a maximum term of
three years. Amgen's certificate of
incorporation classifies the board of directors
into three separate classes, as nearly equal in
size as possible, with staggered three-year
terms.
Removal of Under Washington law, a director may be Delaware law provides that stockholders
Directors removed with or without cause unless a holding a majority of shares entitled to vote
company's articles of incorporation provide may remove any director or the entire board
that directors may be removed only for of directors; provided, however, that in the
cause. The articles of incorporation of case of a Delaware corporation with a
Immunex do not so provide. Under classified board, unless otherwise provided
Washington law, a director may be removed in the certificate of incorporation,
by the shareholders only at a special stockholders may only remove a director for
meeting called for the purpose of removing cause. Amgen's certificate of incorporation
such director and such director will be does not provide otherwise. Amgen's bylaws
removed if the number of votes cast to provide that at a special meeting called for
remove the director exceeds the number of such purpose, the board of directors, or an
votes cast not to remove the director. individual director, may be removed, with
Pursuant to the governance agreement, at cause, by a vote of the stockholders holding
any meeting of shareholders called a majority of the shares entitled to vote at an
expressly for the removal of directors, election of directors.
Wyeth must vote its shares of Immunex
common stock for all nominees in
proportion to the votes cast by the other
holders of shares of Immunex common
stock. Wyeth may, however, cast any or all
of its votes, in its sole discretion, in favor of
any nominee designated by Wyeth pursuant
to the terms of the governance agreement or
in connection with any election contest to
which Rule 14a-11 of the Securities
Exchange Act of 1934 applies.
Vacancies on the Under Washington law, unless a Delaware law provides that, unless the
Board of corporation's articles of incorporation governing documents of a Delaware
Directors provide otherwise, a vacancy on the board corporation provide otherwise, vacancies and
of directors, including a vacancy resulting newly created directorships resulting from a
from an increase in the number of directors, resignation or an increase in the authorized
may be filled by the shareholders, by the number of directors may be filled by a
board of directors or if the directors in office majority of the directors then in office,
constitute fewer than a quorum, by the although less than a quorum. Amgen's
affirmative vote of a majority of all the certificate of incorporation and bylaws
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directors in office. If the corporation has provide that vacancies and newly created
allocated the right to select certain directors directorships may only be filled by a
to a class or classes of shares, only the majority of the remaining directors then in
shareholders of that class or classes may fill office, even if less than a quorum. Any
the vacant board seat. The articles of newly created directorships would be
incorporation of Immunex provide that a apportioned among the three classes of
vacancy may be filled, subject to the directors to keep the size of each class as
governance agreement, by the affirmative nearly equal as possible. Any director
vote of a majority of the remaining directors, elected by a majority of the remaining
though less than a quorum. Any vacancy directors then in office would hold office for
created by an increase in the number of the remainder of the term of his class.
directors may be filled, subject to the
governance agreement, by the Immunex
board of directors for a term of office
continuing only until the next election of
directors by the shareholders. The
governance agreement provides that Wyeth
has the right to designate replacements for
directors originally designated to the
Immunex board of directors by Wyeth.
Shareholder or Under Washington law, action by the As permitted under Delaware law, Amgen's
Stockholder shareholders of a public company may be certificate of incorporation and bylaws
Action by Written taken without a meeting only if written prohibit action by the written consent of
Consent consents approving the action are signed by Amgen stockholders and any stockholder
all shareholders entitled to vote on the action action must be effected at a duly called
and delivered to the corporation. The articles annual or special meeting of the
of incorporation of Immunex eliminate the stockholders.
ability of shareholders to act by written
consent.
Amendment of Under Washington law, a board of directors Under Delaware law, Amgen's certificate of
Articles of may adopt one or more amendments to the incorporation may be amended only if the
Incorporation or articles of incorporation to make certain proposed amendment is approved by the
Certificate of ministerial changes without shareholder board of directors and thereafter approved by
Incorporation action, including changes to the corporate holders of a majority of the outstanding
name and, if the corporation has only one stock entitled to vote thereon. An
class of shares outstanding, changes to the amendment of the provisions of Amgen's
number of outstanding shares in order to certificate of incorporation described under
effectuate a stock split or stock dividend, or the subsection entitled "Vote on Certain
changes to, or the elimination of, provisions Fundamental Issues" below requires the
with respect to the par value of a affirmative vote of at least 66 2/3% of the
corporation's stock. Other amendments to voting power of all outstanding shares of
the articles of incorporation must be Amgen not held by an interested
recommended to the shareholders by the stockholder.
board of directors and the holders of a
majority of the outstanding shares of
stockentitled to vote on the amendment must
approve the amendment unless another
percentage is specified (i) in the articles of
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incorporation, (ii) by the board of directors
as a condition to its recommendation or
(iii) by the provisions of the WBCA. The
articles of incorporation of Immunex require
the affirmative vote of the holders of not less
than 80% of the outstanding shares of stock
entitled to vote generally in the election of
directors to amend or repeal the provisions in
the articles of incorporation of Immunex
limiting director liability. The articles of
incorporation of Immunex require the
affirmative vote of the holders of not less
than 70% of the common stock of Immunex
on a fully diluted basis to amend the
provisions in the articles of incorporation
providing that conflicts between the articles
of incorporation or bylaws, on the one hand,
and the governance agreement, on the other
hand, must be resolved in favor of the
governance agreement.
Amendment of Under Washington law, a corporation's In accordance with Delaware law, Amgen's
Bylaws board of directors can amend or repeal the bylaws may be repealed, altered or amended
bylaws, or adopt new bylaws, unless the or new bylaws adopted by (a) the affirmative
articles of incorporation or the WBCA vote of not less than two-thirds of the
reserve this power exclusively to the outstanding shares of stock entitled to vote
shareholders in whole or in part (the articles upon the election of directors or (b) the
of incorporation of Immunex do not do so) board of directors; provided, however, that
or if the shareholders, in amending or any bylaws made by the directors may be
repealing a particular bylaw, provide amended, altered or repealed by the
expressly that the board of directors may not stockholders.
amend or repeal that bylaw. A corporation's
shareholders may amend or repeal the
bylaws, or adopt new bylaws.
Special Meeting Under Washington law, a special meeting of Under the DGCL, a special meeting of the
of Shareholders the shareholders may be called by a stockholders may be called by the board of
or Stockholders corporation's board of directors, the persons directors of the corporation or by any other
authorized to do so in the corporation's person authorized to do so in the certificate
articles of incorporation or bylaws or, unless of incorporation or bylaws. Amgen's bylaws
limited or denied by a corporation's articles provide that a special meeting of the
of incorporation, by the holders of at least stockholders may be called by the chairman
10% of all the votes entitled to be cast on of the board, the chief executive officer, the
any issue proposed to be considered at the president or a majority of the directors.
special meeting. The articles of
incorporation of Immunex provide that
special meetings of shareholders can only be
called by (i) the board of directors; (ii) the
Chairman of the board of directors; (iii) the
President; or (iv) written demand of holders
of not less than 40% of all votes entitled to
be cast on an action proposed to be
considered at such special meeting.
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Notice of In accordance with Washington law, the In accordance with Delaware law, Amgen's
Shareholder or Immunex bylaws provide that written notice bylaws provide that written notice of any
Stockholder of any shareholders meeting must be given stockholders meeting must be given to each
Meetings to each shareholder entitled to vote not less stockholder entitled to vote not less than 10
than 10 or more than 60 days before the nor more than 60 days before the date of the
meeting, except that notice of not less than meeting.
20 or more than 60 days before the meeting
must be given in the case of a meeting to act
on an amendment to the articles of
incorporation, a plan of merger or share
exchange, the sale, lease exchange or other
disposition of all or substantially all of the
corporation's assets or the dissolution of the
corporation.
Delivery and The Immunex bylaws provide that in order for Amgen's bylaws provide that in order for a
Notice a shareholder to make a nomination for the stockholder to make a nomination for the
Requirements of elections of directors or propose business at an elections of directors or propose business at
Shareholder or annual meeting of the shareholders, the any stockholder meeting, the stockholder
Stockholder Secretary of Immunex must receive the must give timely notice in proper written
Nominations and shareholder's written notice of nomination or form of his intent to make the nomination or
Proposals proposed business: the business proposal. To be timely, the
stockholder's notice must be delivered to, or
. not fewer than 60 or more than 90 days mailed and received by the Secretary of
prior to the date of the annual meeting; Amgen not later than 90 days prior to the
meeting; provided, however, that if less than
. if less than 60 days' notice or prior 100 days' notice or prior public disclosure of
public disclosure of the date of the the date of meeting is given or made to the
annual meeting is given or made to the stockholders, notice by the stockholder to be
shareholders, not later than the close of timely must be received not later than the
business on the 10th day following the close of business on the 10th day following
day on which the notice of the date of the date on which the notice of the date of
the annual meeting was mailed or the meeting was mailed or the public
public disclosure was made; or disclosure was made. To be in proper written
form, the notice must set forth:
. with respect to an election to be held at
a special meeting of the shareholders, . the name and address of the stockholder
the close of business on the seventh who intends to make the nomination or
business day following the date on proposal, and as the case may be, of the
which notice of the special meeting is person or person to be nominated or of
first given to shareholders. the business to be proposed;
The shareholder's written notice of nomination . a representation that the stockholder is a
or proposed business must set forth: holder of record of Amgen stock entitled
to vote at the meeting and, if applicable,
. the name and address of the shareholder intends to appear in person or by proxy
proposing the business or intending to at the meeting to nominate the person or
make the nomination; persons specified in the notice;
. a representation that the shareholder is . if applicable, a description of all
entitled to vote at the meeting and a arrangements or understandings
statement of the number of shares of the between the stockholder and each
corporation that are beneficially owned nominee and any other person or
by the shareholder;
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. a representation that the shareholder persons (naming the person or persons)
intends to appear in person or by proxy pursuant to which the nomination or
at the meeting to propose the business nominations are to be made by the
or to nominate the person or persons stockholder;
specified in the notice;
. other information regarding each
. with respect to each matter the nominee or each business proposal as
shareholder proposes to bring before the would be required to be included in a
meeting, a brief description of the proxy statement filed pursuant to the
business desired to be brought before proxy rules of the SEC had the nominee
the meeting, the reasons for conducting been nominated, or intended to be
the business at the meeting, the nominated, or the business proposal
language of the proposal (if been proposed, or intended to be
appropriate), and any material interest proposed by the Amgen board of
of the shareholder in such business; directors; and
. with respect to each person the . if applicable, the consent of each
shareholder proposes to nominate for nominee to serve as director of Amgen
election or re-election as a director, the if so elected.
name and address of the person and
other information regarding the The chairman of the meeting may refuse to
nomineee as would be required in a acknowledge the nomination of any person
proxy statement filed pursuant to the or the proposal of any business not made in
proxy rules of the SEC had the nominee compliance with the foregoing procedure.
been nominated by the board, and a
description of any arrangements or
understandings, between the
shareholder and the nominee and any
other persons (including their names),
pursuant to which the nomination is to
be made; and
. in the case of a nomination, the consent
of each nominee to serve as a director if
elected.
With respect to a notice regarding proposed
business, if the facts warrant, the board of
directors, or the chairman of the shareholders
meeting, may determine and declare that
(a) a proposal does not constitute proper
business to be transacted at the meeting or
(b) business was not properly brought before
the meeting in accordance with the foregoing
procedures, and, if, in either case, it is so
determined, then that business will not be
transacted. With respect to an intended
nomination, if the facts warrant, the board of
directors, or the chairman of a shareholders
meeting, shall determine and declare that an
intended nomination was not made in
accordance with the foregoing procedures
and, if it is so determined, the defective
nomination will be disregarded.
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Proxy Under Washington law, a proxy is valid for Under Delaware law, each stockholder
eleven months after receipt of the entitled to vote at a meeting of stockholders
appointment form, unless the form provides or to express consent or dissent to corporate
for a longer period. The proxy is revocable action in writing without a meeting may
unless it states that it is irrevocable and is grant a proxy, but no such proxy may be
coupled with an interest. voted or acted upon after 3 years from its
date, unless the proxy provides for a longer
period. A duly executed proxy will be
irrevocable if it states that it is irrevocable
and if, and only as long as, it is coupled with
an interest.
Preemptive Under Washington law, shareholders have The DGCL provides that no stockholder will
Rights preemptive rights unless the corporation's have any preemptive rights to purchase
articles of incorporation provide otherwise. additional securities of the corporation
The articles of incorporation of Immunex unless the certificate of incorporation
provide that no statutory preemptive rights expressly grants these rights. Amgen's
will exist with respect to the shares of capital certificate of incorporation does not grant
stock of Immunex. Notwithstanding the any preemptive rights.
absence of statutory preemptive rights,
Wyeth has certain contractual rights to
purchase additional shares of Immunex
common stock pursuant to the governance
agreement.
Dividends Under Washington law, a board of directors Under the DGCL, the board of directors may
may approve, and a corporation may make, a declare and pay dividends out of its surplus
distribution to shareholders only to the or, if it has no surplus, out of any net profits
extent that (1) such distribution does not for the fiscal year in which the dividend was
leave the corporation unable to pay its debts declared or for the fiscal year preceding the
as they become due in the usual course of fiscal year in which the dividend was
business and (2) after the distribution, the declared, provided that the payment will not
corporation's total assets would not be less reduce capital below the amount of capital
than the sum of its total liabilities plus, represented by all classes of shares having a
unless the articles of incorporation provide preference upon the distribution of assets.
otherwise, the amount that would be needed,
if the corporation were to be dissolved at the
time of the distribution, to satisfy the
preferential rights upon dissolution of
shareholders whose preferential rights are
superior to those receiving the distribution.
Limitation of The Immunex articles of incorporation In accordance with Delaware law, Amgen's
Personal provide that to the full extent permitted by certificate of incorporation provides that a
Liability of the WBCA a director of Immunex will not director of Amgen will not be personally
Directors be liable to Immunex or the Immunex liable to Amgen or Amgen's stockholders for
shareholders for monetary damages for monetary damages for breach of fiduciary
conduct as a director. Washington law duties, except for liability for:
provides that liability cannot be limited or
eliminated for: . any breach of the director's duty of
loyalty to Amgen or Amgen's
. intentional misconduct; stockholders;
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. knowing violations of law; . acts or omissions not in good faith or
which involve intentional misconduct or
. actions that result in a personal benefit a knowing violation of law;
in money, property or services to which
the director was not legally entitled; or . payment of a dividend or the repurchase
or redemption of stock in violation of
. unlawful distributions. Delaware law; or
. any transaction from which the director
derived an improper personal benefit.
Indemnification Under Washington law, the standards for Amgen's bylaws require Amgen to
of Officers and allowing indemnification of officers and indemnify its directors and officers to the
Directors directors are substantially the same as those full extent permitted by the DGCL. In
under Delaware law. The Immunex articles addition, Amgen must advance to any person
of incorporation require Immunex to who was or is a party or is threatened to be
indemnify its directors and officers to the made a party to any threatened, pending or
full extent not prohibited by applicable law completed action, suit or proceeding because
against liability arising out of a proceeding he is or was a director or officer of Amgen,
to which such individual was made a party or is or was serving at the request of Amgen
because the individual is or was a director or as a director or officer of another
an officer of Immunex. The Immunex corporation, partnership, joint venture, trust
bylaws provide that each person who was, is or other enterprise, prior to the final
or is threatened to be made a named party to disposition of any such proceeding, promptly
or is otherwise involved (including, without following a request for advance, all expenses
limitation, as a witness) in any threatened, incurred by any director or officer in
pending or completed action, suit or connection with such proceeding if the
proceeding, by reason of the fact that he or individual provides an undertaking to repay
she is or was a director or officer of all amounts if it is ultimately determined that
Immunex or, that being or having been a the person is not entitled to be indemnified
director or officer of Immunex, he or she is under the bylaws or otherwise.
or was serving at the request of Immunex, as Notwithstanding the foregoing, Amgen is not
a director, officer, partner, trustee, employee required to indemnify a director or officer in
or agent of another corporation or of a connection with any proceeding initiated by
partnership, joint venture, trust, employee that person or any proceedings by that
benefit plan or other enterprise, whether the person against Amgen or Amgen's directors,
basis of a proceeding is alleged action (or officers or other agents unless:
inaction) in an official capacity as a director,
officer, partner, trustee, employee or agent or . the indemnification is expressly
in any other capacity while serving as a required by law;
director, officer, partner, trustee, employee
or agent, will be indemnified and held . the proceeding was authorized by the
harmless by Immunex against all losses, board of directors;
claims, damages, liabilities or expenses
actually and reasonably incurred or suffered . the indemnification is provided by
by the individual in connection therewith, Amgen in its sole discretion; or
and the indemnification will continue as to
an individual who has ceased to be a . a court of competent jurisdiction holds
director, officer, partner, trustee, employee that Amgen is required to provide the
or agent and will inure to the benefit of the indemnification.
individual's heirs, executors and
The right to indemnification is not exclusive
of any other right which that individual may
have or hereafter acquire under any statute,
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administrators. Notwithstanding the provision of Amgen's certificate of
foregoing, Immunex is only required to incorporation or bylaws, agreement, vote of
indemnify an individual in connection with a stockholders or disinterested directors or
proceeding initiated by that individual if the otherwise.
proceeding was authorized or ratified by the
board of directors. Amgen is authorized to enter into individual
contracts with any or all of its directors,
Immunex must advance expenses incurred officers, employees or agents respecting
by an individual in defending any proceeding indemnification and advances, and purchase
in advance of its final disposition if the insurance on behalf of any person required
individual undertakes to repay all amounts so or permitted to be indemnified.
advanced if it is ultimately determined by
final judicial decision from which there is no
further right to appeal that the individual is
not entitled to be indemnified under the
bylaws. An individual's right to
advancement of expenses is conditioned
upon the individual:
. delivering the undertaking;
. cooperating in providing Immunex with
information requested by Immunex that
is within the individual's power to
provide; and
. providing to Immunex a written
affirmation of the individual's good
faith belief that any applicable
standards of conduct have been met by
the individual.
The articles of incorporation of Immunex
provide that directors and officers will not be
indemnified on account of:
. acts or omissions finally adjudged to be
intentional misconduct or a knowing
violation of law;
. conduct relating to distributions by the
corporation finally adjudged to be in
violation of the provisions of the
WBCA; or
. any transaction with respect to which it
was finally adjudged that such director
or officer personally derived a benefit in
money, property or services to which he
or she was not legally entitled.
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Immunex is authorized to enter into
individual contracts with any or all of its
directors, officers, employees or agents
respecting indemnification and advances,
and purchase insurance on behalf of any
person required or permitted to be
indemnified.
Shareholder or Immunex does not have a shareholder rights On February 18, 1997, Amgen adopted a
Stockholder plan. stockholder rights plan pursuant to a rights
Rights Plan agreement. The following description of the
rights agreement is subject in its entirety to
the terms and conditions of the rights
agreement. You should read the rights
agreement carefully. See "Where You Can
Find More Information" below.
Exercisability of Rights. Pursuant to
Amgen's rights agreement, one whole right
attaches to each share of Amgen common
stock outstanding. Each right entitles the
registered holder to purchase from Amgen
one four-thousandth (1/4000) of a share of
Amgen Series A Junior Participating
Preferred Stock at an initial purchase price of
$350.00, subject to customary antidilution
adjustments. A holder of rights will not have
any rights as a stockholder of Amgen by
virtue of holding the rights.
The rights currently are attached to and trade
only together with outstanding certificates of
Amgen common stock. The rights will
separate from the common stock and become
exercisable following the earlier of:
. ten days following a public
announcement that a person or group
has become the beneficial owner of
10% or more of the outstanding shares
of Amgen common stock; and
. ten business days, or a later date as may
be determined by the Amgen board of
directors, following the commencement
of, or the announcement of an intention
to commence, a tender offer or
exchange offer that would result in a
person becoming the beneficial owner
of 10% or more of the outstanding
shares of Amgen common stock.
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"Flip-In" Feature. If a person or group
becomes the beneficial owner of 10% or
more of the outstanding shares of Amgen
common stock, then each registered holder
of an Amgen right, except for such person or
group, will be entitled to purchase, upon
exercise, shares of Amgen common stock
having a then current market value equal
to two times the exercise price of the right.
Prior to March 12, 2004, in limited
circumstances approved by the outside
directors of the board of directors, a
stockholder who enters into an acceptable
standstill agreement may acquire up to 20%
of the outstanding shares of Amgen common
stock before being subject to the foregoing
provision.
"Flip-Over" Feature. Each right will
entitle the holder, except for a person or
group that is the beneficial owner of 10% or
more of the outstanding shares of Amgen
common stock, to purchase, upon exercise, a
number of shares of common stock of an
acquiring company having a then current
market value of two times the exercise price
of the right if an acquiring company obtains
10% or more of the outstanding shares of
Amgen common stock and then one of the
following occurs:
. Amgen merges into the acquiring
company;
. the acquiring company merges into
Amgen; or
. Amgen sells more than 50% of its
assets or earning power to an acquiring
company.
"Exchange" Feature. After a person or
group obtains 10% or more of the
outstanding shares of Amgen common stock,
but less than 50%, the Amgen board of
directors may, at its option, exchange all or
some of the then-outstanding and exercisable
rights (other than rights owned by such
person or group) for Amgen common stock
at an exchange ratio of one share of common
stock per right, adjusted to reflect any stock
split, stock dividend or similar transaction.
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Redemption of Rights. Prior to the time a
person or group becomes the beneficial
owner of 10% or more of the outstanding
shares of Amgen common stock, the Amgen
board of directors may redeem the rights in
whole, but not in part, at a redemption price
of $0.00025 per right, subject to adjustment.
Amendment of Rights. Amgen may amend
the rights agreement for so long as the rights
are then redeemable. After the rights are no
longer redeemable, Amgen may amend or
supplement the rights agreement only:
. to cure an ambiguity or correct a
defective or inconsistent provision;
. to shorten or lengthen any time period
under the rights agreement; or
. in any manner that does not adversely
affect the interests of the holders of the
rights.
Once the rights are no longer redeemable,
the Amgen board may not adopt any
amendment that would lengthen the time
period during which the rights are
redeemable. Until March 12, 2004, any
supplement or amendment to the rights
agreement requires approval of a majority of
the outside directors, and any extension of
the final expiration date requires approval of
three-quarters of the outside directors.
Final Expiration Date. If not previously
exercised, the rights will expire on
December 12, 2010, unless Amgen earlier
redeems or exchanges the rights or extends
the final expiration date.
Series A Junior Participating Preferred
Stock. In connection with the creation of
the rights, the Amgen board of directors has
authorized the issuance of 687,500 shares of
Amgen preferred stock designated as "Series
A Junior Participating Preferred Stock."
Anti-takeover Effects. Amgen's rights
agreement is designed to maximize the value
of Amgen's outstanding common stock in
the event of an unsolicited attempt to take
over Amgen in a manner or on terms that are
not approved by the Amgen board of
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directors. Once the Amgen rights have
become exercisable, the rights will cause
substantial dilution to a person or group that
attempts to acquire or merge with Amgen in
most cases. The rights could discourage,
delay or prevent certain types of transactions
involving an actual or potential change in
control of Amgen, including transactions in
which stockholders might otherwise receive
a premium for their shares over current
market prices. The rights should not interfere
with any merger or other business
combination approved by the Amgen board
of directors since Amgen may redeem the
rights prior to the time that a person becomes
the beneficial owner of 10% or more of
outstanding shares of Amgen common stock.
The Amgen rights agreement does not apply
to the merger with Immunex.
Dissenters' Under Washington law, a shareholder is Delaware law provides stockholders of a
Rights entitled to dissent from, and obtain the fair Delaware corporation involved in a merger
value in cash of his or her shares in the right to demand and receive payment of
connection with, certain corporate actions the fair value of their stock in specific
including some mergers, share exchanges, mergers. However, except in limited
and sales or exchanges of all or substantially circumstances, appraisal rights are not
all of the corporation's property other than in available to holders of shares:
the usual and regular course of business.
. listed on a national securities exchange;
For more information regarding dissenters'
rights please see Chapter 23B.13 of the . designated as a national market system
WBCA, a copy of which is attached to this security on an interdealer quotation
joint proxy statement/prospectus as Annex F. system operated by the National
A summary of Chapter 23B.13 is set forth in Association of Securities Dealers, Inc.;
the section entitled "Dissenters' Rights." or
. held of record by more than 2,000
stockholders.
Dissenters' appraisal rights are not available
to Amgen stockholders with respect to the
merger.
Certain Business Under Washington law, public companies The DGCL contains a business combination
Combination based in Washington (or that have significant statute that protects publicly-traded
Restrictions business contacts with the state) are Delaware corporations, such as Amgen, from
prohibited, with specific exceptions, from hostile takeovers, and from actions following
engaging in significant business transactions the takeover, by prohibiting some
with any person or group of persons who transactions once an acquiror has gained a
beneficially own 10% or more of the voting significant holding in the corporation.
shares of the target corporation for a period Section 203 of the DGCL prohibits "business
of five years after such share acquisition, combinations," including mergers, sales and
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unless the transaction or acquisition of leases of assets, issuances of securities and
shares is approved by a majority of the similar transactions by a corporation or a
members of the board of directors of the subsidiary with an interested stockholder that
target corporation prior to the time of the beneficially owns 15% or more of a
initial acquisition of shares by the acquiring corporation's voting stock, within three years
person. These significant business after the person becomes an interested
transactions include: stockholder, unless:
. a merger, share exchange or . prior to the time the person becomes an
consolidation with, dispositions of interested stockholder, the board of
assets with an aggregate market value directors of the target corporation
over 5% of the total market value of all approved either the business
of the target's assets or all of the target's combination or the transaction which
outstanding shares to, or issuance or will result in the person becoming an
redemption of shares to or from, the interested stockholder;
acquiring person or its affiliates or
associates; . after the completion of the transaction
in which the person becomes an
. termination of 5% or more of the interested stockholder, the interested
Washington-based employees of the stockholder holds at least 85% of the
target corporation over the course of the voting stock of the corporation
five-year period following the acquiring excluding for purposes of determining
person's acquisition of 10% or more of the number of shares outstanding, those
the shares of the target corporation, if shares owned (a) by persons who are
such termination is the result of the both officers and directors, and
acquiring person's acquisition; (b) specific employee benefit plans; or
. the liquidation or dissolution of the . after the person becomes an interested
target corporation pursuant to an stockholder, the business combination
arrangement with an acquiring person; is approved by the target corporation's
board of directors and holders of at least
. a reclassification of securities of the 66 2/3% of the outstanding voting stock,
target corporation pursuant to an excluding shares held by the interested
arrangement with the acquiring person stockholder.
that has the effect of increasing the
proportionate share of voting securities A corporation can elect not to be governed
owned by the acquiring person; or by Section 203, however, Amgen has not
made this election and is therefore governed
. an issuance to the acquiring person, or a by Section 203.
transfer or redemption in favor of the
acquiring person, by the target
corporation of shares, options, warrants
or other rights to acquire shares of the
target corporation if the issuance,
transfer or redemption is not made to all
shareholders of the target corporation
on the same proportional basis.
After the five-year period, certain significant
business transactions may still not occur
unless they comply with certain fair price
provisions of the statute or if it is approved
by disinterested shareholders. The Immunex
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board of directors has expressly approved the
merger agreement and the voting agreement
so that the restrictions set forth above with
respect to business combinations do not
apply to the merger agreement or the voting
agreement or the transactions contemplated
thereby.
Vote on Certain Under Washington law, the following must Amgen's certificate of incorporation requires
Fundamental be approved by two-thirds of all votes that in the case of "business combinations,"
Issues entitled to be cast by each voting group including mergers, sales and leases of assets,
entitled to vote as a separate group: issuances of securities and similar
(i) merger, (ii) a share exchange, (iii) sale of transactions by Amgen or a subsidiary of
all, or substantially all, of a corporation's Amgen with an interested stockholder that
assets, other than in the ordinary course of beneficially owns 20% or more of Amgen's
business and (iv) a dissolution. A voting stock, the transaction must be
corporation may provide for lower voting approved by 66 2/3% of the outstanding
requirements for these fundamental actions, voting stock, excluding shares held by the
provided that the minimum vote requirement interested stockholder. This requirement
may not be below a majority of all votes must be met at all times and not just during
entitled to be cast. The articles of the first three years after the person becomes
incorporation of Immunex provide that, and interested stockholder. Notwithstanding
subject to the governance agreement, a the foregoing, 66 2/3% approval by the
merger, share exchange, sale of all or Amgen stockholder is not required if:
substantially all of the corporation's assets,
or dissolution must be approved by the . a majority of the directors who are
affirmative vote of a majority of the unaffiliated with the interested
outstanding shares of Immunex entitled to stockholder approve the transaction; or
vote or, if separate voting by voting groups
is required, the transaction must be approved . the transaction complies with specific
by not less than a majority of all the votes pricing and procedural conditions set
entitled to be cast by each voting group. forth in Amgen's certificate of
incorporation.
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DISSENTERS' RIGHTS
The following is a brief summary of the rights of holders of Immunex common
stock under Chapter 23B.13 of the WBCA to dissent from the merger, receive an
appraisal as to the fair value of their shares of Immunex common stock and to
receive cash equal to the appraised value of their Immunex common stock instead
of receiving the merger consideration. This summary is not exhaustive, and you
should read the applicable sections of Chapter 23B.13, a copy of which is
attached to this joint proxy statement/prospectus as Annex F.
Under Chapter 23B.13, where a proposed merger is to be submitted for
approval at a meeting of shareholders, as in the case of the Immunex annual
meeting, the corporation in the notice of the meeting must state that
shareholders are or may be entitled to assert dissenters' rights and include in
the notice a copy of the dissenters' rights statute. This joint proxy
statement/prospectus constitutes notice to the holders of common stock and a
copy of the dissenters' rights statute is attached as Annex F.
If you are contemplating the possibility of exercising your dissenters'
rights of appraisal in connection with the merger, you should carefully review
the text of Annex F, particularly the procedural steps required to perfect
dissenters' rights, which are complex. We also encourage you to consult your
legal counsel, at your expense, before attempting to exercise your dissenters'
rights. If you do not fully and precisely satisfy the procedural requirements
of Washington law, you may lose your dissenters' rights. Immunex will not give
you any notice other than as described in this joint proxy statement/prospectus
as required by Washington law.
Requirements for Exercising Dissenters' Rights
To preserve your right if you wish to exercise your statutory dissenters'
rights, you must:
. deliver to Immunex before the annual meeting written notice of your
intent to exercise your dissenters' rights of appraisal and demand
payment for your shares of Immunex common stock if the merger is
completed, which notice must be separate from your proxy. Your vote
against the merger agreement alone will not constitute written notice of
your intent to exercise your dissenters' rights;
. not vote your shares in favor of the merger agreement; and
. follow the statutory procedures for perfecting dissenters' rights under
Washington law, which are described below under "--Appraisal Procedures."
If you do not satisfy each of the requirements, you cannot exercise
dissenters' rights and, if the merger agreement is approved by Immunex
shareholders and the merger occurs, your shares of Immunex common stock will be
converted into the right to receive the merger consideration pursuant to the
terms of the merger agreement.
Vote
Your shares must either not be voted at the Immunex annual meeting or must
be voted against the approval of the merger agreement. Submitting a properly
signed proxy card that is received prior to the vote at the annual meeting that
does not direct how the shares of Immunex common stock represented by that
proxy are to be voted will constitute a vote in favor of the merger and a
waiver of your statutory dissenters' rights.
Notice
Your written notice of your intent to exercise dissenters' rights must be
filed with Immunex at: Immunex Corporation, 51 University Street, Seattle,
Washington 98101-2936, Attn: Corporate Secretary.
It is important that Immunex receive all written notices before the annual
meeting. Your written notice to demand payment should specify your name and
mailing address, the number of shares of Immunex common stock you own, and that
you intend to demand cash payment for your Immunex shares if the merger
agreement is approved.
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Appraisal Procedures
If the merger agreement is approved by Immunex shareholders, within ten days
after the approval, Immunex will send written notice regarding the proper
appraisal procedures to all shareholders who have given written notice under
the dissenters' rights provisions and have not voted in favor of the merger as
described above. The notice will contain:
. the address where the demand for payment and certificates representing
shares of Immunex common stock must be sent and the date by which
certificates must be deposited;
. the date on which your payment demand must be received by Immunex, which
date will not be fewer than 30 nor more than 60 days after the date the
written notice is delivered to you;
. a form for demanding payment that states the date of the first
announcement to the news media or to shareholders of the proposed merger
(December 17, 2001) and requires certification from the person asserting
dissenters' rights of whether or not the date the person acquired
beneficial ownership of Immunex common stock was before the date of the
first announcement; and
. a copy of Chapter 23B.13 of the WBCA.
If you wish to assert dissenters' rights, you must demand payment, certify
that you acquired beneficial ownership of your shares before December 17, 2001,
and deposit your Immunex certificates within the specified number of days after
the notice is given. If you fail to make demand for payment and deposit your
Immunex certificates within the time period set forth in the written notice,
you will lose the right to demand appraisal for your shares under the
dissenters' rights provisions, even if you filed a timely notice of intent to
demand payment.
If Immunex does not consummate the merger within 60 days after the date set
for demanding payment, Immunex will return all deposited certificates. If
Immunex does not return the deposited certificates within 60 days after the
date set, you may notify Immunex in writing of your estimate of the fair value
of your Immunex common stock plus the amount of interest due and demand payment
of your estimated amount.
Except as provided below, within 30 days after the later of the effective
time of the merger or the receipt by Immunex of a valid demand for payment,
Immunex will remit to each dissenting shareholder who complied with the
requirements of Washington law the amount Immunex estimates to be the fair
value of the shareholder's Immunex common stock, plus accrued interest. Immunex
will include the following information with the payment:
. financial data relating to Immunex, including: a balance sheet, an
income statement, and a statement of changes in shareholders' equity as
of and for a fiscal year not more than sixteen months before the date of
payment, and the latest available interim financial statements, if any;
. an estimate by Immunex of the fair value of the shares and a brief
description of the method used to reach that estimate;
. an explanation by Immunex of how the interest was calculated;
. a brief description of the procedures to be followed by shareholders in
demanding supplemental payment if such shareholders are dissatisfied
with the estimate of the fair value of the shares determined by Immunex;
and
. a copy of Chapter 23B.13 of the WBCA.
For dissenting shareholders who were not the beneficial owners of their
shares of Immunex common stock before December 17, 2001, Immunex may withhold
payment and instead send a statement setting forth its estimate of the fair
value of their shares and offering to pay such amount, with interest, as a
final settlement of the dissenting shareholder's demand for payment. Payment of
the fair value of these after-acquired shares may be conditional upon the
dissenting shareholder's waiver of other rights under Chapter 23B.13 of the
WBCA.
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Immunex will also include in such statement an explanation of how it estimated
the fair value of the shares and of how the interest was calculated and a
notice of the dissenter's right to proceed with a judicial determination of the
fair value of the shares if such dissenting shareholder is dissatisfied with
the estimate of the fair value of the shares determined by Immunex.
If you are dissatisfied with the payment of Immunex or offer or believe that
the interest due is incorrectly calculated, you may, within 30 days of the
payment or offer for payment, notify Immunex in writing, and demand payment of,
your estimate of the fair value of your shares and the amount of interest due.
If any dissenting shareholder's demand for payment is not settled within 60
days after receipt by Immunex of his or her payment demand, Washington law
requires that Immunex commence a proceeding in King County Superior Court and
petition the court to determine the fair value of the shares and accrued
interest, naming all the dissenting shareholders whose demands remain unsettled
as parties to the proceeding. If Immunex does not commence the proceeding
within the 60-day period, it will pay each dissenter whose demand remains
unsettled the amount demanded.
The court may appoint one or more appraisers to receive evidence and make
recommendations to the court as to the amount of the fair value of the shares.
The fair value of the shares as determined by the court is binding on all
dissenting shareholders and may be less than, equal to or greater than the
value of the merger consideration to be issued to non-dissenting shareholders
for their Immunex common stock under the terms of the merger agreement if the
merger is consummated. If the court determines that the fair value of the
shares plus interest is in excess of any amount remitted by Immunex, then the
court will enter a judgment for cash in favor of the dissenting shareholders in
an amount by which the value determined by the court, plus interest, exceeds
the amount previously remitted. For dissenting shareholders who were not the
beneficial owners of their shares of Immunex common stock before December 17,
2001 and for which Immunex withheld payment pursuant to Chapter 23B.13.270 of
the WBCA, the court may enter judgment for the fair value, plus accrued
interest, of the dissenting shareholders after-acquired shares.
The court will also determine the costs and expenses of the court proceeding
and assess them against Immunex, except that the court may assess part or all
of the costs against any dissenting shareholders whose actions in demanding
payment are found by the court to be arbitrary, vexatious or not in good faith.
If the court finds that Immunex did not substantially comply with the relevant
provisions of Chapters 23B.13.200 through 23B.13.280 of the WBCA, the court may
also assess against Immunex any fees and expenses of attorneys or experts that
the court deems equitable. The court may also assess those fees and expenses
against any party if the court finds that the party has acted arbitrarily,
vexatiously or not in good faith in bringing the proceedings. If the court
finds that the services of counsel for any dissenter were of substantial
benefit to other dissenters similarly situated, and that the fees for those
services should not be assessed against the corporation, the court may award to
these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
A shareholder of record may assert dissenters' rights as to fewer than all
of the shares registered in the shareholder's name only if he or she dissents
with respect to all shares beneficially owned by any one person and notifies
Immunex in writing of the name and address of each person on whose behalf he or
she asserts dissenters' rights. The rights of the partially dissenting
shareholder are determined as if the shares as to which he or she dissents and
his or her other shares were registered in the names of different shareholders.
Beneficial owners of Immunex common stock who desire to exercise dissenters'
rights themselves must obtain and submit the registered owner's written consent
at or before the time they file the notice of intent to demand fair value, and
the beneficial owner must do so with respect to all shares of which such
shareholder is the beneficial shareholder or over which such shareholder has
power to direct the vote.
For purposes of Washington law, "fair value" means the value of Immunex
common stock immediately before the effective time of the merger, excluding any
appreciation or depreciation in anticipation of the merger, unless that
exclusion would be inequitable. Under Chapter 23B.13.020 of the WBCA, an
Immunex shareholder has no right, at law or in equity, to set aside the
approval of the merger or the consummation of the merger except if the approval
or consummation fails to comply with the procedural requirements of Chapter
23B.13 of the WBCA, the articles of incorporation or bylaws of Immunex or was
fraudulent with respect to that shareholder or Immunex.
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CHAPTER TWO--THE AMGEN ANNUAL MEETING
Date, Time, Place and Purpose of the Amgen Annual Meeting
The annual meeting of Amgen stockholders will be held at 10:30 a.m., P.T.,
on May 16, 2002 at the Beverly Hilton Hotel, 9876 Wilshire Boulevard, Los
Angeles, California.
The Amgen annual meeting is being held for the following purposes:
. to consider and vote upon a proposal to approve the issuance of shares
of Amgen common stock pursuant to the merger agreement;
. to elect three directors to a three-year term of office expiring at the
2005 annual meeting of Amgen stockholders;
. to ratify the selection of Ernst & Young LLP as independent auditors of
Amgen for the year ending December 31, 2002;
. to approve a new executive incentive plan, designed to provide for fully
deductible compensation under Section 162(m) of the Internal Revenue
Code; and
. to transact any other business as may properly come before the annual
meeting or any adjournments or postponements of the annual meeting.
Recommendation of the Amgen Board of Directors
The Amgen board of directors has unanimously approved the merger agreement,
and unanimously recommends that Amgen stockholders vote "FOR" approval of the
issuance of Amgen common stock to Immunex shareholders pursuant to the merger
agreement. See "The Merger--Reasons for the Merger--Amgen." The Amgen board of
directors believes that election of its nominees for directors, the
ratification of its selection of independent auditors and approval of the
executive incentive plan are in the best interests of Amgen and its
stockholders, and, accordingly, recommends a vote "FOR" election of the
nominees for director, ratification of the selection of Ernst & Young LLP and
approval of the executive incentive plan.
Record Date; Outstanding Shares; Shares Entitled to Vote
Only holders of record of Amgen common stock at the close of business on the
record date, March 19, 2002, are entitled to notice of and to vote at the
annual meeting. As of the record date, there were 1,050,895,693 shares of Amgen
common stock outstanding and entitled to vote at the annual meeting, held by
approximately 15,259 holders of record. A list of Amgen stockholders will be
available for review at Amgen's executive offices during regular business hours
for a period of ten days before the annual meeting. Each holder of Amgen common
stock is entitled to one vote for each share of Amgen common stock he or she
owned as of the record date.
Quorum and Vote Required
A quorum of stockholders is necessary to hold a valid annual meeting. The
presence, in person or by proxy, of shares of Amgen common stock representing a
majority of shares of Amgen common stock outstanding and entitled to vote on
the Amgen record date is necessary to constitute a quorum at the Amgen annual
meeting. Abstentions and broker "non-votes," discussed below, count as present
for establishing a quorum.
Stockholder approval of the issuance of shares of Amgen common stock
pursuant to the merger agreement is required under the regulations of the
Nasdaq National Market. Stockholder approval of the executive incentive plan is
required under Section 162(m) of the Internal Revenue Code to qualify
compensation paid under the Plan as performance-based compensation. The
affirmative vote of the holders of a majority of the shares of Amgen common
stock present or represented by proxy and voted at the Amgen annual meeting is
required to approve the issuance of shares of Amgen common stock pursuant to
the merger agreement and the new executive incentive plan. The affirmative vote
of the holders of a majority of the shares of Amgen common stock present or
represented by proxy at the Amgen annual meeting is required to ratify the
selection of Ernst & Young LLP as independent auditors of Amgen. Directors are
elected by a plurality of the votes, which means the three nominees who receive
the largest number of properly cast votes will be elected as directors of Amgen.
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As of the record date for the annual meeting, the directors and executive
officers of Amgen as a group beneficially owned and were entitled to vote
approximately 12,126,508 shares of Amgen common stock, or approximately 1.2% of
the outstanding shares of Amgen on that date. This amount excludes
approximately 1,453,000 shares of Amgen common stock held by the spouses of
certain directors of Amgen; these directors disclaim beneficial ownership of
such shares. As of March 19, 2002, there were approximately 4,061,561 shares of
Amgen common stock held by employees of Amgen through the Amgen Inc. Retirement
and Savings Plan and the Retirement and Savings Plan for Amgen Manufacturing,
Ltd. Each share held by these plans will be voted by the trustee of the plan in
accordance with the instructions it receives from the respective plan
participant. The trustee will vote any shares of Amgen common stock for which
it has not received instructions in the same proportion as the trustee votes
the shares for which it has received instructions from plan participants.
Voting; Proxies; Revocation
You may vote by proxy or in person at the annual meeting.
Voting in Person
If you plan to attend the annual meeting and wish to vote in person, you
will be given a ballot at the annual meeting. Please note, however, that if
your shares are held in "street name," which means your shares are held of
record by a broker, bank or other nominee, and you wish to vote at the annual
meeting, you must bring to the annual meeting a proxy from the record holder of
the shares authorizing you to vote at the annual meeting.
Voting by Proxy
You should vote your proxy even if you plan to attend the annual meeting.
You can always change your vote at the annual meeting. Voting instructions are
included on your proxy card. If you properly grant your proxy and submit it to
Amgen in time to vote, one of the individuals named as your proxy will vote
your shares as you have directed. If no instructions are indicated on a
properly executed proxy card or voting instruction, the shares will be voted
"FOR" the election of all of the director nominees and approval of the
proposals.
If other matters properly come before the Amgen annual meeting, the shares
represented by proxies will be voted, or not voted, by the individuals named in
the proxies in their discretion. No proxy that is voted against approval of the
issuance of shares of Amgen common stock in the merger will be voted in favor
of any adjournment or postponement of the Amgen annual meeting for the purpose
of soliciting additional proxies.
Amgen stockholders of record may submit their proxies through the mail by
completing their proxy card, and signing, dating and returning it in the
enclosed, pre-addressed, postage-paid envelope. To be valid, a returned proxy
card must be signed and dated.
If you are not the record holder of your shares, you must provide the record
holder of your shares with instructions on how to vote your shares. The bank,
broker or other nominee holding your shares may allow you to deliver your
voting instructions by telephone or over the Internet. Amgen stockholders whose
shares are held by a bank, broker or other nominee should refer to their voting
instruction card forwarded by the bank, broker or other nominee holding their
shares. If your voting instruction card does not include telephone or Internet
voting instructions, please complete and return your voting instruction card by
mail.
Revocation of Proxy
You may revoke your proxy at any time before it is voted at the Amgen annual
meeting by:
. delivering to the Secretary of Amgen a signed notice of revocation,
bearing a date later than the date of the proxy, stating that the proxy
is revoked;
. granting a new proxy, relating to the same shares and bearing a later
date; or
. attending the annual meeting and voting in person, however, attendance
at the annual meeting will not, by itself, revoke a proxy.
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If your shares are held in the name of a broker, bank or other nominee, you may
change your vote by submitting new voting instructions to your broker, bank or
other nominee. You must contact your broker, bank or other nominee to find out
how to do so.
Written notices of revocation and other communications with respect to the
revocation of Amgen proxies should be addressed to:
Amgen Inc.
One Amgen Center Drive
Thousand Oaks, California 91320-1799
Attn: Corporate Secretary, Mail Stop 27-4-A
Abstentions and Broker Non-Votes
Shares of Amgen common stock held by persons attending the Amgen annual
meeting but not voting, and shares of Amgen common stock for which Amgen has
received proxies but with respect to which holders of those shares have
abstained from voting, will be counted as present at the Amgen annual meeting
for purposes of determining the presence or absence of a quorum for the
transaction of business at the Amgen annual meeting. Abstentions will not be
counted as votes cast at the Amgen annual meeting for purposes of determining
whether stockholder approval of the issuance of shares of Amgen common stock
pursuant to the merger agreement or the new executive incentive plan has been
obtained. In addition, because directors are elected by a plurality of votes
cast, abstentions will not be counted in determining which nominees received
the largest number of votes cast. However, because the ratification of the
selection of Ernst & Young LLP requires the affirmative vote of a majority of
the shares of Amgen common stock present or represented by proxy at the annual
meeting, abstentions will have the same effect as votes against the
ratification.
Shares represented by proxies that reflect a broker "non-vote" will be
counted for purposes of determining whether a quorum exists. A broker
"non-vote" occurs when a nominee holding shares for a beneficial owner has not
received instructions from the beneficial owner and does not have discretionary
authority to vote the shares. Broker non-votes will not be counted as votes
cast at the Amgen annual meeting for purposes of determining whether
stockholder approval of the issuance of shares of Amgen common stock pursuant
to the merger agreement or the new executive incentive plan has been obtained.
In addition, because directors are elected by a plurality of votes cast, broker
non-votes will not be counted in determining which nominees received the
largest number of votes cast. However, because the ratification of the
selection of Ernst & Young LLP requires the affirmative vote of the holders of
a majority of the shares present or represented by proxy at the annual meeting,
broker non-votes will have the same effect as votes against the ratification.
Proxy Solicitation
Amgen is soliciting proxies for the Amgen annual meeting from Amgen
stockholders. Amgen will bear the entire cost of soliciting proxies from Amgen
stockholders, except that Amgen and Immunex have each agreed to pay one-half of
the costs of filing, printing and mailing this joint proxy statement/prospectus
and related proxy materials. In addition to the solicitation of proxies by
mail, Amgen will request that banks, brokers and other record holders send
proxies and proxy materials to the beneficial owners of Amgen common stock held
by them and secure their voting instructions if necessary. Amgen will reimburse
those record holders for their reasonable expenses in so doing. Amgen has also
made arrangements with Georgeson Shareholder Communications, Inc. to assist it
in soliciting proxies, and has agreed to pay a fee of approximately $20,000
plus expenses for those services. Amgen also may use several of its regular
employees, who will not be specially compensated, to solicit proxies from Amgen
stockholders, either personally or by telephone, Internet, telegram, facsimile
or special delivery letter.
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Other Business; Adjournments
Amgen does not expect that any matter other than the proposals presented in
this joint proxy statement/prospectus will be brought before the Amgen annual
meeting. However, if other matters are properly presented at the annual meeting
or any adjournment or postponement of the annual meeting, the persons named as
proxies will vote in accordance with their best judgment with respect to those
matters. Under the laws of the state of Delaware, no business may be raised at
the Amgen annual meeting unless proper notice to the Amgen stockholders has
been given.
Adjournments may be made for the purpose of, among other things, soliciting
additional proxies. An adjournment may be made from time to time by approval of
the holders of shares representing a majority of the votes present in person or
by proxy at the Amgen annual meeting, whether or not a quorum exists, without
further notice other than by an announcement made at the annual meeting. If the
adjournment is for more than 30 days, a notice of the adjourned meeting will be
given to each stockholder entitled to vote at the meeting. Amgen does not
currently intend to seek an adjournment of the annual meeting.
Assistance
If you need assistance in completing your proxy card or have questions
regarding the Amgen annual meeting, please contact Georgeson Shareholder
Communications, Inc. at (800) 223-2064 or write to the following address:
Georgeson Shareholder Communications, Inc.
17 State Street
10th Floor
New York, New York 10004
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CHAPTER THREE--THE IMMUNEX ANNUAL MEETING
Date, Time, Place and Purpose of the Immunex Annual Meeting
The annual meeting of Immunex shareholders will be held at 12:00 p.m., P.T.,
on May 16, 2002 at the Benaroya Hall, Nordstrom Recital Hall, 200 University
Street, Seattle, Washington.
The Immunex annual meeting is being held for the following purposes:
. to consider and vote upon a proposal to approve the merger agreement;
. to elect nine directors;
. to ratify the selection of Ernst & Young LLP as independent auditors of
Immunex for the year ending December 31, 2002; and
. to transact any other business as may properly come before the annual
meeting or any adjournments or postponements of the annual meeting.
Recommendation of the Immunex Board of Directors
The Immunex board of directors has unanimously adopted the merger agreement
and unanimously recommends that Immunex shareholders vote "FOR" approval of the
merger agreement. See "The Merger--Reasons for the Merger--Immunex." The
Immunex board of directors unanimously recommends that Immunex shareholders
vote "FOR" the nominees for directors and the ratification of the selection of
Ernst & Young LLP.
Record Date; Outstanding Shares; Shares Entitled to Vote
Only holders of record of Immunex common stock at the close of business on
the record date, March 19, 2002, are entitled to notice of and to vote at the
Immunex annual meeting. As of the record date, there were 550,772,083 shares of
Immunex common stock outstanding and entitled to vote at the annual meeting,
held by approximately 2,117 holders of record. A list of Immunex shareholders
will be available for review at the executive offices of Immunex during regular
business hours for a period of ten days before the annual meeting. Each holder
of Immunex common stock is entitled to one vote for each share of Immunex
common stock he or she owned as of the record date. If you do not vote, either
in person or by proxy, it will have the same effect as voting against the
merger agreement.
Quorum and Vote Required
A quorum of shareholders is necessary to hold a valid annual meeting. The
required quorum for the transaction of business at the annual meeting is a
majority of the outstanding shares of Immunex common stock entitled to vote and
present, whether in person or by proxy, at the annual meeting. Abstentions and
broker "non-votes," discussed below, count as present for establishing a quorum.
The affirmative vote of the holders of a majority of the outstanding shares
of Immunex common stock entitled to vote at the annual meeting is required to
approve the merger agreement. The nominees who receive the greatest number of
affirmative votes cast by holders of common stock present, in person or by
proxy, and entitled to vote at the annual meeting, will be elected to the
Immunex board of directors. You are not entitled to cumulate votes in the
election of directors. To ratify the Immunex board of directors' selection and
appointment of Ernst & Young LLP to serve as the independent auditors to
Immunex, the votes cast in favor of the proposal must exceed the votes cast in
opposition to the proposal.
Wyeth and certain of its subsidiaries, which beneficially owned as of the
record date approximately 233,378,088 shares, or approximately 41% of the
outstanding shares of Immunex common stock, have
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executed a shareholder voting agreement whereby they have agreed to vote in
favor of the approval of the merger agreement and have executed a proxy in
favor of Amgen to this effect. See "Shareholder Voting Agreement."
As of the record date for the Immunex annual meeting, the directors and
executive officers of Immunex and their affiliates (excluding Wyeth or its
affiliates) as a group beneficially owned approximately 288,733 shares of
Immunex common stock, or less than 1% of the outstanding shares of Immunex on
that date. Wyeth, which has designated two directors to the Immunex board of
directors in accordance with the terms of a governance agreement with Immunex,
beneficially owned, as of the record date, approximately 233,378,088 shares, or
approximately 41% of the outstanding shares of Immunex common stock. As of the
record date, there were approximately 467,904 shares of Immunex common stock
held by employees of Immunex through the Immunex Corporation Profit Sharing
401(k) Plan and Trust. Each share held by this plan will be voted by the
trustee of the plan in accordance with the instructions it receives from the
respective plan participant.
Voting; Proxies; Revocation
You may vote by proxy or in person at the Immunex annual meeting.
Voting in Person
If you plan to attend the Immunex annual meeting and wish to vote in person,
you will be given a ballot at the annual meeting. Please note, however, that if
your shares are held in "street name," which means your shares are held of
record by a broker, bank or other nominee, and you wish to vote at the annual
meeting, you must bring to the annual meeting a proxy from the record holder of
the shares authorizing you to vote at the annual meeting.
Voting by Proxy
You should vote your proxy even if you plan to attend the Immunex annual
meeting. You can always change your vote at the annual meeting. Voting
instructions are included on your proxy card. If you properly give your proxy
and submit it to Immunex in time to vote, one of the individuals named as your
proxy will vote your shares as you have directed.
The method of voting by proxy differs for shares held as a record holder and
shares held in street name. If you hold your shares of Immunex common stock as
a record holder you should complete, date and sign the enclosed proxy card and
promptly return it in the enclosed, pre-addressed, postage-paid envelope or
otherwise mail it to Immunex. If you hold your shares of Immunex common stock
in street name, you will receive instructions from your broker, bank or other
nominee that you must follow in order to vote your shares. Your broker or bank
may allow you to deliver your voting instructions by the telephone or over the
Internet. Please see the instructions that accompany this joint proxy
statement/prospectus.
All properly signed proxies that are received prior to the annual meeting
and that are not revoked will be voted at the annual meeting according to the
instructions indicated on the proxies or, if no direction is indicated, "FOR"
approval of the merger agreement, the nominees for directors and the
ratification of the selection of Ernst & Young LLP.
You should not send in any certificates representing Immunex common stock at
this time. Following the completion of the merger, you will receive
instructions for the surrender and exchange of your Immunex stock certificates.
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Revocation of Proxy
You may revoke your proxy at any time before it is exercised at the Immunex
annual meeting by taking any of the following actions:
. delivering to the Secretary of Immunex a signed notice of revocation,
bearing a date later than the date of the proxy, stating that the proxy
is revoked;
. signing and delivering a new proxy, relating to the same shares and
bearing a later date; or
. attending the annual meeting and voting in person, however, attendance
at the annual meeting will not, by itself, revoke a proxy.
If your shares are held in street name, you may change your vote by
submitting new voting instructions to your brokers, bank or other nominee. You
must contact your broker, bank or other nominee to find out how to do so.
Written notices of revocation and other communications with respect to the
revocation of Immunex proxies should be addressed to:
Immunex Corporation
51 University Street
Seattle, Washington 98101-2936
Attn: Corporate Secretary
Abstentions and Broker Non-Votes
Abstentions will have the same effect as voting against the merger
agreement. However, abstentions will not affect which nominees are elected to
the Immunex board of directors nor the ratification of Ernst & Young LLP to
serve as the independent auditors of Immunex.
Brokers who hold shares of Immunex common stock in street name for a
beneficial owner of those shares typically have the authority to vote on
"routine" proposals when they have not received instructions from beneficial
owners. However, brokers are not allowed to exercise their voting discretion
with respect to the approval of non-routine matters, such as approval of the
merger agreement, without specific instructions from the beneficial owner.
These non-voted shares are referred to as broker non-votes. If your broker
holds your Immunex common stock in street name, your broker will vote your
shares only if you provide instructions on how to vote by filling out the voter
instruction form sent to you by your broker with this joint proxy
statement/prospectus. Broker non-votes will have the same effect as voting
against the merger agreement. However, broker non-votes will not be counted as
votes entitled to vote in determining whether the shareholders have ratified
the selection of Ernst & Young LLP. Finally, because the election of directors
only requires a plurality of votes cast, broker non-votes will not be counted
in determining which nominees received the largest number of votes cast.
Proxy Solicitation
Immunex is soliciting proxies for the annual meeting from shareholders of
Immunex. Immunex will bear the entire cost of soliciting proxies from Immunex
shareholders, except that Immunex and Amgen have each agreed to pay one-half of
the costs of filing, printing and mailing this joint proxy statement/prospectus
and related proxy materials. In addition to the solicitation of proxies by
mail, Immunex will request that banks, brokers and other record holders send
proxies and proxy materials to the beneficial owners of Immunex common stock
held by them and secure their voting instructions if necessary. Immunex will
reimburse those record holders for their reasonable expenses in so doing.
Immunex has also made arrangements with MacKenzie Partners, Inc. to assist it
in soliciting proxies, and has agreed to pay a fee of approximately $6,500 plus
expenses for those services. Immunex also may use several of its regular
employees, who will not be specially compensated, to solicit proxies from
Immunex shareholders, either personally or by telephone, Internet, telegram,
facsimile or special delivery letter.
III-3
Other Business; Adjournments
Immunex does not expect that any matter other than the proposals presented
in this joint proxy statement/prospectus will be brought before the Immunex
annual meeting. However, if other matters incident to the conduct of the annual
meeting are properly presented at the annual meeting or any adjournment or
postponement of the annual meeting, the persons named as proxies will vote in
accordance with their best judgment with respect to those matters. Under the
laws of the state of Washington, where Immunex is incorporated, only business
for which proper notice to the Immunex shareholders has been given may be
conducted at the Immunex annual meeting.
Adjournments may be made for the purpose of, among other things, soliciting
additional proxies. An adjournment may be made from time to time by approval of
the holders of shares representing a majority of the votes present in person or
by proxy at the annual meeting, whether or not a quorum exists, without further
notice other than by an announcement made at the annual meeting. Immunex does
not currently intend to seek an adjournment of the annual meeting.
Assistance
If you need assistance in completing your proxy card or have questions
regarding the Immunex annual meeting, please contact MacKenzie Partners, Inc.
at (800) 322-2885 or (212) 929-5500 or write to the following address:
MacKenzie Partners, Inc.
105 Madison Avenue
14th Floor
New York, New York 10016
III-4
CHAPTER FOUR--OTHER AMGEN ANNUAL MEETING PROPOSALS
PROPOSAL 2
ELECTION OF DIRECTORS
Under Amgen's certificate of incorporation and bylaws, the Amgen board of
directors is divided into three classes, each class consisting, as nearly as
possible, of one-third of the total number of directors, with each class having
a three-year term. Vacancies on the board may be filled only by persons elected
by a majority of the remaining directors. A director elected by the board to
fill a vacancy (including a vacancy created by an increase in the size of the
board of directors) will serve for the remainder of the full term of the class
of directors in which the vacancy occurred and until such director's successor
is elected and qualified, or until such director's earlier death, resignation
or removal.
Directors are elected by a plurality of the votes, which means the three
nominees who receive the largest number of properly cast votes will be elected
as directors. Each share of Amgen common stock is entitled to one vote for each
of the three director nominees. Cumulative voting is not permitted. It is the
intention of the proxy holders named in the enclosed proxy to vote the proxies
received by them for the election of the nominees named below unless
authorization to do so is withheld. If any nominee should become unavailable
for election prior to the Amgen annual meeting, an event which currently is not
anticipated by the board, the proxies will be voted for the election of a
substitute nominee or nominees proposed by the Amgen board of directors. Each
person nominated for election has agreed to serve if elected and management has
no reason to believe that any nominee will be unable to serve.
The terms of office of Dr. David Baltimore, Mr. William K. Bowes, Jr., Ms.
Judith C. Pelham and Mr. Kevin W. Sharer expire in 2002, and all except Mr.
Bowes are nominees for election to the board. Each of the nominees would serve
until his or her successor is elected and qualified, or until such director's
earlier death, resignation or removal. If elected at the annual meeting, Dr.
Baltimore, Mr. Sharer and Ms. Pelham would each serve until the 2005 annual
meeting of stockholders. If the merger is completed, Edward V. Fritzky,
Chairman of the Board, Chief Executive Officer and President of Immunex, will
be appointed to the Amgen board of directors.
The board of directors recommends you vote "FOR" each named nominee.
Set forth below is biographical information for each person nominated and
for each person whose term of office as a director will continue after the
annual meeting.
Nominees for Election for a Three Year Term Expiring at the 2005 Annual Meeting
DAVID BALTIMORE
Dr. David Baltimore, age 64, has served as a director of Amgen since June
1999. He has been the President of the California Institute of Technology since
October 1997 and has been the Chairman of the National Institutes for Health
AIDS Vaccine Research Committee since December 1996. Previously, Dr. Baltimore
had been an Institute Professor at the Massachusetts Institute of Technology
("MIT") from July 1995 to October 1997, and the Ivan R. Cottrell Professor of
Molecular Biology and Immunology at MIT from July 1994 to October 1997. Dr.
Baltimore also serves as a director of BB Biotech, AG, a Swiss investment
company. In 1975, Dr. Baltimore was the co-recipient of the Nobel Prize in
Medicine.
JUDITH C. PELHAM
Ms. Judith C. Pelham, age 56, has served as a director of Amgen since May
1995. She has been President and CEO of Trinity Health, a national system of
healthcare facilities, including hospitals, long-term care, home care,
psychiatric care, residences for the elderly and ambulatory care, and the third
largest Catholic healthcare system in the U.S., since May 2000. Previously, Ms.
Pelham was the President and Chief Executive Officer of Mercy Health Services,
a system of hospitals, home care, long term care, ambulatory services and
managed care
IV-1
established to carry out the health ministry sponsored by the Sisters of Mercy
Regional Community of Detroit, from January 1993 to April 2000. From 1982 to
1992, Ms. Pelham was President and Chief Executive Officer of Daughters of
Charity Health Services, Austin, Texas, a network of hospitals, home care and
ambulatory services serving central Texas.
KEVIN W. SHARER
Mr. Kevin W. Sharer, age 54, has served as a director of Amgen since
November 1992. He became Chief Executive Officer and President in May 2000 and
Chairman of the Board in December 2000, having served as President and Chief
Operating Officer of Amgen since October 1992. Prior to joining Amgen, Mr.
Sharer served as President of the Business Markets Division of MCI
Communications Corporation, a telecommunications company, from April 1989 to
October 1992 and served in numerous executive capacities at General Electric
Company from February 1984 to March 1989. Mr. Sharer also serves as a director
of Unocal Corporation and Minnesota Mining & Manufacturing Co.
Directors Continuing in Office Until the 2003 Annual Meeting
FREDERICK W. GLUCK
Mr. Frederick W. Gluck, age 66, has served as a director of Amgen since
February 1998. Mr. Gluck is currently a consultant to McKinsey & Company, Inc.
("McKinsey"), a consulting firm. Mr. Gluck joined Bechtel Group, Inc., an
engineering, construction and project management company, in February 1995, and
served as Vice Chairman and Director from January 1996 to July 1998. Mr. Gluck
joined McKinsey in 1967, serving as Managing Director from 1988 to 1994, and
retired from that firm in February 1995. Mr. Gluck is currently a director of
HCA Corporation, Thinking Tools, Inc., the New York Presbyterian Hospital, and
Russell Reynolds Associates, Inc. Mr. Gluck is also a member of the University
of California, Santa Barbara Foundation Board, Co-Chairman of the Advisory
Council of the Institute of Theoretical Physics and a member of the National
Advisory Board of the New University Capital Campaign.
FRANKLIN P. JOHNSON, JR.
Mr. Franklin P. Johnson, Jr., age 73, has served as a director of Amgen
since October 1980. He is the general partner of Asset Management Partners, a
venture capital limited partnership. Mr. Johnson serves as the Vice President,
Chief Financial Officer and Secretary of Indo Pacific Investment Company, a
privately held investment company. Mr. Johnson has been a private venture
capital investor for more than five years. He is also a director of Applied
MicroCircuits Corporation, IDEC Pharmaceuticals Corp. and several private
companies.
J. PAUL REASON
Admiral J. Paul Reason, USN (Retired), age 61, has served as a director of
Amgen since January 2001. Since July 2000, he has been the President and Chief
Operating Officer of Metro Machine Corporation, a privately held ship repair
company. He was a Four Star Admiral and Commander In Chief of the U.S. Atlantic
Fleet of the U.S. Navy from December 1996 to September 1999. He served as
Deputy Chief of Naval Operations from August 1994 to November 1996, and served
in numerous capacities, both at sea and ashore, in the U.S. Navy from June 1965
to July 1994. Admiral Reason is currently a director of Wal-Mart Stores, Inc.
and Norfolk Southern Corporation.
DONALD B. RICE
Dr. Donald B. Rice, age 62, has served as a director of Amgen since October
2000. Dr. Rice has been President, Chief Executive Officer and director of
Agensys, Inc., a biotechnology company, since its founding in late 1996. From
March 1993 until August 1996, Dr. Rice was President and Chief Operating
Officer and a director of Teledyne, Inc., a diversified technology-based
manufacturing company with major segments in
IV-2
specialty metals and aerospace, and also serves as Chairman of the Board. He is
also Chairman of the Board of Scios Inc., and a director of Wells Fargo &
Company, Unocal Corporation, and Vulcan Materials Company.
Directors Continuing in Office Until the 2004 Annual Meeting
FRANK J. BIONDI, JR.
Mr. Frank J. Biondi, Jr., age 57, has served as director of Amgen since
January 2002. Since November 1998, he has served as Senior Managing Director of
WaterView Advisors LLC, an investment advisor organization. Mr. Biondi served
as Chairman and Chief Executive Officer of Universal Studios, Inc. from April
1996 through November 1998. Mr. Biondi previously served as President and Chief
Executive Officer of Viacom, Inc. from July 1987 through January 1996. Mr.
Biondi currently serves on the boards of directors of Hasbro, Inc., The Bank of
New York Company, Inc. and Vail Resorts, Inc.
JERRY D. CHOATE
Mr. Jerry D. Choate, age 63, has served as a director of Amgen since August
1998. In January 1999, Mr. Choate retired as Chairman of the Board and Chief
Executive Officer of The Allstate Corporation ("Allstate"), an insurance
company holding company, where he had held such positions since January 1995.
Prior to becoming Chairman of Allstate in January 1995, Mr. Choate served as
President and Chief Executive Officer of Allstate from August 1994 to January
1995; and had previously held various management positions at Allstate since
1962. Mr. Choate also serves as a director of Valero Energy Corporation and
serves on the board of trustees for the Van Kampen Mutual Funds.
STEVEN LAZARUS
Mr. Steven Lazarus, age 70, has served as a director of Amgen since May
1987. Since July 1994, he has been the managing general partner of ARCH Venture
Partners, L.P., an early stage venture capital partnership. He was President
and Chief Executive Officer of the Argonne National Laboratory/The University
of Chicago Development Corporation and was also associate dean at the Graduate
School of Business, the University of Chicago, from October 1986 to July 1994.
Mr. Lazarus also serves as a director of the First Consulting Group Inc. and
the National Association of Corporate Directors (NACD), an association of
boards of directors, directors and board advisors and is a member of the board
of advisors of RAND Health, a research division of The RAND Corporation
focusing on health, health behavior and health policy.
GILBERT S. OMENN
Dr. Gilbert S. Omenn, age 60, has served as a director of Amgen since
January 1987. He has been the Executive Vice President for Medical Affairs at
the University of Michigan, Chief Executive Officer of the University of
Michigan Health System, and Professor of Internal Medicine, Human Genetics and
Public Health since September 1997. Previously, Dr. Omenn was the Dean of the
School of Public Health and Community Medicine at the University of Washington
from July 1982 to September 1997. Dr. Omenn also is a director of Rohm & Haas
Co.
PATRICIA C. SUELTZ
Ms. Patricia C. Sueltz, age 49, has served as director of Amgen since
January 2002. She has been Executive Vice President, Systems Software Group, at
Sun Microsystems, Inc., a software company, since July 2000 and as President,
Software Products & Platforms from September 1999 to July 2000. Previously, Ms.
Sueltz served in various management capacities at IBM Corporation ("IBM") from
June 1979 to October 1999. Ms. Sueltz currently serves on the boards of
directors of Delphi Automotive Systems Corporation and Enterprise Software
Roundtable. She is also a director of Sun Microsystems Founders Board and
serves on the Corporate Advisory Board of the University of Southern California
Marshall School of Business.
IV-3
Board Committees and Meetings
The Amgen board of directors, which held six meetings during the year ended
December 31, 2001, has an Audit Committee, a Compensation Committee, an
Executive Committee, a New Hire Stock Option Committee, a Nominating Committee
and a Strategy Committee.
The Audit Committee recommends the engagement of Amgen's independent
auditors and approves the services performed by such auditors, including the
review and evaluation of Amgen's accounting system and its system of internal
controls in connection with Amgen's annual audit. The Amgen board of directors
has adopted a written charter for the Audit Committee. The Audit Committee
carries out its responsibilities in accordance with the terms of its charter.
The Audit Committee has also considered whether the provision of other
non-audit services to Amgen by its independent auditors is compatible with
maintaining that firm's independence. Amgen's independent auditors did not
provide any information technology services to Amgen in 2001. During the year
ended December 31, 2001, the Audit Committee met six times. Mr. Bowes served as
Chairman, and Dr. Omenn and Ms. Pelham served as members of the Audit
Committee. Each of these directors is independent, as defined by the National
Association of Securities Dealers ("NASD"), and meets the applicable NASD
requirements for financial literacy and financial expertise.
The Compensation Committee sets guidelines for the administration of all
salaries within Amgen, approves recommendations for officers' salaries,
administers incentive compensation and awards stock options to employees,
officers and consultants under Amgen's stock option plans and otherwise
determines compensation levels. During the year ended December 31, 2001, the
Compensation Committee met five times. Mr. Johnson served as Chairman, and
Messrs. Choate, Gluck and Lazarus and Adm. Reason served as members of the
Compensation Committee.
The Executive Committee may exercise, when the board of directors is not in
session, all powers of the board of directors in the management of the business
and affairs of Amgen to the extent permitted by law, Amgen's bylaws and as
specifically granted by the board of directors. During the year ended December
31, 2001, the Executive Committee met one time. Mr. Sharer served as Chairman,
and Messrs. Bowes and Johnson and Dr. Rice served as members of the Executive
Committee.
The New Hire Stock Option Committee principally grants stock options to
non-officer employees upon commencement of employment with Amgen and its
subsidiaries in accordance with the guidelines established by the Compensation
Committee. During the year ended December 31, 2001, the New Hire Stock Option
Committee did not meet, but did take action by written consent. Mr. Sharer
served as the sole member of the New Hire Stock Option Committee.
The Nominating Committee interviews, evaluates, nominates and recommends
individuals for membership on the Amgen board of directors and committees
thereof and nominates specific individuals to be elected as officers of Amgen
by the board of directors. During the year ended December 31, 2001, the
Nominating Committee met one time. Mr. Bowes served as Chairman, and Mr.
Johnson and Dr. Omenn served as members of the Nominating Committee. The
Nominating Committee will consider nominees for directors nominated by
stockholders upon submission in writing to the Secretary of Amgen of the names
of such nominees in accordance with Amgen's bylaws.
The Strategy Committee meets with management of Amgen to review research
strategies and proposals for collaborations and licensing of technology. During
the year ended December 31, 2001, the Strategy Committee met three times. Mr.
Lazarus served as Chairman, and Messrs. Choate and Gluck, Drs. Baltimore and
Omenn and Ms. Pelham serve as members of the Strategy Committee.
During the year ended December 31, 2001, all of the directors attended at
least 75% of the total number of meetings of the Amgen board of directors and
committees on which they served.
IV-4
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Amgen board of directors has selected Ernst & Young LLP as Amgen's
independent auditors for the year ending December 31, 2002, and has further
directed that management submit the selection of independent auditors for
ratification by the stockholders at the Amgen annual meeting. Ernst & Young LLP
has audited Amgen's financial statements since Amgen's inception in 1980.
Representatives of Ernst & Young LLP are expected to be present at the Amgen
annual meeting and will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
Stockholder ratification of the selection of Ernst & Young LLP as Amgen's
independent auditors is not required by Amgen's bylaws or otherwise. However,
the Amgen board of directors is submitting the selection of Ernst & Young LLP
to the Amgen stockholders for ratification as a matter of corporate practice.
If the stockholders fail to ratify the selection, the board of directors will
reconsider whether or not to retain that firm. Even if the selection is
ratified, the board in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if the board determines
that such a change would be in the best interests of Amgen and its stockholders.
The affirmative vote of the holders of a majority of the shares of Amgen
common stock present or represented by proxy at the Amgen annual meeting is
required to ratify the selection of Ernst & Young LLP.
The board of directors recommends you vote "FOR" Proposal 3.
IV-5
PROPOSAL 4
APPROVAL OF EXECUTIVE INCENTIVE PLAN
General
In general, Section 162(m) of the Internal Revenue Code imposes a limit on
corporate tax deductions for compensation in excess of one million dollars per
year paid by a public company to its Chief Executive Officer or any of the next
four highest paid executive officers as listed in the proxy statement. An
exception to this limitation is provided for performance-based compensation.
The Section 162(m) provisions generally require that affected executives'
compensation satisfy certain conditions in order to qualify for the
performance-based exclusion from the one million dollar deduction cap. The
Compensation Committee of the Amgen board of directors and the Amgen board of
directors have approved, subject to stockholder approval, the Amgen Inc.
Executive Incentive Plan (the "Plan") which is intended to meet these
conditions and therefore qualify compensation paid under the Plan as
performance-based compensation under Section 162(m) of the Internal Revenue
Code. Stockholder approval of the Plan is required under Section 162(m) of the
Internal Revenue Code to qualify compensation paid under the Plan as
performance-based compensation. If Amgen stockholders approve the Plan, it will
take effect as of January 1, 2003. The following is a description of the
material provisions of the Plan. This description is qualified in its entirety
by reference to the Plan itself, a copy of which is attached to this joint
proxy statement/prospectus as Annex G.
Administration
The Plan will be administered by the Compensation Committee which is
composed of "outside directors" as defined under the Internal Revenue Code. The
Compensation Committee will have the sole discretion and authority to
administer and interpret the Plan.
Eligibility and Participation
Eligibility to participate in the Plan is limited to members of Amgen's
management Executive Committee and other senior executives of Amgen and its
subsidiaries. The Compensation Committee will select the Plan participants
("Participants") for each performance period under the Plan.
Business Criteria
The Plan's performance goal will be based upon the Adjusted Net Income of
Amgen and its subsidiaries. No awards will be paid for any performance period
unless there is positive Adjusted Net Income. The Plan defines "Adjusted Net
Income" to mean net income for such performance period computed in accordance
with accounting principles generally accepted in the U.S. which may be adjusted
by the Compensation Committee, as specified in writing, for each performance
period, at the time the goal is established for the performance period, for the
following:
(1) any item of significant gain or loss for the performance period
determined to be related to a change in accounting principle as
reflected in the audited consolidated financial statements of Amgen and
its subsidiaries;
(2) amortization expenses associated with acquired intangible assets;
(3) expenses associated with acquired in-process research and development;
and
(4) any other items of significant income or expense which are determined to
be appropriate adjustments by the Compensation Committee at the time the
goal is established for the performance period.
Award Determinations
By no later than the latest time permitted by Section 162(m) of the Internal
Revenue Code (generally, for performance periods of one year or more, no later
than 90 days after the commencement of the performance period) and while the
performance relating to the performance goal remains substantially uncertain
within the meaning of Section 162(m) of the Internal Revenue Code, the
Compensation Committee will establish the performance goal for such performance
period based on the Adjusted Net Income of Amgen and its subsidiaries, specify
any adjustments
IV-6
permitted under the Plan to the definition of Adjusted Net Income for such
performance period, and adopt targeted awards for Participants for such
performance period. Subject to the foregoing and to the maximum award
limitations described below, no awards will be paid for any period unless there
is positive Adjusted Net Income.
Participants will be selected each period by the Compensation Committee from
those eligible to participate in the Plan. The actual amount of future award
payments under the Plan is not presently determinable because such amounts are
dependent on the future attainment of the performance goal with respect to such
payments. The Plan provides that the maximum award payable to each of the Chief
Executive Officer and President, if each is a Participant for such performance
period, is 0.25% (twenty-five hundredths of one percent) of Adjusted Net Income
for such period, the maximum award payable to an Executive Vice President, if
each is a Participant for such performance period, is 0.15% (fifteen hundredths
of one percent) of Adjusted Net Income for such period, the maximum award
payable to any other individual Participants is 0.10% (one tenth of one
percent) of Adjusted Net Income for such period, and the maximum total awards
payable to all Participants is 2.0% (two percent) of Adjusted Net Income for
such period.
The Compensation Committee may, pursuant to its discretion, reduce or
eliminate any or all of the targeted awards and set additional conditions and
terms of payment of awards, including the achievement of other financial,
strategic or individual goals, which may be objective or subjective, as it
deems appropriate. The Compensation Committee has no discretion to increase the
amount of a Participant's targeted award.
All awards will be determined by the Compensation Committee and will be paid
in cash; provided, however, that no awards will be paid unless and until the
Compensation Committee makes a certification in writing with respect to the
attainment of the performance goal as required by Section 162(m) of the
Internal Revenue Code. Before the beginning of each performance period, each
Participant may elect that all or part of the award for that period will be
deferred and distributed at a later date under the provisions of the Amgen Inc.
Nonqualified Deferred Compensation Plan. Any awards which are not deferred are
paid in cash as soon as practicable after award amounts are determined.
The Plan's maximum award limitations have been set higher than the level at
which awards have been made in prior years under Amgen's Management Incentive
Plan, in part because the regulations adopted under Section 162(m) of the
Internal Revenue Code allow only "negative discretion" with respect to payout
determinations under the Plan. The Compensation Committee expects total awards
paid under the Plan to approximate the awards available to comparable
participants under the Management Incentive Plan in prior years.
If the Plan were in effect for the period that began on January 1, 2001 and
ended on December 31, 2001, based on such period's Adjusted Net Income, the
maximum award the Participants in the Plan could have received is as follows:
Dollar Value
Name and Position ($)
----------------- ------------
Kevin W. Sharer, Chief Executive Officer and
President................................. 3,192,000
Dennis M. Fenton, Executive Vice President.. 1,915,500
Roger M. Perlmutter, Executive Vice
President, Research and Development....... 1,915,500
George J. Morrow, Executive Vice President,
Worldwide Sales and Marketing............. 1,915,500
George Morstyn, Senior Vice President,
Development and Chief Medical Officer..... 1,915,500
Executive Group............................. 10,854,000
Non-Executive Director Group (1)............ 0
Non-Executive Officer Employee Group (2).... 3,831,000
--------
(1) Not eligible to participate in the Plan.
(2) Three officers, based upon last period's management Executive Committee
which consisted of eight members.
IV-7
Other Compensation
The Plan is not exclusive. Amgen may and does pay cash, other awards and
other compensation to certain officers under other authority of the Amgen board
of directors or applicable law.
In the event that the Amgen stockholders do not approve the Plan, the
Participants will not be paid any awards under the Plan and will continue to be
eligible for awards under the Management Incentive Plan. If the Plan is
approved, the Participants named annually will be eligible to receive awards
under the Plan and will not be eligible to receive awards under the Management
Incentive Plan.
Required Vote
The affirmative vote of the holders of a majority of the shares of Amgen
common stock present or represented by proxy and voted at the Amgen annual
meeting is required to approve the Amgen Inc. Executive Incentive Plan.
The board of directors, with Mr. Sharer abstaining, recommends you vote "FOR"
Proposal 4.
IV-8
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Common Stock
The following table sets forth certain information regarding the beneficial
ownership of Amgen common stock as of February 14, 2002, by: (i) each director;
(ii) Amgen's Chief Executive Officer and President, and each of its other four
most highly compensated executive officers (collectively the "Named Executive
Officers") for the year ended December 31, 2001, and (iii) all directors, Named
Executive Officers and executive officers of Amgen as a group. To Amgen's
knowledge, there were no holders beneficially owning more than 5% of Amgen
common stock as of February 14, 2002.
Common Stock
Beneficially Owned (1)(2)
------------------------
Number of Percent
Beneficial Owner Shares of Total
---------------- ---------- --------
David Baltimore.......................................................... 92,000 *
Frank J. Biondi, Jr...................................................... 0 *
William K. Bowes, Jr. (3)................................................ 8,783,200 *
Jerry D. Choate.......................................................... 124,000 *
Frederick W. Gluck....................................................... 64,000 *
Franklin P. Johnson, Jr. (4)............................................. 2,864,621 *
Steven Lazarus........................................................... 301,343 *
Gilbert S. Omenn (5)..................................................... 310,939 *
Judith C. Pelham......................................................... 115,200 *
J. Paul Reason........................................................... 60,050 *
Donald B. Rice........................................................... 80,000 *
Patricia C. Sueltz....................................................... 0 *
Kevin W. Sharer.......................................................... 437,644 *
Dennis M. Fenton......................................................... 589,529 *
George J. Morrow......................................................... 50,000 *
George Morstyn........................................................... 146,732 *
Roger M. Perlmutter...................................................... 201,500 *
All directors, Named Executive Officers and executive officers as a group
(22 persons) (3)(4)(5)(6).............................................. 14,970,752 1.41%
--------
* Less than 1%
(1) Information in this table regarding directors, Named Executive Officers and
executive officers is based on information provided by them. Unless
otherwise indicated in the footnotes and subject to community property laws
where applicable, each of the directors, Named Executive Officers and
executive officers has sole voting and/or investment power with respect to
such shares, except for Mr. Sharer and Drs. Fenton and Morstyn who have
shared voting and/or investment power with their spouses through their
respective trusts.
(2) Includes shares which the individuals shown have the right to acquire on
February 14, 2002, or within 60 days thereafter, pursuant to outstanding
stock options, as follows: Dr. Baltimore--92,000 shares;
Mr. Bowes--160,400 shares; Mr. Choate--124,000 shares;
Mr. Gluck--64,000 shares; Mr. Johnson--160,400 shares;
Mr. Lazarus--160,400 shares; Dr. Omenn--144,400 shares;
Ms. Pelham--111,200 shares; Adm. Reason--60,000; Dr. Rice--76,000;
Mr. Sharer--377,440 shares; Dr. Fenton--424,444 shares; Mr. Morrow--50,000;
Dr. Morstyn--130,672; Dr. Perlmutter--90,000 shares; and all current
directors, Named Executive Officers and executive officers as a
group--2,796,584 shares. Such shares are deemed to be outstanding in
calculating the percentage ownership of such individual (and the group),
but are not deemed to be outstanding as to any other person.
(3) Excludes 609,600 shares held by Mr. Bowes' wife; Mr. Bowes disclaims
beneficial ownership of such shares.
IV-9
(4) Includes 1,554,200 shares held by Asset Management Partners, a venture
capital limited partnership, of which Mr. Johnson is the general partner.
As the general partner, Mr. Johnson may be deemed to have voting and
investment power as to all of these shares, and therefore may be deemed to
be a beneficial owner of such shares. Excludes 843,400 shares held by Mr.
Johnson's wife; Mr. Johnson disclaims beneficial ownership of such shares.
(5) Includes 5,250 shares held by one of Dr. Omenn's children.
(6) Includes 400 shares held by Dr. Fabrizio Bonanni's children.
Contractual Contingent Payment Rights
In 1993, Amgen exercised its option to purchase the Class A and Class B
limited partnership interests of Amgen Clinical Partners, L.P. (the
"Partnership"), a limited partnership previously formed to develop and
commercialize products from certain technologies for human pharmaceutical use
in the United States. As a result of Amgen exercising such option, each holder
of a limited partnership interest in the Partnership acquired contractual
contingent payment rights based on the number of such holder's interests. The
contractual contingent payment rights are not voting securities but entitle the
holders thereof to receive quarterly payments, subject to certain adjustments,
equal to a stated percentage of Amgen's sales of certain products in specified
geographic areas. In 2001, holders received approximately $89,886 for each
whole contractual contingent payment right held. The following table sets forth
certain information regarding the ownership of Amgen's contractual contingent
payment rights as of February 14, 2002, by: (i) each director; (ii) each of the
Named Executive Officers; and (iii) all directors, Named Executive Officers and
executive officers as a group:
Contractual Contingent
Payment Rights
Beneficially Owned(1)
---------------------
Number Percent
Beneficial Owner of Rights of Total
---------------- --------- --------
David Baltimore.......................................................... 0 *
Frank J. Biondi, Jr...................................................... 0 *
William K. Bowes, Jr..................................................... 2 *
Jerry D. Choate.......................................................... 0 *
Frederick W. Gluck....................................................... 0 *
Franklin P. Johnson, Jr. (2)............................................. 4 *
Steven Lazarus........................................................... 0 *
Gilbert S. Omenn......................................................... 0.5 *
Judith C. Pelham......................................................... 0 *
J. Paul Reason........................................................... 0 *
Donald B. Rice........................................................... 0 *
Patricia C. Sueltz....................................................... 0 *
Kevin W. Sharer.......................................................... 0 *
Dennis M. Fenton......................................................... 0 *
George J. Morrow......................................................... 0 *
George Morstyn........................................................... 0 *
Roger M. Perlmutter...................................................... 0 *
All directors, Named Executive Officers and executive officers as a group
(22 persons)(2)........................................................ 6.5 1%
--------
* Less than 1%
(1) This table is based upon information supplied by the directors, Named
Executive Officers and executive officers. Subject to community property
laws where applicable, each holder of a contractual contingent payment
right(s) has sole investment power with respect to such right(s)
beneficially owned.
(2) Includes four rights held by Asset Management Partners, a venture capital
limited partnership, of which Mr. Johnson is the general partner. As the
general partner, Mr. Johnson may be deemed to have investment power as to
all of these rights, and therefore may be deemed to be a beneficial owner
of such rights.
IV-10
EXECUTIVE COMPENSATION
Compensation of Directors
Cash Compensation
Directors of Amgen who are also employees of Amgen are not separately
compensated for their service as directors. Non-employee directors receive a
quarterly retainer of $5,000 (plus $1,500 for a Committee Chairman) and a per
board meeting fee of $1,250 (plus $750 for committee members attending a
committee meeting, up to a maximum of $1,500 for all committee meetings held on
the same day). In 2001, each of the non-employee directors also received $2,500
for his or her attendance at a two-day conference with Amgen's senior
management. The members of the Amgen board of directors also are entitled to
reimbursement of their expenses incurred in connection with attendance at board
and committee meetings in accordance with Amgen policy. There are no family
relationships among any directors of Amgen.
Equity Compensation
Non-employee directors are also entitled to receive stock option grants as
compensation for their service as directors. Amgen's Amended and Restated 1991
Equity Incentive Plan provides for formula grants for non-employee directors.
Under this plan, each non-employee director is automatically granted an annual
non-discretionary option to purchase shares of Amgen common stock. In addition,
newly appointed non-employee directors automatically receive inaugural stock
option grants. Non-employee directors receive annual grants of 16,000 shares in
January of each year; inaugural grants to new non-employee directors are 60,000
shares. The exercise price of options granted under the Amended and Restated
1991 Equity Incentive Plan is equal to 100% of the fair market value of the
underlying stock on the date of the option grant. Formula stock option grants
awarded to non-employee directors under the Amended and Restated 1991 Equity
Incentive Plan vest and are exercisable: (a) on the date of grant, if the
director has had three years of prior continuous service as a non-employee
director, or (b) one year from the date of grant, if a director has had less
than three years of prior continuous service as a non-employee director.
Generally, formula grants must be exercised within ten years from the date of
grant.
In January 2001, Amgen granted to each of the non-employee directors a
Formula Grant under the Amended and Restated 1991 Equity Incentive Plan
covering 16,000 shares at an exercise price of $71.00 per share. In January
2002, Amgen granted to each of Mr. Biondi and Ms. Sueltz an inaugural stock
option grant for 60,000 shares, with an exercise price of $55.69 per share,
upon their respective appointments to the board.
For stock options granted prior to June 1998, a non-employee director
optionee is entitled to a reload option ("Reload Option") in the event the
optionee exercises his or her option, in whole or in part, by surrendering
other shares of Amgen common stock held by such non-employee director. Any such
Reload Option: (i) will be for a number of shares of Amgen common stock equal
to the number of shares of Amgen common stock surrendered as part or all of the
exercise price of the original option; (ii) will have an expiration date that
is the same as the expiration date of the original option; and (iii) will have
an exercise price that is equal to 100% of the fair market value of the Amgen
common stock subject to the Reload Option on the date of exercise of the
original option. Any such Reload Option will be subject to the availability of
sufficient shares under the Amended and Restated 1991 Equity Incentive Plan.
There is no Reload Option on a Reload Option. Stock options granted in June
1998 or subsequently do not have Reload Options.
IV-11
Compensation of Executive Officers
Summary Compensation Table. The following table sets forth summary
information concerning certain compensation awarded or paid to, or earned by,
the Named Executive Officers for all services rendered in all capacities to
Amgen for the years ended December 31, 2001, 2000 and 1999:
SUMMARY COMPENSATION TABLE
Long Term Compensation
-----------------------
Annual Compensation Awards
----------------- -----------------------
Restricted Securities
Stock Underlying All Other
Salary Bonus Awards Options Compensation
Name and Principal Position Year ($)(1) ($) ($) (#) ($)(2)(3)
--------------------------- ---- ------- --------- ---------- ---------- ------------
Kevin W. Sharer......................... 2001 933,333 860,533 0 450,000 95,798
Chairman of the Board, Chief 2000 810,569 1,358,030 0 1,450,000 79,019
Executive Officer and President 1999 631,733 1,124,421 0 240,000 255,998
Roger M. Perlmutter..................... 2001 637,917 1,500,000(5) 6,543,645(6) 350,000 1,625,939(7)
Executive Vice President, Research....
and Development (4)
George J. Morrow........................ 2001 618,337 1,500,000(9) 0 350,000 2,818,457(7)
Executive Vice President,
Worldwide Sales and Marketing (8).....
Dennis M. Fenton........................ 2001 652,288 635,231 0 180,000 35,342
Executive Vice President 2000 455,973 559,084 0 153,800 4,257
1999 388,957 490,781 0 80,132 166,283
George Morstyn.......................... 2001 489,496 385,233 0 25,000 54,545
Senior Vice President, 2000 459,648 549,565 0 80,000 48,754
Development and Chief Medical 1999 409,128 534,649 0 98,732 124,717
Officer
--------
(1) Includes compensation deferred under Amgen's Retirement and Savings Plan
(the "401(k) Plan") otherwise payable in cash during each calendar year.
(2) The amounts shown for 2001 for Mr. Sharer and Drs. Fenton and Morstyn are
comprised primarily of credits of Amgen to the Supplemental Retirement Plan
(the "SRP"), with additional amounts included as a result of a contribution
(the "Company Contribution") to Amgen's 401(k) Plan for each of the Named
Executive Officers (see footnote 3). Amounts for Dr. Perlmutter and Mr.
Morrow include credits of Amgen to the SRP, a Company Contribution,
relocation expenses and the payment of taxes related to those relocation
expenses and certain deferred compensation (see footnote 7). The amounts
for Dr. Morstyn also include $15,319 in relocation expenses. The SRP is a
non-qualified, unfunded plan. Participation in the SRP is available to
selected participants in Amgen's 401(k) Plan who are affected by the
Internal Revenue Code limits on the amount of employee compensation that
may be recognized for purposes of calculating Amgen's contributions to the
401(k) Plan. Pursuant to the SRP, accounts for the respective Named
Executive Officers were credited with (reduced by) the following amounts,
including accrued dividends, interest and unrealized gains or losses for
the years ended December 31, 2001, 2000 and 1999, respectively: Mr. Sharer,
$82,198, $65,419 and $243,198; Dr. Perlmutter, $157,009, $-0- and $-0-; Mr.
Morrow $97,909, $-0- and $-0-; Dr. Fenton, $21,742, ($9,343) and $153,483;
and Dr. Morstyn, $25,626, $35,154 and $111,917.
(3) The amounts shown for 2001 include a Company Contribution in the amount of
$13,600 to Amgen's 401(k) Plan for each of Messrs. Sharer and Morrow and
Drs. Fenton and Morstyn and in the amount of $12,850 for Dr. Perlmutter.
The amounts shown for each of 2000 and 1999 include a Company Contribution
pursuant to
IV-12
the 401(k) Plan in the amount of $13,600, $12,800 and $12,800, respectively,
for each of Mr. Sharer and Drs. Fenton and Morstyn.
(4) Dr. Perlmutter joined Amgen on January 8, 2001.
(5) Consists of $750,000 signing bonus and $750,000 minimum guaranteed
incentive bonus. See "--Employment and Compensation Arrangements--Dr. Roger
M. Perlmutter."
(6) Calculated by multiplying the amount of restricted stock by the closing
market price of $58.6875 on January 8, 2001, less aggregate consideration
paid by Dr. Perlmutter of $11.15. In accordance with the terms of his
letter agreement with Amgen, on January 8, 2001, Dr. Perlmutter was granted
111,500 shares of restricted stock of Amgen in consideration of his payment
of $11.15. The value of such restricted stock as of December 31, 2001
(calculated by multiplying the amount of restricted stock by the closing
market price of $56.44 per share on December 31, 2001, less the purchase
price of $11.15) was $6,293,048. The repurchase option shall lapse with
respect to the following number of shares on the following dates: 40,000
shares on April 1, 2002; 23,750 shares on April 1, 2003; 23,750 shares on
April 1, 2004; and 24,000 shares on April 1, 2005. See "--Employment and
Compensation Arrangements--Dr. Roger M. Perlmutter."
(7) The amounts shown for Mr. Morrow and Dr. Perlmutter include $2,512,577 and
$1,202,130, respectively, in deferred compensation credits pursuant to the
Amgen Inc. Executive Nonqualified Retirement Plan. See "--Executive
Nonqualified Retirement Plan."
(8) Mr. Morrow joined Amgen on January 19, 2001.
(9) Consists of $750,000 signing bonus and $750,000 minimum guaranteed
incentive bonus. See "--Employment and Compensation Arrangements--Mr.
George J. Morrow."
Stock Option Grants and Exercises. The following table sets forth
information concerning individual grants of stock options made by Amgen during
the year ended December 31, 2001, to each of the Named Executive Officers:
OPTION GRANTS IN FISCAL YEAR 2001
Individual Grants
---------------------------------------------------------------------------------
Potential Realizable Value
Percent of at Assumed Annual Rates
Number of Total Options Exercise of Stock Price Appreciation
Securities Granted to or Base for Option Term(1)
Underlying Options Employees in Price Expiration ---------------------------
Name Granted(#)(2) Fiscal Year(6) ($/Sh) Date 5%($) 10%($)
---- ------------------ -------------- -------- ---------- --------- ----------
Kevin W. Sharer......... 150,000(3) 0.82% 67.06 6/15/08 4,095,023 9,543,145
300,000(4) 1.64% 61.67 7/2/08 7,531,765 17,552,215
Roger M. Perlmutter..... 200,000(5) 1.09% 58.69 1/8/08 4,778,341 11,135,567
50,000(3) 0.27% 67.06 6/15/08 1,365,008 3,181,048
100,000(4) 0.55% 61.67 7/2/08 2,510,588 5,850,738
George J. Morrow........ 200,000(5) 1.09% 60.00 1/19/08 4,885,205 11,384,605
50,000(3) 0.27% 67.06 6/15/08 1,365,008 3,181,048
100,000(4) 0.55% 61.67 7/2/08 2,510,588 5,850,738
Dennis M. Fenton........ 60,000(3) 0.33% 67.06 6/15/08 1,638,009 3,817,258
120,000(4) 0.66% 61.67 7/2/08 3,012,706 7,020,886
George Morstyn.......... 8,000(3) 0.04% 67.06 6/15/08 218,401 508,968
17,000(4) 0.09% 61.67 7/2/08 426,800 994,626
--------
(1) The potential realizable value is based on the term of the option at the
time of its grant, which is seven years for the stock options granted to
the Named Executive Officers. The assumed 5% and 10% annual rates of
appreciation over the term of the options are set forth in accordance with
SEC rules and regulations and do not represent Amgen's estimates of stock
price appreciation. The potential realizable value is calculated by
assuming that the stock price on the date of grant appreciates at the
indicated rate, compounded annually,
IV-13
for the entire term of the option and that the option is exercised and the
stock sold on the last day of its term at this appreciated stock price. No
valuation method can accurately predict future stock prices or option values
because there are too many unknown factors. No gain to the optionee is
possible unless the stock price increases over the option term. Such a gain
in stock price would benefit all stockholders.
(2) Options shown in the table have a term of seven years, subject to earlier
termination if the optionee ceases employment with Amgen or an Affiliate of
Amgen (as defined in the Amended and Restated 1991 Equity Incentive Plan).
The vesting of all options will be automatically accelerated in the event
of a Change in Control (as defined in the Amended and Restated 1991 Equity
Incentive Plan). In addition, the options are subject to, in certain
circumstances, certain full or partial accelerated vesting upon the death
or permanent and total disability of the optionee while in the employ of
Amgen or an Affiliate, or death within three months after termination of
employment, or voluntary retirement of an optionee after age 60 ("Voluntary
Retirement"), as provided in the option grant agreement, or at the
discretion of the Compensation Committee as permitted by the Amended and
Restated 1991 Equity Incentive Plan. Additionally, upon the Voluntary
Retirement of an optionee who has been employed by Amgen or an Affiliate
for at least 15 consecutive years, certain options shall not terminate
until the earlier of the termination date set in the grant agreement or
three years following the date of Voluntary Retirement.
(3) Options vest and are exercisable on the earlier to occur of (i) the first
day on which the closing price of Amgen common stock equals or exceeds $100
per share and (ii) June 15, 2006.
(4) Options vest and are exercisable as to 20% of the total grant on each of
the first, second, third, fourth and fifth anniversaries of the date of the
grant.
(5) Options vest and are exercisable as to 25% of the total grant on each of
the first, second, third and fourth anniversaries of the date of the grant.
(6) In 2001, Amgen granted stock options covering a total of 18,309,657 shares
of Amgen common stock to Amgen employees under all stock option plans
maintained by Amgen and this number was used in calculating the percentages.
Aggregated Option Exercises. The following table sets forth information (on
an aggregated basis) concerning each exercise of stock options during the year
ended December 31, 2001, by each of the Named Executive Officers and the final
year-end value of unexercised options:
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 2001
AND FISCAL YEAR-END 2001 OPTION VALUES
Number of
Securities Underlying Value of Unexercised
Shares Unexercised Options at In-the-Money Options at
Acquired On Value FY-End (#) FY-End ($)(1)
Name Exercise (#) Realized ($)(2) Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------ --------------- ------------------------- -------------------------
Kevin W. Sharer......... 234,446 10,990,649 452,440/1,979,440 5,911,565/12,922,826
Roger M. Perlmutter..... 0 0 0/350,000 0/0
George J. Morrow........ 0 0 0/350,000 0/0
Dennis M. Fenton........ 105,360 5,296,910 440,194/451,830 16,730,673/5,417,204
George Morstyn.......... 109,868 5,321,301 170,604/246,140 5,569,318/5,440,116
--------
(1) Value of unexercised in-the-money options is calculated based on the market
value of the underlying securities, minus the exercise price, and assumes
sale of the underlying securities on December 31, 2001, the last trading
day for 2001, at a price of $56.44 per share, the fair market value of
Amgen common stock on such date.
(2) Value realized is based on the market value of Amgen common stock on the
respective dates of exercise, minus the applicable exercise price, and does
not necessarily indicate that the optionee sold stock on that date or, at
that price, or at all.
IV-14
Change-in-Control Arrangements
Effective as of October 20, 1998 (the "Effective Date"), the Amgen board of
directors adopted the Amgen Inc. Change of Control Severance Plan (the "CCS
Plan") which provides certain severance benefits to persons who hold certain
designated positions with Amgen as of the date on which a Change of Control (as
defined below) of Amgen occurs. If a Change of Control had occurred on December
31, 2001, the CCS Plan would have covered approximately 512 officers and key
employees of Amgen, including each of the Named Executive Officers. Under the
terms of the CCS Plan, the CCS Plan extends through December 31, 2001, subject
to automatic one year extensions unless Amgen notified the participants that
the term would not be extended no later than September 30, 2001. Amgen has not
notified participants that the term will not be extended, so the term has been
extended to December 31, 2002, subject to possible further extension. If a
Change of Control occurs during the original or any extended term, the CCS Plan
will continue in effect for at least 36 months following the Change of Control.
Prior to the occurrence of a Change of Control, Amgen has the right to
terminate or amend the CCS Plan at any time; after the occurrence of a Change
of Control, the CCS Plan may not be terminated or amended in any way that
adversely affects a participant's interests under the CCS Plan without the
participant's written consent.
Under the CCS Plan, a Change of Control generally will be deemed to have
occurred at any of the following times: (i) upon the acquisition by any person,
entity or group of beneficial ownership of 50% or more of either the
then-outstanding Amgen common stock or the combined voting power of Amgen's
then-outstanding securities entitled to vote generally in the election of
directors; (ii) at the time individuals making up the incumbent Board (as
defined in the CCS Plan) cease for any reason to constitute at least a majority
of the Board; (iii) immediately prior to the consummation by Amgen of a
reorganization, merger, or consolidation with respect to which persons who were
the stockholders of Amgen immediately prior to such transaction do not,
immediately thereafter, own more than 50% of the shares of Amgen entitled to
vote generally in the election of directors; (iv) a liquidation or dissolution
of Amgen or the sale of all or substantially all of the assets of Amgen; or (v)
any other event which the incumbent Board, in its sole discretion, determines
is a change of control.
Under the CCS Plan, if a Change of Control occurs and a participant's
employment is terminated within the two-year period immediately following the
Change of Control by Amgen other than for Cause or Disability (each as defined
in the CCS Plan) or by the participant for Good Reason (as defined in the CCS
Plan), the participant will be entitled to certain payments and benefits in
lieu of further salary payments subsequent to such termination and in lieu of
severance benefits otherwise payable by Amgen (but not including accrued
vacation and similar benefits otherwise payable upon termination). In the event
of such termination, the participant will receive a lump sum cash severance
payment in an amount equal to the excess, if any, of (A) the product of (x) a
benefits multiple (either 3, 2 or 1, depending on the participant's position (a
"Benefits Multiple")), and (y) the sum of (i) the participant's annual base
salary immediately prior to termination or, if higher, immediately prior to the
Change of Control, plus (ii) the participant's targeted annual bonus for the
year in which the termination occurs or, if higher, the participant's average
annual bonus for the three years immediately prior to the Change of Control;
over (B) the aggregate value (determined in accordance with Section 280G of the
Internal Revenue Code) of the acceleration of vesting of the participant's
unvested stock options in connection with the Change of Control. The terms of
the Amended and Restated 1991 Equity Incentive Plan, the Amended and Restated
1988 Stock Option Plan and the Amended and Restated 1997 Special Non-Officer
Equity Incentive Plan contain the same definition of "Change of Control" as the
CCS Plan definition, and such option plans provide for the acceleration of
vesting of issued and outstanding stock options upon the occurrence of a Change
of Control.
Participants who are senior executive-level staff members who are also
members of the Amgen Executive Committee (which as of December 31, 2001,
included each of the Named Executive Officers) have a Benefits Multiple of 3;
participants who are senior management-level staff members at the level of
"director" or equivalent and above (and who are not members of the Amgen
Executive Committee) have a Benefits Multiple of 2; and management-level staff
members at the level of "associate director" or equivalent have a Benefits
Multiple of 1.
IV-15
Amgen will also provide the participant with continued health and other
group insurance benefits for a period of 1 to 3 years (depending on the
participant's Benefits Multiple) after the participant's termination of
employment. In addition, the participant will be fully vested in his or her
accrued benefits under Amgen's retirement plans and Amgen will provide the
participant with additional fully vested benefits under such plans in an amount
equal to the benefits the participant would have earned under the plans had the
participant continued to be employed by Amgen for a number of years equal to
the participant's Benefits Multiple. The participant will also be indemnified
by Amgen and will be provided with directors' and officers' liability insurance
(if applicable), each as set forth in the CCS Plan. In addition, if any
payment, distribution or acceleration of vesting of any stock option or other
right with respect to a participant who is a "disqualified individual" (within
the meaning of Section 280G of the Internal Revenue Code) would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code, then Amgen
will pay the participant an additional lump sum cash payment in an amount equal
to 20% of the amount of the participant's "excess parachute payments" (within
the meaning of Section 280G of the Internal Revenue Code). If a Change of
Control had occurred on the Effective Date, each of the Named Executive
Officers would have received such indemnification and liability insurance.
The CCS Plan provides that for a period of years equal to a participant's
Benefits Multiple after the participant's termination of employment, the
participant will not disclose confidential information of Amgen and will not
solicit or offer employment to any of Amgen's employees. In the event that the
participant breaches any of such provisions, the participant will forfeit any
right to receive further payments or benefits under the CCS Plan.
Employment and Compensation Arrangements
Dr. Roger M. Perlmutter
Pursuant to an amended and restated letter agreement, effective as of
January 8, 2001, by and between Amgen and Roger Perlmutter, Dr. Perlmutter
became Executive Vice President, Research and Development of Amgen. The letter
agreement provides for a monthly salary of $54,167 and a $750,000 bonus which
was paid within 30 days of the start of Dr. Perlmutter's employment with Amgen.
Dr. Perlmutter has been guaranteed a minimum incentive payment of $750,000 for
each of 2001 and 2002 under Amgen's Amended and Restated Management Incentive
Plan. Amgen will also pay Dr. Perlmutter a retention bonus of $200,000 on each
of the first five one-year anniversaries of the start of his employment with
Amgen. Amgen has also agreed to provide Dr. Perlmutter with certain
non-qualified deferred compensation benefits. See "--Executive Nonqualified
Retirement Plan." In addition, Amgen also agreed to maintain and pay the
premiums on a term life insurance policy in the amount of $10,000,000 for Dr.
Perlmutter's benefit until 2007. In accordance with the terms of the letter
agreement and in connection with Dr. Perlmutter's relocation, Amgen made a loan
of $1,000,000 to Dr. Perlmutter. See "Certain Transactions."
Dr. Perlmutter was granted an option to purchase 200,000 shares of Amgen
common stock on January 8, 2001 with an exercise price of $58.6875 per share.
Amgen has also agreed to grant to Dr. Perlmutter an option under the periodic
stock option program to purchase 150,000 shares of Amgen common stock in each
of 2001 and 2002. Dr. Perlmutter must be actively employed by Amgen on the
periodic stock option program grant date in each year to receive the periodic
stock option program grant for that year. On June 15, 2001 and July 2, 2001
Amgen granted to Dr. Perlmutter an option to purchase 50,000 shares and 100,000
shares of Amgen common stock with an exercise price of $67.06 per share and
$61.67 per share, respectively. On January 8, 2001, Dr. Perlmutter was also
awarded 111,500 shares of restricted Amgen common stock in consideration of his
payment of $.0001 per share, or $11.15 in the aggregate. Amgen has a right to
repurchase the restricted stock at the price paid by Dr. Perlmutter for such
stock in the event that Dr. Perlmutter's employment is terminated for any
reason other than his death or permanent and total disability. The repurchase
option shall lapse with respect to the following number of shares on the
following dates: 40,000 shares on April 1, 2002; 23,750 shares on April 1,
2003; 23,750 shares on April 1, 2004 and 24,000 shares on April 1, 2005.
IV-16
If, within the first five years of his employment with Amgen, Dr.
Perlmutter's employment is terminated without cause, or he resigns from Amgen
due to a reduction of his duties or base salary or annual target incentive
opportunity under the Management Incentive Plan, Dr. Perlmutter will be
entitled to receive three years of base salary and target incentive paid
monthly and health care benefits, unless such health care benefits are obtained
from another employer. Dr. Perlmutter is also entitled to receive severance
benefits under the Amgen Inc. Change of Control Severance Plan in the event of
a change of control of Amgen.
Mr. George J. Morrow
Pursuant to an amended and restated letter agreement, effective as of
January 19, 2001, by and between Amgen and George J. Morrow, Mr. Morrow became
Executive Vice President of Worldwide Sales and Marketing of Amgen. The letter
agreement provides for a monthly salary of $54,167 and a $750,000 bonus which
was paid within 30 days of the start of Mr. Morrow's employment with Amgen. Mr.
Morrow has been guaranteed a minimum incentive payment of $750,000 for each of
2001 and 2002 under Amgen's Amended and Restated Management Incentive Plan.
Amgen will also pay Mr. Morrow a retention bonus of $200,000 on each of the
first five one-year anniversaries of the start of his employment with Amgen.
Amgen has also agreed to provide Mr. Morrow with certain non-qualified deferred
compensation benefits. See "--Executive Nonqualified Retirement Plan." In
addition, Amgen also agreed to maintain and pay the premiums on a term life
insurance policy in the amount of $15,000,000 for Mr. Morrow's benefit until
2006. Amgen also agreed to either assume responsibility for, or provide
alternative compensation with respect to, a split dollar life insurance policy
provided to Mr. Morrow by his former employer. In accordance with the terms of
the letter agreement and in connection with Mr. Morrow's relocation, Amgen made
a loan of $1,000,000 to Mr. Morrow. See "Certain Transactions."
Mr. Morrow was granted an option to purchase 200,000 shares of Amgen common
stock on January 19, 2001 with an exercise price of $60.00 per share. Amgen has
also agreed to grant to Mr. Morrow an option under the periodic stock option
program to purchase 150,000 shares of Amgen common stock in each of 2001 and
2002. Mr. Morrow must be actively employed by Amgen on the periodic stock
option program grant date in each year to receive the periodic stock option
program grant for that year. On June 15, 2001 and July 2, 2001, Amgen granted
to Mr. Morrow an option to purchase 50,000 shares and 100,000 shares of Amgen
common stock with an exercise price of $67.06 per share and $61.67 per share,
respectively.
If, within the first five years of his employment with Amgen, Mr. Morrow's
employment is terminated without cause, or he resigns from Amgen due to a
reduction of his duties or base salary or annual target incentive opportunity
under the Management Incentive Plan, Mr. Morrow will be entitled to receive
three years of base salary and target incentive paid monthly and health care
benefits, unless such health care benefits are obtained from another employer.
Mr. Morrow is also entitled to receive severance benefits under the Amgen Inc.
Change of Control Severance Plan in the event of a change of control of Amgen.
Dr. George Morstyn
Pursuant to a letter agreement, dated July 19, 2001, by and between Amgen
and Dr. George Morstyn, Dr. Morstyn resigned as Senior Vice President,
Development and Chief Medical Officer as of January 1, 2002. Under the terms of
the letter agreement, Dr. Morstyn will continue to be employed part-time by
Amgen as Special Advisor, Development until July 31, 2004, unless his
employment is terminated earlier by either himself or Amgen. The letter
agreement provides for a monthly salary of $32,260. Dr. Morstyn is not eligible
to participate in Amgen's Management Incentive Plan. If, prior to July 31,
2004, Dr. Morstyn's employment is terminated without cause, or he resigns from
Amgen due to a reduction of his duties, title or base salary or due to an
assignment of duties inconsistent with those set forth in the letter agreement,
Dr. Morstyn will be entitled to receive a lump sum payment of the remaining
payments due through July 31, 2004, and all outstanding and unvested stock
options will vest and immediately become exercisable. Under the terms of the
letter agreement, Dr. Morstyn will not be entitled to receive severance
benefits under the Amgen Inc. Change of Control Severance Plan in the event of
a change of control of Amgen.
IV-17
Executive Nonqualified Retirement Plan
The Amgen Inc. Executive Nonqualified Retirement Plan has been established
to provide supplemental retirement income benefits for a select group of
management and highly compensated employees through Amgen contributions.
Participants are selected by the Compensation Committee. Dr. Perlmutter and
Mr. Morrow are currently the only two participants in this plan.
Under the plan, if Dr. Perlmutter is actively employed by Amgen on September
16, 2007, Amgen will credit a deferred compensation account for his benefit
under the plan with $10,000,000. In the event that Dr. Perlmutter's employment
with Amgen is terminated without cause prior to September 16, 2007, Amgen will
pay to Dr. Perlmutter between January 2 and January 31 of the year following
the year in which his employment was terminated a prorated portion of the
$10,000,000. This prorated portion will be equal to the ratio of the number of
full months of Dr. Perlmutter's active employment with Amgen over 80 months;
provided, however, that if the termination of Dr. Perlmutter's employment
occurs within two years after a change of control of Amgen, Dr. Perlmutter will
receive the prorated portion described above, plus an amount equal to
$10,000,000 minus the sum of the prorated portion, and an amount equal to the
aggregate spread between the exercise prices of Dr. Perlmutter's unvested Amgen
common stock options which are in the money and the vesting of which is
accelerated by the change of control of Amgen and the Nasdaq National Market
closing price of Amgen common stock on the date of the change of control.
If the termination of Dr. Perlmutter's employment prior to September 16,
2007 is due to his permanent and total disability, Dr. Perlmutter will receive,
on the second anniversary of the date upon which he last completed one week of
active employment with Amgen, a pro rata portion of the $10,000,000 based upon
the ratio of the sum of the number of full months of his active employment with
Amgen plus 24 months, over 80 months.
If Dr. Perlmutter continues to be actively employed by Amgen until January
7, 2011, Amgen will credit interest on the deferred compensation account at a
rate equal to 125% of the 10-year moving average yield on 10-year U.S. Treasury
notes, adjusted and compounded annually, from September 16, 2007 until the date
upon which the deferred compensation account and accrued interest is
distributed to Dr. Perlmutter. If Dr. Perlmutter's employment is terminated for
any reason prior to January 7, 2011, Amgen will credit interest on the deferred
compensation account at a rate equal to 100% of the 10-year moving average
yield on 10-year U.S. Treasury notes, adjusted and compounded annually, from
September 16, 2006 until the date upon which the deferred compensation account
and accrued interest is distributed to Dr. Perlmutter.
Under the plan, if Mr. Morrow is actively employed by Amgen on January 19,
2006, Amgen will credit a deferred compensation account for his benefit under
the plan with $15,000,000. In the event that Mr. Morrow's employment with Amgen
is terminated without cause prior to January 19, 2006, Amgen will pay to Mr.
Morrow between January 2 and January 31 of the year following the year in which
his employment was terminated a prorated portion of the $15,000,000. This
prorated portion will be equal to the ratio of the number of full months of Mr.
Morrow's active employment with Amgen over 60 months; provided, however, that
if the termination of Mr. Morrow's employment occurs within two years after a
change of control of Amgen, Mr. Morrow will receive the prorated portion
described above, plus an amount equal to $15,000,000 minus the sum of the
prorated portion, and an amount equal to the aggregate spread between the
exercise prices of Mr. Morrow's unvested Amgen common stock options which are
in the money and the vesting of which is accelerated by the change of control
of Amgen and the Nasdaq National Market closing price of Amgen common stock on
the date of the change of control.
If the termination of Mr. Morrow's employment prior to January 19, 2006 is
due to his permanent and total disability, Mr. Morrow will receive, on the
second anniversary of the date upon which he last completed one week of active
employment with Amgen, a pro rata portion of the $15,000,000 based upon the
ratio of the sum of the number of full months of his active employment with
Amgen plus 24 months, over 80 months.
If Mr. Morrow continues to be actively employed with Amgen until January 19,
2011, Amgen will credit interest on the deferred compensation account at a rate
equal to 125% of the 10-year moving average yield on
IV-18
10-year U.S. Treasury notes, adjusted and compounded annually, from January 19,
2006 until the date upon which the deferred compensation account and accrued
interest is distributed to Mr. Morrow. If Mr. Morrow's employment is terminated
for any reason prior to January 19, 2011, Amgen will credit interest on the
deferred compensation account at a rate equal to 100% of the 10-year moving
average yield on 10-year U.S. Treasury notes, adjusted and compounded annually,
from January 19, 2006 until the date upon which the deferred compensation
account and accrued interest is distributed to Mr. Morrow.
Nonqualified Deferred Compensation Plan
The Amgen Inc. Nonqualified Deferred Compensation Plan has been established
to provide eligible participants with an opportunity to defer a portion of
their annual base salary and annual management incentive plan bonus and to earn
tax-deferred returns on the deferrals. Executive officers, vice presidents and
other key employees of Amgen selected by the Compensation Committee are
eligible to participate in the Nonqualified Deferred Compensation Plan. The
Nonqualified Deferred Compensation Plan is an unfunded plan. Participants may
defer up to 50% of their annual base salary and up to 100% of their annual
management incentive plan bonus, with a minimum deferral amount of $2,000. In
each year Amgen may, in its sole discretion, credit any amount it desires to
any participant's account under the Nonqualified Deferred Compensation Plan.
Amgen has not credited any discretionary amounts to participants' accounts.
The Compensation Committee selects measurement funds consisting of mutual
funds, insurance company funds, indexed rates or other methods for the purpose
of providing the basis on which gains and losses shall be attributed to account
balances under the plan. The Compensation Committee may, in its sole
discretion, discontinue, substitute, or add measurement funds at any time.
Participants are entitled to elect to have deferrals credited to one or more
measurement funds. Amgen will establish a "rabbi trust" to satisfy its
obligations under the plan. Payments from the plan may be made in a lump sum or
in annual installments for up to ten years at the election of the participant.
Compensation Committee Report/(3)/
The Amgen board of directors has delegated to the Compensation Committee of
the Amgen board of directors (the "Compensation Committee") the authority to
establish and maintain the Job Grade and Compensation Range Tables and Merit
Increase Guidelines used to establish initial salary guidelines and merit pay
increases throughout Amgen and as the basis for making specific recommendations
to the board of directors concerning the compensation of senior officers,
including the Chief Executive Officer. In addition, the Compensation Committee
administers the performance based Management Incentive Plan, Amgen's various
stock option plans (collectively, "Stock Option Plans"), the 401(k) Plan, the
Supplemental Retirement Plan, the Deferred Compensation Plan, the Amended and
Restated Employee Stock Purchase Plan and all other compensation and benefit
programs currently in place at Amgen. Compensation Committee members are all
non-employee directors.
The key components of the compensation program are base salary, annual
incentive award (Management Incentive Plan), and equity participation. These
components are administered with the goal of providing total compensation that
is competitive in the marketplace, recognizes meaningful differences in
individual performance and offers the opportunity to earn above average rewards
when merited by individual and corporate performance.
Base Salary
Base Salaries for all employees, including executive officers of Amgen, are
determined based on an established Job Grade and Compensation Range Table that
is designed to provide a Base Salary competitive with
--------
(3) The material in this report and in the performance graph is not soliciting
material, is not deemed filed with the SEC, and is not incorporated by
reference in any filing of Amgen under the Securities Act of 1933 or the
Securities Exchange Act of 1934, whether made before or after the date of
this joint proxy statement/prospectus and irrespective of any general
incorporation language in such filing.
IV-19
the marketplace. In monitoring the Executive Job Grade and Compensation Range
Table, the members of the Compensation Committee compared compensation
information derived from compensation surveys outlining compensation levels at
major pharmaceutical companies, the majority of which are included in the
Standard & Poor's Drug Index, and leading biotechnology companies./(4)/
Adjustments to each individual's Base Salary are made in connection with annual
performance reviews. The amounts of such increases are calculated using
compensation levels at comparable companies and the Merit Increase Guidelines
that provide for percentage salary increases based on the position in the
Compensation Range and the result of each individual's annual performance
review. The Merit Increase Guidelines are adjusted annually and reflect the
Compensation Committee's assessment of appropriate salary adjustments given the
results of competitive surveys and general economic conditions.
Performance Based Management Incentive Plan
The Management Incentive Plan has been established to reward participants
for their contributions to the achievement of company-wide and individual
performance goals. Executive officers, vice presidents and other key employees
of Amgen nominated by the Chief Executive Officer and approved by the
Compensation Committee, are eligible to participate in the Management Incentive
Plan. Management Incentive Plan payouts are established at a level designed so
that when such payouts are added to a participant's Base Salary, the resultant
compensation for above average performance should exceed the average cash
compensation level of comparable companies and the resultant compensation for
below average performance should be less than the average cash compensation
level of comparable companies.
At the beginning of each Management Incentive Plan period, the Chief
Executive Officer recommends for approval by the Compensation Committee the
individual participants and the target incentive award for each participant
expressed as a percentage of the base pay of the participant. The Compensation
Committee establishes a formula for determining the amount of incentive award a
participant may receive. Generally, a formula established by the Compensation
Committee reflects both company-wide goals and specific individual performance
goals for the Participant.
As implemented by the Compensation Committee in past years, each
participant's actual award under the Management Incentive Plan was based on
both the determination of the extent to which such participant's individual
goals were achieved (in terms of percent achievement, subject to a maximum
percentage established annually by the Compensation Committee, which may not
exceed 150%) and the Compensation Committee's determination of the extent to
which company-wide goals were achieved (in terms of percent achievement,
subject to a maximum percentage established by the Compensation Committee,
which may not exceed 150%). For the 2001 Management Incentive Plan year, the
formula established by the Compensation Committee to determine awards under the
Management Incentive Plan was as follows: the participant's target bonus
multiplied by the percent achievement of company-wide goals multiplied by the
percent achievement of the participant's individual goals. Pursuant to the
February 1999 amendment to the Management Incentive Plan, the maximum amount
payable under the Management Incentive Plan to any participant in any calendar
year may not exceed $1,800,000.
Company-wide goals for the Management Incentive Plan period ended December
31, 2001 included goals related to profit after taxes, growth in revenue,
product sales, specific product development objectives, a goal to identify and
initiate research and preclinical programs for appropriate product candidates
and a goal to promote the retention of key talent. The relative weightings of
these six factors in determining the extent to which company-wide goals were
achieved were 30%, 15%, 10%, 24%, 16% and 5%, respectively. For 2001, in order
to promote the diversity of Amgen's staff, company-wide goals provided for an
incentive equal to 5% of the
--------
(4) The Compensation Committee utilizes data and summaries provided by
independent consulting firms to determine comparable companies, including
major pharmaceutical and leading biotechnology companies, and their
compensation levels.
IV-20
maximum payable under company-wide goals if certain specified diversity
initiatives were accomplished. This goal was achieved and resulted in the
inclusion of this incentive in the 2001 Management Incentive Plan payout. Based
upon evaluations by management and approved by the Compensation Committee,
Amgen achieved 96% of the target company-wide goals established under the
Management Incentive Plan for the period ending December 31, 2001.
Stock Option Plans
The Stock Option Plans offered by Amgen have been established to provide all
employees with an opportunity to share, along with stockholders, in the
long-term performance of Amgen.
Periodic grants of stock options are generally made annually to all eligible
employees, with additional grants being made to certain employees upon
commencement of employment and occasionally, following a significant change in
job responsibility, scope or title or a particularly noteworthy achievement.
Stock options granted under the various stock option plans generally have a
three-, four- or five-year vesting schedule and generally expire seven years
from the date of grant. The exercise price of options granted under the stock
option plans is 100% of the fair market value of the underlying stock on the
date of grant. Guidelines for the number of stock options for each participant
in the periodic grant program generally are determined by a procedure
established by the Compensation Committee based upon several factors including
the salary grade midpoint, the performance of each participant and the
approximate market price of the stock at the time of grant. The size of the
grants, as developed under the procedure, are targeted to be somewhat above
competitive levels as a reflection of both the added incentive to continue the
favorable competitive performance of Amgen, as well as the risk attached to the
future growth of the biotech industry.
In June 2001, the Compensation Committee approved a special stock option
award to all eligible employees. These awards were intended to serve as a means
to retain valuable contributors to Amgen's long-term success. The options have
an exercise price equal to 100% of the fair market value of the underlying
stock on the grant date and contain a special vesting provision providing that
the options will vest on the earlier of (i) the date on which the closing price
of Amgen common stock equals or exceeds $100 per share and (ii) June 15, 2006.
CEO Compensation
Mr. Sharer's Base Salary, Management Incentive Plan payout and grants of
stock options were determined in accordance with the criteria described in the
"Base Salary," "Performance Based Management Incentive Plan" and "Stock Option
Plans" sections of this report. Mr. Sharer's Base Salary for 2001 of $933,333
reflects the board's assessment of his very favorable performance and his
position in the Grade and Range Table.
The Management Incentive Plan target for Mr. Sharer for the Management
Incentive Plan period ended December 31, 2001 was set at 100% of Base Salary.
The actual award under the Management Incentive Plan for the Management
Incentive Plan period ended December 31, 2001 was $860,533, or 92.2% of Base
Salary. Payments made to Mr. Sharer as a participant in the Management
Incentive Plan for the period ended December 31, 2001 reflect both Amgen's
level of achievement of company-wide goals and Mr. Sharer's level of
achievement of his individual performance objectives, which included goals
relating to: profit after taxes, growth in revenue, product sales, product
development, research and preclinical programs for appropriate product
candidates and a goal to promote the retention of key talent.
In June 2001 and July 2001, Mr. Sharer was granted a special option and a
periodic option, respectively, to purchase 150,000 and 300,000 shares of Amgen
common stock at 100% of fair market value on the date of grant, or $67.06 and
$61.67 per share, respectively. Both grants reflect the board's assessment of
the substantial contributions made by Mr. Sharer to the long-term growth and
performance of Amgen.
The Compensation Committee intends to design and administer its compensation
plans to support the achievement of Amgen's long-term strategic objectives, to
enhance stockholder value and to attract and retain
IV-21
highly qualified employees. To the extent consistent with these objectives, the
Compensation Committee intends to comply with Section 162(m) of the Internal
Revenue Code to achieve deductibility of compensation for tax purposes. Section
162(m) of the Internal Revenue Code places a one million dollar limit on the
amount of non-performance based compensation for each Named Executive Officer
that may be deducted by Amgen for tax purposes. The Compensation Committee has
been advised that based upon prior stockholder approval of the material terms
of the Management Incentive Plan and the Amended and Restated 1991 Equity
Incentive Plan and Section 162(m) transition rules, compensation under these
plans is excluded from this limitation provided that the other requirements of
Section 162(m) are met.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Franklin P. Johnson, Jr., Chairman
Jerry D. Choate
Frederick W. Gluck
Steven Lazarus
J. Paul Reason
Compensation Committee Interlocks and Insider Participation
During 2001, Amgen's Compensation Committee consisted of Messrs. Choate,
Gluck, Johnson and Lazarus and Adm. Reason, all of whom are non-employee
directors. No member of the Compensation Committee has a relationship that
would constitute an interlocking relationship with executive officers or
directors of another entity.
Audit Committee Report/(5)/
The Audit Committee has reviewed and discussed with management Amgen's
audited consolidated financial statements as of and for the year ended December
31, 2001.
The Audit Committee has also discussed with Ernst & Young LLP the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, by the Auditing Standards
Board of the American Institute of Certified Public Accountants.
The Audit Committee has received and reviewed the written disclosures and
the letter from Ernst & Young LLP required by Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees, as amended, and
has discussed with Ernst & Young LLP their independence.
Based on the reviews and discussions referred to above, the Audit Committee
has recommended to the Amgen board of directors that the audited consolidated
financial statements referred to above be included in Amgen Inc.'s Annual
Report on Form 10-K for the year ended December 31, 2001 filed with the SEC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
William K. Bowes, Jr., Chairman
Gilbert S. Omenn
Judith C. Pelham
--------
(5) The material in this report is not soliciting material, is not deemed filed
with the SEC, and is not incorporated by reference in any filing of Amgen
under the Securities Act of 1933 or the Securities Exchange Act of 1934,
whether made before or after the date of this joint proxy
statement/prospectus and irrespective of any general incorporation language
in such filing.
IV-22
Performance Measurement Comparison
The chart set forth below shows the value of an investment of $100 on
December 31, 1996 in each of Amgen common stock, the Amex Biotech Index (the
"Amex Biotech"), the Standard & Poor's Drug Index (the "S&P Drug") and the
Standard & Poor's 500 Index (the "S&P 500"). All values assume reinvestment of
the pre-tax value of dividends paid by companies included in these indices and
are calculated as of December 31 of each year. The historical stock price
performance of Amgen common stock shown in the performance graph below is not
necessarily indicative of future stock price performance.
Amgen Stock Price vs. Amex Biotech, S&P Drug, S&P 500 Indices
Comparison of Five Year Cumulative Total Return
Value of Investment of $100 on December 31, 1996
[CHART]
12/31/96 12/31/97 12/31/98 12/31/99 12/31/00 12/31/01
-------- -------- -------- -------- -------- --------
Amgen Inc. 100.00 99.54 192.30 441.85 470.35 415.18
Amex Biotech 100.00 112.56 128.30 271.27 439.59 402.36
S&P Drug 100.00 159.33 241.66 198.96 276.19 213.94
S&P 500 100.00 133.35 171.46 207.54 188.65 166.24
IV-23
CERTAIN TRANSACTIONS
Amgen has made loans to Drs. Bonanni and Perlmutter and Messrs. Brian M.
McNamee, Richard D. Nanula, and Morrow, all of whom are executive officers of
Amgen. Each of the loans to Drs. Bonanni and Perlmutter and Messrs. McNamee and
Morrow are evidenced by a full recourse promissory note secured by real estate
valued in excess of the principal balance of such loan. The loan to Mr. Nanula
is evidenced by a full recourse unsecured promissory note. The loans to Drs.
Bonanni and Perlmutter and Messrs. McNamee and Morrow were made in connection
with their respective relocations closer to Amgen. Amgen has made two loans to
Dr. Bonanni, each for $250,000, one of which provides that Amgen will forgive
20% of the loan principal on each anniversary of Dr. Bonanni's employment until
the loan is paid in full and interest payments will be reduced correspondingly.
Dr. Bonanni commenced employment with Amgen in April 1999. Amgen made a loan to
Dr. Perlmutter for $1,000,000 in January 2001, to Mr. McNamee for $500,000 in
May 2001, to Mr. Morrow for $1,000,000 in March 2001 and to Mr. Nanula for
$3,000,000 in May 2001. The annual interest rate on the loans to each officer
was 5.0% during the year ended December 31, 2001 and will be 4.0% for the year
ending December 31, 2002. These interest rates are established and adjusted
annually based on the average introduction rates on adjustable loans offered by
California banks and savings and loans. Including principal and accrued
interest, the largest aggregate indebtedness since January 1, 2001, under the
loans of Dr. Bonanni, Messrs. McNamee, Morrow and Nanula and Dr. Perlmutter
were $450,000, $500,000, $1,000,000, $3,070,412, and $1,000,000, respectively,
in 2001. The aggregate outstanding indebtedness at March 15, 2002 of each
of Dr. Bonanni, Messrs. McNamee, Morrow and Nanula and Dr. Perlmutter under
such loans was $400,000, $500,000, $1,000,000, $3,101,667 and $1,000,000,
respectively.
On March 2, 2001, Amgen signed a letter agreement with Dr. Joan Kreiss, the
wife of Dr. Perlmutter, Executive Vice President, Research, regarding possible
funding of research grants for certain scientific work conducted by Dr. Kreiss.
Under the terms of the letter agreement, if Dr. Kreiss relocates to Southern
California, Amgen will work with Dr. Kreiss and any new university with which
she affiliates to try to obtain fellowships or grants to replace those that Dr.
Kreiss is unable to transfer, if any. In addition, if replacement fellowships
or grants cannot be obtained from other sources, Amgen, as part of its general
scientific research mission or through its charitable contribution programs,
will work with Dr. Kreiss and the new university with which she affiliates to
fund any deficits or grants which are attributable to fellowships or grants
that she is not able to transfer, up to an amount not to exceed $1,250,000 per
year for a period of five years from the date that Dr. Kreiss assumes a new
position in Southern California. Amgen did not fund any amounts pursuant to
this agreement in 2001.
IV-24
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires Amgen's
executive officers and directors, and persons who own more than 10% of a
registered class of Amgen's equity securities ("Reporting Persons"), to file
reports of ownership and changes in ownership with the SEC and with the Nasdaq
National Market. Reporting Persons are required by SEC regulations to furnish
Amgen with copies of all forms they file pursuant to Section 16(a). Based
solely on its review of the copies of such reports received by it, and written
representations from certain Reporting Persons that no other reports were
required for those persons, Amgen believes that, during the year ended December
31, 2001, the Reporting Persons complied with all Section 16(a) filing
requirements applicable to them, except that one report covering one
transaction in 2001 was filed late by Mr. Franklin P. Johnson, Jr.
Fees Paid to the Independent Auditors
Audit Fees
The aggregate fees billed by Ernst & Young LLP for professional services
rendered for the audit of Amgen's annual consolidated financial statements for
the year ended December 31, 2001 and the reviews of the unaudited interim
financial statements included in Amgen's Forms 10-Q for the year ended December
31, 2001 ("Audit Services") were $910,000.
Financial Information Systems Design and Implementation Fees
Ernst & Young LLP did not perform any professional services with respect to
financial information systems design and implementation for the year ended
December 31, 2001 ("Technology Services").
All Other Fees
The aggregate fees billed by Ernst & Young LLP for professional services
other than Audit Services and Technology Services for the year ended December
31, 2001 were $3,619,000, including tax and audit related services of
$2,566,000 and $943,000, respectively. Audit related services principally
include fees for accounting consultations and statutory audits of Amgen's
foreign subsidiaries.
IV-25
CHAPTER FIVE--OTHER IMMUNEX ANNUAL MEETING PROPOSALS
PROPOSAL 2
ELECTION OF DIRECTORS
The shareholders will elect an Immunex board of directors consisting of nine
directors, each of whom will hold office for one year and until their successor
is elected and qualified to serve. However, if the merger is consummated, these
newly-elected directors will no longer be Immunex directors, although Mr.
Fritzky will serve as a director of Amgen. Although it is currently anticipated
that the merger could be completed as early as June 2002, after the approval of
the Immunex shareholders has been obtained at the Immunex annual meeting,
Immunex cannot guarantee that the merger will be consummated as anticipated.
Pursuant to the amended and restated governance agreement, Wyeth is entitled
to designate two directors, known as the Wyeth directors, who can be officers
or employees of Wyeth and one independent director for election to the Immunex
board of directors. While Wyeth has not yet designated a candidate to serve as
an independent director, it may do so at any time. For more information
regarding this topic, see "Relationship with Wyeth--Governance Agreement--
Designation of Candidates for the Immunex board of directors." Proxies may not
be voted for a greater number of persons than the number of nominees named.
The Immunex board of directors has approved the nominees named below, who
were designated in accordance with the governance agreement. Unless otherwise
instructed, persons named in the accompanying proxy will vote in favor of those
nominees. Although Immunex anticipates that all the nominees will be available
to serve as directors, should any of them not accept the nomination, or
otherwise be unable to serve, the proxies will be voted in favor of the
election of such substitute nominees in accordance with the governance
agreement.
The Immunex board of directors recommends that you vote "FOR" each of the
nominees listed below.
The following table sets forth the name and age of each nominee for election
as a director, the positions and offices held by the nominee with Immunex and
the period during which the nominee has served as a director of Immunex:
Name Age Positions and Offices With Immunex Director Since
---- --- ------------------------------------------ --------------
Edward V. Fritzky............ 51 Chief Executive Officer; President; 1994
Chairman of the Immunex board of directors
Kirby L. Cramer.............. 65 Director 1987
Robert J. Herbold............ 59 Director 2001
John E. Lyons................ 76 Director 1993
Joseph M. Mahady*............ 48 Director 1998
Edith W. Martin.............. 56 Director 1993
Peggy V. Phillips............ 48 Executive Vice President; Chief Operating 1996
Officer; Director
Lawrence V. Stein*........... 52 Director 2000
Douglas E. Williams.......... 44 Executive Vice President; Chief Technology 1996
Officer; Director
--------
* Designated for election by Wyeth.
EDWARD V. FRITZKY
Mr. Fritzky has been Chief Executive Officer and Chairman of the Immunex
board of directors since January 1994. In April 1999, Mr. Fritzky was named
President. Mr. Fritzky was President of Lederle Laboratories, a division of
American Cyanamid Company, from 1992 to 1994 and Vice President of Lederle
V-1
from 1989 to 1992. Prior to joining Lederle, Mr. Fritzky was an executive of
Searle Pharmaceuticals, Inc., a subsidiary of Monsanto Company. During his
tenure at Searle, Mr. Fritzky was Vice President, Marketing and later President
and General Manager of Searle Canada, Inc. and Lorex Pharmaceuticals, a joint
venture company. Mr. Fritzky also serves on the board of directors of Geron
Corporation and SonoSite, Inc. Mr. Fritzky received a B.A. from Duquesne
University and is a graduate of the Advanced Executive Program, J.L. Kellogg
Graduate School of Management at Northwestern University. Mr. Fritzky is the
Chair of the Immunex succession planning committee.
KIRBY L. CRAMER
Mr. Cramer has been a director since October 1987. Mr. Cramer is Chairman of
SonoSite, Inc. and Northwestern Trust and Investors Advisory Company and
Chairman Emeritus of Hazleton Laboratories Corporation. He also serves on the
board of directors of Array BioPharma Inc., DJ Orthopedics, LLC, Life Sciences
Research, Inc. (LSR), Landec Corporation, The Commerce Bank of Washington, and
Corus Pharma, Inc. Mr. Cramer is the Chair of the Immunex compensation
committee and stock option plan administration committee.
ROBERT J. HERBOLD
Mr. Herbold has been a director since March 2001. Mr. Herbold was Executive
Vice President and Chief Operating Officer of Microsoft Corporation from
November 1994 to February 2001. He is currently working part time for Microsoft
as Executive Vice President. Also, he is Managing Director of Herbold Group,
LLC, a consulting firm. Mr. Herbold was employed by The Procter & Gamble
Company from 1968 to November 1994, and served as Senior Vice President,
Advertising and Information Services from 1989 to 1994. He also serves on the
board of directors of Weyerhaeuser Company, Agilent Technologies Inc., World
Wide Packets Inc., Cintas Corporation, and Terabeam Corporation. Mr. Herbold is
the Chair of the Immunex audit committee.
JOHN E. LYONS
Mr. Lyons has been a director since June 1993. Mr. Lyons retired as Vice
Chairman of the Board of Merck & Company, Inc. in 1991. He joined Merck in 1950
as a Research Chemist and held a number of senior marketing and sales positions
in the Merck, Sharp & Dohme division of Merck, serving as its President from
1975 to 1985. He was named Corporate Senior Vice President of Merck in 1982,
Executive Vice President in 1985, and Vice Chairman of the Merck board of
directors in 1988. Mr. Lyons also serves on the board of directors of Synaptic
Pharmaceutical Company.
JOSEPH M. MAHADY
Mr. Mahady has been a director since February 1998. Mr. Mahady has held
various positions with Wyeth and Wyeth-Ayerst since 1979. He has been President
of Wyeth-Ayerst North America since September 1997. From August 1995 to October
1997, he was President of Wyeth-Ayerst Pharmaceutical Business Division, having
been named Senior Vice President in February 1995 and Vice President in October
1991. For a discussion of Wyeth's right to designate Mr. Mahady as a director,
see the section entitled "Relationship with Wyeth."
EDITH W. MARTIN
Dr. Martin has been a director since June 1993. Dr. Martin has been the
Chief Executive Officer of Advanced Global Technologies, Inc. since 1992 and
Chief Executive Officer of Mill Iron 4 Mill Iron Enterprises since 1994. From
March 1999 to March 2000, Dr. Martin was Vice President and Chief Information
Officer of Halliburton Company. Dr. Martin was Vice President and Chief
Information Officer of Eastman Kodak Company from January 1996 to December
1997. From September 1994 to February 1996, Dr. Martin was the Executive Vice
President and Chief Technology Officer of the Student Loan Marketing
Association, or Sallie Mae. From 1992 to September 1994, Dr. Martin was Vice
President and Chief Information Officer of the International Telecommunications
Satellite Organization, or INTELSAT. Prior to joining INTELSAT, Dr. Martin
V-2
was Vice President, High Technology Center, The Boeing Company. Dr. Martin also
serves on the board of directors of Heska Corporation.
PEGGY V. PHILLIPS
Ms. Phillips has been a director since July 1996. She joined Immunex in 1986
and was named Senior Vice President, Pharmaceutical Development in September
1994. In October 1999, Ms. Phillips was named Executive Vice President and
Chief Operating Officer. She was elected an executive officer of Immunex in
July 1995. From 1991 until its dissolution in January 1995, Ms. Phillips was
Senior Vice President and Chief Operating Officer of Immunex Research and
Development Corporation, a former wholly-owned research and development
subsidiary of Immunex. Ms. Phillips received an M.S. in microbiology from the
University of Idaho.
LAWRENCE V. STEIN
Mr. Stein has been a director since June 2000. Mr. Stein has been Senior
Vice President and Deputy General Counsel of Wyeth since June 2001. He was Vice
President and Deputy General Counsel of Wyeth from June 2000 to June 2001. He
was Senior Vice President and Chief Legal Counsel of Wyeth-Ayerst and Genetics
Institute, Inc. and Associate General Counsel of Wyeth from September 1997 to
June 2000. From November 1992 to August 1997, Mr. Stein was Senior Vice
President and General Counsel of Genetics Institute. For a discussion of
Wyeth's right to designate Mr. Stein as a director, see the section entitled
"Relationship with Wyeth." Mr. Stein is a co-Chair of the Immunex nominating
committee.
DOUGLAS E. WILLIAMS
Dr. Williams has been a director since April 1996. He joined Immunex in 1988
and was Vice President, Research and Development from 1992 until September
1994, when he was named Senior Vice President, Discovery Research. Dr. Williams
was named Executive Vice President and Chief Technology Officer in October
1999. He was elected an executive officer of Immunex in July 1995. Dr. Williams
also serves on the board of directors of Genesis Research and Development
Corporation Limited, Amnis Corporation, and Seattle Genetics. Dr. Williams
received a Ph.D. in physiology from the State University of New York at
Buffalo, Roswell Park Memorial Institute Division. Dr. Williams is a co-Chair
of the Immunex nominating committee.
Information on Committees of the Immunex Board of Directors and Meetings
During the last fiscal year there were nine meetings of the Immunex board of
directors. All incumbent directors attended at least 75% of the aggregate of
the total number of meetings of the Immunex board of directors and the total
number of meetings of all committees on which they served.
In accordance with the governance agreement, the Immunex board of directors
maintains an audit committee, a compensation committee, a nominating committee,
a stock option plan administration committee and a succession planning
committee.
The audit committee, currently composed of Messrs. Cramer, Herbold (Chair)
and Lyons and Dr. Martin is responsible, among other things, for recommending
the selection of certified public accountants to the Immunex board of
directors, reviewing the scope and results of the audits and reviewing for
Immunex its accounting policies and procedures, and system of internal
controls. During the past fiscal year, there were four audit committee
meetings. Each of these directors is independent, as defined by the National
Association of Securities Dealers, and meets the applicable requirements for
financial literacy and expertise.
The compensation committee, currently composed of Messrs. Cramer (Chair),
Herbold, Lyons and Stein, and Dr. Martin, is responsible for, among other
things, recommending to the Immunex board of directors the adoption and
amendment of employee benefit plans and arrangements and the engagement of, and
terms of any
V-3
employment agreements and arrangements with, and termination of, all corporate
executive officers. During the past fiscal year, there were three compensation
committee meetings. In addition, the compensation committee met jointly with
the stock option plan administration committee five times during the past
fiscal year.
The nominating committee, currently composed of Mr. Stein (co-Chair) and Dr.
Williams (co-Chair), is responsible for the nomination of directors and the
solicitation of shareholder proxies. Under the governance agreement,
designation of directors for nomination is to be made exclusively by Immunex
and Wyeth. During the past fiscal year, there was one nominating committee
meeting.
The stock option plan administration committee, currently composed of
Messrs. Cramer (Chair), Mahady and Stein, and Dr. Martin, is responsible, among
other things, for administering all of the Immunex stock option plans. During
the past fiscal year, there were four stock option plan administration
committee meetings. In addition, the stock option plan administration committee
met jointly with the compensation committee five times during the past fiscal
year.
The succession planning committee, currently composed of Messrs. Cramer,
Fritzky (Chair) and Stein, is responsible for planning for the succession of
officers and for aiding in the identification and development of qualified
candidates for successors to the current executive officers and holders of key
leadership positions throughout Immunex. During the past fiscal year, there was
one succession planning committee meeting.
Compensation of Directors
Each independent director receives $6,000 per quarter and, if the
independent director is a chairperson of a committee, an additional $1,000 per
quarter. In addition, each independent director receives $1,000 for each
Immunex board of directors meeting and each committee meeting attended in
person and $500 for each meeting attended telephonically. Directors designated
for election by the management of Immunex, known as management directors, and
Wyeth directors receive no additional compensation for attending Immunex board
of directors or committee meetings.
In 2001, each continuing independent director was entitled, under the
Immunex Stock Option Grant Program for Nonemployee Directors, to receive an
annual grant of an option to purchase 20,000 shares of Immunex common stock
immediately following the Immunex annual meeting of shareholders. All such
options vest at a rate of 20% per year over a five-year period. In February
2001, the Immunex board of directors suspended the Immunex Stock Option Grant
Program for Nonemployee Directors and adopted a Stock Option Grant Program for
Nonemployee Directors under the Immunex 1999 Stock Option Plan. Under this
program each independent director receives a one-time grant of an option to
purchase 30,000 shares of common stock on the day such director is initially
elected or appointed to the Immunex board of directors. Pursuant to the Stock
Option Grant Program for Nonemployee Directors under the Immunex 1999 Stock
Option Plan, Mr. Herbold received a one-time grant of an option to purchase
30,000 shares of common stock on the day of his initial appointment to the
Immunex board of directors.
V-4
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
On February 12, 2002, the Immunex board of directors unanimously approved
the recommendation of the Immunex audit committee that Ernst & Young LLP be
retained as independent auditors and selected and appointed Ernst & Young LLP
to serve as the independent auditors of Immunex for the year ending
December 31, 2002. The Immunex board of directors' selection and appointment is
subject to reconsideration by the Immunex board of directors in the event that
Immunex shareholders fail to ratify the selection of Ernst & Young LLP pursuant
to this Proposal 3. The Immunex board of directors believes that Ernst & Young
LLP, having been the auditor of Immunex since the company's inception, has the
advantage of a longstanding, constructive relationship with Immunex. Fees paid
to Ernst & Young LLP for the last fiscal year were: $224,000 for the annual
audit, $76,000 for audit related services, and $551,000 for all other non-audit
services.
If the shareholders fail to approve this Proposal 3, the Immunex board of
directors will reconsider whether or not to retain Ernst & Young LLP as the
company's independent auditors. Whether or not the selection of Ernst & Young
LLP is ratified, the Immunex board of directors in its discretion may retain
Ernst & Young LLP or direct the appointment of a different independent
accounting firm at any time during the year if the board of directors
determines that such action would be in the best interests of Immunex or its
shareholders.
A representative of Ernst & Young LLP is expected to be present at the
Immunex annual meeting, with the opportunity to make a statement, if the
representative so desires, and is expected to be available to respond to
appropriate questions from shareholders.
To ratify the Immunex board of directors'selection and appointment of Ernst
& Young LLP, certified public accountants, to serve as the independent auditors
of Immunex, the votes cast in favor of this proposal must exceed the votes cast
in opposition to this proposal.
The Immunex board of directors unanimously recommends that you vote "FOR"
ratification of its selection and appointment of Ernst & Young LLP, certified
public accountants, to serve as the independent auditors of Immunex for the
year ending December 31, 2002.
V-5
SHARE OWNERSHIP OF CERTAIN PERSONS
Principal Shareholders
The following table sets forth as of March 19, 2002, information regarding
all shareholders known by Immunex to be the beneficial owners of more than 5%
of outstanding voting securities of Immunex, based on publicly available
information.
Amount and Nature of Percent of
Name and Address of Beneficial Owner Title of Class Beneficial Ownership Class
------------------------------------ -------------- -------------------- ----------
Wyeth.............................. Common Stock 223,378,088(1) 41%
Five Giralda Farms
Madison, New Jersey 07940
Amgen Inc.......................... Common Stock 223,378,088(2) 41%
One Amgen Center Drive
Thousand Oaks, California 91320
--------
(1) In a filing on Schedule 13D/A, dated December 18, 2001, Wyeth reported
shared voting and shared dispositive power over all of the shares that it
beneficially owns.
(2) In a filing on Schedule 13D, dated December 21, 2001, Amgen Inc. reported
sole voting power with respect to certain matters and no dispositive power
over all the shares of Immunex common stock beneficially owned by Wyeth.
Amgen expressly disclaimed beneficial ownership of any of the shares of
Immunex stock which it has the power to vote. Amgen has the power to vote
these shares pursuant to the voting agreement that Amgen entered into with
Wyeth, MDP Holdings, Inc. and Lederle Parenterals, Inc., dated December 16,
2001, in connection with the merger.
V-6
Security Ownership of Management
The following table sets forth as of March 19, 2002, the number of
outstanding Immunex voting securities beneficially owned by (1) each director
and each director nominee, (2) each executive officer for whom compensation is
reported in this joint proxy statement/prospectus, and (3) all current
directors and executive officers as a group.
Amount and Nature of Percent of
Name of Beneficial Owner Title of Class Beneficial Ownership Class
------------------------ -------------- -------------------- ----------
Edward V. Fritzky...................................... Common Stock 3,257,964(1) *
Peggy V. Phillips...................................... Common Stock 1,397,045(2) *
Douglas E. Williams.................................... Common Stock 1,020,600(3) *
John E. Lyons.......................................... Common Stock 334,000(4) *
David A. Mann.......................................... Common Stock 395,280(5) *
Barry G. Pea........................................... Common Stock 254,684(6) *
Edith W. Martin........................................ Common Stock 118,000(7) *
Kirby L. Cramer........................................ Common Stock 109,000(8) *
Robert J. Herbold...................................... Common Stock 11,000(9) *
Joseph M. Mahady....................................... Common Stock -- --
Lawrence V. Stein...................................... Common Stock -- --
All current directors and executive officers as a group
(11 persons)......................................... Common Stock 6,897,573 1.3%
--------
* Less than 1% of the outstanding shares of common stock.
(1) Includes 3,001,000 shares that are issuable upon exercise of stock options
that are currently exercisable or are exercisable within 60 days.
(2) Includes 1,382,000 shares that are issuable upon exercise of stock options
that are currently exercisable or are exercisable within 60 days.
(3) Includes 1,020,600 shares that are issuable upon exercise of stock options
that are currently exercisable or are exercisable within 60 days.
(4) Includes 334,000 shares that are issuable upon exercise of stock options
that are currently exercisable or are exercisable within 60 days.
(5) Includes 395,280 shares that are issuable upon exercise of stock options
that are currently exercisable or are exercisable within 60 days.
(6) Includes 253,960 shares that are issuable upon exercise of stock options
that are currently exercisable or are exercisable within 60 days.
(7) Includes 106,000 shares that are issuable upon exercise of stock options
that are currently exercisable or are exercisable within 60 days.
(8) Includes 106,000 shares that are issuable upon exercise of stock options
that are currently exercisable or are exercisable within 60 days.
(9) Includes 10,000 shares that are issuable upon exercise of stock options
that are currently exercisable or are exercisable within 60 days.
V-7
RELATIONSHIP WITH WYETH
Background
In June 1993, Immunex merged with American Cyanamid Company's Lederle
Oncology business. In November 1994, Wyeth acquired all of the outstanding
shares of common stock of Cyanamid. Thus, Wyeth became the owner of Cyanamid's
then approximate 54% interest in Immunex common stock. Before Wyeth's purchase
of Cyanamid, Immunex entered into an agreement with Wyeth under which Wyeth
agreed to protect the rights of Immunex under its agreements with Cyanamid and
be bound by Cyanamid's obligations under these agreements. Wyeth or various
divisions or affiliates of Wyeth have assumed some of the rights and
obligations of Cyanamid under the agreements that Immunex entered into with
Cyanamid at or after the time of the 1993 merger, including various supply,
license and distribution agreements. In the following discussion, Wyeth refers
to Wyeth, or its various divisions or affiliates, including Cyanamid.
As of March 19, 2002, Wyeth beneficially owned approximately 41% of the
outstanding Immunex common stock.
Immunex and Wyeth are parties to numerous agreements that Wyeth assumed from
Cyanamid or that Immunex entered into directly with Wyeth. The agreements
summarized below, in particular the governance agreement and the product rights
agreement, establish the framework for the ongoing relationship between Immunex
and Wyeth. The summary is not complete and is qualified in its entirety by
reference to the governance agreement and the product rights agreement
themselves, which are filed as exhibits to various reports, proxy statements or
other information that Immunex has filed with the SEC. In addition, as noted
below, a number of these agreements will be modified (or, in some cases,
terminated) upon the effectiveness of the proposed merger with Amgen. Wyeth has
entered into certain agreements with Amgen that will take effect if and when
the merger is consummated. For a description of the agreement among Amgen,
Wyeth and American Cyanamid Company, see the section entitled "Other Agreements
with Wyeth--Agreement Regarding Governance and Commercial Matters" as well as
the sections below.
Governance Agreement
Overview
The governance agreement includes, among other matters, provisions relating
to:
. corporate governance, including the composition of the Immunex board of
directors;
. Wyeth's right to purchase additional shares of Immunex common stock from
Immunex if specified events occur;
. future purchases and sales of Immunex common stock by Wyeth;
. the requirement that members of the Immunex board of directors
designated by Wyeth approve specified corporate actions; and
. the requirement that a supermajority of the members of the Immunex board
of directors approve specified corporate actions.
In August 2000, Immunex and Wyeth amended some terms of the governance
agreement. The changes took effect in November 2000, after Wyeth's ownership
interest in Immunex common stock fell below 45%.
V-8
Designation of Candidates for the Immunex board of directors
The Immunex board of directors, following the annual meeting, will consist
of nine directors. Under the governance agreement and given Wyeth's current
percentage ownership of Immunex common stock, three directors are designated
for election by Immunex management, two are designated for election by Wyeth
and four independent directors are designated for election by agreement between
Immunex and Wyeth. Wyeth has the right to designate a fifth independent
director for election, but has not exercised this right.
During the term of the governance agreement, the number of directors that
Wyeth has the right to designate is determined by Wyeth's current percentage
ownership of Immunex common stock. If Wyeth beneficially owns:
. less than 20%, Wyeth will have no right to designate any directors;
. 20% or above but less than 35%, Wyeth will have the right to designate
one director;
. 35% or above but less than 45%, Wyeth will have the right to designate
two directors;
. 45% or above but less than 65%, Wyeth will have the right to designate
three directors; and
. 65% or above, Wyeth will have the right to designate four directors.
In each case, the governance agreement gives the management of Immunex the
right to designate at least three directors. In addition, if Wyeth beneficially
owns below 45%, there will be at least four independent directors.
In the event that changes to Wyeth's interest result in more Wyeth directors
on the Immunex board of directors than Wyeth has the right to designate, Wyeth
has agreed that it will promptly cause to resign, and take all other action
reasonably necessary to cause the prompt removal of, that number of Wyeth
directors as required to make the remaining number of Wyeth directors conform
with the terms of the governance agreement.
Wyeth and the management directors each have the right, with some
exceptions, to designate replacement directors for Wyeth or management
directors whose terms have ended or who have been removed from office upon
resignation, retirement, disqualification, death or other cause. The Immunex
board of directors will elect each person so designated upon nomination by the
Nominating Committee, which consists of an equal number of management directors
and Wyeth directors. No individual who is an officer, director, partner or
principal shareholder of any of the competitors of Immunex (other than Wyeth
and its affiliates) may be designated to serve as an Immunex director.
In any election of directors or any meeting of Immunex shareholders called
expressly for the removal of directors, Wyeth has agreed to vote its shares for
all nominees in proportion to the votes cast by other Immunex shareholders,
except that Wyeth and its affiliates may cast any or all of their votes, in
their sole discretion, (a) in favor of any nominee designated by Wyeth under
the governance agreement and (b) in connection with any election contest to
which Rule 14a-11 under the Securities Exchange Act of 1934 applies. With
limited exceptions, in all other matters submitted to a vote of Immunex
shareholders, Wyeth may vote any or all of its shares in its sole discretion.
Approval Rights
So long as Wyeth has the right to designate at least two of the directors of
Immunex, the approval of at least one director designated by Wyeth is required
for the Immunex board of directors to approve and authorize certain corporate
actions. Actions requiring this approval include:
. the entry by Immunex into any merger or consolidation or acquisition of
any business or assets that would constitute more than 10% of the fair
market value of the total assets of Immunex;
V-9
. the sale, lease, pledge, grant of a security interest in, license,
transfer or other disposal of more than 10% of the fair market value of
the total assets of Immunex;
. with specified exceptions, the issuance by Immunex of any debt or equity
securities or other capital stock;
. a reclassification, split, redemption or other acquisition of any
Immunex debt or equity securities;
. any amendment to the articles of incorporation or bylaws of Immunex or
any change in the size or composition of the Immunex board of directors
or a committee thereof, except in accordance with the governance
agreement;
. the establishment of any committee of the Immunex board of directors not
specifically described in the governance agreement;
. the institution by Immunex of any shareholder rights plan or similar
plan or device;
. the dissolution, adoption of a plan of liquidation or any action to
commence any bankruptcy or similar proceeding;
. the acquisition by Immunex of technology or products under any license
or similar arrangement unless the purchase price or the fair market
value of the technology or products is less than $15 million;
. the payment or discharge of any claim, liability or obligation other
than in the ordinary course of business by Immunex, except where such
claim, liability or obligation does not exceed a threshold of $15
million;
. the commencement or termination of any suit, litigation or proceeding
with respect to patent rights, and any other suit, litigation or
proceeding that involves a claim, liability or obligation in excess of
$15 million or that is material to the business or assets of Immunex; and
. any (a) incurrence of indebtedness for borrowed money other than as
provided for in the annual operating plans of Immunex or (b) capital
expenditure by Immunex that is greater than both (1) $15 million and (2)
the amount provided for such expenditure in the annual operating plans
of Immunex.
The approval of seven directors (or, if the Immunex board of directors
consists of more than nine persons, that number of directors that represents
70% of the total number of directors, rounded up) is required under the
governance agreement for Immunex board of directors' approval of:
. the employment of the Chief Executive Officer, Chief Operating Officer,
Chief Financial Officer and Chief Scientific Officer of Immunex;
. the annual operating plans of Immunex, which are required to include all
material capital expenditures and borrowing plans applicable to the year
in question;
. the five-year product development and facility plans of Immunex; and
. amendment of the governance agreement or provisions of the articles of
incorporation or bylaws of Immunex implementing the governance agreement
(this act also requires the approval of at least two independent
directors).
The approval of six directors, which six directors must include each of the
independent directors, is required to authorize and approve the termination of
any of the senior officers of Immunex listed above.
Subscription Rights of Wyeth
So long as Wyeth has the right to designate at least one Immunex director,
Immunex must offer Wyeth the right, in advance, to purchase a pro rata share of
any new securities Immunex proposes to issue. This right does not apply,
however, to securities issued upon exercise of outstanding options or warrants,
or to other issuances specified in the governance agreement.
V-10
So long as Wyeth has the right to designate at least one Immunex director,
Wyeth has the option to purchase from Immunex on a quarterly basis additional
shares of Immunex common stock or other voting stock to the extent necessary to
permit Wyeth to maintain its percentage ownership of Immunex common stock or
other voting stock, as the case may be, as of the immediately preceding
quarter. The per share price of the shares purchased pursuant to this right is
equal to the fair market value of the shares, as determined in accordance with
the governance agreement, on the date of Wyeth's purchase.
Transfer of Immunex Common Stock by Wyeth
Under the governance agreement, Wyeth is prohibited from transferring shares
of Immunex common stock except in an underwritten public offering, or as
permitted by the volume and manner of sale limitations of Rule 144 under the
Securities Act of 1933, or to a wholly-owned Wyeth subsidiary. Also, except in
an underwritten public offering, Wyeth may not transfer an amount in excess of
1% of the outstanding shares of Immunex common stock on any given day, nor may
any Wyeth transfer result in the creation of a 5% shareholder of Immunex common
stock.
Wyeth may, however, transfer all, but not less than all, of the shares of
Immunex common stock it beneficially owns to any other person other than an
affiliate of Wyeth, provided that the other person has offered to acquire all
of the outstanding shares of Immunex common stock on the same terms and
conditions as those offered to Wyeth. If Wyeth intends to transfer its shares
of Immunex common stock, Wyeth is required to notify Immunex of that intent
and, for three months after that notice, Immunex has the opportunity to present
to Wyeth a potential buyer willing to purchase all, but not less than all, of
the shares of Immunex common stock beneficially owned by Wyeth. In the event
that Immunex presents a potential buyer, Wyeth may not consummate a sale on
terms less favorable to Wyeth than those proposed by the potential buyer.
Material Transactions with Wyeth
Immunex may not enter into any contract, agreement or transaction with Wyeth
or any of its affiliates that is material to the business of Immunex, taken as
a whole, unless two-thirds of the members of the Immunex board of directors,
excluding Immunex directors designated by Wyeth and including at least two
independent directors, approve that contract, agreement or transaction.
Registration Rights
Under the governance agreement, a group of Immunex securities, all of which
are currently beneficially owned by Wyeth, are referred to as registrable
securities. The registrable securities include the securities issued to
Cyanamid as part of the 1993 merger and any securities issued pursuant to the
governance agreement. The holders of at least 25% of the registrable securities
may request that Immunex file a registration statement under the Securities Act
of 1933 covering the registration of any or all registrable securities held by
those holders. Immunex is not obligated to effect more than three of these
registrations. The governance agreement, however, does not limit the number of
short-form registrations on Form S-3 that may be requested and obtained if
Immunex is eligible to use Form S-3, as long as the estimated aggregate
offering price to the public exceeds $25 million and the other provisions of
the governance agreement are satisfied.
Subject to specified conditions, if Immunex proposes to file a registration
statement under the Securities Act of 1933 on any form (other than on Form S-4
or S-8) that also would permit the registration of registrable securities, and
the filing is for the general registration of shares of common stock for cash,
Immunex must give notice to the holders of the registrable securities and
permit those holders to include registrable securities in the registration.
Wyeth's registration rights are subject to conditions set forth in the
governance agreement. In addition, the governance agreement sets forth specific
procedures relating to those registration rights and detailed obligations
V-11
of the parties. All expenses incident to the performance by Immunex of its
obligations relating to the registration of Wyeth's shares of common stock will
be paid by Immunex, except that the holders exercising registration rights will
pay all expenses incident to the second or third long-form registration. In
addition, the holders of registrable securities will pay the underwriting
commissions and discounts applicable to securities offered for their account in
connection with any registrations, filings and qualifications made pursuant to
the governance agreement, as well as their related attorneys' fees. Immunex and
the holders of registrable securities each have agreed to indemnify the other,
in certain instances, for liabilities incurred in connection with the
registrations.
Termination
The governance agreement will terminate when Wyeth beneficially owns 95% of
all classes and series of Immunex common stock, or when Wyeth no longer owns
any Immunex common stock. Concurrently with the signing of the merger
agreement, Amgen and Wyeth entered into an agreement regarding governance and
commercial matters that will become effective upon the consummation of the
merger. Pursuant to this agreement regarding governance and commercial matters,
Wyeth has agreed to take all action reasonably requested by Amgen to terminate
the governance agreement as of the effective time of the merger. For a
description of this agreement regarding governance matters, see the section
entitled "Other Agreements with Wyeth--Agreement Regarding Governance and
Commercial Matters."
Product Rights Agreement
In July 1998, Immunex entered into a product rights agreement with Wyeth,
under which Immunex granted Wyeth an option to obtain royalty-bearing worldwide
exclusive licenses to a limited number of Immunex products for all clinical
indications. This option is referred to as a "product call." Under the product
rights agreement, Wyeth also owns a right of first refusal to Immunex covered
products and technologies that may only be exercised if the Immunex board of
directors decides that Immunex will not market a covered product or technology
by itself in any part of the world where it has or acquires marketing rights.
Wyeth 's right of first refusal, which is subject to specified negotiation
periods and establishment of mutually acceptable terms, applies to the Immunex
covered products and technologies in all fields, including, ABX-EGF, IL-1
Receptor Type 2 and TRAIL, but not including LEUKINE, IL-15 and several other
Immunex products. Immunex is not obligated to accept any offer for its covered
products and technologies under Wyeth's right of first refusal.
The product rights agreement provides Wyeth with a product call for up to
four of Immunex products over the period discussed below. The product rights
agreement also provides that Wyeth must exercise a product call within
specified time periods determined by a decision by Immunex to formally
designate the product as an investigational new drug, or IND, track product and
ending when the first positive Phase 2 clinical data for that product is
available, or Wyeth will lose the right to use a product call on that product.
Some of the products of Immunex are excluded from Wyeth's product calls,
including ENBREL, NUVANCE, LEUKINE, NOVANTRONE, IL-15, any product marketed by
Immunex on or before July 1, 1998, and several other products. Immunex is
currently within the time period during which Wyeth may exercise a product call
with respect to ABX-EGF, IL-1 Receptor Type 2 and TRAIL/APO2L. Immunex is
developing ABX-EGF in collaboration with Abgenix, Inc. and TRAIL/APO2L in
collaboration with Genentech, Inc. Wyeth's product call with respect to ABX-EGF
and TRAIL covers only the rights of Immunex to the product, and not the rights
of those that collaborate with Immunex.
If Wyeth exercises a product call for an Immunex product, Immunex will enter
into an elected product agreement with Wyeth granting Wyeth exclusive worldwide
rights (or if less than exclusive worldwide rights are held by Immunex, all of
the rights of Immunex) to this product for all indications. Under the elected
product agreement, Wyeth will pay Immunex an initial fee, milestone payments
and royalties on any future worldwide net sales of the product after regulatory
approvals. The initial fee, milestone payments and royalties are determined by
the development stage of the product when Wyeth exercises the product call. In
total, the initial fees and milestone payments range from $25 million if
Immunex has given the product IND status, up to
V-12
$70 million if Immunex has given notice to Wyeth that data from the first
positive Phase 2 clinical trial results are available for the product. The
royalties Wyeth pays to Immunex increase based on the development stage of the
product and based on the product attaining specified annual net sales
thresholds.
Under the product rights agreement, Immunex has the right to keep ownership
of up to two of its products for which Wyeth has exercised product calls,
referred to as a "conversion right," in exchange for a commitment from Immunex
to pay milestone payments and royalties to Wyeth and, in the case of the second
exercise of an Immunex conversion right only, an initial fee. The milestone
payments of Immunex to Wyeth are fixed at one-half the amount Wyeth would
otherwise pay Immunex for a product call, and the royalties of Immunex payable
to Wyeth are always fixed at the lowest of the four levels of royalties that
Wyeth would otherwise pay Immunex after exercising a product call. If Immunex
exercises one of its conversion rights for one of its products, which must be
exercised within 30 days after Wyeth exercises one of its product calls,
Immunex will enter into a converted product agreement with Wyeth for the
product that provides for Immunex to make payments to Wyeth as discussed above,
unless Wyeth has exercised its option to obtain a replacement product call, as
discussed below. Immunex cannot exercise its conversion rights on both of the
first two product calls Wyeth exercises. If Immunex exercises a conversion
right, Wyeth may within 30 days elect to obtain one replacement product call
from Immunex. Wyeth's right to elect a replacement call may be exercised only
one time. If Wyeth makes this election, Wyeth waives its right to receive any
applicable initial fee, milestone payments and royalties from Immunex on this
converted product. If either party exercises its rights under the product
rights agreement and acquires or retains rights to one of the products of
Immunex, the party that exercised these rights assumes independent development
responsibility for that product, including the payment of all costs for future
product development.
Wyeth's rights to exercise product calls under the product rights agreement
terminates upon the first to occur of the following events:
. Wyeth has exercised product calls and entered into elected product
agreements for four Immunex products, subject to the two conversion
rights of Immunex and Wyeth's replacement product call;
. June 30, 2008, with an additional year if Immunex exercises both of its
conversion rights; or
. the later of June 30, 2003, or the date following which Wyeth has
received a total of eight opportunities to exercise a product call for a
product for which Wyeth has requested and obtained specified product
information, except that this number increases to nine opportunities in
specified circumstances.
Wyeth's right of first refusal to Immunex covered products and technologies
terminates June 30, 2003. In connection with the proposed merger, Wyeth and
Amgen have entered into an agreement regarding governance and commercial
matters which relates to, among other things, Wyeth's rights under the product
rights agreement. Wyeth and Amgen have agreed that, upon the consummation of
the merger and in exchange for a specified payment to Wyeth by Amgen, Wyeth's
rights under the product rights agreement will be terminated.
The agreement regarding governance and commercial matters also provides,
among other things, that if Wyeth exercises a product call, replacement product
call or right of first refusal at any time before completion of the proposed
merger, and the merger is completed, Wyeth will rescind such exercise in
exchange for a refund by Amgen or Immunex of payments previously made by Wyeth
in connection with the product call, replacement product call or right of first
refusal. For a description of this agreement, see the section entitled "Other
Agreements with Wyeth--Agreement Regarding Governance and Commercial Matters."
TACE Agreements
In December 1995, Immunex entered into research and license agreements with
Wyeth relating to tumor necrosis factor alpha converting enzyme, or TACE.
Pursuant to these TACE agreements, Immunex granted Wyeth a worldwide exclusive
license under its intellectual property relating to TACE, and agreed to
collaborate
V-13
with Wyeth in developing TACE inhibitors, in consideration of specified fixed
payments for research services, and contingent additional payments that are
payable upon achieving specified research and clinical milestone events. In
September 1997, in conjunction with the promotion agreement for ENBREL
discussed below, Immunex and Wyeth amended one of the TACE agreements to
substantially increase the royalty payable by Wyeth to Immunex on the first
TACE molecule approved by the FDA, if any. Immunex recognized no revenue under
the TACE agreements in 2000 or 2001.
TNFR License and Development Agreement
In July 1996, Immunex entered into a TNFR license and development agreement
with Wyeth under which Immunex retained marketing rights to ENBREL in the
United States and Canada, and Wyeth retained marketing rights to ENBREL outside
of the United States and Canada. The TNFR agreement also addresses joint
project management, cost sharing for development activities related to ENBREL,
manufacturing responsibilities, intellectual property protection and
disposition of rights upon relinquishment or termination of product
development. Wyeth's share of development costs totaled $30.1 million during
2000 and $33.6 million in 2001.
Agreements Related to the Manufacturing of ENBREL
Under the TNFR agreement, Immunex agreed with Wyeth to negotiate the terms
of a supply agreement for the commercial supply of ENBREL to Wyeth outside the
United States and Canada. In November 1998, Immunex and Wyeth entered into an
ENBREL Supply Agreement with Boehringer Ingelheim Pharma KG, or BI Pharma, for
the commercial supply of ENBREL to Immunex in the United States and Canada, and
to Wyeth outside of the United States and Canada. The ENBREL supply agreement
was amended in June 2000 to offer BI Pharma financial incentives to provide
additional near-term production capacity for ENBREL, to facilitate process
improvements for ENBREL, and to extend the term of the agreement.
Immunex collaborated with Wyeth to retrofit a large-scale manufacturing
facility in Rhode Island intended for the production of ENBREL. Wyeth has
agreed to reimburse Immunex for technical assistance provided by personnel of
Immunex related to the facility. The amount Wyeth was required to reimburse
Immunex in 2001 totaled $9,446,000 and in 2000 totaled $5,324,000. In November
2001, Immunex entered into an agreement to acquire the Rhode Island
manufacturing facility from Wyeth effective January 1, 2002. As part of the
agreement, Immunex made a deposit towards the purchase price totaling
$192,778,000 in the fourth quarter of 2001. Immunex assumed ownership of the
facility in January 2002 and made an additional payment towards the purchase
totaling $279,892,000. On February 28, 2002, Immunex made a payment totaling
$27,133,000 for final costs incurred by Wyeth in December 2001.
In connection with the signing of the purchase agreement for the Rhode
Island manufacturing facility, Immunex and Wyeth entered into a collaboration
and global supply agreement related to the manufacture, supply, inventory, and
allocation of defined supplies of ENBREL produced at the Rhode Island
manufacturing facility, and a new Rhode Island manufacturing facility under
construction as well as particular supplies of ENBREL produced by either BI
Pharma in Germany or Wyeth at a manufacturing facility Wyeth is constructing in
Ireland. However, until the Rhode Island manufacturing facility receives
regulatory approval, the August 2000 agreement among Immunex and Wyeth will
continue to govern the allocation of supplies of ENBREL.
ENBREL Promotion Agreement
In 1997, Immunex entered into an ENBREL promotion agreement with Wyeth.
Under the terms of the ENBREL promotion agreement, ENBREL is being promoted in
the United States and Canada by the sales and marketing organization of Wyeth
Pharmaceuticals, a division of Wyeth. The agreement applies to all approved
indications other than oncology. Under the terms of the ENBREL promotion
agreement, Wyeth was obligated to pay Immunex up to $100 million in
nonrefundable scheduled payments for the United States and Canadian promotion
rights to ENBREL. Immunex has earned and received all of the scheduled payments.
V-14
Under the ENBREL promotion agreement, Wyeth has agreed to reimburse Immunex
for more than a majority of the clinical and regulatory expenses that Immunex
incurs in connection with the filing and approval of any new indications for
ENBREL in the United States and Canada, excluding oncology and rheumatoid
arthritis indications. Wyeth's reimbursement of these clinical and regulatory
expenses under the ENBREL promotion agreement is in addition to the existing
cost-sharing arrangement between the parties for development costs related to
ENBREL as provided in the TNFR agreement. The additional Wyeth reimbursement
for clinical and regulatory expenses under the ENBREL promotion agreement, a
portion of which is payable upon regulatory filing of any new indication and
the remainder of which is payable upon regulatory approval of any new
indication, if any, applies for that part of the United States and Canadian
clinical and regulatory expenses for ENBREL for which Immunex is otherwise
financially responsible under the cost-sharing provisions in the TNFR
agreement. Wyeth has also agreed to reimburse Immunex under the ENBREL
promotion agreement for less than a majority of specified patent expenses
related to ENBREL, including any up-front license fees and milestones, as well
as patent litigation and interference expenses. In addition, Wyeth agreed to
pay a majority of the marketing and distribution expenses and sales force costs
for ENBREL incurred prior to and during the two years following commercial
launch of ENBREL in the United States and Canada. In November 2000, Immunex
began sharing equally Wyeth's United States marketing and selling expenses for
ENBREL. Similarly, beginning with the third year following commercial launch of
ENBREL in Canada, Immunex will share equally Wyeth's Canadian marketing and
selling expenses for ENBREL.
ENBREL was approved for use in Canada in December 2000 and became
commercially available in Canada in March 2001. As part of the ENBREL promotion
agreement, Wyeth acts as a selling agent for Immunex in Canada. Sales of ENBREL
to Wyeth for sale in Canada are recorded as product is shipped to customers and
totaled $7,603,000 in 2001.
Under the ENBREL promotion agreement, Immunex may elect at any time to
supplement Wyeth's detailing and promotion of ENBREL in the United States or
Canada with its own sales force to detail ENBREL for any approved indications
promoted by Wyeth. Detailing means visiting and communicating with physicians
by sales representatives to increase physician prescribing preferences for the
detailed product. Immunex will share its sales force costs with Wyeth on an
equal basis. In February 2002, the sales force of Immunex began detailing
ENBREL in the United States for both its rheumatoid and psoriatic arthritis
indications.
The ENBREL promotion agreement also addresses:
. formation of a joint ENBREL management committee;
. payment to Wyeth of a certain percentage of any gross profits of ENBREL
in the United States and Canada;
. retained rights of Immunex to promote ENBREL in the United States and
Canada for any approved oncology indications;
. allocation of certain intellectual property expenses;
. certain protections for Immunex in the event Wyeth markets a product in
the United States and Canada that is directly competitive with ENBREL;
and
. payment of certain residual royalties to Wyeth in the three years
following completion of Wyeth's activities under the ENBREL promotion
agreement.
In connection with the proposed merger, Wyeth and Amgen have entered into an
amended and restated promotion agreement related to the promotion of ENBREL in
the United States and Canada. If the merger is
V-15
completed and Immunex becomes a wholly-owned subsidiary of Amgen, the amended
and restated agreement would take effect, and Amgen has agreed that it would
cause Immunex to sign the agreement. For a description of the amended and
restated promotion agreement, see the section entitled "Other Agreements with
Wyeth--Amended and Restated Promotion Agreement."
Beneficial Ownership of Wyeth Stock
Certain directors of Immunex beneficially own outstanding voting securities
of Wyeth. As of March 19, 2002, Mr. Mahady beneficially owned 177,312(1) shares
of Wyeth voting securities and Mr. Stein beneficially owned 134,074(2) shares
of Wyeth voting securities.
--------
(1) Includes 170,898 that are issuable upon exercise of stock options that are
currently exercisable or are exercisable within 60 days of March 19, 2002.
Mr. Mahady is President of Wyeth-Ayerst North America, an affiliate of
Wyeth. Immunex and each of the Immunex employees and directors disclaims
beneficial ownership of the shares of common stock of Wyeth beneficially
owned by Mr. Mahady.
(2) Includes 127,331 shares that are issuable upon exercise of stock options
that are currently exercisable or are exercisable within 60 days of March
19, 2002. Mr. Stein is Senior Vice President and Deputy General Counsel of
Wyeth. Immunex and each of the Immunex employees and directors disclaims
beneficial ownership of the shares of common stock of Wyeth beneficially
owned by Mr. Stein.
V-16
EXECUTIVE OFFICERS
The following persons are executive officers of Immunex who will serve in
the capacities noted until the election and qualification of their successors.
Each officer named below is expected to be reelected at the Immunex board of
directors meeting to be held on May 16, 2002.
Officer
Name Age Positions and Offices With Immunex Since
---- --- ------------------------------------------------------------ -------
Edward V. Fritzky.. 51 Chief Executive Officer; President 1994
Peggy V. Phillips.. 48 Executive Vice President; Chief Operating Officer 1995
Douglas E. Williams 43 Executive Vice President; Chief Technology Officer 1995
David A. Mann...... 43 Executive Vice President; Chief Financial Officer; Treasurer 1999
Barry G. Pea....... 44 Executive Vice President; General Counsel; Secretary 2000
The biographical summaries of Mr. Fritzky, Ms. Phillips and Dr. Williams are
provided above in the section entitled "Election of Directors."
Mr. Mann joined Immunex in 1995 as Vice President and Controller, a position
he served in until April 1999. From April 1999 to October 1999, he was Interim
Chief Financial Officer and Vice President. Mr. Mann was named Treasurer in
July 1999 and Senior Vice President and Chief Financial Officer in October
1999. He was named Executive Vice President in January 2001. From 1986 to 1995,
he was Controller of Fred Hutchinson Cancer Research Center and from 1982 to
1984, he was an auditor at KPMG Peat Marwick. Mr. Mann received a B.A. in
accounting from Western Washington University and an M.B.A. from the University
of Washington. Mr. Mann is a Certified Public Accountant in Washington.
Mr. Pea joined Immunex in 1996 as Associate General Counsel. He served as
Vice President and Deputy General Counsel from 1998 to June 2000. In June 2000,
Mr. Pea was named Senior Vice President, General Counsel and Secretary. In
January 2002, Mr. Pea was named Executive Vice President. From 1989 to 1996,
Mr. Pea served in various legal positions at Glaxo Wellcome Inc. and Burroughs
Wellcome Co. He received a B.A. with high honors from Wheaton College and a
J.D. with honors from Duke University School of Law.
V-17
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth compensation information as to (1) the Chief
Executive Officer of Immunex and (2) the four other most highly compensated
executive officers of Immunex for services rendered in all capacities during
the fiscal years ended December 31, 1999, 2000 and 2001. Where applicable, this
information is adjusted to reflect the 2-for-1 splits of Immunex common stock
effected March 25, 1999 and August 26, 1999 and the 3-for-1 split of Immunex
common stock effected March 20, 2000.
Long-Term
Compensation
- ------------
Shares
Annual Compensation Underlying All Other
------------------------ Options Compensation
Name and Principal Position Year Salary($) Bonus($) Awards(#) ($) (1)
--------------------------- ---- --------- --------- ------------ ------------
Edward V. Fritzky.................. 2001 825,000 1,577,813 600,000 119,111
Chief Executive Officer; 2000 680,016 1,445,000 337,500 69,195
President 1999 567,000 595,350 540,000 52,870
Peggy V. Phillips.................. 2001 436,800 737,100 127,500 44,000
Executive Vice President; 2000 407,004 393,750 180,000 50,934
Chief Operating Officer 1999 329,185 548,438 240,000 34,902
Douglas E. Williams................ 2001 368,040 414,045 112,500 33,848
Executive Vice President; 2000 340,800 266,233 112,500 33,399
Chief Technology Officer 1999 252,432 283,982 240,000 24,090
David A. Mann...................... 2001 330,000 371,250 112,500 31,365
Executive Vice President 2000 260,016 257,813 75,000 21,054
Chief Financial Officer; Treasurer 1999 177,821 190,350 249,600 6,767
Barry G. Pea....................... 2001 300,000 337,500 112,500 24,776
Executive Vice President; 2000 240,198 257,813 60,500 12,919
General Counsel; Secretary 1999 186,666 93,555 140,400 8,664
--------
(1) Consists of matching contributions to a 401(k) savings plan of $113,500,
$41,528, $31,714, $29,391, and $23,188, payment of excess life insurance
premiums of $1,403, $245, $257, $291, and $58, and payment of long-term
disability premiums of $4,208, $2,228, $1,877, $1,683, and $1,530, for Mr.
Fritzky, Ms. Phillips, Dr. Williams, Mr. Mann and Mr. Pea, respectively, in
2001. All dollar amounts are rounded to the nearest whole dollar.
V-18
Option Grants in Fiscal 2001
The following table sets forth information regarding options granted during
the fiscal year ended December 31, 2001 to the Chief Executive Officer of
Immunex and the other executive officers of Immunex for whom compensation is
reported in this joint proxy statement/prospectus.
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term(3)
-------------------------- ---------------------------
Number of
Securities Percent of Total
Underlying Options Granted
Options to Employees Exercise Price Expiration
Name Granted(#) in Fiscal Year ($/Share)(1) Date(2) 5%($) 10%($)
---- ---------- ---------------- -------------- ---------- --------- ----------
Edward V. Fritzky............ 400,000 6% 30.125 2/7/11 7,578,180 19,204,597
200,000 3% 14.830 4/20/11 1,865,301 4,727,040
Peggy V. Phillips............ 85,000 1% 30.125 2/7/11 1,610,363 4,080,977
42,500 1% 14.830 4/20/11 396,377 1,004,496
Douglas E. Williams.......... 75,000 1% 30.125 2/7/11 1,420,909 3,600,862
37,500 1% 14.830 4/20/11 349,744 886,320
David A. Mann................ 75,000 1% 30.125 2/7/11 1,420,909 3,600,862
37,500 1% 14.830 4/20/11 349,744 886,320
Barry G. Pea................. 75,000 1% 30.125 2/7/11 1,420,909 3,600,862
37,500 1% 14.830 4/20/11 349,744 886,320
--------
(1) The exercise price of the options is equal to the fair market value of the
underlying Immunex common stock on the date of grant.
(2) All options granted in 2001 terminate 10 years from the date of grant.
(3) Future value of current year grants assuming appreciation of 5% and 10% per
year over the 10-year option period. The actual value realized may be
greater or less than the potential realizable values set forth in the table.
Option Exercises in Fiscal 2001 and Year-End Values
The following table sets forth information for the fiscal year ended
December 31, 2001 regarding options exercised during 2001 by, and held at year
end by, the Chief Executive Officer of Immunex and the other officers of
Immunex for whom compensation is reported in this joint proxy
statement/prospectus.
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Shares at Fiscal Year-End (#) at Fiscal Year-End ($)
Acquired on Value ------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
Edward V. Fritzky............ -- -- 2,541,500 1,506,000 $61,626,248 $15,165,802
Peggy V. Phillips............ -- -- 1,185,000 619,500 27,296,901 7,558,729
Douglas E. Williams.......... -- -- 839,100 490,500 19,886,715 6,215,477
David A. Mann................ -- -- 260,520 401,940 5,104,690 4,461,319
Barry G. Pea................. -- -- 176,980 314,740 3,958,839 3,455,849
Compensation Committee Interlocks and Insider Participation
The Immunex Compensation Committee is currently composed of Messrs. Cramer,
Herbold, Lyons and Stein and Dr. Martin. Mr. Stein is a Vice President of
Wyeth. For details on the relationship Immunex has with Wyeth, see
"Relationship with Wyeth," as well as "Other Agreements with Wyeth."
V-19
Report on Executive Compensation by the Immunex Compensation Committee and the
Stock Option Plan Administration Committee
The compensation policy of Immunex as established by the Immunex board of
directors is intended to provide competitive compensation to all employees,
giving consideration to the relative contribution and performance of each
employee on an individual basis. It is the policy of Immunex to compensate
Immunex executive officers by taking into consideration industry norms,
primarily in the form of base salary, together with incentive bonuses. In
addition, it is the policy of Immunex to grant stock options to each of the
Immunex executive officers to align their interests with shareholder value. The
biotechnology industry is extremely competitive with respect to recruitment and
retention of qualified executives; accordingly, Immunex uses independently
published surveys of biotechnology industry compensation levels to ensure that
its compensation practices are comparable to other biotechnology companies.
Determining the compensation of Immunex executive officers is the
responsibility of the Immunex board of directors, through its compensation
committee, which has overall responsibility for Immunex compensation policies
for senior management. The Immunex stock option plan administration committee
is responsible for administering Immunex stock option plans. The Immunex
compensation committee makes recommendations to the Immunex board of directors
as to the salaries of, and incentive bonuses awarded to, the Chief Executive
Officer and other executive officers of Immunex. The stock option plan
administration committee determines the number and terms of options granted to
the Immunex chief executive officer, other Immunex executive officers and
current Immunex employees.
Executive compensation consists of three major components: base salary,
annual incentive bonus and stock options. The compensation committee has a
regular meeting each December (delayed until January this year) to determine
the annual salary component of executive compensation to be paid in the
following calendar year. At this meeting, the amount of cash incentive bonus
compensation to be awarded to executives for performance in the current year,
which can be higher or lower than the bonus incentive target, is also
determined.
The determination of the base salaries of the chief executive officer and
other executive officers of Immunex is based on annual surveys of similar
positions at other biotechnology companies, together with assessments of
individual performance and the achievement by Immunex of predetermined
operating goals that are established annually by the Immunex board of directors
(the goals for 2001 are described below). Relative weights are assigned to the
factors used to determine base salaries for individual executives. Assessments
of individual performance include objective standards and subjective
evaluations of the value of individual executives to Immunex. The surveys
employed include some, but not all, of the companies in the Nasdaq
Pharmaceutical Index, one of the indices Immunex uses in the performance graph
that appears below. In determining the salaries paid to Immunex executives in
2001, the Immunex compensation committee made reference to compensation survey
data from various public and proprietary sources. In the case of Mr. Fritzky,
the Immunex compensation committee established a base salary of $825,000 for
2001, which represented a base salary half-way between the 50th and 75th
percentile for chief executive officers. The Immunex compensation committee
established 2001 base salaries for other Immunex executive officers,
implementing increases from 4% to 20% of the previous year's salary that
reflect a combination of merit increase and market adjustment.
From time to time, the Immunex compensation committee considers survey data
in establishing new annual bonus incentive targets for Immunex executive
officers, including annual bonus information provided for executive officers by
a representative group of selected biotechnology companies, as well as from
proprietary sources obtained by an external compensation consultant. The annual
bonus incentive targets most recently approved by the compensation committee
for Immunex executive officers represented approximately the 50/th/ percentile
from these sources. The Immunex compensation committee believes that annual
bonus incentive awards for Immunex executive officers should be driven by
overall Immunex achievements. Objectives are established at the beginning of
each year and approved by the Immunex board of directors. On an annual basis,
V-20
the Immunex compensation committee conducts an assessment of the overall
performance of Immunex as measured against Immunex objectives for the
applicable year, and at that time the Immunex compensation committee determines
the maximum percentage of the annual bonus incentive targets payable to
executive officers. The annual bonus targets can be increased by the Immunex
compensation committee if Immunex has exceeded its objectives for the year or
decreased if Immunex has failed to meet its objectives for the year. An annual
bonus award can also be modified upward (up to 200% of the annual bonus
incentive target) or downward (to 0%) by the Immunex compensation committee,
depending on the strength of the individual executive officer's performance.
At its December 2000 meeting, the Immunex compensation committee approved
new year 2001 annual bonus incentive targets for Immunex executive officers.
The chief executive officer, Mr. Fritzky, has an annual incentive target of 85%
of base salary. In addition, the other officers for whom compensation is
reported in this joint proxy statement/prospectus were given an annual
incentive target of 75% of base salary or 50% of base salary. Although based on
the annual incentive target percentages, actual incentive bonuses are subject
to modification based on the overall performance of Immunex, whether Immunex
has met its objectives for the year, and based on the individual executive
officer's performance.
Subsequently, at its January 7, 2002 meeting, the Immunex compensation
committee determined that incentive payments for Mr. Fritzky and the other
executive officers for whom compensation is reported in this joint proxy
statement/prospectus, in respect of the performance of Immunex for 2001, be
equal to 125% of the annual incentive target amount for which each officer was
eligible (i.e., 125% of 85% of base salary for Mr. Fritzky, 125% of 75% for Ms.
Phillips, 125% of 50% for Mr. Mann, Mr. Pea and Dr. Williams). The Immunex
compensation committee's decision took into account the overall achievement of
Immunex against established 2001 objectives, which had been assigned relative
weights by the Immunex board of directors. Substantially all of the 2001
objectives previously established by the Immunex board of directors had been
met or exceeded, including: achievement of budgeted goals for revenue growth
and improvement in Immunex net operating results; achievement of clinical trial
program goals for ENBREL in psoriatic arthritis; implementation of ENBREL
enrollment program; accomplishment of certain manufacturing improvements and
goals relating to ENBREL; initiation of a phase 1 clinical trial program of
IL-1 receptor type 2 in rheumatoid arthritis to assess tolerability; with
Abgenix, initiation of a series of Phase 2 clinical trials to evaluate
tolerability and efficacy of ABX-EGF for the treatment of several types of
cancers; and formulation of a strategic, long-term plan to expand the
biopharmaceutical manufacturing capabilities of Immunex. To qualify
compensation for deductibility for federal income tax purposes, it is the
policy of Immunex to meet the requirements for exclusion from the limit on
deduction imposed by Section 162(m) of the Internal Revenue Code, by paying
performance-based compensation if possible and, with respect to cases in which
it is not possible to meet the requirements for exclusion from Section 162(m)
of the Internal Revenue Code, Immunex intends to minimize any award of
compensation in excess of the limit.
In addition, the Immunex compensation committee elected to increase the
target annual bonus award of Mr. Fritzky and maintain or increase the annual
bonus award of the other executive officers discussed above based on the
strength of their individual performance in 2001. In the case of Mr. Fritzky as
Chief Executive Officer, the Immunex compensation committee increased his
annual bonus award to 180% of 85% of his base salary based on his very strong
individual performance in 2001. Thus, when both adjustments to Mr. Fritzky's
annual bonus award are combined (i.e., 125% of 85% of base salary for Immunex
overall performance against 2001 objectives, and 180% of 85% of his base salary
based on his 2001 individual performance), Mr. Fritzky received 225% (125%
multiplied by 180%) of 85% of his 2001 base salary of $825,000, which amounted
to an annual bonus award of $1,577,812.50.
Options to purchase shares of Immunex stock were granted to the officers
named in this report, as well as other employees, during 2001. The option grant
was undertaken pursuant to the Immunex long-term incentive performance award
program, initially implemented in 1993, wherein employees are eligible to
receive a grant of stock options dependent on individual performance and
position held. Under this program in 2001, Mr. Fritzky
V-21
received a grant to purchase 600,000 shares of stock; other executive officers
named in this joint proxy statement/prospectus received grants to purchase
between 112,500 and 127,500 shares.
Immunex Compensation Committee
Kirby L. Cramer
Robert J. Herbold
John E. Lyons
Edith W. Martin
Lawrence V. Stein
Stock Option Plan Administration Committee
Kirby L. Cramer
Joseph M. Mahady
Edith W. Martin
Lawrence V. Stein
V-22
Stock Performance Graph
Comparison of Cumulative Total Return (1)
Among Immunex, S&P 500 Index and Nasdaq Pharmaceutical Index (2)
[CHART]
Pharmaceuticals/2/ S&P 500 Immunex
----------------- ------- --------
12/31/1996 100.00 100.00 100.00
12/31/1997 148.48 133.35 276.92
12/31/1998 216.91 171.46 645.19
12/31/1999 97.53 207.54 2,246.15
12/31/2000 124.46 188.65 2,500.31
12/31/2001 106.06 166.24 1,705.23
--------
(1) Assumes $100 invested at the close of trading on December 31, 1996 in
Immunex common stock, in the S&P 500 Index and in the Nasdaq Pharmaceutical
Index.
(2) Nasdaq Pharmaceuticals: All companies listed on Nasdaq with SIC codes in
the 283 "Drugs" main category. (2833-Medicinals & Botanicals, 2834 -
Pharmaceutical Preparations, 2835 - Diagnostic Substances, 2836 -
Biological Products).
NOTE: Stock price performance shown above for Immunex common stock is
historical and not necessarily indicative of future price performance.
V-23
OTHER MATTERS
Report of the Audit Committee
The audit committee of the Immunex board of directors is responsible for
general oversight of Immunex in its financial accounting and reporting process,
system of internal control, the audit process, and process for monitoring
compliance with laws and regulations. The management of Immunex has primary
responsibility for preparing the Immunex financial statements and for the
financial reporting process. Independent auditors of Immunex, Ernst & Young
LLP, are responsible for expressing an opinion on the conformity of the audited
financial statements of Immunex with accounting principles generally accepted
in the United States.
In this context, the audit committee hereby reports as follows:
. The audit committee reviewed and discussed the audited financial
statements with management, including a discussion of the quality, not
just the acceptability, of the accounting principles, the reasonableness
of significant judgments, and the clarity of disclosures in the
financial statements.
. The audit committee reviewed with the independent auditors, their
judgments as to the quality, not just the acceptability, of the
accounting principles of Immunex and such other matters as are required
to be discussed with the audit committee under generally accepted
auditing standards and SAS 61 (Codification of Statements on Auditing
Standard, AU 380).
. The audit committee received the written disclosures and the letter from
the independent auditors required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standards No. 1,
Independence Discussions with Audit Committees) and has discussed with
the independent auditors the auditors' independence from management and
from Immunex. The audit committee considered the compatibility of
non-audit services with the auditors' independence.
. The audit committee discussed with the independent auditors of Immunex
the overall scope and plans for their respective audits. The audit
committee met with the independent auditors, with and without management
present, to discuss the results of their examinations in the independent
auditors' annual report on the internal controls of Immunex and the
responses of management to the report, and the overall quality of the
financial reporting of Immunex.
. Based on the review and discussion referred to above, the audit
committee recommended to the Immunex board of directors, and the Immunex
board of directors has approved, that the audited financial statements
be included in the Immunex Annual Report on Form 10-K for the fiscal
year ended December 31, 2001 for filing with the Securities and Exchange
Commission.
. The audit committee has provided means for direct access to the audit
committee by Immunex personnel or personnel of the independent auditors.
. The audit committee reports that it has direct access to the corporate
compliance function of Immunex including discussions of the scope of
their responsibilities and activities and the results of their findings.
. The audit committee recommends the selection and appointment of Ernst &
Young LLP, certified public accountants, to serve as the independent
auditors of Immunex for the year ending December 31, 2002.
Each of the members of the audit committee is independent as defined under
the listing standards of the National Association of Securities Dealers.
Audit Committee
Kirby L. Cramer
Robert J. Herbold
John E. Lyons
Edith W. Martin
V-24
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Immunex officers, directors and persons who own more than 10% of a registered
class of Immunex equity securities to file reports of ownership and changes in
ownership with the SEC. Officers, directors and greater-than-10% shareholders
are required by SEC regulation to furnish us with copies of all Section 16(a)
forms they file. Based solely on the review conducted by Immunex of the copies
of forms Immunex received, or written representations from certain reporting
persons that no forms were required for those persons, Immunex believes that
during 2001 all filing requirements required by Section 16(a) applicable to the
officers, directors and greater-than-10% beneficial owners of Immunex were
complied with.
V-25
CHAPTER SIX--ADDITIONAL INFORMATION
LEGAL MATTERS
The legality of Amgen common stock offered by this joint proxy
statement/prospectus will be passed upon for Amgen by its counsel, Latham &
Watkins. Certain United States federal income tax consequences of the merger
will be passed upon for Amgen by Latham & Watkins and for Immunex by Skadden,
Arps, Slate, Meagher & Flom LLP. Certain attorneys of Latham & Watkins and
their families own beneficial interests in less than 0.1% of the outstanding
shares of Amgen common stock and an attorney of Latham & Watkins receives
certain contractual payments based on certain geographic product sales.
EXPERTS
The consolidated financial statements and schedule of Amgen Inc. appearing
in Amgen's Annual Report (Form 10-K) for the year ended December 31, 2001, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
consolidated financial statements and schedule are incorporated herein by
reference in reliance upon such report given on the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements and schedule of Immunex Corporation
appearing in the Immunex Annual Report (Form 10-K) for the year ended December
31, 2001, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements and schedule are incorporated
herein by reference in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
Representatives of Ernst & Young LLP, independent auditors, are expected to
be present at the Amgen annual meeting and the Immunex annual meeting, where
they will have the opportunity to make a statement if they desire to do so and
are expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934,
stockholders may present proper proposals for inclusion in Amgen's proxy
statement and for consideration at Amgen's next annual meeting of stockholders.
To be eligible for inclusion in Amgen's 2003 proxy statement, your proposal
must be received by Amgen no later than November 26, 2002 and must otherwise
comply with Rule 14a-8 under the Securities Exchange Act of 1934. In addition,
the bylaws contain an advance notice provision with respect to matters to be
brought at an annual meeting of stockholders, and not included in Amgen's proxy
statement. Further, if you would like to nominate a director or bring any other
business before the stockholders at the 2003 annual meeting, you must comply
with the procedures contained in the bylaws and you must notify Amgen in
writing and such notice must be delivered to or received by the Secretary no
later than February 14, 2003. While the board will consider stockholder
proposals, Amgen reserves the right to omit from Amgen's 2003 proxy statement
stockholder proposals that it is not required to include under the Securities
Exchange Act of 1934, including Rule 14a-8 of the Securities Exchange Act of
1934.
You may write to the Secretary of Amgen at Amgen's principal executive
office, One Amgen Center Drive, Thousand Oaks, California 91320-1799, Mail Stop
27-4-A, to deliver the notices discussed above and for a copy of the relevant
bylaw provisions regarding the requirements for making stockholder proposals
and nominating director candidates.
VI-1
Immunex will hold an annual meeting in the year 2003 only if the merger has
not already been completed. If such a meeting is held, shareholders' proposals
will be eligible for consideration for inclusion in the proxy statement for the
2003 annual meeting in accordance with Rule 14a-8 under the Securities Exchange
Act of 1934 if such proposals are received by Immunex before the close of
business on November 26, 2002. Shareholders that intend to present a proposal
that will not be included in the proxy statement for the 2003 annual meeting
must give notice of the proposal to Immunex no fewer than 60 nor more than 90
days prior to the date of the 2003 annual meeting. Even if Immunex receives a
proposal from a shareholder in a timely manner, it will not guarantee that the
proposal will be included in the proxy statement or that it will be presented
at the 2003 annual meeting because other requirements exist under the
Securities Exchange Act of 1934.
You may write to the Secretary of Immunex at the following address: Immunex
Corporation, 51 University Street, Seattle, Washington 98101-2936, Attn:
Corporate Secretary.
WHERE YOU CAN FIND MORE INFORMATION
Amgen and Immunex file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy these
reports, statements or other information filed by either Amgen or Immunex at
the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. The SEC filings of Amgen and Immunex are also available
to the public from commercial document retrieval services and at the Web site
maintained by the SEC at http://www.sec.gov.
Amgen has filed a registration statement on Form S-4 to register with the
SEC the Amgen common stock to be issued to Immunex shareholders in the merger.
This joint proxy statement/prospectus is a part of that registration statement
and constitutes a proxy statement and a prospectus of Amgen, in addition to
being a proxy statement of Immunex for the Immunex annual meeting. The
registration statement, including the attached exhibits and schedules, contains
additional relevant information about Amgen and Immunex and Amgen common stock.
As allowed by SEC rules, this joint proxy statement/prospectus does not contain
all the information you can find in the registration statement or the exhibits
to the registration statement.
The SEC allows Amgen and Immunex to "incorporate by reference" information
into this joint proxy statement/prospectus. This means that Amgen and Immunex
can disclose important information to you by referring you to another document
filed separately with the SEC. The information incorporated by reference is
considered to be a part of this joint proxy statement/prospectus, except for
any information that is superseded by information that is included directly in
this joint proxy statement/prospectus or incorporated by reference subsequent
to the date of this joint proxy statement/prospectus.
This joint proxy statement/prospectus incorporates by reference the
documents listed below that Amgen and Immunex have previously filed with the
SEC. They contain important information about Amgen and Immunex and their
financial condition. The following documents, which were filed by Amgen with
the SEC, are incorporated by reference into this joint proxy
statement/prospectus:
. annual report of Amgen on Form 10-K for the fiscal year ended December
31, 2001, filed with the SEC on February 26, 2002;
. current report of Amgen on Form 8-K dated February 21, 2002, filed with
the SEC on March 1, 2002; and
. the description of Amgen's preferred share purchase rights, contained in
the Forms 8-K filed with the SEC on February 28, 1997 and December 18,
2000, and any amendment or report filed with the SEC for the purpose of
updating the description.
VI-2
The following documents, which were filed by Immunex with the SEC, are
incorporated by reference into this joint proxy statement/prospectus:
. annual report of Immunex on Form 10-K for the fiscal year ended December
31, 2001, filed with the SEC on March 8, 2002;
. current report of Immunex on Form 8-K dated January 1, 2002, filed with
the SEC on January 18, 2002;
. current report of Immunex on Form 8-K/A dated January 1, 2002, filed
with the SEC on March 8, 2002; and
. the description of the common stock of Immunex contained in its
registration statement on Form 8-A/A filed with the SEC on August 1,
1993, and any amendment or report filed with the SEC for the purpose of
updating the description.
In addition, Amgen and Immunex incorporate by reference additional documents
that either may file with the SEC pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 between the date of this joint
proxy statement/prospectus and the dates of the Amgen annual meeting and the
Immunex annual meeting, respectively. These documents include periodic reports,
such as annual reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K, as well as proxy statements.
Amgen and Immunex also incorporate by reference the following additional
documents:
. the amended and restated agreement and plan of merger attached to this
joint proxy statement/prospectus as Annex A;
. the shareholder voting agreement attached to this joint proxy
statement/prospectus as Annex B;
. the stockholders' rights agreement attached to this joint proxy
statement/prospectus as Annex C;
. the amended and restated promotion agreement, which was filed as an
exhibit to the registration statement of which this joint proxy
statement/prospectus is a part; and
. the agreement regarding governance and commercial matters, which was
filed as an exhibit to the registration statement of which this joint
proxy statement/prospectus is a part.
Amgen has supplied all information contained or incorporated by reference
into this joint proxy statement/prospectus relating to Amgen, and Immunex has
supplied all the information relating to Immunex.
You can obtain any of the documents incorporated by reference into this
joint proxy statement/prospectus through Amgen or Immunex, as the case may be,
or from the SEC through the SEC's Internet Web site at the address described
above. Documents incorporated by reference are available from Amgen and Immunex
without charge, excluding any exhibits to those documents, unless the exhibit
is specifically incorporated by reference as an exhibit in this joint proxy
statement/prospectus.
Amgen stockholders and Immunex shareholders may request a copy of
information incorporated by reference into this joint proxy
statement/prospectus by contacting the investor relations department for each
of Amgen and Immunex at:
Amgen Inc. Immunex Corporation
Mail stop 27-5-C 51 University Street
One Amgen Center Drive Seattle, Washington 98101-2936
Thousand Oaks, California (206) 389-4363
91320-1799 Attn: Investor Relations
(800) 842-6436
Attn: Investor Relations
In addition, you may obtain copies of the information relating to Amgen,
without charge, by sending an e-mail to investor.relations@Amgen.com.
Furthermore, you may obtain copies of some of this information by making a
request through the Amgen investor relations Web site,
http://www.Amgen.com/investor/litRequest.html.
VI-3
In addition, you may obtain copies of the information relating to Immunex,
without charge, by sending an e-mailto ImmunexIR@immunex.com. Furthermore, you
may obtain copies of some of this information by making a request through the
Immunex investor relations Web site, http://www.Immunex.com/investor_fs2.html.
In order for you to receive timely delivery of the documents in advance of
the Amgen and Immunex annual meetings, Amgen or Immunex, respectively, should
receive your request no later than May 9, 2002.
We have not authorized anyone to give any information or make any
representation about the merger or our companies that is different from, or in
addition to, that contained in this joint proxy statement/prospectus or in any
of the materials that we have incorporated into this joint proxy
statement/prospectus. Therefore, if anyone does give you information of this
sort, you should not rely on it. If you are in a jurisdiction where offers to
exchange or sell, or solicitations of offers to exchange or purchase, the
securities offered by this joint proxy statement/prospectus or the solicitation
of proxies is unlawful, or if you are a person to whom it is unlawful to direct
these types of activities, then the offer presented in this joint proxy
statement/prospectus does not extend to you. The information contained in this
joint proxy statement/prospectus is accurate only as of the date of this
document unless the information specifically indicates that another date
applies.
VI-4
ANNEX A
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AMGEN INC.,
AMS ACQUISITION INC.
AND
IMMUNEX CORPORATION
Dated as of December 16, 2001
TABLE OF CONTENTS
ARTICLE 1. The Merger................................................................. A-1
Section 1.1 The Merger.......................................................... A-1
Section 1.2 Closing............................................................. A-1
Section 1.3 Effect of the Merger................................................ A-1
Section 1.4 Articles of Incorporation; Bylaws................................... A-2
Section 1.5 Directors and Officers of the Surviving Corporation................. A-2
Section 1.6 Directors of Parent................................................. A-2
ARTICLE 2. Conversion of Securities; Exchange of Certificates........................ A-2
Section 2.1 Conversion of Securities............................................ A-2
Section 2.2 Exchange of Certificates............................................ A-3
Section 2.3 Stock Transfer Books................................................ A-6
Section 2.4 Stock Options....................................................... A-6
Section 2.5 Employee Stock Purchase Plan........................................ A-6
Section 2.6 Employment Agreement................................................ A-7
Section 2.7 AHP Agreements...................................................... A-7
Section 2.8 Role of Seattle and Rhode Island Following the Merger............... A-7
ARTICLE 3. Representations and Warranties of the Company.............................. A-7
Section 3.1 Organization and Qualification; Subsidiaries........................ A-7
Section 3.2 Articles of Incorporation and Bylaws; Corporate Books and Records... A-8
Section 3.3 Capitalization...................................................... A-8
Section 3.4 Authority........................................................... A-9
Section 3.5 No Conflict; Required Filings and Consents.......................... A-9
Section 3.6 Permits; Compliance With Law........................................ A-10
Section 3.7 SEC Filings; Financial Statements................................... A-10
Section 3.8 Absence of Certain Changes or Events................................ A-11
Section 3.9 Employee Benefit Plans.............................................. A-11
Section 3.10 Labor and Other Employment Matters.................................. A-13
Section 3.11 Tax Treatment....................................................... A-13
Section 3.12 Contracts........................................................... A-14
Section 3.13 Litigation.......................................................... A-14
Section 3.14 Environmental Matters............................................... A-14
Section 3.15 Intellectual Property............................................... A-15
Section 3.16 Taxes............................................................... A-15
Section 3.17 Insurance........................................................... A-16
Section 3.18 Properties.......................................................... A-16
Section 3.19 Regulatory Compliance............................................... A-16
Section 3.20 Opinion of Financial Advisor........................................ A-17
Section 3.21 Vote Required....................................................... A-17
Section 3.22 Brokers............................................................. A-17
ARTICLE 4. Representations and Warranties of Parent and Merger Sub.................... A-17
Section 4.1 Organization and Qualification; Subsidiaries........................ A-17
Section 4.2 Certificate of Incorporation and Bylaws; Corporate Books and Records A-18
Section 4.3 Capitalization...................................................... A-18
Section 4.4 Authority Relative to This Agreement................................ A-19
Section 4.5 No Conflict; Required Filings and Consents.......................... A-19
Section 4.6 Permits; Compliance With Law........................................ A-20
Section 4.7 SEC Filings; Financial Statements................................... A-20
Section 4.8 Absence of Certain Changes or Events................................ A-20
A-i
Section 4.9 Litigation................................................... A-21
Section 4.10 Environmental Matters........................................ A-21
Section 4.11 Intellectual Property........................................ A-21
Section 4.12 Regulatory Compliance........................................ A-21
Section 4.13 Tax Treatment................................................ A-21
Section 4.14 Ownership of Merger Sub; No Prior Activities................. A-22
Section 4.15 Opinion of Financial Advisor................................. A-22
Section 4.16 Vote Required................................................ A-22
Section 4.17 Brokers...................................................... A-22
Section 4.18 Sufficient Funds............................................. A-22
ARTICLE 5. Covenants........................................................... A-22
Section 5.1 Conduct of Business by the Company Pending the Closing....... A-22
Section 5.2 Conduct of Business by Parent Pending the Closing............ A-25
Section 5.3 Cooperation.................................................. A-25
Section 5.4 Tax-Free Reorganization Treatment............................ A-26
Section 5.5 Control of Other Party's Business............................ A-26
ARTICLE 6. Additional Agreements............................................... A-26
Section 6.1 Registration Statement; Proxy Statement...................... A-26
Section 6.2 Shareholders' Meetings....................................... A-27
Section 6.3 Access to Information; Confidentiality....................... A-28
Section 6.4 No Solicitation of Transactions.............................. A-28
Section 6.5 Appropriate Action; Consents; Filings........................ A-30
Section 6.6 Certain Notices.............................................. A-31
Section 6.7 Public Announcements......................................... A-32
Section 6.8 Nasdaq Listing............................................... A-32
Section 6.9 Employee Benefit Matters..................................... A-32
Section 6.10 Indemnification of Directors and Officers.................... A-32
Section 6.11 Plan of Reorganization....................................... A-33
Section 6.12 Affiliate Letters............................................ A-33
Section 6.13 Section 16 Matters........................................... A-33
Section 6.14 Stock Award Matters.......................................... A-34
Section 6.15 Restructure of Transaction................................... A-34
ARTICLE 7. Closing Conditions.................................................. A-34
Section 7.1 Conditions to Obligations of Each Party Under This Agreement. A-34
Section 7.2 Additional Conditions to Obligations of Parent and Merger Sub A-35
Section 7.3 Additional Conditions to Obligations of the Company.......... A-36
ARTICLE 8. Termination, Amendment and Waiver................................... A-36
Section 8.1 Termination.................................................. A-36
Section 8.2 Effect of Termination........................................ A-37
Section 8.3 Amendment.................................................... A-38
Section 8.4 Waiver....................................................... A-39
Section 8.5 Fees and Expenses............................................ A-39
ARTICLE 9. General Provisions.................................................. A-39
Section 9.1 Non-Survival of Representations and Warranties............... A-39
Section 9.2 Notices...................................................... A-39
Section 9.3 Certain Definitions.......................................... A-40
Section 9.4 Terms Defined Elsewhere...................................... A-45
Section 9.5 Headings..................................................... A-47
Section 9.6 Severability................................................. A-47
A-ii
Section 9.7 Entire Agreement............................................... A-47
Section 9.8 Assignment..................................................... A-47
Section 9.9 Parties in Interest............................................ A-47
Section 9.10 Mutual Drafting................................................ A-47
Section 9.11 Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury A-47
Section 9.12 Specific Performance........................................... A-48
Section 9.13 Disclosure..................................................... A-48
Section 9.14 Counterparts................................................... A-48
Exhibit 6.12 Form of Affiliate Letter
Exhibit 7.2(c)(i) Parent Tax Matters Certificate
Exhibit 7.2(c)(ii) Company Tax Matters Certificate
A-iii
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of December 16,
2001 (this "Agreement"), by and among Amgen Inc., a Delaware corporation
("Parent"), AMS Acquisition Inc., a Washington corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), and Immunex Corporation, a Washington
corporation (the "Company").
WHEREAS, Parent, Merger Sub and the Company entered into an Agreement and
Plan of Merger dated as of December 16, 2001 (the "Original Agreement")
providing for the merger of Merger Sub with and into the Company, with the
Company surviving the merger as a wholly-owned subsidiary of Parent;
WHEREAS, Parent and the Company wish to amend and restate the Original
Agreement in its entirety to clarify the treatment of purchase rights under the
Immunex Corporation 1999 Employee Stock Purchase Plan, as amended from time to
time (the "ESPP"), and to provide for the assumption of the Company Stock
Option Plans and the ESPP by Parent;
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved the merger of Merger Sub with and into the Company (the
"Merger") upon the terms and subject to the conditions of this Agreement and in
accordance with the Business Corporation Act of the State of Washington (the
"WBCA");
WHEREAS, the respective Boards of Directors of Parent and the Company have
determined that the Merger is in furtherance of and consistent with their
respective business strategies and is in the best interest of their respective
shareholders, and Parent has approved this Agreement and the Merger as the sole
shareholder of Merger Sub;
WHEREAS, as a condition to and inducement to Parent's and Merger Sub's
willingness to enter into this Agreement, simultaneously with the execution of
this Agreement, American Home Products Corporation, a Delaware corporation and
shareholder of the Company ("AHP"), is entering into a Shareholder Voting
Agreement with Parent and Merger Sub (the "Voting Agreement");
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, certain capitalized terms used herein are defined in Section 9.3;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE 1.
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to satisfaction or
waiver of the conditions set forth in this Agreement, and in accordance with
the WBCA, at the Effective Time, Merger Sub shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the surviving corporation of
the Merger (the "Surviving Corporation").
Section 1.2 Closing. The closing of the Merger (the "Closing") shall take
place on the first Business Day after the satisfaction or waiver (subject to
applicable Law) of the conditions (excluding conditions that, by their nature,
cannot be satisfied until the Closing Date) set forth in Article 7, unless this
Agreement has been theretofore terminated pursuant to its terms or unless
another time or date is agreed to in writing by the parties hereto (the actual
date of the Closing being referred to herein as the "Closing Date"). The
Closing shall be held at the offices of Latham & Watkins, 633 West Fifth
Street, Suite 4000, Los Angeles, California 90071, unless another place is
agreed to in writing by the parties hereto. As soon as practicable after the
Closing Date, the parties hereto shall cause the Merger to be consummated by
filing articles of merger relating to the Merger (the "Articles of Merger")
with the Secretary of State of the State of Washington, in such form as
required by, and executed in accordance with the relevant provisions of, the
WBCA (the date and time of such filing, or if another date and time is
specified in such filing, such specified date and time, being the "Effective
Time").
Section 1.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the WBCA.
Without limiting the generality of the foregoing, at the Effective Time,
A-1
except as otherwise provided herein, all the property, rights, privileges,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger
Sub shall become the debts, liabilities and duties of the Surviving Corporation.
Section 1.4 Articles of Incorporation; Bylaws.
(a) Articles of Incorporation. At the Effective Time, the Articles of
Incorporation of the Surviving Corporation shall be amended in their entirety
to read as the Articles of Incorporation of Merger Sub, until thereafter
changed or amended as provided therein or by applicable Law, except that
Article I thereof shall be amended to read as follows: "The name of the
Corporation is Immunex Corporation." Such Articles shall not be inconsistent
with Section 6.10.
(b) Bylaws. At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation, until thereafter changed or amended as provided therein or by
applicable Law. Such Bylaws shall not be inconsistent with Section 6.10.
Section 1.5 Directors and Officers of the Surviving Corporation. The
directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation. The officers of Merger Sub immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, each to hold office
in accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation.
Section 1.6 Directors of Parent. At or prior to the Effective Time, the
Board of Directors of Parent shall take all action necessary so that, effective
immediately following the Effective Time, Edward V. Fritzky shall be appointed
to the Board of Directors of Parent. If at the Effective Time Parent has
multiple classes of directors, Parent shall take all action reasonably
necessary, subject to applicable Law, to appoint Mr. Fritzky to the class of
directors with the longest remaining term as of the Effective Time, provided,
that Parent shall not be required to request that an incumbent director of
Parent switch classes.
ARTICLE 2.
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
Section 2.1 Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the following securities:
(a) Conversion Generally. Each share of common stock, par value $0.01 per
share, of the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time (other than any shares of Company
Common Stock to be canceled pursuant to Section 2.1(b) and dissenting shares
referred to in Section 2.1(e)) shall be converted, subject to Section 2.2(e),
into the right to receive (i) 0.440 (the "Exchange Ratio") of a share of common
stock, par value $0.0001 per share ("Parent Common Stock"), of Parent (the
"Common Stock Consideration") and (ii) $4.50 in cash (the "Cash Consideration,"
and together with the Common Stock Consideration, the "Merger Consideration").
All such shares of Company Common Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
certificate previously representing any such shares shall thereafter represent
the right to receive the Merger Consideration payable in respect of such shares
of Company Common Stock.
(b) Parent-Owned Shares. All shares of Company Common Stock owned by Parent
or any of its Subsidiaries shall be cancelled and retired and shall cease to
exist and no Merger Consideration or other consideration shall be delivered in
exchange therefor.
A-2
(c) Merger Sub. Each share of common stock of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
be exchanged for one newly and validly issued, fully paid and nonassessable
share of common stock of the Surviving Corporation.
(d) Change in Shares. If, between the date of this Agreement and the
Effective Time, the outstanding shares of Parent Common Stock or Company Common
Stock shall have been changed into, or exchanged for, a different number of
shares or a different class, by reason of any stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of shares,
the Exchange Ratio and the Option Exchange Ratio shall be correspondingly
adjusted to provide the holders of Company Common Stock and Company Options the
same economic effect as contemplated by this Agreement prior to such event.
(e) Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, with respect to each share of Company Common Stock as to which the
holder thereof shall have properly complied with the provisions of Chapter
23B.13 of the WBCA as to dissenters' rights (each, a "Dissenting Share"), if
any, such holder shall be entitled to payment, solely from the Surviving
Corporation, of the appraisal value of the Dissenting Shares to the extent
permitted by and in accordance with the provisions of Chapter 23B.13 of the
WBCA; provided, however, that (i) if any holder of Dissenting Shares, under the
circumstances permitted by and in accordance with the WBCA, affirmatively
withdraws such holder's demand for appraisal of such Dissenting Shares, (ii) if
any holder of Dissenting Shares fails to establish such holder's entitlement to
dissenters' rights as provided in the WBCA or (iii) if any holder of Dissenting
Shares takes or fails to take any action the consequence of which is that such
holder is not entitled to payment for such holder's shares under the WBCA, such
holder or holders (as the case may be) shall forfeit the right to appraisal of
such shares of Company Common Stock and such shares of Company Common Stock
shall thereupon be deemed to have been converted, as of the Effective Time,
into and represent the right to receive the Merger Consideration payable in
respect of such shares of Company Common Stock. The Company shall give Parent
prompt notice of any demands received by the Company for appraisal of shares of
Company Common Stock, and Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. The Company shall
not settle, make any payments with respect to, or offer to settle, any claim
with respect to Dissenting Shares without the written consent of Parent.
(f) Associated Rights. References in this Agreement to Parent Common Stock
shall include, unless the context requires otherwise, the associated Preferred
Share Purchase Rights issued pursuant to the Amended and Restated Rights
Agreement dated as of December 12, 2000 between Parent and American Stock
Transfer and Trust Company, as Rights Agent (the "Rights Plan").
Section 2.2 Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit, or
shall cause to be deposited, with American Stock Transfer and Trust Company or
another bank or trust company designated by Parent and reasonably satisfactory
to the Company (the "Exchange Agent"), for the benefit of the holders of shares
of Company Common Stock, for exchange, in accordance with this Article 2,
through the Exchange Agent, sufficient cash and certificates representing
shares of Parent Common Stock to make all deliveries pursuant to this Article
2. Parent agrees to make available to the Exchange Agent, from time to time as
needed, cash sufficient to pay any dividends and other distributions pursuant
to Section 2.2(c). The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Merger Consideration contemplated to be paid for
shares of Company Common Stock pursuant to this Agreement out of the Exchange
Fund. Except as contemplated by Sections 2.2(c) and 2.2(e) hereof, the Exchange
Fund shall not be used for any other purpose. Any cash and certificates
representing Parent Common Stock deposited with the Exchange Agent (including
the proceeds from sales of Excess Shares in accordance with Section 2.2(e))
shall be referred to as the "Exchange Fund."
(b) Exchange Procedures. Promptly after the Effective Time, Parent shall
instruct the Exchange Agent to mail to each holder of record of a certificate
or certificates which immediately prior to the Effective Time
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represented outstanding shares of Company Common Stock (the "Certificates") (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Exchange Agent and shall be in customary
form) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration payable in respect of the
shares of Company Common Stock represented by such Certificates. Upon surrender
of a Certificate for cancellation to the Exchange Agent together with such
letter of transmittal, properly completed and duly executed, and such other
documents as may be required pursuant to such instructions, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration payable in respect of the shares of Company Common Stock
represented by such Certificate, cash in lieu of fractional shares of Parent
Common Stock to which such holder is entitled pursuant to Section 2.2(e) and
any dividends or other distributions to which such holder is entitled pursuant
to Section 2.2(c), and the Certificate so surrendered shall forthwith be
canceled. No interest shall be paid or accrued on any Cash Consideration, cash
in lieu of fractional shares or on any unpaid dividends and distributions
payable to holders of Certificates. In the event of a transfer of ownership of
shares of Company Common Stock which is not registered in the transfer records
of the Company, the Merger Consideration payable in respect of such shares of
Company Common Stock may be paid to a transferee if the Certificate
representing such shares of Company Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer Taxes have been
paid. Until surrendered as contemplated by this Section 2.2, each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive upon such surrender the Merger Consideration payable in
respect of the shares of Company Common Stock represented by such Certificate,
cash in lieu of any fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(c).
(c) Distributions with Respect to Unexchanged Shares of Parent Common
Stock. No dividends or other distributions declared or made with respect to
shares of Parent Common Stock, with a record date after the Effective Time,
shall be paid to the holder of any unsurrendered Certificate, and no cash
payment in lieu of fractional shares of Parent Common Stock shall be paid to
any such holder pursuant to Section 2.2(e), unless and until the holder of such
Certificate shall surrender such Certificate. Subject to the effect of escheat,
Tax or other applicable Laws, following surrender of any such Certificate,
there shall be paid to such holder of the certificates representing whole
shares of Parent Common Stock issuable in exchange therefor, without interest,
(i) promptly, the amount of any cash due pursuant to Section 2.1 and cash
payable in lieu of fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(e) and the amount of dividends or
other distributions with a record date at or after the Effective Time
theretofore paid with respect to such whole shares of Parent Common Stock and
(ii) at the appropriate payment date, the amount of dividends or other
distributions, with a record date at or after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender, payable with
respect to such whole shares of Parent Common Stock.
(d) Further Rights in Company Common Stock. The Merger Consideration issued
upon conversion of a share of Company Common Stock in accordance with the terms
hereof (including any dividends or distributions pursuant to Section 2.2(c) or
Section 2.2(e)) shall be deemed to have been issued in full satisfaction of all
rights pertaining to such share of Company Common Stock.
(e) Fractional Shares. No certificates or scrip representing fractional
shares of Parent Common Stock shall be issued upon the surrender for exchange
of Certificates, no dividend or distribution with respect to Parent Common
Stock shall be payable on or with respect to any fractional share and such
fractional share interests shall not entitle the owner thereof to any rights of
a stockholder of Parent.
(i) As promptly as practicable following the Effective Time, the Exchange
Agent shall determine the closest number of whole shares of Parent Common
Stock represented by the aggregate of the fractional share interests in
Parent Common Stock to which all holders of Company Common Stock are
entitled (the "Excess Shares"). As soon after the Effective Time as
practicable, the Exchange Agent, as agent for such
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holders of Parent Common Stock, shall sell the Excess Shares at then
prevailing prices on Nasdaq, all in the manner provided in this Section
2.2(e).
(ii) The sale of the Excess Shares by the Exchange Agent shall be
executed on Nasdaq through one or more member firms of Nasdaq and shall be
executed in round lots to the extent practicable. Until the net proceeds of
any such sale or sales have been distributed to such holders of Company
Common Stock, the Exchange Agent shall hold such proceeds in trust for such
holders of Company Common Stock as part of the Exchange Fund. All
commissions, transfer Taxes and other out-of-pocket transaction costs of the
Exchange Agent incurred in connection with such sale or sales of Excess
Shares shall be deducted from the Exchange Fund. In addition, the Exchange
Agent's compensation and expenses in connection with such sale or sales
shall be deducted from the Exchange Fund. The Exchange Agent shall determine
the portion of such net proceeds to which each holder of Company Common
Stock shall be entitled, if any, by multiplying the amount of the aggregate
net proceeds by a fraction the numerator of which is the amount of the
fractional share interest to which such holder of Company Common Stock is
entitled (after taking into account all shares of Parent Common Stock to be
issued to such holder) and the denominator of which is the aggregate amount
of fractional share interests to which all holders of Company Common Stock
are entitled.
(iii) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Company Common Stock with respect to
any fractional share interests, the Exchange Agent shall promptly pay such
amounts to such holders of Company Common Stock subject to and in accordance
with the terms of this Article 2.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of Company Common Stock for one year after
the Effective Time shall be delivered to Parent, upon demand, and, from and
after such delivery to Parent, any holders of Company Common Stock who have not
theretofore complied with this Article 2 shall thereafter look only to Parent
for the Merger Consideration payable in respect of such shares of Company
Common Stock, any cash in lieu of fractional shares of Parent Common Stock to
which they are entitled pursuant to Section 2.2(e) and any dividends or other
distributions with respect to Parent Common Stock to which they are entitled
pursuant to Section 2.2(c), in each case, without any interest thereon.
(g) No Liability. None of Parent, the Surviving Corporation or the Company
shall be liable to any holder of shares of Company Common Stock for any such
shares of Parent Common Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund delivered to a public official pursuant
to any abandoned property, escheat or similar Law.
(h) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Parent,
the posting by such person of a bond, in such reasonable amount as Parent may
direct, as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent shall pay in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration payable in respect of
the shares of Company Common Stock represented by such Certificate, any cash in
lieu of fractional shares of Parent Common Stock to which the holders thereof
are entitled pursuant to Section 2.2(e) and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
2.2(c), in each case, without any interest thereon.
(i) Withholding. Parent or the Exchange Agent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Company Common Stock such amounts as Parent or the
Exchange Agent are required to deduct and withhold under the Code, or any Tax
Law, with respect to the making of such payment. To the extent that amounts are
so withheld by Parent or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
Company Common Stock in respect of whom such deduction and withholding was made
by Parent or the Exchange Agent.
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(j) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent upon termination of the Exchange Fund pursuant to Section 2.2(f). In the
event the cash in the Exchange Fund shall be insufficient to fully satisfy all
of the payment obligations to be made by the Exchange Agent hereunder, Parent
shall promptly deposit cash into the Exchange Fund in an amount which is equal
to the deficiency in the amount of cash required to fully satisfy such payment
obligations.
Section 2.3 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and thereafter, there shall be no
further registration of transfers of shares of Company Common Stock theretofore
outstanding on the records of the Company. From and after the Effective Time,
the holders of certificates representing shares of Company Common Stock
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such shares of Company Common Stock except as otherwise
provided herein or by Law. On or after the Effective Time, any Certificates
presented to the Exchange Agent or Parent for any reason shall be converted
into the Merger Consideration payable in respect of the shares of Company
Common Stock represented by such Certificates, any cash in lieu of fractional
shares of Parent Common Stock to which the holders thereof are entitled
pursuant to Section 2.2(e) and any dividends or other distributions to which
the holders thereof are entitled pursuant to Section 2.2(c), without any
interest thereon.
Section 2.4 Stock Options.
(a) At the Effective Time, each Company Stock Option Plan shall be assumed
by Parent, and each Company Option, other than Cancelled Company Options, then
outstanding under any Company Stock Option Plan, whether or not then
exercisable, shall be converted into an option to purchase Parent Common Stock
in accordance with this Section 2.4(a). Each Company Option so converted shall
continue to have, and be subject to, the same terms and conditions (including
vesting schedule) as set forth in the applicable Company Stock Option Plan and
any agreements thereunder immediately prior to the Effective Time, except that,
as of the Effective Time, (i) each Company Option shall be exercisable (or
shall become exercisable in accordance with its terms) for that number of whole
shares of Parent Common Stock equal to the product of the number of shares that
were issuable upon exercise of such Company Option immediately prior to the
Effective Time multiplied by 0.52 (the "Option Exchange Ratio"), rounded down
to the nearest whole number of shares of Parent Common Stock, (ii) the per
share exercise price for the shares of Parent Common Stock issuable upon
exercise of such Company Option so converted shall be equal to the quotient
determined by dividing the exercise price per share of Company Common Stock at
which such Company Option was exercisable immediately prior to the Effective
Time by the Option Exchange Ratio, rounded up to the nearest whole cent, and
(iii) each Company Option which (a) is outstanding as of the date of this
Agreement, (b) remains outstanding at the Effective Time, and (c) constitutes
an Accelerated Company Option immediately prior to the Effective Time, shall be
fully vested and exercisable as to all shares of Parent Common Stock subject
thereto. Notwithstanding the foregoing, the conversion of any Company Options
which are "incentive stock options," within the meaning of Section 422 of the
Code, into options to purchase Parent Common Stock shall be made so as not to
constitute a "modification" of such Company Options within the meaning of
Section 424 of the Code. In addition to the foregoing, the number and kind of
shares available for issuance under each Company Stock Option Plan shall be
converted into shares of Parent Common Stock in accordance with the provisions
of the applicable Company Stock Option Plan.
(b) At the Effective Time, each Cancelled Company Option then outstanding
under any Company Stock Option Plan shall be cancelled, and in exchange
therefor, shall be converted into an option ("Replacement Option") to purchase
that number of whole shares of Parent Common Stock equal to the product of the
number of shares subject to the related Cancelled Company Option multiplied by
0.4, rounded down to the nearest whole number of shares of Parent Common Stock,
with an exercise price per share equal to the fair market value of a share of
Parent Common Stock as of the date of grant of the Replacement Option (which
shall be as of the close of market on the date of the Effective Time)and
otherwise subject to the terms and conditions (including the vesting schedule)
that were applicable to the related Cancelled Company Option immediately prior
to the Effective Time, and neither the vesting nor exercisability of any
Cancelled Company Option or Replacement Option shall be accelerated except as
provided in the addendums to the Company Stock Option Plans.
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Section 2.5 Employee Stock Purchase Plan. At the Effective Time, the ESPP
shall be assumed by Parent, and each outstanding purchase right under the ESPP
shall be assumed by Parent in such manner that Parent is a corporation "issuing
or assuming a stock option in a transaction to which Section 424(a) applies"
within the meaning of the Code, and shall be converted into a right to purchase
Parent Common Stock in accordance with this Section 2.5. Each purchase right so
assumed and converted by Parent under this Agreement will continue to have, and
be subject to, the same terms and conditions set forth in the ESPP and the
documents governing the outstanding purchase rights under the ESPP, immediately
prior to the Effective Time. The purchase price of shares of Parent Common
Stock and the number of shares of Parent Common Stock to be issued upon the
exercise of such purchase rights shall be adjusted in a manner which preserves
the intrinsic value of such purchase rights as well as the tax treatment of
such purchase rights as options which are subject to Section 421(a) of the
Code. In addition to the foregoing, the number and kind of shares available for
issuance under the ESPP shall be converted into shares of Parent Common Stock
in accordance with the provisions of the ESPP.
Section 2.6 Employment Agreement. Simultaneously with the execution of
this Agreement, Parent has entered into an employment agreement with Edward V.
Fritzky, which agreement shall become effective upon the Closing.
Section 2.7 AHP Agreements. Simultaneously with the execution of this
Agreement, each of that certain Stockholders' Rights Agreement by and among
Parent, AHP, MDP Holdings, Inc. and Lederle Parenterals, Inc., that certain
Amended and Restated Promotion Agreement by and between Parent and AHP, and
that certain Agreement Regarding Governance and Commercial Matters by and among
Parent, AHP and American Cyanamid Company (collectively, the "AHP Agreements")
has been executed, which agreements shall become effective upon the Closing
(except that the Agreement Regarding Governance and Commercial Matters shall be
effective as of the date hereof).
Section 2.8 Role of Seattle and Rhode Island Following the Merger. Parent
intends to, following the Effective Time, (i) operate and grow the Company's
Seattle, Washington facility as a major research and development center for
Parent, (ii) maintain Seattle, Washington as the primary location for the team
of employees responsible for Enbrel, (iii) complete the Company's Helix Project
research and technology center in Seattle, Washington, in order to consolidate
Parent's Seattle downtown operations to one campus, and (iv) operate and grow
the West Greenwich, Rhode Island biotechnology manufacturing complex as a
large-scale manufacturing complex for biological products.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the corresponding section of the Disclosure Letter
delivered by the Company to Parent prior to the execution of this Agreement
(the "Company Disclosure Letter") (and subject to Section 9.13 hereof), the
Company hereby represents and warrants to Parent as follows:
Section 3.1 Organization and Qualification; Subsidiaries. The Company is a
corporation duly organized and validly existing under the Laws of the State of
Washington and has paid all excise taxes required by the Washington Department
of Revenue. Each Subsidiary of the Company (collectively, the "Company
Subsidiaries") has been duly organized and is validly existing under the Laws
of the State of Washington and has paid all excise taxes required by the
Washington Department of Revenue, except where the failure to be so organized,
existing or to have paid taxes would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. Each of the
Company and the Company Subsidiaries has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to have such power, authority and governmental approvals would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Each of the Company and the Company Subsidiaries is
duly qualified or licensed to do business, and is in good standing (but only
with respect to jurisdictions which recognize such concepts) in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing or good
standing necessary, except for such failures to be so qualified or licensed and
in good standing that would not, individually or in the aggregate, reasonably
be expected to have a
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Company Material Adverse Effect. Section 3.1 of the Company Disclosure Letter
sets forth a true and complete list of all of the Company Subsidiaries. Except
with respect to securities of non-affiliates held for investment purposes which
do not constitute more than a 5% percent interest in any such non-affiliate,
neither the Company nor any Company Subsidiary holds an Equity Interest in any
other person.
Section 3.2 Articles of Incorporation and Bylaws; Corporate Books and
Records. The copies of the Company's Articles of Incorporation (the "Company
Articles") and Bylaws (the "Company Bylaws") that are listed as exhibits to the
Company's Form 10-K for the year ended December 31, 2000 are complete and
correct copies thereof as in effect on the date hereof. The Company is not in
violation of any of the provisions of the Company Articles or the Company
Bylaws as of the date hereof and will not, as of the Closing Date, be in
violation of any of the provisions of the Company Articles or Company Bylaws,
as such Company Articles and Company Bylaws may be amended between the date
hereof and the Closing Date. True and complete copies of all minute books of
the Company since January 1, 1999 have been made available by the Company to
Parent.
Section 3.3 Capitalization.
(a) As of the date hereof, the authorized capital stock of the Company
consists of 1,200,000,000 shares of Company Common Stock and 30,000,000 shares
of preferred stock, par value $0.01 per share (the "Company Preferred Stock").
As of December 1, 2001, (i) 544,893,425 shares of Company Common Stock were
issued and outstanding, all of which were validly issued and fully paid,
nonassessable and, except pursuant to Sections 2.01 and 2.02 of the Governance
Agreement, free of preemptive rights, and (ii) 51,062,923 shares of Company
Common Stock were issuable (and such number was reserved for issuance) upon
exercise of Company Options outstanding as of such date. As of the date hereof,
no shares of Company Preferred Stock are issued or outstanding.
(b) Except for outstanding Company Options, outstanding purchase rights
under the ESPP and pursuant to Sections 2.01 and 2.02 of the Governance
Agreement, as of the date hereof, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which the
Company or any Company Subsidiary is a party or by which the Company or any
Company Subsidiary is bound relating to the issued or unissued capital stock or
other Equity Interests of the Company or any Company Subsidiary, or obligating
the Company or any Company Subsidiary to issue or sell any shares of its
capital stock or other Equity Interests. From December 1, 2001 to the date of
this Agreement, the Company has not issued any Equity Interests with respect to
Company Common Stock, other than (x) Parent Common Stock issued upon exercise
of Company Stock Options and (y) stock options issued to newly-hired employees
in the ordinary course of business consistent with past practice. The Company
has previously provided Parent with a true and complete list, as of December
15, 2001, of the prices at which outstanding Company Options may be exercised
under the applicable Company Stock Option Plan, the number of Company Options
outstanding at each such price and the vesting schedule of the Company Options.
All shares of Company Common Stock subject to issuance under the Company Stock
Option Plans, upon issuance prior to the Effective Time on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid, nonassessable and, except
pursuant to Sections 2.01 and 2.02 of the Governance Agreement, free of
preemptive rights.
(c) Except as set forth in the Governance Agreement, there are no
outstanding contractual obligations of the Company or any Company Subsidiary
(i) restricting the transfer of, (ii) affecting the voting rights of, (iii)
requiring the repurchase, redemption or disposition of, or containing any right
of first refusal with respect to, (iv) requiring the registration for sale of,
or (v) granting any preemptive or antidilutive right with respect to, any
Company Common Stock or any capital stock of, or other Equity Interests in, any
Company Subsidiary. Each outstanding share of capital stock of each Company
Subsidiary is duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights and is owned, beneficially and of record, by the
Company or another Company Subsidiary free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Company's or such other Company Subsidiary's voting rights,
charges and other encumbrances of any nature whatsoever. There are no
outstanding contractual obligations of the Company or any
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Company Subsidiary to make any loan to, or any equity or other investment (in
the form of a capital contribution or otherwise) in, any Company Subsidiary or
any other person, other than guarantees by the Company of any indebtedness or
other obligations of any wholly-owned Company Subsidiary and other than loans
made in the ordinary course consistent with past practice to employees of the
Company and its Subsidiaries. The Company has not adopted a shareholder rights
plan.
Section 3.4 Authority.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Company and the consummation by the Company
of such transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
and no shareholder votes are necessary to authorize this Agreement or to
consummate such transactions other than, with respect to the Merger, as
provided in Section 3.21. The Board of Directors of the Company, by resolutions
adopted by vote of at least a majority of the Board of Directors of the Company
at a meeting duly called and held at which a quorum was present and acting
throughout, has duly (i) adopted this Agreement and the transactions
contemplated hereby, which adoption has not been rescinded or modified, (ii)
resolved (subject to Section 6.4) to recommend this Agreement and the Merger to
its shareholders for approval and (iii) directed that this Agreement be
submitted to its shareholders for consideration in accordance with this
Agreement. All necessary approvals under the Governance Agreement have been
obtained with respect to the execution and performance by the Company of this
Agreement and the consummation of the Merger. No approval by the Company is
necessary under the Governance Agreement for the execution and performance by
AHP, MDP Holdings, Inc. and Lederle Parenterals, Inc. of the Voting Agreement.
The Company has waived its rights with respect to the Merger under Section
5.1(d) of the Governance Agreement. This Agreement has been duly and validly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms.
(b) A majority of the Board of Directors of the Company has approved this
Agreement and the Voting Agreement and the transactions contemplated hereby and
thereby for purposes of Chapter 23B.19 of the WBCA such that the restrictions
set forth in Section 23B.19.040 of the WBCA are not applicable to this
Agreement or the Voting Agreement or the consummation of the transactions
contemplated hereby and thereby, or to the Surviving Corporation or Parent and
their Affiliates or transferees following the Merger. No other State of
Washington takeover statute or similar statute or regulation is applicable to
the Merger.
Section 3.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not, (i) conflict with or
violate any provision of the Company Articles, the Company Bylaws, any
equivalent organizational documents of any Company Subsidiary or the Governance
Agreement (assuming the Company Shareholder Approval is obtained), (ii)
assuming that all consents, approvals, authorizations and permits described in
Section 3.5(b) have been obtained and all filings and notifications described
in Section 3.5(b) have been made and any waiting periods thereunder have
terminated or expired, conflict with or violate any Law applicable to the
Company or any Company Subsidiary or by which any property or asset of the
Company or any Company Subsidiary is bound or affected or (iii) require any
consent or approval under, result in any breach of, any loss of any benefit
under or constitute a change of control or default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any right of termination, vesting, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on
any property or asset of the Company or any Company Subsidiary pursuant to, any
Contract, Company Permit or other instrument or obligation, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not, individually or in the
aggregate, reasonably be expected to (x) have a Company Material Adverse Effect
or (y) prevent or materially delay the performance under this Agreement by the
Company.
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(b) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
domestic or foreign Governmental Entity or any other person, except (i) under
the Exchange Act, the Securities Act, any applicable Blue Sky Law, the rules
and regulations of Nasdaq, the HSR Act, foreign or supranational antitrust and
competition Laws and the filing and recordation of the Articles of Merger as
required by the WBCA and (ii) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications to a person
other than a Governmental Entity, would not, individually or in the aggregate,
reasonably be expected to (x) have a Company Material Adverse Effect or (y)
prevent or materially delay the performance of this Agreement by the Company.
Section 3.6 Permits; Compliance With Law. Each of the Company and the
Company Subsidiaries is in possession of all authorizations, licenses, permits,
certificates, approvals and clearances, and has submitted notices to, all
Governmental Entities (including all authorizations under the Federal Food,
Drug and Cosmetic Act of 1938, as amended (the "FDCA") and the regulations of
the United States Food and Drug Administration (the "FDA") promulgated
thereunder) necessary for the Company or any Company Subsidiary to own, lease
and operate its properties or other assets and to carry on their respective
businesses in the manner described in the Company SEC Filings filed prior to
the date hereof and as it is being conducted as of the date hereof (the
"Company Permits"), and all such Company Permits are valid, and in full force
and effect, except where the failure to have, or the suspension or cancellation
of, or failure to be valid or in full force and effect of, any of the Company
Permits would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect. Neither the Company nor any Company
Subsidiary is in conflict with, or in default or violation of, (i) any Law
applicable to the Company or any Company Subsidiary or by which any property or
asset of the Company or any Company Subsidiary is bound or affected or (ii) any
Company Permits, except, with respect to clauses (i) and (ii), for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 3.7 SEC Filings; Financial Statements.
(a) The Company has timely filed all registration statements, prospectuses,
forms, reports, definitive proxy statements, schedules and documents required
to be filed by it under the Securities Act or the Exchange Act, as the case may
be, since January 1, 1998 (collectively, the "Company SEC Filings"). Each
Company SEC Filing (i) as of its date, complied in all material respects with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and (ii) did not, at the time it was filed, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. As of the date of
this Agreement, no Company Subsidiary is subject to the periodic reporting
requirements of the Exchange Act.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Company SEC Filings was prepared in all
material respects in accordance with GAAP applied (except as may be indicated
in the notes thereto and, in the case of unaudited quarterly financial
statements, as permitted by Form 10-Q under the Exchange Act) on a consistent
basis throughout the periods indicated (except as may be indicated in the notes
thereto), and each presented fairly the consolidated financial position,
results of operations and cash flows of the Company and the consolidated
Company Subsidiaries as of the respective dates thereof and for the respective
periods indicated therein (subject, in the case of unaudited statements, to
normal and recurring year-end adjustments which did not and would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect). The books and records of the Company and the Company
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements.
(c) Except as and to the extent set forth on the consolidated balance sheet
of the Company and the consolidated Company Subsidiaries as of December 31,
2000 included in the Company's Form 10-K for the year ended December 31, 2000,
including the notes thereto (the "Company Form 10-K"), neither the Company nor
any consolidated Company Subsidiary has any liabilities or obligations of any
nature (whether accrued, absolute,
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contingent or otherwise) that would be required to be reflected on a balance
sheet or in notes thereto prepared in accordance with GAAP, except for (i)
liabilities or obligations incurred in the ordinary course of business
consistent with past practice since December 31, 2000 and (ii) liabilities and
obligations incurred in connection with this Agreement and the transactions
contemplated hereby that would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
(d) As of the date hereof, no "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K of the SEC) filed as an exhibit to the
Company Form 10-K has been amended or modified, except for such amendments or
modifications which have been filed as an exhibit to a subsequently dated
Company SEC Filing or are not required to be filed with the SEC.
Section 3.8 Absence of Certain Changes or Events. Since December 31, 2000,
except as disclosed in the Company Form 10-K or in Company SEC Filings since
December 31, 2000 through to the date of this Agreement, including the notes
thereto, and except as specifically contemplated by, or as disclosed in, this
Agreement, the Company and the Company Subsidiaries have conducted their
businesses in the ordinary course consistent with past practice and, since such
date, there has not been (a) an event or development that would, individually
or in the aggregate, reasonably be expected to have a Company Material Adverse
Effect or (b) any event or development that would, individually or in the
aggregate, reasonably be expected to prevent or materially delay the
performance of this Agreement by the Company.
Section 3.9 Employee Benefit Plans.
(a) Section 3.9(a) of the Company Disclosure Letter sets forth a true and
complete list of each "employee benefit plan" as defined in Section 3(3) of
ERISA and any other material plan, policy, program, practice, agreement,
understanding or arrangement providing compensation or other benefits to any
current or former director, officer, employee or consultant (or to any
dependent or beneficiary thereof) of the Company or any ERISA Affiliate, which
are now, or with respect to any plan intended to be qualified under 401(a) of
the Code, were within the past 6 years, maintained, sponsored or contributed to
by the Company or any ERISA Affiliate, or under which the Company or any ERISA
Affiliate has any obligation or liability, whether actual or contingent,
including, without limitation, all material incentive, bonus, deferred
compensation, vacation, holiday, cafeteria, medical, disability, stock
purchase, stock option, stock appreciation, phantom stock, restricted stock or
other stock-based compensation plans, policies, programs, practices or
arrangements. Each "employee benefit plan" as defined in Section 3(3) of ERISA
and each other material plan, policy, program, practice, agreement,
understanding or arrangement providing compensation or other benefits to any
current or former director, officer, employee or consultant (or to any
dependent or beneficiary thereof) of the Company or any ERISA Affiliate, which
are now, or were within the past 6 years, maintained, sponsored or contributed
to by the Company or any ERISA Affiliate, or under which the Company or any
ERISA Affiliate has any obligation or liability, whether actual or contingent,
including, without limitation, all material incentive, bonus, deferred
compensation, vacation, holiday, cafeteria, medical, disability, stock
purchase, stock option, stock appreciation, phantom stock, restricted stock or
other stock-based compensation plans, policies, programs, practices or
arrangements is hereinafter referred to as a "Company Benefit Plan". Neither
the Company, nor to the Knowledge of the Company, any other person, has any
express or implied commitment, whether legally enforceable or not, to modify,
change or terminate any Company Benefit Plan, other than with respect to a
modification, change or termination required by ERISA or the Code. The Company
has delivered or made available to Parent true, correct and complete copies of
all Company Benefit Plans (or, if not so delivered, has delivered or made
available to Parent a written summary of their material terms), and, with
respect thereto, all amendments, trust agreements, insurance Contracts, other
funding vehicles, determination letters issued by the United States Internal
Revenue Service (the "IRS"), the most recent annual reports (Form 5500 series)
filed with the IRS, and the most recent actuarial report or other financial
statement relating to such Company Benefit Plan.
(b) Each Company Benefit Plan has been administered in all material respects
in accordance with its terms and all applicable Laws, including ERISA and the
Code, and contributions required to be made under the terms of any of the
Company Benefit Plans as of the date of this Agreement have been timely made.
Except as would
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not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, (i) with respect to the Company Benefit Plans, no
event has occurred and, to the Knowledge of the Company, there exists no
condition or set of circumstances in connection with which the Company could be
subject to any material liability (other than for routine benefit liabilities)
under the terms of, or with respect to, such Company Benefit Plans, ERISA, the
Code or any other applicable Law, and (ii) neither the Company nor any ERISA
Affiliate has any liability under ERISA Section 502.
(c) Each Company Benefit Plan that is intended to be qualified under Section
401(a) of the Code has obtained a favorable determination letter from the IRS
that the Company Benefit Plan is so qualified and all related trusts are exempt
from U.S. federal income taxation under Section 501(a) of the Code, and, to the
Knowledge of the Company, nothing has occurred, whether by action or by failure
to act, which would cause the loss of such qualification or exemption. Except
as would not reasonably be expected to result in material liability to the
Company or a Company ERISA Affiliate, (i) to the knowledge of the Company there
has been no prohibited transaction (within the meaning of Section 406 of ERISA
or Section 4975 of the Code and other than a transaction that is exempt under a
statutory or administrative exemption) with respect to any Company Benefit
Plan, (ii) no suit, administrative proceeding, action or other litigation has
been brought, or to the Knowledge of the Company is threatened, against or with
respect to any such Company Benefit Plan, including any audit or inquiry by the
IRS or United States Department of Labor (other than routine benefits claims),
(iii) none of the assets of the Company or any Company ERISA Affiliate is, or
may reasonably be expected to become, the subject of any lien arising under
ERISA or Section 412(n) of the Code, (iv) all Tax, annual reporting and other
governmental filings required by ERISA and the Code have been timely filed with
the appropriate Governmental Entity and all notices and disclosures have been
timely provided to participants, (v) all contributions and payments to each
Company Benefit Plan are deductible under Code Sections 162 or 404, and (vi) no
excise Tax could be imposed upon the Company under Chapter 43 of the Code.
(d) Neither the Company nor any of its ERISA Affiliates sponsors, maintains,
contributes to or has an obligation to contribute to, or has sponsored,
maintained, contributed to or had an obligation to contribute to, any "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) that is subject to
Title IV of ERISA or Section 412 of the Code, or any "multiemployer plan" as
defined in Section 3(37) of ERISA.
(e) No amount that could be received (whether in cash or property or the
vesting of property), in connection with the consummation of the transactions
contemplated by this Agreement, by any employee, officer or director of the
Company or any of its Subsidiaries who is a "disqualified individual" (as such
term is defined in proposed Treasury Regulation Section 1.280G-1) under any
Company Benefit Plan or otherwise are reasonably likely to be characterized as
an "excess parachute payment" (as defined in Section 280G(b)(1) of the Code).
(f) Except as required by Law, no Company Benefit Plan provides any of the
following retiree or post-employment benefits to any person: medical,
disability or life insurance benefits. The Company and each ERISA Affiliate are
in compliance with (i) the requirements of the applicable health care
continuation and notice provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and the regulations (including proposed
regulations) thereunder and any similar state Law and (ii) the applicable
requirements of the Health Insurance Portability and Accountability Act of
1996, as amended, and the regulations (including the proposed regulations)
thereunder, except as would not be reasonably expected to result in material
liability to the Company or a Company ERISA Affiliate.
(g) Neither the Company nor any of its Subsidiaries, sponsors, contributes
to or has any liability with respect to any employee benefit plan, program or
arrangement that provides benefits to non-resident aliens with no United States
source income outside of the United States.
(h) The Company has delivered to Parent accurate W-2 information for the
executive officers of the Company for the 1997, 1998, 1999 and 2000 calendar
years.
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Section 3.10 Labor and Other Employment Matters.
(a) Except as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, (i) no work stoppage or
labor strike against the Company or any Company Subsidiary by employees is
pending or threatened, (ii) neither the Company nor any Company Subsidiary is
delinquent in payments to any of its employees for any wages, salaries,
commissions, bonuses or other direct compensation for any services performed
for it or amounts required to be reimbursed to such employees, (iii) the
Company and each of the Company Subsidiaries are in compliance with all
applicable Laws respecting labor, employment, fair employment practices, terms
and conditions of employment, workers' compensation, occupational safety, plant
closings, and wage and hours, (iv) the Company and each Company Subsidiary has
withheld all amounts required by Law or by agreement to be withheld from the
wages, salaries, and other payments to employees; and is not liable for any
arrears of wages or any Taxes or any penalty for failure to comply with any of
the foregoing, (v) neither the Company nor any Company Subsidiary is liable for
any payment to any trust or other fund or to any Governmental Entity, with
respect to unemployment compensation benefits, social security or other
benefits or obligations for employees (other than routine payments to be made
in the ordinary course of business consistent with past practice), (vi) there
are no material pending claims against the Company or any Company Subsidiary
under any workers' compensation plan or policy or for long term disability and
(vii) there are no material controversies pending or, to the Knowledge of the
Company, threatened, between the Company or any Company Subsidiary and any of
their respective current or former employees, which controversies have or could
reasonably be expected to result in an action, suit, proceeding, claim,
arbitration or investigation before any Governmental Entity. To the Company's
Knowledge, as of the date hereof, no employees of the Company or any Company
Subsidiary are in any material respect in violation of any term of any
employment Contract, non-disclosure agreement, noncompetition agreement, or any
restrictive covenant to a former employer relating to the right of any such
employee to be employed by the Company or any Company Subsidiary because of the
nature of the business conducted or presently proposed to be conducted by the
Company or such Company Subsidiary or to the use of trade secrets or
proprietary information of others. As of the date hereof, no employee of the
Company or any Company Subsidiary, at the officer level or above, has given
notice to the Company or any Company Subsidiary that any such employee intends
to terminate his or her employment with the Company or any Company Subsidiary.
(b) Neither the Company nor any Company Subsidiary is a party to or
otherwise bound by any collective bargaining Contract with a labor union or
labor organization, nor is any such Contract presently being negotiated. As of
the date hereof, there has not been since January 1, 1998 a representation
question respecting any of the employees of the Company or any Company
Subsidiary and, to the Knowledge of the Company, there are no campaigns being
conducted to solicit cards from employees of the Company or any Company
Subsidiary to authorize representation by any labor organization.
(c) The Company has identified in Section 3.10(c) of the Company Disclosure
Letter and has made available to Parent true and complete copies of (i) all
severance and employment agreements with directors, officers or employees of or
consultants to the Company or any Company Subsidiary, (ii) all severance
programs and policies of each of the Company and each Company Subsidiary with
or relating to its employees, and (iii) all plans, programs, agreements and
other arrangements of each of the Company and each Company Subsidiary with or
relating to its directors, officers, employees or consultants which contain
change in control provisions. Neither the execution and delivery of this
Agreement or other related agreements, nor the consummation of the transactions
contemplated hereby or thereby will (either alone or in conjunction with any
other event, such as termination of employment) (i) result in any payment
(including, without limitation, severance, unemployment compensation, parachute
or otherwise) becoming due to any director or any employee of the Company or
any Company Subsidiary or Affiliate from the Company or any Company Subsidiary
or Affiliate under any Company Benefit Plan or otherwise, (ii) significantly
increase any benefits otherwise payable under any Company Benefit Plan or (iii)
result in any acceleration of the time of payment or vesting of any benefits.
Section 3.11 Tax Treatment. None of the Company, any Company Subsidiary
nor any of the Company's Affiliates has taken or agreed to take any action that
would prevent the Merger from qualifying as a
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reorganization within the meaning of Section 368(a) of the Code. The Company is
not aware of any agreement, plan or other circumstance that would prevent the
Merger from qualifying as a reorganization within the meaning of Section 368(a)
of the Code.
Section 3.12 Contracts. Except as filed as exhibits to the Company SEC
Filings filed prior to the date of this Agreement, or as disclosed in Section
3.12 of the Company Disclosure Letter, neither the Company nor any Company
Subsidiary is a party to or bound by any Contract that (i) is a "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC), (ii) relates to the co-promotion or distribution of Enbrel, the
manufacturing and supply by third parties of Enbrel, the out-license of Company
Intellectual Property relating to Enbrel to third parties pursuant to which the
Company currently receives royalties, or the in-license of intellectual
property relating to Enbrel from third parties pursuant to which the Company
currently pays royalties or (iii) limits or otherwise restricts the Company or
any Company Subsidiary or that would, after the Effective Time, limit or
restrict Parent or any of its Subsidiaries (including the Surviving Corporation
and its Subsidiaries) or any successor thereto, from engaging or competing in
any line of business or in any geographic area, which Contracts would be
material to Parent and its Subsidiaries (determined after giving effect to the
Merger). Each Contract of the type described in this Section 3.12, whether or
not set forth in Section 3.12 of the Company Disclosure Letter, is referred to
herein as a "Company Material Contract." Each Company Material Contract is
valid and binding on the Company or a Company Subsidiary party thereto and, to
the Company's Knowledge, each other party thereto, and is in full force and
effect, and the Company and each of the Company Subsidiaries have performed in
all material respects all obligations required to be performed by them to the
date hereof under each Company Material Contract and, to the Company's
Knowledge, each other party to each Company Material Contract has performed in
all material respects all obligations required to be performed by it under such
Company Material Contract, except, in each case, as would not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. Neither the Company nor any Company Subsidiary knows of, or has
received notice of, any violation or default under (or any condition which with
the passage of time or the giving of notice would cause such a violation of or
default under) any Company Material Contract or any other Contract to which it
is a party or by which it or any of its properties or assets is bound, except
for violations or defaults that would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
Section 3.13 Litigation. Except as and to the extent disclosed in the
Company SEC Filings, including the notes thereto, filed prior to the date of
this Agreement or would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, (i) there is no suit,
claim, action, proceeding or investigation pending or, to the Knowledge of the
Company, threatened in writing against the Company or any Company Subsidiary or
for which the Company or any Company Subsidiary is obligated to indemnify a
third party that, as of the date hereof, relates to Enbrel, and (ii) neither
the Company nor any Company Subsidiary is subject to any outstanding and
unsatisfied order, writ, injunction, decree or arbitration ruling, award or
other finding. There is no suit, claim, action, proceeding or investigation
pending or, to the Knowledge of the Company, threatened in writing against the
Company or any Company Subsidiary that, as of the date hereof, challenges the
validity or propriety, or seeks to prevent consummation of, the Merger or any
other transaction contemplated by this Agreement.
Section 3.14 Environmental Matters. Except as disclosed in the Company
Form 10-K or in Company SEC Filings, including the notes thereto, since
December 31, 2000 through to the date of this Agreement or would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect:
(a) The Company and the Company Subsidiaries (i) are in compliance with all,
and are not subject to any liability, in each case with respect to any,
applicable Environmental Laws, (ii) hold or have applied for all Environmental
Permits necessary to conduct their current operations and (iii) are in
compliance with their respective Environmental Permits.
(b) Neither the Company nor any Company Subsidiary has received any written
notice, demand, letter, claim or request for information alleging that the
Company or any Company Subsidiary may be in violation of, or liable under, any
Environmental Law.
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(c) Neither the Company nor any Company Subsidiary (i) has entered into or
agreed to any consent decree or order or is subject to any judgment, decree or
judicial order relating to compliance with Environmental Laws, Environmental
Permits or the investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Materials and, to the Knowledge of the Company,
no investigation, litigation or other proceeding is pending or threatened in
writing with respect thereto or (ii) is an indemnitor in connection with any
claim threatened or asserted in writing by any third-party indemnitee for any
liability under any Environmental Law or relating to any Hazardous Materials.
(d) None of the real property owned or leased by the Company or any Company
Subsidiary is listed or, to the Knowledge of the Company, proposed for listing
on the "National Priorities List" under CERCLA, as updated through the date
hereof, or any similar state or foreign list of sites requiring investigation
or cleanup.
Section 3.15 Intellectual Property. Except as would not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect, (i) the Company (or one of its Subsidiaries) owns or has the right to
use, whether through ownership, licensing or otherwise, all Company
Intellectual Property, (ii) no written claim of invalidity or conflicting
ownership rights with respect to any Company Intellectual Property has been
received by the Company or any Company Subsidiary from a third party, (iii) no
Company Intellectual Property owned by the Company or any Company Subsidiary is
the subject of any pending or, to the Company's Knowledge, threatened action,
suit, claim, investigation, arbitration, validity or enforceability challenge
or other proceeding, (iv) to the Company's Knowledge, no Company Intellectual
Property that is not owned by the Company or any Company Subsidiary is the
subject of any pending or threatened action, suit, claim, investigation,
arbitration, validity or enforceability challenge or other proceeding, (v) no
person has given written notice to the Company or any Company Subsidiary that
the use of any Company Intellectual Property by the Company, any Company
Subsidiary or any licensee is infringing or has infringed any patent,
trademark, service mark, trade name, or copyright or design right or other
intellectual property right of any third party, or that the Company, any
Company Subsidiary or any licensee has misappropriated or improperly used or
disclosed any trade secret, confidential information or know-how, (vi) to the
Company's knowledge after due inquiry, the making, having made, using, selling,
offering for sale, importing, exporting, manufacturing, marketing, licensing,
reproduction, distribution or publishing by the Company of any process,
machine, manufacture or product does not, because of and to the extent that
such process, manufacture or product incorporates Company Intellectual
Property, infringe any valid claim of any patent, trademark, service mark,
trade name, copyright, design right, or other intellectual property right of
any third party in the jurisdictions in which such making, using, selling,
offering for sale, importing, exporting, manufacturing, marketing, licensing,
reproduction, distribution, or publishing occurs, and does not involve the
misappropriation or improper use or disclosure of any trade secrets,
confidential information or know-how of any third party, and (vii) there exists
no prior act or current conduct or use by the Company, any Company Subsidiary
or, to the Knowledge of the Company, any third party that would void or
invalidate any Company Intellectual Property. As of the date hereof, AHP has
not made any Product Calls (as such term is defined in the Product Rights
Agreement by and among the Wyeth-Ayerst Research division of AHP, the Lederle
Pharmaceutical division of American Cyanamid Company and the Company dated as
of July 1, 1998, as amended (the "Product Rights Agreement")) under the Product
Rights Agreement.
Section 3.16 Taxes.
(a) Each of the Company and each Company Subsidiary has duly and timely
filed with the appropriate Tax authorities or other Governmental Entities all
material Tax Returns that it was required to file. All such Tax Returns are
complete and accurate in all material respects. All Taxes shown as due on such
Tax Returns have been paid, and the Company and the Company Subsidiaries have
provided adequate reserves in accordance with GAAP in the most recent financial
statements contained in the Company SEC Filings for any material Taxes that
have not been paid, whether or not shown as being due on any Tax Returns. None
of the Company nor any Company Subsidiary currently is the beneficiary of any
extension of time within which to file any material Tax Return.
A-15
(b) No claim for unpaid material Taxes has been asserted in writing by a Tax
authority or other Governmental Entity or has become a lien against the
property of the Company or any Company Subsidiary (other than with respect to
Permitted Liens for Taxes). No audit or other proceeding with respect to any
material Taxes due from or with respect to the Company or any Company
Subsidiary or any material Tax Return filed by the Company or any Company
Subsidiary is being conducted by any Tax authority or Governmental Entity, and
the Company and the Company Subsidiaries have not received notification in
writing that any such audit or other proceeding with respect to material Taxes
or any material Tax Return is pending. No extension of the statute of
limitations on the assessment of any material Taxes has been granted by the
Company or any Company Subsidiary.
(c) All material Taxes required to be withheld, collected or deposited by or
with respect to the Company and each Company Subsidiary have been timely
withheld, collected or deposited as the case may be, and to the extent
required, have been paid to the relevant Tax authority or other Governmental
Entity.
(d) Neither the Company nor any Company Subsidiary is responsible for the
Taxes of any person other than members of the affiliated group of which the
Company is the common parent under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign Law), as a transferee, by
Contract, or otherwise. Neither the Company nor any Company Subsidiary is a
party to, is bound by or has any obligation under any Tax sharing or Tax
indemnity agreement or similar Contract or arrangement.
(e) Neither the Company nor any Company Subsidiary has been a party to any
distribution occurring during the two years preceding the date of this
Agreement in which the parties to such distribution treated the distribution as
one to which Section 355 of the Code is applicable.
Section 3.17 Insurance. Copies of all material insurance policies
maintained by the Company, including fire and casualty, general liability,
product liability, business interruption and professional liability policies,
have been made available to Parent.
Section 3.18 Properties. Each of the Company and the Company Subsidiaries
has good and valid title to or a valid leasehold interest in all its properties
and assets reflected on the most recent balance sheet contained in the
Company's quarterly report on Form 10-Q that is part of the Company SEC Filings
or acquired after the date thereof, except for (i) properties and assets sold
or otherwise disposed of in the ordinary course of business since the date of
such balance sheet and (ii) properties and assets the loss of which would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section 3.19 Regulatory Compliance.
(a) All biological and drug products being manufactured, distributed, or
developed by the Company and its Subsidiaries ("Company Pharmaceutical
Products") that are subject to the jurisdiction of the FDA are being
manufactured, labeled, stored, tested, distributed, and marketed in compliance
with all applicable requirements under the FDCA, the Public Health Service Act,
and their applicable implementing regulations, except for noncompliances which
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
(b) All preclinical trials and clinical trials conducted by or on behalf of
the Company and its Subsidiaries have been, and are being conducted in material
compliance with the applicable requirements of Good Clinical Practice, Informed
Consent, and all applicable requirements relating to protection of human
subjects contained in 21 C.F.R. Parts 50, 54, and 56, except for noncompliances
which, individually or in the aggregate, would reasonably not be expected to
have a Company Material Adverse Effect.
(c) All manufacturing operations conducted by or for the benefit of the
Company and its Subsidiaries have been and are being conducted in compliance
with the FDA's applicable current Good Manufacturing Practice regulations for
drug and biological products, except for noncompliances which, individually or
in the aggregate, would not reasonably be expected to have a Company Material
Adverse Effect. In addition, the Company and its Subsidiaries are in compliance
with all applicable registration and listing requirements set forth in 21
U.S.C. Section 360 and 21 C.F.R. Part 207 and all similar applicable laws,
except for noncompliances which, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
A-16
(d) No Company Pharmaceutical Product has been recalled, suspended or
discontinued as a result of any action by the FDA or any other similar foreign
Governmental Entity by the Company or any of its Subsidiaries or, to the
Knowledge of the Company, any licensee, distributor or marketer of any Company
Pharmaceutical Product, in the United States or outside of the United States
since January 1, 1999.
(e) Neither the Company nor any of its Subsidiaries have received any notice
since January 1, 1999 that the FDA or any other Governmental Entity has
commenced, or threatened to initiate, any action to withdraw approval, place
marketing or sale restrictions, or request the recall of any Company
Pharmaceutical Product, or commenced, or threatened to initiate, any action to
enjoin or place restrictions on the production, sale, marketing or
reimbursement of any Company Pharmaceutical Products.
(f) Neither the Company, nor any of its Subsidiaries, have committed any
act, made any statement or failed to make any statement that would reasonably
be expected to provide a basis for the FDA to invoke its policy with respect to
"Fraud, Untrue Statements of Material Facts, Bribery, and Illegal Gratuities"
set forth in 56 Fed. Reg. 46191 (September 10, 1991) and any amendments
thereto. Additionally, neither the Company, the Company Subsidiaries, nor to
the Knowledge of the Company, any officer, key employee or agent of the Company
has been convicted of any crime or engaged in any conduct that would reasonably
be expected to result in (i) debarment under 21 U.S.C. Section 335a or any
similar state law or regulation or (ii) exclusion under 42 U.S.C. Section
1320a-7 or any similar state law or regulation.
Section 3.20 Opinion of Financial Advisor. Merrill Lynch & Co. (the
"Company Financial Advisor") has delivered to the Board of Directors of the
Company its opinion that, as of the date of such opinion, the Merger
Consideration to be received by the holders of the shares of Company Common
Stock pursuant to the Merger is fair to such holders from a financial point of
view.
Section 3.21 Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of capital stock or other Equity Interests
of the Company necessary to approve this Agreement, the Merger and the
transactions contemplated hereby (the "Company Shareholder Approval").
Section 3.22 Brokers. No broker, finder or investment banker (other than
the Company Financial Advisor) is entitled to any brokerage, finder's or other
fee or commission in connection with the Merger based upon arrangements made by
or on behalf of the Company or any Company Subsidiary. Prior to the date
hereof, the Company has accurately described to Parent the Company's
arrangements with, and the fees that may be paid by the Company to, the Company
Financial Advisor relating to the Merger.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the corresponding section of the Disclosure Letter
delivered by Parent and Merger Sub to the Company prior to the execution of
this Agreement (the "Parent Disclosure Letter") (and subject to Section 9.13
hereof), Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company as follows:
Section 4.1 Organization and Qualification; Subsidiaries. Parent is a
corporation duly organized, validly existing and in good standing under the
Laws of Delaware. Merger Sub is a corporation duly organized and validly
existing under the laws of the State of Washington and has paid all excise
taxes required by the Washington Department of Revenue. Each Significant
Subsidiary of Parent (together with Merger Sub, the "Parent Subsidiaries") has
been duly organized and is validly existing and in good standing under the Laws
of the jurisdiction of its incorporation, except where the failure to be so
organized, existing or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect.
Each of Parent and the Parent Subsidiaries has the requisite power and
authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted,
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except where the failure have such power, authority and governmental approvals
would not, individually or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect. Each of Parent and the Parent Subsidiaries is
duly qualified or licensed to do business, and is in good standing (but only
with respect to jurisdictions which recognize such concepts) in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its business makes such qualification or licensing or good
standing
necessary, except for such failures to be so qualified or licensed and in good
standing that would not, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect.
Section 4.2 Certificate of Incorporation and Bylaws; Corporate Books and
Records. The copies of the Parent Certificate and Parent's Amended and
Restated Bylaws (the "Parent Bylaws") that are listed as exhibits to Parent's
Form 10-K for the year ended December 31, 2000 are complete and correct copies
thereof as in effect on the date hereof. The Parent is not in violation of any
of the provisions of the Parent Certificate or the Parent Bylaws as of the date
hereof and will not, as of the Closing Date, be in violation of any of the
provisions of the Parent Certificate or Parent Bylaws, as such Parent
Certificate and Parent Bylaws may be amended between the date hereof and the
Closing Date. True and complete copies of all minute books of Parent since
January 1, 1999 have been made available by Parent to the Company.
Section 4.3 Capitalization.
(a) As of the date hereof, the authorized capital stock of Parent consists
of (a) 2,750,000,000 shares of Parent Common Stock and (b) 5,000,000 shares of
preferred stock, par value $0.0001 per share (the "Parent Preferred Stock"). As
of November 30, 2001, (a) 1,048,325,488 shares of Parent Common Stock were
issued and outstanding, all of which were validly issued and fully paid,
nonassessable and free of preemptive rights and (b) 8,659,960 shares of Parent
Common Stock were held in the treasury of Parent or by Parent's Subsidiaries.
As of the date hereof, 687,500 shares of Parent Preferred Stock are designated
as Series A Junior Participating Preferred Stock, and no shares of Parent
Preferred Stock are issued or outstanding. As of November 30, 2001, 95,657,177
shares of Parent Common Stock were reserved for issuance upon exercise of stock
options, rights and warrants outstanding as of such date. Except for stock
options and agreements or arrangements described in the Parent SEC Filings,
including the notes or exhibits thereto, filed prior to the date of this
Agreement and pursuant to the rights outstanding under the Rights Plan, as of
the date hereof, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which Parent or any Parent
Subsidiary is a party or by which Parent or any Parent Subsidiary is bound
relating to the issued or unissued capital stock or other Equity Interests, or
obligating Parent or any Parent Subsidiary to issue or sell any shares of its
capital stock or other Equity Interests. From November 30, 2001 to the date of
this Agreement, Parent has not issued any Equity Interests with respect to
Parent Common Stock, other than (x) Parent Common Stock issued upon exercise of
stock options and (y) Equity Interests granted or issued under existing
stock-based incentive compensation plans. The shares of Parent Common Stock to
be issued in connection with the Merger, when issued as contemplated herein,
will be duly authorized, validly issued, fully paid and nonassessable and will
not be issued in violation of any preemptive rights. Except as disclosed in the
Parent SEC Filings, including the notes and exhibits thereto, as of the date
hereof, there are no outstanding contractual obligations of Parent or any
Parent Subsidiary (a) restricting the transfer of, or (b) requiring the
repurchase, redemption or disposition of, or containing any right of first
refusal with respect to, any Parent Common Stock or any capital stock of, or
other Equity Interests in, any Parent Subsidiary. As of the date hereof, there
are no outstanding contractual obligations of Parent or any Parent Subsidiary
(a) requiring the registration for sale of, (b) granting any preemptive or
antidilutive right with respect to, or (c) affecting the voting rights (except
for the Stockholders' Rights Agreement by and among Parent, AHP, MDP Holdings,
Inc. and Lederle Parenterals, Inc., dated as of the date hereof) of, any Parent
Common Stock. Except as disclosed in the Parent SEC Filings, including the
notes and exhibits thereto, as of the date hereof, there are no outstanding
contractual obligations of Parent or any Parent Subsidiary (a) affecting the
voting rights of, (b) requiring the registration for sale of, or (c) granting
any preemptive or antidilutive right with respect to or any capital stock of,
or other Equity Interests in, any Parent Subsidiary.
(b) Each outstanding share of capital stock of each Parent Subsidiary is
duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights and is owned, beneficially and of record, by Parent free
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and clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on Parent's or any Parent Subsidiary's
voting rights, charges and other encumbrances of any nature whatsoever.
(c) Except as a result of the Voting Agreement, neither Parent nor any
Parent Subsidiary beneficially owns any Equity Interest in the Company.
Section 4.4 Authority Relative to This Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated by this Agreement. Each of (a) the execution and
delivery of this Agreement by each of Parent and Merger Sub and the
consummation by Parent and Merger Sub of such transactions and (b) the issuance
of shares of Parent Common Stock in accordance with the Merger has been duly
and validly authorized by all necessary corporate action by Parent and Merger
Sub and no other corporate proceedings on the part of Parent and Merger Sub and
no other stockholder votes are necessary to authorize this Agreement or to
consummate such transactions, other than, with respect to the Share Issuance,
as provided in Section 4.16. The Board of Directors of Parent, by resolutions
adopted by unanimous vote of those voting (and not subsequently rescinded or
modified in any way) at a meeting duly called and held at which a quorum was
present and acting throughout, has duly (i) determined that this Agreement and
the Merger are fair to and in the best interests of Parent and its
stockholders, and has declared the Merger to be advisable, (ii) approved and
adopted this Agreement, the Merger, the Share Issuance and the other
transactions contemplated hereby, (iii) resolved to recommend the Share
Issuance to its stockholders for approval and (iv) directed that the Share
Issuance be submitted to its stockholders for consideration. This Agreement has
been duly authorized and validly executed and delivered by Parent and Merger
Sub and constitutes the legal, valid and binding obligations of each of Parent
and Merger Sub, enforceable against Parent and Merger Sub in accordance with
its terms.
Section 4.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and Merger Sub do
not, and the performance of this Agreement by Parent and Merger Sub will not,
(i) conflict with or violate any provision of the certificate or articles of
incorporation or bylaws of Parent or Merger Sub, (ii) assuming that all
consents, approvals, authorizations and permits described in Section 4.5(b)
have been obtained, that Parent's stockholders have approved the Share Issuance
and that all filings and notifications described in Section 4.5(b) have been
made, and any waiting periods thereunder have terminated or expired, conflict
with or violate any Law applicable to Parent or any Parent Subsidiary or by
which any property or asset of Parent or any Parent Subsidiary is bound or
affected or (iii) require any consent or approval under, result in any breach
of, any loss of any benefit under or constitute a change of control or default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, vesting, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Parent or any Parent Subsidiary
pursuant to, any Contract, except, with respect to clauses (ii) and (iii), for
any such conflicts, violations, breaches, defaults or other occurrences which
would not, individually or in the aggregate, reasonably be expected to (x) have
a Parent Material Adverse Effect or (y) prevent or materially delay the
performance of this Agreement by Parent or Merger Sub.
(b) The execution and delivery of this Agreement by Parent and Merger Sub do
not, and the performance of this Agreement by Parent and Merger Sub will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any domestic or foreign Governmental Entity or any other
person, except (i) under the Exchange Act, the Securities Act, any applicable
Blue Sky Law, the rules and regulations of Nasdaq, the HSR Act, foreign or
supranational antitrust and competition Laws, and the filing and recordation of
the Articles of Merger as required by the WBCA and (ii) where failure to obtain
such consents, approvals, authorizations or permits, or to make such filings or
notifications to a person other than a Governmental Entity, would not,
individually or in the aggregate, reasonably be expected to (x) have a Parent
Material Adverse Effect or (y) prevent or materially delay the performance
under this Agreement by Parent or Merger Sub.
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Section 4.6 Permits; Compliance With Law. Parent and each Parent
Subsidiary is in possession of all authorizations, licenses, permits,
certificates, approvals and clearances necessary to carry on their respective
businesses in the manner described in the Parent SEC Filings filed prior to the
date hereof and as it is being conducted as of the date hereof (the "Parent
Permits"), and all such Parent Permits are valid and in full force and effect,
except where the failure to have, or the suspension or cancellation of, or
failure to be valid or in full force and effect of, any of the Parent Permits
would not, individually or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect. Neither Parent nor any Parent Subsidiary is in
conflict with any Law applicable to Parent or any Parent Subsidiary that would,
individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect.
Section 4.7 SEC Filings; Financial Statements.
(a) Parent has timely filed all registration statements, prospectuses,
forms, reports, definitive proxy statements, schedules and documents required
to be filed by it under the Securities Act or the Exchange Act, as the case may
be, since January 1, 1998 (collectively, the "Parent SEC Filings"). Each Parent
SEC Filing (i) as of its date, complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be and
(ii) did not at the time it was filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. As of the date of
this Agreement, no Subsidiary of Parent is subject to the periodic reporting
requirements of the Exchange Act.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the Parent SEC Filings was prepared in all
material respects in accordance with GAAP applied (except as may be indicated
in the notes thereto and, in the case of unaudited quarterly financial
statements, as permitted by Form 10-Q under the Exchange Act) on a consistent
basis throughout the periods indicated (except as may be indicated in the notes
thereto), and each presented fairly the consolidated financial position,
results of operations and cash flows of Parent and its consolidated
Subsidiaries as of the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which did not and would not, individually or in
the aggregate, reasonably be expected to have a Parent Material Adverse
Effect). The books and records of Parent and its Subsidiaries have been, and
are being, maintained in all material respects in accordance with GAAP and any
other applicable legal and accounting requirements.
(c) Except as and to the extent set forth on the consolidated balance sheet
of Parent and its consolidated Subsidiaries as of December 31, 2000 included in
Parent's Form 10-K for the year ended December 31, 2000, including the notes
thereto (the "Parent Form 10-K"), neither Parent nor any of its consolidated
Subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on a
balance sheet or in notes thereto prepared in accordance with GAAP, except for
liabilities or obligations incurred in the ordinary course of business
consistent with past practice since December 31, 2000 and liabilities incurred
in connection with this Agreement and the transactions contemplated hereby that
would not, individually or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect.
(d) As of the date hereof, no "material contract" (as such term is defined
in Item 601(b)(10) of Regulation S-K of the SEC) filed as an exhibit to the
Parent Form 10-K has been amended or modified, except for such amendments or
modifications which have been filed as an exhibit to a subsequently dated
Parent SEC Filing or are not required to be filed with the SEC.
Section 4.8 Absence of Certain Changes or Events. Since December 31, 2000,
except as disclosed in the Parent Form 10-K or in Parent SEC Filings since
December 31, 2000 through to the date of this Agreement, including he notes
thereto, and except as specifically contemplated by, or as disclosed in, this
Agreement, Parent and its Subsidiaries have conducted their business in the
ordinary course consistent with past practice and, since such date, there has
not been (a) an event or development that would, individually or in the
aggregate, reasonably
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be expected to have a Parent Material Adverse Effect or (b) any event or
development that would, individually or in the aggregate, reasonably be
expected to prevent or materially delay the performance of this Agreement by
Parent or Merger Sub.
Section 4.9 Litigation. Except as disclosed in the Parent SEC Filings,
including the notes thereto, filed prior to the date of this Agreement or would
not, individually or in the aggregate, reasonably be expected to have a Parent
Material Adverse Effect, (i) there is no suit, claim, action, proceeding or
investigation pending or, to the Knowledge of Parent, threatened in writing
against Parent or any Parent Subsidiary or for which Parent or any Parent
Subsidiary is obligated to indemnify a third party, and (ii) neither Parent nor
any Parent Subsidiary is subject to any outstanding and unsatisfied order,
writ, injunction, decree or arbitration ruling, award or other finding. There
is no suit, claim, action, proceeding or investigation pending or, to the
Knowledge of Parent, threatened in writing against Parent or any Parent
Subsidiary that, as of the date hereof, challenges the validity or propriety,
or seeks to prevent consummation of, the Merger or any other transaction
contemplated by this Agreement.
Section 4.10 Environmental Matters. Except as disclosed in the Parent Form
10-K or in the Parent SEC Filings, including the notes thereto, since December
31, 2000 through the date of this Agreement or would not, individually or in
the aggregate, reasonably be expected to have a Parent Material Adverse Effect,
Parent and the Parent Subsidiaries (i) are in compliance with all, and are not
subject to any liability, in each case with respect to any, applicable
Environmental Laws, (ii) hold or have applied for all Environmental Permits
necessary to conduct their current operations, and (iii) are in compliance with
their respective Environmental Permits.
Section 4.11 Intellectual Property. Except as disclosed in the Parent Form
10-K or in the Parent SEC Filings, including the notes thereto, since December
31, 2000 through the date of this Agreement or would not, individually or in
the aggregate, reasonably be expected to have a Parent Material Adverse Effect:
(i) Parent and its Subsidiaries own or have the right to use, whether through
ownership, licensing or otherwise, all Parent Intellectual Property, (ii) no
Parent Intellectual Property is the subject of any pending or, to Parent's
Knowledge, threatened action, suit, claim, investigation, arbitration or other
proceeding, (iii) there exists no prior act or current conduct or use by Parent
or any Parent Subsidiary or, to the Knowledge of Parent, any third party that
would void or invalidate any Parent Intellectual Property, and (iv) to the
Knowledge of Parent, the making, using, selling, manufacturing, marketing,
licensing, reproduction, distribution or publishing by Parent of any process,
manufacture or product does not, because of and to the extent that such
process, manufacture or product incorporates Parent Intellectual Property,
infringe any valid claim of patent, trademark, service mark, trade name,
copyright or other intellectual property right of any third party in the
jurisdictions in which such making, using, selling, manufacturing, marketing,
licensing, reproduction, distribution, or publishing occurs, and does not
involve the misappropriation or improper use or disclosure of any trade
secrets, confidential information or know-how of any third party.
Section 4.12 Regulatory Compliance.
(a) All biological and drug products being manufactured, distributed or
developed by Parent and its Subsidiaries ("Parent Pharmaceutical Products")
that are subject to the jurisdiction of the FDA are being manufactured,
labeled, stored, tested, distributed and marketed in compliance with all
applicable requirements under the FDCA and the Public Health Service Act,
except for noncompliances which, individually or in the aggregate, would
reasonably not be expected to have a Parent Material Adverse Effect.
(b) Neither Parent nor any of its Subsidiaries have received any notice
since January 1, 1999 that the FDA or any other Governmental Entity has
commenced, or threatened to initiate, any action to withdraw approval or
request the recall of any Parent Pharmaceutical Product, or commenced, or
threatened to initiate, any action to enjoin or place restrictions on the
production of any Parent Pharmaceutical Products.
Section 4.13 Tax Treatment. None of Parent, nor any of its Subsidiaries or
Affiliates has taken or agreed to take any action that would prevent the Merger
from qualifying as a reorganization within the meaning of
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Section 368(a) of the Code. Parent is not aware of any agreement, plan or other
circumstance that would prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
Section 4.14 Ownership of Merger Sub; No Prior Activities.
(a) Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement. All of the outstanding capital
stock of Merger Sub is owned directly by Parent.
(b) Except for obligations or liabilities incurred in connection with its
incorporation or organization and the transactions contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any Subsidiary or Affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person. Merger Sub has no
Subsidiaries.
Section 4.15 Opinion of Financial Advisor. Goldman, Sachs & Co. (the
"Parent Financial Advisor") has delivered to the Board of Directors of Parent
its opinion that, as of the date of such opinion, the Merger Consideration is
fair from a financial point of view to Parent.
Section 4.16 Vote Required. The affirmative vote of the holders of a
majority of the shares of Parent Common Stock represented at a meeting of the
stockholders of Parent called for such purpose and entitled to vote thereon
(provided that at least a majority of such shares are represented in person or
by proxy at such meeting) is the only vote of the holders of any class or
series of capital stock or other Equity Interests of Parent necessary to
approve the Share Issuance (the "Parent Stockholder Approval").
Section 4.17 Brokers. No broker, finder or investment banker (other than
the Parent Financial Advisor, Bear, Stearns & Co. Inc. and Salomon Smith Barney
Inc.) is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger based upon arrangements made by or on behalf of
Parent or any of its Subsidiaries.
Section 4.18 Sufficient Funds. Parent will have at or prior to the Closing
and at the Effective Time sufficient immediately available funds and sufficient
authorized but unissued shares or treasury shares of Parent Common Stock to pay
the Merger Consideration upon consummation of the Merger.
ARTICLE 5.
COVENANTS
Section 5.1 Conduct of Business by the Company Pending the Closing. The
Company agrees that, between the date of this Agreement and the Effective Time,
except as set forth in Section 5.1 of the Company Disclosure Letter or as
specifically permitted by any other provision of this Agreement, or unless
Parent shall otherwise agree in writing, the Company shall, and shall cause
each Company Subsidiary to, (x) maintain its existence in good standing under
applicable Law, (y) subject to the restrictions set forth in this Section 5.1
and Section 6.5, conduct its operations only in the ordinary and usual course
of business consistent with past practice and (z) use its reasonable best
efforts to keep available the services of the current officers, key employees
and consultants of the Company and each Company Subsidiary and, subject to
Section 6.5, to preserve the current relationships of the Company and the
Company Subsidiaries with their customers, suppliers and other persons with
which the Company or any Company Subsidiary has significant business relations
as is reasonably necessary in order to preserve substantially intact its
business organization. In addition, without limiting the foregoing, except as
set forth in Section 5.1 of the Company Disclosure Letter or as specifically
permitted by any other provision of this Agreement, the Company shall not and
shall not permit any of its Subsidiaries to (unless required by applicable Law
or the regulations or requirements of any stock exchange or regulatory
organization applicable to the Company and its Subsidiaries), between the date
of this Agreement and the Effective Time, directly or indirectly, do, or agree
to do, any of the following without the prior written consent of Parent:
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(a) amend or otherwise change its articles or certificate of incorporation
or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, encumber, or authorize
the issuance, sale, pledge, disposition, grant, transfer or encumbrance of any
shares of capital stock of, or other Equity Interests in, the Company or any
Company Subsidiary of any class, or securities convertible or exchangeable or
exercisable for any shares of such capital stock or other Equity Interests, or
any options, warrants or other rights of any kind to acquire any shares of such
capital stock or other Equity Interests or such convertible or exchangeable
securities, or any other ownership interest, of the Company or any Company
Subsidiary, except that (i) the Company may issue shares of Company Common
Stock pursuant to the ESPP or upon exercise of Company Options outstanding on
the date hereof or hereafter granted in accordance with the provisions of
subclause (ii), (iii) or (iv) of this clause (b), (ii) the Company may grant
Company Options up to an aggregate of 1,100,000 shares of Company Common Stock
to newly-hired employees and may grant Company Options up to an aggregate of
4,400,000 shares of Company Common Stock to existing employees and non-employee
directors, in each case, in accordance with the terms of the Company Stock
Option Plans consistent with past practice and with an exercise price per share
of Company Common Stock no less than the fair market value of a share of
Company Common Stock as of the date of grant, provided that in no event shall
the vesting or exercisability of any such Company Options accelerate solely as
a result of the consummation of the transactions contemplated by this
Agreement, (iii) the Company may grant Company Options that are Replacement
Options pursuant to Section 2.4(b), (iv) the Company may grant Company Options
pursuant to existing contractual relationships and as set forth in the Company
Disclosure Letter, (v) the Company may grant Equity Interests in accordance
with Sections 2.01 and 2.02 of the Governance Agreement, and (vi) the Company
Subsidiaries may issue shares of capital stock or other Equity Interests to the
Company or any wholly-owned Company Subsidiary;
(c) (i) sell, pledge, dispose of, transfer, lease, license, or encumber, or
authorize the sale, pledge, disposition, transfer, lease, license, or
encumbrance of, any material property or assets (other than Company
Intellectual Property) of the Company or any Company Subsidiary, except (A)
sales, pledges, dispositions, transfers, leases, licenses or encumbrances
pursuant to existing Contracts, (B) sales, pledges, dispositions, transfers,
leases, licenses or encumbrances of property or assets by the Company or a
Company Subsidiary in the ordinary course of business but not to exceed an
aggregate value for all such sales, pledges, dispositions, transfers, leases,
licenses and encumbrances of $100,000,000, (C) sales or dispositions of
inventory and other tangible current assets, or (D) as may be required pursuant
to Section 6.5(b); (ii) sell, pledge, dispose of, transfer, lease, license,
abandon, fail to maintain or encumber, or authorize the sale, pledge,
disposition, transfer, lease, license, abandonment, failure to maintain or
encumbrance of, any Company Intellectual Property (other than Company
Intellectual Property that protects or enhances the value of Enbrel), except
(A) sales, pledges, dispositions, transfers, leases, licenses, abandonments,
failures to maintain or encumbrances in the ordinary course of business which
will not materially impair the conduct of the Company's business and (B) as may
be required pursuant to Section 6.5(b); (iii) sell, pledge, dispose of,
transfer, lease, license, abandon, fail to maintain or encumber, or authorize
the sale, pledge, disposition, transfer, lease, license, abandonment, failure
to maintain or encumbrance of, any Company Intellectual Property which protects
Enbrel, except (A) agreements entered into for clinical studies involving
Enbrel in the ordinary course of business and (B) material transfer agreements
relating to Enbrel entered into in the ordinary course of business; or (iv)
enter into any material commitment or transaction outside the ordinary course
of business consistent with past practice other than transactions between a
wholly-owned Company Subsidiary and the Company or another wholly-owned Company
Subsidiary;
(d) declare, set aside, make or pay any dividend or other distribution
(whether payable in cash, stock, property or a combination thereof) with
respect to any of the capital stock of the Company (other than dividends or
distributions paid by wholly-owned Company Subsidiaries to the Company or to
other wholly-owned Company Subsidiaries) or enter into any agreement with
respect to the voting of the capital stock of the Company;
(e) (i) reclassify, combine, split or subdivide any of its capital stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of, or in substitution for, shares of its capital stock, or (ii) redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital
stock, other Equity Interests or other securities;
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(f) (i) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person (other than a
wholly-owned Company Subsidiary) for borrowed money, except for indebtedness
for borrowed money under the Company's existing credit facilities or
replacement credit facilities in an aggregate amount not materially larger than
the Company's existing credit facilities, (ii) terminate, cancel, or agree to
any material and adverse change in, any Company Material Contract other than in
the ordinary course of business consistent with past practice, (iii) make or
authorize any capital expenditure materially in excess of the Company's budget
as disclosed to Parent prior to the date hereof or (iv) make or authorize any
material loan to any person (other than a Company Subsidiary) outside the
ordinary course of business;
(g) except as may be required by contractual commitments or corporate
policies with respect to severance or termination pay in existence on the date
of this Agreement as disclosed in Section 3.9 or 6.10(c) of the Company
Disclosure Letter, (i) increase the compensation or benefits payable or to
become payable to its directors, officers or employees (except for increases in
accordance with past practices and methodologies in salaries or wages of
officers and/or employees of the Company or any Company Subsidiary), (ii) grant
any rights to severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or other employee of the
Company or any Company Subsidiary (other than with respect to newly appointed
directors and newly hired employees in accordance with past practices of the
Company or any Company Subsidiary, provided that any such agreements shall not
provide for the payment of any severance or termination pay solely as a result
of the execution of this Agreement or the consummation of the transactions
contemplated hereby), (iii) establish, adopt, enter into or amend any
collective bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer, consultant or
employee, except to the extent required by applicable Law or (iv) take any
affirmative action to amend or waive any performance or vesting criteria or
accelerate vesting, exercisability or funding under any Company Benefit Plan or
Company Option;
(h) make any material change in accounting policies or procedures, other
than in the ordinary course of business consistent with past practice or except
as required by GAAP or by a Governmental Entity;
(i) except in the ordinary course of business consistent with past practice,
make any material Tax election or settle or compromise any material liability
for Taxes, change any annual Tax accounting period, change any method of Tax
accounting, file any amended material Tax Return, enter into any closing
agreement relating to any material Tax, surrender any right to claim a material
Tax refund, or consent to any extension or waiver of the statute of limitations
period applicable to any material Tax claim or assessment;
(j) subject to Section 6.4(h), modify, amend or terminate, or waive, release
or assign any material rights or claims with respect to any confidentiality or
standstill agreement to which the Company is a party and which relates to a
business combination involving the Company;
(k) write up, write down or write off the book value of any assets,
individually or in the aggregate, for the Company and the Company Subsidiaries
taken as a whole, other than in the ordinary course of business or otherwise
not in excess of $50 million;
(l) subject to Section 6.4(h), take any action to render inapplicable, or to
exempt any third party from, (i) the provisions of Chapter 23B.19 of the WBCA
or (ii) any other state takeover Law or state Law that purports to limit or
restrict business combinations or the ability to acquire or vote shares;
(m) acquire, or agree to acquire, from any Person any assets (not including
Intellectual Property), operations, business or securities or engage in, or
agree to engage in, any merger, consolidation or other business combination
with any Person, except (i) in connection with capital expenditures permitted
hereunder and except for acquisitions of inventory and other assets (not
including Intellectual Property) in the ordinary course of business or (ii) for
acquisitions of businesses or assets (not including Intellectual Property) or
business
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combinations having or involving aggregate consideration not in excess of
$50,000,000, which, in the case of clauses (i) and (ii), individually or in the
aggregate, would not be reasonably expected to result in any of the conditions
to the Merger set forth in Article 7 not being satisfied;
(n) take any action that is intended or would reasonably be expected to
result in any of the conditions to the Merger set forth in Article 7 not being
satisfied;
(o) adopt a shareholder rights agreement, or "poison pill";
(p) acquire, or agree to acquire, from any Person, any Intellectual
Property, except in the ordinary course of business consistent with past
practice (including in size and nature); or
(q) authorize or enter into any agreement or otherwise make any commitment
to do any of the foregoing.
Section 5.2 Conduct of Business by Parent Pending the Closing. Parent
agrees that, between the date of this Agreement and the Effective Time, except
as specifically permitted by any other provision of this Agreement or unless
the Company shall otherwise agree in writing, Parent shall maintain its
existence in good standing under applicable Law and Parent and its Subsidiaries
shall continue to conduct their businesses such that the primary business of
Parent and its Subsidiaries, taken as a whole, shall involve biotechnology or
pharmaceuticals. Without limiting the foregoing, and as an extension thereof,
except as specifically permitted by any other provision of this Agreement,
Parent shall not and shall not permit any of its Subsidiaries to (unless
required by applicable Laws or the regulations or requirements of any stock
exchange or regulatory organization applicable to Parent and its Subsidiaries),
between the date of this Agreement and the Effective Time, directly or
indirectly, do, or agree to do, any of the following, without the prior written
consent of the Company:
(a) amend or otherwise change the Parent Certificate in a manner that
adversely affects the rights of holders of Parent Common Stock (including
holders of the Parent Common Stock issuable in the Merger), except to increase
the authorized number of shares of Parent capital stock (including Parent
Common Stock);
(b) issue any shares of Parent Common Stock if, following such issuance,
there would be an insufficient number of shares of Parent Common Stock to pay
the Merger Consideration and to be reserved for issuance in connection with the
transactions contemplated hereby;
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock property or otherwise, with respect to any of Parent's
capital stock;
(d) take any action (including any acquisition or entering into any business
combination) that is intended or could reasonably be expected to result in any
of the conditions to the Merger set forth in Article 7 not being satisfied; or
(e) authorize or enter into any agreement or otherwise make any commitment
to do any of the foregoing.
Section 5.3 Cooperation.
(a) In addition to their other obligations set forth in this Agreement, the
Company and Parent shall coordinate and cooperate in connection with (a) the
preparation of the Registration Statement and the Proxy Statement, (b)
determining whether any action by or in respect of, or filing with, any
Governmental Entity is required, or any actions, consents, approvals or waivers
are required to be obtained from parties to any Company Material Contracts, in
connection with the consummation of the Merger, and (c) seeking any such
actions, consents, approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the Registration Statement
and the Proxy Statement.
(b) As soon as reasonably practicable after the date hereof, Parent and
Company shall establish an Integration Committee with a consultative function,
which shall be comprised of two senior executives of Parent, designated by the
Chairman, President and Chief Executive Officer of the Parent, and two senior
executives of
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the Company, designated by the Chairman, President and Chief Executive Officer
of the Company. Subject to applicable Law, the Integration Committee will be
concerned with matters relating to the integration of Parent's and Company's
respective businesses and personnel following the Effective Time and will
periodically meet to discuss and review such matters.
Section 5.4 Tax-Free Reorganization Treatment.
(a) Neither Company nor Parent shall, nor shall they permit any of their
respective Subsidiaries to, take or cause to be taken any action that would
disqualify the Merger as a reorganization within the meaning of Section 368(a)
of the Code. Parent and the Company shall use their reasonable best efforts,
and shall cause their respective Subsidiaries to use their reasonable best
efforts, to take or cause to be taken any action that would cause the Merger to
qualify as a reorganization within the meaning of Section 368(a) of the Code.
(b) Each of the Company and Parent shall report the Merger as a
reorganization within the meaning of Section 368 of the Code, unless otherwise
required pursuant to a "determination" within the meaning of Section 1313(a) of
the Code.
Section 5.5 Control of Other Party's Business. Nothing contained in this
Agreement shall give Parent or Merger Sub, directly or indirectly, the right to
control or direct the operations of the Company prior to the consummation of
the Merger. Prior to the consummation of the Merger, the Company shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its operations.
ARTICLE 6.
ADDITIONAL AGREEMENTS
Section 6.1 Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement, Parent
and the Company shall prepare and file with the SEC a joint proxy statement
relating to the Company Shareholders' Meeting and Parent Stockholders' Meeting
(together with any amendments thereof or supplements thereto, the "Proxy
Statement") and Parent shall prepare and file with the SEC a registration
statement on Form S-4 (together with all amendments thereto, the "Registration
Statement"; the prospectus contained in the Registration Statement together
with the Proxy Statement, the "Joint Proxy/Prospectus"), in which the Proxy
Statement shall be included, in connection with the registration under the
Securities Act of the shares of Parent Common Stock to be issued to the
shareholders of the Company as Merger Consideration. Each of Parent and the
Company shall use reasonable best efforts to cause the Registration Statement
to become effective as promptly as practicable, and, prior to the effective
date of the Registration Statement, Parent shall take all or any action
reasonably required under any applicable federal or state securities Laws in
connection with the issuance of shares of Parent Common Stock in the Merger.
Each of Parent and the Company shall furnish all information concerning it and
the holders of its capital stock as the other may reasonably request in
connection with such actions and the preparation of the Registration Statement
and Proxy Statement. As promptly as reasonably practicable after the
Registration Statement shall have become effective and the Proxy Statement
shall have been cleared by the SEC, the Company and Parent shall mail the Joint
Proxy/Prospectus to their respective shareholders; provided, however, that the
parties shall consult and cooperate with each other in determining the
appropriate time for mailing the Joint Proxy/Prospectus in light of the date
set for the Company Shareholders' Meeting and the Parent Stockholders' Meeting.
No filing of, or amendment or supplement to, the Proxy Statement shall be made
by the Company or Parent, and no filing of, or amendment or supplement to, the
Registration Statement shall be made by Parent, in each case, without providing
the other party a reasonable opportunity to review and comment thereon, which
comments shall be considered in good faith. Parent and the Company each shall
advise the other, promptly after it receives notice thereof, of the time when
the Registration Statement has become effective or any supplement or amendment
has been filed, of the issuance of any stop order, the suspension of the
qualification of
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the Parent Common Stock issuable in connection with the Merger for offering or
sale in any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement or the Registration Statement or comments thereon and responses
thereto or requests by the SEC for additional information.
(b) The information supplied by Parent for inclusion in the Registration
Statement and the Proxy Statement shall not, at (i) the time the Registration
Statement is declared effective, (ii) the time the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to the shareholders of
the Company, (iii) the time the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to stockholders of Parent, (iv) the time of
the Company Shareholders' Meeting and (v) the time of the Parent Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading. If at any time prior to the Effective Time
any event or circumstance relating to Parent or any of its Subsidiaries, or
their respective officers or directors, should be discovered by Parent which
should be set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, Parent shall promptly inform the Company. All
documents that Parent is responsible for filing with the SEC in connection with
the transactions contemplated herein will comply as to form and substance in
all material respects with the applicable requirements of the Securities Act
and the rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder.
(c) The information supplied by the Company for inclusion in the
Registration Statement and the Proxy Statement shall not, at (i) the time the
Registration Statement is declared effective, (ii) the time the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to the
shareholders of the Company, (iii) the time the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to stockholders of
Parent, (iv) the time of the Company Shareholders' Meeting and (v) the time of
the Parent Stockholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. If at any
time prior to the Effective Time any event or circumstance relating to the
Company or any Company Subsidiary, or their respective officers or directors,
should be discovered by the Company which should be set forth in an amendment
or a supplement to the Registration Statement or Proxy Statement, the Company
shall promptly inform Parent. All documents that the Company is responsible for
filing with the SEC in connection with the transactions contemplated herein
will comply as to form and substance in all material respects with the
applicable requirements of the Securities Act and the rules and regulations
thereunder and the Exchange Act and the rules and regulations thereunder.
Section 6.2 Shareholders' Meetings.
(a) The Company shall duly call and hold a meeting of its shareholders (the
"Company Shareholders' Meeting") as promptly as reasonably practicable in
accordance with applicable Law following the date the Registration Statement
becomes effective and the Proxy Statement is cleared by the SEC and after
coordination with Parent, provided that the meeting shall be held not later
than five Business Days prior to the Outside Date (provided that the Company
shall not be required to hold the Company Shareholders' Meeting prior to the
date of the Parent Stockholders' Meeting), for the purpose of voting upon the
adoption and approval of this Agreement. In connection with the Company
Shareholders' Meeting and the transactions contemplated hereby, the Company
will (i) subject to applicable Law, use its reasonable best efforts (including
postponing or adjourning the Company Shareholders' Meeting to obtain a quorum
or to solicit additional proxies) to obtain the necessary approvals by its
shareholders of this Agreement, the Merger and the other transactions
contemplated hereby and (ii) otherwise comply with all legal requirements
applicable to the Company Shareholders' Meeting.
(b) Parent shall duly call and hold a meeting of its stockholders (the
"Parent Stockholders' Meeting") as promptly as reasonably practicable in
accordance with applicable Law following the date the Registration Statement
becomes effective and the Proxy Statement is cleared by the SEC and after
coordination with the Company, provided that the meeting shall be held not
later than five Business Days prior to the Outside Date (provided that the
Parent shall not be required to hold the Parent Stockholders' Meeting prior to
the date of the Company Shareholders' Meeting), for the purpose of voting upon
the approval of the Share Issuance, and Parent
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shall use its reasonable best efforts to hold the Parent Stockholders' Meeting
as soon as practicable after the date on which the Registration Statement
becomes effective. In connection with the Parent Stockholders' Meeting and the
transactions contemplated hereby, Parent will (i) subject to applicable Law,
use its reasonable best efforts (including postponing or adjourning Parent
Stockholders' Meeting to obtain a quorum or to solicit additional proxies) to
obtain the necessary approvals by its stockholders of the Share Issuance and
(ii) otherwise comply with all legal requirements applicable to the Parent
Stockholders' Meeting.
(c) The Board of Directors of the Company shall recommend approval of this
Agreement and the Merger by the shareholders of the Company (the "Company
Recommendation") and, subject to Section 6.4, shall not withdraw or adversely
modify (or propose to withdraw or adversely modify) such recommendation, and
the Joint Proxy Statement/Prospectus shall contain such recommendation.
(d) The Board of Directors of Parent shall recommend the approval of the
Share Issuance by the stockholders of Parent (the "Parent Recommendation") and
shall not withdraw or adversely modify (or propose to withdraw or adversely
modify) such recommendation, and the Joint Proxy Statement/Prospectus shall
contain such recommendation.
Section 6.3 Access to Information; Confidentiality.
(a) Except as required pursuant to any confidentiality agreement or similar
agreement or arrangement to which the Company or Parent or any of their
respective Subsidiaries is a party (which such person shall use reasonable best
efforts to cause the counterparty to waive) from the date of this Agreement to
the Effective Time, the Company and Parent shall, and shall cause each of its
Subsidiaries and each of their respective directors, officers, employees,
accountants, consultants, legal counsel, investment bankers, advisors, and
agents and other representatives (collectively, "Representatives") to (i)
provide to the other party and its respective Representatives access at
reasonable times upon prior notice to the officers, employees, agents,
properties, offices and other facilities of such party and its Subsidiaries and
to the books and records thereof and (ii) subject to applicable Laws relating
to the exchange of information, furnish promptly such information concerning
the business, properties, Contracts, assets, liabilities, personnel and other
aspects of itself and its Subsidiaries as the other party and its
Representatives may reasonably request. No investigation conducted pursuant to
this Section 6.3(a) shall affect or be deemed to modify or limit any
representation or warranty made in this Agreement.
(b) With respect to the information disclosed pursuant to this Section 6.3,
the parties shall comply with, and shall cause their respective Representatives
to comply with, all of their respective obligations under the confidentiality
agreement, dated November 14, 2001, previously executed by the Company and
Parent (the "Confidentiality Agreement"); provided, however, that the
restrictions on Parent and its Subsidiaries, Affiliates and Representatives set
forth in paragraph 8 of the Confidentiality Agreement shall be inapplicable
with respect to any of the transactions set forth in this Agreement.
Section 6.4 No Solicitation of Transactions.
(a) The Company agrees that neither it nor any Company Subsidiary shall, and
that it shall use its reasonable best efforts to cause its and their
Representatives not to, directly or indirectly: (i) solicit, initiate,
encourage, knowingly facilitate or induce any inquiry with respect to, or the
making, submission or announcement of, any Acquisition Proposal, (ii)
participate in any discussions or negotiations regarding, or furnish to any
person any nonpublic information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes or may
reasonably be expected to lead to, any Acquisition Proposal (except to the
extent specifically permitted pursuant to this Section 6.4), (iii) engage in
discussions with any person with respect to any Acquisition Proposal, except to
notify such person as to the existence of these provisions (except to the
extent specifically permitted pursuant to this Section 6.4), (iv) approve,
endorse or recommend any Acquisition Proposal with respect the Company (except
to the extent specifically permitted pursuant to this Section 6.4), or (v)
enter into any letter of intent or similar document or
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any agreement, commitment or understanding contemplating or otherwise relating
to any Acquisition Proposal or a transaction contemplated thereby (except for
confidentiality agreements specifically permitted pursuant to Section 6.4(c)).
The Company shall immediately terminate, and shall cause the Company
subsidiaries and its and their Representatives to immediately terminate, all
discussions or negotiations, if any, with any third party with respect to, or
any that could reasonably be expected to lead to or contemplate the possibility
of, an Acquisition Proposal. The Company shall immediately demand that each
person which has heretofore executed a confidentiality agreement with the
Company or any of its Affiliates or Subsidiaries or any of its or their
Representatives with respect to such person's consideration of a possible
Acquisition Proposal to immediately return or destroy (which destruction shall
be certified in writing by such person to the Company) all confidential
information heretofore furnished by the Company or any of its Affiliates or
Subsidiaries or any of its or their Representatives to such person or any of
its Affiliates or Subsidiaries or any of its or their Representatives.
(b) Promptly after receipt of any Acquisition Proposal or any request for
nonpublic information or inquiry which it reasonably believes could lead to an
Acquisition Proposal, the Company shall provide Parent with written notice of
the material terms and conditions of such Acquisition Proposal, request or
inquiry, and the identity of the person or group making any such Acquisition
Proposal, request or inquiry, and a copy of all written materials provided in
connection with such Acquisition Proposal, request or inquiry. After receipt of
the Acquisition Proposal, request or inquiry, the Company shall promptly keep
Parent informed in all material respects of the status and details (including
material amendments or proposed material amendments) of any such Acquisition
Proposal, request or inquiry and shall promptly provide to Parent a copy of all
written materials subsequently provided in connection with such Acquisition
Proposal, request or inquiry.
(c) If the Company receives an Acquisition Proposal which (i) constitutes a
Superior Proposal or (ii) which the Board of Directors of the Company in good
faith concludes proposes consideration that is more favorable to the Company's
shareholders than the transactions contemplated by this Agreement and which
could reasonably be expected to result in a Superior Proposal in all other
respects, the Company shall promptly provide to Parent written notice that
shall state expressly (A) that it has received an Acquisition Proposal which
constitutes a Superior Proposal or which could reasonably be expected to result
in a Superior Proposal, and (B) the identity of the party making such
Acquisition Proposal and the material terms and conditions of the Acquisition
Proposal (the "Superior Proposal Notice") and may then take the following
actions:
(i) furnish nonpublic information to the third party making such
Acquisition Proposal, provided, that (A) prior to so furnishing, the Company
receives from the third party an executed confidentiality agreement
containing customary limitations on the use and disclosure of all nonpublic
written and oral information furnished to such third party on its behalf and
customary standstill provisions, and (B) contemporaneously with furnishing
any such nonpublic information to such third party, the Company furnishes a
copy of such nonpublic information to Parent (to the extent such nonpublic
information has not been previously so furnished); and
(ii) engage in negotiations with the third party with respect to the
Acquisition Proposal.
(d) For a period of not less than five Business Days after Parent's receipt
from the Company of each Superior Proposal Notice, the Company shall, if
requested by Parent, negotiate in good faith with Parent to revise this
Agreement so that the Acquisition Proposal that constituted a Superior Proposal
no longer constitutes a Superior Proposal.
(e) In response to the receipt of a Superior Proposal that has not been
withdrawn and continues to constitute a Superior Proposal after the Company's
compliance with Section 6.4(d), the Board of Directors of the Company may
withhold or withdraw the Company Recommendation and, in the case of a Superior
Proposal that is a tender or exchange offer made directly to its shareholders,
may recommend that its shareholders accept the tender or exchange offer (any of
the foregoing actions, whether by the Board of Directors or a committee
thereof, a "Change of Recommendation"), if both of the following conditions in
Sections 6.4(e)(i) and 6.4(e)(ii) are met:
A-29
(i) the Company Shareholders' Meeting has not occurred; and
(ii) the Board of Directors of the Company has concluded in good faith,
following the receipt of advice of its outside legal counsel, that, in light
of such Superior Proposal, the failure of the Board of Directors to effect a
Change of Recommendation would result in a breach of its fiduciary
obligations to its shareholders under applicable Law.
(f) Notwithstanding anything to the contrary contained in this Agreement,
(i) the obligation of the Company to call, give notice of, convene and hold the
Company Shareholders' Meeting and to hold a vote of the Company's shareholders
on this Agreement and the Merger at the Company Shareholders' Meeting shall not
be limited or otherwise affected by the commencement, disclosure, announcement
or submission to it of any Acquisition Proposal (whether or not a Superior
Proposal), or by any Change of Recommendation and (ii) in any case in which the
Company withholds or withdraws the Company Recommendation pursuant to Section
6.4(e), recognizing that special circumstances, as provided in Section
23B.11.030 of the WBCA, exist in light of the provisions of this Section 6.4
and/or the provisions of the Voting Agreement, the Company shall submit this
Agreement and the Merger to a vote of its shareholders with no recommendation
as permitted by Section 23B.11.030(2) of the WBCA. The Company agrees that it
shall not submit to the vote of its shareholders any Acquisition Proposal
(whether or not a Superior Proposal) or propose to do so.
(g) Nothing contained in this Agreement shall be deemed to restrict the
Company from complying with Rules 14d-9 or 14e-2 under the Exchange Act or be
deemed to restrict the Company or Parent from making such other disclosures as
may be required by federal securities laws or applicable State of Washington
fiduciary duties laws.
(h) Notwithstanding anything to the contrary contained in this Agreement,
the prohibitions contained in Sections 5.l(j) and 5.1(l) shall not be
applicable with respect to a Person who has submitted a Superior Proposal to
the Company.
Section 6.5 Appropriate Action; Consents; Filings.
(a) Subject to the proviso contained in Section 6.5(b)(ii), the Company and
Parent shall use their reasonable best efforts to (i) take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the transactions contemplated by this Agreement as promptly
as practicable, (ii) obtain from any Governmental Entities any consents,
licenses, permits, waivers, approvals, authorizations or orders required (A) to
be obtained or made by Parent or the Company or any of their Subsidiaries, (B)
to avoid any action or proceeding by any Governmental Entity (including,
without limitation, those in connection with the HSR Act and antitrust and
competition Laws of any other applicable jurisdiction), in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated herein, including, without limitation, the
Merger, and (C) to prevent a Company Material Adverse Effect from occurring
prior to or after the Effective Time or a Parent Material Adverse Effect from
occurring after the Effective Time, and (iii) make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement
and the Merger required under (A) the Securities Act and the Exchange Act, and
any other applicable federal or state securities Laws, (B) the HSR Act and
antitrust and competition Laws of any other applicable jurisdiction and (C) any
other applicable Law. Parent and the Company shall cooperate with each other in
connection with the making of all filings referenced in the preceding sentence,
including providing copies of all such documents to the non-filing party and
its advisors prior to filing and, if requested, to accept all reasonable
additions, deletions or changes suggested in connection therewith. The Company
and Parent shall have the right to review in advance, and to the extent
practicable each shall consult the other on, all the information relating to
the Company and the Company Subsidiaries or Parent and its Subsidiaries, as the
case may be, that appears in any filing made with, or written materials
submitted to, any third party and/or any Governmental Entity in connection with
the Merger and the other transactions contemplated by this Agreement. Parent
and the Company may, as each deems reasonably advisable and necessary,
designate any competitively sensitive information provided to the other
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under this Section 6.5(a) as "outside counsel only." Such information shall be
given only to outside counsel of the recipient. In addition, Parent and the
Company may redact any information from such documents shared with the other
party or its counsel that is not pertinent to the subject matter of the filing
or submission.
(b) Without limiting Section 6.5(a), Parent and the Company shall:
(i) each use its reasonable best efforts to avoid the entry of, or to
have vacated or terminated, any decree, order, or judgment that would
restrain, prevent or delay the Closing, on or before the Outside Date,
including defending through litigation on the merits any claim asserted in
any court by any person; and
(ii) each use its reasonable best efforts to avoid or eliminate each and
every impediment under any antitrust, competition or trade regulation Law
that may be asserted by any Governmental Entity with respect to the Merger
so as to enable the Closing to occur as soon as reasonably possible (and in
any event no later than the Outside Date), including implementing,
contesting or resisting any litigation before any court or quasi-judicial
administrative tribunal seeking to restrain or enjoin the Merger; provided,
however, that nothing in this Agreement shall require any of Parent and its
Subsidiaries or the Company and its Subsidiaries to commit to any
divestitures, licenses or hold separate or similar arrangements with respect
to its assets or conduct of business arrangements, whether as a condition to
obtaining any approval from a Governmental Entity or any other person or for
any other reason, if, in any such case, such divestiture, license, holding
separate or arrangement (x) is not conditioned upon the consummation of the
Merger or (y) would, individually or in the aggregate, have a Parent
Material Adverse Effect (including, for purposes of this clause, the
Surviving Corporation and its Subsidiaries) after giving effect to the
Merger.
(c) Subject to the proviso contained in Section 6.5(b)(ii) and the proviso
contained in the following sentence of this Section 6.5(c), the Company and
Parent shall give (or shall cause their respective Subsidiaries to give) any
notices to third parties, and use, and cause their respective Subsidiaries to
use, reasonable best efforts to obtain any non-governmental third party
consents, (i) necessary, proper or advisable to consummate the transactions
contemplated in this Agreement, (ii) required to be disclosed in the Company
Disclosure Letter or the Parent Disclosure Letter, as applicable, or (iii)
required to prevent a Company Material Adverse Effect from occurring prior to
or after the Effective Time or a Parent Material Adverse Effect from occurring
after the Effective Time. In the event that either party shall fail to obtain
any third party consent described in the first sentence of this Section 6.5(c),
such party shall use reasonable best efforts, and shall take any such actions
reasonably requested by the other party hereto, to minimize any adverse effect
upon the Company and Parent, their respective Subsidiaries, and their
respective businesses resulting, or which could reasonably be expected to
result after the Effective Time, from the failure to obtain such consent;
provided that no obligation to make a material payment or grant a material
right not conditioned upon the consummation of the Merger shall be imposed by
this Section 6.5(c).
(d) From the date of this Agreement until the Effective Time, each party
shall promptly notify the other party in writing of any pending or, to the
Knowledge of the Company or Parent, as appropriate, threatened action, suit,
arbitration or other proceeding or investigation by any Governmental Entity or
any other person (i) challenging or seeking damages in connection with the
Merger or the conversion of Company Common Stock into Parent Common Stock
pursuant to the Merger or (ii) seeking to restrain or prohibit the consummation
of the Merger or otherwise limit the right of Parent or its Subsidiaries to own
or operate all or any portion of the businesses or assets of the Company or its
Subsidiaries.
Section 6.6 Certain Notices. From and after the date of this Agreement
until the Effective Time, each party hereto shall promptly notify the other
party hereto of (a) the occurrence, or non-occurrence, of any event that would
be likely to cause any condition to the obligations of any party to effect the
Merger and the other transactions contemplated by this Agreement not to be
satisfied or (b) the failure of the Company or Parent, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it pursuant to this Agreement which would reasonably be
expected to result in any condition to the obligations of any party to effect
the Merger and the other transactions contemplated by this Agreement not to be
satisfied;
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provided, however, that the delivery of any notice pursuant to this Section 6.6
shall not cure any breach of any representation or warranty, the failure to
comply with any covenant, the failure to meet any condition or otherwise limit
or affect the remedies available hereunder to the party receiving such notice.
Section 6.7 Public Announcements. Parent and the Company will consult with
each other before issuing, and provide each other the opportunity to review and
make reasonable comment upon, any press release or making any public statement
with respect to this Agreement and the transactions contemplated hereby and,
except as may be required by applicable Law or any listing agreement with
Nasdaq, will not issue any such press release or make any such public statement
prior to such consultation; provided, however, that each of Parent and the
Company may make any public statement in response to specific questions by the
press, analysts, investors or those attending industry conferences or financial
analyst conference calls, so long as any such statements are not inconsistent
with previous press releases, public disclosures or public statements made
jointly by Parent and the Company and do not reveal non-public information
regarding the other party.
Section 6.8 Nasdaq Listing. Parent shall use reasonable best efforts (a)
to cause the Parent Common Stock to be issued in the Merger to be approved for
listing upon the Effective Time on Nasdaq or on such national securities
exchange as the Parent Common Stock is listed and (b) to cause the Parent
Common Stock issued upon the exercise of converted Company Options to be
approved for listing on Nasdaq or on such national securities exchange as
Parent Common Stock is listed.
Section 6.9 Employee Benefit Matters.
(a) For a period of at least two years following the Effective Time, Parent
shall provide employee benefits (excluding any benefits attributable to equity
based plans or grants) to the employees and former employees of the Company and
their respective Subsidiaries ("New Parent Employees") that are no less
favorable in the aggregate than those provided to such persons in effect on the
date hereof. Nothing herein shall require Parent to continue any particular
Company Benefit Plan or prevent the amendment or termination thereof (subject
to the maintenance, in the aggregate, of the benefits as provided in the
preceding sentence); provided, however, that Parent shall not take any action
(by way of amendment, termination or otherwise) which is in violation of the
terms of any Company Benefit Plan or applicable Law.
(b) With respect to each benefit plan of Parent ("Parent Benefit Plan") in
which New Parent Employees subsequently participate, for purposes of
determining vesting and entitlement to benefits, including for severance
benefits and vacation entitlement (but not for accrual of pension benefits),
service with the Company (or predecessor employers to the extent the Company
provides past service credit) shall be treated as service with Parent;
provided, that such service shall not be recognized to the extent that such
recognition would result in a duplication of benefits or to the extent that
such service was not recognized under the applicable Company Benefit Plan. Such
service also shall apply for purposes of satisfying any waiting periods,
evidence of insurability requirements, or the application of any pre-existing
condition limitations. Each Parent Benefit Plan shall waive pre-existing
condition limitations to the same xtent waived under the applicable Company
Benefit Plan. New Parent Employees shall be given credit for amounts paid under
a corresponding benefit plan during the same period for purposes of applying
deductibles, co-payments and out-of-pocket maximums as though such amounts had
been paid in accordance with the terms and conditions of the Parent Benefit
Plan for the plan year in which the Effective Time occurs.
(c) At the request of Parent, the Company shall terminate any and all 401(k)
plans of the Company, effective not later than the day immediately preceding
the Closing Date. In the event that Parent requests that such 401(k) plan(s) be
terminated, the Company shall provide Parent with evidence that such 401(k)
plan(s) have been terminated pursuant to resolution of Company's Board of
Directors (the form and substance of which shall be subject to review and
approval by Parent) not later than the day immediately preceding the Closing
Date.
Section 6.10 Indemnification of Directors and Officers.
(a) Parent shall, and shall cause the Surviving Corporation to, indemnify
and hold harmless, and provide advancement of expenses to, all past and present
directors, officers and employees of the Company or any of its
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Subsidiaries to the fullest extent permitted by Law for acts or omissions
occurring at or prior to the Effective Time (including for acts or omissions
occurring in connection with the approval of this Agreement and the
consummation of the transactions contemplated hereby) in their capacities as
such.
(b) For six years from the Effective Time, Parent shall, or shall cause the
Surviving Corporation to, cause to be maintained in effect for the benefit of
the Company's current directors and officers an insurance and indemnification
policy that provides coverage for acts or omissions occurring prior to the
Effective Time (the "D&O Insurance") covering each such person currently
covered by the officers' and directors' liability insurance policies of the
Company on terms with respect to coverage and in amounts no less favorable than
those of the Company's policies in effect on the date hereof; provided,
however, that the Surviving Corporation shall not be required to pay an annual
premium for the D&O Insurance in excess of 200% of the estimated premium for
the 2002 fiscal year, which premium the Company presently expects to be
approximately $1,850,000.
(c) Parent shall, and shall cause the Surviving Corporation to, cause to be
maintained in effect in the Surviving Corporation's (or any successor's)
Articles of Incorporation and Bylaws provisions with respect to indemnification
and advancement of expenses that are at least as favorable to the intended
beneficiaries as those contained in the Company Articles and the Company Bylaws
as in effect on the date hereof.
(d) Parent agrees to honor (and hereby guarantees the Surviving
Corporation's performance under) all indemnification agreements entered into by
the Company or any Company Subsidiary. In the event that Parent or the
Surviving Corporation or any of their respective successors or assigns (i)
consolidates with or merges into any other person and is not the continuing or
surviving corporation or entity of such consolidation or merger or (ii)
transfers or conveys all or substantially all its properties and assets to any
person, then, and in each such case, Parent shall cause proper provisions to be
made so that the successors and assigns of the Parent or the Surviving
Corporation, as the case may be, assume the obligations set forth in this
ection 6.10. The obligations of Parent and the Surviving Corporation under this
Section 6.10 shall not be terminated or modified in such a manner as to
adversely affect any indemnitee to whom this Section 6.10 applies without the
express written consent of such affected indemnitee (it being expressly agreed
that the indemnitees to whom this Section 6.10 applies shall be third party
beneficiaries of this Section 6.10).
Section 6.11 Plan of Reorganization. This Agreement is intended to
constitute a "plan of reorganization" within the meaning of Treasury Regulation
Section 1.368-2(g).
Section 6.12 Affiliate Letters. The Company shall, promptly after the date
hereof and prior to the mailing of the Joint Proxy/Prospectus, deliver to
Parent a list setting forth the names of all persons the Company expects to be,
at the time of the Company Shareholders' Meeting, "affiliates" of the Company
for purposes of Rule 145 under the Securities Act. The Company shall furnish
such information and documents as Parent may reasonably request for the purpose
of reviewing the list. The Company shall use reasonable best efforts to cause
each person who is identified as an affiliate in the list furnished or
supplemented pursuant to this Section 6.12 to execute a written agreement,
promptly following the date hereof, in substantially the form of Exhibit 6.12
hereto.
Section 6.13 Section 16 Matters. Prior to the Effective Time: (a) the
Board of Directors of Parent, or an appropriate committee of non-employee
directors thereof, shall adopt a resolution consistent with the interpretive
guidance of the SEC so that the acquisition by any officer or director of the
Company who may become a covered person of Parent for purposes of Section 16 of
the Exchange Act (together with the rules and regulations thereunder, "Section
16"), of shares of Parent Common Stock or options to purchase shares of Parent
Common Stock pursuant to this Agreement and the Merger shall be an exempt
transaction for purposes of Section 16; and (b) the Board of Directors of the
Company or an appropriate committee of non-employee directors thereof, shall
adopt a resolution consistent with the interpretive guidance of the SEC so that
the disposition by any officer or director of the Company who is a covered
person of the Company for purposes of Section 16 of shares of Company Common
Stock or Company Options pursuant to this Agreement and the Merger shall be an
exempt transaction for purposes of Section 16.
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Section 6.14 Stock Award Matters.
(a) The Company shall, and shall cause the administrator(s) of each of the
Company Stock Option Plans and the ESPP to, take any and all actions necessary
(under the applicable Company Stock Option Plan and otherwise) to (i) cause the
Company Options to be treated in accordance with Section 2.4 hereof, including,
without limitation, amending the Company Stock Option Plans and, if necessary
or desirable, obtaining the consent of the optionholders to such treatment; and
(ii) cause the stock purchase rights outstanding under the ESPP to be assumed
and converted into rights to purchase Parent Common Stock pursuant to ection
2.5 in such manner as will not result in acceleration of the exercise of stock
purchase rights under the ESPP.
(b) Promptly after the Effective Time, Parent shall file one or more
registration statements on Form S-3 or Form S-8, as the case may be (or any
other successor or other appropriate forms), with respect to the shares of
Parent Common Stock subject to options and purchase rights issued pursuant to
Sections 2.4 and 2.5 and shall maintain the effectiveness of such registration
statement or registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such options
remain outstanding.
Section 6.15 Restructure of Transaction. In the event that either of
Latham & Watkins, counsel to Parent, or Skadden, Arps, Slate, Meagher & Flom
LLP, counsel to the Company, is unable to render its opinion pursuant to
Section 7.2(c) or Section 7.3(c), respectively, the structure of the Merger
shall be revised to provide for the merger of the Company with and into Merger
Sub with Merger Sub being the surviving entity in such Merger (the "Forward
Subsidiary Merger"), subject to the approval of each of the Company and Parent
which approval shall not be unreasonably withheld or delayed; provided, that if
a Forward Subsidiary Merger structure would not result in each of Latham &
Watkins or Skadden, Arps, Slate, Meagher & Flom LLP being able to render such
respective opinions, the Company and Parent shall negotiate in good faith to
revise the structure of the business combination between the Company and Parent
such that each of Latham & Watkins and Skadden, Arps, Slate, Meagher & Flom LLP
will be able to render such opinion; provided, further, that no such revision
to the structure of the Merger shall (a) result in any change in the Merger
Consideration, (b) be materially adverse to the interests of Parent, the
Company, Merger Sub, the holders of shares of Parent Common Stock or the
holders of shares of Company Common Stock or (c) unreasonably impede or delay
consummation of the Merger. If the structure of the Merger is so revised, this
Agreement shall be amended by the parties as appropriate to give effect to the
revised structure of the Merger with each party executing a written amendment
to this Agreement as necessary to reflect the foregoing.
ARTICLE 7.
CLOSING CONDITIONS
Section 7.1 Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and
the other transactions contemplated herein shall be subject to the satisfaction
at or prior to the Effective Time of the following conditions, any or all of
which may be waived, in whole or in part, to the extent permitted by applicable
Law:
(a) Effectiveness of the Registration Statement. The Registration Statement
shall have been declared effective by the SEC under the Securities Act. No stop
order suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceedings for that purpose shall have been
initiated or, to the Knowledge of Parent or the Company, threatened by the SEC.
(b) Shareholder and Stockholder Approval. The Company Shareholder Approval
and the Parent Stockholder Approval shall have been obtained.
(c) No Order. No Governmental Entity, nor any federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, judgment or
injunction or order (whether temporary, preliminary or permanent), in any case
which is in effect and which prevents or prohibits consummation of the Merger.
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(d) Consents and Approvals. Other than the filing provided for under
Section 1.2 and filings pursuant to the HSR Act, all consents, approvals and
authorizations of any Governmental Entity required of Parent, the Company or
any of their Subsidiaries to consummate the Merger, the failure of which to be
obtained or taken, individually or in the aggregate, would have a Parent
Material Adverse Effect (determined, for purposes of this clause, after giving
effect to the Merger), shall have been obtained.
(e) HSR Act. The applicable waiting periods, together with any extensions
thereof, under the HSR Act shall have expired or been terminated.
(f) Nasdaq Listing. The shares of Parent Common Stock issuable to the
Company's shareholders in the Merger and such other shares of Parent Common
Stock to be reserved for issuance in connection with the Merger shall have been
approved for listing on Nasdaq or on such national securities exchange as
Parent Common Stock is then listed, subject to official notice of issuance.
(g) Litigation. There shall not be instituted or pending any action,
litigation or proceeding by any Governmental Entity (i) seeking to prohibit,
restrain or otherwise interfere with the Merger or the ownership or operation
by Parent or any of its Subsidiaries of all or any portion of the business or
assets of the Company or Parent or any of their Subsidiaries or to compel
Parent or any of its Subsidiaries to dispose of or hold separate all or any
portion of the business or assets of the Company or Parent or any of their
respective Subsidiaries, or (ii) seeking divestiture of any shares of Company
Common Stock (or shares of stock of the Surviving Corporation) or seeking to
impose or confirm limitations on the ability of Parent to effectively exercise
full rights of ownership of the shares of Company Common Stock (or shares of
stock of the Surviving Corporation), including the right to vote any securities
on any matters properly presented to shareholders, in the case of clause (i) or
(ii), which would, or would reasonably be expected to, have a Parent Material
Adverse Effect (determined, for purposes of this clause, after giving effect to
the Merger).
Section 7.2 Additional Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to effect the Merger and the
other transactions contemplated herein are also subject to the following
conditions:
(a) Representations and Warranties. The representations and warranties of
the Company contained in this Agreement shall be true and correct (without
giving effect to any limitation as to "materiality" or "Company Material
Adverse Effect" set forth therein) at and as of the Effective Time as if made
at and as of such time (except to the extent expressly made as of an earlier
date, in which case as of such earlier date), except where the failure of such
representations and warranties to be true and correct (without giving effect to
any limitation as to "materiality" or "Company Material Adverse Effect" set
forth therein) would not, individually or in the aggregate, result in a Company
Material Adverse Effect. Parent shall have received a certificate signed by an
executive officer of the Company on its behalf to the foregoing effect.
(b) Agreements and Covenants. The Company shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time. Parent shall have received a certificate of an executive officer of the
Company to that effect.
(c) Parent Tax Opinion. Parent shall have received the opinion of Latham &
Watkins, dated the date of the Effective Time, to the effect that the Merger
will be treated for Federal income Tax purposes as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, Latham &
Watkins shall receive and rely upon representations contained in letters of
Parent and the Company to be delivered as of the Effective Time substantially
in the forms attached hereto as Exhibits 7.2(c)(i) and 7.2(c)(ii),
respectively. The opinion referred to in this Section 7.2(c) shall not be
waivable after receipt of the Company Shareholder Approval or the Parent
Stockholder Approval referred to in Section 7.1(b), unless further stockholder
approval is obtained with appropriate disclosure.
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(d) AHP Agreements. The AHP Agreements shall be in full force and effect,
and no authorized officer of AHP shall have notified Parent in writing of, and
AHP shall not have publicly announced, AHP's intention to repudiate such
agreements.
Section 7.3 Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger and the other transactions
contemplated in this Agreement is also subject to the following conditions:
(a) Representations and Warranties. The representations and warranties of
Parent contained in this Agreement shall be true and correct (without giving
effect to any limitation as to "materiality" or "Parent Material Adverse
Effect" set forth therein) at and as of the Effective Time as if made at and as
of such time (except to the extent expressly made as of an earlier date, in
which case as of such earlier date), except where the failure of such
representations and warranties to be true and correct (without giving effect to
any limitation as to "materiality" or "Parent Material Adverse Effect" set
forth therein) would not, individually or in the aggregate, result in a Parent
Material Adverse Effect. The Company shall have received a certificate signed
by an executive officer of Parent on its behalf to the foregoing effect.
(b) Agreements and Covenants. Parent shall have performed or complied in
all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time. The Company shall have received a certificate of an executive officer of
Parent to that effect.
(c) Company Tax Opinion. The Company shall have received the opinion of
Skadden, Arps, Slate, Meagher & Flom LLP, dated the date of the Effective Time,
to the effect that the Merger will be treated for federal income Tax purposes
as a reorganization within the meaning of Section 368(a) of the Code. In
rendering such opinion, Skadden, Arps, Slate, Meagher & Flom LLP shall receive
and rely upon representations contained in letters of Parent and the Company to
be delivered as of the Effective Time substantially in the form attached hereto
as Exhibits 7.2(c)(i) and 7.2(c)(ii), respectively. The opinion referred to in
this Section 7.3(c) shall not be waivable after receipt of the Company
Shareholder Approval or the Parent Stockholder Approval referred to in Section
7.1(b), unless further stockholder approval is obtained with appropriate
disclosure.
ARTICLE 8.
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, by action taken or authorized by the Board of
Directors of the terminating party or parties, whether before or after approval
of the matters presented in connection with the Merger by the shareholders of
the Company or the stockholders of Parent:
(a) By mutual written consent of Parent and the Company, which consent shall
have been approved by action of their respective Boards of Directors;
(b) By written notice of either the Company or Parent, if the Merger shall
not have been consummated prior to September 30, 2002 (such date, as it may be
extended as provided below, shall be referred to herein as the "Outside Date");
provided, however, that such date may, from time to time, be extended by either
party (by written notice thereof to the other party) up to and including
December 31, 2002 in the event all conditions to effect the Merger other than
one or more conditions set forth in Sections 7.1(c), 7.1(d), 7.1(e) or 7.1(g)
(the "Regulatory Conditions") have been or are capable of being satisfied at
the time of each such extension and the Regulatory Conditions have been or are
reasonably capable of being satisfied on or prior to December 31, 2002;
provided further that the right to terminate this Agreement under this Section
8.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or results in, the
failure of the Merger to occur on or before such date;
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(c) By written notice of either the Company or Parent, if any Governmental
Entity shall have issued an order, decree or ruling or taken any other action
permanently restraining, enjoining or otherwise prohibiting the Merger, and
such order, decree, ruling or other action shall have become final and
nonappealable (which order, decree, ruling or other action the parties shall
have used their reasonable best efforts to resist, resolve or lift, as
applicable, subject to Section 6.5);
(d) By written notice of Parent, if (i) the Board of Directors of the
Company shall have withdrawn or adversely modified, or shall have resolved to
withdraw or adversely modify, the Company Recommendation; (ii) the Board of
Directors of the Company shall have approved or recommended, or shall have
resolved to approve or recommend, to the shareholders of the Company, an
Acquisition Proposal other than that contemplated by this Agreement; or (iii)
the Company fails to call or hold the Company Shareholders' Meeting by the
fifth day prior to the Outside Date;
(e) By written notice of the Company, if (i) the Board of Directors of
Parent shall have withdrawn or adversely modified, or shall have resolved to
withdraw or adversely modify, the Parent Recommendation or (ii) Parent fails to
call or hold the Parent Stockholders' Meeting by the fifth day prior to the
Outside Date;
(f) By written notice of Parent, if there has been a breach by the Company
of any representation, warranty, covenant or agreement contained in this
Agreement which (i) would result in a failure of a condition set forth in
Section 7.2(a) or 7.2(b) and (ii) cannot be cured prior to the Outside Date,
provided that Parent shall have given the Company written notice, delivered at
least twenty days prior to such termination, stating Parent's intention to
terminate this Agreement pursuant to this Section 8.1(f) and the basis for such
termination;
(g) By written notice of the Company, if there has been a breach by Parent
of any representation, warranty, covenant or agreement contained in this
Agreement which (i) would result in a failure of a condition set forth in
Section 7.3(a) or 7.3(b) and (ii) cannot be cured prior to the Outside Date,
provided that the Company shall have given Parent written notice, delivered at
least twenty days prior to such termination, stating the Company's intention to
terminate this Agreement pursuant to this Section 8.1(g) and the basis for such
termination; or
(h) By written notice of either Parent or the Company if (i) the Company
Shareholder Approval shall not have been obtained at the Company Shareholders'
Meeting duly convened therefor (or at any adjournment or postponement thereof)
at which a quorum is present and the vote to adopt and approve this Agreement
and the Merger is taken, or (ii) the Parent Stockholder Approval shall not have
been obtained at the Parent Stockholders' Meeting duly convened therefor (or at
any adjournment or postponement thereof) at which a quorum is present and the
vote to approve the Share Issuance is taken.
Section 8.2 Effect of Termination.
(a) Limitation on Liability. In the event of termination of this Agreement
by either the Company or Parent as provided in Section 8.1, this Agreement
shall forthwith become void and there shall be no liability or obligation on
the part of Parent, Merger Sub or the Company or their respective Subsidiaries,
officers or directors, except with respect to Sections 6.3(b) and 8.2 and
Article 9 and with respect to any liabilities or damages incurred or suffered
by a party as a result of the willful and material breach by the other party of
any of its representations, warranties, covenants or other agreements set forth
in this Agreement.
(b) Parent Expenses. Parent and the Company agree that if this Agreement is
terminated pursuant to Sections 8.1(f), then the Company shall pay Parent an
amount equal to the sum of Parent's Expenses up to an amount equal to $15
million.
(c) Company Expenses. Parent and the Company agree that if this Agreement
is terminated pursuant to Sections 8.1(g), then Parent shall pay to the Company
an amount equal to the sum of the Company's Expenses up to an amount equal to
$15 million.
(d) Payment of Expenses. Payment of Expenses pursuant to Sections 8.2(b) or
8.2(c) shall be made not later than two Business Days after delivery to the
other party of notice of demand for payment and a documented
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itemization setting forth in reasonable detail all Expenses of the party
entitled to receive payment (which itemization may be supplemented and updated
from time to time by such party until the ninetieth day after such party
delivers such notice of demand for payment).
(e) Company Termination Fee.
(i) In the event that this Agreement is terminated pursuant to (A)
Section 8.1(d)(i) and the Board of Directors of the Company has withdrawn or
adversely modified the Company Recommendation in such a manner that the
Company cannot submit this Agreement to a vote of the Company's shareholders
pursuant to Section 23B.11.030(2) of the WBCA, (B) Section 8.1(d)(ii), or
(C) Section 8.1(d)(iii), then the Company shall pay to Parent, within two
Business Days following written notice of such termination, a termination
fee of $475,000,000 in immediately available funds.
(ii) In the event that the Company shall have withdrawn or adversely
modified the Company Recommendation prior to the Company Shareholders'
Meeting and this Agreement is terminated pursuant to Section 8.1(h)(i), then
the Company shall pay to Parent, within two Business Days following written
notice of such termination, a termination fee of $475,000,000 in immediately
available funds.
(iii) In the event that (A) this Agreement is terminated pursuant to
Section 8.1(h)(i) and, at any time after the date of this Agreement and
before the vote on this Agreement at the Company Shareholders' Meeting, an
Acquisition Proposal with respect to the Company shall have been publicly
announced and not bona fide withdrawn and (B) a Competing Transaction with
respect to the Company is consummated or the Company enters into a
definitive agreement with respect to a Competing Transaction, in either
case, within twelve months following the termination of this Agreement, then
the Company shall pay to Parent, within two Business Days after the earlier
of the consummation of such Competing Transaction or execution of a
definitive agreement with respect to such Competing Transaction, a fee of
$475,000,000 in immediately available funds.
(f) Parent Termination Fee.
(i) In the event that the Board of Directors of Parent shall have
withdrawn or adversely modified the Parent Recommendation and, thereafter,
this Agreement is terminated pursuant to Section 8.1(h)(ii), then Parent
shall pay to the Company, within two Business Days following written notice
of such termination, a termination fee of $475,000,000 in immediately
available funds.
(ii) In the event that this Agreement is terminated pursuant to Section
8.1(e)(ii), then Parent shall pay to the Company, within two Business Days
following written notice of such termination, a termination fee of
$475,000,000 in immediately available funds.
(g) All Payments. All payments under Section 8.2 shall be made by wire
transfer of immediately available funds to an account designated by the party
entitled to receive payment. The Company and Parent acknowledge that the
agreements contained in Section 8.2 are an integral part of the transactions
contemplated by this Agreement and that, without these agreements, neither the
Company nor Parent would enter into this Agreement. Accordingly, if either
party fails promptly to pay any amount due pursuant to this Section 8.2 and, in
order to obtain such payment, the Company or Parent, as applicable, commences a
suit which results in a judgment against the other party for the fee set forth
in this Section 8.2, such defaulting party shall pay to the prevailing party
its costs and expenses (including reasonable attorneys' fees and expenses) in
connection with such suit, together with interest on the amount of the fee at
the prime rate of Citibank, N.A. in effect on the date such payment was
required to be made.
Section 8.3 Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that,
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after approval of the Merger by the shareholders of the Company, no amendment
may be made without further shareholder approval which, by Law or in accordance
with the rules of Nasdaq, requires further approval by such shareholders. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.
Section 8.4 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto, and (c) waive compliance by the other party
with any of the agreements or conditions contained herein; provided, however,
that after any approval of the transactions contemplated by this Agreement by
the shareholders of the Company, there may not be, without further approval of
such shareholders, any extension or waiver of this Agreement or any portion
thereof which, by Law or in accordance with the rules of Nasdaq, requires
further approval by such shareholders. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby, but such extension or waiver or failure to insist
on strict compliance with an obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
Section 8.5 Fees and Expenses. Subject to Sections 8.2(a), 8.2(b), 8.2(c)
and 8.2(g), all expenses incurred by the parties hereto shall be borne solely
and entirely by the party which has incurred the same; provided, however, that
each of Parent and the Company shall pay one-half of the expenses related to
printing, filing and mailing the Registration Statement and the Proxy Statement
and all SEC and other regulatory filing fees incurred in connection with the
Registration Statement and the Proxy Statement.
ARTICLE 9.
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section 9.2 Notices. Any notices or other communications required or
permitted under, or otherwise in connection with this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person or
upon confirmation of receipt when transmitted by facsimile transmission (but
only if followed by transmittal by national overnight courier or hand for
delivery on the next Business Day) or on receipt after dispatch by registered
or certified mail, postage prepaid, addressed, or on the next Business Day if
transmitted by national overnight courier, in each case as follows:
(a) If to Parent or Merger Sub, addressed to it at:
Amgen Inc.
One Amgen Center Drive
Thousand Oaks, CA 91320
Fax: (805) 499-3540
Attn: Chief Executive Officer
with a copy to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, NY 10022-4802
Fax: (212) 751-4864
Attn: Charles Nathan
and
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Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, CA 90071-2007
Fax: (213) 891-8763
Attn: Gary Olson
Paul D. Tosetti
Charles K. Ruck
(b) If to the Company, addressed to it at:
Immunex Corporation
51 University Street
Seattle, Washington 98101
Fax: (206) 467-0368
Attn: Chief Executive Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 10036
Fax: (212) 735-2000
Attn: Roger Aaron
Stephen Arcano
Section 9.3 Certain Definitions. For purposes of this Agreement, the term:
"Accelerated Company Option" shall mean a Company Option with a per share
exercise price which is equal to or less than the greater of (i) $40.00 or (ii)
the closing sales price for a share of Company Common Stock (or the closing
bid, if no sales were reported) as quoted on Nasdaq for the last market trading
day immediately preceding the Effective Time, as reported in The Wall Street
Journal.
"Acquisition Proposal" means any offer or proposal concerning any (a)
merger, consolidation, business combination, or similar transaction involving
the Company or any Significant Subsidiary of the Company pursuant to which the
shareholders of the Company immediately prior to such transaction would own
less than 80% of any class of equity securities of the entity surviving or
resulting from such transaction (or the ultimate parent entity thereof), (b)
sale or other disposition directly or indirectly of assets of the Company or
the Company Subsidiaries representing 20% or more of the consolidated assets of
the Company and the Company Subsidiaries, (c) issuance, sale, or other
disposition of securities (or options, rights or warrants to purchase, or
securities convertible into or exchangeable for, such securities) in each case
by the Company representing 20% or more of the voting power of the Company or
(d) transaction in which any person shall acquire beneficial ownership, or the
right to acquire beneficial ownership or any group shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of, 20% or
more of the outstanding voting capital stock of the Company (other than the
Merger).
"Affiliate" of a specified person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the person specified.
"beneficial ownership" (and related terms such as "beneficially owned" or
"beneficial owner") has the meaning set forth in Rule 13d-3 under the Exchange
Act.
"Blue Sky Laws" means state securities or "blue sky" Laws.
"Business Day" means any day on which banks are not required or authorized
to close in the City of New York.
"Cancelled Company Option" shall mean a Company Option with a per share
exercise price which exceeds the greater of (i) $40.00 or (ii) the closing
sales price for a share of Company Common Stock (or the closing bid,
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if no sales were reported) as quoted on Nasdaq for the last market trading day
immediately preceding the Effective Time, as reported in The Wall Street
Journal.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended as of the date hereof.
"Company Intellectual Property" means all intellectual property or other
proprietary rights of every kind, foreign or domestic, including all patents,
patent applications, inventions (whether or not patentable), processes,
products, technologies, discoveries, copyrightable and copyrighted works,
apparatus, trade secrets, trademarks, trademark registrations and applications,
domain names, service marks, service mark registrations and applications, trade
names, trade secrets, know-how, trade dress, copyright registrations, customer
lists, confidential marketing and customer information, licenses, confidential
technical information, software, and all documentation thereof, in each case,
used in the business of the Company as of the date of this Agreement or the
Closing Date.
"Company Material Adverse Effect" means any change affecting, or condition
having an effect on, the Company or any Company Subsidiary that is, or would
reasonably be expected to be, materially adverse to the business, financial
condition or results of operations of the Company and the Company Subsidiaries,
taken as a whole, except, in each case, for any such change or condition
resulting from or arising out of (i) changes or developments in the
biotechnology industry generally, which changes or developments do not
disproportionately affect the Company relative to other participants in the
biotechnology industry in any material respect, (ii) changes or developments in
financial or securities markets or the economy in general which changes do not
disproportionately affect the Company in any material respect, (iii) any change
in the Company's stock price or trading volume, in and of itself or (iv) the
announcement of the transactions contemplated by this Agreement.
"Company Option" means any option or warrant to purchase Company Common
Stock.
"Company Stock Option Plan" means the Immunex Corporation 1993 Stock Option
Plan, as Amended and Restated on April 25, 2000, the Immunex Corporation 1999
Stock Option Plan, as Amended and Restated on April 25, 2000, the Stock Option
Grant Program for Nonemployee Directors under the Immunex Corporation Amended
and Restated 1999 Stock Option Plan, the Immunex Corporation Stock Option Plan
for Nonemployee Directors, as Amended and Restated on April 18, 2000, and in
each case, the addendums thereto, or any other plan, agreement or arrangement
pursuant to which Company Options have been issued as of the Effective Time,
other than the ESPP.
"Competing Transaction" means any (a) merger, consolidation, business
combination, or similar transaction involving the Company or any Significant
Subsidiary of the Company pursuant to which the shareholders of the Company
immediately prior to such transaction would own less than 70% of any class of
equity securities of the entity surviving or resulting from such transaction
(or the ultimate parent entity thereof), (b) sale or other disposition directly
or indirectly of assets of the Company or the Company Subsidiaries representing
30% or more of the consolidated assets of the Company and the Company
Subsidiaries, (c) issuance, sale, or other disposition of securities (or
options, rights or warrants to purchase, or securities convertible into or
exchangeable for, such securities) in each case by the Company to any person or
"group" (as defined in Rule 13d-5(b)(1) under the Exchange Act) representing
30% or more of the voting power of the Company or (d) transaction in which any
person shall acquire beneficial ownership, or the right to acquire beneficial
ownership or any group shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, 30% or more of the outstanding
voting capital stock of the Company (other than any shares beneficially owned
by AHP or its Subsidiaries).
"Contracts" means any of the agreements, contracts, leases, powers of
attorney, notes, loans, evidence of indebtedness, purchase orders, letters of
credit, settlement agreements, franchise agreements, undertakings, covenants
not to compete, employment agreements, licenses, instruments, obligations,
commitments,
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understandings, policies, purchase and sales orders, quotations and other
executory commitments to which any company is a party or to which any of the
assets of the companies are subject, whether oral or written, express or
implied.
"control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the management or policies of
a person, whether through the ownership of securities or as trustee or
executor, by Contract or credit arrangement or otherwise.
"delivered" or "made available" (or words of similar import) shall include,
without limitation, all documents and materials made available in the Company's
data rooms in Los Angeles, California or New York, New York or Parent's data
rooms in Los Angeles, California or New York, New York, as the case may be.
"Environmental Laws" means any federal, state, local or foreign statute,
Law, ordinance, regulation, rule, code, treaty, writ or order and any
enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree, judgment, stipulation,
injunction, permit, authorization, policy, opinion, or agency requirement, in
each case having the force and effect of Law, relating to the pollution,
protection, investigation or restoration of the environment, health and safety
as affected by the environment or natural resources, including, without
limitation, those relating to the use, handling, presence, transportation,
treatment, storage, disposal, release, threatened release or discharge of
Hazardous Materials or noise, odor, wetlands, pollution or contamination.
"Environmental Permits" means any permit, approval, identification number,
license and other authorization required under any applicable Environmental Law.
"Equity Interest" means any share, capital stock, partnership, member or
similar interest in any entity, and any option, warrant, right or security
(including debt securities) convertible, exchangeable or exercisable therefor.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means any entity or trade or business (whether or not
incorporated) other than the Company that together with the Company is
considered under common control and treated as a single employer under Section
4.14(b), (c), (m) or (o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Expenses" includes all reasonable out-of-pocket expenses (including,
without limitation, all reasonable fees and expenses of counsel, accountants,
investment bankers, experts and consultants to a party hereto and its
Affiliates) incurred by a party or on its behalf in connection with or related
to the authorization, preparation, negotiation, execution and performance of
this Agreement and the transactions contemplated hereby, including the
preparation, printing, filing and mailing of the Registration Statement and
Proxy Statement, as applicable, and the solicitation of shareholder approvals
and all other matters related to the transactions contemplated hereto.
"GAAP" means generally accepted accounting principles as applied in the
United States.
"Governance Agreement" means that certain Amended and Restated Governance
Agreement dated as of December 15, 1992 among American Cyanamid Company,
Lederle Oncology Corporation and the Company, as amended by Amendment No. 1 to
the Amended and Restated Governance Agreement dated May 20, 1999 between
American Cyanamid Company and the Company and Amendment No. 2 to Amended and
Restated Governance Agreement dated August 9, 2000 between American Cyanamid
Company and the Company.
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"Governmental Entity" means domestic or foreign governmental,
administrative, judicial or regulatory authority.
"group" is defined as in the Exchange Act, except where the context
otherwise requires.
"Hazardous Materials" means (A) any petroleum, petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (B) any chemical, material or other
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder.
"Intellectual Property" means intellectual property or other proprietary
rights of every kind, foreign or domestic, including all patents, patent
applications, inventions (whether or not patentable), processes, products,
technologies, discoveries, copyrightable and copyrighted works, apparatus,
trade secrets, trademarks, trademark registrations and applications, domain
names, service marks, service mark registrations and applications, trade names,
trade secrets, know-how, trade dress, copyright registrations, customer lists,
confidential marketing and customer information, licenses, confidential
technical information, software, and all documentation thereof.
"Knowledge" of any person which is not an individual means, with respect to
any specific matter, the actual knowledge of such person's executive officers
and any other officer having primary responsibility for such matter.
"Law" means foreign or domestic law, statute, code, ordinance, rule,
regulation, order, judgment, writ, stipulation, award, injunction, decree or
arbitration award or finding.
"Liens" means any mortgage, pledge, lien, security interest, conditional or
installment sale agreement, encumbrance, charge or other claims of third
parties of any kind.
"Nasdaq" means the Nasdaq Stock Market.
"Parent Certificate" means Parent's Restated Certificate of Incorporation,
as amended through the date of this Agreement.
"Parent Intellectual Property" means all intellectual property or other
proprietary rights of every kind, foreign or domestic, including all patents,
patent applications, inventions (whether or not patentable), processes,
products, technologies, discoveries, copyrightable and copyrighted works,
apparatus, trade secrets, trademarks, trademark registrations and applications,
domain names, service marks, service mark registrations and applications, trade
names, trade secrets, know-how, trade dress, copyright registrations, customer
lists, confidential marketing and customer information, licenses, confidential
technical information, software, and all documentation thereof, in each case,
used in the business of Parent as of the date of this Agreement or the Closing
Date.
"Parent Material Adverse Effect" means any change affecting, or condition
having an effect on, Parent, Merger Sub or any of Parent's Subsidiaries that
is, or would reasonably be expected to be, materially adverse to the business,
financial condition or results of operations of Parent and its Subsidiaries,
taken as a whole, except, in each case, for any such change or condition
resulting from or arising out of (i) changes or developments in the
biotechnology industry generally, which changes or developments do not
disproportionately affect Parent relative to other participants in the
biotechnology industry in any material respect, (ii) changes or developments in
financial or securities markets or the economy in general which changes do not
disproportionately affect Parent in any material respect, (iii) any change in
Parent's stock price or trading volume, in and of itself or (iv) the
announcement of the transactions contemplated by this Agreement.
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"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means (a) Liens for Taxes, assessments or similar charges
incurred in the ordinary course of business consistent with past practice that
are not yet due and payable or are being contested in good faith; (b) pledges
or deposits made in the ordinary course of business consistent with past
practice; (c) Liens of mechanics, materialmen, warehousemen or other like Liens
securing obligations incurred in the ordinary course of business consistent
with past practice that are not yet due and payable or are being contested in
good faith; and (iv) similar Liens and encumbrances which are incurred in the
ordinary course of business consistent with past practice and which do not in
the aggregate materially detract from the value of such assets or properties or
materially impair the use thereof in the operation of such business.
"person" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"Share Issuance" means the issuance of Parent Common Stock pursuant to
Section 2.1(a).
"Significant Subsidiary" has the meaning set forth in Rule 1-02 of
Regulation S-X.
"Subsidiary" or "Subsidiaries" of any person or any other person means any
corporation, partnership, joint venture or other legal entity of which such
person, as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, a majority of the stock or other
equity interests the holders of which are generally entitled to vote for the
election of the Board of Directors or other governing body of such corporation
or other legal entity.
"Superior Proposal" means any bona fide offer or proposal (on its most
recently amended or modified terms, if amended or modified) made by a person
other than Parent or Merger Sub that (1) concerns any (a) merger, tender offer,
exchange offer, business combination or similar transaction involving the
Company or any Subsidiary of the Company pursuant to which (i) shareholders of
the Company immediately prior to such transaction would own less than 50% of
the voting power of the entity surviving or resulting from such transaction (or
the ultimate parent entity thereof) and (ii) shareholders of the Company other
than AHP would own less than 30% of the voting power of the entity surviving or
resulting from such transaction (or the ultimate parent entity thereof) or (b)
sale or other disposition directly or indirectly of assets of the Company or
the Company Subsidiaries representing 67% or more of the consolidated assets of
the Company and the Company Subsidiaries, (2) is on terms which the Board of
Directors of the Company in good faith concludes (following receipt of the
advice of its financial advisors and outside counsel) are more favorable to the
Company's shareholders (in their capacities as shareholders) than the
transactions contemplated by this Agreement (including any revisions hereto),
and (3) is, in the good faith judgment of the Company, reasonably likely to be
completed and financed.
"Taxes" means all taxes of any kind, including, without limitation, those on
or measured by or referred to as income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall
profits taxes, customs, duties or similar fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any Governmental Entity.
"Tax Returns" means any report, return (including information return), claim
for refund, or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendments thereof.
"Treasury Regulations" means the United States Treasury regulations
promulgated under the Code.
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Section 9.4 Terms Defined Elsewhere. The following terms are defined
elsewhere in this Agreement, as indicated below:
"Agreement"...................... Preamble
"AHP"............................ Recitals
"AHP Agreements"................. Section 2.7
"Articles of Merger"............. Section 1.2
"Cash Consideration"............. Section 2.1(a)
"Certificates"................... Section 2.2(b)
"Change of Recommendation"....... Section 6.4(e)
"Closing"........................ Section 1.2
"Closing Date"................... Section 1.2
"Code"........................... Recitals
"Common Stock Consideration"..... Section 2.1(a)
"Company"........................ Preamble
"Company Articles"............... Section 3.2
"Company Benefit Plan"........... Section 3.9(a)
"Company Bylaws"................. Section 3.2
"Company Common Stock"........... Section 2.1(a)
"Company Disclosure Letter"...... Article 3
"Company Financial Advisor"...... Section 3.20
"Company Form 10-K".............. Section 3.7(c)
"Company Material Contract"...... Section 3.12
"Company Pharmaceutical Products" Section 3.19(a)
"Company Permits"................ Section 3.6
"Company Preferred Stock"........ Section 3.3(a)
"Company Recommendation"......... Section 6.2(c)
"Company SEC Filings"............ Section 3.7(a)
"Company Shareholder Approval"... Section 3.21
"Company Shareholders' Meeting".. Section 6.2(a)
"Company Subsidiaries"........... Section 3.1
"Confidentiality Agreement"...... Section 6.3(b)
"D&O Insurance".................. Section 6.10(b)
"Director Plans"................. Section 2.4
"Dissenting Share"............... Section 2.1(e)
"Effective Time"................. Section 1.2
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"employee benefit plan"......... Section 3.9(a)
"ESPP".......................... Recitals
"Excess Shares"................. Section 2.2(e)(i)
"Exchange Agent"................ Section 2.2(a)
"Exchange Fund"................. Section 2.2(a)
"Exchange Ratio"................ Section 2.1(a)
"FDA"........................... Section 3.6
"FDCA".......................... Section 3.6
"Forward Subsidiary Merger"..... Section 6.15
"IRS"........................... Section 3.9(a)
"Joint Proxy/Prospectus"........ Section 6.1(a)
"Litigation Conditions"......... Section 8.1(b)
"Merger"........................ Recitals
"Merger Consideration".......... Section 2.1(a)
"Merger Sub".................... Preamble
"multiemployer plan"............ Section 3.9(d)
"New Parent Employees".......... Section 6.9(a)
"Option Exchange Ratio"......... Section 2.4(a)
"Original Agreement"............ Recitals
"Outside Date".................. Section 8.1(b)
"Parent"........................ Preamble
"Parent Benefit Plans".......... Section 6.9(b)
"Parent Bylaws"................. Section 4.2
"Parent Common Stock"........... Section 2.1(a)
"Parent Disclosure Letter"...... Article 4.
"Parent Financial Advisor"...... Section 4.14
"Parent Form 10-K".............. Section 4.7(c)
"Parent Permits"................ Section 4.6
"Parent Pharmaceutical Products" Section 4.12(a)
"Parent Preferred Stock"........ Section 4.3(a)
"Parent Recommendation"......... Section 6.2(d)
"Parent SEC Filings"............ Section 4.7(a)
"Parent Stockholder Approval"... Section 4.15
"Parent Stockholders' Meeting".. Section 6.2(b)
"Parent Subsidiaries"........... Section 4.1
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"Product Rights Agreement" Section 3.15
"Registration Statement".. Section 6.1(a)
"Proxy Statement"......... Section 6.1(a)
"Replacement Option"...... Section 2.4(b)
"Representatives"......... Section 6.3(a)
"Rights Plan"............. Section 2.1(f)
"Section 16".............. Section 6.13
"Superior Proposal Notice" Section 6.4(c)
"Surviving Corporation"... Section 1.1
"Voting Agreement"........ Recitals
"WBCA".................... Recitals
Section 9.5 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 9.6 Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
Section 9.7 Entire Agreement. This Agreement (together with the Exhibits,
Parent and Company Disclosure Letters and the other documents delivered
pursuant hereto) and the Confidentiality Agreement constitute the entire
agreement of the parties and supersede all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof.
Section 9.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, in whole or in part (whether by operation of Law or otherwise), without
the prior written consent of the other parties, and any attempt to make any
such assignment without such consent shall be null and void, except that Merger
Sub may assign, in its sole discretion, any or all of its rights, interests and
obligations under this Agreement to any direct wholly-owned Subsidiary of
Parent without the consent of the Company.
Section 9.9 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective
successors and assigns, and nothing in this Agreement, express or implied,
other than pursuant to Section 6.11, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
Section 9.10 Mutual Drafting. Each party hereto has participated in the
drafting of this Agreement, which each party acknowledges is the result of
extensive negotiations between the parties.
Section 9.11 Governing Law; Consent to Jurisdiction; Waiver of Trial by
Jury.
(a) This Agreement and the transactions contemplated hereby, and all
disputes between the parties under or related to the Agreement or the facts and
circumstances leading to its execution, whether in Contract, tort or
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otherwise, shall be governed by and construed in accordance with the Laws of
the State of Delaware, applicable to contracts executed in and to be performed
entirely within the State, except that the provisions of the WBCA shall govern
the Merger.
(b) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdiction of any
Delaware State court, or Federal court of the United States of America, sitting
in Delaware, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the agreements
delivered in connection herewith or the transactions contemplated hereby or
thereby or for recognition or enforcement of any judgment relating thereto, and
each of the parties hereby irrevocably and unconditionally (a) agrees not to
commence any such action or proceeding except in such courts, (b) agrees that
any claim in respect of any such action or proceeding may be heard and
determined in such Delaware State court or, to the extent permitted by Law, in
such Federal court, (c) waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such action or proceeding in any such Delaware State or
Federal court, and (d) waives, to the fullest extent permitted by Law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such Delaware State or Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by Law. Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices
in Section 9.2. Nothing in this Agreement shall affect the right of any party
to this Agreement to serve process in any other manner permitted by Law.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS
OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 9.11(c).
Section 9.12 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof in
addition to any other remedies at Law or in equity.
Section 9.13 Disclosure. Any matter disclosed in any section of a party's
Disclosure Letter shall be considered disclosed for other sections of such
Disclosure Letter, but only to the extent such matter on its face would
reasonably be expected to be pertinent to a particular section of a party's
Disclosure Letter in light of the disclosure made in such section. The
provision of monetary or other quantitative thresholds for disclosure does not
and shall not be deemed to create or imply a standard of materiality hereunder.
Section 9.14 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
[Signature page follows]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
AMGEN INC.
a Delaware corporation
/s/ KEVIN W. SHARER
By: _______________________________
Name: Kevin W. Sharer
Title: Chairman of the Board,
Chief Executive Officer and
President
AMS ACQUISITION INC.
a Washington corporation
/s/ KEVIN W. SHARER
By: _______________________________
Name: Kevin W. Sharer
Title: Chairman of the Board,
Chief Executive Officer and
President
IMMUNEX CORPORATION
a Washington corporation
/s/ EDWARD V. FRITZKY
By: _______________________________
Name: Edward V. Fritzky
Title: Chairman of the Board,
Chief Executive Officer and
President
[SIGNATURE PAGE--AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER]
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ANNEX B
SHAREHOLDER VOTING AGREEMENT
BY AND AMONG
AMGEN INC.
AMERICAN HOME PRODUCTS CORPORATION,
MDP HOLDINGS, INC. AND
LEDERLE PARENTERALS, INC.
Dated as of December 16, 2001
SHAREHOLDER VOTING AGREEMENT
This SHAREHOLDER VOTING AGREEMENT (this "Agreement") is entered into as of
December 16, 2001, by and among Amgen Inc., a Delaware corporation ("Parent"),
American Home Products Corporation, a Delaware corporation ("AHP"), MDP
Holdings, Inc., a Delaware corporation and wholly-owned subsidiary of AHP ("Sub
1"), and Lederle Parenterals, Inc., a New Jersey corporation and wholly-owned
subsidiary of AHP ("Sub 2" and, together with AHP and Sub 1, the
"Shareholders").
W I T N E S S E T H:
WHEREAS, as of the date hereof, each Shareholder "beneficially owns" (as
such term is defined in Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended) and is entitled to dispose of (or to direct the
disposition of) and to vote (or to direct the voting of) the number of shares
of common stock, par value $0.01 per share (the "Common Stock"), of Immunex
Corporation, a Washington corporation (the "Company"), set forth opposite such
Shareholder's name on Schedule I hereto (such shares of Common Stock, together
with any other shares of Common Stock the voting power over which is acquired
by any Shareholder during the period from and including the date hereof through
and including the date on which this Agreement is terminated in accordance with
its terms, are collectively referred to herein as the "Subject Shares");
WHEREAS, Parent, AMS Acquisition Inc., a Washington corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), and the Company propose to
enter into an Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"), pursuant to which Merger Sub will merge with and into the
Company, with the Company surviving as a wholly-owned subsidiary of Parent (the
"Merger"); and
WHEREAS, as a condition to the willingness of Parent to enter into the
Merger Agreement, and as an inducement and in consideration therefor, each
Shareholder is executing this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual premises,
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Capitalized Terms. For purposes of this Agreement, capitalized
terms used and not defined herein shall have the respective meanings ascribed
to them in the Merger Agreement.
Section 1.2 Other Definitions. For purposes of this Agreement:
(a) "Affiliate" means, with respect to any specified Person, any Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified. For
purposes of this Agreement, with respect to each Shareholder, the term
"Affiliate" shall not include the Company and the Persons that directly, or
indirectly through one or more intermediaries, are controlled by the Company.
(b) "Governance Agreement" means the Amended and Restated Governance
Agreement by and among the Company, American Cyanamid Company and Lederle
Oncology Corporation, dated as of December 15, 1992, as amended.
B-1
(c) "Person" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization, other entity or
group.
(d) "Representative" means, with respect to any particular Person, any
director, officer, employee, accountant, consultant, legal counsel, investment
banker, advisor, agent or other representatives of such Person.
ARTICLE II
VOTING AGREEMENT AND IRREVOCABLE PROXY
Section 2.1 Agreement to Vote the Subject Shares. Each Shareholder, in its
capacity as such, hereby agrees that, during the period commencing on the date
hereof and continuing until the termination of this Agreement (such period, the
"Voting Period"), at any meeting (or any adjournment or postponement thereof)
of the Company's shareholders, however called, or in connection with any
written consent of the Company's shareholders, such Shareholder shall vote (or
cause to be voted) its Subject Shares (x) in favor of the approval of the terms
of the Merger Agreement, the Merger and the other transactions contemplated by
the Merger Agreement (and any actions required in furtherance thereof), (y)
against any action, proposal, transaction or agreement that would result in a
breach in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company contained in the Merger Agreement or of
any Shareholder contained in this Agreement, and (z) except with the written
consent of Parent, against the following actions or proposals (other than the
transactions contemplated by the Merger Agreement): (i) any Acquisition
Proposal; and (ii) (A) any change in the persons who constitute the board of
directors of the Company that is not approved in advance by at least a majority
of the persons who were directors of the Company as of the date of this
Agreement (or their successors who were so approved); (B) any material change
in the present capitalization of the Company or any amendment of the Company's
articles of incorporation or bylaws; (C) any other material change in the
Company's corporate structure or business; or (D) any other action or proposal
involving the Company or any of its subsidiaries that is intended, or could
reasonably be expected, to prevent, impede, interfere with, delay, postpone or
adversely affect the transactions contemplated by the Merger Agreement;
provided, however, that nothing in this Agreement shall limit or affect any
actions taken by any member of the board of directors of the Company nominated
by, or appointed at the request of, AHP solely in his or her capacity as a
director of the Company; provided, further, that nothing in this Agreement
shall be interpreted as obligating the Shareholders to exercise any options to
acquire shares of Common Stock. Any such vote shall be cast or consent shall be
given in accordance with such procedures relating thereto so as to ensure that
it is duly counted for purposes of determining that a quorum is present and for
purposes of recording the results of such vote or consent. Each Shareholder
agrees not to enter into any agreement or commitment with any Person the effect
of which would be inconsistent with or violative of the provisions and
agreements contained in this Article II.
Section 2.2 Grant of Irrevocable Proxy. Each Shareholder hereby appoints
Parent and any designee of Parent, and each of them individually, as such
Shareholder's proxy and attorney-in-fact, with full power of substitution and
resubstitution, to vote or act by written consent during the Voting Period with
respect the Subject Shares in accordance with Section 2.1. This proxy is given
to secure the performance of the duties of each Shareholder under this
Agreement. The Shareholders shall promptly cause a copy of this Agreement to be
deposited with the Company at its principal place of business. Each Shareholder
shall take such further action or execute such other instruments as may be
necessary to effectuate the intent of this proxy.
Section 2.3 Nature of Irrevocable Proxy. The proxy and power of attorney
granted pursuant to Section 2.2 by each Shareholder shall be irrevocable during
the term of this Agreement, shall be deemed to be coupled with an interest
sufficient in law to support an irrevocable proxy and shall revoke any and all
prior proxies granted by such Shareholder. The power of attorney granted by
each Shareholder herein is a durable power of attorney and shall survive the
dissolution, bankruptcy, death or incapacity of such Shareholder. The proxy and
power of attorney granted hereunder shall terminate upon the termination of
this Agreement.
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ARTICLE III
COVENANTS
Section 3.1 Generally.
(a) Except for pledges in existence as of the date hereof, each Shareholder
agrees that during the Voting Period, except as contemplated by the terms of
this Agreement, it shall not (i) sell, transfer, tender, pledge, encumber,
assign or otherwise dispose of (collectively, a "Transfer"), or enter into any
contract, option or other agreement with respect to, or consent to, a Transfer
of, any or all of the Subject Shares; provided, however, that any Shareholder
may Transfer any or all of its Subject Shares to any other Shareholder or to
any wholly owned subsidiary of AHP that agrees in writing to be bound by the
terms of this Agreement and, with the consent of Parent (which consent shall
not be unreasonably withheld), may pledge or encumber any Subject Shares so
long as such pledge or encumbrance would not impair any Shareholder's ability
to perform its obligations under this Agreement; or (ii) take any action that
would have the effect of preventing, impeding, interfering with or adversely
affecting its ability to perform its obligations under this Agreement.
(b) In the event of a stock dividend or distribution, or any change in the
Common Stock by reason of any stock dividend or distribution, split-up,
recapitalization, combination, exchange of shares or the like, the term
"Subject Shares" shall be deemed to refer to and include the Subject Shares as
well as all such stock dividends and distributions and any securities into
which or for which any or all of the Subject Shares may be changed or exchanged
or which are received in such transaction.
(c) AHP agrees that it shall not, and it shall cause its controlled
Affiliates not to, (i) directly or indirectly, acquire additional shares of
Common Stock (including through the exercise of subscription rights as set
forth in Section 2.01 of the Governance Agreement or quarterly purchase rights
as set forth in Section 2.02 of the Governance Agreement) or (ii) exercise any
of the registration rights set forth in Article VI of the Governance Agreement.
Section 3.2 Standstill Obligations of Shareholders. Each Shareholder,
jointly and severally, covenants and agrees with Parent that, during the Voting
Period:
(a) Such Shareholder shall not, nor shall such Shareholder permit any
controlled Affiliate of such Shareholder to, nor shall such Shareholder act in
concert with or permit any controlled Affiliate to act in concert with any
Person to make, or in any manner participate in, directly or indirectly, a
"solicitation" of "proxies" (as such terms are used in the rules of the
Securities and Exchange Commission) or powers of attorney or similar rights to
vote, or seek to advise or influence any Person with respect to the voting of,
any shares of Common Stock in connection with any vote or other action on any
matter, other than to recommend that shareholders of the Company vote in favor
of the Merger and the Merger Agreement and otherwise as expressly provided by
Article II of this Agreement.
(b) Such Shareholder shall not, nor shall such Shareholder permit any
controlled Affiliate of such Shareholder to, nor shall such Shareholder act in
concert with or permit any controlled Affiliate to act in concert with any
Person to, deposit any shares of Common Stock in a voting trust or subject any
shares of Common Stock to any arrangement or agreement with any Person with
respect to the voting of such shares of Common Stock, except as provided by
Article II of this Agreement.
(c) Such Shareholder shall not, and shall direct its Representatives not to,
directly or indirectly, through any officer, director, agent or otherwise,
enter into, solicit, initiate, conduct or continue any discussions or
negotiations with, or knowingly encourage or respond to any inquiries or
proposals by, or provide any information to, any Person, other than Parent,
relating to any Acquisition Proposal; provided, however, that, in connection
with Acquisition Proposals as to which Parent has received a Superior Proposal
Notice, AHP may provide information and engage in discussions to the same
extent as the Company is so permitted pursuant to
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Section 6.4(c) of the Merger Agreement. Each Shareholder hereby represents that
it is not now engaged in discussions or negotiations with any party other than
Parent with respect to any Acquisition Proposal. Promptly after receipt of any
Acquisition Proposal or any request for nonpublic information or inquiry which
it reasonably believes could lead to an Acquisition Proposal, AHP shall provide
Parent with written notice of the material terms and conditions of such
Acquisition Proposal, request or inquiry, and the identity of the person or
group making any such Acquisition Proposal, request or inquiry, and a copy of
all written materials provided in connection with such Acquisition Proposal,
request or inquiry. After receipt of the Acquisition Proposal, request or
inquiry, AHP shall promptly keep Parent informed in all material respects of
the status and details (including material amendments or proposed material
amendments) of any such Acquisition Proposal, request or inquiry.
(d) Notwithstanding any of the provisions of this Agreement, AHP has two
representatives on the Company's Board of Directors and such persons will act
in their capacities as directors of the Company in accordance with their
fiduciary duties to the Company and its shareholders.
Section 3.3 Further Agreements of Parent. Parent hereby covenants and
agrees with the Shareholders that it shall take all reasonably necessary
actions to ensure that immediately following the Effective Time, each
Shareholder or its designee shall receive the Cash Consideration in immediately
available funds with respect to such number of Subject Shares for which such
Shareholder is entitled to receive pursuant to the terms of the Merger
Agreement; provided, that such Shareholder or its designee shall have
surrendered to Parent a Certificate or Certificates evidencing such number of
Subject Shares together with a letter or letters of transmittal in accordance
with Section 2.2 of the Merger Agreement, duly executed and completed in
accordance with the instructions thereto. The remainder of the Merger
Consideration that the Shareholders would be entitled to under the Merger
Agreement would be distributed following the Effective Time in the manner set
forth in the Merger Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EACH SHAREHOLDER
Each Shareholder hereby represents and warrants, jointly and severally, to
Parent as follows:
Section 4.1 Due Organization, etc. Each Shareholder is a company duly
organized and validly existing under the laws of the jurisdiction of its
incorporation. Each Shareholder has all necessary corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by each Shareholder have
been duly authorized by all necessary action on the part of such Shareholder.
Section 4.2 Ownership of Shares. Schedule I sets forth, opposite each
Shareholder's name, the number of shares of Common Stock over which such
Shareholder has record and beneficial ownership as of the date hereof. As of
the date hereof, each Shareholder is the lawful owner of the shares of Common
Stock denoted as being owned by such Shareholder on Schedule I and has the sole
power to vote (or cause to be voted) such shares of Common Stock. Except as set
forth on such Schedule I and as provided in the Governance Agreement, no
Shareholder nor any Affiliate of a Shareholder owns or holds any right to
acquire any additional shares of any class of capital stock of the Company or
other securities of the Company or any interest therein or any voting rights
with respect to any securities of the Company. Each Shareholder has good and
valid title to the Common Stock denoted as being owned by such Shareholder on
Schedule I, free and clear of any and all pledges, mortgages, liens, charges,
proxies, voting agreements, encumbrances, adverse claims, options, security
interests and demands of any nature or kind whatsoever, other than those
created by this Agreement or provided in the Governance Agreement or as could
not reasonably be expected to impair any Shareholder's ability to perform its
obligations under this Agreement.
B-4
Section 4.3 No Conflicts. (i) No filing with any governmental authority,
and no authorization, consent or approval of any other Person is necessary for
the execution of this Agreement by any Shareholder and the consummation by any
Shareholder of the transactions contemplated hereby and (ii) none of the
execution and delivery of this Agreement by the Shareholders, the consummation
by any Shareholder of the transactions contemplated hereby or compliance by any
Shareholder with any of the provisions hereof shall (A) conflict with or result
in any breach of the organizational documents of any Shareholder, (B) result
in, or give rise to, a violation or breach of or a default under any of the
terms of any material contract, understanding, agreement or other instrument or
obligation to which any Shareholder is a party or by which any Shareholder or
any of its Subject Shares or assets may be bound, or (C) violate any applicable
order, writ, injunction, decree, judgment, statute, rule or regulation, except
for any of the foregoing as could not reasonably be expected to impair any
Shareholder's ability to perform its obligations under this Agreement.
Section 4.4 Reliance by Parent. Each Shareholder understands and
acknowledges that Parent is entering into the Merger Agreement in reliance upon
the execution and delivery of this Agreement by such Shareholder.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to the Shareholders as follows:
Section 5.1 Due Organization, etc. Parent is a company duly organized and
validly existing under the laws of the jurisdiction of its incorporation.
Parent has all necessary corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Parent have been duly authorized by all
necessary action on the part of Parent.
Section 5.2 Conflicts. (i) No filing with any governmental authority, and
no authorization, consent or approval of any other Person is necessary for the
execution of this Agreement by Parent and the consummation by Parent of the
transactions contemplated hereby and (ii) none of the execution and delivery of
this Agreement by Parent, the consummation by Parent of the transactions
contemplated hereby shall (A) conflict with or result in any breach of the
organizational documents of Parent, (B) result in, or give rise to, a violation
or breach of or a default under any of the terms of any material contract,
understanding, agreement or other instrument or obligation to which Parent is a
party or by which Parent or any of its assets may be bound, or (C) violate any
applicable order, writ, injunction, decree, judgment, statute, rule or
regulation, except for any of the foregoing as could not reasonably be expected
to impair Parent's ability to perform its obligations under this Agreement.
Section 5.3 Reliance by the Shareholders. Parent understands and
acknowledges that the Shareholders are entering into this Agreement in reliance
upon the execution and delivery of the Merger Agreement by Parent.
ARTICLE VI
TERMINATION
Section 6.1 Termination. This Agreement shall terminate, and none of
Parent or any Shareholder shall have any rights or obligations hereunder and
this Agreement shall become null and void and have no effect upon the earliest
to occur of (i) the mutual consent of Parent and AHP, (ii) the Effective Time,
(iii) the date of termination of the Merger Agreement in accordance with its
terms, (iv) the date of any modification, waiver or amendment to the Merger
Agreement in a manner that reduces either the Exchange Ratio or the Cash
Consideration, and (v) December 31, 2002; provided, however, that termination
of this Agreement shall not prevent any party hereunder from seeking any
remedies (at law or in equity) against any other party hereto for such party's
breach of any of the terms of this Agreement. Notwithstanding the foregoing,
Section 7.1 and Sections 7.5 through 7.18, inclusive, of this Agreement shall
survive the termination of this Agreement.
B-5
ARTICLE VII
MISCELLANEOUS
Section 7.1 Appraisal Rights. To the extent permitted by applicable law,
each Shareholder hereby waives any rights of appraisal or rights to dissent
from the Merger that it may have under applicable law.
Section 7.2 Publication. Each Shareholder hereby permits Parent to publish
and disclose in the Proxy Statement/Prospectus (including all documents and
schedules filed with the Securities and Exchange Commission) its identity and
ownership of shares of Common Stock and the nature of its commitments,
arrangements and understandings pursuant to this Agreement; provided, however,
that such publication and disclosure is subject in all cases to the prior
review and comment by AHP and its advisors.
Section 7.3 HSR Requirements. Each Shareholder agrees promptly to make all
necessary filings, if any,and thereafter make any other required submissions,
if any, with respect to the Merger Agreement, the AHP Agreements (as that term
is defined in the Merger Agreement), the Merger and the transactions
contemplated by the Merger Agreement required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, any antitrust and competition
laws of any other applicable jurisdiction and any other applicable law. Each
Shareholder shall cooperate with Parent in connection with the making of any
such filings referenced in the preceding sentence, including providing copies
of all such documents to Parent and its advisors prior to filing and, if
requested, to accept all reasonable additions, deletions or changes suggested
in connection therewith.
Section 7.4 Affiliate Letters. Each Shareholder agrees to execute an
affiliate agreement, as soon as practicable after the date hereof, in
substantially the form attached hereto as Exhibit 7.4.
Section 7.5 Further Actions. Each of the parties hereto agrees that it
will use its reasonable best efforts to do all things necessary to effectuate
this Agreement.
Section 7.6 Fees and Expenses. Except as provided below, each of the
parties shall be responsible for its own fees and expenses (including, without
limitation, the fees and expenses of financial consultants, investment bankers,
accountants and counsel) (collectively, "Fees") in connection with the entering
into of this Agreement and the consummation of the transactions contemplated
hereby and by the Merger Agreement. In the event that the Merger Agreement is
terminated (i) pursuant to Section 8.1(a) or Section 8.1(h)(ii) of the Merger
Agreement, or (ii) by the Company pursuant to Section 8.1(e) or Section 8.1(g)
of the Merger Agreement, then Parent shall promptly reimburse AHP for all of
the Fees of the Shareholders incurred in connection with the transactions
contemplated hereby and by the Merger Agreement; provided, however, that
Parent's liability for Fees payable to AHP pursuant to this Section 7.6 shall
in no event exceed $3 million.
Section 7.7 Amendments, Waivers, etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified, except upon the execution
and delivery of a written agreement executed by each of the parties hereto. The
failure of any party hereto to exercise any right, power or remedy provided
under this Agreement or otherwise available in respect hereof at law or in
equity, or to insist upon compliance by any other party hereto with its
obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof shall not constitute a waiver by such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.
Section 7.8 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof in
addition to any other remedies at law or in equity.
B-6
Section 7.9 Notices. Any notices or other communications required or
permitted under, or otherwise in connection with this Agreement shall be in
writing and shall be deemed to have been duly given when delivered in person or
upon confirmation of receipt when transmitted by facsimile transmission (with
confirmation) or on receipt after dispatch by registered or certified mail,
postage prepaid, addressed, or on the next Business Day if transmitted by
national overnight courier, in each case as follows:
If to Parent or Merger Sub, addressed to it at:
Amgen Inc.
One Amgen Center Drive
Thousand Oaks, California 91320-1799
Fax: (805) 449-3540
Attn: Chief Executive Officer
with a copy to:
Latham & Watkins
885 Third Avenue, Suite 1000
New York, NY 10022-4802
Fax: (212) 751-4864
Attn: Charles Nathan
and
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, CA 90071-2007
Fax: (213) 891-8763
Attn: Gary Olson
Paul D. Tosetti
Charles Ruck
If to any Shareholder, addressed to:
American Home Products Corporation
Five Giralda Farms
Madison, NJ 07940
Fax: (973) 660-7156
Attn: Louis L. Hoynes, Esq.
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Fax: (212) 455-2502
Attn: Charles I. Cogut
Section 7.10 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 7.11 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
B-7
Section 7.12 Entire Agreement. This Agreement (together with the Merger
Agreement, to the extent referred to herein) constitutes the entire agreement
of the parties and supersedes all prior agreements and undertakings, both
written and oral, between the parties, or any of them, with respect to the
subject matter hereof.
Section 7.13 Assignment. This Agreement shall not be assigned by operation
of law or otherwise without the prior written consent of each of the parties,
except that each of Parent and Merger Sub may assign and transfer its rights
and obligations hereunder to any direct or indirect wholly subsidiary of Parent.
Section 7.14 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto and their respective
successors and assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
Section 7.15 Mutual Drafting. Each party hereto has participated in the
drafting of this Agreement, which each party acknowledges is the result of
extensive negotiations between the parties.
Section 7.16 Governing Law; Consent to Jurisdiction; Waiver of Trial by
Jury.
(a) This Agreement and the transactions contemplated hereby, and all
disputes between the parties under or related to the Agreement or the facts and
circumstances leading to its execution, whether in contract, tort or otherwise,
shall be governed by and construed in accordance with the laws of the State of
Delaware, without regard to the application of Delaware principles of conflicts
of laws.
(b) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdiction of any
Delaware State court, or Federal court of the United States of America, sitting
in Delaware, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the agreements
delivered in connection herewith or the transactions contemplated hereby or
thereby or for recognition or enforcement of any judgment relating thereto, and
each of the parties hereby irrevocably and unconditionally (i) agrees not to
commence any such action or proceeding except in such courts, (ii) agrees that
any claim in respect of any such action or proceeding may be heard and
determined in such Delaware State court or, to the extent permitted by law, in
such Federal court, (iii) waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any such action or proceeding in any such Delaware State or
Federal court, and (iv) waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such Delaware State or Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Each party to this Agreement
irrevocably consents to service of process in the manner provided for notices
in Section 7.9. Nothing in this Agreement shall affect the right of any party
to this Agreement to serve process in any other manner permitted by law.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS
OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (IV) IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 7.16(c).
B-8
Section 7.17 Counterparts. This Agreement may be executed in counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
Section 7.18 Acknowledgement. The parties hereto acknowledge and agree
that this Agreement is entered into pursuant to the provisions of Section
23B.07.310 of the Business Corporation Act of the State of Washington.
* * * * *
B-9
IN WITNESS WHEREOF, Parent and each Shareholder have caused this Agreement
to be duly executed as of the day and year first above written.
AMGEN INC.
a Delaware corporation
/s/ KEVIN W. SHARER
By: _______________________________
Name: Kevin W. Sharer
Title: Chairman of the Board,
CEO and President
AMERICAN HOME PRODUCTS CORPORATION
a Delaware corporation
/s/ KENNETH MARTIN
By: _______________________________
Name: Kenneth Martin
Title: Senior Vice President
and Chief Financial Officer
MDP HOLDINGS, INC.
a Delaware corporation
/s/ KENNETH MARTIN
By: _______________________________
Name: Kenneth Martin
Title: Executive Vice President
LEDERLE PARENTERALS, INC.
a New Jersey corporation
/s/ KENNETH MARTIN
By: _______________________________
Name: Kenneth Martin
Title: Vice President
B-10
Schedule I
Ownership of Common Stock
Number of
Name and Address of Shareholder Shares
------------------------------- -----------
American Home Products Corporation(1) 0
Five Giralda Farms
Madison, NJ 07940
MDP Holdings, Inc. 180,153,032
Five Giralda Farms
Madison, NJ 07940
Lederle Parenterals, Inc. 43,225,056
Five Giralda Farms
Madison, NJ 07940
--------
(1) American Home Products Corporation beneficially owns the shares held by MDP
Holdings, Inc. and Lederle Parenterals, Inc.
B-11
ANNEX C
STOCKHOLDERS' RIGHTS AGREEMENT
THIS STOCKHOLDERS' RIGHTS AGREEMENT (this "Agreement") is entered into as of
December 16, 2001, by and among Amgen Inc., a Delaware corporation (the
"Company"), American Home Products Corporation, a Delaware corporation ("AHP"),
MDP Holdings, Inc., a Delaware corporation and wholly-owned subsidiary of AHP
("Sub1"), and Lederle Parenterals, Inc., a New Jersey corporation and
wholly-owned subsidiary of AHP ("Sub2," and together with Sub1, the
"Stockholders," each, a "Stockholder").
RECITALS
WHEREAS, the Stockholders hold shares of common stock of Immunex
Corporation, a Washington corporation ("Immunex");
WHEREAS, pursuant to the terms of an Agreement and Plan of Merger, dated as
of December 16, 2001 (as the same may be amended, the "Merger Agreement"), by
and among the Company, AMS Acquisition Inc., a Washington corporation and
wholly owned subsidiary of the Company ("Merger Sub"), and Immunex, Merger Sub
will merge with and into Immunex (the "Merger"), with the result that each of
outstanding shares of common stock of Immunex will be converted into the right
to receive shares of common stock of the Company together with cash in the
manner set forth in the Merger Agreement; and
WHEREAS, this Agreement shall become effective upon the issuance to AHP of
the common stock of the Company to be issued pursuant to the Merger Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing Recitals and for other
good and valuable consideration, the receipt and sufficiency of which hereby
are acknowledged, the parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings:
"Affiliate" of a specified Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the Person specified.
"AHP Parties" means AHP, the Stockholders and their controlled Affiliates
and Subsidiaries.
"Business Day" means any day on which banks are not required or
authorized to close in the City of New York.
"Closing Date" means the date the Merger is consummated by filing
articles of merger related to the Merger with the Secretary of State of the
State of Washington.
"Common Stock" means the Common Stock, par value $0.0001 per share, of
the Company or any other shares of capital stock or other securities of the
Company into which such shares of Common Stock shall be reclassified or
changed, including, by reason of a merger, consolidation, reorganization or
recapitalization. If the Common Stock has been so reclassified or changed,
or if the Company pays a dividend or makes a distribution on the Common
Stock in shares of capital stock or subdivides (or combines) its outstanding
shares of Common Stock into a greater (or smaller) number of shares of
Common Stock, a share of Common Stock shall be deemed to be such number of
shares of stock and amount of other securities to which a holder of a share
of Common Stock outstanding immediately prior to such change,
reclassification, exchange, dividend, distribution, subdivision or
combination would be entitled.
C-1
"Company Blackout Period" shall have the meaning set forth in Section
5(j) hereof.
"Company Offering" shall have the meaning set forth in Section
5(a)(iv)(C) hereof.
"Company Shares" shall have the meaning set forth in Section 5(b)(viii)
hereof.
"Deferral Notice" shall have the meaning set forth in Section 5(a)(v)
hereof.
"Deferral Period" shall have the meaning set forth in Section 5(a)(v)
hereof.
"Delay Notice" shall have the meaning set forth in Section 5(b)(vii)
hereof.
"Delay Period" shall have the meaning set forth in Section 5(b)(vii)
hereof.
"Demand Underwriters" shall have the meaning set forth in Section
5(b)(iii) hereof.
"Derivative Transaction" means any transaction involving a security
linked to the Common Stock, including any equity swap, put, put equivalent,
collar, sale of exchangeable security or similar transaction.
"Disposition" or "to Dispose of" means any sale, transfer, hypothecation,
pledge, or other transfer of any Common Stock or securities convertible into
or exchangeable or exercisable for, or any rights to purchase or acquire any
Common Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Holder" means any recordholder of Registrable Securities that is a party
to this Agreement, including a Permitted Transferee.
"Material Event" means any event or the existence of any fact as a result
of which the Company shall determine in its reasonable discretion that a
Registration Statement shall contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or any Prospectus
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (including, in any such case, as a result of the
non-availability of financial statements).
"NASD" means the National Association of Securities Dealers, Inc.
"Permitted Transferees" means AHP and any wholly-owned direct or indirect
subsidiary of AHP; provided that in each case such transferee assumes and
agrees to perform and becomes a party to this Agreement by notice and
execution of a counterpart signature page.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Prospectus" means the prospectus included in any Registration Statement
(including a prospectus that discloses information previously omitted from a
prospectus filed as part of an effective registration statement in reliance
upon Rule 430A), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement and all other amendments
and supplements to such prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by
reference in such prospectus.
"Registrable Securities" means shares of Common Stock issued to the
Stockholders in the Merger. Any Registrable Securities shall cease to be
Registrable Securities at such time as they are held of record by a Person
other than AHP or a Subsidiary of AHP.
"Registration Statement" means any registration statement under the
Securities Act of the Company that covers any of the Registrable Securities
pursuant to the provisions of this Agreement, including the related
Prospectus, all amendments and supplements to such registration statement,
including pre- and post-
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effective amendments, all exhibits thereto and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"SEC" means the United States Securities and Exchange Commission.
"Section 5(a)(iv) Reason" shall have the meaning set forth in Section
5(a)(iv)(C).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Securities Act Legend" shall have the meaning set forth in Section 4(e)
hereof.
"Shelf Bookrunning Manager" shall have the meaning set forth in Section
5(a)(iv)(B).
"Shelf Effectiveness Deadline Date" shall have the meaning set forth in
Section 5(a)(i) hereof.
"Shelf Effectiveness Period" shall have the meaning set forth in Section
5(a)(i) hereof.
"Shelf Registration Statement" shall have the meaning set forth in
Section 5(a)(i) hereof.
"Shelf Underwriters" shall have the meaning set forth in Section
5(a)(iv)(B) hereof.
"Standstill Period" means the period beginning on the date of this
Agreement and ending on a date five (5) years from the date of this
Agreement.
"Subject Shares" means shares of Common Stock beneficially owned by AHP,
the Stockholders, any Permitted Transferees or their Affiliates whether
acquired in the Merger, beneficially owned prior thereto or acquired
thereafter.
"Subsequent Shelf Registration Statement" shall have the meaning set
forth in Section 5(a)(ii) hereof.
"Subsidiary" shall have the same meaning as in Rule 12b-2 under the
Exchange Act.
"Transfer Restriction Legend" shall have the meaning set forth in Section
4(e) hereof.
"Transaction Delay Notice" shall have the meaning set forth in Section
5(a)(iv)(C).
"Transaction Delay Period" shall have the meaning set forth in Section
5(a)(iv)(C).
"Valid Business Reason" shall have the meaning set forth in Section
5(b)(vii) hereof.
2. Standstill Agreement. Each Stockholder (so long as it or its
Subsidiaries or controlled Affiliates holds any shares of Common Stock) and AHP
agree that, during the Standstill Period, unless specifically invited in
writing by the Board of Directors of the Company, they shall not and shall not
authorize or permit any of their respective Subsidiaries or controlled
Affiliates or their representatives (other than their financial advisors,
counsel, accountants and similar outside advisors not acting in their capacity
as such for or on behalf of AHP or any of its Subsidiaries or its controlled
Affiliates) to do or agree to do any of the following: (i) acquire, offer,
seek, or propose to acquire (or request permission to do so or agree to do so),
directly or indirectly, by purchase, exchange, merger or otherwise, any
securities or direct or indirect rights to acquire any securities of the
Company or its Subsidiaries or any assets (other than purchases of assets in
the ordinary course of business) of the Company or its Subsidiaries or
divisions, or to make any public announcement with respect to any of the
foregoing; (ii) make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are used in the rules of the SEC) to
vote, or seek to advise or influence any Person with respect to the voting of,
any securities of the Company, or make any public announcement with respect to
any of the foregoing; (iii) form, join or in any way participate in a "group"
(as defined in Section 13(d)(3) of the Exchange Act) in connection with any of
the foregoing; (iv) otherwise act, alone or in concert with others, to seek to
control or influence the management or the Board of Directors of the Company or
policies of the Company; (v) request the Company or any of its representatives,
directly or indirectly, to amend or waive any provision of this paragraph, or
make any public announcement with respect to the restrictions of this clause
(v), or take any action which would reasonably be expected to require the
Company to make a public announcement regarding the possibility of a business
combination or merger; or (vi) advise, assist or encourage, or direct any
Person to advise, assist or
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encourage any other Persons, in connection with any of the foregoing. It is
understood and agreed, however, that the restrictions set forth in this
paragraph do not apply to purchases by AHP of Common Stock for employee benefit
or other plans not to exceed 1% of the outstanding Common Stock. In addition,
the restrictions set forth in this paragraph shall not apply to securities held
by a company that AHP may acquire in the future, provided that the fair market
value of such securities represents less than 20% of the assets of such company
as of the date of the most recent available financial statements of such
company; provided that in the event AHP acquires a company that owns equity
securities of the Company, AHP will use its commercially reasonable efforts to
divest such equity securities within eighteen (18) months of the consummation
of such acquisition.
3. Voting. Until such time as the AHP Parties beneficially own in the
aggregate shares of Common Stock representing less than 2% of the outstanding
Common Stock, at each meeting of stockholders of the Company, AHP and the
Stockholders shall cause all shares of Common Stock beneficially owned by the
AHP Parties to be voted: (x) with respect to the election of directors, in
favor of those individuals nominated by the Board of Directors or a nominating
committee thereof, (y) on all proposals of any other stockholder of the
Company, in accordance with the recommendation of the Board of Directors of the
Company, and (z) on all other matters that shall come before the stockholders
of the Company for a vote, in proportion to the votes cast by the other
stockholders of the Company.
4. Lock-Up; Volume Limitations; Legends; Transfer Notice.
(a) Initial Lock-Up. Notwithstanding any other provision of this Agreement,
none of AHP or the Stockholders shall, and they shall cause their Subsidiaries
and controlled Affiliates who have become holders of Common Stock not to,
effect any Disposition at any time prior to the date which is ninety (90) days
following the Closing Date other than:
(i) to any Permitted Transferee;
(ii) pursuant to a third party tender offer or exchange offer which was
not induced directly or indirectly by AHP or any Stockholder and (i) which
is approved by the Board of Directors of the Company or (ii) in
circumstances in which it is reasonably likely that the Stockholders would
be, as a result of not tendering or exchanging, relegated to different
consideration than would be available to those stockholders who did tender
or exchange, taking into account any provisions thereof (including with
respect to proration and any proposed second-step or back-end transaction
(or the absence of such provisions));
(iii) any Disposition arising as a result of a merger or similar
transaction involving the Company; or
(iv) any pledge of the shares of Common Stock held by AHP or the
Stockholders in connection with bona fide financings (other than Derivative
Transactions) with a financial institution, provided the pledgee agrees to
the restrictions set forth in this Section 4(a).
(b) General Volume Limitations. AHP and the Stockholders shall not, and
they shall not permit their Subsidiaries or Affiliates to, effect Dispositions
of greater than an aggregate of twenty million (20,000,000) shares of Common
Stock (including Common Stock underlying Derivative Transactions) in any
calendar quarter, not including shares of Common Stock Disposed of pursuant to
an underwritten syndicated offering as provided in Section 5(a)(iv) or Section
5(b) in such calendar quarter.
(c) Derivatives Volume Limitation. Notwithstanding any other provision of
this Agreement, the aggregate number of shares of Common Stock underlying
Derivative Transactions (not including any shares of Common Stock underlying
derivative securities sold in underwritten syndicated offerings pursuant to
Section 5(a)(iv) or Section 5(b)) effected in any calendar week by the AHP
Parties shall not exceed twenty percent (20%) of the aggregate trading volume
of the Common Stock on the Nasdaq Stock Market or any national securities
exchange on which the Common Stock is then listed in the immediately preceding
calendar week. AHP and the Stockholders shall, and they shall cause their
Subsidiaries and Affiliates to, within two Business Days of effecting a
Derivative Transaction give written notice to the Company, which notice shall
describe in detail the Derivative Transaction, the number of shares of Common
Stock underlying the transaction and details of all other Derivative
Transactions effected during the calendar week in which the Derivative
Transaction was effected.
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(d) Stop Transfer Acknowledgment. AHP and the Stockholders hereby
acknowledge and agree that the Company may impose stop transfer instructions
with respect to the Common Stock subject to the restrictions contained in
Sections 4(a), 4(b) and 4(c) solely in order to implement the restrictions on
Dispositions.
(e) Restrictive Legends. Each certificate representing Subject Shares shall
be stamped or otherwise imprinted with a legend substantially in the following
form (the "Transfer Restriction Legend"):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
TRANSFER RESTRICTIONS SET FORTH IN THAT CERTAIN STOCKHOLDERS' RIGHTS
AGREEMENT DATED DECEMBER 16, 2001, A COPY OF WHICH IS AVAILABLE FROM THE
COMPANY UPON REQUEST."
Each certificate representing Registrable Securities shall be stamped or
otherwise imprinted with a legend substantially in the following form (the
"Securities Act Legend"):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, APPLIES AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN
ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933, AS AMENDED."
The Company agrees that the Securities Act Legend shall promptly be removed by
delivery of substitute certificates without such legend, if (a) one year shall
have elapsed from the Effective Date and, in the judgment of the Company, the
provisions of Rule 145(d)(2) are then available to the Stockholders or (b) the
Company shall have received (i) an opinion of counsel in form and substance
reasonably satisfactory to the Company, or a copy of a "no-action" or
interpretive letter from the SEC, to the effect that the restrictions imposed
by Rule 145 are not applicable to such shares or (ii) evidence or
representations reasonably satisfactory to the Company that (x) the proposed
Disposition of the shares of Common Stock represented by such certificates has
been registered under the Securities Act or (y) the shares of Common Stock
represented by such certificates are being or have been sold, transferred or
disposed in a transaction made in conformity with the provisions of Rule 145
under the Securities Act. The Company further agrees that the Transfer
Restriction Legend shall promptly be removed by delivery of substitute
certificates without such legend, at such time as the Transfer Restriction
Legend is no longer required pursuant to the terms of this Agreement.
(f) Notice of Distribution. Within two Business Days of any Disposition of
Subject Shares (other than pursuant to Sections 5(a), 5(b) or 5(c)), the Person
effecting such Disposition shall give written notice to the Company of such
Disposition. Each such notice shall describe the manner of the proposed
Disposition and the number of Subject Shares involved.
5. Registration Rights.
(a) Shelf Registration.
(i) Shelf Registration Statement. The Company shall prepare and file or
cause to be prepared and filed with the SEC immediately after the Closing
Date a Registration Statement for an offering to be made on a delayed or
continuous basis pursuant to Rule 415 of the Securities Act registering the
resale from time to time by the Holders of all of the Registrable Securities
(the "Shelf Registration Statement"). The Shelf Registration Statement shall
be on Form S-3 or another appropriate form permitting registration of such
Registrable Securities for resale by such Holders in accordance with the
methods of distribution set forth in the Shelf Registration Statement (such
methods of distribution to include underwritten offerings and other methods
designated in writing by the Holders pursuant to Section 5(e)). The Company
shall not permit any securities other than the Registrable Securities to be
included in the Shelf Registration Statement. The Company shall use
commercially reasonable efforts to cause the Shelf Registration Statement to
be declared effective under the Securities Act by the date (the "Shelf
Effectiveness Deadline Date") that is ninety
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(90) days after the Closing Date. The Company shall use commercially
reasonable efforts to keep the Shelf Registration Statement continuously
effective under the Securities Act (subject to Section 5(a)(v)) until the
earlier of (x) the first anniversary of the Closing Date and (y) the sale of
all of the Registrable Securities included in the Shelf Registration
Statement (such period as may be extended in accordance with the proviso in
Section 5(a)(ii), the "Shelf Effectiveness Period"). Each Holder agrees that
if such Holder wishes to sell Registrable Securities pursuant to the Shelf
Registration Statement and related Prospectus, it will do so only in
accordance with this Section 5(a).
(ii) Subsequent Shelf Registrations. If the initial Shelf Registration
Statement or any Subsequent Shelf Registration Statement ceases to be
effective for any reason at any time during the Shelf Effectiveness Period
(other than because of the sale of all of the Registrable Securities), the
Company shall use commercially reasonable efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof, and in any
event shall within ten (10) days of such cessation of effectiveness (or, if
the cessation of effectiveness occurs during a Deferral Period, within three
Business Days of the end of such Deferral Period) amend the Shelf
Registration Statement in a manner reasonably expected by the Company to
obtain withdrawal of the order suspending the effectiveness thereof, or file
an additional "shelf" Registration Statement pursuant to Rule 415 of the
Securities Act covering all of the Registrable Securities (a "Subsequent
Shelf Registration Statement") to permit registration of the Registrable
Securities. If a Subsequent Shelf Registration Statement is filed, the
Company shall use its commercially reasonable efforts to cause the
Subsequent Shelf Registration Statement to be declared effective under the
Securities Act as soon as reasonably practicable after such filing or, if
filed during a Deferral Period, immediately after completion of the Deferral
Period, and to keep such Registration Statement continuously effective until
the end of the Shelf Effectiveness Period; provided, however, that, unless
all Registrable Securities included on the Shelf Registration Statement have
been sold, the Shelf Effectiveness Period shall be extended by the aggregate
number of days such Registration Statement was not effective as a result of
Deferral Periods or Transaction Delay Periods. As used herein, the term
"Shelf Registration Statement" means the Shelf Registration Statement and
any Subsequent Shelf Registration Statement.
(iii) Amendments to Shelf Registration Statement. The Company shall
promptly supplement and amend the Shelf Registration Statement and any
related Prospectus if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement, if required by the Securities Act or as reasonably
requested by AHP or by the Shelf Bookrunning Manager.
(iv) Underwritten Syndicated Offerings.
(A) If one or more Holders proposes to sell Registrable Securities in
a underwritten syndicated offering pursuant to the Shelf Registration
Statement, such Holder or Holders may request the Company in writing to
effect such underwritten syndicated offering by supplement or amendment
to the Shelf Registration Statement, stating the number of Registrable
Securities proposed to be sold. The Company and all Holders proposing to
distribute Registrable Securities through such underwritten syndicated
offering shall enter into an underwriting agreement in customary form
with the underwriters for the offering.
(B) Any underwritten syndicated offering requested pursuant to this
Section 5(a)(iv) shall be underwritten by two co-managing underwriters.
The Holders shall have the right to select one co-managing underwriter
and the Company shall have the right to select a second co-managing
underwriter (together, the "Shelf Underwriters"). The co-managing
underwriter selected by the Holders (the "Shelf Bookrunning Manager")
shall be the sole bookrunning underwriter and shall be entitled to 55%
of the economics allocated to the two co-managing underwriters.
(C) Notwithstanding any provision of this Agreement to the contrary,
the Company shall not be required to effect an offering pursuant to this
Section 5(a)(iv) during any Transaction Delay Period (as defined below)
if, immediately following the Company's receipt of a request from a
Holder to effect an offering pursuant to this Section 5(a)(iv), the
Company furnishes such Holder with a certificate signed by an executive
officer of the Company (a "Transaction Delay Notice") to the effect that
the Company
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(i) prior to the Company's receipt of such request, had commenced
preparations for the filing of a registration statement pertaining to a
public offering of securities of the Company for the account of the
Company or any selling security holder (collectively, a "Company
Offering") or (ii) has determined in good faith that an offering
pursuant to Section 5(a)(iv) would likely materially interfere with a
potential contemplated material financing, acquisition, corporation,
reorganization, corporate development or merger or other transaction
involving the Company (a "Section 5(a)(iv) Reason"). Any "Transaction
Delay Period" shall be the period commencing on the day the Company
furnishes a Transaction Delay Notice and continuing until (i) in the
case of a Company Offering, the earliest of (A) sixty (60) days
following the effectiveness of the registration statement relating to
the applicable Company Offering, (B) promptly after the abandonment of
the applicable Company Offering or (C) one hundred twenty (120) days
after the date of the Transaction Delay Notice or (ii) in the case of a
Section 5(a)(iv) Reason, until the earlier of (A) such time as the
Company reasonably determines that the delay is no longer appropriate or
(B) one hundred and twenty (120) days. The Company may deliver no more
than two (2) Transaction Delay Notices in any twelve-month period, and
the aggregate duration of all Transaction Delay Periods shall not exceed
one hundred and eighty (180) days in any twelve-month period. The
Company shall use commercially reasonable efforts to cause any such
registration statement relating to any such Company Offering to become
effective as soon as possible.
(D) The Company shall not be obligated to (i) effect more than two
offerings pursuant to this Section 5(a)(iv), or (ii) effect any offering
pursuant to this Section 5(a)(iv) involving less than Five Million
(5,000,000) Registrable Securities. An offering requested pursuant to
this Section 5(a)(iv) shall not be deemed to have been effected for
purposes of this Section 5(a)(iv)(D), unless (1) the Shelf Registration
Statement remains effective for a period of at least forty-five (45)
days after commencement of the offering, and (2) the offering is not
subject to any stop order or requirement of the SEC during the period
specified in clause (1) above (other than any such stop order,
injunction, or other requirement of the SEC prompted by any act or
omission of Holders of Registrable Securities).
(E) If in an underwritten syndicated offering requested pursuant to
this Section 5(a)(iv), either Shelf Underwriter (after consultation with
the other Shelf Underwriter) reasonably advises the Company in writing
that, in its opinion, the number of Registrable Securities requested to
be included in such offering exceeds the number that can be sold in such
offering at a price reasonably related to the then current market value
of such securities, there shall be included in such offering only the
Registrable Securities that such Shelf Underwriter so advises may be
sold at a price reasonably related to the then current market value of
such securities.
(v) Suspension of Shelf Registration Statement. Upon (A) the issuance by
the SEC of a stop order suspending the effectiveness of the Shelf
Registration Statement or the initiation of proceedings with respect to the
Shelf Registration Statement under Section 8(d) or 8(e) of the Securities
Act or (B) the occurrence of a Material Event or the non-availability of
financial statements required in the Shelf Registration Statement, the
Company shall (i) in the case of clause (B) above, subject to the next to
last sentence of this Section 5(a)(v), as promptly as practicable prepare
and file a post-effective amendment to the Shelf Registration Statement or a
supplement to the related Prospectus or any document incorporated therein by
reference or file any other required document that would be incorporated by
reference into the Shelf Registration Statement and Prospectus so that such
Shelf Registration Statement does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
related Prospectus does not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, as thereafter delivered to the
purchasers of the Registrable Securities being sold thereunder, and, in the
case of a post-effective amendment to the Shelf Registration Statement,
subject to the next to last sentence of this Section 5(a)(v), use
commercially reasonable efforts to cause it to be declared effective as
promptly as is reasonably practicable, and (ii) give notice to the Holders
named as selling security holders in the Prospectus that the availability of
the Shelf Registration Statement is suspended (a "Deferral Notice"). Upon
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receipt of any Deferral Notice, each Holder agrees not to sell any
Registrable Securities pursuant to the Registration Statement until such
Holder's receipt of copies of the supplemented or amended Prospectus
provided for in clause (i) above, or until it is advised in writing by the
Company that the Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed
incorporated by reference in such Prospectus. The Company will use
reasonable best efforts to ensure that the use of the Prospectus may be
resumed (x) in the case of clause (A) above, as promptly as is practicable,
but in no event later than fifteen (15) days after the Deferral Notice is
given to the Holders, (y) in the case of clause (B) above, as soon as in the
reasonable judgment of the Company the public disclosure of such Material
Event would not be prejudicial to or contrary to the interests of the
Company, but in no event later than forty-five (45) days after the Deferral
Notice is given to the Holders. The period during which the availability of
the Shelf Registration Statement and any related Prospectus is suspended
pursuant to Section 5(a)(v) (the "Deferral Period") shall not exceed
forty-five (45) days in any three (3) month period and ninety (90) days
during the Shelf Effectiveness Period.
(b) Request for Registration of Underwritten Offering.
(i) Demand Registration Statement. Beginning on the first anniversary of
the Closing Date, and until the fourth anniversary of the Closing Date, one
or more Holders may request in a written notice that the Company file a
Registration Statement under the Securities Act covering the registration of
a minimum of Five Million (5,000,000) Registrable Securities held by such
Holders in an underwritten offering. Following receipt of any notice under
this Section 5(b), the Company shall use commercially reasonable efforts to
cause to be registered under the Securities Act all Registrable Securities
that the Holders have requested be registered, subject to Section 5(b)(vi)
hereof.
(ii) Underwritten Offering. Any distribution of Registrable Securities
pursuant to any registration filed pursuant to this Section 5(b) shall be by
means of an underwritten syndicated offering. The Company and all Holders
proposing to distribute Registrable Securities through such underwritten
offering shall enter into an underwriting agreement in customary form with
the underwriters for the offering.
(iii) Co-Bookrunning Managing Underwriters. Any offering requested
pursuant to this Section 5(b) shall be underwritten by two co-managing
underwriters. The Holders shall have the right to select one co-managing
underwriter and the Company shall have the right to select a second
co-managing underwriter (together, the "Demand Underwriters"). The
co-managing underwriter selected by the Holders shall be the sole
bookrunning underwriter and shall be entitled to 55% of the economics
allocated to the two co-managing underwriters.
(iv) Blackout. Notwithstanding any provision of this Agreement to the
contrary, the Company shall not be required to effect a registration
pursuant to this Section 5(b) during any Transaction Delay Period. The
Company may deliver no more than two (2) such Transaction Delay Notices in
any twelve-month period, and the aggregate duration of all such Transaction
Delay Periods shall not exceed one hundred and eighty (180) days in any
twelve-month period. The Company shall use commercially reasonable efforts
to cause any registration statement relating to any Company Offering causing
the Transaction Delay Period to become effective as soon as possible.
(v) Limitation on Number of Demand Registrations. The Company shall not
be obligated to effect more than four registrations pursuant to Section
5(b), less the number of offerings effected pursuant to Section 5(a)(iv);
provided that a registration requested pursuant to this Section 5(b) shall
not be deemed to have been effected for purposes of this Section 5(b)(v)
unless (1) it has been declared effective by the SEC, (2) it has remained
effective for the period required for the underwriters of the registration
to complete their distribution of the securities purchased by them in the
offering pursuant to such registration not to exceed forty-five (45) days,
and (3) the offering of Registrable Securities pursuant to such registration
is not subject to any stop order or requirement of the SEC during the period
specified in Section 5(b)(v)(2) (other than any such stop order, injunction,
or other requirement of the SEC prompted by any act or omission of Holders
of Registrable Securities).
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(vi) Underwriter Holdback. If in a registration requested pursuant to
this Section 5(b) either Demand Underwriter (after consultation with the
other Demand Underwriter) reasonably advises the Company in writing that, in
its opinion, the number of Registrable Securities requested to be included
in such registration exceeds the number that can be sold in such offering at
a price reasonably related to the then current market value of such
securities, the Company will include in such registration only the
Registrable Securities that such Demand Underwriter so advises may be sold
at a price reasonably related to the then current market value of such
securities.
(vii) Delay for Valid Business Reason. If the Board of Directors of the
Company, in its good faith judgment, determines that the effectiveness of a
Registration Statement would likely materially interfere with a potential
contemplated material financing, acquisition, corporation reorganization,
corporate development or merger or other transaction involving the Company
(collectively, "Valid Business Reason"), the Company may postpone filing a
Registration Statement relating to a request for registration under this
Section 5(b) until such Valid Business Reason no longer exists or such
financial statements become available, but in no event for more than
forty-five (45) days from the date of the notice referred to below (such
period of postponement, the "Delay Period"), and, in case any such
Registration Statement has been filed the Company may cause such
Registration Statement to be withdrawn and its effectiveness terminated or
may postpone amending or supplementing such Registration Statement; and the
Company shall give written notice of its determination to postpone or
withdraw a Registration Statement (a "Delay Notice") and written notice of
the fact that the Valid Business Reason for such postponement or withdrawal
no longer exists or that the required financial statements are available, in
each case, promptly after the occurrence thereof. Each Holder agrees that,
upon receipt of a Delay Notice from the Company such Holder will forthwith
discontinue Disposition of Registrable Securities until the conclusion of
the Delay Period, and, if so directed by the Company, such Holder will
deliver to the Company all copies, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable
Securities current at the time of receipt of Delay Notice. Notwithstanding
the foregoing provisions of this Section 5(b)(vii), no Registration
Statement filed and subsequently withdrawn by reason of any existing or
anticipated Valid Business Reason or non-availability of financial
statements as hereinabove provided shall count as one of the four
Registration Statements referred to in the limitation in Section 5(b)(v) and
the aggregate duration of all Delay Periods and Deferral Periods shall not
exceed forty-five (45) days in any three month period or one hundred and
twenty (120) days in any twelve month period.
(viii) Parent Piggyback. If upon the written request of any Holder
pursuant to Section 5(b)(i) the Company files a Registration Statement
registering an underwritten offering of Common Stock on behalf of one or
more Holders, the Company may, upon written notice to such Holder or Holders
(which notice shall be delivered no later than ten (10) days after the date
of the Company's receipt of the Holder's notice of demand), include in such
Registration Statement shares of Common Stock for its own account (the
"Company Shares"). If either Demand Underwriter (after consultation with the
other Demand Underwriter) reasonably advises AHP in writing that, in its
opinion, the aggregate number of shares of Common Stock proposed to be sold
for the account of the Holders and the Company Shares exceeds the maximum
amount of the Company's securities that can be marketed either (a) at a
price reasonably related to the then current market value of such
securities, or (b) without otherwise materially and adversely affecting the
entire offering, then the Company shall include in such registration (1)
first, all Registrable Securities requested to be included in such
Registration Statement by the Holders pursuant to this Section 5(b), and (2)
second, all of the Company Shares, up to the number which AHP has been
advised can be sold in such offering.
(c) Holders Incidental Registration. Subject to Section 5(g), if at any
time after the initial lock-up period referenced in Section 4(a), the Company
determines, in its sole discretion, that it shall file a registration statement
under the Securities Act (other than (i) a registration statement providing for
an offering on a delayed or continuous basis pursuant to Rule 415 of the
Securities Act or (ii) a registration statement on Form S-4 or S-8 or any
successor or similar forms) registering an underwritten offering of Common
Stock for cash consideration on any form that also would permit the
registration of the Registrable Securities and such filing is to be on its
behalf and/or on behalf of selling holders of the Company's securities, the
Company shall each such time
C-9
promptly give each Holder written notice of such determination setting forth
the date on which the Company proposes to file such registration statement, and
advising each Holder of its right to have Registrable Securities included in
such registration. The Company will select the managing underwriter and all
other underwriters in any underwritten offering pursuant to this Section 5(c).
Upon the written request of any Holder received by the Company no later than
ten (10) days after the date of the Company's notice, the Company shall use
commercially reasonable efforts to cause to be registered under the Securities
Act all of the Registrable Securities that each such Holder has so requested to
be registered subject to the limitations of Section 4(b) and (c); provided that
if, at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any
reason not to proceed with the proposed registration of the securities to be
sold by it, the Company may, at its election, give written notice of such
determination to each Holder of Registrable Securities and, thereupon, shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the registration
expenses pursuant to Section 5(f) in connection therewith), without prejudice,
however, to the rights of any Holder to request such registration to be
effected as a registration under Section 5(b). If, in the written opinion of
the managing underwriter, the total amount of such securities to be so
registered, including such Registrable Securities, will exceed the maximum
amount of the Company's securities that can be marketed either (a) at a price
reasonably related to the then current market value of such securities, or (b)
without otherwise materially and adversely affecting the entire offering, then
the Company shall include in such registration (1) first, all the securities
the Company proposes to sell for its own account or is required to register on
behalf of any third party exercising rights similar to those granted in Section
5(b)(i) and without having the adverse effect referred to above, and (2)
second, all Registrable Securities requested to be included in such
registration by the Holders pursuant to this Section 5(c) and all shares of
Common Stock requested to be included by third parties exercising the rights
similar to those granted in this Section 5(c) up to the number which the
Company has been advised can be sold in such offering without having either of
the adverse effects referred to above. The number of such Registrable
Securities requested to be included in such registration by the Holders
pursuant to this Section 5(c) shall be limited to such extent and shall be
allocated pro rata among all such requesting Holders and third parties
exercising rights similar to those granted in this Section 5(c) on the basis of
the relative number of Registrable Securities each such Holder has requested to
be included in such registration and the number of shares of Common Stock
requested to be included in such registration by such third parties.
(d) Obligations of the Company. Whenever required under Section 5(a) or
Section 5(b) to use commercially reasonable efforts to effect the registration
of any Registrable Securities, the Company shall, as expeditiously as possible:
(i) prepare and file with the SEC a Registration Statement with respect
to such Registrable Securities and use commercially reasonable efforts to
cause such Registration Statement to become and remain effective for the
period of the distribution contemplated thereby;
(ii) prepare and file with the SEC such amendments and supplements to
such Registration Statement and the Prospectus used in connection therewith
as may be necessary to keep such Registration Statement effective for the
Shelf Effectiveness Period in the case of the Shelf Registration Statement
or for a period not in excess of sixty (60) days (or such shorter period
during which the distribution of securities thereunder continues) in the
case of all other Registration Statements contemplated by this Agreement,
cause the related Prospectus to be supplemented by any Prospectus supplement
required by applicable law, and as so supplemented to be filed pursuant to
the Securities Act and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by
such Registration Statement in accordance with the intended methods of
disposition by the seller or sellers thereof, and furnish to the Holders of
the Registrable Securities copies of any such amendments and supplements
prior to their being used or filed with the SEC, which amendments and
supplements will be subject to the review of the Holders and their counsel;
(iii) furnish to the Holders such reasonable numbers of copies of the
Registration Statement and any Prosectus included therein (including each
preliminary Prospectus and any amendments or supplements thereto (including
all exhibits and documents incorporated by reference) in conformity with the
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requirements of the Securities Act) and such other documents and information
as they may reasonably request and make available for inspection by the
parties referred to in Section 5(d)(iv) below such financial and other
information and books and records of the Company, and cause the officers,
directors, employees, counsel and independent certified public accountants
of the Company to respond to such inquiries, as shall be reasonably
necessary, in the judgment of the respective counsel referred to in such
Section 5(d)(iv);
(iv) provide (1) the Holders of the Registrable Securities to be included
in such Registration Statement, (2) the Shelf Underwriters or Demand
Underwriters, as applicable, (3) the sales or placement agent, if any,
therefor, (4) counsel for the Shelf Underwriters or Demand Underwriters or
agent, as applicable, and (5) not more than one counsel for all the Holders
of such Registrable Securities the opportunity to participate in the
preparation of such Registration Statement, each Prospectus included therein
or filed with the SEC, and each amendment or supplement thereto, and (a)
promptly incorporate in a Prospectus supplement or post-effective amendment
such information as the Bookrunning Manager, its counsel, or such Holders'
counsel reasonably determine is necessary and appropriate to be included
therein, (b) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has
received notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment, and (c) supplement or make
amendments to such Registration Statement;
(v) use commercially reasonable efforts to register or qualify the
Registrable Securities covered by such Registration Statement under such
other securities or Blue Sky laws of such jurisdictions within the United
States as the Holders shall reasonably request for the distribution of the
Registrable Securities covered by the Registration Statement; provided,
however, that the Company shall not be required in connection therewith or
as a condition thereto to qualify to do business in or to file a general
consent to service of process in any jurisdiction wherein it would not but
for the requirements of this paragraph (v) be obligated to do so; and
provided further that the Company shall not be required to qualify such
Registrable Securities in any jurisdiction in which the securities
regulatory authority requires that any Holder submit its Registrable
Securities to the terms, provisions and restrictions of any escrow, lockup
or similar agreement(s) for consent to sell Registrable Securities in such
jurisdiction unless such Holder agrees to do so;
(vi) promptly notify the selling Holders, the sales or placement agent,
if any, and the Shelf Underwriters or Demand Underwriters, as applicable,
(1) when such Registration Statement, amendment, supplement or
post-effective amendment has been filed, and, with respect to such
Registration Statement or any post-effective amendment, when the same has
become effective, (2) of any comments by the SEC or by any Blue Sky or
securities commissioner or regulator of any state with respect thereto, (3)
of the issuance by the SEC of any stop order suspending the effectiveness of
such Registration Statement or the initiation or threatening of any
proceedings for that purpose, or (4) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;
(vii) subject to Sections 5(a)(v) and 5(b)(viii) use commercially
reasonable efforts to obtain the withdrawal of any order suspending the
effectiveness of such Registration Statement and use its commercially
reasonable efforts to cause such Registrable Securities covered by any such
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
Holders to consummate the disposition of such Registrable Securities;
(viii) furnish on the date that the Registrable Securities are delivered
to the Shelf Underwriters or Demand Underwriters, as applicable, for sale
pursuant to such registration, (1) a signed opinion, dated such date, of the
legal counsel representing the Company (which may be the general counsel or
any other attorney employed by the Company) for the purpose of such
registration, addressed to the Shelf Underwriters or Demand Underwriters, as
applicable, as to such matters as such underwriters may reasonably request
and as would be customary in such a transaction; and (2) letters dated such
date and the date the offering is priced from the independent certified
public accountants of the Company, addressed to the Shelf Underwriters or
Demand Underwriters, as applicable, (i) stating that they are independent
certified
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public accountants within the meaning of the Securities Act and that, in the
opinion of such accountants, the financial statements and other financial
data of the Company included in the Registration Statement or the
Prospectus, or any amendment or supplement thereto, comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and (ii) covering such other financial matters with respect
to the registration in respect of which such letter is being given as the
Shelf Underwriters or Demand Underwriters, as applicable, may reasonably
request and as would be customary in such a transaction;
(ix) enter into customary agreements (including, without limitation, an
underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of
the Registrable Securities to be so included in the Registration Statement;
(x) cooperate with the Holders of the Registrable Securities and the
Shelf Underwriters or Demand Underwriters, as applicable, to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be sold, and enable such Registrable Securities to be in such
denominations and registered in such names as the Shelf Underwriters or
Demand Underwriters, as applicable, may request at least five Business Days
prior to any sale of the Registrable Securities;
(xi) otherwise comply with all applicable rules and regulations of the
SEC, and make available to its security holders, as soon as reasonably
practicable, but not later than eighteen months after the effective date of
the Registration Statement, an earnings statement covering the period of at
least twelve months beginning with the first full month after the effective
date of such Registration Statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act;
(xii) use commercially reasonable efforts to list the Registrable
Securities covered by such Registration Statement with any securities
exchange on which the Common Stock of the Company is then listed; and
(xiii) use commercially reasonable efforts to make available appropriate
senior executive officers of the Company to participate in customary "road
show" presentations that may be reasonably requested by the Holders in any
underwritten syndicated offering; provided that the participation of such
senior executive officers shall not interfere with the conduct of their
duties to the Company.
With respect to registration required pursuant to Section 5(a) or Section
5(b), the period of distribution of Registrable Securities in a firm
commitment underwritten public offering shall be deemed to extend until each
underwriter has completed the distribution of all securities purchased by it
but in no event longer than forty-five (45) days from the effective date.
(e) Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the Holders shall furnish to the Company such information regarding themselves,
the Registrable Securities held by them, and the intended method of disposition
of such securities as the Company shall reasonably request in writing and as
shall be required in connection with the action to be taken by the Company.
(f) Expenses of Registration.
(i) Shelf and Requested Registration. All expenses incurred in
connection with each registration pursuant to Section 5(a) and 5(b),
including without limitation all registration, filing and qualification
fees, word processing, duplicating, printers' and accounting fees (including
the expenses of any special audits or "cold comfort" letters required by or
incident to such performance and compliance), fees of the NASD or listing
fees, messenger and delivery expenses, all fees and expenses of complying
with state securities or Blue Sky laws, and reasonable fees and
disbursements of counsel for the Company, shall be borne by the Holders
participating in the registration. The Holders shall also bear and pay the
underwriting commissions and discounts applicable to the Registrable
Securities offered for their account in connection with any regulations,
filings and qualifications made pursuant to this Agreement, as well as
related fees and disbursements of counsel or other advisors to Holders.
(ii) Incidental Registration. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings
or qualifications of Registrable Securities pursuant to
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Section 5(c) for each Holder, including without limitation all registration,
filing and qualification fees, word processing, duplicating, printers' and
accounting fees (including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and
compliance), fees of the NASD or listing fees, messenger and delivery
expenses, all fees and expenses of complying with state securities or Blue
Sky laws, and fees and disbursements of counsel for the Company, shall be
paid by the Company. The Holders shall bear and pay the underwriting
commissions and discounts applicable to the Registrable Securities offered
for their account in connection with any regulations, filings and
qualifications made pursuant to this Agreement, as well as related fees and
disbursements of counsel or other advisors to Holders.
(g) Underwriting Requirements. In connection with any underwritten
offering, the Company shall not be required under Section 5(c) to include
Registrable Securities in such underwritten offering unless the Holder of such
Registrable Securities accepts the terms of the underwriting of such offering
that have been reasonably agreed upon between the Company and the underwriters
selected by the Company in accordance with the terms of this Agreement.
(h) Rule 144 and Rule 145 Information. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Registrable Securities to the public without
registration at all times, the Company agrees to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) use commercially reasonable efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(iii) furnish to each Holder of Registrable Securities forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirementsof such Rule 144 under the Securities Act and of the
Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so
filed by the Company as such Holder may reasonably request in availing
itself of any rule or regulation of the SEC allowing such Holder to sell any
Registrable Securities without registration.
Notwithstanding anything contained in this Section 5(h), the Company may cease
to file reports with the SEC under Section 12 of the Exchange Act if it then is
permitted to do so pursuant to the Exchange Act and the rules and regulations
thereunder.
(i) Indemnification. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
(i) The Company shall indemnify and hold harmless each Holder, such
Holder's directors and officers, each Person who participates in the
offering of such Registrable Securities, including underwriters (as defined
in the Securities Act), and each Person, if any, who controls such Holder or
participating Person within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and
all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with defending
or investigating any such action or claim) to which they may become subject
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or proceedings in respect thereof) arise out of or
are based on any untrue or alleged untrue statement of a material fact
contained in such Registration Statement, preliminary Prospectus, final
Prospectus or amendments or supplements thereto or arise out of or are based
upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading; provided, however, that the indemnity agreement in this
Section 5(i)(i) shall not apply to any loss, claim, damage or liability
resulting from a Holder's failure to deliver at or prior to written
confirmation of sale, the most recent Prospectus, as amended or
supplemented, if such Prospectus, as amended or supplemented, would have
corrected such untrue statement or omission of a material fact or alleged
untrue statement or omission of a material fact, but only if copies of such
Prospectus have previously been furnished to such Holder; provided, further,
that the indemnity agreement contained in this
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Section 5(i)(i) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld); provided further that the Company shall not be liable to any
Holder, such Holder's directors and officers, participating Person or
controlling Person in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon (A)
an untrue statement or alleged untrue statement or omission or alleged
omission made in connection with such Registration Statement, preliminary
Prospectus, final Prospectus or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by any such Holder, such
Holder's directors and officers, participating Person or controlling Person
or (B) an offer or sale of Registrable Securities during a Deferral Period
or Delay Period or a violation of the Holder's obligations under Section
5(a)(v) or 5(d)(viii). Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any such Holder,
such Holder's directors and officers, participating Person or controlling
Person, and shall survive the transfer of such securities by such Holder.
(ii) Each Holder requesting or joining in a registration jointly and
severally shall indemnify and hold harmless the Company, each of its
directors and officers, each Person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, and each agent and any underwriter for the Company (within the
meaning of the Securities Act) to the same extent as the foregoing indemnity
from the Company to the Holders but only with reference to written
information relating to such Holder furnished to the Company expressly for
use in connection with such registration, including without limitation
information contained in the Holder's Notice and Questionnaire; provided,
however, that the indemnity agreement contained in this Section 5(i)(ii)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of such Holder (which consent shall not be unreasonably withheld);
and provided further that the liability of Holders hereunder shall be
limited to the proportion of any such loss, claim, damage, liability or
expense that is equal to the proportion that the net proceeds from the sale
of the shares sold by Holders under such Registration Statement bears to the
total net proceeds from the sale of all securities sold thereunder.
(iii) In case any proceeding (including any governmental investigation)
shall be instituted involving any Person in respect of which indemnity may
be sought pursuant to either of the two preceding paragraphs, such Person
(the "indemnified party") shall promptly notify the Person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (1)
the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel or (2) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both parties by the
same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying party shall
not, in respect of the legal expenses of any indemnified party in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such
fees and expenses shall be reimbursed as they are incurred. Such firm shall
be designated in writing by the Holders, in the case of parties indemnified
pursuant to the second preceding paragraph, and by the Company, in the case
of parties indemnified pursuant to the first preceding paragraph. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees
C-14
and expenses of counsel as contemplated by the second and third sentences of
this paragraph, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than thirty (30) days after receipt by
such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance with
such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which
any indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(iv) Indemnification similar to that specified in the preceding
subdivision of this subclause 5(i) (with appropriate modifications) shall be
given by the Company and each Holder of Registrable Securities with respect
to any required registration or other qualification of securities under any
federal or state law or regulation or governmental authority other than the
Securities Act.
(j) Company Blackout. The Company agrees that during the period beginning
on the day of a valid request by one or more Holders for (x) an underwritten
syndicated offering pursuant to Section 5(a)(iv) or (y) a registration of an
underwritten syndicated offering pursuant to Section 5(b), and ending sixty
(60) days after completion of such underwritten syndicated offering (each, a
"Company Blackout Period"), the Company shall not initiate any registration of
its securities with the intention of sales of such securities for cash for its
own benefit or the benefit of any other equity holder of the Company (other
than registrations on Form S-8, registrations of Common Stock issuable upon
exercise of options on Form S-3 and shelf registration statements registering
the resale of securities issued in transactions exempt from the Securities Act
(including pursuant to Rule 144A under the Securities Act)); provided, that the
Company shall not be subject to more than two Company Blackout Periods in any
twelve (12) month period.
(k) Lockup. Each Holder shall, in connection with any underwritten
syndicated offering of the Company's securities, upon the reasonable request of
the underwriters managing any underwritten offering of such securities, agree
in writing not to effect any Disposition or distribution of any Subject Shares
(other than that included in the registration) without the prior written
consent of the Company or such underwriters, as the case may be, for such
period of time (not to exceed ninety (90) days) from the effective date of such
registration as the underwriters may specify.
(l) Transfer of Registration Rights. The registration rights of any Holder
under this Agreement with respect to the Registrable Securities may be
transferred to any Permitted Transferee; provided, however, that (1) the
transferring Holder shall give the Company written notice at or prior to the
time of such transfer stating the name and address of the transferee and
identifying the securities with respect to which the rights under this
Agreement are being transferred and (2) such Permitted Transferee shall agree
in writing in form and substance reasonably satisfactory to the Company, to be
bound as a Holder by the provisions of this Agreement.
6. Miscellaneous.
(a) Termination. Except with respect to Section 2 (which shall terminate at
the conclusion of the Standstill Period) and Section 3 (which shall terminate
in accordance with its terms), this Agreement and the obligations of the
parties hereunder (other than Section 6 hereof) shall terminate on the first
date on which the AHP Parties beneficially own, in the aggregate, less than
Five Million (5,000,000) shares of Common Stock.
(b) Further Actions. Each of the parties hereto agrees that it will use
commercially reasonable efforts to do all things necessary to effectuate this
Agreement.
(c) Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated, except upon the
execution and delivery of a written agreement executed by each of the parties
hereto. The failure of any party hereto to exercise any right, power or remedy
provided under this Agreement or otherwise available in respect hereof at law
or in equity, or to insist upon compliance by any other party hereto with its
obligations hereunder, and any custom or practice of the parties at variance
with the
C-15
terms hereof shall not constitute a waiver by such party of its right to
exercise any such or other right, power or remedy or to demand such compliance.
(d) Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any of the provisions of this Agreement were not to be
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof in addition to any other
remedies at law or in equity.
(e) Notices. Any notices or other communications required or permitted
under, or otherwise in connection with this Agreement shall be in writing and
shall be deemed to have been duly given when delivered in Person or upon
confirmation of receipt when transmitted by facsimile transmission (but only if
followed by transmittal by national overnight courier or hand for delivery on
the next Business Day) or on receipt after dispatch by registered or certified
mail, postage prepaid, addressed, or on the next Business Day if transmitted by
national overnight courier, in each case as follows:
If to Company, at: Amgen Inc.
One Amgen Center Drive
Thousand Oaks, CA 91320-1797
Facsimile: (805) 449-3540
Attention: Chief Executive Officer
With a copy to: Latham & Watkins
885 Third Avenue, Suite 1000
New York, New York 10022-4802
Facsimile: (212) 751-4864
Attention: Charles Nathan
and Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071-2007
Facsimile: (213) 891-8763
Attention: Gary Olson
Charles K. Ruck
If to AHP, a Stockholder or a
Permitted Transferee, at: American Home Products Corporation
Five Giralda Farms
Madison, New Jersey 07940
Facsimile: (973) 660-7156
Attention: Louis L. Hoynes, Esq.
With a copy to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile: (212) 455-2502
Attention: Charles I. Cogut
(f) Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(g) Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
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(h) Entire Agreement. This Agreement constitutes the entire agreement of
the parties and supersedes all prior agreements and undertakings, both written
and oral, between the parties, or any of them, with respect to the subject
matter hereof including, without limitation, the eighth paragraph of the
confidentiality agreement dated November 28, 2001 between AHP and the Company.
(i) Assignment. Neither this Agreement nor any of the rights, interests, or
obligations hereunder shall be assigned (whether by operation of law or
otherwise) by AHP or the Stockholders without the consent of the Company, or by
the Company without the consent of holders of at least a majority in number of
the Subject Shares then outstanding, provided, that AHP and the Stockholders
can assign their rights hereunder to a Permitted Transferee without the consent
of the Company. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns. In no event shall any transferee of
Subject Shares be entitled or be subject, solely as a result of such transfer,
to any of the benefits or obligations, respectively, of this Agreement or to
enforce or be subject to the same.
(j) Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and
assigns, and nothing in this Agreement, express or implied, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.
(k) Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury.
(i) This Agreement and the transactions contemplated hereby, and all
disputes between the parties under or related to the Agreement or the facts
and circumstances leading to its execution, whether in contract tort or
otherwise, shall be governed by and construed in accordance with the laws of
the State of Delaware, without regard to the application of Delaware
principles of conflicts of laws.
(ii) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdiction of any
Delaware State court, or Federal court of the United States of America,
sitting in Delaware, and any appellate court from any thereof, in any action
or proceeding arising out of or relating to this Agreement or the agreements
delivered in connection herewith or the transactions contemplated hereby or
thereby or for recognition or enforcement of any judgment relating thereto,
and each of the parties hereby irrevocably and unconditionally (A) agrees
not to commence any such action or proceeding except in such courts, (B)
agrees that any claim in respect of any such action or proceeding may be
heard and determined in such Delaware State court or, to the extent
permitted by law, in such Federal court, (C) waives, to the fullest extent
it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any such action or proceeding in
any such Delaware State or Federal court, and (D) waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such Delaware State or
Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided
by law. Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 6(e). Nothing in this
Agreement shall affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
(iii) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT
C-17
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (C) IT
MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
IN THIS SECTION 6(k).
(l) Effectiveness of Agreement. Notwithstanding anything in this Agreement
to the contrary, this Agreement shall become effective only upon the issuance
to the Stockholders of the Common Stock to be issued pursuant to the Merger
Agreement.
(m) Counterparts. This Agreement may be executed in counterparts, each of
which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
(Signature Page Follows)
C-18
IN WITNESS WHEREOF, the parties have executed this Stockholders' Rights
Agreement as of the date first above written.
AMGEN INC.
a Delaware corporation
/s/ KEVIN W. SHARER
By: _______________________________
Name: Kevin W. Sharer
Title: Chairman of the Board, CEO
and
President
AMERICAN HOME PRODUCTS CORPORATION
a Delaware corporation
/s/ KENNETH MARTIN
By: _______________________________
Name: Kenneth Martin
Title: Senior Vice President and
Chief
Financial Officer
MDP HOLDINGS, INC.
a Delaware corporation
/s/ KENNETH MARTIN
By: ____________________________
Name: Kenneth Martin
Title: Executive Vice President
LEDERLE PARENTERALS, INC.
a New Jersey corporation
/s/ KENNETH MARTIN
By: ______________________________
Name: Kenneth Martin
Title: Vice President
C-19
ANNEX D
--------------------------------------------------------------------------------
Goldman, Sachs & Co. 85 Broad Street New York, New York 10004
Tel: 212-902-1000
[LOGO] GOLDMAN SACHS
--------------------------------------------------------------------------------
PERSONAL AND CONFIDENTIAL
-------------------------
December 16, 2001
Board of Directors
Amgen Inc.
One Amgen Center Drive
Thousand Oaks, CA 91320
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a financial point of
view to Amgen Inc. ("Amgen" or the "Company") of the Merger Consideration (as
defined below) to be paid by the Company for each outstanding share of Common
Stock, par value $0.01 per share (the "Shares"), of Immunex Corporation
("Immunex") pursuant to the Agreement and Plan of Merger, dated as of December
16, 2001 (the "Agreement"), by and among the Company, AMS Acquisition Inc., a
wholly-owned subsidiary of the Company ("Merger Sub"), and Immunex. Pursuant to
the Agreement, Merger Sub will be merged with and into Immunex, and each
outstanding Share (other than Shares held by the Company or any of its
subsidiaries) will be converted into (i) 0.440 shares of Common Stock, par
value $0.0001 per share (the "Company Common Stock"), of the Company (the
"Stock Consideration") and (ii) $4.50 in cash (the "Cash Consideration";
together with the Stock Consideration, the "Merger Consideration").
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in performing financial analyses with respect to businesses
and their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities as private placements as well as for estate, corporate and
other purposes. We are familiar with the Company having provided certain
investment banking services to the Company from time to time, including having
acted as its financial advisor in connection with its stock repurchase program
and having acted as its financial advisor in connection with, and having
participated in certain of the negotiations leading to, the Agreement. Goldman,
Sachs & Co. provides a full range of financial advisory and securities services
and, in the course of its normal trading activities, may from time to time
effect transactions and hold positions in securities, including derivative
securities, of the Company or Immunex for its own account and for the accounts
of customers.
In connection with this opinion, we have reviewed, among other things, the
Agreement; the Shareholder Voting Agreement, dated as of December 16, 2001, by
and among the Company, American Home Products Corporation, MDP Holdings, Inc.
and Lederle Parenterals, Inc.; Annual Reports to Stockholders and Annual
Reports on Form 10-K of the Company and Immunex for the five years ended
December 31, 2000; certain interim reports to stockholders and Quarterly
Reports on Form 10-Q of the Company and Immunex; certain other communications
from the Company and Immunex to their respective stockholders; and certain
financial analyses and forecasts for the Company, Immunex and the combined
company on a pro forma basis prepared by the management of the Company (the
"Forecasts"), including certain cost savings and operating synergies projected
by the management
D-1
Board of Directors
Amgen Inc.
December 16, 2001
Page Two
of the Company to result from the transaction contemplated by the Agreement
(the "Synergies"). We have held discussions with members of the senior
management of the Company regarding their assessment of the strategic rationale
for, and the potential benefits of, the transaction contemplated by the
Agreement and the past and current business operations, financial condition and
future prospects of the Company, including the future prospects of the combined
companies. We have also held discussions with senior management of the Company
and L.E.K Consulting LLC regarding discussions they had with the senior
management of Immunex regarding the past and current business operations,
financial condition and future prospects of Immunex. In addition, we have
reviewed the reported price and trading activity for the Company Common Stock
and the Shares, compared
certain financial and stock market information for the Company and Immunex with
similar information for certain other companies the securities of which are
publicly traded, reviewed the financial terms of certain recent
business combinations in the biotechnology industry specifically and other
industries generally and performed such other studies and analyses as we
considered appropriate.
We have relied upon the accuracy and completeness of all of the financial,
accounting and other information discussed with or reviewed by us and have
assumed such accuracy and completeness for purposes of rendering this opinion.
In that regard, we have assumed with your consent that the Forecasts (including
the Synergies) have been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the Company and that such
Synergies will be realized in the amounts and time periods contemplated
thereby. In addition, we have not made an independent evaluation or appraisal
of the assets and liabilities of the Company or Immunex or any of their
respective subsidiaries and we have not been furnished with any such
evaluations or appraisals. We also have assumed that all material governmental,
regulatory or other consents and approvals necessary for the consummation of
the transaction contemplated by the Agreement will be obtained without any
adverse effect on Amgen or Immunex or on the contemplated benefits of the
transaction contemplated by the Agreement. Our advisory services and the
opinion expressed herein are provided for the information and assistance of the
Board of Directors of the Company in connection with its consideration of the
transaction contemplated by the Agreement and such opinion does not constitute
a recommendation as to how any holder of Company Common Stock should vote with
respect to such transaction.
Based upon and subject to the foregoing and based upon such other matters, as
we consider relevant, it is our opinion that as of the date hereof the Merger
Consideration to be paid by the Company for each Share pursuant to the
Agreement is fair from a financial point of view to the Company.
Very truly yours,
/s/ GOLDMAN, SACHS & CO.
-------------------------
(GOLDMAN, SACHS & CO.)
D-2
ANNEX E
[LOGO] OF MERRILL LYNCH
December 16, 2001
Board of Directors
Immunex Corporation
51 University Street
Seattle, WA 98101
Members of the Board of Directors:
Immunex Corporation (the "Company"), Amgen Inc. (the "Acquiror") and AMS
Acquisition Inc., a wholly owned subsidiary of the Acquiror (the "Acquisition
Sub"), propose to enter into an agreement (the "Agreement") pursuant to which
the Acquisition Sub will be merged with and into the Company (the "Merger").
Upon consummation of the Merger, each outstanding share of common stock, par
value $0.01 per share, of the Company (the "Company Common Stock") will be
converted into the right to receive (i) 0.440 of a share of common stock (the
"Acquiror Common Stock"), par value $0.0001 per share, of the Acquiror (the
"Common Stock Consideration") and (ii) $4.50 in cash (the "Cash Consideration,"
and together with the Common Stock Consideration, the "Merger Consideration").
Simultaneously with the Agreement, (i) American Home Products Corporation, the
Company's principal shareholder ("AHP") and the Acquiror propose to enter into
a voting agreement (the "Voting Agreement") pursuant to which AHP agrees, among
other things, to vote its shares in favor of the Merger, and a stockholders'
rights agreement (the "Stockholders' Rights Agreement") and (ii) the Company,
AHP and the other parties thereto propose to enter into an agreement regarding
certain governance and commercial matters (the "Agreement Regarding Governance
and Commercial Matters").
You have asked us whether, in our opinion, the Merger Consideration to be
received by the holders of the shares of Company Common Stock in the Merger is
fair to such holders from a financial point of view.
In arriving at the opinion set forth below, we have, among other things:
1. Reviewed certain publicly available business and financial information
relating to the Company and the Acquiror;
2. Reviewed certain information with respect to the Acquiror, including
financial forecasts, relating to the business, earnings, cash flow,
assets and prospects of the Acquiror, furnished to us by the Acquiror;
3. Reviewed certain information with respect to the Company, including
financial forecasts, relating to the business, earnings, cash flow,
assets and prospects of the Company, furnished to us by the Company;
4. Conducted discussions with members of senior management of the Company
and the Acquiror concerning their respective businesses and prospects
before and after giving effect to the Merger and the potential synergies
expected to result from the Merger;
5. Reviewed the historical market prices, trading activity and valuation
multiples for the Company Common Stock and the Acquiror Common Stock and
compared them with that of certain publicly traded companies which we
deemed to be reasonably similar to the Company and the Acquiror,
respectively;
6. Compared the results of operations of the Company and the Acquiror with
those of certain companies which we deemed to be reasonably similar to
the Company and the Acquiror, respectively;
7. Compared the proposed financial terms of the transactions contemplated
by the Agreement with the financial terms of certain other mergers and
acquisitions which we deemed to be relevant;
E-1
8. Reviewed the potential pro forma impact of the Merger;
9. Reviewed the Agreement, the Voting Agreement, the Stockholders' Rights
Agreement and the Agreement Regarding Governance and Commercial Matters;
and
10. Reviewed such other financial studies and analyses and performed such
other investigations and took into account such other matters as we
deemed necessary, including our assessment of general economic, market
and monetary conditions.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us by
the Company and the Acquiror, and we have not assumed any responsibility to
independently verify such information or undertaken an independent appraisal of
any of the assets and liabilities of the Company or Acquiror or been furnished
with any such evaluation or appraisal. In addition, we have not assumed any
obligation to conduct any physical inspection of the properties or facilities
of the Company or the Acquiror. With respect to the financial forecasts
furnished to or discussed with us by the Company and the Acquiror, we have
assumed that they have been reasonably prepared and reflect the best currently
available estimates and judgment of the Company's and the Acquiror's management
as to the expected future financial performance of the Company and the
Acquiror, as the case may be. We have further assumed that the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended and that all conditions to the Merger
will be satisfied.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available to
us as of, the date hereof. We have assumed that in the course of obtaining the
necessary regulatory or other consents or approvals (contractual or otherwise)
for the consummation of the Merger, no restrictions, including divestiture
requirements or amendments or modifications, will be imposed that will have a
material adverse effect on the contemplated benefits of the Merger.
In connection with the preparation of this opinion, we have not been
authorized by the Company or the Board of Directors to solicit, and have not
solicited, third party indications of interest for acquisition of all or any
part of the Company.
We are acting as financial advisor to the Company in connection with the
Merger and will receive a fee from the Company for our services, a significant
portion of which is contingent upon the consummation of the Merger. In
addition, the Company has agreed to indemnify us for certain liabilities
arising out of our engagement. We have, in the past, provided financial
advisory and financing services to the Company and the Acquiror and may
continue to do so and have received, and may receive, fees for the rendering of
such services. In addition, in the ordinary course of our business, we may
actively trade the Company Common Stock, as well as the Acquiror Common Stock,
for our own account or for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities.
This opinion is for the use and benefit of the Board of Directors of the
Company. Our opinion does not address the merits of the underlying decision by
Company to engage in the Merger and does not constitute a recommendation to any
shareholder as to how such shareholder should vote on the proposed Merger or
any matter related thereto.
We are not expressing any opinion herein as to the prices at which the
Company Common Stock and the Acquiror Common Stock will trade following the
announcement or consummation of the Merger.
On the basis of, and subject to the foregoing, we are of the opinion that
the Merger Consideration to be received by the holders of the shares of Company
Common Stock pursuant to the Merger is fair to such holders from a financial
point of view.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
/s/ MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
E-2
ANNEX F
TITLE 23B. WASHINGTON BUSINESS CORPORATION ACT
CHAPTER 23B.13. DISSENTERS' RIGHTS
(S) 23B.13.010. Definitions
As used in this chapter:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under RCW 23B.13.020 and who exercises that right when and
in the manner required by RCW 23B.13.200 through 23B.13.280.
(3) "Fair value," with respect to a dissenter's shares, means the value
of the shares immediately before the effective date of the corporate action
to which the dissenter objects, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be
inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares
to the extent of the rights granted by a nominee certificate on file with a
corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner
of shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
(S) 23B.13.020. Right to dissent
(1) A shareholder is entitled to dissent from, and obtain payment of the
fair value of the shareholder's shares in the event of, any of the following
corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party
(1) if shareholder approval is required for the merger by RCW 23B.11.030,
23B.11.080, or the articles of incorporation and the shareholder is entitled
to vote on the merger, or (ii) if the corporation is a subsidiary that is
merged with its parent under RCW 23B.11.040;
(b) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
(c) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the shareholders
within one year after the date of sale;
(d) An amendment of the articles of incorporation that materially reduces
the number of shares owned by the shareholder to a fraction of a share if
the fractional share so created is to be acquired for cash under RCW
23B.06.040; or
(e) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
F-1
(2) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this chapter may not challenge the corporate action
creating the shareholder's entitlement unless the action fails to comply with
the procedural requirements imposed by this title, RCW 25.10.900 through
25.10.955, the articles of incorporation, or the bylaws, or is fraudulent with
respect to the shareholder or the corporation.
(3) The right of a dissenting shareholder to obtain payment of the fair
value of the shareholder's shares shall terminate upon the occurrence of any
one of the following events:
(a) The proposed corporate action is abandoned or rescinded;
(b) A court having jurisdiction permanently enjoins or sets aside the
corporate action; or
(c) The shareholder's demand for payment is withdrawn with the written
consent of the corporation.
(S) 23B.13.030. Dissent by nominees and beneficial owners
(1) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in the shareholder's name only if the shareholder
dissents with respect to all shares beneficially owned by any one person and
notifies the corporation in writing of the name and address of each person on
whose behalf the shareholder asserts dissenters' rights. The rights of a
partial dissenter under this subsection are determined as if the shares as to
which the dissenter dissents and the dissenter's other shares were registered
in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares held
on the beneficial shareholder's behalf only if:
(a) The beneficial shareholder submits to the corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights; and
(b) The beneficial shareholder does so with respect to all shares of
which such shareholder is the beneficial shareholder or over which such
shareholder has power to direct the vote.
(S) 23B.13.200. Notice of dissenters' rights
(1) If proposed corporate action creating dissenters' rights under RCW 23B.
13.020 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters'
rights under this chapter and be accompanied by a copy of this chapter.
(2) If corporate action creating dissenters' rights under RCW 23B. 13.020 is
taken without a vote of shareholders, the corporation, within ten days after
[the] effective date of such corporate action, shall notify in writing all
shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in RCW 23B. 13.220.
(S) 23B.13.210. Notice of intent to demand payment
(1) If proposed corporate action creating dissenters' rights under RCW 23B.
13.020 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights must (a) deliver to the corporation before
the vote is taken written notice of the shareholder's intent to demand payment
for the shareholder's shares if the proposed action is effected, and (b) not
vote such shares in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1) of
this section is not entitled to payment for the shareholder's shares under this
chapter.
F-2
(S) 23B.13.220. Dissenters' notice
(1) If proposed corporate action creating dissenters' rights under RCW
23B.13.020 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of RCW 23B.13.210.
(2) The dissenters' notice must be sent within ten days after the effective
date of the corporate action, and must:
(a) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(b) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting dissenters'
rights certify whether or not the person acquired beneficial ownership of
the shares before that date;
(d) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than thirty nor more than sixty days after the
date the notice in subsection (1) of this section is delivered; and
(e) Be accompanied by a copy of this chapter.
(S) 23B.13.230. Duty to demand payment
(1) A shareholder sent a dissenters' notice described in RCW 23B.13.220 must
demand payment, certify whether the shareholder acquired beneficial ownership
of the shares before the date required to be set forth in the dissenters'
notice pursuant to RCW 23B.13.220(2)(c), and deposit the shareholder's
certificates in accordance with the terms of the notice.
(2) The shareholder who demands payment and deposits the shareholder's share
certificates under subsection (1) of this section retains all other rights of a
shareholder until the proposed corporate action is effected.
(3) A shareholder who does not demand payment or deposit the shareholder's
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for the shareholder's shares under this
chapter.
(S) 23B.13.240. Share restrictions
(1) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is effected or the restriction is released under RCW 23B.13.260.
(2) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until the effective date of
the proposed corporate action.
(S) 23B.13.250. Payment
(1) Except as provided in RCW 23B.13.270, within thirty days of the later of
the effective date of the proposed corporate action, or the date the payment
demand is received, the corporation shall pay each dissenter who complied with
RCW 23B.13.230 the amount the corporation estimates to be the fair value of the
shareholder's shares, plus accrued interest.
F-3
(2) The payment must be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal year ending
not more than sixteen months before the date of payment, an income statement
for that year, a statement of changes in shareholders' equity for that year,
and the latest available interim financial statements, if any;
(b) An explanation of how the corporation estimated the fair value of the
shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment under RCW
23B.13.280; and
(e) A copy of this chapter.
(S) 23B.13.260. Failure to take action
(1) If the corporation does not effect the proposed action within sixty days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release any transfer
restrictions imposed on uncertificated shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the corporation wishes to undertake the proposed action, it must
send a new dissenters' notice under RCW 23B.13.220 and repeat the payment
demand procedure.
(S) 23B.13.270. After-acquired shares
(1) A corporation may elect to withhold payment required by RCW 23B.13.250
from a dissenter unless the dissenter was the beneficial owner of the shares
before the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action.
(2) To the extent the corporation elects to withhold payment under
subsection (1) of this section, after taking the proposed corporate action, it
shall estimate the fair value of the shares, plus accrued interest, and shall
pay this amount to each dissenter who agrees to accept it in full satisfaction
of the dissenter's demand. The corporation shall send with its offer an
explanation of how it estimated the fair value of the shares, an explanation of
how the interest was calculated, and a statement of the dissenter's right to
demand payment under RCW 23B.13.280.
(S) 23B.13.280. Procedure if shareholder dissatisfied with payment or offer
(1) A dissenter may notify the corporation in writing of the dissenter's own
estimate of the fair value of the dissenter's shares and amount of interest
due, and demand payment of the dissenter's estimate, less any payment under RCW
23B.13.250, or reject the corporation's offer under RCW 23B.13.270 and demand
payment of the dissenter's estimate of the fair value of the dissenter's shares
and interest due, if.
(a) The dissenter believes that the amount paid under RCW 23B.13.250 or
offered under RCW 23B.13.270 is less than the fair value of the dissenter's
shares or that the interest due is incorrectly calculated;
(b) The corporation fails to make payment under RCW 23B.13.250 within
sixty days after the date set for demanding payment; or
(c) The corporation does not effect the proposed action and does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty days after the date set for
demanding payment.
(2) A dissenter waives the right to demand payment under this section unless
the dissenter notifies the corporation of the dissenter's demand in writing
under subsection (1) of this section within thirty days after the corporation
made or offered payment for the dissenter's shares.
F-4
(S) 23B.13.300. Court action
(1) If a demand for payment under RCW 23B.13.280 remains unsettled, the
corporation shall commence a proceeding within sixty days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding
within the sixty-day period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.
(2) The corporation shall commence the proceeding in the superior court of
the county where a corporation's principal office, or, if none in this state,
its registered office, is located. If the corporation is a foreign corporation
without a registered office in this state, it shall commence the proceeding in
the county in this state where the registered office of the domestic
corporation merged with or whose shares were acquired by the foreign
corporation was located.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled, parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(4) The corporation may join as a party to the proceeding any shareholder
who claims to be a dissenter but who has not, in the opinion of the
corporation, complied with the provisions of this chapter. If the court
determines that such shareholder has not complied with the provisions of this
chapter, the shareholder shall be dismissed as a party.
(5) The jurisdiction of the court in which the proceeding is commenced under
subsection (2) of this section is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend decision on
the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The dissenters are entitled
to the same discovery rights as parties in other civil proceedings.
(6) Each dissenter made a party to the proceeding is entitled to judgment
(a) for the amount, if any, by which the court finds the fair value of the
dissenter's shares, plus interest, exceeds the amount paid by the corporation,
or (b) for the fair value, plus accrued interest, of the dissenter's
after-acquired shares for which the corporation elected to withhold payment
under RCW 23B.13.270.
(S) 23B.13.310. Court costs and counsel fees
(1) The court in a proceeding commenced under RCW 23B.13.300 shall determine
all costs of the proceeding, including the reasonable compensation and expenses
of appraisers appointed by the court. The court shall assess the costs against
the corporation, except that the court may assess the costs against all or some
of the dissenters, in amounts the court finds equitable, to the extent the
court finds the dissenters acted arbitrarily, vexatiously, or not in good faith
in demanding payment under RCW 23B.13.280.
(2) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of RCW 23B.13.200 through 23B.13.280; or
(b) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by chapter 23B.13 RCW.
(3) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
F-5
ANNEX G
AMGEN INC.
EXECUTIVE INCENTIVE PLAN
I. PURPOSE
The purpose of the Amgen Inc. Executive Incentive Plan (the "Plan") is to
attract and retain highly qualified individuals; to obtain from each the best
possible performance; to establish a performance goal based on objective
criteria; to further underscore the importance of achieving business objectives
for the short and long term; and to include in such individual's compensation
package an annual incentive component which is tied directly to the achievement
of those objectives. Such component is intended to qualify as performance-based
compensation under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), so as to be fully deductible by Amgen Inc. and its
subsidiary companies (collectively, "Amgen").
II. EFFECTIVE DATE; TERM
The Plan is effective as of January 1, 2003, subject to approval by the
affirmative vote of a majority of shares of Amgen Inc.'s common stock, $.0001
par value, voting at Amgen Inc.'s 2002 annual meeting of stockholders, and
shall remain in effect until such time as it shall be terminated by the
Compensation Committee of the board of directors or any successor thereto (the
"Compensation Committee").
III. ELIGIBILITY AND PARTICIPATION
Eligibility to participate in the Plan is limited to members of Amgen's
management Executive Committee and other senior executives of Amgen.
Participants in the Plan ("Participants") shall be selected annually by the
Compensation Committee from those eligible to participate in the Plan.
IV. BUSINESS CRITERIA
The Plan's performance goal shall be based upon Amgen's Adjusted Net Income.
No award shall be paid unless there is positive Adjusted Net Income for such
performance period. "Adjusted Net Income" shall mean net income for such
performance period computed in accordance with accounting principles generally
accepted in the U.S. which may be adjusted by the Compensation Committee, as
specified in writing, for each performance period, at the time the goal is
established for the performance period, for the following:
(1) any item of significant gain or loss for the performance period
determined to be related to a change in accounting principle as
reflected in Amgen's audited consolidated financial statements;
(2) amortization expenses associated with acquired intangible assets;
(3) expenses associated with acquired in-process research and development;
and
(4) any other items of significant income or expense which are determined to
be appropriate adjustments and are specified in writing by the
Compensation Committee at the time the goal is established for the
performance period.
V. PERFORMANCE GOAL
By no later than the latest time permitted by Section 162(m) of the Code
(generally, for performance periods of one year or more, no later than 90 days
after the commencement of the performance period) and while the performance
relating to the performance goal remains substantially uncertain within the
meaning of Section 162(m) of the Code, the Compensation Committee shall specify
the adjustments which shall be included in
G-1
determining Adjusted Net Income for such performance period pursuant to Section
IV, shall establish the Plan's performance goal for such performance period
based upon Adjusted Net Income for such performance period and shall adopt
targeted awards for Participants for such performance period.
Subject to the foregoing and to the limitations set forth in Section VI, no
awards shall be paid to Participants unless and until the Compensation
Committee makes a certification in writing with respect to the attainment of
the performance goal as required by Section 162(m) of the Code.
VI. DETERMINATION OF AMOUNTS OF AWARDS
The Compensation Committee may grant an award to a Participant which shall
be payable if there is positive Adjusted Net Income. The maximum award payable
to each of the Chief Executive Officer and President, if each is a Participant
for such performance period, shall be 0.25% (twenty-five hundredths of one
percent) of Adjusted Net Income for such period, the maximum award payable to
an Executive Vice President, if each is a Participant for such performance
period, shall be 0.15% (fifteen hundredths of one percent) of Adjusted Net
Income for such period, and the maximum award payable to any other individual
Participants shall be 0.10% (one tenth of one percent) of Adjusted Net Income
for such period. The maximum total awards payable to all Participants shall be
2.0% (two percent) of Adjusted Net Income for such period.
The Compensation Committee shall have authority to exercise discretion in
determining the amount of the targeted award granted to each Participant at the
beginning of a performance period, provided that no such targeted award shall
exceed the foregoing maximum award limits, and to exercise discretion to reduce
the amount of a targeted award which shall be payable to each Participant at
the end of each performance period, subject to the terms, conditions and limits
of the Plan and of any other written commitment authorized by the Compensation
Committee. The Compensation Committee may at any time establish (and once
established, rescind, waive or amend) additional conditions and terms of
payment of awards (including but not limited to the achievement of other
financial, strategic or individual goals, which may be objective or subjective)
as it deems desirable in carrying out the purposes of the Plan and may take
into account such other factors as it deems appropriate in administering any
aspect of the Plan. However, the Compensation Committee shall have no authority
to increase the amount of a targeted award granted to any Participant or to pay
an award under the Plan if the performance goal has not been satisfied. In
determining the amount of any award to be granted or to be paid to any
Participant, the Compensation Committee shall give consideration to the
contribution which may be or has been made by the Participant to achievement of
Amgen's established objectives and such other matters as it shall deem relevant.
The payment of an award to a Participant with respect to a performance
period shall be conditioned upon the Participant's employment by Amgen on the
last day of the performance period; provided, however, that in the discretion
of the Compensation Committee, awards may be paid to Participants who have
retired or whose employment has terminated after the beginning of the period
for which an award is made, or to the designee or estate of a Participant who
died during such period.
VII. FORM OF AWARDS
All awards shall be determined by the Compensation Committee and shall be
paid in cash. Before the beginning of each performance period, each Participant
may elect that all or part of the Participant's award for that period will be
deferred and distributed at a later date under the Amgen Inc. Nonqualified
Deferred Compensation Plan subject to the terms of the Amgen Inc. Nonqualified
Deferred Compensation Plan.
VIII. PAYMENT OF AWARDS
Awards may be paid at any time following the end of the performance period;
provided, however, that no awards shall be paid unless and until the
Compensation Committee certifies, in writing, that the amounts payable
G-2
with respect to each award, and all awards in the aggregate, does not exceed
the limitations set forth in Section VI and that the amount payable to each
Participant does not exceed the amount of the targeted award granted to the
Participant at the beginning of the performance period. If the Compensation
Committee deems it appropriate or advisable, it may request a report from a
nationally recognized public accounting firm stating the amount of Adjusted Net
Income for such performance period.
IX. SPECIAL AWARDS AND OTHER PLANS
Nothing contained in the Plan shall prohibit Amgen from granting awards or
authorizing other compensation to any person under any other plan or authority
or limit the authority of Amgen to establish other special awards or incentive
compensation plans providing for the payment of incentive compensation to
employees (including those employees who are eligible to participate in the
Plan).
X. STOCKHOLDER APPROVAL
No awards shall be paid under the Plan unless and until Amgen Inc.'s
stockholders shall have approved the Plan and the performance goal as required
by Section 162(m) of the Code.
XI. ADMINISTRATION, AMENDMENT AND INTERPRETATION OF THE PLAN
The Compensation Committee shall administer the Plan. The Compensation
Committee shall consist solely of two or more members of the board of directors
who shall qualify as "outside directors" under Section 162(m) of the Code. The
Compensation Committee shall have full power to construe and interpret the
Plan, establish and amend rules and regulations for its administration, and
perform all other acts relating to the Plan, including the delegation of
administrative responsibilities, that it believes reasonable and proper and in
conformity with the purposes of the Plan.
The Compensation Committee shall have the right to amend the Plan from time
to time or to repeal it entirely or to direct the discontinuance of awards
either temporarily or permanently; provided, however, that no amendment of the
Plan that changes the maximum award payable to any Participant or all
Participants in the aggregate, as set forth in Section VI, or materially amends
the definition of Adjusted Net Income as used in Section VI, shall be effective
before approval by the affirmative vote of a majority of shares voting at a
meeting of the stockholders of Amgen Inc.
Any decision made, or action taken, by the Compensation Committee arising
out of or in connection with the interpretation and/or administration of the
Plan shall be final, conclusive and binding on all persons affected thereby.
XII. RIGHTS OF PLAN PARTICIPANTS
Neither the Plan, nor the adoption or operation of the Plan, nor any
documents describing or referring to the Plan (or any part hereof) shall confer
upon any Participant any right to continue in the employ of Amgen or shall
interfere with or restrict in any way the rights of Amgen, which are hereby
expressly reserved, to discharge any Participant at any time for any reason
whatsoever, with or without cause.
No individual to whom an award has been made or any other party shall have
any interest in the cash or any other asset of Amgen prior to such amount being
paid.
No right or interest of any Participant shall be assignable or transferable,
or subject to any claims of any creditor or subject to any lien.
G-3
XIII. MISCELLANEOUS
Amgen shall deduct all federal, state and local taxes required by law or
Amgen policy from any award paid hereunder.
In no event shall Amgen be obligated to pay to any Participant an award for
any period by reason of Amgen's payment of an award to such Participant in any
other period, or by reason of Amgen's payment of an award to any other
Participant or Participants in such period or in any other period. Nothing
contained in this Plan shall confer upon any person any claim or right to any
payments hereunder. Such payments shall be made at the sole discretion of the
Compensation Committee.
The Plan shall be unfunded. Amounts payable under the Plan are not and will
not be transferred into a trust or otherwise set aside. Amgen shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any award under the Plan. Any
accounts under the Plan are for bookkeeping purposes only and do not represent
a claim against the specific assets of Amgen.
It is the intent of Amgen that the Plan and awards made hereunder shall
satisfy and shall be interpreted in a manner that satisfies any applicable
requirements as performance-based compensation within the meaning of Section
162(m) of the Code. Any provision, application or interpretation of the Plan
that is inconsistent with this intent to satisfy the standards in Section
162(m) of the Code shall be disregarded.
Any provision of the Plan that is prohibited or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of the Plan.
The Plan and the rights and obligations of the parties to the Plan shall be
governed by, and construed and interpreted in accordance with, the law of the
State of Delaware (without regard to principles of conflicts of law).
G-4
Amgen Inc.
One Amgen Center Drive
Thousand Oaks, CA 91320-1799
2002 Amgen Inc. All Rights Reserved.
P50206-4 800 M/4-01
Immunex Corporation
51 University Street
Seattle, Washington 98101-2936
2002 Immunex Corporation All Rights Reserved.
(recycle graphic)Printed on recycled paper
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law, or the DGCL, provides
that, subject to specific limitations in the case of derivative suits brought
by a corporation's stockholders in its name, a corporation may indemnify any
individual who is made a party or threatened to be made a party to any third
party suit or proceeding on account of being a director, officer, employee or
agent of the corporation against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement reasonably incurred by him or
her in connection with the action, through, among other things, a majority vote
of directors who were not parties to the suit or proceeding, if the individual:
. 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
. in the case of a criminal proceeding, had no reasonable cause to believe
his or her conduct was unlawful.
Moreover, to the extent a director, officer, employee or agent is successful in
the defense of the action, suit or proceeding, the DGCL requires a corporation
to indemnify the individual for reasonable expenses incurred thereby.
In accordance with the DGCL, Amgen's certificate of incorporation provides
that a director of Amgen will not be personally liable to Amgen or Amgen's
stockholders for monetary damages for breach of fiduciary duties, except for
liability for:
. any breach of the director's duty of loyalty to Amgen or Amgen's
stockholders;
. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. payment of a dividend or the repurchase or redemption of stock in
violation of Delaware law; or
. any transaction from which the director derived an improper personal
benefit.
The bylaws of Amgen provide that the officers and directors of Amgen will be
indemnified to the full extent permitted by the DGCL. In addition, Amgen must
advance to any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding because he
is or was a director or officer of Amgen, or is or was serving at the request
of Amgen as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, prior to the final disposition of any such
proceeding, promptly following request for advance, all expenses incurred by
any director or officer in connection with such proceeding if the individual
provides an undertaking to repay all amounts if it is ultimately determined
that the person is not entitled to be indemnified under the bylaws or otherwise.
The right to indemnification is not exclusive of any other right which that
individual may have or hereafter acquire under any statute, provision of
Amgen's certificate of incorporation or bylaws, agreement, vote of stockholders
or disinterested directors or otherwise. Amgen is authorized to enter into
individual contracts with any or all of its directors, officers, employees or
agents respecting indemnification and advances, and, upon approval by the board
of directors of Amgen, to purchase insurance on behalf of any person required
or permitted to be indemnified. Amgen maintains a standard policy of officers'
and directors' liability insurance.
Part II-1
Item 21. Exhibits and Financial Statement Schedules
(a) See Exhibit Index
(b) Not applicable.
(c) Not applicable.
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Exchange Act of 1934)
that is incorporated by reference in the 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.
(b) The undersigned registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(c) The registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (b) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used
in connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offering therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(d) Insofar as 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 foregoing provisions, 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
Securities Act of 1933 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, 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(e) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in the
documents filed subsequent to the effective date of the registration statement
through the date of responding to the request.
(f) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
Part II-2
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 to registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Thousand
Oaks, State of California, on March 22, 2002.
Amgen Inc.
By: /s/ KEVIN W. SHARER
-----------------------------
Name: Kevin W. Sharer
Title: Chairman of the Board, Chief
Executive Officer and
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to registration statement has been signed by the following persons in the
capacities and as of the dates indicated.
Signature Title Date
--------- ----- ----
/s/ KEVIN W. SHARER Chairman of the Board, Chief March 22, 2002
----------------------------- Executive Officer,
Kevin W. Sharer President and Director
* Executive Vice President, March 22, 2002
----------------------------- Finance, Strategy and
Richard D. Nanula Communications and Chief
Financial Officer
* Vice President, Financial March 22, 2002
----------------------------- Operations and Chief
Barry D. Schehr Accounting Officer
* Director March 22, 2002
-----------------------------
David Baltimore
* Director March 22, 2002
-----------------------------
Frank J. Biondi, Jr.
* Director March 22, 2002
-----------------------------
William K. Bowes, Jr.
* Director March 22, 2002
-----------------------------
Jerry D. Choate
* Director March 22, 2002
-----------------------------
Frederick W. Gluck
* Director March 22, 2002
-----------------------------
Franklin P. Johnson, Jr.
Part II-3
* Director March 22, 2002
------------------------------
Steven Lazarus
* Director March 22, 2002
------------------------------
Gilbert S. Omenn
* Director March 22, 2002
------------------------------
Judith C. Pelham
* Director March 22, 2002
------------------------------
J. Paul Reason
* Director March 22, 2002
------------------------------
Donald B. Rice
* Director March 22, 2002
------------------------------
Patricia C. Sueltz
* By: /s/ KEVIN W. SHARER March 22, 2002
-------------------------
Kevin W. Sharer
Attorney-in-fact
Part II-4
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
2.1* Amended and Restated Agreement and Plan of Merger, dated as of December 16, 2001, by and
among Amgen Inc., AMS Acquisition Inc. and Immunex Corporation. (1)
4.1 Form of stock certificate for the common stock, par value $0.0001 of Amgen Inc. (2)
4.2 Amended and Restated Rights Agreement, dated as of December 12, 2000 between Amgen Inc. and
American Stock Transfer & Trust Company, as Rights Agent. (3)
4.3+ Stockholders' Rights Agreement dated as of December 16, 2001, by and among Amgen Inc.,
American Home Products Corporation, MDP Holdings, Inc. and Lederle Parenterals, Inc. (4)
5.1* Legal opinion of Latham & Watkins.
8.1** Tax opinion of Latham & Watkins.
8.2** Tax opinion of Skadden, Arps, Slate, Meagher & Flom LLP.
10.1*++ Amended and Restated Promotion Agreement by and between Immunex Corporation, American
Home Products Corporation and Amgen Inc. dated December 16, 2001.
10.2*++ Agreement Regarding Governance and Commercial Matters by and among American Home
Products Corporation, American Cyanamid Company and Amgen Inc. dated December 16, 2001.
23.1 Consent of Latham & Watkins (included in Exhibits 5.1* and 8.1**).
23.2** Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 8.2).
23.3* Consent of Ernst & Young LLP, independent auditors.
23.4* Consent of Ernst & Young LLP, independent auditors.
23.5* Consent of Goldman, Sachs & Co.
23.6* Consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated.
24.1+ Powers of Attorney.
99.1+ Shareholder Voting Agreement dated as of December 16, 2001, by and among Amgen Inc.,
American Home Products Corporation, MDP Holdings, Inc. and Lederle Parenterals, Inc. (5)
99.2* Opinion of Goldman, Sachs & Co. (6)
99.3* Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated. (7)
99.4* Form of Proxy of Amgen Inc.
99.5* Form of Proxy of Immunex Corporation.
99.6+ Consent of Edward V. Fritzky to be named a director of Amgen Inc. upon completion of the merger.
99.7+ Employment Agreement between Amgen Inc. and Edward V. Fritzky.
--------
* Filed herewith.
** To be filed by post-effective amendment.
+ Previously filed with the initial registration statement on January 31,
2002.
++ Confidential portions of this document have been omitted and separately
filed with the Securities and Exchange Commission pursuant to an
application for confidential treatment under Rule 406 of the Securities Act
of 1933.
(1) Included as Annex A to the joint proxy statement/prospectus forming a part
of this registration statement.
(2) Filed as an exhibit to Amgen's Form 10-Q for the quarter ended March 31,
1997 on May 13, 1997 and incorporated herein by reference.
(3) Filed as an exhibit to Amgen's Form 8-K Current Report dated December 13,
2000 on December 18, 2000 and incorporated herein by reference.
(4) Included as Annex C to the joint proxy statement/prospectus forming a part
of this registration statement.
Part II-5
(5) Included as Annex B to the joint proxy statement/prospectus forming a part
of this registration statement.
(6) Included as Annex D to the joint proxy statement/prospectus forming a part
of this registration statement.
(7) Included as Annex E to the joint proxy statement/prospectus forming a part
of this registration statement.
Part II-6