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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000898430-02-000744.txt : 20020414
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ACCESSION NUMBER: 0000898430-02-000744
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 11
CONFORMED PERIOD OF REPORT: 20011231
FILED AS OF DATE: 20020226
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: AMGEN INC
CENTRAL INDEX KEY: 0000318154
STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
IRS NUMBER: 953540776
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-12477
FILM NUMBER: 02558690
BUSINESS ADDRESS:
STREET 1: ONE AMGEN CENTER DRIVE
CITY: THOUSAND OAKS
STATE: CA
ZIP: 91320-1799
BUSINESS PHONE: 805-447-1000
MAIL ADDRESS:
STREET 1: ONE AMGEN CENTER DRIVE
STREET 2: MAIL STOP 27-3-C
CITY: THOUSAND OAKS
STATE: CA
ZIP: 91320-1799
FORMER COMPANY:
FORMER CONFORMED NAME: AMGEN
DATE OF NAME CHANGE: 19870305
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>d10k.txt
<DESCRIPTION>FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 2001
<TEXT>
<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2001
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 000-12477
AMGEN INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3540776
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Amgen Center Drive, Thousand Oaks, California 91320-1799
(Address of principal executive offices) (Zip Code)
(805) 447-1000
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $0.0001 par value; preferred share purchase rights;
Contractual contingent payment rights
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
The approximate aggregate market value of voting and non-voting stock held
by non-affiliates of the registrant was $60,066,301,000 as of February 14, 2002
(A)
1,047,800,052
(Number of shares of common stock outstanding as of February 14, 2002)
Documents incorporated by reference:
<TABLE>
<CAPTION>
Form 10-K
Document Parts
-------- ---------
<S> <C>
Definitive 2002 Proxy Statement, to be filed within
120 days of December 31, 2001 (specified portions)....... III
</TABLE>
- --------
(A) Excludes 12,174,168 shares of common stock held by directors and officers,
and any stockholders whose ownership exceeds five percent of the shares
outstanding, at February 14, 2002. Exclusion of shares held by any person
should not be construed to indicate that such person possesses the power,
directly or indirectly, to direct or cause the direction of the management
or policies of the registrant, or that such person is controlled by or
under common control with the registrant.
================================================================================
<PAGE>
PART I
Item 1. BUSINESS
Overview
Amgen Inc. ("Amgen" or the "Company") is a global biotechnology company that
discovers, develops, manufactures, and markets human therapeutics based on
advances in cellular and molecular biology.
The Company manufactures and markets human therapeutic products including,
EPOGEN(R) (Epoetin alfa), NEUPOGEN(R) (Filgrastim), Aranesp(TM) (darbepoetin
alfa), and Kineret(TM) (anakinra). EPOGEN(R) stimulates the production of red
blood cells and is marketed by Amgen in the United States for the treatment of
anemia associated with chronic renal failure in patients on dialysis.
NEUPOGEN(R) selectively stimulates the production of neutrophils, one type of
white blood cell. The Company markets NEUPOGEN(R) in the United States,
countries of the European Union ("EU"), Canada, and Australia for use in
decreasing the incidence of infection in patients undergoing myelosuppressive
chemotherapy. In addition, NEUPOGEN(R) is marketed in most of these countries
for use in increasing neutrophil counts in various other treatment modalities.
Aranesp(TM) stimulates the production of red blood cells and is marketed in the
United States, most countries in the EU, Australia, and New Zealand for the
treatment of anemia associated with chronic renal failure, including patients
on dialysis and patients not on dialysis. Kineret(TM) blocks the biologic
activity of interleukin-1 ("IL-1"), a substance that mediates inflammatory and
immunological responses. Kineret(TM) is marketed in the United States for the
reduction of the signs and symptoms of moderately to severely active rheumatoid
arthritis, in patients 18 years of age or older who have failed one or more
disease modifying antirheumatic drugs.
The Company focuses its research and development efforts on human
therapeutics delivered in the form of proteins, monoclonal antibodies, and
small molecules in the therapeutic areas of nephrology, cancer, inflammation,
and neurology and metabolism. The Company has research facilities in the United
States, and has clinical development staff in the United States, the EU,
Canada, Australia, and Japan. In addition to internal research and development
efforts, the Company has acquired certain product and technology rights and has
established research and development collaborations.
Amgen operates commercial manufacturing facilities located in the United
States, Puerto Rico, and a packaging and distribution center in The
Netherlands. A sales and marketing force is maintained in the United States,
the EU, Canada, Australia, and New Zealand. In addition, Amgen has entered into
licensing and/or co-promotion agreements to market certain of its products
including EPOGEN(R), NEUPOGEN(R), and Aranesp(TM) in certain geographic areas.
The Company was incorporated in California in 1980 and was merged into a
Delaware corporation in 1987. Amgen's principal executive offices are located
at One Amgen Center Drive, Thousand Oaks, California 91320-1799.
Products
EPOGEN(R) (Epoetin alfa)
EPOGEN(R) (proper name--Epoetin alfa) is Amgen's registered trademark for
its recombinant human erythropoietin product, a protein that stimulates red
blood cell production. Red blood cells transport oxygen to all cells of the
body. Without adequate amounts of erythropoietin, the red blood cell count is
reduced, thereby diminishing the ability of the blood to deliver sufficient
amounts of oxygen to the body, resulting in anemia. People with chronic renal
failure suffer from anemia because they do not produce sufficient amounts of
erythropoietin, which is normally produced in healthy kidneys. Amgen promotes
EPOGEN(R) for the treatment of anemia associated with chronic renal failure for
patients who are on dialysis. EPOGEN(R) is indicated to elevate or maintain the
red blood cell level (as determined by hematocrit or hemoglobin measurements)
and to decrease the need for blood transfusions in these patients.
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<PAGE>
In the United States, Amgen was granted rights to market recombinant human
erythropoietin under a licensing agreement with Kirin-Amgen, Inc.
("Kirin-Amgen"), a joint venture between Kirin Brewery Company, Limited
("Kirin") and Amgen (see "Joint Ventures and Business Relationships--Kirin
Brewery Company, Limited"). The Company began selling EPOGEN(R) in 1989 when
the U.S. Food and Drug Administration ("FDA") approved its use in the treatment
of anemia associated with chronic renal failure. In November 1999, the FDA
approved EPOGEN(R) for the treatment of anemia in children with chronic renal
failure who are on dialysis.
The Company has retained exclusive rights to market EPOGEN(R) in the United
States for dialysis patients. Amgen has granted Ortho Pharmaceutical
Corporation (which has assigned its rights under the Product License Agreement
to Ortho Biotech Products, L.P.), a subsidiary of Johnson & Johnson, hereafter
referred to as "Johnson & Johnson", a license to commercialize recombinant
human erythropoietin as a human therapeutic in the United States in all markets
other than dialysis. Johnson & Johnson markets recombinant human erythropoietin
under the trademark PROCRIT(R) in the United States (see Note 1 to the
Consolidated Financial Statements, "Summary of significant accounting
policies--Product sales"). In countries other than the United States, the
People's Republic of China, and Japan, Johnson & Johnson was granted rights to
commercialize erythropoietin as a human therapeutic under a licensing agreement
with Kirin-Amgen. Affiliates of Johnson & Johnson manufacture and market
erythropoietin under the trademark EPREX(R) in various countries (see "Joint
Ventures and Business Relationships--Johnson & Johnson").
In Japan and the People's Republic of China, Kirin was granted rights to
market recombinant human erythropoietin under licensing agreements with
Kirin-Amgen (see "Joint Ventures and Business Relationships--Kirin Brewery
Company, Limited"). Kirin manufactures and markets its recombinant human
erythropoietin product under the trademark ESPO(R).
EPOGEN(R) sales for the year ended December 31, 2001 were $2,108.5 million.
For EPOGEN(R) sales information for the years ended December 31, 2000 and 1999,
see Note 10 to the Consolidated Financial Statements.
NEUPOGEN(R) (Filgrastim)
NEUPOGEN(R) (proper name--Filgrastim) is Amgen's registered trademark for
its recombinant-methionyl human granulocyte colony-stimulating factor
("G-CSF"), a protein that selectively stimulates production of certain white
blood cells known as neutrophils. Neutrophils defend against infection.
Treatments for various diseases and diseases themselves can result in extremely
low numbers of neutrophils, a condition called neutropenia. Myelosuppressive
chemotherapy, one treatment option for individuals with cancer, targets cell
types which grow rapidly, such as tumor cells, neutrophils, and other types of
blood cells. Myelosuppressive chemotherapy can be administered with the intent
to cure cancer (curative setting) or with the intent to reduce pain and other
complications of cancer by managing tumor growth (palliative setting).
NEUPOGEN(R) is prescribed more frequently in the curative setting. Providing
NEUPOGEN(R) as an adjunct to myelosuppressive chemotherapy can reduce the
duration of neutropenia and thereby reduce the potential for infection.
Severe chronic neutropenia is an example of disease-related neutropenia. In
severe chronic neutropenia, the body fails to manufacture sufficient
neutrophils. Chronic administration of NEUPOGEN(R) has been shown to reduce the
incidence and duration of neutropenia-related consequences, such as fever and
infections, in patients with severe chronic neutropenia.
Patients undergoing bone marrow transplantation are treated with NEUPOGEN(R)
to accelerate recovery of neutrophils following chemotherapy and bone marrow
infusion. NEUPOGEN(R) also has been shown to induce immature blood cells
(progenitor cells, sometimes referred to as stem cells) to migrate (mobilize)
from the bone marrow into the blood circulatory system. When these peripheral
blood progenitor cells ("PBPC") are collected from the blood, stored, and
re-infused (transplanted) after high dose chemotherapy, recovery of platelets,
red
3
<PAGE>
blood cells, and neutrophils is accelerated. PBPC transplantation may be an
alternative to autologous bone marrow transplantation for some patients.
In the United States, NEUPOGEN(R) was initially indicated to decrease the
incidence of infection as manifested by febrile neutropenia for patients with
non-myeloid malignancies undergoing myelosuppressive chemotherapy.
Subsequently, the FDA approved NEUPOGEN(R) for additional indications: to
reduce the duration of neutropenia for patients with non-myeloid malignancies
undergoing myeloablative therapy followed by bone marrow transplantation; to
reduce the incidence and duration of neutropenia-related consequences in
symptomatic patients with congenital neutropenia, cyclic neutropenia, or
idiopathic neutropenia (collectively, severe chronic neutropenia); for use in
mobilization of PBPC for stem cell transplantation; and to reduce the recovery
time of neutrophils and the duration of fever following chemotherapy treatment
in patients being treated for acute myelogenous leukemia ("AML"). In the EU,
Canada, and Australia, NEUPOGEN(R) is marketed for the same indications. The
Company also markets NEUPOGEN(R) in the EU, Canada, and Australia for the
treatment of neutropenia in HIV patients receiving antiviral and/or other
myelosuppressive medications.
The Company began selling NEUPOGEN(R) in the United States in February 1991
pursuant to a licensing agreement with Kirin-Amgen. Kirin markets GRAN(R), its
G-CSF product, in Japan, the People's Republic of China, Taiwan, and Korea
under licensing agreements with Kirin-Amgen (see "Joint Ventures and Business
Relationships--Kirin Brewery Company, Limited"). In the EU, NEUPOGEN(R) is
commercialized by Amgen and F. Hoffmann-La Roche Ltd ("Roche") under a
co-promotion agreement (see "Joint Ventures and Business Relationships--F.
Hoffmann-La Roche Ltd"). In geographic areas of the world other than those
above, Roche markets NEUPOGEN(R) under licenses from Amgen and Kirin-Amgen (see
"Joint Ventures and Business Relationships--Kirin Brewery Company, Limited" and
"Joint Ventures and Business Relationships--F. Hoffmann-La Roche Ltd").
For NEUPOGEN(R) sales information for the years ended December 31, 2001,
2000, and 1999, see Note 10 to the Consolidated Financial Statements.
Aranesp(TM) (darbepoetin alfa)
Aranesp(TM) (proper name--darbepoetin alfa) is Amgen's trademark for its
erythropoiesis stimulating protein, a protein that stimulates red blood cell
production. A reduced red blood cell count can result in anemia (see
"--EPOGEN(R) (Epoetin alfa)"). Since this protein leaves the body more slowly,
Aranesp(TM) should be administered less frequently than Epoetin alfa, thus
simplifying anemia management for patients and health care providers. In 2001,
the Company received approval to market Aranesp(TM) in the United States
(September 2001), most European countries in the EU, Australia, and New Zealand
for the treatment of anemia associated with chronic renal failure, including
patients on dialysis and patients not on dialysis.
The Company has an agreement with Kirin to jointly develop darbepoetin alfa
through its joint venture, Kirin-Amgen (see "Joint Ventures and Business
Relationships--Kirin Brewery Company, Limited"). Amgen has been granted an
exclusive license by Kirin-Amgen to manufacture and market darbepoetin alfa in
the United States, all European countries, Canada, Australia, New Zealand,
Mexico, and all Central and South American countries. Kirin has been granted
similar rights by Kirin-Amgen for Japan, the People's Republic of China,
Taiwan, Korea, and certain other countries in Southeast Asia.
Aranesp(TM) sales for the year ended December 31, 2001 were $41.5 million.
Neulasta(TM) (pegfilgrastim)
Neulasta(TM) (proper name--pegfilgrastim) is Amgen's trademark for a protein
that selectively stimulates production of certain white blood cells known as
neutrophils and is based on the Filgrastim molecule. A polyethylene glycol
molecule or "PEG" unit is added to enlarge the Filgrastim molecule, thereby
extending its
4
<PAGE>
half-life and causing it to be removed more slowly from the body. This allows
for administration as a single dose per chemotherapy cycle compared with
NEUPOGEN(R) which requires more frequent dosing. In January 2002, Neulasta(TM)
was approved by the FDA for decreasing the incidence of infection, as
manifested by febrile neutropenia, in patients with non-myeloid malignancies
receiving myelosuppressive anti-cancer drugs associated with a clinically
significant incidence of febrile neutropenia.
Kineret(TM) (anakinra)
Kineret(TM) (proper name--anakinra) is Amgen's trademark for its recombinant
nonglycosylated form of the human interleukin-1 ("IL-1") receptor antagonist.
Kineret(TM) blocks the biologic activity of IL-1 by competitively inhibiting
IL-1 binding to the interleukin-1 type receptor, which is expressed in a wide
variety of tissues. IL-1 production is induced in response to inflammatory
stimuli and mediates various physiologic responses including inflammatory and
immunological responses. Kineret(TM) is a product that was added to the
Company's inflammation research program through the acquisition of Synergen,
Inc. ("Synergen") (see "Joint Ventures and Business Relationships--Other
business relationships").
In November 2001, Amgen received FDA approval and began marketing
Kineret(TM) in the United States for the reduction of the signs and symptoms of
moderately to severely active rheumatoid arthritis, in patients 18 years of age
or older who have failed one or more disease modifying antirheumatic drugs.
Also in November 2001, the Company announced that the European Union Committee
for Proprietary Medicinal Products ("CPMP") recommended granting Kineret(TM) a
marketing authorization for the signs and symptoms of rheumatoid arthritis in
combination with methotrexate, in patients with an inadequate response to
methotrexate alone. The CPMP's recommendation has been forwarded to the
European Commission for their final decision.
Other products
INFERGEN(R) (proper name--Interferon alfacon-1) is Amgen's registered
trademark for its recombinant consensus interferon, a non-naturally occurring
protein that combines structural features of many interferon sub-types.
Interferons are natural proteins produced by the body which stimulate the
immune system to fight viral infections. Hepatitis C viral infection ("HCV") is
a potentially deadly disease that, if not treated, may lead to cirrhosis and
hepatocellular carcinoma, or liver cancer. The Company began selling
INFERGEN(R) in the United States in October 1997 and in Canada in March 1999.
The Company licensed its rights to market INFERGEN(R) in the United States and
Canada to InterMune, Inc. ("InterMune") in June 2001 (see "Joint Ventures and
Business Relationships--Other business relationships").
Previously, Amgen licensed to Yamanouchi Pharmaceutical Co., Ltd. of Japan
("Yamanouchi") the rights to develop, manufacture, and commercialize Interferon
alfacon-1 for all indications around the world except in the United States and
Canada. Yamanouchi granted rights to the Company to co-develop and market
Interferon alfacon-1 in Japan, the People's Republic of China, and Taiwan (see
"Joint Ventures and Business Relationships--Yamanouchi Pharmaceutical Co.,
Ltd.").
Product Candidates
The Company focuses its research and development efforts on human
therapeutics delivered in the form of proteins, monoclonal antibodies, and
small molecules in the therapeutic areas of nephrology, cancer, inflammation,
and neurology and metabolism (see "Factors That May Affect Amgen--Our product
development efforts may not result in commercial products.").
Nephrology
A focus of the Company's effort in nephrology is in the area of
hyperparathyroidism ("HPT"). HPT is a disorder that results from excessive
secretion of parathyroid hormone ("PTH") from the parathyroid gland.
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Symptoms of HPT include bone loss, muscle weakness, depression, and
forgetfulness. Secondary HPT is commonly seen as a result of kidney failure,
affecting a majority of dialysis patients. Primary HPT primarily afflicts
post-menopausal women. The Company has entered into a license agreement with
NPS Pharmaceuticals, Inc. ("NPS") for Amgen to develop and commercialize NPS's
calcimimetic small molecules based on NPS's proprietary calcium receptor
technology for the treatment of HPT. The Company has conducted separate phase 2
clinical trials for primary and secondary HPT with a second generation
calcimimetic compound. In 2000 and 2001, data from phase 2 studies were
presented demonstrating that treatment with small-molecule calcimimetics
results in dose-dependent decreases in PTH levels and control of elevated
calcium levels. In December 2001, the Company announced it had initiated a
phase 3 clinical study in secondary HPT.
Cancer
In 2001, the Company announced it had submitted a Biologics License
Application Supplement for Aranesp(TM) to the FDA (September) and submitted a
variation application to the European Agency for the Evaluation of Medicinal
Products (October) for the treatment of cancer patients suffering from anemia
associated with certain types of chemotherapy.
Certain tissue growth factors are believed to play a role in tissue
protection, regeneration and/or repair processes. Mucositis is a side effect
often experienced by patients undergoing radiation therapy and chemotherapy and
is characterized as the irritation or ulceration of the lining of the
gastrointestinal tract. Amgen currently is conducting research with
Keratinocyte Growth Factor ("KGF") to prevent and treat mucositis. Early-stage
clinical trials suggest that treatment with KGF may reduce the duration of
severe oral mucositis in cancer patients receiving chemo/radiotherapy. Phase 2
and 3 clinical trials of KGF in cancer patients suffering from mucositis are
ongoing.
In December 2000, the Company acquired the rights from Immunomedics, Inc.
("Immunomedics") to develop and commercialize epratuzumab. Epratuzumab is
currently being evaluated for the treatment of non-Hodgkin's lymphoma ("NHL").
Epratuzumab is a humanized monoclonal antibody. Preliminary research and
early-stage clinical trials showed epratuzumab has some level of anti-tumor
activity, either directly or indirectly, against B-cell malignancies. In July
2001, after refining the phase 3 protocol based on FDA input and adding
clinical sites in Canada and Australia, the Company initiated a phase 3
clinical trial. The phase 3 clinical trial is designed to evaluate epratuzumab
for the treatment of low-grade NHL in patients who failed to respond, or who
responded for less than six months, to rituximab, a monoclonal antibody
approved for the treatment of certain types of NHL (see "Competition--Cancer").
A phase 1/2 clinical trial of epratuzumab in combination with rituximab to
treat low-grade and aggressive NHL also is ongoing. In 2001, the Company
initiated a phase 2 clinical trial of epratuzumab in combination with rituximab
in low-grade NHL patients and a phase 2 clinical trial of epratuzumab in
aggressive NHL patients.
Osteoprotegerin ("OPG") is implicated in the regulation of bone mass. Bone
mass is maintained in the body by the regulation of the competing activities of
bone forming cells (osteoblasts) and bone resorbing cells (osteoclasts). Cancer
metastases (cancers which have spread from their original tumor site) to bone
cause bone destruction, leading to fractures and bone pain. In preclinical
studies, OPG has been shown to inhibit the osteoclast mediated bone destruction
induced by invading cancer cells. The Company completed phase 1 studies with
the initial molecule in its OPG program. Data from these studies validated the
importance of this pathway in the pathology of bone disorders. The Company is
currently assessing the potential of several other pre-clinical and clinical
candidates in this program and plans to conduct additional phase 1 studies
before making the decision to advance into phase 2 studies.
In March 1999, Amgen acquired the rights from PRAECIS PHARMACEUTICALS
INCORPORATED ("Praecis") to develop and commercialize abarelix-depot (see
"Joint Ventures and Business Relationships--PRAECIS PHARMACEUTICALS
INCORPORATED"). Abarelix-depot may confer a therapeutic benefit to patients
with a number of diseases and medical conditions, including prostate cancer and
endometriosis. A
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regulatory file was submitted to the FDA in December 2000 regarding use of
abarelix-depot in patients with hormonally-responsive prostate cancer. During
2001, the FDA issued a letter indicating this application was inadequate for
approval, and subsequently, Amgen and Praecis announced that they were ending
their agreement to jointly develop and commercialize abarelix-depot for all
indications. Amgen is transitioning all development and commercialization
rights and responsibilities back to Praecis.
Inflammation
The inflammatory response is essential for defense against harmful
microorganisms and for the repair of damaged tissues. The failure of the body's
control mechanisms regulating inflammatory response occurs in conditions such
as rheumatoid arthritis. Tumor necrosis factor binding protein was added to the
Company's inflammation research program through the acquisition of Synergen
(see "Joint Ventures and Business Relationships--Other business
relationships"). The Company is in phase 2 development of a second generation
inhibitor of tumor necrosis factor, soluble tumor necrosis factor-receptor type
I ("sTNF-RI") in patients with rheumatoid arthritis. In 2001, the Company
initiated a phase 2 clinical trial of sTNF-RI in combination with Kineret(TM)
in patients with rheumatoid arthritis.
Neurology and Metabolism
The Company has discovery programs in neurological and metabolism disorders.
The Company has a program to develop leptin, a protein encoded by the obesity
gene. Leptin is a naturally occurring cytokine hormone secreted by fat cells
that may act primarily at the hypothalamus to regulate food intake and energy
expenditure. In 1995, the Rockefeller University granted the Company an
exclusive license that allows the Company to develop products based on the
obesity gene. The Company's clinical trials of leptin failed to show clinical
efficacy in normal obesity and diabetes, and development of this molecule was
subsequently discontinued in these diseases. Amgen continues to support
investigator research in certain exploratory indications.
In 1997, Amgen acquired the rights from Guilford Pharmaceuticals Inc.
("Guilford") for a novel class of small molecule, orally-active, neurotrophic
agents called neuroimmunophilin compounds (see "Joint Ventures and Business
Relationships--Other business relationships"). The Company conducted a phase 2
clinical trial with neuroimmunophilins in patients with Parkinson's disease,
which did not produce a substantial reversal of the motor symptoms of
Parkinson's disease. During 2001, Amgen elected to terminate its agreement with
Guilford and return all rights to the neuroimmunophilin compounds.
Neurotrophic factors are proteins which play a role in nerve cell protection
and regeneration and which may therefore be useful in treating a variety of
neurological disorders, including neurodegenerative diseases of the central and
peripheral nervous systems, nerve injury, and trauma. In January 2001, all
clinical development of brain-derived neurotrophic factor ("BDNF") that was
being developed in collaboration with Regeneron Pharmaceuticals, Inc.
("Regeneron") (see "Joint Ventures and Business Relationships--Other business
relationships") for the potential treatment of amyotrophic lateral sclerosis
("ALS") was discontinued when it was determined that BDNF did not provide a
therapeutic advantage to ALS patients in clinical trials. On behalf of the
collaboration with the Company, Regeneron is currently evaluating the results
of clinical trials of Neurotrophin-3 ("NT-3") for the treatment of chronic
constipation.
Joint Ventures and Business Relationships
The Company generally intends to self-market its products. From time to
time, the Company may enter into joint ventures and other business
relationships to provide additional marketing and product development
capabilities in certain countries. In addition to internal research and
development efforts, the Company has acquired certain product and technology
rights and has established research and development collaborations.
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F. Hoffmann-La Roche Ltd
Amgen and Roche have an agreement providing for the commercialization of
NEUPOGEN(R) (Filgrastim) (known as GRANULOKINE(R) in the EU) and pegfilgrastim.
Under this agreement, the companies collaborate in the EU on the
commercialization and further clinical development of the product, and Amgen
has a majority share in the related costs and profits from sales. Amgen has
substantially all of the responsibilities for marketing, promotion,
distribution, and other key functions relating to product sales, and the
Company primarily distributes the product to EU countries from its European
Logistics Center in Breda, The Netherlands. Amgen and Roche also have an
agreement to commercialize Filgrastim in certain European countries not located
within the EU. Under this agreement, Roche commercializes Filgrastim in these
countries and pays a royalty to Amgen on these sales.
Johnson & Johnson
Amgen granted Johnson & Johnson a license to commercialize recombinant human
erythropoietin as a human therapeutic in the United States in all markets other
than dialysis. In countries other than the United States, the People's Republic
of China, and Japan, Johnson & Johnson was granted rights to commercialize
recombinant human erythropoietin as a human therapeutic for all uses under a
licensing agreement with Kirin-Amgen.
Kirin Brewery Company, Limited
The Company has a 50-50 joint venture (Kirin-Amgen) with Kirin. Kirin-Amgen,
which was formed in 1984, develops and commercializes certain of the Company's
and Kirin's technologies which have been transferred to this joint venture.
Kirin-Amgen has given exclusive licenses to Amgen and Kirin to manufacture and
market erythropoietin in the United States and Japan, respectively. Kirin-Amgen
has licensed to Johnson & Johnson rights to erythropoietin in certain
geographic areas of the world (see "--Johnson & Johnson"). Kirin-Amgen has also
granted Amgen an exclusive license to manufacture and market G-CSF and
pegfilgrastim in the United States, Europe, Canada, Australia, and New Zealand.
Kirin-Amgen has licensed to Kirin similar rights with respect to G-CSF and
pegfilgrastim in Japan, Taiwan and Korea. Kirin markets recombinant human
erythropoietin and recombinant-methionyl human granulocyte colony-stimulating
factor in the People's Republic of China under a separate agreement.
Kirin-Amgen and Roche have an agreement to commercialize Filgrastim in certain
territories not covered by the various Amgen/Roche agreements (see "--F.
Hoffmann-La Roche Ltd"). Under this agreement, Roche markets Filgrastim in
these countries and pays a royalty to Kirin-Amgen on these sales.
In 1996, Kirin-Amgen licensed to Amgen and Kirin the rights to develop and
market darbepoetin alfa. Amgen has been granted an exclusive license by
Kirin-Amgen to manufacture and market darbepoetin alfa in the United States,
all European countries, Canada, Australia, New Zealand, Mexico, all Central and
South American countries, and certain countries in Central Asia, North Africa,
and the Middle East. Kirin has been licensed by Kirin-Amgen with similar rights
for darbepoetin alfa in Japan, the People's Republic of China, Taiwan, Korea,
and certain other countries in Southeast Asia.
Pursuant to the terms of agreements entered into with Kirin-Amgen, the
Company conducts certain research and development activities on behalf of
Kirin-Amgen and is paid for such services at negotiated rates. Included in
"Corporate partner revenues" in the Company's Consolidated Financial Statements
for the years ended December 31, 2001, 2000 and 1999, are $210.1 million,
$221.0 million, and $138.5, respectively, related to these agreements.
In connection with its various license agreements with Kirin-Amgen, the
Company pays Kirin-Amgen royalties based on sales. During the years ended
December 31, 2001, 2000, and 1999, Kirin-Amgen earned royalties from Amgen of
$147.1 million, $140.8 million, and $128.1 million, respectively, under such
agreements, which are included in "Cost of sales" in the Company's Consolidated
Financial Statements.
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Yamanouchi Pharmaceutical Co., Ltd.
In 1996, Amgen licensed to Yamanouchi the rights to develop, manufacture,
and commercialize Interferon alfacon-1 for the treatment of hepatitis C viral
infection and any additional indications around the world except in the United
States and Canada. Amgen has earned certain milestones from Yamanouchi and will
receive royalties on sales. Yamanouchi has granted to Amgen certain
co-development and co-promotion/co-marketing rights in Japan, and certain
co-development and co-promotion rights in the People's Republic of China.
PRAECIS PHARMACEUTICALS INCORPORATED
In March 1999, Amgen entered into a collaboration with Praecis relating to
the exclusive right to develop and commercialize abarelix-depot for all
indications, including prostate cancer and endometriosis in the United States,
Canada, Australia, Japan, and several secondary markets. In December 2001,
Amgen and Praecis terminated their agreement to jointly develop and
commercialize abarelix-depot for all indications.
Other business relationships
In 1990, the Company entered into a collaboration agreement with Regeneron
to co-develop and commercialize BDNF and NT-3 in the United States. To
facilitate this collaboration, the Company and Regeneron formed Amgen-Regeneron
Partners, a 50-50 partnership. In addition, Regeneron licensed these potential
products to Amgen for development in certain other countries.
In 1994, the Company acquired Synergen, a biotechnology company. The
acquisition of Synergen principally added its inflammation program to Amgen's
product candidate pipeline. Synergen Clinical Partners, L.P. ("SCP"), the
general partner of which was a subsidiary of Synergen, was formed to fund
development and commercialization of Kineret(TM) in certain geographic areas.
As a result of the acquisition of Synergen, the general partner of SCP became a
subsidiary of Amgen. In connection with the settlement of certain litigation
relating to Synergen and SCP, Amgen acquired all of the limited partnership
units of SCP. Amgen paid an amount in connection with the FDA approval of
Kineret(TM), and will be required to pay additional amounts to the former
limited partners that were members of the plaintiff class, other members of the
plaintiff class, and their counsel if certain product revenues are realized.
In 1997, Amgen and Guilford entered into an agreement granting Amgen
worldwide rights for Guilford's neuroimmunophilin compounds, a novel class of
small molecule, orally-active, neurotrophic agents. During 2001, Amgen elected
to terminate its agreement with Guilford and return all rights to the
neuroimmunophilin compounds.
In 2000, Amgen licensed epratuzumab, a therapeutic antibody for the
treatment of NHL, from Immunomedics. Under this agreement, Amgen has the rights
to develop and commercialize epratuzumab in North America and Australia. Amgen
has paid and will make additional payments if certain clinical and commercial
milestones are achieved and will make royalty payments based on sales.
In June 2001, Amgen licensed to InterMune the exclusive rights to develop
and commercialize INFERGEN(R), as well as an early stage pegylated interferon
product candidate being developed by Amgen, in the United States and Canada.
Pursuant to the license agreement, Amgen supplies INFERGEN(R) to InterMune.
Proposed Merger with Immunex
In December 2001, the Company signed a definitive agreement to acquire
Immunex Corporation ("Immunex"). Immunex is a biopharmaceutical company
dedicated to developing immune system science to protect human health. The
transaction is expected to close in the second half of 2002, subject to various
conditions, including Federal Trade Commission approval (see "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations--Proposed Merger with Immunex").
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Marketing
Amgen uses wholesale distributors of pharmaceutical products as the
principal means of distributing the Company's products to clinics, hospitals,
and pharmacies. The Company monitors the financial condition of its larger
distributors and limits its credit exposure by setting appropriate credit
limits and requiring collateral from certain customers. Sales to three large
wholesalers each accounted for more than 10% of total revenues for the year
ended December 31, 2001. In 2001, sales to AmerisourceBergen Corporation were
$1,470.1 million, sales to Cardinal Distribution were $535.8 million, and sales
to McKesson Corporation were $459.8 million. For the years ended December 31,
2000 and 1999, sales to two wholesalers each accounted for more than 10% of
total revenues. Sales to Bergen Brunswig Corporation were $1,233.4 million and
$1,078.0 million for the years ended December 31, 2000 and 1999, respectively.
Sales to Cardinal Distribution were $445.2 million and $438.2 million for the
years ended December 31, 2000 and 1999, respectively.
Dialysis providers are primarily reimbursed for EPOGEN(R) by the federal
government through the End Stage Renal Disease Program ("ESRD Program") of
Medicare. The ESRD Program reimburses approved providers for 80% of allowed
dialysis costs; the remainder is paid by other sources, including Medicaid,
private insurance, and to a lesser extent, state kidney patient programs. The
ESRD Program reimbursement rate is established by Congress and is monitored by
the Centers for Medicare & Medicaid Services ("CMS"). Changes in coverage and
reimbursement policies could have a material adverse effect on EPOGEN(R) sales
(see "Factors That May Affect Amgen--Our sales depend on payment and
reimbursement from third party payors, and a reduction in the payment rate or
reimbursement could result in decreased use or sales of our products.").
Aranesp(TM) is reimbursed by both private and public payors, and changes in
coverage and reimbursement policies of these payors could have a material
adverse effect on sales of Aranesp(TM) (see "Factors That May Affect Amgen--Our
sales depend on payment and reimbursement from third party payors, and a
reduction in the payment rate or reimbursement could result in decreased use or
sales of our products."). Aranesp(TM) is marketed by the Company in the United
States, Europe, Australia, and New Zealand.
NEUPOGEN(R) is reimbursed by both private and public payors, and changes in
coverage and reimbursement policies of these payors could have a material
adverse effect on sales of NEUPOGEN(R) (see "Factors That May Affect Amgen--Our
sales depend on payment and reimbursement from third party payors, and a
reduction in the payment rate or reimbursement could result in decreased use or
sales of our products.").
In the EU, Amgen and Roche share commercialization responsibilities for
NEUPOGEN(R) under a co-promotion agreement (see "Joint Ventures and Business
Relationships--F. Hoffmann-La Roche Ltd"). NEUPOGEN(R) is principally
distributed to wholesalers and/or hospitals in all EU countries depending upon
the distribution practice for products in each country. Most patients receiving
NEUPOGEN(R) for approved indications are covered by government health care
programs. Generally, the use of NEUPOGEN(R) is affected by EU government
pressures on physician prescribing practices in response to ongoing government
initiatives to reduce health care expenditures, and to a lesser extent,
competition.
Kineret(TM) is sold by the Company in the United States. Kineret(TM) is
reimbursed through both private and public sources, with primary reimbursement
through private payors (see "Factors That May Affect Amgen--Our sales depend on
payment and reimbursement from third party payors, and a reduction in the
payment rate or reimbursement could result in decreased use or sales of our
products.").
Competition
Competition among biotechnology, pharmaceutical, and other companies that
research, develop, manufacture, or market pharmaceuticals is intense and is
expected to increase. See "Factors That May Affect Amgen--We face substantial
competition, and others may discover, develop, acquire or commercialize
products before or more successfully than we do.". Some competitors,
principally large pharmaceutical companies, have
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greater clinical, research, regulatory, and marketing resources and experience
than the Company, particularly in the area of small molecule therapeutics. In
addition, certain specialized biotechnology firms have entered into cooperative
arrangements with major companies for development and commercialization of
products, creating an additional source of competition. The Company faces
product competition from firms in the United States, countries of the EU,
Canada, Australia, and elsewhere. Additionally, some of the Company's
competitors, including biotechnology and pharmaceutical companies, are actively
engaged in the research and development in areas where the Company is also
developing product candidates, as more fully discussed below.
The introduction of new products or the development of new processes by
competitors or new information about existing products may result in product
replacements or price reductions, even for products protected by patents. In
addition, the timing of entry of a new product into the market can be an
important factor in determining the product's eventual success and
profitability. Early entry may have important advantages in gaining product
acceptance and market share. Accordingly, in some cases, the relative speed
with which the Company can develop products, complete the testing and approval
process, and supply commercial quantities of the product to the market is
expected to be important to Amgen's competitive position. Competition among
pharmaceutical products approved for sale also may be based on, among other
things, patent position, product efficacy, safety, reliability, availability,
and price.
A significant amount of research and development in the biotechnology
industry is conducted by small companies, academic institutions, governmental
agencies, and other public and private research organizations. These entities
may seek patent protection and enter into licensing arrangements to collect
royalties for use of technology or for the sale of products they have
discovered or developed. Amgen also may face competition in its licensing or
acquisition activities from pharmaceutical companies and large biotechnology
companies that also seek to acquire technologies or product candidates from
these entities. Accordingly, the Company may have difficulty acquiring
technologies or product candidates on acceptable terms. Additionally, the
Company competes with these entities and with pharmaceutical and biotechnology
companies to attract and retain qualified scientific and technical personnel.
Nephrology
Any products or technologies that are directly or indirectly successful in
addressing anemia could negatively impact the market for EPOGEN(R) or for
Aranesp(TM). Aranesp(TM) directly competes with other currently marketed
products which treat anemia, including EPOGEN(R) and the recombinant human
erythropoietin product marketed by Johnson & Johnson (see "Products--EPOGEN(R)
(Epoetin alfa)" and "Products--Aranesp(TM) (darbepoetin alfa)"). Aventis
Pharmaceuticals Inc. ("Aventis") is developing gene-activated erythropoietin
for the treatment of anemia (see "Item 3. Legal Proceedings--Transkaryotic
Therapies and Aventis litigation"). Baxter International Inc. is developing
epoetin omega for the treatment of anemia. Roche is developing a pegylated
erythropoietin product for the treatment of anemia.
The calcimimetic program could face competition from products currently
marketed by Abbott Laboratories, Bone Care International, Inc., Genzyme
Corporation, and Roche which treat secondary HPT. In addition, another product
to treat HPT is currently being developed by Chugai Pharmaceuticals Co., Ltd.
("Chugai").
Cancer
Any products or technologies that are directly or indirectly successful in
addressing anemia associated with chemotherapy could negatively impact the
market for Aranesp(TM). Aranesp(TM) would directly compete with other currently
marketed products which treat anemia associated with chemotherapy, the
recombinant human erythropoietin product marketed by Johnson & Johnson (see
"Products--EPOGEN(R) (Epoetin alfa)"). In Europe, Aranesp(TM) would directly
compete with other erythropoietin products marketed by Ortho
Biotech/Janssen-Cilag/Johnson & Johnson and Roche. Aventis is developing
gene-activated erythropoietin for the treatment of anemia (see "Item 3. Legal
Proceedings--Transkaryotic Therapies and Aventis litigation"). Baxter
International Inc. is
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developing epoetin omega for the treatment of anemia. Roche is developing a
pegylated erythropoietin product for the treatment of anemia.
Any products or technologies that are directly or indirectly successful in
addressing neutropenia associated with chemotherapy could negatively impact the
markets for NEUPOGEN(R) and Neulasta(TM). NEUPOGEN(R) currently faces and
Neulasta(TM) will face (when launched) market competition from a competing CSF
product, granulocyte macrophage colony stimulating factor ("GM-CSF"), and from
the chemoprotectant, amifostine. Potential future sources of competition
include other G-CSF products, GM-CSF products, FLT-3 ligand, myelopoietin,
PGG-glucan, promegapoietin, and progenipoietin, among others. Once launched,
Neulasta(TM) may impact NEUPOGEN(R) sales as health care providers in the U.S.
may transition from administering NEUPOGEN(R) to Neulasta(TM).
Chugai markets a G-CSF product in Japan as an adjunct to chemotherapy and as
a treatment for BMT patients. Chugai and Aventis market a G-CSF product in
certain EU countries as an adjunct to chemotherapy and as a treatment in BMT
settings. Chugai, through its licensee, AMRAD, markets this G-CSF product in
Australia as an adjunct to chemotherapy and as a treatment for BMT patients.
Under an agreement with Amgen, Chugai is precluded from selling its G-CSF
product in the United States, Canada, and Mexico.
Immunex markets GM-CSF under the trademark LEUKINE(R) in the United States
for BMT and PBPC transplant patients and as an adjunct to chemotherapy
treatments for acute non-lymphocytic leukemia ("ANLL") and AML. Immunex is also
pursuing other indications for its GM-CSF product including as an adjunct to
chemotherapy outside the limited settings of ANLL and AML. In connection with
proposed merger between Amgen and Immunex, Immunex intends to divest of
LEUKINE(R) (see "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Proposed Merger with Immunex"). Novartis
AG markets another GM-CSF product for use in BMT patients and as an adjunct to
chemotherapy in the EU and certain other countries. This GM-CSF product is
currently being developed for similar indications in the United States and
Canada. Nartograstim, a modified G-CSF protein, is sold by Kyowa Hakko Kogyo
Co., Ltd. in Japan.
Many companies are developing products that promote wound healing, soft
tissue regeneration, and chemoprotection. Companies such as Human Genome
Sciences, Inc., Genetics Institute, Inc., MedImmune, Inc., and IntraBiotics
Pharmaceuticals, Inc. are currently among many companies that are developing
products which could be potential competitors for KGF.
NHL is primarily treated with standard chemotherapy agents, monoclonal
antibodies, or a combination of the two modalities. Epratuzumab could face
competition from rituximab, another monoclonal antibody marketed jointly by
Genentech, Inc. and Idec Pharmaceuticals Corporation. However, it is also
possible that epratuzumab may be used in combination with rituximab (see
"Product candidates--Cancer"). In addition, other monoclonal antibodies are
being investigated for the treatment of NHL including those in development by
GlaxoSmithKline plc (in collaboration with Beckman Coulter, Inc.) and Idec
Pharmaceuticals Corporation.
The OPG program could face competition from a product currently marketed by
Novartis AG for the treatment of cancer metastases to the bone.
Inflammation
Kineret(TM) and sTNF-RI could face competition in some circumstances from a
number of companies developing or marketing rheumatoid arthritis treatments.
Current anti-arthritic treatments include generic methotrexate and other
products marketed by, among others, Centocor, Inc./Johnson & Johnson,
Immunex/American Home Products Corporation, Merck & Co., Inc., Pharmacia
Corporation, Novartis AG, and Sanofi-Synthelabo. In addition, a number of
companies have cytokine inhibitors in development including Abbott
Laboratories, GlaxoSmithKline plc, Pharmacia Corporation, and Taisho
Pharmaceutical Co., Ltd.
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Neurology and Metabolism
Many companies currently market or are believed to be developing obesity
treatments that could compete with the leptin program. Potential future
competitors include Millennium Pharmaceuticals, Inc. (in collaboration with
Roche), Neurogen Corporation (in collaboration with Pfizer Inc.), Bristol Myers
Squibb Company, Novartis AG, Eli Lilly and Company, and Merck & Co., Inc.
Abbott Laboratories and Roche currently market obesity treatments in various
countries.
Research and Development
The Company's primary sources of new product candidates are internal
research and acquisition and licensing from third parties. Amgen's internal
research capabilities include an expertise in secreted protein therapeutics.
The Company's discovery program may yield targets that lead to the development
of therapeutics delivered as proteins, small molecules, or monoclonal
antibodies. Amgen has only recently entered the small molecule field. To
supplement its small molecule discovery program, in December 2000, Amgen
acquired Kinetix Pharmaceuticals, Inc. ("Kinetix"), a privately held company
that focused on the discovery of small molecule drugs that inhibit protein
kinases, a key class of biological regulators (see Note 11 to the Consolidated
Financial Statements). Research and development expenses for the years ended
December 31, 2001, 2000, and 1999 were $865.0 million, $845.0 million, and
$822.8 million, respectively. Additionally, the Company recorded a $30.1
million write-off of acquired in-process research and development during the
year ended December 31, 2000 arising from the acquisition of Kinetix (see Note
4 to the Consolidated Financial Statements).
Government Regulation
Regulation by governmental authorities in the United States and other
countries is a significant factor in the production and marketing of the
Company's products and its ongoing research and development activities (see
"Factors That May Affect Amgen--Our current products and products in
development cannot be sold if we do not obtain and maintain regulatory
approval.").
In order to clinically test, manufacture, and market products for
therapeutic use, Amgen must satisfy mandatory procedures and safety and
effectiveness standards established by various regulatory bodies. In the United
States, the Federal Food, Drug, and Cosmetic Act, as amended, and the
regulations promulgated thereunder, and other federal and state statutes and
regulations govern, among other things, the testing, manufacture, labeling,
storage, record keeping, approval, advertising, and promotion of the Company's
products on a product-by-product basis. Product development and approval within
this regulatory framework takes a number of years and involve the expenditure
of substantial resources. After laboratory analysis and preclinical testing in
animals, an investigational new drug application is filed with the FDA to begin
human testing. Typically, a three-phase human clinical testing program is then
undertaken. In phase 1, small clinical trials are conducted to determine the
safety of the product. In phase 2, clinical trials are conducted to assess
safety, acceptable dose, and gain preliminary evidence of the efficacy of the
product. In phase 3, clinical trials are conducted to provide sufficient data
for the statistically valid proof of safety and efficacy. The time and expense
required to perform this clinical testing can vary and is substantial. No
action can be taken to market any new drug or biologic product in the United
States until an appropriate marketing application has been approved by the FDA.
Even after initial FDA approval has been obtained, further clinical trials may
be required to provide additional data on safety and effectiveness and are
required to gain clearance for the use of a product as a treatment for
indications other than those initially approved. In addition, side effects or
adverse events that are reported during clinical trials can delay, impede, or
prevent marketing approval. Similarly, adverse events that are reported after
marketing approval can result in additional limitations being placed on the
product's use and, potentially, withdrawal of the product from the market. Any
adverse event, either before or after marketing approval, can result in product
liability claims against the Company.
In addition to regulating and auditing human clinical trials, the FDA
regulates and inspects equipment, facilities, and processes used in the
manufacturing of such products prior to providing approval to market a
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product. If after receiving clearance from the FDA, a material change is made
in manufacturing equipment, location, or process, additional regulatory review
may be required. The Company also must adhere to current Good Manufacturing
Practice and product-specific regulations enforced by the FDA through its
facilities inspection program. The FDA also conducts regular, periodic visits
to re-inspect equipment, facilities, and processes following the initial
approval. If, as a result of these inspections, the FDA determines that the
Company's equipment, facilities, or processes do not comply with applicable FDA
regulations and conditions of product approval, the FDA may seek civil,
criminal, or administrative sanctions and/or remedies against Amgen, including
the suspension of the Company's manufacturing operations.
In the EU countries, Canada, and Australia, regulatory requirements and
approval processes are similar in principle to those in the United States.
Additionally, depending on the type of drug for which approval is sought, there
are currently two potential tracks for marketing approval in the EU countries:
mutual recognition and the centralized procedure. These review mechanisms may
ultimately lead to approval in all EU countries, but each method grants all
participating countries some decision making authority in product approval.
The Company is also subject to various federal and state laws pertaining to
health care "fraud and abuse," including anti-kickback laws and false claims
laws. Anti-kickback laws make it illegal for a prescription drug manufacturer
to solicit, offer, receive, or pay any remuneration in exchange for, or to
induce, the referral of business, including the purchase or prescription of a
particular drug. The federal government has published regulations that identify
"safe harbors" or exemptions for certain payment arrangements that do not
violate the anti-kickback statutes. The Company seeks to comply with the safe
harbors where possible. Due to the breadth of the statutory provisions and the
absence of guidance in the form of regulations or court decisions addressing
some of the Company's practices, it is possible that the Company's practices
might be challenged under anti-kickback or similar laws. False claims laws
prohibit anyone from knowingly and willingly presenting, or causing to be
presented for payment to third party payors (including Medicare and Medicaid)
claims for reimbursed drugs or services that are false or fraudulent, claims
for items or services not provided as claimed, or claims for medically
unnecessary items or services. Amgen's activities relating to the sale and
marketing of its products may be subject to scrutiny under these laws.
Violations of fraud and abuse laws may be punishable by criminal and/or civil
sanctions, including fines and civil monetary penalties, as well as the
possibility of exclusion from federal health care programs (including Medicare
and Medicaid). If the government were to allege against or convict the Company
of violating these laws, there could be a material adverse effect on the
Company, including its stock price. The Company's activities could be subject
to challenge for the reasons discussed above and due to the broad scope of
these laws and the increasing attention being given to them by law enforcement
authorities.
Since 1991, the Company has participated in the Medicaid rebate program
established by the Omnibus Budget Reconciliation Act of 1990, and under
amendments of that law that became effective in 1993, participation has
included extending comparable discounts under the Public Health Service ("PHS")
pharmaceutical pricing program. Under the Medicaid rebate program, the Company
pays a rebate for each unit of its product reimbursed by Medicaid. The amount
of the rebate for each product is set by law as a minimum 15.1% of the average
manufacturer price ("AMP") of that product, or if it is greater, the difference
between AMP and the best price available from the Company to any customer. The
rebate amount also includes an inflation adjustment if AMP increases faster
than inflation. The PHS pricing program extends discounts comparable to the
Medicaid rebate to a variety of community health clinics and other entities
that receive health services grants from the PHS, as well as hospitals that
serve a disproportionate share of poor Medicare and Medicaid beneficiaries. The
rebate amount is recomputed each quarter based on the Company's reports of its
current average manufacturer price and best price for each of its products to
the Health Care Financing Administration ("HCFA"). The terms of the Company's
participation in the program impose an obligation to correct the prices
reported in previous quarters, as may be necessary. Any such corrections could
result in an overage or underage in the Company's rebate liability for past
quarters, depending on the direction of the correction. In addition to
retroactive rebates (and interest, if any), if the Company were found to have
knowingly submitted false information to the government, in addition to other
penalties available to the government, the statute provides for civil monetary
penalties in the amount of $100,000 per item of false information.
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The Company also makes its products available to authorized users of the
Federal Supply Schedule ("FSS") of the General Services Administration. Since
1993, as a result of the Veterans Health Care Act of 1992 (the "VHC Act"),
federal law has required that product prices for purchases by the Veterans
Administration, the Department of Defense, Coast Guard, and the PHS (including
the Indian Health Service) be discounted by a minimum of 24% off the AMP to
non-federal customers (the non-federal average manufacturer price, "non-FAMP").
The Company's computation and report of non-FAMP is used in establishing the
price, and the accuracy of the reported non-FAMP may be audited by the
government under applicable federal procurement laws. Among the remedies
available to the government for infractions of these laws is recoupment of any
overages paid by FSS users during the audited years. In addition, if the
Company were found to have knowingly reported a false non-FAMP, the VHC Act
provides for civil monetary penalties of $100,000 per item that is incorrect.
Amgen is also subject to regulation under the Occupational Safety and Health
Act, the Toxic Substances Control Act, the Resource Conservation and Recovery
Act, and other current and potential future federal, state, or local
regulations. The Company's research and development activities involve the
controlled use of hazardous materials, chemicals, biological materials, and
various radioactive compounds. The Company believes that its procedures comply
with the standards prescribed by state and federal regulations; however, the
risk of injury or accidental contamination cannot be completely eliminated.
Amgen's research and manufacturing activities also are conducted in voluntary
compliance with the National Institutes of Health Guidelines for Recombinant
DNA Research.
Additionally, the U.S. Foreign Corrupt Practices Act, to which the Company
is subject, prohibits corporations and individuals from engaging in certain
activities to obtain or retain business or to influence a person working in an
official capacity. It is illegal to pay, offer to pay, or authorize the payment
of anything of value to any foreign government official, government staff
member, political party, or political candidate in an attempt to obtain or
retain business or to otherwise influence a person working in an official
capacity. The Company's present and future business has been and will continue
to be subject to various other laws and regulations.
Patents and Trademarks
Patents are very important to the Company in establishing proprietary rights
to the products it has developed or licensed. The patent positions of
pharmaceutical and biotechnology companies, including the Company, can be
uncertain and involve complex legal, scientific, and factual questions. See
"Factors That May Affect Amgen--If our intellectual property positions are
challenged, invalidated or circumvented, or if we fail to prevail in present
and future intellectual property litigation, our business could be adversely
affected.".
The Company has filed applications for a number of patents, has been granted
patents, or has obtained rights relating to its erythropoietin, G-CSF,
darbepoetin alfa, pegfilgrastim, anakinra, consensus interferon and various
potential products. In the United States, the U.S. Patent and Trademark Office
(the "USPTO") has issued to the Company or the Company has obtained rights to
patents relating to erythropoietin that generally cover DNA and host cells
(issued in 1987); processes for making erythropoietin (issued in 1995 and
1997); certain product claims to erythropoietin (issued in 1996 and 1997);
cells that make certain levels of erythropoietin (issued in 1998); and
pharmaceutical compositions of erythropoietin (issued in 1999). These patents
have varying expiration dates, with the latest erythropoietin related patents
expiring in 2015; all other patents expire earlier. The USPTO has also issued
to the Company or the Company has obtained rights to patents relating to
aspects of DNA, vectors, cells, and processes relating to recombinant G-CSF
(issued in 1989); other aspects of DNA, vectors, cells, and processes relating
to recombinant G-CSF (issued in 1991); G-CSF polypeptides (issued in 1996);
methods of treatment using G-CSF polypeptides (issued in 1996); methods of
enhancing bone marrow transplantation and treating burn wounds (issued in
1997); methods for recombinant production of G-CSF (issued in 1998); and
analogs of G-CSF (issued in 1999). The last to issue G-CSF patents expire in
2013; all other patents expire earlier. Additionally, U.S. and EU patents
pertaining to pegylated G-CSF (pegfilgrastim) expire in 2015. The
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patent relating to erythropoietin for the EU expires in 2004. The patent
relating to G-CSF for the EU expires in 2006. The Company has been granted or
has obtained rights to two patents in the EU relating to darbepoetin alfa and
hyperglycosylated erythropoietic proteins which expire in 2014 and 2010,
respectively. The Company has been granted or has obtained rights to a patent
on DNA encoding anakinra in the United States which expires in 2008 and has
been granted or has obtained rights to patents in the countries adhering to the
European Patent Office on anakinra and the DNA encoding it which expire in
2009; the Company has applied, or plans to apply, for extensions of anakinra
patents.
There can be no assurance that Amgen's patents or licensed patents will
afford legal protection against competitors or provide significant proprietary
protection or competitive advantage. In addition, Amgen's patents or licensed
patents could be held invalid or unenforceable by a court, or infringed or
circumvented by others, or others could obtain patents that the Company would
need to license or circumvent. Competitors or potential competitors may have
filed patent applications or received patents, and may obtain additional
patents and proprietary rights relating to proteins, small molecules,
compounds, or processes competitive with those of the Company. Additionally,
for certain of the Company's product candidates, competitors, or potential
competitors may claim that their existing or pending patents prevent the
Company from commercializing such product candidates in certain territories.
In general, the Company has obtained licenses from various parties which it
deems to be necessary or desirable for the manufacture, use, or sale of its
products. These licenses generally require Amgen to pay royalties to the
parties on product sales. In addition, other companies have filed patent
applications or have been granted patents in areas of interest to the Company.
There can be no assurance any licenses required under such patents will be
available for license on acceptable terms or at all. The Company is engaged in
various legal proceedings relating to certain of its patents. See "Item 3.
Legal Proceedings".
Trade secret protection for its unpatented confidential and proprietary
information is important to Amgen. To protect its trade secrets, the Company
generally requires its employees, material consultants, scientific advisors,
and parties to collaboration and licensing agreements to execute
confidentiality agreements upon the commencement of employment, the consulting
relationship, or the collaboration or licensing arrangement with the Company.
However, others could either develop independently the same or similar
information or obtain access to Amgen's proprietary information.
The Company has obtained U.S. registration of its EPOGEN(R), NEUPOGEN(R),
and INFERGEN(R) trademarks. In addition, these trademarks have been registered
in other countries. The Company also has trademark protection for its product
names Aranesp(TM), Kineret(TM), and Neulasta(TM) and is currently seeking U.S.
registration of these trademarks.
Manufacturing and Raw Materials
Amgen has manufacturing facilities which produce commercial quantities of
Epoetin alfa, NEUPOGEN(R), Aranesp(TM), Kineret(TM), Neulasta(TM), and
INFERGEN(R) (see "Item 2. Properties"). Additionally, the Company supplies
Epoetin alfa to Johnson & Johnson under a supply agreement. There can be no
assurance that the Company will be able to accurately anticipate future demand
for Epoetin alfa, NEUPOGEN(R), Aranesp(TM), Kineret(TM), Neulasta(TM), and
INFERGEN(R) or maintain adequate manufacturing capacity (see "Factors That May
Affect Amgen--We plan to grow rapidly, and if we fail to adequately manage that
growth our business could be adversely impacted.").
Certain raw materials necessary for the Company's commercial manufacturing
of its products are proprietary products of other companies, and in some cases,
such proprietary products are specifically cited in the Company's drug
application with the FDA such that they must be obtained from that specific,
sole source. The Company currently attempts to manage the risk associated with
such sole sourced raw materials by active inventory management and alternate
source development, where feasible. Amgen attempts to remain apprised of
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the financial condition of its suppliers, their ability to supply the Company's
needs and the market conditions for these raw materials. Also, certain of the
raw materials required in the commercial manufacturing of the Company's
products are derived from biological sources. The Company is investigating
screening procedures with respect to certain biological sources and
alternatives to them. Raw materials may be subject to contamination and/or
recall. A material shortage, contamination, and/or recall could adversely
impact or disrupt Amgen's commercial manufacturing of its products.
Human Resources
As of December 31, 2001, the Company had approximately 7,700 employees,
including approximately 70 part-time employees, of which approximately 3,800
were engaged in research and development, approximately 1,800 were engaged in
sales and marketing, and approximately 2,100 were engaged in other activities.
There can be no assurance that the Company will be able to continue attracting
and retaining qualified personnel in sufficient numbers to meet its needs. None
of the Company's employees are covered by a collective bargaining agreement,
and the Company has experienced no work stoppages. The Company considers its
employee relations to be good.
Executive Officers of the Registrant
The executive officers of the Company, their ages as of February 26, 2002
and positions are as follows:
Mr. Kevin W. Sharer, age 53, has served as a director of the Company 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 from October 1992 to May 2000. From April 1989 to October
1992, Mr. Sharer served as President of the Business Markets Division of MCI
Communications Corporation, a telecommunications company, and from February
1984 to March 1989 served in numerous executive capacities at General Electric
Company. Mr. Sharer also serves as a director of Unocal Corporation and
Minnesota Mining & Manufacturing Co.
Dr. Fabrizio Bonanni, age 55, became Senior Vice President, Quality and
Compliance in April 1999. From December 1997 to April 1999, Dr. Bonanni served
as the Corporate Vice President for Regulatory/Clinical Affairs for Baxter
International Inc. ("Baxter"), a pharmaceutical company, from November 1994 to
December 1997, as Corporate Vice President, Quality System, and beginning in
1974, held a variety of quality, regulatory and manufacturing positions with
Baxter in Europe and in the U.S. Dr. Bonanni currently serves on the Board of
Directors of Aaestrom Biosciences Inc.
Dr. Dennis M. Fenton, age 50, became Executive Vice President in March 2000,
having served as Senior Vice President, Operations, from January 1995 to March
2000, as Senior Vice President, Sales and Marketing from August 1992 to January
1995, and as Vice President, Process Development, Facilities and Manufacturing
Services from July 1991 to August 1992. Dr. Fenton also served as Vice
President, Pilot Plant Operations and Clinical Manufacturing, from October 1988
to July 1991, and as Director, Pilot Plant Operations, from 1985 to October
1988. Dr. Fenton also serves on the Board of Directors of Aviron and is a
member of the Compensation Committee.
Mr. Brian M. McNamee, age 45, became Senior Vice President, Human Resources
in June 2001. From November 1999 to June 2001, Mr. McNamee served as Vice
President of Human Resources at Dell Computer Corp. From July 1988 to November
1999, Mr. McNamee held human resource positions at General Electric, including
serving as Senior Vice President Human Resources for the National Broadcasting
Corporation ("NBC") from 1998 to 1999.
Mr. George J. Morrow, age 49, became Executive Vice President of Worldwide
Sales and Marketing, in January 2001. From January 1999 until December 2000,
Mr. Morrow was President and Chief Executive Officer of
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Glaxo Wellcome Inc. ("Glaxo"), a subsidiary of GlaxoSmithKline plc. From
January 1997 until December 1998, Mr. Morrow was Managing Director of Glaxo
Wellcome U.K., also a subsidiary of GlaxoSmithKline plc. From May 1993 until
December 1996, Mr. Morrow was Group Vice President for Commercial Operations of
Glaxo.
Mr. Richard D. Nanula, age 41, became Executive Vice President, Finance,
Strategy and Communications in May 2001. He also became Chief Financial Officer
in August 2001. From November 1999 to February 2001, Mr. Nanula was Chairman
and Chief Executive Officer of Broadband Sports, Inc., an internet media
company. From March 1998 to May 1999, Mr. Nanula was President and Chief
Operating Officer of Starwood Hotels & Resorts Worldwide, a worldwide hotel and
gaming company. From August 1986 to March 1998, Mr. Nanula was at the Walt
Disney Company where he held several positions including Senior Executive Vice
President and Chief Financial Officer and President of Disney Stores Worldwide.
Mr. Steven M. Odre, age 52, became Senior Vice President, General Counsel
and Secretary in March 2000, having served as Vice President, Intellectual
Property, and Associate General Counsel since October 1988, and as Associate
General Counsel from March 1988 to October 1988. From May 1986 to March 1988,
Mr. Odre served as Director of Intellectual Property.
Dr. Roger M. Perlmutter, age 49, became Executive Vice President of Research
and Development in January 2001. From July 1999 to December 2000, Dr.
Perlmutter was Executive Vice President, Worldwide Basic Research and
Preclinical Development of Merck Research Laboratories ("Merck"), and from
February 1999 to July 1999 served as Executive Vice President of Merck, and
from February 1997 to January 1999 as Senior Vice President of Merck. From May
1989 to January 1997, Dr. Perlmutter was also Chairman of the Department of
Immunology, University of Washington, and from January 1991 to January 1997,
Professor in the Departments of Immunology, Biochemistry and Medicine,
University of Washington, and from October 1991 to January 1997, Investigator,
the Howard Hughes Medical Institute at the University of Washington.
Dr. Perlmutter currently serves on the Board of Directors of Stem Cells, Inc.
Mr. Barry D. Schehr, age 46, became Vice President, Financial Operations and
Chief Accounting Officer in May 2000, having served as Vice President,
Accounting and Financial Operations from March 2000 to May 2000 and as Director
of Internal Audit from February 1997 to February 2000. From October 1989 to
January 1997, Mr. Schehr was a partner with Ernst & Young LLP, an accounting
firm.
Dr. Beth C. Seidenberg, age 45, became Senior Vice President, Development of
the Company in January 2002. From September 2001 to December 2001, Dr.
Seidenberg was Senior Vice President, Global Development of Bristol-Myers
Squibb Company ("Bristol-Myers"). From May 2000 to September 2001, Dr.
Seidenberg served as Senior Vice President, Clinical Development & Life Cycle
Management, and from April 2000 to May 2000 as Vice President, Clinical
Immunology/Pulmonary/Dermatology of Bristol-Myers. From July 1998 to March
2000, Dr. Seidenberg was Vice President, Pulmonary-Immunology of Merck Research
Laboratories ("Merck"). From June 1989 to June 1998, Dr. Seidenberg held
several director positions at Merck, including Executive Director.
Geographic Area Financial Information
For financial information concerning the geographic areas in which the
Company operates, see Note 10 to the Consolidated Financial Statements.
Factors That May Affect Amgen
Amgen operates in a rapidly changing environment that involves a number of
risks, some of which are beyond our control. The following discussion
highlights some of these risks and others are discussed elsewhere in this Form
10-K.
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Our product development efforts may not result in commercial products.
We intend to continue an aggressive product development program. Successful
product development in the biotechnology industry is highly uncertain, and very
few research and development projects produce a commercial product. Product
candidates that appear promising in the early phases of development, such as in
early human clinical trials, may fail to reach the market for a number of
reasons, such as:
-- the product candidate did not demonstrate acceptable clinical trial
results even though it demonstrated positive preclinical trial results
-- the product candidate was not effective in treating a specified
condition or illness
-- the product candidate had harmful side effects on humans
-- the necessary regulatory bodies such as the U.S. Food and Drug
Administration, did not approve our product candidate for an intended use
-- the product candidate was not economical for us to manufacture and
commercialize
-- other companies or people have or may have proprietary rights to our
product candidate, such as patent rights, and will not let us sell it on
reasonable terms, or at all
-- the product candidate is not cost effective in light of existing
therapeutics
Several of our product candidates have failed at various stages in the
product development process, including Brain Derived Neurotrophic Factor
("BDNF"), Megakaryocyte Growth and Development Factor ("MGDF") and Glial
Cell-line Derived Neurotrophic Factor ("GDNF"). For example, in 1997, we
announced the failure of BDNF for the treatment of amyotrophic lateral
sclerosis, or Lou Gehrig's Disease, because the product candidate, when
administered by injection, did not produce acceptable clinical results for a
specific use after a phase 3 trial, even though BDNF had progressed
successfully through preclinical and earlier clinical trials. In addition, in
1998, we discontinued development of MGDF, a novel platelet growth factor, at
the phase 3 trial stage after several people in platelet donation trials
developed low platelet counts and neutralizing antibodies. In 1999 we
discontinued development of GDNF after a phase 1/2 trial of GDNF in Parkinson's
disease failed to demonstrate a statistically significant benefit. Of course,
there may be other factors that prevent us from marketing a product. We cannot
guarantee we will be able to produce commercially successful products. Further,
clinical trial results are frequently susceptible to varying interpretations by
scientists, medical personnel, regulatory personnel, statisticians, and others
which may delay, limit, or prevent further clinical development or regulatory
approvals of a product candidate. Also, the length of time that it takes for us
to complete clinical trials and obtain regulatory approval for product
marketing has in the past varied by product and by the intended use of a
product. We expect that this will likely be the case with future product
candidates and we cannot predict the length of time to complete necessary
clinical trials and obtain regulatory approval. See "- Our current products and
products in development cannot be sold if we do not obtain and maintain
regulatory approval."
Our current products and products in development cannot be sold if we do not
obtain and maintain regulatory approval.
We conduct research, preclinical testing, and clinical trials and we
manufacture our product candidates. We also manufacture, price, sell,
distribute, and market our products for their approved indications. These
activities are subject to extensive regulation by numerous state and federal
governmental authorities in the U.S., such as the FDA and HCFA, as well as by
foreign countries, including the European Union. Currently, we are required in
the U.S. and in foreign countries to obtain approval from those countries'
regulatory authorities before we can market and sell our products in those
countries. In our experience, obtaining regulatory approval is costly and takes
many years, and after it is obtained, it remains costly to maintain. The FDA
and other U.S. and foreign regulatory agencies have substantial discretion to
terminate clinical trials, require additional testing, delay or withhold
registration and marketing approval, and mandate product withdrawals.
EPOGEN(R), Kineret(TM), and Neulasta(TM) are currently approved in the U.S. and
NEUPOGEN(R) and Aranesp(TM) are currently approved in the
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U.S., the EU, and in some other foreign countries for specific uses. We
currently manufacture EPOGEN(R), NEUPOGEN(R), Aranesp(TM), Kineret(TM),
Neulasta(TM), and INFERGEN(R) and market EPOGEN(R), NEUPOGEN(R), Aranesp(TM),
and Kineret(TM), and we plan to manufacture and market many of our potential
products. Even though we have obtained regulatory approval for EPOGEN(R),
NEUPOGEN(R), Aranesp(TM), Kineret(TM), Neulasta(TM), and INFERGEN(R), these
products and our manufacturing processes are subject to continued review by the
FDA and other regulatory authorities. In addition, later discovery of unknown
problems with our products or manufacturing processes could result in
restrictions on such products or manufacturing processes, including potential
withdrawal of the products from the market. If regulatory authorities determine
that we have violated regulations or if they restrict, suspend, or revoke our
prior approvals, they could prohibit us from manufacturing or selling
EPOGEN(R), NEUPOGEN(R), Aranesp(TM), Kineret(TM), Neulasta(TM), and INFERGEN(R)
until we comply or indefinitely. In addition, if regulatory authorities
determine that we have not complied with regulations in the research and
development of a product candidate, then they may not approve the product
candidate and we will not be able to market and sell it. If we are unable to
market and sell our products or product candidates, our business would be
adversely affected.
Guidelines and recommendations published by various organizations can reduce
the use of our products.
Government agencies promulgate regulations and guidelines directly
applicable to us and to our products. However, professional societies, practice
management groups, private health/science foundations, and organizations
involved in various diseases from time to time may also publish guidelines or
recommendations to the health care and patient communities. Recommendations of
government agencies or these other groups/organizations may relate to such
matters as usage, dosage, route of administration, and use of concomitant
therapies. Organizations like these have in the past made recommendations about
our products. Recommendations or guidelines that are followed by patients and
health care providers could result in decreased use of our products. In
addition, the perception by the investment community or stockholders that
recommendations or guidelines will result in decreased use of our products
could adversely affect prevailing market prices for our common stock.
Our sales depend on payment and reimbursement from third party payors, and a
reduction in the payment rate or reimbursement could result in decreased use
or sales of our products.
In both domestic and foreign markets, sales of our products are dependent,
in part, on the availability of reimbursement from third party payors such as
state and federal governments, under programs such as Medicare and Medicaid in
the U.S., and private insurance plans. In certain foreign markets, the pricing
and profitability of our products generally are subject to government controls.
In the U.S., there have been, and we expect there will continue to be, a number
of state and federal proposals that could limit the amount that state or
federal governments will pay to reimburse the cost of drugs. In addition, we
believe the increasing emphasis on managed care in the U.S. has and will
continue to put pressure on the price and usage of our products, which may
adversely impact product sales. Further, when a new therapeutic product is
approved, the availability of governmental and/or private reimbursement for
that product is uncertain, as is the amount for which that product will be
reimbursed. We cannot predict the availability or amount of reimbursement for
our recently approved products or product candidates, including those at a late
stage of development, and current reimbursement policies for existing products
may change at any time. For example, we believe that sales of Aranesp(TM) are
and will be affected by government and private payor reimbursement policies.
If reimbursement for EPOGEN(R) and NEUPOGEN(R) changes adversely or if we
fail to obtain adequate reimbursement for our other current or future products,
health care providers may limit how much or under what circumstances they will
administer them, which could reduce the use of our products or cause us to
reduce the price of our products. This could result in lower product sales or
revenues which could have a material adverse effect on us and our results of
operations. For example, in the U.S. the use of EPOGEN(R) in connection with
treatment for end stage renal disease is funded primarily by the U.S. federal
government. In early 1997, HCFA instituted a reimbursement change for EPOGEN(R)
which adversely affected Amgen's EPOGEN(R) sales, until the
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policies were revised. Therefore, as in the past, EPOGEN(R) sales could be
adversely affected by future changes in reimbursement rates or the basis for
reimbursement by the federal government for the end stage renal disease program.
If our intellectual property positions are challenged, invalidated or
circumvented, or if we fail to prevail in present and future intellectual
property litigation, our business could be adversely affected.
The patent positions of pharmaceutical and biotechnology companies can be
highly uncertain and often involve complex legal, scientific, and factual
questions. To date, there has emerged no consistent policy regarding breadth of
claims allowed in such companies' patents. Third parties may challenge,
invalidate, or circumvent our patents and patent applications relating to our
products, product candidates, and technologies. In addition, our patent
positions might not protect us against competitors with similar products or
technologies because competing products or technologies may not infringe our
patents. For certain of our product candidates, there are third parties who
have patents or pending patents that they may claim prevent us from
commercializing these product candidates in certain territories. Patent
disputes are frequent, costly and can preclude commercialization of products.
We are currently, and in the future may be, involved in patent litigation. For
example, we are involved in ongoing patent infringement lawsuits against
Transkaryotic Therapies, Inc. and Aventis with respect to our erythropoietin
patents. The trial court decided in our favor on January 19, 2001, however,
Transkaryotic Therapies, Inc. and Aventis have appealed the decision. If we
ultimately lose these or other litigations we could be subject to competition
and/or significant liabilities, we could be required to enter into third party
licenses for the infringed product or technology, or we could be required to
cease using the technology or product in dispute. In addition, we cannot
guarantee that such licenses will be available on terms acceptable to us.
Our success depends in part on our ability to obtain and defend patent
rights and other intellectual property rights that are important to the
commercialization of our products and product candidates. We have filed
applications for a number of patents and have been granted patents or obtained
rights relating to erythropoietin, recombinant G-CSF and our other products and
potential products. We market our erythropoietin and G-CSF products as
EPOGEN(R) and NEUPOGEN(R), respectively. In the United States, we have been
issued or obtained rights to several patents relating to erythropoietin that
generally cover DNA and host cells, processes for making erythropoietin,
various product claims to erythropoietin, cells that make levels of
erythropoietin, and pharmaceutical compositions of erythropoietin. We have also
been issued or obtained rights to U.S. patents relating to G-CSF that cover
aspects of DNA, vectors, cells, processes, polypeptides, methods of treatment
using G-CSF polypeptides, methods of enhancing bone marrow transplantation, and
treating burn wounds, methods for recombinant production of G-CSF and analogs
of G-CSF. We also have been granted or obtained rights to a patent in the EU
relating to erythropoietin and a patent in the EU relating to G-CSF, two
patents in the EU relating to darbepoetin alfa and hyperglycosylated
erythropoietic proteins, and a patent in the U.S. and a patent in the EU
relating to anakinra.
We face substantial competition, and others may discover, develop, acquire or
commercialize products before or more successfully than we do.
We operate in a highly competitive environment. Our products compete with
other products or treatments for diseases for which our products may be
indicated. For example, although we maintain a substantial share of the
chemotherapy induced neutropenia market, NEUPOGEN(R) competes in certain
circumstances against a product marketed by Immunex. EPOGEN(R) faces
competition from other treatments for anemia in end stage renal disease
patients in the U.S. Further, we believe that some of our newly approved
products and late stage product candidates may face competition when and as
they are approved and marketed. For example, Aranesp(TM) competes with an
Epoetin alfa product marketed by Johnson & Johnson in certain anemia markets
and Kineret(TM) competes in certain circumstances with rheumatoid arthritis
products marketed by Immunex/American Home Products Corporation, Centocor
Inc./Johnson & Johnson, and others. Additionally, some of our competitors,
including biotechnology and pharmaceutical companies, market products or are
actively engaged in research and development in areas where we are developing
product candidates. Large pharmaceutical corporations may have
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greater clinical, research, regulatory, and marketing resources than we do. In
addition, some of our competitors may have technical or competitive advantages
over us for the development of technologies and processes. These resources may
make it difficult for us to compete with them to successfully discover,
develop, and market new products.
Our operating results may fluctuate, and this fluctuation could cause
financial results to be below expectations.
Our operating results may fluctuate from period to period for a number of
reasons. In budgeting our operating expenses, we assume that revenues will
continue to grow; however, some of our operating expenses are fixed in the
short term. Because of this, even a relatively small revenue shortfall may
cause a period's results to be below our expectations or projections. A revenue
shortfall could arise from any number of factors, some of which we cannot
control. For example, we may face:
-- lower than expected demand for our products
-- changes in the government's or private payors' reimbursement policies
for our products
-- changes in wholesaler buying patterns
-- increased competition from new or existing products
-- fluctuations in foreign currency exchange rates
-- changes in our product pricing strategies
Of these, we would only have control over changes in our product pricing
strategies and, of course, there may be other factors that affect our revenues
in any given period.
We plan to grow rapidly, and if we fail to adequately manage that growth our
business could be adversely impacted.
We have an aggressive growth plan that includes substantial and increasing
investments in research and development, sales and marketing and facilities.
Our plan has a number of risks, some of which we cannot control. For example:
-- we may need to generate higher revenues to cover a higher level of
operating expenses, and our ability to do so may depend on factors that
we do not control
-- we may need to attract and assimilate a large number of new employees
-- we may need to manage complexities associated with a larger and faster
growing organization
-- we will need to accurately anticipate demand for the products we
manufacture and maintain adequate manufacturing capacity, and our
ability to do so may depend on factors that we do not control
Of course, there may be other risks and we cannot guarantee that we will be
able to successfully manage these or other risks.
Our stock price is volatile, which could adversely affect your investment.
Our stock price, like that of other biotechnology companies, is highly
volatile. For example, in the fifty-two weeks prior to February 25, 2002, the
trading price of our common stock has ranged from a high of $75.06 per share to
a low of $45.44 per share. Our stock price may be affected by such factors as:
-- clinical trial results
-- product development announcements by us or our competitors
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-- regulatory matters
-- announcements in the scientific and research community
-- intellectual property and legal matters
-- changes in reimbursement policies or medical practices
-- broader industry and market trends unrelated to our performance
In addition, if our revenues or earnings in any period fail to meet the
investment community's expectations, there could be an immediate adverse impact
on our stock price.
The value of our common stock to be issued to Immunex shareholders in the
merger will fluctuate.
In the merger, Immunex shareholders will receive 0.44 of a share of our
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 our stock, the value of the merger consideration to be received by
Immunex shareholders will depend on the market price of our stock at the time
the merger is completed. The market price of our stock at the closing of the
merger will likely vary from time to time. 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. See "--Our stock price is volatile,
which could adversely affect your investment." Additionally, the payment of our
common stock to Immunex shareholders in connection with the merger would dilute
the share ownership of our existing common stockholders and may affect the
value of our common stock. The merger consideration will not be adjusted for
any increase or decrease in the market price of our stock or Immunex common
stock.
We may not realize all of the anticipated benefits of the merger.
The success of the merger will depend, in part, on our ability to realize
the anticipated synergies, cost savings, and growth opportunities from
integrating the businesses of Immunex with the businesses of Amgen. Our 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 our and Immunex's research and development, distribution,
marketing, promotion, and other important relationships
-- minimizing the diversion of management's attention from ongoing business
concerns
-- coordinating geographically separate organizations
We cannot assure you that the integration of Immunex with us will result in
the realization of the full benefits anticipated by us to result from the
merger.
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Our business and stock price may be adversely affected if the merger with
Immunex is not completed.
Our acquisition of Immunex is subject to several customary conditions,
including obtaining clearance from governmental entities and the approvals of
the transaction by our stockholders and those of Immunex. If our acquisition of
Immunex is not completed, we could be subject to a number of risks that may
adversely affect our business and stock price, including:
-- the diversion of our management's attention from our day-to-day business
and the disruption to our employees and our relationships with customers
and joint venture partners as a result of efforts relating to the
acquisition
-- the market price of shares of our stock may decline to the extent that
the current market price reflects a market assumption that the
acquisition will be completed
-- under certain circumstances, we could be required to pay Immunex a $475
million termination fee
-- we must pay costs related to the merger, such as legal and accounting
fees and a portion of the investment banking fees, and, under certain
circumstances, could be required to reimburse Immunex for up to $15
million of costs
-- we would not realize the benefits we expect by acquiring Immunex
Item 2. PROPERTIES
Amgen's principal executive offices and a majority of its administrative,
manufacturing, and research and development facilities are located in forty
buildings in Thousand Oaks, California. Thirty-six of the buildings are owned
and four are leased. Adjacent to these buildings are facilities that are under
construction and additional property for future expansion. The Thousand Oaks,
California properties include manufacturing facilities licensed by various
regulatory bodies that produce commercial quantities of Epoetin alfa,
NEUPOGEN(R), Aranesp(TM), INFERGEN(R), and Neulasta(TM).
Amgen owns two buildings and leases four buildings in Boulder, Colorado,
housing research facilities and a manufacturing facility capable of producing
commercial quantities of Kineret(TM). The Company has a manufacturing complex
in Longmont, Colorado, that is licensed to produce commercial quantities of
Epoetin alfa. Amgen also plans on using the Longmont facility to produce
commercial quantities of Aranesp(TM). The Company has acquired approximately
159 acres of undeveloped land adjacent to the Longmont site to accommodate
future expansion.
Elsewhere in North America, the Company owns a distribution center in
Louisville, Kentucky, and a research facility in Cambridge, Massachusetts. The
Company leases administrative offices in Washington, D.C. and Canada, and five
regional sales offices in the U.S.
Outside North America, the Company has a manufacturing facility in Juncos,
Puerto Rico, and a European packaging and distribution center in Breda, The
Netherlands, which have been licensed by various regulatory bodies. In 2001,
the Company purchased approximately 76 acres of undeveloped land adjacent to
its current Juncos manufacturing facility to accommodate future expansion. The
Company leases facilities in thirteen European countries, Australia, New
Zealand, Japan, and Taiwan for administration, marketing, and/or research and
development.
Amgen believes that its existing facilities plus anticipated additions are
sufficient to meet its current needs.
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Item 3. LEGAL PROCEEDINGS
Certain of the Company's legal proceedings are discussed below. While it is
impossible to predict accurately or to determine the eventual outcome of these
matters, the Company believes that the outcome of these proceedings will not
have a material adverse effect on the annual financial statements of the
Company.
Biogen litigation
On March 10, 1995, Biogen, Inc. ("Biogen") filed suit in the United States
District Court for the District of Massachusetts (the "Massachusetts District
Court") alleging infringement by the Company of certain claims of U.S. Patent
No. 4,874,702 (the "'702 Patent"), relating to vectors for expressing cloned
genes. Biogen alleged that Amgen infringed its patent by manufacturing and
selling NEUPOGEN(R). On March 28, 1995, Biogen filed an amended complaint
further alleging that the Company also infringed the claims of two additional
patents allegedly assigned to Biogen, U.S. Patent No. 5,401,642 (the "'642
Patent") and U.S. Patent No. 5,401,658 (the "'658 Patent"), relating to
vectors, methods for making vectors and expressing cloned genes, and host cells.
In a separate matter, on July 30, 1997, Biogen filed a complaint in the
Massachusetts District Court alleging that Amgen infringes claims 9 and 17 of
the '702 Patent and the claims of the '642 and '658 Patents, identified above,
by making and using the claimed subject matter in the United States in the
manufacture of INFERGEN(R). In December 2001, the parties settled both actions.
Pursuant to such settlement, the judge dismissed both actions with prejudice on
December 28, 2001.
Genentech litigation
On October 16, 1996, Genentech, Inc. ("Genentech") filed suit in the United
States District Court for the Northern District of California (the "California
Court") for infringement of U.S. Patent Nos. 4,704,362, 5,221,619, and
4,342,832 (the "'362, '619, and '832 Patents"), relating to vectors for
expressing cloned genes and the methods for such expression. Genentech alleged
that Amgen infringed its patents by manufacturing and selling NEUPOGEN(R). On
February 10, 1997, Genentech served an additional counterclaim asserting U.S.
Patent No. 5,583,013 (the "'013 Patent"), issued December 10, 1996.
At a hearing held on May 29, 1998, the parties stipulated to the dismissal
with prejudice of claims with respect to the '832 Patent. The judge issued a
final claim construction ruling interpreting the '362, '619, and '013 Patent
claims which, among other things, essentially limited the claim term "control
region" to DNA taken from a single operon and not constructed from control
elements derived from various operons. On October 12, 2000, the California
Court entered Final Judgment in the Company's favor on the basis of no
infringement. Genentech filed a notice of appeal. The parties filed briefs
before the Federal Circuit Court of Appeals. Oral arguments were heard on
October 9, 2001. The parties are currently awaiting a decision.
Transkaryotic Therapies and Aventis litigation
On April 15, 1997, Amgen filed suit in the Massachusetts District Court
against Transkaryotic Therapies, Inc. ("TKT") and Hoechst Marion Roussel, Inc.
("HMR"--now Aventis Pharmaceuticals Inc., together with TKT, the "Defendants")
alleging infringement of three U.S. patents owned by Amgen that claim an
erythropoietin product and processes for making erythropoietin. The suit sought
an injunction preventing the Defendants from making, importing, using, or
selling erythropoietin in the U.S. On October 7, 1999, Amgen filed an amended
complaint, which added two additional patents to the litigation. Defendants'
amended answer asserted that all five of the patents-in-suit were not
infringed, were invalid or were unenforceable due to inequitable conduct.
Amgen's motion for summary judgment of literal infringement was granted by
the Massachusetts District Court on April 26, 2000 with respect to claim 1 of
U.S. Patent No. 5,955,422 (the "'422 Patent"). On May 15, 2000, trial began in
the Massachusetts District Court. On June 9, 2000, the Massachusetts District
Court granted
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Defendants' motion for non-infringement of U.S. Patent No. 5,618,698 (the "'698
Patent"), removing the '698 Patent from this action. On July 21, 2000, the
Massachusetts District Court granted Amgen's motion for judgment on the
Defendants' defenses of invalidity based upon anticipation and obviousness.
On January 19, 2001, the Massachusetts District Court ruled that claims 2-4
of the '080 Patent, claims 1, 3, 4, and 6 of the '349 Patent and claim 1 of the
'422 Patent were valid, enforceable, and infringed by TKT's EPO product and the
cells used to make such product. The Massachusetts District Court also held
that claim 7 of the '349 patent and claims 1, 2, and 9 of the '933 Patent were
not infringed, and that if infringed the claims of the '933 patent would be
invalid.
On January 26, 2001, TKT and HMR filed a Notice of Appeal and on February
14, 2001, Amgen filed a Notice of Cross-Appeal, to the U.S. Court of Appeals
for the Federal Circuit. On March 22, 2001, Amgen filed an Amended Notice of
Cross-Appeal to include claim 9 of the '698 patent. TKT and HMR filed their
appeal brief on April 23, 2001 and a corrected version of their brief on May
11, 2001. Amgen timely filed its appeal brief on December 28, 2001 and a
corrected version of its brief on January 15, 2002. TKT and HMR filed a reply
brief on February 5, 2002. Amgen filed its reply brief on February 22, 2002.
Oral argument has not yet been scheduled.
Citizens for Consumer Justice, et. al. litigation
A class action complaint in which Amgen and twenty-seven other
pharmaceutical manufacturers are named as defendants has come to Amgen's
attention. The complaint was filed on December 19, 2001 in the Massachusetts
District Court, and it broadly alleges that the defendants' reporting of prices
for certain products had the effect of falsely overstating the Average
Wholesale Price, allegedly inflating reimbursements, including co-payments,
paid to providers who prescribe and administered the products. The complaint
asserts claims under the federal RICO statute and federal antitrust laws. It is
brought on behalf of a putative class of individuals and/or entities who paid
any portion of the 20% co-payment and/or deductible amount under Medicare Part
B for identified drugs manufactured or distributed by the defendants since 1993.
Johnson & Johnson arbitrations
The Company has filed a demand in an arbitration with Johnson & Johnson to
terminate Johnson & Johnson's rights under a license agreement (the "License
Agreement") relating to certain patented technology and know-how of the Company
to sell Epoetin alfa throughout the U.S. for all human uses except dialysis and
diagnostics and to recover damages for breach of the License Agreement based on
the Company's claim that Johnson & Johnson has intentionally sold PROCRIT(R)
(the brand name under which Johnson & Johnson sells Epoetin alfa) into the
Company's exclusive dialysis market. The trial commenced in January 2002.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security holders during
the last quarter of its fiscal year ended December 31, 2001.
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PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock trades on The Nasdaq Stock Market under the
symbol AMGN. As of February 26, 2002, there were approximately 15,000 holders
of record of the Company's common stock. No cash dividends have been paid on
the common stock to date, and the Company currently intends to utilize any
earnings for development of the Company's business and for repurchases of its
common stock.
The following table sets forth, for the fiscal periods indicated, the range
of high and low closing sales prices of the common stock as quoted on The
Nasdaq Stock Market for the years 2001 and 2000:
<TABLE>
<CAPTION>
High Low
------ ------
<S> <C> <C>
2001
4th Quarter..... $68.49 $56.03
3rd Quarter..... 65.66 54.01
2nd Quarter..... 70.02 51.51
1st Quarter..... 74.19 54.94
2000
4th Quarter..... $71.38 $54.13
3rd Quarter..... 78.00 64.94
2nd Quarter..... 70.38 51.31
1st Quarter..... 74.69 52.25
</TABLE>
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<PAGE>
Item 6. SELECTED FINANCIAL DATA
(in millions, except per share data)
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
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............................ 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(2).................... 1.03 1.05 1.02 0.82 0.59
Cash dividends declared 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
</TABLE>
- --------
(1) Due to Year 2000 contingency planning in the fourth quarter of 1999, the
Company offered extended payment terms on limited shipments of EPOGEN(R)
and NEUPOGEN(R) 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. See Notes 4 and 11 to the Consolidated Financial
Statements for a discussion of the amounts in 2001, 2000, and 1999. 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.
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company had cash, cash equivalents, and marketable securities of
$2,662.2 million and $2,028.1 million at December 31, 2001 and 2000,
respectively. Cash provided by operating activities has been and is expected to
continue to be the Company's primary source of funds. Cash provided from
operations was $1,480.2 million and $1,634.6 million in 2001 and 2000,
respectively.
Capital expenditures totaled $441.8 million in 2001 compared with $437.7
million in 2000. The Company anticipates spending approximately $450 million to
$550 million in 2002 on capital projects and equipment to expand its global
operations.
The Company receives cash from the exercise of employee stock options and
proceeds from the sale of stock by Amgen pursuant to the employee stock
purchase plan. Employee stock option exercises and proceeds from the sale of
stock by Amgen pursuant to the employee stock purchase plan provided $277.7
million and $333.7 million of cash in 2001 and 2000, respectively. Proceeds
from the exercise of employee stock options will vary from period to period
based upon, among other factors, fluctuations in the market value of the
Company's stock relative to the exercise price of such options.
The Company has a stock repurchase program primarily to reduce the dilutive
effect of its employee stock option and stock purchase plans. In 2001, the
Company repurchased 12.7 million shares of its common stock at a total cost of
$737.5 million. In 2000, the Company repurchased 12.2 million shares of its
common stock at a total cost of $799.9 million. In December 2000, the Board of
Directors authorized the Company to repurchase up to $2 billion of common stock
between January 1, 2001 and December 31, 2002. The amount the Company spends on
and the number of shares repurchased each quarter varies based on a variety of
factors, including the stock price and blackout periods in which the Company is
restricted from repurchasing shares. As of December 31, 2001, $1,262.5 million
was available for stock repurchases through December 31, 2002.
On February 22, 2002, the Company announced that it has agreed to issue $3.5
billion in aggregate face amount of 30-year zero coupon senior notes (the
"Convertible Notes") that are convertible into shares of the Company's common
stock. The proceeds from the offering, net of estimated issuance costs, are
expected to be approximately $2.45 billion. The Company may raise up to an
additional $321 million upon exercise of an over-allotment option that has been
granted in connection with the offering. The Company expects to use
approximately $650 million of the net proceeds to repurchase shares of its
common stock simultaneously with the issuance of the Convertible Notes, with
the remaining proceeds to be used for general corporate purposes. The terms of
the Convertible Notes include a yield to maturity of 1.125% and an initial
conversion premium of 40%. The issuance of the Convertible Notes is subject to
customary closing conditions and is expected to be completed by March 1, 2002.
To provide for financial flexibility and increased liquidity, the Company
has established several other sources of debt financing. As of December 31,
2001, the Company had $223 million of unsecured long-term debt securities
outstanding. These unsecured long-term debt securities consisted of: 1) $100
million of debt securities that bear interest at a fixed rate of 6.5% and
mature in 2007 under a $500 million debt shelf registration (the "Shelf"), 2)
$100 million of debt securities that bear interest at a fixed rate of 8.1% and
mature in 2097, and 3) $23 million of debt securities that bear interest at a
fixed rate of 6.2% and mature in 2003. As of December 31, 2001, the Company's
outstanding long-term debt was rated A2 by Moody's and A by Standard & Poor's.
Under the Shelf, all of the remaining $400 million of debt securities available
for issuance may be offered under the Company's medium-term note program with
terms to be determined by market conditions.
The Company's sources of debt financing also include a commercial paper
program which provides for unsecured short-term borrowings up to an aggregate
face amount of $200 million. As of December 31, 2001, commercial paper with a
face amount of $100 million was outstanding. These borrowings had maturities of
less
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<PAGE>
than one month and had effective interest rates averaging 1.9%. In addition,
the Company has an unsecured $150 million committed credit facility with five
participating banking institutions that expires on May 28, 2003. This credit
facility supports the Company's commercial paper program. As of December 31,
2001, no amounts were outstanding under this credit facility.
The primary objectives for the Company's fixed income investment portfolio
are liquidity and safety of principal. Investments are made to achieve the
highest rate of return to the Company, consistent with these two objectives.
The Company's investment policy limits investments to certain types of
instruments issued by institutions with investment grade credit ratings and
places restrictions on maturities and concentration by type and issuer.
The Company believes that existing funds, cash generated from operations,
and existing sources of debt financing (including the pending issuance of the
Convertible Notes) are adequate to satisfy its working capital and capital
expenditure requirements for the foreseeable future, as well as to support its
stock repurchase program and the proposed acquisition of Immunex Corporation
("Immunex") (see "Proposed Merger with Immunex"). However, the Company may
raise additional capital from time to time.
Results of Operations
Product sales
Product sales primarily consist of sales of EPOGEN(R) (Epoetin alfa),
Aranesp(TM) (darbepoetin alfa), and NEUPOGEN(R) (Filgrastim). In 2001, product
sales were $3,511.0 million, an increase of $308.8 million or 10% over the
prior year. Product sales were $3,202.2 million in 2000, an increase of $159.4
million or 5% over the prior year. Product sales are influenced by a number of
factors, including underlying demand, wholesaler inventory management
practices, and foreign exchange effects.
EPOGEN(R)/Aranesp(TM)
In 2001, the Company received approval to market Aranesp(TM) in the U.S.
(September 2001), most countries in the European Union ("EU"), Australia, and
New Zealand for the treatment of anemia associated with chronic renal failure,
including patients on dialysis and patients not on dialysis.
Combined EPOGEN(TM) and Aranesp(TM) sales in 2001 were $2,150.0 million, an
increase of $187.1 million or 10% over 2000 EPOGEN(R) sales. This increase was
primarily due to higher EPOGEN(R) demand, which includes the effect of higher
prices and growth in the U.S. dialysis patient population, and to a lesser
extent, the launch of Aranesp(TM) in the U.S. and Europe. The reported sales
growth was negatively impacted to a slight degree by wholesaler inventory
changes. Worldwide Aranesp(TM) sales in 2001 were $41.5 million.
EPOGEN(R) sales in 2000 were $1,962.9 million, an increase of $203.8 million
or 12% over the prior year. This increase was primarily due to higher demand,
which was principally driven by growth in the U.S. dialysis patient population
and to a lesser extent, the effect of higher prices. Sales in 2000 were
adversely impacted by Year 2000-related sales to wholesalers in the fourth
quarter of 1999 for which the Company provided extended payment terms and, the
Company believes, by dialysis provider inventory drawdowns in 2000 of
additional 1999 year-end stockpiling. The Company believes that some of this
dialysis provider stockpiling may have been due to Year 2000 concerns and
year-end contract expirations.
NEUPOGEN(R)
Worldwide NEUPOGEN(R) sales in 2001 were $1,346.4 million, an increase of
$122.7 million or 10% over the prior year. This increase was primarily due to
worldwide demand growth, which includes the effect of higher prices in the U.S.
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<PAGE>
Worldwide NEUPOGEN(R) sales were $1,223.7 million in 2000, a decrease of
$32.9 million or 3% from the prior year. This decrease was primarily due to the
adverse impact of wholesaler buying patterns, including Year 2000-related sales
to wholesalers in the fourth quarter of 1999 for which the Company provided
extended payment terms, as well as adverse foreign exchange effects. The
Company believes these factors were partially offset by a mid-single digit rate
increase in demand, which includes the effect of higher prices in the U.S.
Corporate partner revenues
In 2001, corporate partner revenues were $252.0 million, an increase of $5.8
million or 2% over the prior year. This increase was due to slightly higher
revenues, primarily related to INFERGEN(R), substantially offset by lower
amounts earned from Kirin-Amgen, Inc. In 2000, corporate partner revenues were
$246.2 million, an increase of $84.8 million or 53% over the prior year. This
increase was primarily due to amounts earned from Kirin-Amgen, Inc. related to
the development program for Aranesp(TM).
Royalty income
In 2001, royalty income was $252.7 million, an increase of 40% over the
prior year. In 2000, royalty income was $181.0 million, an increase of 33% over
the prior year. These increases were primarily due to higher royalties from
Johnson & Johnson relating to their sales of Epoetin alfa.
Cost of sales
Cost of sales as a percentage of product sales was 12.6%, 12.8%, and 13.2%
for 2001, 2000, and 1999, respectively. The decrease in 2001 was primarily due
to reduced royalty obligations, substantially offset by the impact of the $39.5
million write-off of certain inventory in the fourth quarter of 2001. The
decrease in 2000 was primarily due to increased manufacturing efficiencies.
Research and development
In 2001, research and development expenses increased $20.0 million or 2%
over the prior year. This increase was primarily due to higher staff-related
costs necessary to support ongoing research and product development activities,
partially offset by lower clinical manufacturing and product licensing-related
costs.
In 2000, research and development expenses increased $22.2 million or 3%
over the prior year. This increase was primarily due to higher staff-related
costs necessary to support ongoing research and product development activities
and higher clinical trial costs. These increases were substantially offset by a
reduction in clinical manufacturing and product licensing-related costs.
Selling, general and administrative
In 2001, selling, general and administrative ("SG&A") expenses increased
$143.8 million or 17% over the prior year. This increase was primarily due to
higher outside marketing expenses, staff-related costs, and consulting expenses
as support for new product launches was increased.
In 2000, SG&A expenses increased $172.6 million or 26% over the prior year.
This increase was primarily due to higher staff-related costs and outside
marketing expenses as the Company continued to support its existing products
and prepared for anticipated new product launches.
Other items, net
In 2001, other items, net primarily consisted of costs associated with the
termination of collaboration agreements with various third parties, including
PRAECIS PHARMACEUTICALS INCORPORATED and certain
31
<PAGE>
academic institutions. In 2000, other items, net consisted of three items: 1)
legal award associated with the spillover arbitration with Johnson & Johnson,
2) a write-off of acquired in-process research and development associated with
the acquisition of Kinetix Pharmaceuticals, Inc., and 3) a charitable
contribution to the Amgen Foundation. In 1999, other items, net consisted of a
reduction in liabilities related to the spillover arbitration with Johnson &
Johnson. See Note 4 to the Consolidated Financial Statements for a discussion
of the 2001, 2000, and 1999 items.
Interest and other income, net
In 2001, interest and other income, net increased $22.5 million or 15% over
the prior year. This increase was due to higher interest income generated from
the Company's investment portfolio as a result of higher average cash balances,
partially offset by lower interest rates in 2001 and higher gains on the sale
of equity investments that occurred in 2000.
In 2000, interest and other income, net increased $57.9 million or 66% over
the prior year. This increase was primarily due to gains realized on the sale
of certain equity securities in the Company's portfolio and higher interest
income generated from the Company's investment portfolio as a result of higher
average cash balances and higher interest rates.
Income taxes
The Company's effective tax rate was 33.6%, 32.0%, and 30.0% for 2001, 2000,
and 1999, respectively. The Company's tax rate in 2001 has increased, in part,
due to the absence of capital loss carryforwards that benefited 2000. The tax
rate in all three years reflected the tax benefits from the sale of products
manufactured in the Company's Puerto Rico manufacturing facility. In addition,
the 2001 and 2000 tax rates increased as a result of increased taxable income
combined with a provision in the federal tax law that caps tax benefits
associated with the Company's Puerto Rico operations at the 1995 income level.
The 2000 tax rate increased also as a result of the write-off of acquired
in-process research and development, which is not deductible for tax purposes.
Proposed Merger with Immunex
On December 16, 2001, the Company signed a definitive agreement to acquire
Immunex Corporation ("Immunex") in a transaction to be accounted for as a
purchase. Immunex is a biopharmaceutical company dedicated to developing immune
system science to protect human health. Under the terms of the 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, at the closing of the merger each option outstanding to purchase a
share of Immunex common stock will be assumed by Amgen and exchanged into an
option to purchase Amgen common stock based on the terms of the merger
agreement. The estimated purchase price is approximately $17.6 billion, which
includes the cash portion of the merger consideration, the estimated fair
values of Amgen stock issued and options to be exchanged, and the direct
transaction costs. The final purchase price will be determined based upon the
number of Immunex shares and options outstanding at the closing date. The
transaction is expected to close in the second half of 2002, subject to
approval by shareholders of both companies, customary regulatory approvals, as
well as other customary closing conditions. More information about this
transaction is available in Amgen's Current Report on Form 8-K filed with the
SEC on December 17, 2001 which is incorporated herein by reference. Unless
otherwise indicated, the discussions in this document relate to Amgen as a
stand-alone entity and do not reflect the impact of the proposed merger with
Immunex.
Financial Outlook
In the future, the Company expects the growth of its anemia business to be
driven primarily by Aranesp(TM) sales in new markets. The Company expects
growth in its U.S. dialysis business to come primarily from patient
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<PAGE>
population growth and inflation-related price increases. Patients receiving
treatment for end stage renal disease are covered primarily under medical
programs provided by the federal government. Therefore, EPOGEN(R) sales may
also be affected by future changes in reimbursement rates or a change in the
basis for reimbursement by the federal government. Worldwide Aranesp(TM) sales
will be dependent in part upon such factors as the effects of competitive
pressures, penetration of existing and new market opportunities, the
availability and extent of reimbursement by third-party payors including
governments and private insurance plans, and changes in foreign currency
exchange rates.
Future NEUPOGEN(R) demand is dependent primarily upon penetration of
existing markets, inflation-related price increases, and the effects of
competitive products. In addition, chemotherapy treatments that are less
myelosuppressive may require less NEUPOGEN(R). NEUPOGEN(R) usage is expected to
continue to be affected by cost containment pressures from governments and
private insurers on health care providers worldwide. In addition, reported
NEUPOGEN(R) sales will continue to be affected by changes in foreign currency
exchange rates. In both domestic and foreign markets, sales of NEUPOGEN(R) are
dependent, in part, on the availability of reimbursement from third-party
payors such as governments (for example, Medicare and Medicaid programs in the
U.S.) and private insurance plans. Therefore, NEUPOGEN(R) sales may also be
affected by future changes in reimbursement rates or changes in the bases for
reimbursement.
In January 2002, the Company received regulatory approval to market
Neulasta(TM), its new white blood cell booster, in the U.S. Neulasta(TM),
administered as a single fixed dose per chemotherapy cycle, is indicated for
decreasing the incidence of infection, as manifested by febrile neutropenia in
patients with non-myeloid malignancies receiving myelosuppressive anti-cancer
drugs associated with clinically significant incidence of febrile neutropenia.
The Company expects to launch Neulasta(TM) in April 2002. Once launched,
Neulasta may impact NEUPOGEN(R) sales as health care providers in the U.S. may
transition from administering NEUPOGEN(R) to Neulasta(TM).
In November 2001, the Company received regulatory approval to market
Kineret(TM) (anakinra) in the U.S. for the reduction in signs and symptoms of
moderately to severely active rheumatoid arthritis in adult patients who have
failed one or more disease modifying antirheumatic drugs.
The Company is providing this information as of the filing date of the
Company's Annual Report on Form 10-K for the year ended December 31, 2001, and
does not plan to update this information and expressly disclaims any duty to
update the information contained in this filing, except as required by law.
Except for the historical information contained herein, the matters
discussed herein are by their nature forward-looking. Investors are cautioned
that forward-looking statements or projections made by the Company, including
those made in this document, are subject to risks and uncertainties that may
cause actual results to differ materially from those projected. Reference is
made in particular to forward-looking statements regarding product sales,
expenses, liquidity and the Convertible Notes, and the proposed merger with
Immunex. Amgen operates in a rapidly changing environment that involves a
number of risks, some of which are beyond the Company's control. Future
operating results and the Company's stock price may be affected by a number of
factors, including, without limitation: (i) the results of preclinical and
clinical trials; (ii) regulatory approvals of product candidates, new
indications, and manufacturing facilities; (iii) health care guidelines and
policies relating to Amgen's products; (iv) reimbursement for Amgen's products
by governments and private payors; (v) intellectual property matters (patents)
and the results of litigation; (vi) competition; (vii) fluctuations in
operating results; and (viii) rapid growth of the Company. The proposed merger
with Immunex may fail to close or the terms of the merger may need to be
modified to achieve regulatory approval. Depending on the timing of the merger,
and other factors, Amgen may not realize all of the anticipated benefits of the
merger, including the anticipated synergies, cost savings, and growth
opportunities from integrating the businesses of Immunex with the businesses of
Amgen. Additionally, the value of the Amgen common stock to be issued to the
Immunex
33
<PAGE>
shareholders in connection with the merger will fluctuate. These factors and
others are discussed herein and in the sections appearing under the heading
"Business--Factors That May Affect Amgen" and in Amgen's other filings with the
Securities and Exchange Commission, which sections are incorporated herein by
reference.
Summary of Critical Accounting Policies
EPOGEN(R) revenue recognition
The Company has the exclusive right to sell Epoetin alfa for dialysis,
certain diagnostics, and all non-human, non-research uses in the United States.
Amgen has granted to Johnson & Johnson a license relating to Epoetin alfa for
sales in the United States for all human uses except dialysis and diagnostics.
Pursuant to this license, the Company and Johnson & Johnson are required to
compensate each other for Epoetin alfa sales that either party makes into the
other party's exclusive market, sometimes referred to as "spillover" sales.
Accordingly, Amgen does not recognize product sales it makes into the exclusive
market of Johnson & Johnson and does recognize the product sales made by
Johnson & Johnson into Amgen's exclusive market. Sales in Amgen's exclusive
market are derived from the Company's sales to its customers, as adjusted for
any spillover sales. The Company is employing an arbitrated audit methodology
to measure each party's spillover sales based on independent third-party data
on shipments to end users and their estimated usage. Data on end user usage is
derived in part using market sampling techniques, and accordingly, the results
of such sampling can produce variability in recognized spillover sales. The
Company initially recognizes spillover sales based on estimates of shipments to
end users and their usage, utilizing historical third-party data and
subsequently adjusts such amounts based on revised third-party data as
received. Differences between initially estimated spillover sales and amounts
based on revised third-party data could produce materially different amounts
for recognized EPOGEN(R) sales. However, such differences to date have not been
material.
Inventory capitalization
The Company capitalizes inventory costs associated with certain product
candidates prior to regulatory approval, based on management's judgment of
probable future commercialization. The Company would be required to expense
previously capitalized costs related to pre-approval inventory upon a change in
such judgment, due to, among other factors, a decision denying approval of the
product candidate by the necessary regulatory bodies. At December 31, 2001,
capitalized inventory related to the product candidate Neulasta(TM) totaled
$8.8 million. In January 2002, the Company received regulatory approval to
market Neulasta(TM) in the U.S.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest income earned on the Company's investment portfolio is affected by
changes in the general level of U.S. interest rates. In 2001, the Company
entered into interest rate swap agreements on a portion of its
available-for-sale investment portfolio, effectively converting these fixed
income investments to variable income investments. The Company's short-term
borrowings effectively bear interest at variable rates and therefore, changes
in U.S. interest rates affect interest expense incurred thereon. Changes in
interest rates do not affect interest expense incurred on the Company's
long-term borrowings because they all bear interest at fixed rates. The
following tables provide information about the Company's financial instruments
that are sensitive to changes in interest rates. For the Company's investment
portfolio and debt obligations, the tables present principal cash flows and
related weighted-average interest rates by expected maturity dates.
Additionally, the Company has assumed its available-for-sale debt securities,
comprised primarily of corporate debt instruments and treasury securities, are
similar enough to aggregate those securities for presentation purposes. For the
interest rate swaps, the 2001 table presents the notional amount and
weighted-average interest rates by contractual maturity date. The notional
amount is used to calculate the contractual cash flows to be exchanged under
the contract.
34
<PAGE>
Interest Rate Sensitivity
Principal Amount by Expected Maturity as of December 31, 2001
(Dollars in millions)
Average Interest Rate
<TABLE>
<CAPTION>
Fair Value
2002 2003 2004 2005 2006 Thereafter Total 12/31/01
-------- ------ ------ ------ ------ ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available-for-sale debt
securities.................. $1,466.9 $362.9 $390.6 $163.9 $115.0 -- $2,499.3 $2,568.0
Interest rate................. 4.4% 6.6% 5.8% 7.0% 5.1% --
Commercial paper obligations.. $ 100.0 -- -- -- -- -- $ 100.0 $ 100.0
Interest rate................. 1.9% -- -- -- -- --
Long-term debt................ -- $ 23.0 -- -- -- $200.0 $ 223.0 $ 244.9
Interest rate................. -- 6.2% -- -- -- 7.3%
Interest rate swaps related to
available-for-sale debt
securities:
Pay fixed/receive variable.... -- $153.7 $144.2 $120.0 $ 40.0 -- $ 457.9 $ 1.4
Average pay rate.............. -- 2.9% 3.8% 4.2% 4.5% --
Average receive rate.......... -- 2.0% 2.0% 2.0% 2.0% --
</TABLE>
Interest Rate Sensitivity
Principal Amount by Expected Maturity as of December 31, 2000
(Dollars in millions)
Average Interest Rate
<TABLE>
<CAPTION>
Fair Value
2001 2002 2003 2004 2005 Thereafter Total 12/31/00
------ ------ ------ ------ ----- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Available-for-sale debt
securities.................. $780.4 $740.6 $232.3 $118.5 $60.0 -- $1,931.8 $1,950.2
Interest rate................. 6.6% 6.7% 7.0% 6.5% 7.0% --
Commercial paper obligations.. $100.0 -- -- -- -- -- $ 100.0 $ 100.0
Interest rate................. 6.7% -- -- -- -- --
Long-term debt................ -- -- $ 23.0 -- -- $200.0 $ 223.0 $ 222.0
Interest rate................. -- -- 6.2% -- -- 7.3%
</TABLE>
The Company is exposed to equity price risks on the marketable portion of
equity securities included in its portfolio of investments entered into for the
promotion of business and strategic objectives. These investments are generally
in small capitalization stocks in the biotechnology industry sector. In 2001,
the Company entered into equity forward contracts to hedge against changes in
the fair market value of a portion of its equity investment portfolio. At
December 31, 2001 and 2000, the fair value of the unhedged portion of its
equity securities was $133.4 million and $223.0 million, respectively. For the
years ended December 31, 2001 and 2000, an adverse change in equity prices of
45% and 80%, respectively, would result in a decrease of approximately $60.0
million and $178.4 million, respectively, in the fair value of the unhedged
portion of the Company's equity securities. Price volatility for equity
investments is based on the volatility of a relevant market index for small
capitalization stocks in the biotechnology sector.
35
<PAGE>
The Company did not have material exposures to changes in foreign currency
exchange rates related to its foreign currency forward contracts outstanding as
of December 31, 2001 and 2000.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference to
the financial statements listed in Item 14(a) of Part IV of this Form 10-K
Annual Report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
36
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of the Company is incorporated by
reference to the section entitled "Election of Directors" in the Company's
definitive Proxy Statement with respect to the Company's 2002 Annual Meeting to
be filed with the Securities and Exchange Commission within 120 days of
December 31, 2001 (the "Proxy Statement"). For information concerning the
executive officers of the Company, see "Item 1. Business--Executive Officers of
the Registrant".
Item 11. EXECUTIVE COMPENSATION
The section labeled "Executive Compensation" appearing in the Company's
Proxy Statement is incorporated herein by reference, except for such
information as need not be incorporated by reference under rules promulgated by
the Securities and Exchange Commission.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section labeled "Security Ownership of Directors and Executive Officers
and Certain Beneficial Owners" appearing in the Company's Proxy Statement is
incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section labeled "Certain Transactions" appearing in the Company's Proxy
Statement is incorporated herein by reference.
37
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)1. Index to Financial Statements
The following Financial Statements are included herein:
<TABLE>
<CAPTION>
Page
Number
----------
<S> <C>
Report of Ernst & Young LLP, Independent Auditors............................................... F-1
Consolidated Statements of Operations for each of the three years in the period ended
December 31, 2001............................................................................. F-2
Consolidated Balance Sheets at December 31, 2001 and 2000....................................... F-3
Consolidated Statements of Stockholders' Equity for each of the three years in the period ended
December 31, 2001............................................................................. F-4
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 2001............................................................................. F-5
Notes to Consolidated Financial Statements...................................................... F-6 - F-24
</TABLE>
(a)2. Index to Financial Statement Schedules
The following Schedule is filed as part of this Form 10-K Annual Report:
<TABLE>
<CAPTION>
Page
Number
------
<C> <S> <C>
II. Valuation Accounts................................................... F-25
</TABLE>
All other schedules are omitted because they are not applicable, or not
required, or because the required information is included in the consolidated
statements or notes thereto.
(a)3. Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of December 16, 2001, by and among Amgen Inc.,
AMS Acquisition Inc., and Immunex Corporation. (26)
3.1 Restated Certificate of Incorporation as amended. (10)
3.2* Amended and Restated Bylaws of Amgen Inc. (as amended January 7, 2002).
3.3 Certificate of Amendment of Restated Certificate of Incorporation. (19)
3.4 Certificate of Designations of Series A Junior Participating Preferred Stock. (22)
4.1 Indenture dated January 1, 1992 between the Company and Citibank N.A., as trustee. (4)
4.2 First Supplement to Indenture, dated February 26, 1997 between the Company and Citibank N.A.,
as trustee. (7)
4.3 Officer's Certificate pursuant to Sections 2.1 and 2.3 of the Indenture, as supplemented, establishing a
series of securities "8 1/8% Debentures due April 1, 2097." (9)
4.4 8 1/8% Debentures due April 1, 2097. (9)
4.5 Form of stock certificate for the common stock, par value $.0001 of the Company. (10)
4.6 Officer's Certificate pursuant to Sections 2.1 and 2.3 of the Indenture, dated as of January 1, 1992, as
supplemented by the First supplemental Indenture, dated as of February 26, 1997, each between the
Company and Citibank, N.A., as Trustee, establishing a series of securities entitled "6.50% Notes
Due December 1, 2007". (12)
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<C> <S>
4.7 6.50% Notes Due December 1, 2007 described in Exhibit 4.6. (12)
4.8 Corporate Commercial Paper--Master Note between and among Amgen Inc., as Issuer, Cede & Co.,
as nominee of The Depository Trust Company and Citibank, N.A. as Paying Agent. (14)
4.9 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. (27)
10.1*+ Company's Amended and Restated 1991 Equity Incentive Plan, effective December 11, 2001.
10.2*+ Company's Amended and Restated 1997 Special Non-Officer Equity Incentive Plan, effective
December 11, 2001.
10.3 Shareholder's Agreement of Kirin-Amgen, Inc., dated May 11, 1984, between the Company and
Kirin Brewery Company, Limited. (22)
10.4 Amendment Nos. 1, 2, and 3, dated March 19, 1985, July 29, 1985 and December 19, 1985,
respectively, to the Shareholder's Agreement of Kirin-Amgen, Inc., dated May 11, 1984. (19)
10.5 Product License Agreement, dated September 30, 1985, and Technology License Agreement, dated,
September 30, 1985 between the Company and Ortho Pharmaceutical Corporation. (19)
10.6 Product License Agreement, dated September 30, 1985, and Technology License Agreement, dated
September 30, 1985 between Kirin-Amgen, Inc. and Ortho Pharmaceutical Corporation. (19)
10.7+ Company's Amended and Restated Employee Stock Purchase Plan. (19)
10.8 Research, Development Technology Disclosure and License Agreement PPO, dated January 20,
1986, by and between the Company and Kirin Brewery Co., Ltd. (1)
10.9 Amendment Nos. 4 and 5, dated October 16, 1986 (effective July 1, 1986) and December 6, 1986
(effective July 1, 1986), respectively, to the Shareholders Agreement of Kirin-Amgen, Inc. dated
May 11, 1984. (22)
10.10 Assignment and License Agreement, dated October 16, 1986, between the Company and Kirin-
Amgen, Inc. (22)
10.11 G-CSF European License Agreement, dated December 30, 1986, between Kirin-Amgen, Inc. and the
Company. (22)
10.12+ Company's Retirement and Savings Plan (as amended and restated effective October 23, 2000). (22)
10.13+ Company's Amended and Restated 1988 Stock Option Plan. (6)
10.14+ First Amendment to the Company's Retirement and Savings Plan (as amended and restated effective
October 23, 2000). (22)
10.15 Amendment, dated June 30, 1988, to Research, Development, Technology Disclosure and License
Agreement: GM-CSF dated March 31, 1987, between Kirin Brewery Company, Limited and the
Company. (2)
10.16 Agreement on G-CSF in Certain European Countries, dated January 1, 1989, between Amgen Inc.
and F. Hoffmann-La Roche & Co. Limited Company (with certain confidential information
deleted therefrom). (3)
10.17 Partnership Purchase Agreement, dated March 12, 1993, between the Company, Amgen Clinical
Partners, L.P., Amgen Development Corporation, the Class A limited partners and the Class B
limited partner. (5)
10.18+ Amgen Inc. Supplemental Retirement Plan (As Amended and Restated Effective
November 1, 1999). (18)
10.19+ First Amendment to Amgen Inc. Change of Control Severance Plan. (19)
10.20+ Amended and Restated Amgen Performance Based Management Incentive Plan. (17)
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<C> <S>
10.21 Credit Agreement, dated as of May 28, 1998, among Amgen Inc., the Borrowing Subsidiaries named
therein, the Banks named therein, Citibank, N.A., as Issuing Bank, and Citicorp USA, Inc., as
Administrative Agent. (15)
10.22 G-CSF United States License Agreement dated June 1, 1987 (effective July 1, 1986) between Kirin-
Amgen, Inc. and the Company. (22)
10.23 Amendment No. 1 dated October 20, 1988 to Kirin-Amgen, Inc./Amgen G-CSF United States
License Agreement dated June 1, 1987 (effective July 1, 1986). (22)
10.24 Amendment No. 2 dated October 17, 1991 (effective November 13, 1990) to Kirin-Amgen, Inc./
Amgen G-CSF United States License Agreement dated June 1, 1987 (effective July 1, 1986). (22)
10.25 Amendment No. 10 dated March 1, 1996 to the Shareholders' Agreement of Kirin-Amgen, Inc. dated
May 11, 1984. (22)
10.26+ Amgen Inc. Change of Control Severance Plan effective as of October 20, 1998. (16)
10.27 Preferred Share Rights Agreement, dated as of December 12, 2000, between Amgen Inc. and
American Stock Transfer and Trust Company, as Rights Agent. (21)
10.28+ First Amendment, effective January 1, 1998, to the Company's Amended and Restated Employee
Stock Purchase Plan. (11)
10.29 Amendment No. 11 dated March 20, 2000 to the Shareholders' Agreement of Kirin-Amgen, Inc.
dated May 11, 1984. (22)
10.30+ Agreement between Amgen Inc. and Dr. Fabrizio Bonanni, dated March 3, 1999. (18)
10.31 Amendment No. 1 dated June 1, 1987 to Kirin-Amgen, Inc./Amgen G-CSF European License
Agreement dated December 30, 1986. (22)
10.32 Amendment No. 2 dated March 15, 1988 to Kirin-Amgen, Inc./Amgen G-CSF European License
Agreement dated December 30, 1986. (22)
10.33 Amendment No. 3 dated October 20, 1988 to Kirin-Amgen, Inc./Amgen G-CSF European License
Agreement dated December 30, 1986. (22)
10.34 Amendment No. 4 dated December 29, 1989 to Kirin-Amgen, Inc./Amgen G-CSF European License
Agreement dated December 30, 1986. (22)
10.35+ Company's Amended and Restated 1987 Directors' Stock Option Plan. (8)
10.36 Amended and Restated Agreement on G-CSF in the EU between Amgen Inc. and F. Hoffmann-La
Roche Ltd (with certain confidential information deleted therefrom). (14)
10.37 Collaboration and License Agreement, dated December 15, 1997, between the Company, GPI NIL
Holdings, Inc. and Guilford Pharmaceuticals Inc. (with certain confidential information deleted
therefrom). (13)
10.38+ Promissory Note of Dr. Fabrizio Bonanni, dated August 7, 1999. (18)
10.39+ Promissory Note of Dr. Fabrizio Bonanni, dated October 29, 1999. (18)
10.40+ Company's Amended and Restated 1997 Equity Incentive Plan. (25)
10.41+ Agreement between Amgen Inc. and Mr. Gordon M. Binder, dated May 10, 2000. (19)
10.42 Amendment No. 6 dated May 11, 1984 to the Shareholders' Agreement of Kirin-Amgen, Inc. dated
May 11, 1984. (22)
10.43 Amendment No. 7 dated July 17, 1987 (effective April 1, 1987) to the Shareholders' Agreement of
Kirin-Amgen, Inc. dated May 11, 1984. (22)
10.44 Amendment No. 8 dated May 28, 1993 (effective November 13, 1990) to the Shareholders'
Agreement of Kirin-Amgen, Inc. dated May 11, 1984. (22)
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
- ------- -----------
<C> <S>
10.45 Amendment No. 9 dated December 9, 1994 (effective June 14, 1994) to the Shareholders'
Agreement of Kirin-Amgen, Inc. dated May 11, 1984. (22)
10.46+ Agreement between Amgen Inc. and Mr. George J. Morrow, dated March 3, 2001. (23)
10.47+ Promissory Note of Mr. George J. Morrow, dated March 11, 2001. (23)
10.48+ Agreement between Amgen Inc. and Dr. Roger M. Perlmutter, M.D., Ph.D., dated March 5, 2001.
(23)
10.49+ Agreement between Amgen Inc. and Mr. Brian McNamee, dated May 5, 2001. (24)
10.50+ Agreement between Amgen Inc. and Mr. Richard Nanula, dated May 15, 2001. (24)
10.51+ Promissory Note of Mr. Richard Nanula, dated June 27, 2001. (24)
10.52+ Promissory Note of Dr. Roger M. Perlmutter, dated June 29, 2001. (24)
10.53+ Second Amendment to the Amgen Retirement and Savings Plan as amended and restated effective
October 23, 2000. (25)
10.54+ Second Amendment to the Amgen Inc. Change of Control Severance Plan. (25)
10.55+ First Amendment to the Amgen Supplemental Retirement Plan as amended and restated effective
November 1, 1999. (25)
10.56+ Agreement between Amgen Inc. and Dr. George Morstyn, dated July 19, 2001. (25)
10.57+ Promissory Note of Mr. Brian McNamee, dated May 30, 2001. (25)
10.58+ Restricted Stock Purchase Agreement between Amgen Inc. and Mr. Richard Nanula, dated
May 16, 2001. (25)
10.59+ Restricted Stock Purchase Agreement between Amgen Inc. and Dr. Roger M. Perlmutter, dated
January 8, 2001. (25)
10.60*+ Agreement between Amgen Inc. and Dr. Beth C. Seidenberg, dated December 21, 2001.
10.61*+ Amendment to Agreement between Amgen Inc. and Dr. Beth C. Seidenberg, dated
December 21, 2001.
10.62*+ Second Amendment to the Amgen Supplemental Retirement Plan (As Amended and Restated
Effective November 1, 1999), effective January 1, 2002.
10.63*+ Third Amendment to the Amgen Retirement and Savings Plan (as amended and restated effective
October 23, 2000), effective February 1, 2002.
10.64*+ Amgen Inc. Executive Nonqualified Retirement Plan, effective January 1, 2001.
10.65*+ Nonqualified Deferred Compensation Plan, effective January 1, 2002.
10.66 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. (26)
21* Subsidiaries of the Company.
23 Consent of Ernst & Young LLP, Independent Auditors. The consent set forth on page 46 is
incorporated herein by reference.
24 Power of Attorney. The Power of Attorney set forth on page 45 is incorporated herein by reference.
</TABLE>
- --------
* Filed herewith.
+ Management contract or compensatory plan or arrangement.
(1) Filed as an exhibit to Amendment No. 1 to Form S-1 Registration Statement
(Registration No. 33-3069) on March 11, 1986 and incorporated herein by
reference.
41
<PAGE>
(2) Filed as an exhibit to Form 8 amending the Quarterly Report on Form 10-Q
for the quarter ended June 30, 1988 on August 25, 1988 and incorporated
herein by reference.
(3) Filed as an exhibit to the Form 8 dated November 8, 1989, amending the
Annual Report on Form 10-K for the year ended March 31, 1989 on June 28,
1989 and incorporated herein by reference.
(4) Filed as an exhibit to Form S-3 Registration Statement dated December 19,
1991 and incorporated herein by reference.
(5) Filed as an exhibit to the Form 8-A dated March 31, 1993 and incorporated
herein by reference.
(6) Filed as an exhibit to the Form 10-Q for the quarter ended September 30,
1996 on November 5, 1996 and incorporated herein by reference.
(7) Filed as an exhibit to the Form 8-K Current Report dated March 14, 1997 on
March 14, 1997 and incorporated herein by reference.
(8) Filed as an exhibit to the Annual Report on Form 10-K for the year ended
December 31, 1996 on March 24, 1997 and incorporated herein by reference.
(9) Filed as an exhibit to the Form 8-K Current Report dated April 8, 1997 on
April 8, 1997 and incorporated herein by reference.
(10) Filed as an exhibit to the Form 10-Q for the quarter ended March 31, 1997
on May 13, 1997 and incorporated herein by reference.
(11) Filed as an exhibit to the Form 10-Q for the quarter ended June 30, 1997
on August 12, 1997 and incorporated herein by reference.
(12) Filed as an exhibit to the Form 8-K Current Report dated and filed on
December 5, 1997 and incorporated herein by reference.
(13) Filed as Exhibit 10.40 to the Guilford Pharmaceuticals Inc. Form 10-K for
the year ended December 31, 1997 on March 27, 1998 and incorporated herein
by reference.
(14) Filed as an exhibit to the Form 10-Q for the quarter ended March 31, 1998
on May 13, 1998 and incorporated herein by reference.
(15) Filed as an exhibit to the Form 10-Q for the quarter ended June 30, 1998
on August 14, 1998 and incorporated herein by reference.
(16) Filed as an exhibit to the Annual Report on Form 10-K for the year ended
December 31, 1998 on March 16, 1999 and incorporated herein by reference.
(17) Filed as an exhibit to the Form 10-Q for the quarter ended June 30, 1999
on August 3, 1999 and incorporated herein by reference.
(18) Filed as an exhibit to the Annual Report on Form 10-K for the year ended
December 31, 1999 on March 7, 2000 and incorporated herein by reference.
(19) Filed as an exhibit to the Form 10-Q for the quarter ended June 30, 2000
on August 1, 2000 and incorporated herein by reference.
(20) Filed as an exhibit to the Form 10-Q for the quarter ended September 30,
2000 on November 14, 2000 and incorporated herein by reference.
(21) Filed as an exhibit to the Form 8-K Current Report dated December 13, 2000
on December 18, 2000 and incorporated herein by reference.
(22) Filed as an exhibit to the Annual Report on Form 10-K for the year ended
December 31, 2000 on March 7, 2001 and incorporated herein by reference.
42
<PAGE>
(23) Filed as an exhibit to the Form 10-Q for the quarter ended March 31, 2001
on May 14, 2001 and incorporated herein by reference.
(24) Filed as an exhibit to the Form 10-Q for the quarter ended June 30, 2001
on July 27, 2001 and incorporated herein by reference.
(25) Filed as an exhibit to the Form 10-Q for the quarter ended September 30,
2001 on October 26, 2001 and incorporated herein by reference.
(26) Filed as an exhibit to the Form 8-K Current Report dated December 16, 2001
on December 17, 2001 and incorporated herein by reference.
(27) Filed as an exhibit to the Form S-4 Registration Statement dated January
31, 2002 and incorporated herein by reference.
(b) Reports on Form 8-K
The Company filed one Current Report on Form 8-K during the three months
ended December 31, 2001. The report filed on December 17, 2001 reported under
Item 5 that on December 16, 2001, the Company entered into an Agreement and
Plan of Merger, dated December 16, 2001 (the "Merger Agreement"). Under the
terms of the Merger Agreement, each outstanding share of Immunex common stock
will be converted into the right to receive 0.44 of a share of Amgen common
stock and $4.50 in cash. The merger is intended to qualify as a tax-free
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended. Also on December 16, 2001, the Company entered into a Shareholder
Voting Agreement (the "Voting Agreement") with American Home Products
Corporation and two of its wholly-owned subsidiaries (collectively "AHP").
Pursuant to the Voting Agreement, AHP has agreed to vote in favor of the merger
and the Merger Agreement.
43
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Annual Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMGEN INC.
(Registrant)
Date: 2/26/02 By: /S/ RICHARD D. NANULA
-----------------------------
Richard D. Nanula
Executive Vice President,
Finance,
Strategy and Communications,
and Chief Financial Officer
44
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN AND WOMEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard D. Nanula and Barry D. Schehr,
or either of them, his or her attorney-in-fact, each with the power of
substitution, for him or her in any and all capacities, to sign any amendments
to this Report, and to file the same, with exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his or her
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/S/ KEVIN W. SHARER Chairman of the Board, Chief 2/26/02
- ----------------------------- Executive Officer and
Kevin W. Sharer President, and Director
(Principal Executive
Officer)
/S/ RICHARD D. NANULA Executive Vice President, 2/26/02
- ----------------------------- Finance, Strategy and
Richard D. Nanula Communications, and Chief
Financial Officer
/S/ BARRY D. SCHEHR Vice President, Financial 2/26/02
- ----------------------------- Operations, and Chief
Barry D. Schehr Accounting Officer
/S/ DAVID BALTIMORE Director 2/26/02
- -----------------------------
David Baltimore
/S/ FRANK J. BIONDI, JR. Director 2/26/02
- -----------------------------
Frank J. Biondi, Jr.
/S/ WILLIAM K. BOWES, JR. Director 2/26/02
- -----------------------------
William K. Bowes, Jr.
/S/ JERRY D. CHOATE Director 2/26/02
- -----------------------------
Jerry D. Choate
/S/ FREDERICK W. GLUCK Director 2/26/02
- -----------------------------
Frederick W. Gluck
/S/ FRANKLIN P. JOHNSON, JR. Director 2/26/02
- -----------------------------
Franklin P. Johnson, Jr.
/S/ STEVEN LAZARUS Director 2/26/02
- -----------------------------
Steven Lazarus
/S/ GILBERT S. OMENN Director 2/26/02
- -----------------------------
Gilbert S. Omenn
/S/ JUDITH C. PELHAM Director 2/26/02
- -----------------------------
Judith C. Pelham
/S/ J. PAUL REASON Director 2/26/02
- -----------------------------
J. Paul Reason
/S/ DONALD B. RICE Director 2/26/02
- -----------------------------
Donald B. Rice
/S/ PATRICIA C. SUELTZ Director 2/26/02
- -----------------------------
Patricia C. Sueltz
45
<PAGE>
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 33-5111) pertaining to the 1984 Stock Option Plan, 1981 Incentive
Stock Option Plan and Nonqualified Stock Option Plan of Amgen Inc., in the
Registration Statement (Form S-8 No. 33-24013) pertaining to the Amended and
Restated 1988 Stock Option Plan of Amgen Inc., in the Registration Statement
(Form S-8 No. 33-39183) pertaining to the Amended and Restated Employee Stock
Purchase Plan, in the Registration Statement (Form S-8 No. 33-39104) pertaining
to the Amended and Restated Amgen Retirement and Savings Plan, in the
Registration Statements (Form S-3/S-8 No. 33-29791 and Form S-8 No. 33-42501)
pertaining to the Amended and Restated 1987 Directors' Stock Option Plan, in
the Registration Statement (Form S-8 No. 33-42072) pertaining to the Amgen Inc.
Amended and Restated 1991 Equity Incentive Plan, in the Registration Statement
(Form S-8 No. 33-47605) pertaining to the Retirement and Savings Plan for Amgen
Puerto Rico, Inc., in the Registration Statement (Form S-8 No. 333-44727)
pertaining to the Amgen Inc. 1997 Special Non-Officer Equity Incentive Plan, in
the Registration Statement (Form S-3 No. 333-19931) of Amgen Inc., in the
Registration Statement (Form S-3 No. 333-40405) of Amgen Inc., in the
Registration Statement (Form S-8 No. 333-62735) pertaining to the Amgen Inc.
Amended and Restated 1997 Special Non-Officer Equity Incentive Plan, in the
Registration Statement (Form S-3 No. 333-53929) pertaining to the Amgen Inc.
1997 Special Non-Officer Equity Incentive Plan, the Amgen Inc. Amended and
Restated 1991 Equity Incentive Plan, the Amended and Restated 1988 Stock Option
Plan of Amgen Inc. and the Amended and Restated 1987 Directors' Stock Option
Plan, in the Registration Statement (Form S-8 No. 333-74585) pertaining to the
Amgen Limited Sharesave Plan, in the Registration Statement (Form S-8 No.
333-81284) pertaining to the Amgen Nonqualified Deferred Compensation Plan, in
the Registration Statement (Form S-8 No. 333-56672) pertaining to the Amended
and Restated 1997 Special Non-Officer Equity Incentive Plan, and in the
Registration Statement (Form S-3 No. 333-56664 and Amendment No. 1 thereto)
pertaining to the Amgen Inc. 1997 Special Non-Officer Equity Incentive Plan,
the Amgen Inc. Amended and Restated 1991 Equity Incentive Plan, the Amended and
Restated 1988 Stock Option Plan of Amgen Inc. and the Amended and Restated 1987
Directors' Stock Option Plan, and in the related Prospectuses of our report
dated January 22, 2002, with respect to the consolidated financial statements
and financial statement schedule of Amgen Inc. included in this Annual Report
(Form 10-K) for the year ended December 31, 2001.
/s/ Ernst & Young LLP
Los Angeles, California
February 26, 2002
46
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders of Amgen Inc.
We have audited the accompanying consolidated balance sheets of Amgen Inc.
as of December 31, 2001 and 2000, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the three years in
the period ended December 31, 2001. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Amgen Inc. as
of December 31, 2001 and 2000, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended December 31,
2001, in accordance with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
/s/ Ernst & Young LLP
Los Angeles, California
January 22, 2002
F-1
<PAGE>
AMGEN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 2001, 2000, and 1999
(In millions, except per share data)
<TABLE>
<CAPTION>
2001 2000 1999
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Product sales................................. $3,511.0 $3,202.2 $3,042.8
Corporate partner revenues.................... 252.0 246.2 161.4
Royalty income................................ 252.7 181.0 135.9
-------- -------- --------
Total revenues............................ 4,015.7 3,629.4 3,340.1
-------- -------- --------
Operating expenses:
Cost of sales................................. 443.0 408.4 402.1
Research and development...................... 865.0 845.0 822.8
Selling, general and administrative........... 970.7 826.9 654.3
Loss of affiliates, net....................... 2.7 23.9 16.8
Other items, net.............................. 203.1 (18.8) (49.0)
-------- -------- --------
Total operating expenses ................. 2,484.5 2,085.4 1,847.0
-------- -------- --------
Operating income . .............................. 1,531.2 1,544.0 1,493.1
Other income (expense):
Interest and other income, net................ 168.7 146.2 88.3
Interest expense, net......................... (13.6) (15.9) (15.2)
-------- -------- --------
Total other income . ..................... 155.1 130.3 73.1
-------- -------- --------
Income before income taxes ...................... 1,686.3 1,674.3 1,566.2
Provision for income taxes....................... 566.6 535.8 469.8
-------- -------- --------
Net income....................................... $1,119.7 $1,138.5 $1,096.4
======== ======== ========
Earnings per share:
Basic......................................... $ 1.07 $ 1.11 $ 1.07
Diluted ...................................... $ 1.03 $ 1.05 $ 1.02
Shares used in calculation of earnings per share:
Basic . ...................................... 1,045.5 1,029.6 1,021.7
Diluted....................................... 1,084.4 1,084.7 1,078.3
</TABLE>
See accompanying notes.
F-2
<PAGE>
AMGEN INC.
CONSOLIDATED BALANCE SHEETS
December 31, 2001 and 2000
(In millions, except per share data)
<TABLE>
<CAPTION>
2001 2000
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ..................................................... $ 689.1 $ 226.5
Marketable securities.......................................................... 1,973.1 1,801.6
Trade receivables, net of allowance for doubtful accounts of
$21.4 in 2001 and $21.2 in 2000 ............................................. 497.2 389.2
Inventories.................................................................... 355.6 305.2
Other current assets .......................................................... 343.6 214.6
-------- --------
Total current assets ...................................................... 3,858.6 2,937.1
Property, plant, and equipment at cost, net . .................................... 1,946.1 1,781.5
Other assets...................................................................... 638.4 681.0
-------- --------
$6,443.1 $5,399.6
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................... $ 136.7 $ 143.2
Commercial paper............................................................... 99.9 99.7
Accrued liabilities ........................................................... 766.3 619.2
-------- --------
Total current liabilities ................................................. 1,002.9 862.1
Long-term debt.................................................................... 223.0 223.0
Stockholders' equity:
Preferred stock; $0.0001 par value; 5.0 shares authorized; none issued or
outstanding ................................................................. -- --
Common stock and additional paid-in capital; $0.0001 par value; 2,750.0 shares
authorized; outstanding--1,045.8 shares in 2001 and 1,037.4 shares in 2000... 3,474.1 2,947.3
Retained earnings ............................................................. 1,686.8 1,304.6
Accumulated other comprehensive income ........................................ 56.3 62.6
-------- --------
Total stockholders' equity................................................. 5,217.2 4,314.5
-------- --------
$6,443.1 $5,399.6
======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE>
AMGEN INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended December 31, 2001, 2000, and 1999
(In millions)
<TABLE>
<CAPTION>
Common Accumulated
stock and other
Number additional comprehensive
of paid-in Retained income
shares capital earnings (loss) Total
------- ---------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1998........................... 1,018.5 $1,671.9 $ 894.3 $ (4.0) $ 2,562.2
Comprehensive Income:
Net income.......................................... -- -- 1,096.4 -- 1,096.4
Other comprehensive loss, net of tax:
Unrealized gains on securities,
net of reclassification adjustments............ -- -- -- 7.3 7.3
Foreign currency translation adjustments ........ -- -- -- (18.1) (18.1)
---------
Total other comprehensive loss............... -- -- -- -- (10.8)
---------
Comprehensive income .................................. -- -- -- -- 1,085.6
Issuance of common stock upon the exercise of
employee stock options .............................. 26.5 248.8 -- -- 248.8
Tax benefits related to employee stock options......... -- 151.6 -- -- 151.6
Repurchases of common stock............................ (27.1) -- (1,024.7) -- (1,024.7)
------- -------- --------- ------ ---------
Balance at December 31, 1999........................... 1,017.9 2,072.3 966.0 (14.8) 3,023.5
Comprehensive Income:
Net income.......................................... -- -- 1,138.5 -- 1,138.5
Other comprehensive income, net of tax:
Unrealized gains on securities, net of
reclassification adjustments................... -- -- -- 99.0 99.0
Foreign currency translation adjustments ........ -- -- -- (21.6) (21.6)
---------
Total other comprehensive income............. -- -- -- -- 77.4
---------
Comprehensive income .................................. -- -- -- -- 1,215.9
Issuance of common stock upon the exercise of
employee stock options and in connection with an
employee stock purchase plan ........................ 29.1 333.7 -- -- 333.7
Tax benefits related to employee stock options......... -- 376.6 -- -- 376.6
Issuance of common stock for the acquisition of Kinetix
Pharmaceuticals, Inc................................. 2.6 164.7 -- -- 164.7
Repurchases of common stock............................ (12.2) -- (799.9) -- (799.9)
------- -------- --------- ------ ---------
Balance at December 31, 2000........................... 1,037.4 2,947.3 1,304.6 62.6 4,314.5
Comprehensive Income:
Net income.......................................... -- -- 1,119.7 -- 1,119.7
Other comprehensive loss, net of tax:
Unrealized losses on securities,
net of reclassification adjustments............ -- -- -- (6.7) (6.7)
Foreign currency translation adjustments ........ -- -- -- 0.4 0.4
---------
Total other comprehensive loss............... -- -- -- -- (6.3)
---------
Comprehensive income .................................. -- -- -- -- 1,113.4
Issuance of common stock upon the exercise of
employee stock options and in connection
with an employee stock purchase plan................. 21.1 282.3 -- -- 282.3
Tax benefits related to employee stock options......... -- 244.5 -- -- 244.5
Repurchases of common stock............................ (12.7) -- (737.5) -- (737.5)
------- -------- --------- ------ ---------
Balance at December 31, 2001........................... 1,045.8 $3,474.1 $ 1,686.8 $ 56.3 $ 5,217.2
======= ======== ========= ====== =========
</TABLE>
See accompanying notes.
F-4
<PAGE>
AMGEN INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 2001, 2000, and 1999
(In millions)
<TABLE>
<CAPTION>
2001 2000 1999
-------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income........................................................ $1,119.7 $ 1,138.5 $ 1,096.4
Depreciation and amortization..................................... 265.9 211.8 176.8
Tax benefits related to employee stock options ................... 244.5 376.6 151.6
Loss/(gain) on equity investments ................................ 7.4 (31.8) --
Other non-cash expenses .......................................... 87.7 29.7 --
Deferred income taxes............................................. (148.3) 6.6 9.8
Loss of affiliates, net........................................... 2.7 23.9 16.8
Cash provided by (used in):
Trade receivables, net ....................................... (123.0) 23.0 (92.3)
Inventories................................................... (85.5) (120.9) (73.5)
Other current assets.......................................... (31.5) (51.4) (9.0)
Accounts payable.............................................. (6.5) 59.8 (38.2)
Accrued liabilities........................................... 147.1 (31.2) (11.5)
-------- --------- ---------
Net cash provided by operating activities.................. 1,480.2 1,634.6 1,226.9
-------- --------- ---------
Cash flows from investing activities:
Purchases of property, plant, and equipment....................... (441.8) (437.7) (304.2)
Proceeds from maturities of marketable securities ................ 490.3 -- 40.0
Proceeds from sales of marketable securities...................... 301.7 1,067.8 843.5
Purchases of marketable securities ............................... (918.2) (1,638.7) (1,032.7)
Other............................................................. 28.4 (27.7) (10.1)
-------- --------- ---------
Net cash used in investing activities...................... (539.6) (1,036.3) (463.5)
-------- --------- ---------
Cash flows from financing activities:
Net proceeds from issuance of common stock upon the exercise of
employee stock options and in connection with an employee stock
purchase plan................................................... 277.7 333.7 248.8
Repurchases of common stock....................................... (737.5) (799.9) (1,024.7)
Other ............................................................ (18.2) (36.5) (57.7)
-------- --------- ---------
Net cash used in financing activities...................... (478.0) (502.7) (833.6)
-------- --------- ---------
Increase (decrease) in cash and cash equivalents..................... 462.6 95.6 (70.2)
Cash and cash equivalents at beginning of period .................... 226.5 130.9 201.1
-------- --------- ---------
Cash and cash equivalents at end of period .......................... $ 689.1 $ 226.5 $ 130.9
======== ========= =========
</TABLE>
See accompanying notes.
F-5
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001
1. Summary of significant accounting policies
Business
Amgen Inc. ("Amgen" or the "Company") is a global biotechnology company that
discovers, develops, manufactures, and markets human therapeutics based on
advances in cellular and molecular biology.
Principles of consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries as well as affiliated companies in which the
Company has a controlling financial interest and exercises control over their
operations ("majority controlled affiliates"). All material intercompany
transactions and balances have been eliminated in consolidation. Investments in
affiliated companies which are 50% or less owned and where the Company
exercises significant influence over operations are accounted for using the
equity method. All other equity investments are accounted for under the cost
method. The caption "Loss of affiliates, net" includes Amgen's equity in the
operating results of affiliated companies and the minority interest others hold
in the operating results of Amgen's majority controlled affiliates.
Cash and cash equivalents
The Company considers cash equivalents to be only those investments which
are highly liquid, readily convertible to cash, and which mature within three
months from date of purchase.
Available-for-sale securities
The Company considers its investment portfolio and marketable equity
investments available-for-sale as defined in Statement of Financial Accounting
Standards ("SFAS") No. 115 and, accordingly, these investments are recorded at
fair value (see Note 9, "Fair values of financial instruments"). Realized gains
totaled $13.3 million, $32.4 million, and $2.8 million for the years ended
December 31, 2001, 2000, and 1999, respectively. Realized losses totaled $21.7
million, $2.5 million, and $6.6 million for the years ended December 31, 2001,
2000, and 1999, respectively. The cost of securities sold is based on the
specific identification method. The fair values of available-for-sale
investments by type of security, contractual maturity, and classification in
the balance sheets are as follows (in millions):
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized fair
December 31, 2001 cost gains losses value
----------------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Type of security:
Corporate debt securities .................................. $1,207.7 $ 50.8 $(1.4) $1,257.1
U.S. Treasury securities and obligations of U.S. government
agencies.................................................. 601.3 12.1 (0.2) 613.2
Other interest bearing securities........................... 697.6 1.1 (1.0) 697.7
-------- ------ ----- --------
Total debt securities .................................. 2,506.6 64.0 (2.6) 2,568.0
Equity securities........................................... 58.3 117.9 (0.3) 175.9
-------- ------ ----- --------
$2,564.9 $181.9 $(2.9) $2,743.9
======== ====== ===== ========
</TABLE>
F-6
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized unrealized unrealized fair
December 31, 2000 cost gains losses value
----------------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Type of security:
Corporate debt securities .................................. $1,054.7 $ 11.3 $(1.4) $1,064.6
U.S. Treasury securities and obligations of U.S. government
agencies.................................................. 663.6 5.9 -- 669.5
Other interest bearing securities........................... 215.8 0.4 (0.1) 216.1
-------- ------ ----- --------
Total debt securities .................................. 1,934.1 17.6 (1.5) 1,950.2
Equity securities........................................... 73.1 179.2 (7.0) 245.3
-------- ------ ----- --------
$2,007.2 $196.8 $(8.5) $2,195.5
======== ====== ===== ========
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------------
2001 2000
-------- --------
<S> <C> <C>
Contractual maturity:
Maturing in one year or less ........................... $1,480.1 $ 783.6
Maturing after one year through three years............. 785.2 986.1
Maturing after three years ............................. 302.7 180.5
-------- --------
Total debt securities............................... 2,568.0 1,950.2
Equity securities....................................... 175.9 245.3
-------- --------
$2,743.9 $2,195.5
======== ========
Classification in balance sheets:
Cash and cash equivalents .............................. $ 689.1 $ 226.5
Marketable securities................................... 1,973.1 1,801.6
Other assets--noncurrent................................ 215.9 285.3
-------- --------
2,878.1 2,313.4
Less cash .............................................. (134.2) (117.9)
-------- --------
$2,743.9 $2,195.5
======== ========
</TABLE>
The primary objectives for the Company's fixed income investment portfolio
are liquidity and safety of principal. Investments are made to achieve the
highest rate of return to the Company, consistent with these two objectives.
The Company's investment policy limits investments to certain types of
instruments issued by institutions with investment grade credit ratings and
places restrictions on maturities and concentration by type and issuer.
F-7
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Inventories
Inventories are stated at the lower of cost or market. Cost is determined in
a manner which approximates the first-in, first-out (FIFO) method. Inventories
consist of currently marketed products and product candidates which the Company
expects to commercialize. The inventory balance of such product candidates
totaled $8.8 million and $112.7 million as of December 31, 2001 and 2000,
respectively. Inventories are shown net of applicable reserves and allowances.
Inventories consisted of the following (in millions):
<TABLE>
<CAPTION>
December 31,
-------------
2001 2000
------ ------
<S> <C> <C>
Raw materials.............................................. $ 21.9 $ 29.4
Work in process ........................................... 266.7 238.7
Finished goods ............................................ 67.0 37.1
------ ------
$355.6 $305.2
====== ======
</TABLE>
In the fourth quarter of 2001, the Company recorded a charge of
$39.5 million, included in cost of sales, to write-off certain inventory deemed
not recoverable.
Depreciation and amortization
Depreciation of buildings and equipment is provided over their estimated
useful lives on a straight-line basis. Leasehold improvements are amortized on
a straight-line basis over the shorter of their estimated useful lives or lease
terms. Useful lives by asset category were as follows:
<TABLE>
<CAPTION>
Asset category Years
-------------- -----
<S> <C>
Buildings and building improvements................................. 10-30
Manufacturing equipment............................................. 5-10
Laboratory equipment................................................ 5-10
Furniture and office equipment...................................... 3-10
</TABLE>
Long-lived assets
The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable.
Product sales
Product sales primarily consist of sales of EPOGEN(R) (Epoetin alfa),
Aranesp(TM) (darbepoetin alfa), and NEUPOGEN(R) (Filgrastim) (see Note 10,
"Segment information").
The Company has the exclusive right to sell Epoetin alfa for dialysis,
certain diagnostics and all non-human, non-research uses in the United States.
The Company sells Epoetin alfa under the brand name EPOGEN(R). Amgen has
granted to Ortho Pharmaceutical Corporation (which has assigned its rights
under the product license agreement to Ortho Biotech Products, L.P.), a
subsidiary of Johnson & Johnson ("Johnson & Johnson"), a license relating to
Epoetin alfa for sales in the United States for all human uses except dialysis
and diagnostics. Pursuant to this license, the Company and Johnson & Johnson
are required to compensate each other for Epoetin alfa sales that either party
makes into the other party's exclusive market, sometimes referred to as
"spillover" sales. Accordingly, Amgen does not recognize product sales it makes
into the exclusive market of Johnson & Johnson and does recognize the product
sales made by Johnson & Johnson into Amgen's exclusive market. Sales in
F-8
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Amgen's exclusive market are derived from the Company's sales to its customers,
as adjusted for any spillover sales. The Company is employing an arbitrated
audit methodology to measure each party's spillover sales based on estimates of
and subsequent adjustments thereto of third-party data on shipments to end
users and their usage. Sales of the Company's other products are recognized
when shipped and title has passed.
Research and development costs
Research and development expenses are comprised of the following types of
costs incurred in performing research and development activities: salaries and
benefits, allocated overhead and occupancy costs, clinical trial and related
clinical manufacturing costs, contract services and other outside costs, and
costs to acquire in-process research and development projects and technologies
which have no alternative future use (see Note 11, "Kinetix acquisition").
Research and development expenses also include such costs related to activities
performed on behalf of corporate partners. Research and development costs are
expensed as incurred.
Derivative instruments
The Company adopted SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities", as amended, on January 1, 2001 and its adoption has not
had a material effect on the Company's financial statements. SFAS No. 133
requires companies to recognize all of its derivative instruments as either
assets or liabilities in the balance sheet at fair value. The accounting for
changes in the fair value (i.e., unrealized gains or losses) of a derivative
instrument depends on whether it has been designated and qualifies as part of a
hedging relationship and further, on the type of hedging relationship.
Derivatives that are not hedges must be adjusted to fair value through current
earnings.
To protect against possible changes in values of certain anticipated foreign
currency cash flows, primarily resulting from sales outside the U.S., the
Company enters into foreign currency forward contracts which qualify and are
designated as cash flow hedges. These foreign currency forward contracts cover
anticipated foreign currency cash flows for up to the succeeding twelve months.
No portions of these foreign currency forward contracts are excluded from the
assessment of hedge effectiveness, and there are no ineffective portions of
these hedging instruments. The gains and losses on these forward contracts are
reported as a component of other comprehensive income and reclassified into
interest and other income, net in the same periods during which the hedged
transactions affect earnings. At December 31, 2001, amounts in accumulated
other comprehensive income related to cash flow hedges were not material.
To protect against possible reductions in value of certain of its
available-for-sale marketable equity securities, the Company has entered into
equity forward contracts during 2001 which qualify and are designated as fair
value hedges. The gains and losses on these forward contracts as well as the
offsetting losses and gains on the hedged equity securities are recognized in
interest and other income, net in the current period. During the year ended
December 31, 2001, gains and losses on the portions of these forwards excluded
from the assessment of hedge effectiveness and the ineffective portions of
these hedging instruments were not material. In addition, to protect against
possible reductions in value of certain available-for-sale fixed income
investments, the Company entered into interest rate swap agreements during 2001
which qualify and are designated as fair value hedges. The terms of the
interest rate swap agreements correspond to the related hedged investments. As
a result, there is no hedge ineffectiveness. During the year ended December 31,
2001, gains and losses on these interest rate swap agreements were fully offset
by the losses and gains on the hedged investments.
The Company has additional foreign currency forward contracts to reduce
exposures to foreign currency fluctuations of certain assets and liabilities
denominated in foreign currencies. However, these contracts have not been
designated as hedges under SFAS No. 133. Accordingly, gains and losses on these
foreign currency forward
F-9
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
contracts are recognized in interest and other income, net in the current
period. During the year ended December 31, 2001, gains and losses on these
foreign currency forward contracts were not material.
Prior to the adoption of SFAS No. 133, all of the Company's foreign exchange
forward contracts were adjusted to fair value through current earnings. Foreign
exchange option contracts that hedged anticipated foreign currency transactions
were deferred and recognized in the same period as the hedged transaction. In
addition, derivatives that hedged against possible reductions in the fair
values of available-for-sale equity securities were included in the basis of
the hedged securities and adjusted to fair value through other comprehensive
income.
Interest
Interest costs are expensed as incurred, except to the extent such interest
is related to construction in progress, in which case interest is capitalized.
Interest costs capitalized for the years ended December 31, 2001, 2000, and
1999, were $12.7 million, $12.3 million, and $11.6 million, respectively.
Employee stock option and stock purchase plans
The Company's employee stock option and stock purchase plans are accounted
for under Accounting Principles Board Opinion ("APB") No. 25, "Accounting for
Stock Issued to Employees" (see Note 7, "Employee stock option, stock purchase,
and defined contribution plans").
Earnings per share
Basic earnings per share is based upon the weighted-average number of common
shares outstanding. Diluted earnings per share is based upon the
weighted-average number of common shares and dilutive potential common shares
outstanding. Dilutive potential common shares are outstanding options under the
Company's employee stock option plans, restricted stock, and potential
issuances of stock under the employee stock purchase plan (collectively
"Dilutive Securities") which are included under the treasury stock method.
The following table sets forth the computation for basic and diluted
earnings per share (in millions, except per share information):
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------
2001 2000 1999
-------- -------- --------
<S> <C> <C> <C>
Numerator for basic and diluted earnings per share--net income........... $1,119.7 $1,138.5 $1,096.4
======== ======== ========
Denominator:
Denominator for basic earnings per share--weighted-average shares..... 1,045.5 1,029.6 1,021.7
Effect of Dilutive Securities......................................... 38.9 55.1 56.6
-------- -------- --------
Denominator for diluted earnings per share--adjusted weighted-average
shares.............................................................. 1,084.4 1,084.7 1,078.3
======== ======== ========
Basic earnings per share................................................. $ 1.07 $ 1.11 $ 1.07
======== ======== ========
Diluted earnings per share............................................... $ 1.03 $ 1.05 $ 1.02
======== ======== ========
</TABLE>
Options to purchase 17.3 million, 10.6 million, and 1.6 million shares with
exercise prices greater than the annual average market prices of common stock
were outstanding at December 31, 2001, 2000, and 1999, respectively. These
options were excluded from the respective computations of diluted earnings per
share because their effect would be anti-dilutive.
F-10
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Use of estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results may differ from those
estimates.
Recent accounting pronouncements
In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets" effective for fiscal years beginning after December 15, 2001. Under the
new rules, goodwill will no longer be amortized but will be subject to annual
impairment tests. Other intangible assets will continue to be amortized over
their estimated useful lives. The Company will apply the new rules on
accounting for goodwill and other intangible assets beginning in the first
quarter of 2002. The impact of adoption of the new standards will not have a
material impact on the results of operations or financial position of the
Company.
Reclassification
Certain prior year amounts have been reclassified to conform to the current
year presentation.
2. Related party transactions
The Company owns a 50% interest in Kirin-Amgen, Inc. ("Kirin-Amgen"), a
corporation formed in 1984 with Kirin Brewery Company, Limited ("Kirin") for
the development and commercialization of certain products based on advanced
biotechnology. Kirin-Amgen has given exclusive licenses to Amgen to manufacture
and market certain products including erythropoietin, granulocyte
colony-stimulating factor ("G-CSF"), darbepoetin alfa, and pegfilgrastim in
certain geographic areas of the world. The Company currently markets certain of
these products under the brand names EPOGEN(R) (erythropoietin), NEUPOGEN(R)
(G-CSF), and Aranesp(TM) (darbepoetin alfa). Kirin-Amgen's revenues primarily
consist of royalty income related to its licensed technology rights.
Kirin-Amgen receives royalty income from Amgen, as well as Kirin, Johnson &
Johnson, Roche, and others under separate product license agreements for
certain geographic areas outside of the United States. During the years ended
December 31, 2001, 2000, and 1999, Kirin-Amgen earned royalties from Amgen of
$147.1 million, $140.8 million, and $128.1 million, respectively, which are
included in "Cost of sales" in the accompanying consolidated statements of
operations.
Kirin-Amgen's expenses primarily consist of costs related to research and
development activities conducted on its behalf by Amgen and Kirin. Kirin-Amgen
pays Amgen and Kirin for such services at negotiated rates. During the years
ended December 31, 2001, 2000, and 1999, Amgen earned revenues from Kirin-Amgen
of $210.1 million, $221.0 million, and $138.5 million, respectively, for
certain research and development activities performed on Kirin-Amgen's behalf,
which are included in "Corporate partner revenues" in the accompanying
consolidated statements of operations.
At December 31, 2001, Amgen's share of Kirin-Amgen's undistributed retained
earnings was approximately $85.5 million.
3. Debt
The Company has a commercial paper program which provides for unsecured
short-term borrowings up to an aggregate of $200 million. As of December 31,
2001, commercial paper with a face amount of $100 million
F-11
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
was outstanding. These borrowings had maturities of less than one month and had
effective interest rates averaging 1.9%. Commercial paper with a face amount of
$100 million and with effective interest rates averaging 6.7% was outstanding
at December 31, 2000.
The Company has established a $500 million debt shelf registration
statement. In December 1997, pursuant to this registration statement, the
Company issued $100 million of debt securities that bear interest at a fixed
rate of 6.5% and mature in 2007 (the "Notes") and established a $400 million
medium-term note program. The Company may offer and issue medium-term notes
from time to time with terms to be determined by market conditions.
The Company had $100 million of debt securities outstanding at December 31,
2001 and 2000 that bear interest at a fixed rate of 8.1% and mature in 2097
(the "Century Notes"). These securities may be redeemed in whole or in part at
the Company's option at any time for a redemption price equal to the greater of
the principal amount to be redeemed or the sum of the present values of the
principal and remaining interest payments discounted at a determined rate plus,
in each case, accrued interest.
In addition to the Notes and the Century Notes, debt securities outstanding
at December 31, 2001 and 2000 include $23 million of debt securities that bear
interest at a fixed rate of 6.2% and mature in 2003. The terms of the debt
securities require the Company to meet certain debt to tangible net asset
ratios and place limitations on liens and sale/leaseback transactions and,
except with respect to the Notes and the Century Notes, place limitations on
subsidiary indebtedness.
The Company has an unsecured committed credit facility (the "credit
facility") with five participating banking institutions that includes a
commitment expiring on May 28, 2003 for up to $150 million of borrowings under
a revolving line of credit (the "revolving line commitment"). This credit
facility supports the Company's commercial paper program. As of December 31,
2001, $150 million was available under the revolving line commitment for
borrowing. Borrowings under the revolving line commitment bear interest at
various rates which are a function of, at the Company's option, either the
prime rate of a major bank, the federal funds rate, or a Eurodollar base rate.
Under the terms of the credit facility, the Company is required to meet a
minimum interest coverage ratio and maintain a minimum level of tangible net
worth. In addition, the credit facility contains limitations on investments,
liens, and sale/leaseback transactions.
The aggregate stated maturities of all long-term obligations due subsequent
to December 31, 2001, are as follows: none in 2002; $23 million in 2003; none
in 2004, 2005, and 2006; and $200 million after 2006.
4. Other items, net
Other items, net in the accompanying consolidated statements of operations
consists of the following expense/(income) items (in millions):
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------
2001 2000 1999
------ ------ ------
<S> <C> <C> <C>
Termination of collaboration agreements................................ $203.1 $ -- $ --
Legal award, net....................................................... -- (73.9) (49.0)
Write-off of acquired in-process research and development (see Note 11,
"Kinetix acquisition") . ............................................ -- 30.1 --
Amgen Foundation contribution.......................................... -- 25.0 --
------ ------ ------
$203.1 $(18.8) $(49.0)
====== ====== ======
</TABLE>
F-12
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Termination of collaboration agreements
In 2001, the Company recorded a charge of $203.1 million primarily related
to the costs of terminating collaboration agreements with various third
parties, including PRAECIS PHARMACEUTICALS INCORPORATED ("Praecis") and certain
academic institutions. These costs include $102.4 million primarily with
respect to amounts previously capitalized related to these agreements, and
$100.7 million with respect to amounts to be paid to third parties in
connection with the termination of these relationships.
Legal award, net
In September 1985, the Company granted Johnson & Johnson's affiliate, Ortho
Pharmaceutical Corporation, a license relating to certain patented technology
and know-how of the Company to sell a genetically engineered form of
recombinant human erythropoietin, called Epoetin alfa, throughout the United
States for all human uses except dialysis and diagnostics. A number of disputes
have arisen between Amgen and Johnson & Johnson as to their respective rights
and obligations under the various agreements between them, including the
agreement granting the license (the "License Agreement").
A dispute between Amgen and Johnson & Johnson that had been the subject of
an arbitration proceeding related to the audit methodology currently employed
by the Company to account for Epoetin alfa sales. Under the License Agreement,
the Company and Johnson & Johnson are required to compensate each other for
Epoetin alfa sales that either party makes into the other party's exclusive
market, sometimes described as "spillover" sales. The Company has established
and is employing an audit methodology to measure each party's spillover sales
and to allocate the net profits from those sales to the appropriate party. The
arbitrator in this dispute (the "Arbitrator") issued a final order adopting the
Company's audit methodology with certain adjustments and also found that the
Company was the successful party in the arbitration. Pursuant to the final
order in the arbitration, an independent panel was formed principally (i) to
address ongoing challenges to the survey results for the years 1995 through
1999 and (ii) to refine the procedures for measuring the erythropoietin market
as may be necessary. As a result of decisions made by this independent panel
regarding certain challenges by Johnson & Johnson as well as other reduced
uncertainties, the Company reduced amounts previously provided for potential
spillover liabilities by $49 million in the third quarter of 1999.
Because the Arbitrator ruled that the Company was the successful party in
the arbitration, Johnson & Johnson was ordered to pay to the Company all costs
and expenses, including reasonable attorneys' fees, that the Company incurred
in the arbitration as well as one-half of the audit costs. On July 17, 2000,
the Arbitrator issued a final order awarding the Company approximately $78
million in costs and expenses, including reasonable attorneys' fees, that the
Company incurred in the arbitration as well as one-half of the audit costs (the
"Fee Award"). As a result, the Company recorded a net $73.9 million legal
award, which represents the Fee Award reduced by minor amounts related to other
miscellaneous disputes with Johnson & Johnson, in the third quarter of 2000.
Amgen Foundation contribution
In 2000, the Company contributed $25.0 million to the Amgen Foundation. This
contribution will allow the Amgen Foundation to increase its support of
non-profit organizations that focus on issues in health and medicine, science
education, and other activities that strengthen local communities over the next
several years.
F-13
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
5. Income taxes
The provision for income taxes includes the following (in millions):
<TABLE>
<CAPTION>
Years ended December 31,
------------------------
2001 2000 1999
------- ------ ------
<S> <C> <C> <C>
Current provision:
Federal (including U.S. possessions) .......... $ 636.6 $481.7 $422.8
State ......................................... 78.3 47.5 37.2
------- ------ ------
Total current provision.................... 714.9 529.2 460.0
------- ------ ------
Deferred (benefit) provision:
Federal (including U.S. possessions)........... (104.3) 9.6 5.3
State ......................................... (44.0) (3.0) 4.5
------- ------ ------
Total deferred (benefit) provision......... (148.3) 6.6 9.8
------- ------ ------
$ 566.6 $535.8 $469.8
======= ====== ======
</TABLE>
Deferred income taxes reflect the net tax effects of net operating loss and
credit carryforwards and temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes. Significant components of the Company's deferred tax
assets and liabilities are as follows (in millions):
<TABLE>
<CAPTION>
December 31,
----------------
2001 2000
------- -------
<S> <C> <C>
Deferred tax assets:
Expense accruals...................................... $ 105.2 $ 32.9
Expenses capitalized for tax purposes................. 70.6 58.9
Acquired net operating loss and credit carryforwards.. 45.4 66.0
Credit carryforwards.................................. 39.4 15.0
Fixed assets.......................................... 29.3 46.0
Other................................................. 54.2 16.4
------- -------
Total deferred tax assets......................... 344.1 235.2
Valuation allowance................................... (19.6) (25.4)
------- -------
Net deferred tax assets........................... 324.5 209.8
------- -------
Deferred tax liabilities:
Purchase of technology rights......................... (85.9) (95.9)
Marketable securities and investments................. (70.4) (74.0)
Other................................................. (12.5) (39.3)
------- -------
Total deferred tax liabilities.................... (168.8) (209.2)
------- -------
$ 155.7 $ 0.6
======= =======
</TABLE>
At December 31, 2001, the Company had operating loss carryforwards of $99.3
million available to reduce future federal taxable income which will begin
expiring in 2008. The Company also had $10.6 million of credit carryforwards
against which a partial valuation allowance was established. These operating
loss and credit carryforwards relate to the acquisition of companies.
F-14
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The provision for income taxes varies from income taxes provided based on
the federal statutory rate as follows:
<TABLE>
<CAPTION>
Years ended December 31,
----------------------
2001 2000 1999
----- ----- -----
<S> <C> <C> <C>
Statutory rate applied to income before income taxes................... 35.0 % 35.0 % 35.0 %
Benefit of Puerto Rico operations, net of Puerto Rico income taxes..... (1.7)% (2.0)% (2.3)%
Utilization of tax credits, primarily research and experimentation..... (1.3)% (1.4)% (2.1)%
Other, net............................................................. 1.6 % 0.4 % (0.6)%
---- ---- ----
33.6 % 32.0 % 30.0 %
==== ==== ====
</TABLE>
Income taxes paid during the years ended December 31, 2001, 2000, and 1999,
totaled $516.2 million, $141.3 million, and $318.7 million, respectively.
6. Stockholders' equity
Stockholder Rights Agreement
On February 18, 1997, the Board of Directors of the Company redeemed the
rights under the Company's former common stock rights plan and declared a
dividend of one preferred share purchase right (a "Right") for each then
outstanding share of common stock of the Company and authorized the
distribution of one Right with respect to each subsequently issued share of
common stock. The Rights were distributed to stockholders of record on March
21, 1997. On December 12, 2000, the Board of Directors of the Company amended
and restated the preferred stock rights plan governing the Rights (the "Amended
and Restated Rights Plan") to, among other things: (i) provide that, as a
result of two-for-one splits of the Company's common stock effected in February
and November 1999 (the "Stock Splits"), each Right shall represent the right to
purchase one four-thousandth of a share of Series A Junior Participating
Preferred Stock ("Series A Preferred Stock") of the Company (which
one four-thousandth gives effect to the Stock Splits); (ii) increase the
exercise price of each Right to $350.00 from $56.25 (as adjusted for the Stock
Splits); (iii) extend the term of the rights agreement to December 12, 2010
from March 21, 2007, and (iv) amend the definition of "Outside Director".
Pursuant to the Amended and Restated Rights Plan, each share of common stock
outstanding has attached to it one whole Right. One Right represents the right
to purchase one four-thousandth (1/4000) of a share of Series A Preferred Stock
of the Company at $350.00. The Rights will expire on December 12, 2010.
Under certain circumstances, if an acquiring person or group acquires 10% or
more of the Company's outstanding common stock, an exercisable Right will
entitle its holder (other than the acquirer) to buy shares of common stock of
the Company having a market value of two times the exercise price of one Right.
However, 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 without triggering
the Rights. If an acquirer acquires at least 10%, but less than 50%, of the
Company's common stock, the Board of Directors may exchange each Right (other
than those of the acquirer) for one share of common stock per Right. In
addition, under certain circumstances, if the Company is involved in a merger
or other business combination where it is not the surviving corporation, an
exercisable Right will entitle its holder to buy shares of common stock of the
acquiring company having a market value of two times the exercise price of one
Right. The Company may redeem the Rights at $0.00025 per Right at any time
prior to the public announcement that a 10% position has been acquired.
F-15
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Stock repurchase program
The Company has a stock repurchase program primarily to reduce the dilutive
effect of its employee stock option and stock purchase plans. Stock repurchased
under the program is intended to be retired. The amount the Company spends on
and the number of shares repurchased varies based on a variety of factors,
including the stock price and blackout periods in which the Company is
restricted from repurchasing shares. In December 2000, the Board of Directors
authorized the Company to repurchase up to $2 billion of common stock between
January 1, 2001 and December 31, 2002. As of December 31, 2001, $1,262.5
million was available for stock repurchases through December 31, 2002.
Other comprehensive income/(loss)
SFAS No. 130, "Reporting Comprehensive Income", requires unrealized gains
and losses on the Company's available-for-sale securities and foreign currency
forward contracts which qualify and are designated as cash flow hedges, and
foreign currency translation adjustments to be included in other comprehensive
income.
Information regarding the components of accumulated other comprehensive
income/(loss) are as follows (in millions):
<TABLE>
<CAPTION>
Accumulated
Unrealized Foreign other
gains on currency comprehensive
securities translation income
---------- ----------- -------------
<S> <C> <C> <C>
Balance at December 31, 2000..................... $114.3 $(51.7) $62.6
Current year other comprehensive (loss)/income... (6.7) 0.4 (6.3)
------ ------ -----
Balance at December 31, 2001..................... $107.6 $(51.3) $56.3
====== ====== =====
</TABLE>
F-16
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Information regarding the income tax effects for items of other
comprehensive income/(loss) is as follows (in millions):
<TABLE>
<CAPTION>
Tax
Before-tax benefit/ After-tax
amount (expense) amount
---------- --------- ---------
<S> <C> <C> <C>
For the year ended December 31, 1999:
Unrealized gains on available-for-sale securities......................... $ 12.0 $ (5.3) $ 6.7
Less: Reclassification adjustments for losses realized in net income...... (1.0) 0.4 (0.6)
------ ------ ------
Net unrealized gains on available-for-sale securities..................... 13.0 (5.7) 7.3
Foreign currency translation adjustments.................................. (18.1) -- (18.1)
------ ------ ------
Other comprehensive loss.................................................. $ (5.1) $ (5.7) $(10.8)
====== ====== ======
For the year ended December 31, 2000:
Unrealized gains on available-for-sale securities......................... $193.0 $(75.8) $117.2
Less: Reclassification adjustments for gains realized in net income....... 30.0 (11.8) 18.2
------ ------ ------
Net unrealized gains on available-for-sale securities..................... 163.0 (64.0) 99.0
Foreign currency translation adjustments.................................. (21.6) -- (21.6)
------ ------ ------
Other comprehensive income................................................ $141.4 $(64.0) $ 77.4
====== ====== ======
For the year ended December 31, 2001:
Unrealized losses on available-for-sale securities........................ $(18.4) $ 7.0 $(11.4)
Less: Reclassification adjustments for losses realized in net income...... (8.0) 3.3 (4.7)
------ ------ ------
Net unrealized losses on available-for-sale securities.................... (10.4) 3.7 (6.7)
Foreign currency translation adjustments.................................. 0.4 -- 0.4
------ ------ ------
Other comprehensive loss.................................................. $(10.0) $ 3.7 $ (6.3)
====== ====== ======
</TABLE>
Other
In addition to common stock, the Company's authorized capital includes 5.0
million shares of preferred stock, $0.0001 par value, of which 0.7 million
shares have been designated Series A Preferred Stock. At December 31, 2001 and
2000, no shares of preferred stock were issued or outstanding.
At December 31, 2001, the Company had reserved 166.7 million shares of its
common stock which may be issued through its employee stock option and stock
purchase plans and had reserved 0.7 million shares of Series A Preferred Stock.
7. Employee stock option, stock purchase, and defined contribution plans
Employee stock option plans
The Company's employee stock option plans provide for option grants
designated as either nonqualified or incentive stock options. Option grants to
employees generally vest over a three to five year period and expire seven
years from the date of grant. Most employees are eligible to receive a grant of
stock options periodically with the number of shares generally determined by
the employee's salary grade, performance level, and the stock price. In
addition, certain management and professional level employees normally receive
a stock option grant upon hire. In 2001, most employees received stock option
grants, totaling 5.2 million shares, in which all shares vest upon the earlier
of: (i) five years from the date of grant or (ii) the date on which the closing
price of Amgen
F-17
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
stock equals or exceeds $100.00 per share. As of December 31, 2001, the Company
had 56.3 million shares of common stock available for future grant under its
employee stock option plans.
Stock option information with respect to all of the Company's employee stock
option plans is as follows (shares in millions):
<TABLE>
<CAPTION>
Exercise price
-----------------------
Weighted-
Shares Low High average
------ ------ ------ ---------
<S> <C> <C> <C> <C>
Balance unexercised at December 31, 1998.... 126.2 $ 0.66 $26.22 $12.18
Granted ................................. 19.0 $26.25 $57.69 $31.48
Exercised ............................... (26.9) $ 0.66 $39.44 $ 9.45
Forfeited................................ (2.5) $ 5.48 $44.97 $17.76
-----
Balance unexercised at December 31, 1999.... 115.8 $ 0.92 $57.69 $15.88
Granted ................................. 13.1 $51.31 $78.00 $67.40
Exercised ............................... (28.2) $ 0.92 $72.75 $11.03
Forfeited................................ (2.0) $ 4.48 $74.86 $26.02
-----
Balance unexercised at December 31, 2000.... 98.7 $ 2.55 $78.00 $23.89
Granted ................................. 18.6 $51.51 $74.19 $63.47
Exercised ............................... (20.6) $ 2.55 $70.38 $13.12
Forfeited................................ (2.3) $ 5.48 $78.00 $41.43
-----
Balance unexercised at December 31, 2001.... 94.4 $ 6.19 $78.00 $33.62
=====
</TABLE>
At December 31, 2001, 2000, and 1999, employee stock options to purchase
53.4 million, 55.5 million, and 61.7 million shares were exercisable at
weighted-average prices of $20.81, $15.35, and $11.80, respectively.
During the years ended December 31, 2001 and 2000, the Company issued 0.2
million and 0.1 million shares of restricted common stock, respectively.
Fair value disclosures of employee stock options
Employee stock option grants are set at the closing price of the Company's
common stock on the date of grant and the related number of shares granted is
fixed at that point in time. Therefore, under the principles of APB No. 25, the
Company does not recognize compensation expense associated with the grant of
employee stock options. SFAS No. 123, "Accounting for Stock-Based
Compensation," requires the use of option valuation models to provide
supplemental information regarding options granted after 1994. Pro forma
information regarding net income and earnings per share shown below was
determined as if the Company had accounted for its employee stock options and
shares sold under its employee stock purchase plan under the fair value method
of that statement.
The fair value of the options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions for 2001, 2000, and 1999, respectively: risk-free interest rates of
4.7%, 5.9%, and 5.8%; dividend yields of 0%, 0%, and 0%; volatility factors of
the expected market price of the Company's common stock of 50%, 45%, and 38%;
and expected life of the options of 3.7 years, 3.4 years, and 3.4 years. These
assumptions resulted in weighted-average fair values of $26.74, $25.87, and
$10.55 per share for employee stock options granted in 2001, 2000, and 1999,
respectively.
F-18
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options. The Company's employee stock options have
characteristics significantly different from those of traded options such as
vesting restrictions and extremely limited transferability. In addition, the
assumptions used in option valuation models (see above) are highly subjective,
particularly the expected stock price volatility of the underlying stock.
Because changes in these subjective input assumptions can materially affect the
fair value estimate, in management's opinion, existing valuation models do not
provide a reliable single measure of the fair value of its employee stock
options.
For purposes of pro forma disclosures, the estimated fair values of the
options are amortized over the options' vesting periods. The Company's pro
forma information is as follows (in millions, except per share information):
<TABLE>
<CAPTION>
Years ended December 31,
------------------------
2001 2000 1999
------ -------- --------
<S> <C> <C> <C>
Pro forma net income............................. $930.6 $1,035.4 $1,030.0
Pro forma earnings per share:
Basic ........................................ $ 0.89 $ 1.01 $ 1.01
Diluted....................................... $ 0.86 $ 0.95 $ 0.95
</TABLE>
Information regarding employee stock options outstanding as of December 31,
2001 is as follows (shares in millions):
<TABLE>
<CAPTION>
Options outstanding Options exercisable
---------------------------- -------------------
Weighted-
Weighted- average Weighted-
average remaining average
exercise contractual exercise
Price range Shares price life Shares price
----------- ------ --------- ----------- ------ ---------
<S> <C> <C> <C> <C> <C>
$10.00 and under ............ 4.1 $ 9.66 0.6 years 4.1 $ 9.66
Over $10.00 to $15.00........ 24.4 $13.77 2.4 years 23.2 $13.75
Over $15.00 to $30.00........ 20.6 $17.01 3.6 years 14.6 $17.11
Over $30.00 to $60.00........ 17.1 $35.04 4.6 years 8.1 $33.37
Over $60.00 ................. 28.2 $65.56 6.1 years 3.4 $68.11
</TABLE>
Employee stock purchase plan
The Company has an employee stock purchase plan whereby, in accordance with
Section 423 of the Internal Revenue Code, eligible employees may authorize
payroll deductions of up to 10% of their salary to purchase shares of the
Company's common stock at the lower of 85% of the fair market value of common
stock on the first or last day of the offering period. During the years ended
December 31, 2001 and 2000, employees purchased 0.6 million and 1.3 million
shares at weighted-average prices of approximately $47.97 and $30.33 per share,
respectively. No shares were purchased under the employee stock purchase plan
during 1999 because the Company had a 15 month offering period which extended
from January 1, 1999 to March 31, 2000. At December 31, 2001, the Company had
15.6 million shares available for future issuance under this plan.
Defined contribution plans
The Company has defined contribution plans covering substantially all
employees in the U.S. and its possessions. Under these plans, the Company makes
certain amounts of matching contributions for those employees who elect to
contribute to the plans and makes additional contributions based upon the
compensation
F-19
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
of eligible employees regardless of whether or not the employees contribute to
the plans. In addition, the Company has other defined contribution plans
covering certain employees of the Company and employees of its foreign
affiliates. The Company's expense for its defined contribution plans totaled
$45.2 million, $42.6 million, and $34.3 million for the years ended December
31, 2001, 2000, and 1999, respectively.
8. Balance sheet accounts
Property, plant, and equipment consisted of the following (in millions):
<TABLE>
<CAPTION>
December 31,
-------------------
2001 2000
--------- --------
<S> <C> <C>
Land.................................................. $ 207.7 $ 120.0
Buildings and building improvements................... 980.1 901.7
Manufacturing equipment............................... 356.5 287.6
Laboratory equipment.................................. 394.3 338.1
Furniture and office equipment........................ 894.8 672.6
Leasehold improvements................................ 67.0 53.7
Construction in progress.............................. 209.5 345.5
--------- --------
3,109.9 2,719.2
Less accumulated depreciation and amortization........ (1,163.8) (937.7)
--------- --------
$ 1,946.1 $1,781.5
========= ========
</TABLE>
Accrued liabilities consisted of the following (in millions):
<TABLE>
<CAPTION>
December 31,
-------------
2001 2000
------ ------
<S> <C> <C>
Employee compensation and benefits.............................................. $147.2 $151.9
Sales incentives, royalties, and allowances .................................... 124.7 107.6
Obligations from terminating collaboration agreements (see Note 4, "Other items,
net")......................................................................... 100.7 --
Due to affiliated companies and corporate partners.............................. 97.6 92.8
Income taxes ................................................................... 92.6 116.7
Clinical development costs...................................................... 56.0 50.5
Other........................................................................... 147.5 99.7
------ ------
$766.3 $619.2
====== ======
</TABLE>
9. Fair values of financial instruments
The carrying amounts of cash, cash equivalents, marketable securities, and
marketable equity investments approximated their fair values. Fair values of
cash equivalents, marketable securities, and marketable equity investments are
based on quoted market prices.
The carrying amount of commercial paper approximated its fair value as of
December 31, 2001 and 2000. The fair values of long-term debt at December 31,
2001 and 2000 totaled approximately $244.9 million and $222.0 million,
respectively. The fair values of commercial paper and long-term debt were
estimated based on quoted market rates for instruments with similar terms and
remaining maturities.
F-20
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The carrying amounts of derivative instruments approximated their fair
values. At December 31, 2001 and 2000, the fair values of derivative
instruments were not material.
10. Segment information
The company operates in one business segment--human therapeutics. Therefore,
results of operations are reported on a consolidated basis for purposes of
segment reporting. Enterprise-wide disclosures about revenues by product,
revenues and long-lived assets by geographic area, and revenues from major
customers are presented below.
Revenues
Revenues consisted of the following (in millions):
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------
2001 2000 1999
-------- -------- --------
<S> <C> <C> <C>
EPOGEN(R)/Aranesp(TM)....................... $2,150.0 $1,962.9 $1,759.1
NEUPOGEN(R) ................................ 1,346.4 1,223.7 1,256.6
Other product sales......................... 14.6 15.6 27.1
-------- -------- --------
Total product sales......................... 3,511.0 3,202.2 3,042.8
Other revenues.............................. 504.7 427.2 297.3
-------- -------- --------
Total revenues........................... $4,015.7 $3,629.4 $3,340.1
======== ======== ========
</TABLE>
Geographic information
Outside the U.S., the Company sells NEUPOGEN(R) in the European Union
("EU"), Canada, and Australia. Outside the U.S., the Company sells Aranesp(TM)
in most countries in the EU, Australia, and New Zealand. Information regarding
revenues and long-lived assets (consisting of property, plant, and equipment)
attributable to the United States and to all foreign countries collectively is
stated below. The geographic classification of product sales was based upon the
location of the customer. The geographic classification of all other revenues
was based upon the domicile of the entity from which the revenues were earned.
Information is as follows (in millions):
<TABLE>
<CAPTION>
Years ended December 31,
--------------------------
2001 2000 1999
-------- -------- --------
<S> <C> <C> <C>
Revenues:
U.S. and possessions..................... $3,688.5 $3,343.0 $3,024.5
Foreign countries........................ 327.2 286.4 315.6
-------- -------- --------
Total revenues ...................... $4,015.7 $3,629.4 $3,340.1
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
December 31,
--------------------------
2001 2000 1999
-------- -------- --------
<S> <C> <C> <C>
Long-lived assets:
U.S. and possessions..................... $1,861.0 $1,706.5 $1,475.7
Foreign countries........................ 85.1 75.0 77.9
-------- -------- --------
Total long-lived assets ............. $1,946.1 $1,781.5 $1,553.6
======== ======== ========
</TABLE>
F-21
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Major customers
Amgen uses wholesale distributors of pharmaceutical products as the
principal means of distributing the Company's products to clinics, hospitals,
and pharmacies. The Company monitors the financial condition of its larger
distributors and limits its credit exposure by setting appropriate credit
limits and requiring collateral from certain customers.
For the year ended December 31, 2001, sales to three large wholesalers each
accounted for more than 10% of total revenues. Sales to these three wholesalers
were $1,470.1 million, $535.8 million, and $459.8 million. For the years ended
December 31, 2000 and 1999, sales to two large wholesalers each accounted for
more than 10% of total revenues. Sales to these wholesalers were $1,233.4
million and $445.2 million, respectively, for the year ended December 31, 2000.
Sales to these two wholesalers were $1,078.0 million and $438.2 million,
respectively, for the year ended December 31, 1999.
At December 31, 2001, amounts due from three large wholesalers each exceeded
10% of gross trade receivables, and accounted for 64% of gross trade
receivables on a combined basis. At December 31, 2000, amounts due from four
large wholesalers each exceeded 10% of gross trade receivables, and accounted
for 51% of gross trade receivables on a combined basis.
11. Kinetix acquisition
On December 14, 2000, Amgen acquired all of the outstanding shares of
Kinetix Pharmaceuticals, Inc. ("Kinetix"), a privately held company, in a
tax-free exchange for 2.6 million shares of Amgen common stock. The acquisition
was accounted for under the purchase method of accounting, and accordingly, the
operating results of Kinetix are included in the accompanying consolidated
financial statements starting from December 14, 2000. The acquisition was
valued at $172.2 million, including $1.0 million of related acquisition costs
and $6.5 million of Amgen restricted common stock issued in exchange for
Kinetix restricted common stock held by employees retained from Kinetix. The
$6.5 million is being recognized as compensation expense over the vesting
period of the restricted common stock.
The purchase price was allocated among identifiable tangible and intangible
assets and liabilities of Kinetix based upon their fair values. A discounted,
risk-adjusted cash flow analysis was performed to value the technology platform
of Kinetix expected to generate future molecules that may be developed into
human therapeutics, as well as in-process research projects. The analysis
resulted in valuing the acquired base technology at $36.6 million, which was
capitalized and will be amortized on a straight-line basis over a 15 year
period. Additionally, $30.1 million of value was assigned to acquired
in-process research and development, and was expensed on the acquisition date
in accordance with generally accepted accounting principles. The excess of the
purchase price over the fair values of assets and liabilities acquired of
$103.3 million was allocated to goodwill, which was amortized through December
31, 2001 using a 15 year useful life. Goodwill amortization ceased beginning
January 1, 2002 (see Note 1, "Summary of significant accounting
policies--Recent accounting pronouncements").
12. Proposed merger with Immunex
On December 16, 2001, the Company signed a definitive agreement to acquire
Immunex Corporation ("Immunex") in a transaction to be accounted for as a
purchase. Immunex is a biopharmaceutical company dedicated to developing immune
system science to protect human health. Under the terms of the 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
F-22
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
and $4.50 cash. In addition, at the closing of the merger each option
outstanding to purchase a share of Immunex common stock will be assumed by
Amgen and exchanged into an option to purchase Amgen common stock based on the
terms of the merger agreement. The estimated purchase price is approximately
$17.6 billion, which includes the cash portion of the merger consideration, the
estimated fair values of Amgen stock issued and options to be exchanged, and
the direct transaction costs. The final purchase price will be determined based
upon the number of Immunex shares and options outstanding at the closing date.
The transaction is expected to close in the second half of 2002, subject to
approval by shareholders of both companies, customary regulatory approvals, as
well as other customary closing conditions.
13. Quarterly financial data (unaudited)
(in millions, except per share data)
<TABLE>
<CAPTION>
2001 Quarter Ended Dec. 31(1) Sept. 30 June 30 Mar. 31
------------------ ----------- ------------ ------- -----------
<S> <C> <C> <C> <C>
Product sales..................... $974.1 $879.6 $858.9 $798.4
Gross margin from product sales... 821.6 776.9 760.5 709.0
Net income........................ 163.0 329.9 321.9 304.9
Earnings per share:...............
Basic.......................... $ 0.16 $ 0.31 $ 0.31 $ 0.29
Diluted........................ $ 0.15 $ 0.30 $ 0.30 $ 0.28
2000 Quarter Ended Dec. 31 (2) Sept. 30 (3) June 30 Mar. 31 (4)
------------------ ----------- ------------ ------- -----------
Product sales..................... $846.8 $851.0 $806.8 $697.6
Gross margin from product sales... 735.3 741.5 705.1 611.9
Net income........................ 210.8 358.9 302.6 266.2
Earnings per share:...............
Basic.......................... $ 0.20 $ 0.35 $ 0.29 $ 0.26
Diluted........................ $ 0.19 $ 0.33 $ 0.28 $ 0.25
</TABLE>
- --------
(1) During the fourth quarter of 2001, the Company recorded a charge of $203.1
million, primarily related to the costs of terminating collaboration
agreements with various third parties, including Praecis and certain
academic institutions (see Note 4, "Other items, net--Termination of
collaboration agreements"). In addition, Amgen recorded a charge of $39.5
million, included in cost of sales, to write-off certain inventory deemed
not recoverable (see Note 1, "Summary of significant accounting
policies--Inventories"). After applicable tax effects, the impact of these
items on net income was $0.15 per share for the year ended December 31,
2001.
(2) During the fourth quarter of 2000, the Company recorded an after-tax charge
of $30.1 million to write-off acquired in-process research and development
related to the acquisition of Kinetix (see Note 11, "Kinetix acquisition").
In addition, the Company made a contribution of $25 million to the Amgen
Foundation (see Note 4, "Other items, net--Amgen Foundation contribution").
After applicable tax effects, these amounts combined with the legal award
discussed in item 3 below had no impact on net income for the year ended
December 31, 2000.
(3) During the third quarter of 2000, the Company recorded a net legal award of
$73.9 million, which primarily represents an award for certain costs and
expenses, including attorney's fees, associated with the spillover
arbitration with Johnson & Johnson (see Note 4, "Other items, net--Legal
award, net").
(4) During the first quarter of 2000, sales were adversely impacted by Year
2000-related sales totaling $45 million. In addition, the Company believes
sales were adversely impacted by additional 1999 year-end stockpiling of
EPOGEN(R) by dialysis providers and by wholesalers reducing their
inventories of NEUPOGEN(R).
F-23
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
14. Subsequent event (unaudited)
On February 22, 2002, the Company announced that it has agreed to issue $3.5
billion in aggregate face amount of 30-year zero coupon senior notes (the
"Convertible Notes") that are convertible into shares of the Company's common
stock. The proceeds from the offering, net of estimated issuance costs, are
expected to be approximately $2.45 billion. The Company may raise up to an
additional $321 million upon exercise of an over-allotment option that has been
granted in connection with the offering. The Company expects to use
approximately $650 million of the net proceeds to repurchase shares of its
common stock simultaneously with the issuance of the Convertible Notes, with
the remaining proceeds to be used for general corporate purposes.
The terms of the Convertible Notes include a yield to maturity of 1.125% and
an initial conversion premium of 40%. Amgen may not call the Convertible Notes
for redemption until five years from the date of issuance, after which they are
redeemable by Amgen at the accreted value. The holders of the Convertible Notes
will have the option to require the Company to purchase their Convertible Notes
at the accreted value on specific dates in years three, five, ten, and fifteen.
The Company may choose to pay the redemption purchase price in cash and/or
shares of common stock. In addition, starting the day after the fifth
anniversary of issuance, the Company will be obligated to make contingent
interest payments if the market price of the Convertible Notes exceeds certain
thresholds.
The issuance of the Convertible Notes is subject to customary closing
conditions and is expected to be completed by March 1, 2002.
F-24
<PAGE>
SCHEDULE II
AMGEN INC.
VALUATION ACCOUNTS
Years ended December 31, 2001, 2000, and 1999
(In millions)
<TABLE>
<CAPTION>
Additions
Balance at charged to Balance
beginning costs and at end
of period expenses Deductions of period
---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Year ended December 31, 2001:
Allowance for doubtful accounts. $21.2 $ 0.3 $0.1 $21.4
Year ended December 31, 2000:......
Allowance for doubtful accounts. $26.0 $ 0.1 $4.9 $21.2
Year ended December 31, 1999:......
Allowance for doubtful accounts. $17.1 $10.1 $1.2 $26.0
</TABLE>
F-25
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.2
<SEQUENCE>3
<FILENAME>dex32.txt
<DESCRIPTION>AMENDED AND RESTATED BYLAWS OF AMGEN
<TEXT>
<PAGE>
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
AMGEN INC.
(AS AMENDED and RESTATED JANUARY 7, 2002)
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
AMGEN INC.
(a Delaware corporation)
ARTICLE I
Offices
Section 1. Registered Office. The registered office of the corporation in
-----------------
the State of Delaware shall be in the City of Dover, County of Kent.
Section 2. Other Offices. The corporation also shall have and maintain an
-------------
office or principal place of business at such place as may be fixed by the Board
of Directors, and also may have offices at such other places, both within and
without the State of Delaware as the Board of Directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
Corporate Seal
Section 3. Corporate Seal. The corporate seal shall consist of a die
--------------
bearing the name of the corporation and the inscription, "Corporate Seal-
Delaware." Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE III
Stockholders' Meetings
Section 4. Place of Meetings. Meetings of the stockholders of the
-----------------
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 2 hereof.
Section 5. Annual Meeting. The annual meeting of the stockholders of the
--------------
corporation shall be held on any date and time which may from time to time be
designated by the Board of Directors. At such annual meeting, directors shall
be elected and any other business may be transacted that may properly come
before the meeting.
1
<PAGE>
Section 6. Special Meetings. Special meetings of the stockholders of the
----------------
corporation may be called, for any purpose or purposes, by the Chairman of the
Board of Directors ("Chairman of the Board"), the Chief Executive Officer, the
President, or the Board of Directors at any time.
Section 7. Notice of Meetings. Except as otherwise provided by law or the
------------------
Certificate of Incorporation, written notice of each meeting of stockholders
shall be given not less than ten (10) nor more than sixty (60) days before the
date of the meeting to each stockholder entitled to vote at such meeting, such
notice to specify the place, date and hour and purpose or purposes of the
meeting. Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, signed by the person entitled to notice thereof,
either before or after such meeting, and will be waived by any stockholder by
his attendance thereat in person or by proxy, except when the stockholder
attends a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not lawfully
called or convened. Any stockholder so waiving notice of such meeting shall be
bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
Section 8. Quorum. At all meetings of stockholders, except where
------
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. Any shares, the voting of
which at said meeting has been enjoined, or which for any reason cannot be
lawfully voted at such meeting, shall not be counted to determine a quorum at
such meeting. In the absence of a quorum any meeting of stockholders may be
adjourned, from time to time, by vote of the holders of a majority of the shares
represented thereat, but no other business shall be transacted at such meeting.
The stockholders present at a duly called or convened meeting, at which a quorum
is present, may continue to transact business until adjournment, notwithstanding
the withdrawal of enough stockholders to leave less than a quorum. Except as
otherwise provided by law, the Certificate of Incorporation or these Bylaws, all
action taken by the holders of a majority of the voting power represented at any
meeting at which a quorum is present shall be valid and binding upon the
corporation.
Section 9. Adjournment and Notice of Adjourned Meetings. Any meeting of
--------------------------------------------
stockholders, whether annual or special, may be adjourned from time to time by
the vote of a majority of the shares, the holders of which are present either in
person or by proxy. When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting the corporation may transact any business which might have been
transacted at the original meeting. If the
2
<PAGE>
adjournment is for more than thirty (30) days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 10. Voting Rights. For the purpose of determining those
-------------
stockholders entitled to vote at any meeting of the stockholders, except as
otherwise provided by law, only persons in whose names shares stand on the stock
records of the corporation on the record date, as provided in Section 12 of
these Bylaws, shall be entitled to vote at any meeting of stockholders. Every
person entitled to vote or execute consents shall have the right to do so either
in person or by an agent or agents authorized by a written proxy executed by
such person or his duly authorized agent, which proxy shall be filed with the
Secretary at or before the meeting at which it is to be used. An agent so
appointed need not be a stockholder. No proxy shall be voted on after three (3)
years from its date of creation unless the proxy provides for a longer period.
All elections of Directors shall be by written ballot, unless otherwise provided
in the Certificate of Incorporation.
Section 11. Joint Owners of Stock. If shares or other securities having
---------------------
voting power stand of record in the names of two (2) or more persons, whether
fiduciaries, members of a partnership, joint tenants, tenants in common, tenants
by the entirety, or otherwise, or if two (2) or more persons have the same
fiduciary relationship respecting the same shares, unless the Secretary is given
written notice to the contrary and is furnished with a copy of the instrument or
order appointing them or creating the relationship wherein it is so provided,
their acts with respect to voting shall have the following effect: (a) if only
one (1) votes, his act binds all; (b) if more than one (1) votes, the act of the
majority so voting binds all; (c) if more than one (1) votes, but the vote is
evenly split on any particular matter, each faction may vote the securities in
question proportionally, or may apply to the Delaware Court of Chancery for
relief as provided in the General Corporation Law of Delaware, Section 217(b).
If the instrument filed with the Secretary shows that any such tenancy is held
in unequal interests, a majority or even-split for the purpose of this
subsection (c) shall be a majority or even-split in interest.
Section 12. List of Stockholders. The Secretary shall prepare and make,
--------------------
at least ten (10) days before every meeting of stockholders, a complete list of
the stockholders entitled to vote at said meeting, arranged in alphabetical
order, showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not
specified, at the place where the meeting is to be held. The list shall be
produced and kept at the time
3
<PAGE>
and place of meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 13. No Action Without Meeting. Any action required or permitted
-------------------------
to be taken by the stockholders of the corporation must be effected at a duly
called annual or special meeting of such holders and may not be effected by any
consent in writing by such holders.
Section 14. Organization. At every meeting of stockholders, the Chairman
------------
of the Board, or, if the Chairman of the Board is absent, the Chief Executive
Officer, or, if the Chief Executive Officer is absent, the President, or, if the
President is absent, the most senior Vice President present, or in the absence
of any such officer, a chairman of the meeting chosen by a majority in interest
of the stockholders entitled to vote, present in person or by proxy, shall act
as chairman. The Secretary, or, in his absence, an Assistant Secretary directed
to do so by the Chief Executive Officer, shall act as secretary of the meeting.
Section 15. Notifications of Nominations and Proposed Business. Subject
--------------------------------------------------
to the rights of holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation,
(x) nominations for the election of directors, and
(y) business proposed to be brought before any stockholder meeting,
may be made by the Board of Directors or a proxy committee appointed by the
Board of Directors or by any stockholder entitled to vote in the election of
directors generally. However, any such stockholder may nominate one or more
persons for election as directors at a meeting or propose business to be brought
before a meeting, or both, only if such stockholder has given timely notice in
proper written form of his intent to make such nomination or nominations or to
propose such business. To be timely, a stockholder's notice must be delivered to
or mailed and received by the Secretary of the corporation not later than 90
days prior to such meeting; provided, however, that in the event that less than
100 days' notice or prior public disclosure of the date of the meeting is given
or made to stockholders, notice by the stockholder to be timely must be received
not later than the close of business on the 10th day following the date on which
such notice of the date of such meeting was mailed or such public disclosure was
made. To be in proper written form, a stockholder's notice to the Secretary
shall set forth:
(a) the name and address of the stockholder who intends to make the
nominations or propose the business and, as the case may be, of the person or
persons to be nominated or of the business to be proposed;
4
<PAGE>
(b) a representation that the stockholder is a holder of record of stock of
the corporation entitled to vote at such meeting and, if applicable, intends to
appear in person or by proxy at the meeting to nominate the person or persons
specified in the notice;
(c) if applicable, a description of all arrangements or understandings
between the stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations are to
be made by the stockholder;
(d) such other information regarding each nominee or each matter of
business to be proposed by such stockholder as would be required to be included
in a proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission had the nominee been nominated, or intended to be nominated,
or the matter been proposed, or intended to be proposed by the Board of
Directors; and
(e) if applicable, the consent of each nominee to serve as director of the
corporation if so elected.
The chairman of the meeting may refuse to acknowledge the nomination of any
person or the proposal of any business not made in compliance with the foregoing
procedure.
ARTICLE IV
Directors
Section 16. Number. The authorized number of directors of the
------
corporation shall be fixed from time to time by the Board of Directors. The
number of directors presently authorized is thirteen. Directors need not be
stockholders unless so required by the Certificate of Incorporation. If for any
cause the directors shall not have been elected at an annual meeting, they may
be elected as soon thereafter as convenient at a special meeting of the
stockholders called for that purpose in the manner provided in these Bylaws.
Section 17. Classes of Directors. The Board of Directors shall be
--------------------
divided into three classes: Class I, Class II and Class III, which shall be as
nearly equal in number as possible. Each director shall serve for a term ending
on the date of the third annual meeting of stockholders following the annual
meeting at which the director was elected. Notwithstanding the foregoing
provisions of this section, each director shall serve until his successor is
duly elected and qualified or until his death, resignation or removal.
Section 18. Newly Created Directorships and Vacancies. In the event of
-----------------------------------------
any increase or decrease in the authorized number of directors, the newly
created or
5
<PAGE>
eliminated directorships resulting from such increase or decrease shall be
apportioned by the Board of Directors among the three classes of directors so as
to maintain such classes as nearly equal in number as possible. No decrease in
the number of directors constituting the Board of Directors shall shorten the
term of any incumbent director. Newly created directorships resulting from any
increase in the number of directors and any vacancies on the Board of Directors
resulting from death, resignation, disqualification, removal or other cause
shall be filled by the affirmative vote of a majority of the remaining directors
then in office (and not by stockholders), even though less than a quorum of the
authorized Board of Directors. Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term of the
class of directors in which the new directorship was created or the vacancy
occurred and until such director's successors shall have been elected and
qualified.
Section 19. Powers. The powers of the corporation shall be exercised,
------
its business conducted and its property controlled by the Board of Directors,
except as may be otherwise provided by statute or by the Certificate of
Incorporation.
Section 20. Resignation. Any director may resign at any time by
-----------
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the Secretary
or at the pleasure of the Board of Directors. If no such specification is made,
it shall be deemed effective at the pleasure of the Board of Directors. When
one or more directors shall resign from the Board of Directors, effective at a
future date, a majority of the directors then in office, including those who
have so resigned, shall have power to fill such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each Director so chosen shall hold office for the unexpired
portion of the term of the director whose place shall be vacated and until his
successor shall have been duly elected and qualified.
Section 21. Removal. At a special meeting of stockholders called for the
-------
purpose in the manner hereinabove provided, the Board of Directors, or any
individual director, may be removed from office, with cause, and one or more new
directors may be elected, by a vote of stockholders holding a majority of the
outstanding shares entitled to vote at an election of Directors.
Section 22. Meetings.
--------
(a) Annual Meetings. The annual meeting of the Board of Directors
---------------
shall be held on the date of the annual meeting of stockholders and at the place
where such meeting is held. No notice of an annual meeting of the Board of
Directors shall be necessary and such meeting shall be held for the purpose of
electing officers and transacting such other business as may lawfully come
before it.
6
<PAGE>
(b) Regular Meetings. Except as hereinafter otherwise provided,
----------------
regular meetings of the Board of Directors shall be held in the office of the
corporation required to be maintained pursuant to Section 2 hereof. Unless
otherwise restricted by the Certificate of Incorporation, regular meetings of
the Board of Directors also may be held at any place within or without the State
of Delaware which has been designated by resolution of the Board of Directors or
the written consent of all Directors.
(c) Special Meetings. Unless otherwise restricted by the Certificate
----------------
of Incorporation, special meetings of the Board of Directors may be held at any
time and place within or without the State of Delaware whenever called by the
Chairman of the Board, the Chief Executive Officer, the President or a majority
of the Directors.
(d) Telephone Meetings. Any member of the Board of Directors, or of
------------------
any committee thereof, may participate in a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by such means shall constitute presence in person at such meeting.
(e) Notice of Meetings. Written notice of the time and place of all
------------------
regular and special meetings of the Board of Directors shall be given at least
one (1) day before the date of the meeting. Notice of any meeting may be waived
in writing at any time before or after the meeting and will be waived by any
director by attendance thereat, except when the director attends the meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened.
(f) Waiver of Notice. The transaction of all business at any meeting
----------------
of the Board of Directors, or any committee thereof, however called or noticed,
or wherever held, shall be as valid as though taken at a meeting duly held after
regular call and notice, if a quorum is present and if, either before or after
the meeting, each of the Directors not present sign a written waiver of notice,
or a consent to holding such meeting, or an approval of the minutes thereof. All
such waivers, consents or approvals shall be filed with the corporate records or
made a part of the minutes of the meeting.
Section 23. Quorum and Voting.
-----------------
(a) Quorum. Unless the Certificate of Incorporation requires a
------
greater number, a quorum of the Board of Directors shall consist of a majority
of the exact number of Directors fixed from time to time in accordance with
Section 16 of these Bylaws, but not less than one (1); provided, however, at any
meeting whether a quorum is present or otherwise, a majority of the directors
present may adjourn from time to time until the time fixed for the next regular
meeting of the Board of Directors, without notice other than by announcement at
the meeting.
7
<PAGE>
(b) Majority Vote. At each meeting of the Board of Directors at
-------------
which a quorum is present all questions and business shall be determined by a
vote of a majority of the Directors present, unless a different vote is required
by law, the Certificate of Incorporation or these Bylaws.
Section 24. Action without Meeting. Unless otherwise restricted by the
----------------------
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and such writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 25. Fees and Compensation. Directors shall not receive any
---------------------
stated salary for their services as Directors, but by resolution of the Board of
Directors a fixed fee, with or without expense of attendance, may be allowed for
serving on the Board of Directors and/or attendance at each meeting and at each
meeting of any committee of the Board of Directors. Nothing herein contained
shall be construed to preclude any director from serving the corporation in any
other capacity as an officer, agent, consultant, employee, or otherwise and
receiving compensation therefor.
Section 26. Committees.
----------
(a) Executive Committee. The Board of Directors may by resolution
-------------------
passed by a majority of the whole Board of Directors, appoint an Executive
Committee to consist of one (1) or more members of the Board of Directors. The
Executive Committee, to the extent permitted by law and specifically granted by
the Board of Directors, shall have and 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 the corporation, including, without limitation, the
power and authority to declare a dividend or to authorize the issuance of stock,
except such committee shall not have the power or authority to amend the
Certificate of Incorporation (except that the committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of shares
of stock adopted by the Board of Directors as provided by law, fix any of the
preferences or rights of such shares relating to dividends, redemption,
dissolution, any distribution of assets of the corporation or the conversion
into, or the exchange of such shares for shares of any other class or classes or
any other series of the same or any other class or classes of stock of the
corporation), to adopt an agreement of merger or consolidation, to recommend to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, to recommend to the stockholders a
dissolution of the corporation or a revocation of a dissolution or to amend
these Bylaws.
8
<PAGE>
(b) Other Committees. The Board of Directors may, by resolution
----------------
passed by a majority of the whole Board of Directors, from time to time appoint
such other committees as may be permitted by law. Such other committees
appointed by the Board of Directors shall consist of one (1) or more members of
the Board of Directors, and shall have such powers and perform such duties as
may be prescribed by the resolution or resolutions creating such committees, but
in no event shall such committee have the powers denied to the Executive
Committee in these Bylaws.
(c) Term. Each member of a committee of the Board of Directors shall
----
serve a term on the committee coexistent with such member's term on the Board of
Directors. The Board of Directors, subject to the provisions of subsections (a)
or (b) of this Section 26, may at any time increase or decrease the number of
members of a committee or terminate the existence of a committee. The
membership of a committee member shall terminate on the date of his death or
voluntary resignation. The Board of Directors may at any time for any reason
remove any individual committee member and the Board of Directors may fill any
committee vacancy created by death, resignation, removal or increase in the
number of members of the committee. The Board of Directors may designate one or
more Directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee, and, in addition, in the
absence or disqualification of any member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent or
disqualified member.
(d) Meetings. Unless the Board of Directors shall otherwise provide,
--------
regular meetings of the Executive Committee or any other committee appointed
pursuant to this Section 26 shall be held at such times and places as are
determined by the Board of Directors, or by any such committee, and when notice
thereof has been given to each member of such committee, no further notice of
such regular meetings need be given thereafter. Special meetings of any such
committee may be held at the principal office of the corporation required to be
maintained pursuant to Section 2 hereof, or at any place which has been
designated from time to time by resolution of such committee or by written
consent of all members thereof, and may be called by any director who is a
member of such committee, upon written notice to the members of such committee
of the time and place of such special meeting given in the manner provided for
the giving of written notice to members of the Board of Directors of the time
and place of special meetings of the Board of Directors. Notice of any special
meeting of any committee may be waived in writing at any time before or after
the meeting and will be waived by any director by attendance thereat, except
when the director attends such special meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened. A majority of the
authorized number of members of any
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such committee shall constitute a quorum for the transaction of business, and
the act of a majority of those present at any meeting at which a quorum is
present shall be the act of such committee.
Section 27. Organization. At every meeting of the directors, the
------------
Chairman of the Board, or, if the Chairman of the Board is absent, the Chief
Executive Officer, or if the Chief Executive Officer is absent, the President,
or if the President is absent, the most senior Vice President, or, in the
absence of any such officer, a chairman of the meeting chosen by a majority of
the directors present, shall preside over the meeting. The Secretary, or in his
absence, an Assistant Secretary directed to do so by the Chief Executive
Officer, shall act as secretary of the meeting.
ARTICLE V
Officers
Section 28. Officers Designated. The officers of the corporation shall be
-------------------
the Chairman of the Board, the Chief Executive Officer, the President and Chief
Operating Officer, one or more Vice Presidents, the Chief Financial Officer and
the Secretary, all of whom shall be elected at the annual meeting of the Board
of Directors. The Board of Directors also may appoint such other officers and
agents with such powers and duties as it shall deem necessary. The order of the
seniority of the Vice Presidents shall be in the order of their nomination,
unless otherwise determined by the Board of Directors. The Board of Directors
may assign such additional titles to one or more of the officers as it shall
deem appropriate. Any one person may hold any number of offices of the
corporation at any one time unless specifically prohibited therefrom by law.
The salaries and other compensation of the officers of the corporation shall be
fixed by or in the manner designated by the Board of Directors.
Section 29. Tenure and Duties of Officers.
-----------------------------
(a) General. All officers shall hold office at the pleasure of
-------
the Board of Directors and until their successors shall have been duly elected
and qualified, unless sooner removed. Any officer elected or appointed by the
Board of Directors may be removed at any time by the Board of Directors. If the
office of any officer becomes vacant for any reason, the vacancy may be filled
by the Board of Directors.
(b) Duties of Chairman of the Board. The Chairman of the Board,
-------------------------------
subject to the control of the Board of Directors, shall perform such duties and
functions as are necessary to further the strategic direction of the
corporation. Unless the Board of Directors designates another person, the
Chairman of the Board shall preside at all meetings of the stockholders, the
Board of Directors and of the Executive Committee.
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(c) Duties of Chief Executive Officer. The Chief Executive Officer,
---------------------------------
at the request of the Chairman of the Board or upon his absence or disability,
or in the event of a vacancy in the office of Chairman of the Board, shall
exercise all the powers of Chairman of the Board as provided in Subsection
29(b). The Chief Executive Officer shall, subject to the control of the Board
of Directors, exercise general management and supervision over the property,
affairs and business of the corporation and shall authorize officers of the
corporation, other than the Chairman of the Board, to exercise such powers as
he, in his discretion, may deem to be in the best interests of the corporation.
The Chief Executive Officer shall in general perform all duties incident to
general management and supervision of the corporation and such other duties as
the Board of Directors shall designate from time to time.
(d) Duties of President and Chief Operating Officer. The President
-----------------------------------------------
and Chief Operating Officer, at the request of the Chief Executive Officer or
upon his absence or disability, or in the event of a vacancy in the office of
Chief Executive Officer, shall exercise all the powers of Chief Executive
Officer as provided in Subsection 29(c). The President and Chief Operating
Officer shall, subject to the control of the Chief Executive Officer and the
Board of Directors, exercise general management and supervision over the
operating functions of the corporation, and shall authorize officers of the
corporation, other than the Chairman of the Board and the Chief Executive
Officer, to exercise such powers with respect to the operating function of the
corporation as he, in his discretion, may deem to be in the best interests of
the corporation. The President and Chief Operating Officer shall perform such
other duties and have such other powers as the Board of Directors shall
designate from time to time.
(e) Duties of Vice Presidents. The Vice Presidents, in the order of
-------------------------
their seniority, may assume and perform the duties of the President and Chief
Operating Officer in the absence or disability of the Chief Executive Officer
and the President and Chief Operating Officer or whenever the offices of Chief
Operating Officer and President and Chief Operating Officer are vacant. The
Vice Presidents shall perform other duties commonly incident to their office and
also shall perform such other duties and have such other powers as the Board of
Directors, the Chief Executive Officer, or the President and Chief Operating
Officer shall designate from time to time.
(f) Duties of Chief Financial Officer. The Chief Financial Officer
---------------------------------
shall keep or cause to be kept the books of account of the corporation in a
thorough and proper manner, and shall render statements of the financial affairs
of the corporation in such form and as often as required by the Board of
Directors or the Chief Executive Officer. The Chief Financial Officer, subject
to the order of the Board of Directors, shall have the custody of all funds and
securities of the corporation. The Chief Financial Officer shall perform other
duties commonly incident to his office and also shall perform such other duties
and have such other powers as the Board of Directors or the Chief Executive
Officer shall designate from time to time. The Chief Executive Officer
11
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may direct any Assistant Chief Financial Officer to assume and perform the
duties of the Chief Financial Officer in the absence or disability of the Chief
Financial Officer, and each Assistant Chief Financial Officer shall perform
other duties commonly incident to his office and also shall perform such other
duties and have such other powers as the Board of Directors or the Chief
Executive Officer shall designate from time to time.
(g) Duties of Secretary. The Secretary shall attend all meetings
-------------------
of the stockholders and of the Board of Directors, and shall record all acts and
proceedings thereof in the minute books of the corporation. The Secretary shall
give notice in conformity with these Bylaws of all meetings of the stockholders,
and of all meetings of the Board of Directors and any committee thereof
requiring notice. The Secretary shall perform all other duties given him in
these Bylaws and other duties commonly incident to his office and also shall
perform such other duties and have such other powers as the Board of Directors
shall designate from time to time. The Chief Executive Officer may direct any
Assistant Secretary to assume and perform the duties of the Secretary in the
absence or disability of the Secretary, and each Assistant Secretary shall
perform other duties commonly incident to his office and also shall perform such
other duties and have such other powers as the Board of Directors or the Chief
Executive Officer shall designate from time to time.
Section 30. Resignations. Any officer may resign at any time by giving
------------
written notice to the Board of Directors or to the Chief Executive Officer or to
the President or to the Secretary. Any such resignation shall be effective when
received by the person or persons to whom such notice is given, unless a later
time is specified therein, in which event the resignation shall become effective
at such later time. Unless otherwise specified in such notice, the acceptance
of any such resignation shall not be necessary to make it effective.
Section 31. Removal. Any officer may be removed from office at any time,
-------
with or without cause, by the vote or written consent of a majority of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.
Section 32. Compensation. The compensation of the officers shall be
------------
fixed from time to time by the Board of Directors, and no officer shall be
prevented from receiving such compensation by reason of the fact that such
officer is also a director of the corporation.
ARTICLE VI
Execution of Corporate Instruments and Voting
of Securities Owned by the Corporation
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Section 33. Execution of Corporate Instruments. The Board of Directors
----------------------------------
may, in its discretion, determine the method and designate the signatory officer
or officers, or other person or persons, to execute on behalf of the corporation
any corporate instrument or document, or to sign on behalf of the corporation
the corporate name without limitation, or to enter into contracts on behalf of
the corporation, except where otherwise provided by law or these Bylaws, and
such execution or signature shall be binding upon the corporation.
Unless otherwise specifically determined by the Board of
Directors or otherwise required by law, promissory notes, deeds of trust,
mortgages and other evidences of indebtedness of the corporation, and other
corporate instruments or documents requiring the corporate seal, and
certificates of shares of stock owned by the corporation, shall be executed,
signed or endorsed by the Chairman of the Board, or the Chief Executive Officer,
or the President or any Vice President, and by the Secretary or Treasurer or any
Assistant Secretary or Assistant Treasurer. All other instruments and documents
requiring the corporate signature, but not requiring the corporate seal, may be
executed as aforesaid or in such other manner as may be directed by the Board of
Directors.
All checks and drafts drawn on banks or other depositaries on
funds to the credit of the corporation or in special accounts of the corporation
shall be signed by such person or persons as the Board of Directors shall
authorize so to do.
Section 34. Voting of Securities Owned by the Corporation. All stock and
---------------------------------------------
other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized to do so by
resolution of the Board of Directors, or, in the absence of such authorization,
by the Chairman of the Board, the Chief Executive Officer, the President, or any
Vice President.
ARTICLE VII
Shares of Stock
Section 35. Form and Execution of Certificates. The shares of the
----------------------------------
corporation shall be represented by certificates, provided that the Board of
Directors of the corporation may provide by resolution or resolutions that some
or all of any or all classes or series of its stock shall be uncertificated
shares. Any such resolution shall not apply to shares represented by a
certificate until such certificate is surrendered to the corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock represented by certificates and upon request every holder
of uncertificated shares shall be entitled to have a certificate signed by, or
in the name of the corporation by, the Chairman of the Board or any vice-
chairman of the
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<PAGE>
Board of Directors, or the Chief Executive Officer, or the President or any
Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the corporation representing the number of shares
registered in certificate form. Any or all the signatures on the certificate may
be a facsimile. In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of issue.
Section 36. Lost Certificates. The corporation may issue a new
-----------------
certificate of stock or uncertificated shares in place of any certificate
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of such lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against the
corporation on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate or uncertificated shares.
Section 37. Transfers. Transfers of record of shares of stock of the
---------
corporation shall be made only upon its books by the holders thereof, in person
or by attorney duly authorized, and upon the surrender of a properly endorsed
certificate or certificates for a like number of shares.
Section 38. Fixing Record Dates. In order that the corporation may
-------------------
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty (60) nor less than
ten (10) days before the date of such meeting, nor more than sixty (60) days
prior to any other action. If no record date is fixed: (a) the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; and (b) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 39. Registered Stockholders. The corporation shall be entitled
-----------------------
to recognize the exclusive right of a person registered on its books as the
owner of shares
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to receive dividends, and to vote as such owner, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
Section 40. Issuance, Transfer and Resignation of Shares. The Board of
--------------------------------------------
Directors may make such rules and regulations, not inconsistent with law or with
these Bylaws, as it may deem advisable concerning the issuance, transfer and
registration of certificates for shares of the capital stock of the corporation.
The Board of Directors may appoint a transfer agent or registrar of transfers,
or both, and may require all certificates for shares of the corporation to bear
the signature of either or both.
ARTICLE VIII
Other Securities of the Corporation
Section 41. Execution of Other Securities. All bonds, debentures and
-----------------------------
other corporate securities of the corporation, other than stock certificates,
may be signed by the Chairman of the Board, the Chief Executive Officer, the
President or any Vice President, or such other person as may be authorized by
the Board of Directors, and the corporate seal impressed thereon or a facsimile
of such seal imprinted thereon and attested by the signature of the Secretary or
an Assistant Secretary, or the Treasurer or an Assistant Treasurer; provided,
however, that where any such bond, debenture or other corporate security shall
be authenticated by the manual signature of a trustee under an indenture
pursuant to which such bond, debenture or other corporate security shall be
issued, the signatures of the persons signing and attesting the corporate seal
on such bond, debenture or other corporate security may be the imprinted
facsimile of the signatures of such persons. Interest coupons appertaining to
any such bond, debenture or other corporate security, authenticated by a trustee
as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the
corporation or such other person as may be authorized by the Board of Directors,
or bear imprinted thereon the facsimile signature of such person. In case any
officer who shall have signed or attested any bond, debenture or other corporate
security, or whose facsimile signature shall appear thereon or on any such
interest coupon, shall have ceased to be such officer before the bond, debenture
or other corporate security so signed or attested shall have been delivered,
such bond, debenture or other corporate security nevertheless may be adopted by
the corporation and issued and delivered as though the person who signed the
same or whose facsimile signature shall have been used thereon had not ceased to
be such officer of the corporation.
ARTICLE IX
Dividends
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Section 42. Declaration of Dividends. Dividends upon the capital stock
------------------------
of the corporation, subject to the provisions of the Certificate of
Incorporation, if any, may be declared by the Board of Directors pursuant to law
at any regular or special meeting. Dividends may be paid in cash, in property,
or in shares of the capital stock, subject to the provisions of the Certificate
of Incorporation.
Section 43. Dividend Reserve. Before payment of any dividend, there may
----------------
be set aside out of any funds of the corporation available for dividends such
sum or sums as the Board of Directors may from time to time, in its absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
corporation, or for such other purpose as the Board of Directors shall think
conducive to the interests of the corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
ARTICLE X
Fiscal Year
Section 44. Fiscal Year. Unless otherwise fixed by resolution of the
-----------
Board of Directors, effective as of January 1, 1992, the fiscal year of the
corporation shall end on the 31st day of the month of December in each calendar
year.
ARTICLE XI
Indemnification of Directors, Officers
Employees and Other Agents
Section 45. Indemnification of Directors, Officers, Employees and Other
-----------------------------------------------------------
Agents.
- ------
(a) Directors and Officers. The corporation shall indemnify its
----------------------
directors and officers to the full extent permitted by the Delaware General
Corporation Law, as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said Law permitted
the corporation to provide prior to such amendment); provided, further, that the
-------- -------
corporation shall not be required to indemnify any director or officer in
connection with any proceeding (or part thereof) initiated by such person or any
proceeding by such person against the corporation or its directors, officers,
employees or other agents unless (i) such indemnification is expressly required
to be made by law, (ii) the proceeding was authorized by the Board of Directors
of the corporation or (iii) such indemnification is provided by the corporation,
16
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in its sole discretion, pursuant to the powers vested in the corporation under
the Delaware General Corporation Law, or (iv) such indemnification is required
to be made under subsection (d) of this Article XI.
(b) Other Employees and Other Agents. The corporation shall have the
--------------------------------
power to indemnify its other employees and other agents as set forth in the
Delaware General Corporation Law.
(c) Expenses. The corporation shall 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, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director or officer of
the corporation, or is or was serving at the request of the corporation 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 therefor, all expenses incurred by any director or
officer in connection with such proceeding upon receipt of any undertaking by or
on behalf of such person to repay said amounts if it should be determined
ultimately that such person is not entitled to be indemnified under this Bylaw
or otherwise.
Notwithstanding the foregoing, unless otherwise determined pursuant to
paragraph (d) of this Bylaw, no advance shall be made by the corporation to an
officer of the corporation in any action, suit or proceeding, whether civil,
criminal, administrative or investigate, if a determination is reasonably and
promptly made (1) by the Board of Directors by a majority vote of a quorum
consisting of directors who were not parties to the proceeding, or (2) if such
quorum is not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion that,
the facts known to the decision-making party at the time such determination is
made demonstrate clearly and convincingly that such person acted in bad faith or
in a manner that such person did not reasonably believe to be in or not opposed
to the best interests of the corporation, or, with respect to any criminal
action or proceeding, such person believed or had reasonable cause to believe
his conduct was unlawful, except by reason of the fact that such officer is or
was a director of the corporation or is or was serving at the request of the
corporation as a director of another corporation, joint venture, trust or other
enterprise in which event this paragraph shall not apply.
(d) Enforcement. Without the necessity of entering into an express
-----------
contract, all rights to indemnification and advances under this Bylaw shall be
deemed to be contractual rights and be effective to the same extent and as if
provided for in a contract between the corporation and the director or officer
who serves in such capacity at any time while this Bylaw and other relevant
provisions of the Delaware General Corporation Law and other applicable law, if
any, are in effect. Any right to
17
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indemnification or advances granted by this Bylaw to a director or officer shall
be enforceable by or on behalf of the person holding such right in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. The claimant in such enforcement action,
if successful in whole or in part, shall be entitled to be paid also the expense
of prosecuting his claim. In connection with any claim for indemnification, the
corporation shall be entitled to raise as a defense to any such action that the
claimant has not met the standards of conduct which make it permissible under
the Delaware General Corporation Law for the corporation to indemnify the
claimant for the amount claimed. In connection with any claim by an officer of
the corporation (except in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
officer is or was a director of the corporation or is or was serving at the
request of the corporation as a director of another corporation, partnership,
joint venture, trust or other enterprise) for advances, the corporation shall be
entitled to raise a defense as to any such action clear and convincing evidence
that such person acted in bad faith or in a manner that such person did not
reasonably believe to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, such person
believed or had reasonable cause to believe his conduct was unlawful. Neither
the failure of the corporation (including its Board of Directors, independent
legal counsel or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he has met the applicable standard of conduct set
forth in the Delaware General Corporation Law, nor an actual determination by
the corporation (including its Board of Directors, independent legal counsel or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that claimant
has not met the applicable standard of conduct. In any suit brought by a
director or officer to enforce a right to indemnification or to an advancement
of expenses hereunder, the burden of proving that the director or officer is not
entitled to be indemnified, or to such advancement of expenses, under this
Article XI or otherwise shall be on the corporation.
(e) Non-Exclusivity of Rights. The rights conferred on any person by
-------------------------
this Bylaw shall not be exclusive of any other right which such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is
specifically authorized to enter into individual contracts with any or all of
its directors, officers, employees or agents respecting indemnification and
advances, as provided by law.
(f) Survival of Rights. The rights conferred on any person by this
------------------
Bylaw shall continue as to a person who has ceased to be a director, officer,
employee or
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other agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(g) Insurance. To the fullest extent permitted by the Delaware
---------
General Corporation Law, the corporation, upon approval by the Board of
Directors, may purchase insurance on behalf of any person required or permitted
to be indemnified pursuant to this Bylaw.
(h) Amendments. Any repeal or modification of this Bylaw shall only
----------
be prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.
(i) Savings Clause. If this Bylaw or any portion hereof shall be
--------------
invalidated on any ground by any court of competent jurisdiction, then the
corporation shall nevertheless indemnify each director and officer to the full
extent permitted by any applicable portion of this Bylaw that shall not have
been invalidated, or by any other applicable law.
(j) Certain Definitions. For the purposes of this Bylaw, the
-------------------
following definitions shall apply:
(i) The term "proceeding" shall be broadly construed and shall
include, without limitation, the investigation, preparation,
prosecution, defense, settlement, arbitration and appeal of, and the
giving of testimony in, any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative.
(ii) The term "expenses" shall be broadly construed and shall
include, without limitation, court costs, attorneys' fees, witness
fees, fines, amounts paid in settlement or judgment and any other
costs and expenses of any nature or kind incurred in connection with
any proceeding.
(iii) The term the "corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger
which, if its separate existence had continued, would have had power
and authority to indemnify its directors, officers, and employees or
agents, so that any person who is or was a director, officer, employee
or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the
provisions of this Bylaw with respect
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to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.
(iv) References to a "director," "officer," "employee," or
"agent" of the corporation shall include, without limitation,
situations where such person is serving at the request of the
corporation as, respectively, a director, officer, employee, trustee
or agent of another corporation, partnership, joint venture, trust or
other enterprise.
(v) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes
assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee
benefit plan, its participants, or beneficiaries; and a person who
acted in good faith and in a manner he reasonably believed to be in
the interest of the participants and beneficiaries of an employee
benefit plan shall be deemed to have acted in a manner "not opposed to
the best interests of the corporation" as referred to in this Bylaw.
ARTICLE XII
Notices
Section 46. Notices.
-------
(a) Notice to Stockholders. Whenever under any provisions of
----------------------
these Bylaws notice is required to be given to any stockholder, it shall be
given in writing, timely and duly deposited in the United States mail, postage
prepaid, and addressed to his last known post office address as shown by the
stock record of the corporation or its transfer agent.
(b) Notice to Directors. Any notice required to be given to any
-------------------
director may be given by the method stated in subsection (a), or by telegram,
except that such notice other than one which is delivered personally shall be
sent to such address as such director shall have filed in writing with the
Secretary, or, in the absence of such filing, to the last known post office
address of such director.
(c) Address Unknown. If no address of a stockholder or
---------------
director be known, notice may be sent to the office of the corporation required
to be maintained pursuant to Section 2 hereof.
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(d) Affidavit of Mailing. An affidavit of mailing, executed by a
--------------------
duly authorized and competent employee of the corporation or its transfer agent
appointed with respect to the class of stock affected, specifying the name and
address or the names and addresses of the stockholder or stockholders, or
director or directors, to whom any such notice or notices was or were given, and
the time and method of giving the same, shall be conclusive evidence of the
statements therein contained.
(e) Time Notices Deemed Given. All notices given by mail, as above
-------------------------
provided, shall be deemed to have been given as at the time of mailing and all
notices given by telegram shall be deemed to have been given as at the sending
time recorded by the telegraph company transmitting the notices.
(f) Methods of Notice. It shall not be necessary that the same method
-----------------
of giving notice be employed in respect of all directors, but one permissible
method may be employed in respect of any one or more, and any other permissible
method or methods may be employed in respect of any other or others.
(g) Failure to Receive Notice. The period or limitation of time
-------------------------
within which any stockholder may exercise any option or right, or enjoy any
privilege or benefit, or be required to act, or within which any director may
exercise any power or right, or enjoy any privilege, pursuant to any notice sent
him in the manner above provided, shall not be affected or extended in any
manner by the failure of such stockholder or such director to receive such
notice.
(h) Notice to Person with Whom Communication Is Unlawful. Whenever
----------------------------------------------------
notice is required to be given, under any provision of law or of the Certificate
of Incorporation or Bylaws of the corporation, to any person with whom
communication is unlawful, the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person. Any action or
meeting which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given. In the event that the action taken by the corporation is
such as to require the filing of a certificate under any provision of the
Delaware General Corporation Law, the certificate shall state, if such is the
fact and if notice is required, that notice was given to all persons entitled to
receive notice except such persons with whom communication is unlawful.
ARTICLE XIII
Amendments
21
<PAGE>
Section 47. Amendments. These Bylaws may be repealed, altered or amended
----------
or new Bylaws adopted by the affirmative vote of the holders of not less than
sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of stock
entitled to vote upon the election of directors. The Board of Directors also
shall have the authority, if such authority is conferred upon the Board of
Directors by the Certificate of Incorporation, to repeal, alter or amend these
Bylaws or adopt new Bylaws (including, without limitation, the amendment of any
Bylaw setting forth the number of directors who shall constitute the whole Board
of Directors) subject to the foregoing power of the stockholders to change or
repeal such Bylaws and provided that the Board of Directors shall not make or
alter any Bylaws fixing the qualifications, classifications, term of office or
compensation of directors.
ARTICLE XIV
Loans of Officers and Others
Section 48. Certain Corporate Loans and Guaranties. The corporation may
--------------------------------------
make loans of money or property to, or guarantee the obligations of, or
otherwise assist any officer or other employee who is a director of the
corporation or its parent or any subsidiary, or adopt an employee benefit plan
or plans authorizing such loans or guaranties, upon the approval of the Board of
Directors alone if the Board of Directors determines that such a loan or
guaranty or plan may reasonably be expected to benefit the corporation.
22
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>4
<FILENAME>dex101.txt
<DESCRIPTION>COMPANY'S AMENDED AND RESTATED 1991 EIP
<TEXT>
<PAGE>
Exhibit 10.1
AMGEN INC.
AMENDED AND RESTATED 1991 EQUITY INCENTIVE PLAN
-----------------------------------------------
1. PURPOSE.
-------
(a) The purpose of the Amended and Restated 1991 Equity Incentive Plan
as amended and restated in December 2001 (the "Plan") is to provide a means by
which employees or directors of and consultants to Amgen Inc., a Delaware
corporation (the "Company"), and its Affiliates, as defined in paragraph 1(b),
directly, or indirectly through Trusts, may be given an opportunity to benefit
from increases in value of the stock of the Company through the granting of (i)
incentive stock options, (ii) nonqualified stock options, (iii) stock bonuses,
and (iv) rights to purchase restricted stock, all as defined below. For
purposes of the incentive stock option rules of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), the Plan is a new plan.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Code.
(c) The Company, by means of the Plan, seeks to retain the services of
persons now employed by or serving as directors or consultants to the Company,
to secure and retain the services of persons capable of filling such positions,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company.
(d) The Company intends that the rights issued under the Plan ("Stock
Awards") shall, in the discretion of the Board of Directors of the Company (the
"Board") or any committee to which responsibility for administration of the Plan
has been delegated pursuant to paragraph 2(c), be either (i) stock options
granted pursuant to Sections 5 or 6 hereof, including incentive stock options as
that term is used in Section 422 of the Code ("Incentive Stock Options"), or
options which do not qualify as Incentive Stock Options ("Nonqualified Stock
Options") (together hereinafter referred to as "Options"), or (ii) stock bonuses
or rights to purchase restricted stock granted pursuant to Section 7 hereof.
(e) The word "Trust" as used in the Plan shall mean a trust created for
the benefit of the employee, director or consultant, his or her spouse, or
members of their immediate family. The word optionee shall mean the person to
whom the option is granted or the employee, director or consultant for whose
benefit the option is granted to a Trust, as the context shall require.
<PAGE>
2. ADMINISTRATION.
--------------
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a committee, as provided in paragraph 2(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how Stock Awards shall be
granted; whether a Stock Award will be an Incentive Stock Option, a Nonqualified
Stock Option, a stock bonus, a right to purchase restricted stock, or a
combination of the foregoing; the provisions of each Stock Award granted (which
need not be identical), including the time or times when a person shall be
permitted to purchase or receive stock pursuant to a Stock Award; and the number
of shares with respect to which Stock Awards shall be granted to each such
person.
(2) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award, in a manner
and to the extent it shall deem necessary or expedient to make the Plan fully
effective.
(3) To amend the Plan as provided in Section 14.
(4) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee"). One
or more of these members may be non-employee directors and outside directors, if
required and as defined by the provisions of paragraphs 2(e) and 2(f). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board (except amendment of Section 6 or the options granted thereunder
shall only be by action taken by the Board or a committee of one or more members
of the Board to which such authority has been specifically delegated by the
Board), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board.
Notwithstanding anything else in this paragraph 2(c) to the contrary, at any
time the Board or the Committee may delegate to a committee of one or more
members of the Board the authority to grant or amend options to all employees,
directors or consultants or any portion or class thereof.
(d) Notwithstanding anything else in the Plan to the contrary, at any
time the Board or the Committee may authorize by duly adopted resolution one or
more Officers (as
2
<PAGE>
defined below) (each a "Delegated Officer") to take the actions described in
paragraph 2(b)(1) of the Plan with respect to Options only, subject to, and
within the limitations of, the express provisions of the Plan; provided,
--------
however, that a Delegated Officer shall not have the power to (1) grant any
- -------
Options to himself, any non-employee director, consultant, Trust, other
Delegated Officer or Officer, (2) determine the time or times when a person
shall be permitted to purchase stock pursuant to the exercise of an Option
(i.e., vesting), (3) determine the exercise price of an Option, or (4) grant any
Option to a parent corporation of the Company, as defined in Section 424(e) of
the Code. The resolution authorizing a Delegated Officer to act as such shall
specify the total number of shares of Common Stock that a Delegated Officer may
grant with respect to Options. The exercise price (including any formula by
which such price or prices may be determined) and the time or times when a
person shall be permitted to purchase stock pursuant to the exercise of an
Option shall, however, be set by the Board or the Committee and not by a
Delegated Officer to the extent required by Delaware General Corporation Law
Section 157 or any other applicable law. The term "Officer" shall include any
natural person who is elected as a corporate officer of the Company by the
Board.
(e) The term "non-employee director" shall mean a member of the Board
who (i) is not currently an officer of the Company or a parent or subsidiary of
the Company (as defined in Rule 16a-1(f) promulgated by the Securities and
Exchange Commission under Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) or an employee of the Company or a parent or
subsidiary of the Company; (ii) does not receive compensation from the Company
or a parent or subsidiary of the Company for services rendered in any capacity
other than as a member of the Board (including a consultant) in an amount
required to be disclosed to the Company's stockholders under Rule 404 of
Regulation S-K promulgated by the Securities and Exchange Commission ("Rule
404"); (iii) does not possess an interest in any other transaction required to
be disclosed under Rule 404; or (iv) is not engaged in a business relationship
required to be disclosed under Rule 404, as all of these provisions are
interpreted by the Securities and Exchange Commission under Rule 16b-3
promulgated under the Exchange Act.
(f) The term "outside director," as used in this Plan, shall mean an
administrator of the Plan, whether a member of the Board or of any Committee to
which responsibility for administration of the Plan has been delegated pursuant
to paragraph 2(c), who is considered to be an "outside director" in accordance
with the rules, regulations or interpretations of Section 162(m) of the Code.
(g) Any requirement that an administrator of the Plan be a "non-
employee director" or "outside director" shall not apply if the Board or the
Committee expressly declares that such requirement shall not apply.
3
<PAGE>
3. SHARES SUBJECT TO THE PLAN.
--------------------------
(a) Subject to the provisions of Section 11 relating to adjustments
upon changes in stock, the stock that may be issued pursuant to Stock Awards
granted under the Plan shall not exceed in the aggregate One Hundred Ninety-Two
Million (192,000,000) shares of the Company's $.0001 par value common stock (the
"Common Stock"). If any Stock Award granted under the Plan shall for any reason
expire or otherwise terminate without having been exercised in full, the Common
Stock not purchased under such Stock Award shall again become available for the
Plan. Shares repurchased by the Company pursuant to any repurchase rights
reserved by the Company pursuant to the Plan shall not be available for
subsequent issuance under the Plan.
(b) The Common Stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
(c) An Incentive Stock Option may be granted to an eligible person
under the Plan only if the aggregate fair market value (determined at the time
the Incentive Stock Option is granted) of the Common Stock with respect to which
incentive stock options (as defined by the Code) are exercisable for the first
time by such optionee during any calendar year under all such plans of the
Company and its Affiliates does not exceed one hundred thousand dollars
($100,000). If it is determined that an entire Option or any portion thereof
does not qualify for treatment as an Incentive Stock Option by reason of
exceeding such maximum, such Option or the applicable portion shall be
considered a Nonqualified Stock Option.
4. ELIGIBILITY.
-----------
(a) Incentive Stock Options may be granted only to employees (including
officers) of the Company or its Affiliates. A director of the Company shall not
be eligible to receive Incentive Stock Options unless such director is also an
employee of the Company or any Affiliate. Stock Awards other than Incentive
Stock Options may be granted to employees (including officers) or directors of
or consultants to the Company or any Affiliate or to Trusts of any such
employee, director or consultant.
(b) A director shall in no event be eligible for the benefits of the
Plan (other than from a Director NQSO under Section 6 of the Plan) unless and
until such director is expressly declared eligible to participate in the Plan by
action of the Board or the Committee, and only if, at any time discretion is
exercised by the Board or the Committee in the selection of a director as a
person to whom Stock Awards may be granted, or in the determination of the
number of shares which may be covered by Stock Awards granted to a director, the
Plan complies with the requirements of Rule 16b-3 promulgated under the Exchange
Act, as from
4
<PAGE>
time to time in effect. The Board shall otherwise comply with the requirements
of Rule 16b-3 promulgated under the Exchange Act, as from time to time in
effect. Notwithstanding the foregoing, the restrictions set forth in this
paragraph 4(b) shall not apply if the Board or Committee expressly declares that
such restrictions shall not apply.
(c) No person shall be eligible for the grant of an Incentive Stock
Option under the Plan if, at the time of grant, such person owns (or is deemed
to own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates unless the exercise price of such Incentive
Stock Option is at least one hundred and ten percent (110%) of the fair market
value of the Common Stock at the date of grant and the Incentive Stock Option is
not exercisable after the expiration of five (5) years from the date of grant.
(d) Stock Awards shall be limited to a maximum of 2,000,000 shares of
Common Stock per person per calendar year.
5. TERMS OF DISCRETIONARY STOCK OPTIONS.
------------------------------------
An option granted pursuant to this Section 5 (a "Discretionary Stock
Option") shall be in such form and shall contain such terms and conditions as
the Board or the Committee shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) The exercise price of each Incentive Stock Option and each
Nonqualified Stock Option shall be not less than one hundred percent (100%) of
the fair market value of the Common Stock subject to the Option on the date the
Option is granted.
(c) The purchase price of Common Stock acquired pursuant to an Option
shall be paid, to the extent permitted by applicable statutes and regulations,
either: (i) in cash at the time the Option is exercised; or (ii) at the
discretion of the Board or the Committee, either at the time of grant or
exercise of the Option (A) by delivery to the Company of shares of Common Stock
that have been held for the period required to avoid a charge to the Company's
reported earnings and valued at the fair market value on the date of exercise,
(B) according to a deferred payment or other arrangement with the person to whom
the Option is granted or to whom the Option is transferred pursuant to paragraph
5(d), or (C) in any other form of legal consideration that may be acceptable to
the Board or the Committee in their discretion; including but not limited to
payment of the purchase price pursuant to a program developed under Regulation T
as promulgated by the Federal Reserve Board which results in the receipt of
5
<PAGE>
cash (or a check) by the Company before Common Stock is issued or the receipt of
irrevocable instruction to pay the aggregate exercise price to the Company from
the sales proceeds before Common Stock is issued.
In the case of any deferred payment arrangement, interest shall be payable
at least annually and shall be charged at not less than the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(d) An Option granted to a natural person shall be exercisable during
the lifetime of such person only by such person, provided that such person
during such person's lifetime may designate a Trust to be such person's
beneficiary with respect to any Incentive Stock Options granted after February
25, 1992 and with respect to any Nonqualified Stock Options, and such
beneficiary shall, after the death of the person to whom the Option was granted,
have all the rights that such person has while living, including the right to
exercise the Option. In the absence of such designation, after the death of the
person to whom the Option is granted, the Option shall be exercisable by the
person or persons to whom the optionee's rights under such Option pass by will
or by the laws of descent and distribution.
(e) The total number of shares of Common Stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). From time to time during each of such installment periods, the
Option may become exercisable ("vest") with respect to some or all of the shares
allotted to that period, and may be exercised with respect to some or all of the
shares allotted to such period and/or any prior period as to which the Option
was not fully exercised. During the remainder of the term of the Option (if its
term extends beyond the end of the installment periods), the Option may be
exercised from time to time with respect to any shares then remaining subject to
the Option. The provisions of this paragraph 5(e) are subject to any Option
provisions governing the minimum number of shares as to which an Option may be
exercised.
(f) The Company may require any optionee, or any person to whom an
Option is transferred under paragraph 5(d), as a condition of exercising any
such Option: (i) to give written assurances satisfactory to the Company as to
such person's knowledge and experience in financial and business matters and/or
to employ a purchaser representative who has such knowledge and experience in
financial and business matters, and that such person is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (ii) to give written assurances satisfactory to the
Company stating that such person is acquiring the Common Stock subject to the
Option for such person's own account and not with any present intention of
selling or otherwise distributing the Common Stock. These requirements, and any
assurances given pursuant to such requirements, shall be
6
<PAGE>
inoperative if: (x) the issuance of the shares upon the exercise of the Option
has been registered under a then currently effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"); or (y) as
to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities law.
(g) An Option shall terminate three (3) months after termination of the
optionee's employment or relationship as a consultant or director with the
Company or an Affiliate, unless: (i) such termination is due to the optionee's
permanent and total disability, within the meaning of Section 422(c)(6) of the
Code and with such permanent and total disability being certified by the Social
Security Administration prior to such termination, in which case the Option may,
but need not, provide that it may be exercised at any time within one (1) year
following such termination of employment or relationship as a consultant or
director; (ii) the optionee dies while in the employ of or while serving as a
consultant or director to the Company or an Affiliate, or within not more than
three (3) months after termination of such employment or relationship as a
consultant or director, in which case the Option may, but need not, provide that
it may be exercised at any time within eighteen (18) months following the death
of the optionee by the person or persons to whom the optionee's rights under
such Option pass by will or by the laws of descent and distribution; or (iii)
the Option by its term specifies either (A) that it shall terminate sooner than
three (3) months after termination of the optionee's employment or relationship
as a consultant or director with the Company or an Affiliate; or (B) that it may
be exercised more than three (3) months after termination of the optionee's
employment or relationship as a consultant or director with the Company or an
Affiliate. This paragraph 5(g) shall not be construed to extend the term of any
Option or to permit anyone to exercise the Option after expiration of its term,
nor shall it be construed to increase the number of shares as to which any
Option is exercisable from the amount exercisable on the date of termination of
the optionee's employment or relationship as a consultant or director.
(h) The Option may, but need not, include a provision whereby the
optionee may elect at any time during the term of the optionee's employment or
relationship as a consultant or director with the Company or any Affiliate to
exercise the Option as to any part or all of the shares subject to the Option
prior to the stated vesting dates of the Option. Any shares so purchased from
any unvested installment or Option may be subject to a repurchase right in favor
of the Company or to any other restriction the Board or the Committee determines
to be appropriate.
(i) To the extent provided by the terms of an Option, each optionee may
satisfy any federal, state or local tax withholding obligation relating to the
exercise of such Option by any of the following means or by a combination of
such means: (i) tendering a cash
7
<PAGE>
payment; (ii) authorizing the Company to withhold from the shares of the Common
Stock otherwise issuable to the optionee as a result of the exercise of the
Option a number of shares having a fair market value less than or equal to the
amount of the Company's required minimum statutory withholding; or (iii)
delivering to the Company owned and unencumbered shares of the Common Stock
having a fair market value less than or equal to the amount of the Company's
required minimum statutory withholding.
(j) Without in any way limiting the authority of the Board or Committee
to make or not to make grants of Discretionary Stock Options under this Section
5, the Board or Committee shall have the authority (but not an obligation) to
include as part of any Option agreement a provision entitling the optionee to a
further Option (a "Re-Load Option") in the event the optionee exercises the
Option evidenced by the Option agreement, in whole or in part, by surrendering
other shares of Common Stock in accordance with this Plan and the terms and
conditions of the Option agreement. Any such Re-Load Option (i) shall be for a
number of shares equal to the number of shares surrendered as part or all of the
exercise price of such Option; (ii) shall have an expiration date which is the
same as the expiration date of the Option the exercise of which gave rise to
such Re-Load Option; and (iii) shall have an exercise price which is equal to
one hundred percent (100%) of the fair market value of the Common Stock subject
to the Re-Load Option on the date of exercise of the original Option or, in the
case of a Re-Load Option which is an Incentive Stock Option and which is granted
to a 10% stockholder (as defined in paragraph 4(c)), shall have an exercise
price which is equal to one hundred and ten percent (110%) of the fair market
value of the Common Stock subject to the Re-Load Option on the date of exercise
of the original Option.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonqualified Stock Option, as the Board or Committee may designate at the time
of the grant of the original Option, provided, however, that the designation of
any Re-Load Option as an Incentive Stock Option shall be subject to the one
hundred thousand dollars ($100,000) annual limitation on exercisability of
Incentive Stock Options described in paragraph 3(c) of the Plan and in Section
422(d) of the Code. There shall be no Re-Load Option on a Re-Load Option. Any
such Re-Load Option shall be subject to the availability of sufficient shares
under paragraph 3(a) and shall be subject to such other terms and conditions as
the Board or Committee may determine.
6. TERMS OF NON-DISCRETIONARY OPTIONS
----------------------------------
(a) On January 27 of each year, each person who is at that time an
Eligible Director of the Company, (as defined in paragraph 6(k)), shall
automatically be granted under the Plan, without further action by the Company,
the Board, or the Company's stockholders, a
8
<PAGE>
Nonqualified Stock Option (a "Director NQSO") to purchase sixteen thousand
(16,000) shares of Common Stock on the terms and conditions set forth herein. An
Eligible Director may designate that such Director NQSO be granted in the name
of a Trust instead of in the name of such Eligible Director. The Director NQSO
shall be on the terms and conditions set forth herein and should the date of
grant set forth above be a Saturday, Sunday or legal holiday, such grant shall
be made on the next business day.
(b) Each person who becomes an Eligible Director, shall, upon the
date such person first becomes an Eligible Director, automatically be granted
under the Plan, without further action by the Company, the Board, or the
Company's stockholders, a Director NQSO to purchase sixty thousand (60,000)
shares of Common Stock on the terms and conditions set forth herein. An Eligible
Director may designate that such Director NQSO be granted in the name of a Trust
instead of in the name of such Eligible Director. The Director NQSO shall be on
the terms and conditions set forth herein and should the date of grant set forth
above be a Saturday, Sunday or legal holiday, such grant shall be made on the
next business day.
(c) Each Director NQSO granted pursuant to this Section 6 (or any
Director Re-Load Option granted pursuant to paragraph 6(j)) shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate. The provisions of separate Director NQSO's need not be
identical, but each Director NQSO shall include (through incorporation of
provisions hereof by reference in the Director NQSO or otherwise) the substance
of each of the following provisions as set forth in paragraphs 6(d) through
6(j), inclusive.
(d) The term of each Director NQSO shall be ten (10) years from the
date it was granted.
(e) The exercise price of each Director NQSO shall be one hundred
percent (100%) of the fair market value of the Common Stock subject to such
Director NQSO on the date such Director NQSO is granted.
(f) The purchase price of Common Stock acquired pursuant to a
Director NQSO shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Director NQSO is exercised; (ii)
by delivery to the Company of shares of Common Stock that have been held for the
period required to avoid a charge to the Company's reported earnings and valued
at their fair market value on the date of exercise; or (iii) pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
which results in the receipt of cash (or a check) by the Company before Common
Stock is issued or the receipt of irrevocable instructions to pay the aggregate
exercise price to the Company from the sales proceeds before Common Stock is
issued.
(g) A Director NQSO shall be exercisable during the lifetime of the
Eligible
9
<PAGE>
Director with respect to whom it was granted only by the person to whom it was
granted (whether the Eligible Director or a Trust), provided that such person
during the Eligible Director's lifetime may designate a Trust to be a
beneficiary with respect to the Director NQSO, and such beneficiary shall, after
the death of the Eligible Director to whom the Director NQSO was granted, have
all of the rights designated for such beneficiary. In the absence of such
designation, after the death of the Eligible Director with respect to whom the
Director NQSO was granted, if such Director NQSO was granted to the Eligible
Director, the Director NQSO shall be exercisable by the person or persons to
whom the optionee's rights under such option pass by will or by the laws of
descent and distribution.
(h) A Director NQSO shall not vest with respect to an Eligible
Director, or the affiliate of such Eligible Director, as the case may be, (i)
unless the Eligible Director, has, at the date of grant, provided three (3)
years of prior continuous service as an Eligible Director, or (ii) until the
date upon which such Eligible Director has provided one year of continuous
service as an Eligible Director following the date of grant of such Director
NQSO, whereupon such Director NQSO shall become fully vested and exercisable in
accordance with its terms.
(i) The Company may require any optionee under this Section 6, or any
person to whom a Director NQSO is transferred under paragraph 6(g), as a
condition of exercising any such option: (i) to give written assurances
satisfactory to the Company as to such person's knowledge and experience in
financial and business matters and/or to employ a purchaser representative who
has such knowledge and experience in financial and business matters, and that
such person is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Director NQSO; and (ii)
to give written assurances satisfactory to the Company stating that such person
is acquiring the Common Stock subject to the Director NQSO for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the Director NQSO has been registered under a then currently
effective registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), or (ii), as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws.
(j) Subject to the last sentence of this paragraph 6(j), each
Director NQSO shall include a provision entitling the optionee to a further
Nonqualified Stock Option (a "Director Re-Load Option") in the event the
optionee exercises the Director NQSO evidenced by the Director NQSO grant, in
whole or in part, by surrendering other shares of Common Stock in accordance
with the Plan and the terms of the Director NQSO grant. Any such Director Re-
Load Option (i) shall be for a number of shares equal to the number of shares
10
<PAGE>
surrendered as part or all of the exercise price of the original Director NQSO;
(ii) shall have an expiration date which is the same as the expiration date of
the original Director NQSO; and (iii) shall have an exercise price which is
equal to one hundred percent (100%) of the fair market value of the Common Stock
subject to the Director Re-Load Option on the date of exercise of the original
Director NQSO. Any such Director Re-Load Option shall be subject to the
availability of sufficient shares under paragraph 3(a). There shall be no
Director Re-Load Option on a Director Re-Load Option. Notwithstanding anything
else in the Plan to the contrary, this paragraph 6(j) shall be of no force and
effect from and after June 23, 1998.
(k) For purposes of this Section 6, the term "Eligible Director"
shall mean a member of the Board who is not an employee of the Company or any
Affiliate, and the term "affiliate" shall mean a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Eligible Director.
7. TERMS OF STOCK BONUSES AND PURCHASES OF
---------------------------------------
RESTRICTED STOCK.
----------------
Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the terms
and conditions of separate agreements need not be identical, but each stock
bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:
(a) The purchase price under each stock purchase agreement shall be
such amount as the Board or Committee shall determine and designate in such
agreement. Notwithstanding the foregoing, the Board or the Committee may
determine that eligible participants in the Plan may be awarded stock pursuant
to a stock bonus agreement in consideration for past services actually rendered
to the Company or for its benefit.
(b) No rights under a stock bonus or restricted stock purchase
agreement shall be assignable by any participant under the Plan, either
voluntarily or by operation of law, except where such assignment is required by
law or expressly authorized by the terms of the applicable stock bonus or
restricted stock purchase agreement.
(c) The purchase price of stock acquired pursuant to a stock purchase
agreement shall be paid either: (i) in cash at the time of purchase; (ii) at
the discretion of the Board or the Committee, according to a deferred payment or
other arrangement with the person to whom the Common Stock is sold; or (iii) in
any other form of legal consideration that may be acceptable to the Board or the
Committee in their discretion; including but not limited to
11
<PAGE>
payment of the purchase price pursuant to a program developed under Regulation T
as promulgated by the Federal Reserve Board which results in the receipt of cash
(or a check) by the Company before Common Stock is issued or the receipt of
irrevocable instruction to pay the aggregate exercise price of the Company from
the sales proceeds before Common Stock is issued. Notwithstanding the foregoing,
the Board or the Committee to which administration of the Plan has been
delegated may award Common Stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit.
(d) Shares of Common Stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.
(e) In the event a person ceases to be an employee of or ceases to
serve as a director or consultant to the Company or an Affiliate, the Company
may repurchase or otherwise reacquire any or all of the shares of Common Stock
held by that person which have not vested as of the date of termination under
the terms of the stock bonus or restricted stock purchase agreement between the
Company and such person.
8. COVENANTS OF THE COMPANY.
------------------------
(a) During the terms of the Stock Awards granted under the Plan, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards up to the number of shares of Common Stock
authorized under the Plan.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of Common Stock under the Stock Awards granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any Stock Award granted under
the Plan or any Common Stock issued or issuable pursuant to any such Stock
Award. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority that counsel for the Company
deems necessary for the lawful issuance and sale of Common Stock under the Plan,
the Company shall be relieved from any liability for failure to issue and sell
Common Stock upon exercise of such Stock Awards unless and until such authority
is obtained.
9. USE OF PROCEEDS FROM COMMON STOCK.
---------------------------------
Proceeds from the sale of Common Stock pursuant to Stock Awards granted
under the Plan shall constitute general funds of the Company.
12
<PAGE>
10. MISCELLANEOUS.
-------------
(a) The Board or Committee shall have the power to accelerate the
time during which a Stock Award may be exercised or the time during which a
Stock Award or any part thereof will vest, notwithstanding the provisions in the
Stock Award stating the time during which it may be exercised or the time during
which it will vest. Each Discretionary Stock Option providing for vesting
pursuant to paragraph 5(e) shall also provide that if the employee's employment
or a director's or consultant's affiliation with the Company or an Affiliate of
the Company is terminated by reason of death or disability (within the meaning
of Title II or XVI of the Social Security Act or comparable statute applicable
to an Affiliate and with such permanent and total disability certified by (i)
the Social Security Administration, (ii) the comparable governmental authority
applicable to an Affiliate, (iii) such other body having the relevant decision-
making power applicable to an Affiliate or (iv) an independent medical advisor
appointed by the Company, as applicable, prior to such termination), then the
vesting schedule of Discretionary Stock Options granted to such employee,
director or consultant or to the Trusts of such employee, director or consultant
shall be accelerated by twelve months for each full year the employee has been
employed by or the director or consultant has been affiliated with the Company
and/or an Affiliate of the Company.
(b) Neither an optionee nor any person to whom an Option is
transferred under the provisions of the Plan shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to such Option unless and until such person has satisfied all requirements for
exercise of the Option pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any eligible employee, consultant,
director, optionee or holder of Stock Awards under the Plan any right to
continue in the employ of the Company or any Affiliate or to continue acting as
a consultant or director or shall affect the right of the Company or any
Affiliate to terminate the employment or consulting relationship or directorship
of any eligible employee, consultant, director, optionee or holder of Stock
Awards under the Plan with or without cause. In the event that a holder of
Stock Awards under the Plan is permitted or otherwise entitled to take a leave
of absence, the Company shall have the unilateral right to (i) determine whether
such leave of absence will be treated as a termination of employment or
relationship as consultant or director for purposes hereof, and (ii) suspend or
otherwise delay the time or times at which exercisability or vesting would
otherwise occur with respect to any outstanding Stock Awards under the Plan.
11. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
----------------------------------------
If any change is made in the Common Stock subject to the Plan, or
subject to any
13
<PAGE>
Stock Award granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding Stock Awards
will be appropriately adjusted in the class(es) and maximum number of shares
subject to the Plan, the maximum number of shares which may be granted to a
participant in a calendar year, the class(es) and number of shares and price per
share of stock subject to outstanding Stock Awards, and the number of shares of
Common Stock to be granted as provided for in paragraphs 6(a) and 6(b). Such
adjustment shall be made by the Board or the Committee, the determination of
which shall be final, binding and conclusive. (The conversion of any convertible
securities of the Company shall not be treated as a "transaction not involving
the receipt of consideration".)
12. CHANGE OF CONTROL.
-----------------
(a) Notwithstanding anything to the contrary in this Plan, in the
event of a Change in Control (as hereinafter defined), then, to the extent
permitted by applicable law: (i) the time during which Stock Awards become
vested shall automatically be accelerated so that the unvested portions of all
Stock Awards shall be vested prior to the Change in Control and (ii) the time
during which the Options may be exercised shall automatically be accelerated to
prior to the Change in Control. Upon and following the acceleration of the
vesting and exercise periods, at the election of the holder of the Stock Award,
the Stock Award may be: (x) exercised (with respect to Options) or, if the
surviving or acquiring corporation agrees to assume the Stock Awards or
substitute similar stock awards, (y) assumed; or (z) replaced with substitute
stock awards. Options not exercised, substituted or assumed prior to or upon the
Change in Control shall be terminated.
(b) For purposes of the Plan, a "Change of Control" shall be deemed to
have occurred at any of the following times:
(i) upon the acquisition (other than from the Company) by any
person, entity or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act (excluding, for this purpose, the Company or its affiliates, or
any employee benefit plan of the Company or its affiliates which acquires
beneficial ownership of voting securities of the Company), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of fifty percent (50%) or more of either the then outstanding shares of Common
Stock or the combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of directors; or
(ii) at the time individuals who, as of April 2, 1991, constitute
the Board
14
<PAGE>
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board, provided that any person becoming a director subsequent to April
2, 1991, whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the Exchange Act) shall be, for purposes of the Plan, considered as though
such person were a member of the Incumbent Board; or
(iii) immediately prior to the consummation by the Company of a
reorganization, merger, consolidation, (in each case, with respect to which
persons who were the stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than fifty percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or consolidated
company's then outstanding voting securities) or a liquidation or dissolution of
the Company or of the sale of all or substantially all of the assets of the
Company; or
(iv) the occurrence of any other event which the Incumbent
Board in its sole discretion determines constitutes a Change of Control.
13. QUALIFIED DOMESTIC RELATIONS ORDERS
-----------------------------------
(a) Anything in the Plan to the contrary notwithstanding, rights
under Stock Awards may be assigned to an Alternate Payee to the extent that a
QDRO so provides. (The terms "Alternate Payee" and "QDRO" are defined in
paragraph 13(c) below.) The assignment of a Stock Award to an Alternate Payee
pursuant to a QDRO shall not be treated as having caused a new grant. The
transfer of an Incentive Stock Option to an Alternate Payee may, however, cause
it to fail to qualify as an Incentive Stock Option. If a Stock Award is
assigned to an Alternate Payee, the Alternate Payee generally has the same
rights as the grantee under the terms of the Plan; provided however, that (i)
the Stock Award shall be subject to the same vesting terms and exercise period
as if the Stock Award were still held by the grantee, (ii) an Alternate Payee
may not transfer a Stock Award and (iii) an Alternate Payee is ineligible for
Re-Load Options described at paragraph 5(j) or Director Re-Load Options
described at paragraph 6(j).
(b) In the event of the Plan administrator's receipt of a domestic
relations order or other notice of adverse claim by an Alternate Payee of a
grantee of a Stock Award, transfer of the proceeds of the exercise of such Stock
Award, whether in the form of cash, stock or other
15
<PAGE>
property, may be suspended. Such proceeds shall thereafter be transferred
pursuant to the terms of a QDRO or other agreement between the grantee and
Alternate Payee. A grantee's ability to exercise a Stock Award may be barred if
the Plan administrator receives a court order directing the Plan administrator
not to permit exercise.
(c) The word "QDRO" as used in the Plan shall mean a court order (i)
that creates or recognizes the right of the spouse, former spouse or child (an
"Alternate Payee") of an individual who is granted a Stock Award to an interest
in such Stock Award relating to marital property rights or support obligations
and (ii) that the administrator of the Plan determines would be a "qualified
domestic relations order," as that term is defined in section 414(p) of the Code
and section 206(d) of the Employee Retirement Income Security Act ("ERISA"), but
for the fact that the Plan is not a plan described in section 3(3) of ERISA.
14. AMENDMENT OF THE PLAN.
---------------------
(a) The Board at any time, and from time to time, may amend the
Plan. However, except as provided in Section 10 relating to adjustments upon
changes in the Common Stock, no amendment shall be effective unless approved by
the stockholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:
(i) increase the number of shares reserved for Stock Awards under
the Plan;
(ii) modify the requirements as to eligibility for participation in
the Plan (to the extent such modification requires stockholder approval in order
for the Plan to satisfy the requirements of Section 422(b) of the Code); or
(iii) modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to satisfy the requirements of
Section 422(b) of the Code.
(b) The Board may in its sole discretion submit any other amendment
to the Plan for stockholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of Section 162(m) of the Code
and the regulations promulgated thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation to certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan
in any respect the Board deems necessary or advisable to provide optionees with
the maximum benefits provided or to be provided under the provisions of the Code
and the regulations promulgated thereunder relating to employee Incentive Stock
Options and/or to bring the Plan and/or Options granted under it into compliance
therewith.
(d) Rights and obligations under any Stock Award granted before
amendment
16
<PAGE>
of the Plan shall not be impaired by any amendment of the Plan, unless: (i) the
Company requests the consent of the person to whom the Stock Award was granted;
and (ii) such person consents in writing.
15. TERMINATION OR SUSPENSION OF THE PLAN.
-------------------------------------
(a) The Board may suspend or terminate the Plan at any time. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated. No Incentive Stock Options may be granted under the Plan after
February 22, 2009.
(b) Rights and obligations under any Stock Awards granted while the
Plan is in effect shall not be impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Stock Award was granted.
16. EFFECTIVE DATE OF PLAN.
----------------------
The Plan shall become effective as determined by the Board.
17
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>5
<FILENAME>dex102.txt
<DESCRIPTION>COMPANY'S AMENDED & RESTATED 1997 SPECIAL NOEIP
<TEXT>
<PAGE>
Exhibit 10.2
AMGEN INC.
AMENDED AND RESTATED 1997 SPECIAL NON-OFFICER EQUITY INCENTIVE PLAN
1. PURPOSE.
-------
(a) The purpose of the 1997 Special Non-Officer Equity Incentive Plan
(the "Plan") is to provide a means by which non-Officer employees of and
consultants to Amgen Inc., a Delaware corporation (the "Company"), and employees
of and consultants to the Company's Affiliates, as defined in paragraph 1(b),
directly, or indirectly through Trusts, may be given an opportunity to benefit
from increases in value of the stock of the Company through the granting of (i)
stock options, (ii) stock bonuses, and (iii) rights to purchase restricted
stock, all as defined below.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
non-Officer employees of the Company and persons serving as consultants to the
Company, to secure and retain the services of persons capable of filling such
positions, and to provide incentives for such persons to exert maximum efforts
for the success of the Company.
(d) The Company intends that the rights issued under the Plan ("Stock
Awards") shall, in the discretion of the Board of Directors of the Company (the
"Board") or any committee to which responsibility for administration of the Plan
has been delegated pursuant to paragraph 2(c), be either (i) stock options
granted pursuant to Section 5 hereof, which option shall not qualify as
incentive stock options as that term is used in Section 422 of the Code
("Options") or (ii) stock bonuses or rights to purchase restricted stock granted
pursuant to Section 6 hereof.
(e) The word "Trust" as used in the Plan shall mean a trust created
for the benefit of the employee or consultant, his or her spouse, or members of
their immediate family. The word optionee shall mean the person to whom the
option is granted or the employee or consultant for whose benefit the option is
granted to a Trust, as the context shall require.
2. ADMINISTRATION.
--------------
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a committee, as provided in paragraph 2(c).
<PAGE>
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how Stock Awards shall be
granted; whether a Stock Award will be an Option, a stock bonus, a right to
purchase restricted stock, or a combination of the foregoing; the provisions of
each Stock Award granted (which need not be identical), including the time or
times when a person shall be permitted to purchase or receive stock pursuant to
a Stock Award; and the number of shares with respect to which Stock Awards shall
be granted to each such person.
(2) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award, in a manner
and to the extent it shall deem necessary or expedient to make the Plan fully
effective.
(3) To amend the Plan as provided in Section 13.
(4) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members of the Board (the "Committee") which
members may be non-employee directors and outside directors. If administration
is delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. Notwithstanding
anything else in this paragraph 2(c) to the contrary, at any time the Board or
the Committee may delegate to a committee of one or more members of the Board
the authority to grant or amend options to all employees or consultants or any
portion or class thereof.
(d) Notwithstanding anything else in the Plan to the contrary, at any
time the Board or the Committee may authorize by duly adopted resolution one or
more Officers (as defined in paragraph 4(a) below) (each a "Delegated Officer")
to take the actions described in paragraph 2(b)(1) of the Plan with respect to
Options only, subject to, and within the limitations of, the express provisions
of the Plan; provided, however, that a Delegated Officer shall not have the
-------- -------
power to (1) grant any Options to himself, any non-employee director,
consultant, Trust, other Delegated Officer or Officer, (2) determine the time
or times when a person shall be permitted to purchase stock pursuant to the
exercise of an Option (i.e., vesting), (3) determine the exercise price of an
Option, or (4) grant any Option to a parent corporation of the Company, as
defined in Section 424(e) of the Code. The resolution authorizing a Delegated
Officer to act as such shall specify the total number of shares of Common Stock
that a Delegated Officer may grant with respect to Options. The exercise price
(including any formula by which such price or prices may be determined) and the
time or times when a person shall be permitted to purchase stock pursuant to the
exercise of an Option shall, however, be set by the Board and not by a
2
<PAGE>
Delegated Officer to the extent required by Delaware General Corporation Law
Section 157 or any other applicable law.
(e) The term "non-employee director" shall mean a member of the Board
who (i) is not currently an officer of the Company or a parent or subsidiary of
the Company (as defined in Rule 16a-1(f) promulgated by the Securities and
Exchange Commission under Section 16 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) or an employee of the Company or a parent or
subsidiary of the Company; (ii) does not receive compensation from the Company
or a parent or subsidiary of the Company for services rendered in any capacity
other than as a member of the Board (including a consultant) in an amount
required to be disclosed to the Company's stockholders under Rule 404 of
Regulation S-K promulgated by the Securities and Exchange Commission ("Rule
404"); (iii) does not possess an interest in any other transaction required to
be disclosed under Rule 404; or (iv) is not engaged in a business relationship
required to be disclosed under Rule 404, as all of these provisions are
interpreted by the Securities and Exchange Commission under Rule 16b-3
promulgated under the Exchange Act.
(f) The term "outside director," as used in this Plan, shall mean an
administrator of the Plan, whether a member of the Board or of any Committee to
which responsibility for administration of the Plan has been delegated pursuant
to paragraph 2(c), who is considered to be an "outside director" in accordance
with the rules, regulations or interpretations of Section 162(m) of the Code.
3. SHARES SUBJECT TO THE PLAN.
--------------------------
(a) Subject to the provisions of Section 10 relating to adjustments
upon changes in stock, the stock that may be issued pursuant to Stock Awards
granted under the Plan shall not exceed in the aggregate Eighty-Nine Million
(89,000,000) shares of the Company's $.0001 par value common stock (the "Common
Stock"). If any Stock Award granted under the Plan shall for any reason expire
or otherwise terminate without having been exercised in full, the Common Stock
not purchased under such Stock Award shall again become available for the Plan.
Shares repurchased by the Company pursuant to any repurchase rights reserved by
the Company pursuant to the Plan shall not be available for subsequent issuance
under the Plan.
(b) The Common Stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
4. ELIGIBILITY.
-----------
(a) Stock Awards may be granted to non-Officer employees of the
Company, or employees of any Affiliate, or consultants to the Company or any
Affiliate, or to Trusts of any such employee or consultant. Notwithstanding any
other provisions in this Plan to the contrary, Officers of the Company shall not
be eligible to receive Stock Awards. The term "Officer" shall include any
natural person who is elected as a corporate officer of the Company by the
Board.
3
<PAGE>
(b) Stock Awards shall be limited to a maximum of 2,000,000 shares of
Common Stock per person per calendar year.
5. TERMS OF OPTIONS.
----------------
An Option granted pursuant to this Section 5 shall be in such form and
shall contain such terms and conditions as the Board or the Committee shall deem
appropriate. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following provisions:
(a) No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(b) The exercise price of each Option shall be not less than one
hundred percent (100%) of the fair market value of the Common Stock subject to
the Option on the date the Option is granted.
(c) The purchase price of Common Stock acquired pursuant to an Option
shall be paid, to the extent permitted by applicable statutes and regulations,
either: (i) in cash at the time the Option is exercised; or (ii) at the
discretion of the Board or the Committee, either at the time of grant or
exercise of the Option (A) by delivery to the Company of shares of Common Stock
that have been held for the period required to avoid a charge to the Company's
reported earnings and valued at the fair market value of the shares of Common
Stock on the date of exercise, (B) according to a deferred payment or other
arrangement with the person to whom the Option is granted or to whom the Option
is transferred pursuant to paragraph 5(d), or (C) in any other form of legal
consideration that may be acceptable to the Board or the Committee in their
discretion, including but not limited to payment of the purchase price pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve
Board which results in the receipt of cash (or a check) by the Company before
Common Stock is issued or, prior to the issuance of Common Stock, receipt by the
Company of evidence from the person authorized to sell the underlying stock that
they have received irrevocable instructions from the option holder to pay to the
Company the aggregate exercise price of the Option from the sale proceeds.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at not less than the minimum rate
of interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
(d) An Option granted to a natural person shall be exercisable during
the lifetime of such person only by such person, provided that such person
during such person's lifetime may designate a Trust to be such person's
beneficiary, and such beneficiary shall, after the death of the person to whom
the Option was granted, have all the rights that such person had while living,
including the right to exercise the Option. In the absence of such designation,
after the death of the person to whom the Option is granted, the Option shall be
exercisable by the person or persons to whom the optionee's rights under such
Option pass by will or by the laws of descent and distribution.
4
<PAGE>
(e) The total number of shares of Common Stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). From time to time during each of such installment periods, the
Option may become exercisable ("vest") with respect to some or all of the shares
allotted to that period, and may be exercised with respect to some or all of the
shares allotted to such period and/or any prior period as to which the Option
was not fully exercised. During the remainder of the term of the Option (if its
term extends beyond the end of the installment periods), the Option may be
exercised from time to time with respect to any shares then remaining subject to
the Option. The provisions of this paragraph 5(e) are subject to any Option
provisions governing the minimum number of shares as to which an Option may be
exercised.
(f) The Company may require any optionee, or any person to whom an
Option is transferred under paragraph 5(d), as a condition of exercising any
such Option: (i) to give written assurances satisfactory to the Company as to
such person's knowledge and experience in financial and business matters and/or
the employment of such person's purchaser representative who has such knowledge
and experience in financial and business matters, and that such person is
capable of evaluating, alone or together with the purchaser representative, the
merits and risks of exercising the Option; and (ii) to give written assurances
satisfactory to the Company stating that such person is acquiring the Common
Stock subject to the Option for such person's own account and not with any
present intention of selling or otherwise distributing the Common Stock. These
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if: (x) the issuance of the shares upon the exercise of the Option
has been registered under a then currently effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act"); or (y) as
to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities law.
(g) An Option shall terminate three (3) months after termination of
the optionee's employment or relationship as a consultant with the Company or an
Affiliate, unless: (i) such termination is due to the optionee's permanent and
total disability, within the meaning of Section 422(c)(6) of the Code and with
such permanent and total disability being certified by the Social Security
Administration prior to such termination, in which case the Option may, but need
not, provide that it may be exercised at any time within one (1) year following
such termination of employment or relationship as a consultant; (ii) the
optionee dies while in the employ of or while serving as a consultant to the
Company or an Affiliate, or within not more than three (3) months after
termination of such employment or relationship as a consultant, in which case
the Option may, but need not, provide that it may be exercised at any time
within eighteen (18) months following the death of the optionee by the person or
persons to whom the optionee's rights under such Option pass by will or by the
laws of descent and distribution; or (iii) the Option by its term specifies
either (A) that it shall terminate sooner than three (3) months after
termination of the optionee's employment or relationship as a consultant with
the Company or an Affiliate; or (B) that it may be exercised more than three (3)
months after termination of the optionee's employment or relationship as a
consultant with the Company or an Affiliate. Notwithstanding any other
provision in this Plan to the contrary, (x) no portion of an Option shall be
exercisable by any person to the extent that the Company's federal income tax
deduction with respect to the exercise of such portion of the Option would be
subject to disallowance pursuant to
5
<PAGE>
Section 162(m) of the Code, or any successor thereto, and (y) subject to
paragraph 5(a), if any portion of an Option is not exercisable solely because of
the preceding clause (x) on the date on which such Option would otherwise
terminate pursuant to the foregoing provisions of this paragraph 5(g), such
Option shall not terminate until three (3) months after such Option thereafter
ceases to be subject to the preceding clause (x). Subject to the preceding
sentence, any portion of an Option which is not exercisable on the date on which
an optionee's employment or relationship as a consultant with the Company or an
Affiliate ceases shall terminate immediately on such date. This paragraph 5(g)
shall not be construed to extend the term of any Option or to permit anyone to
exercise the Option after expiration of its term, nor shall it be construed to
increase the number of shares as to which any Option is exercisable from the
amount exercisable on the date of termination of the optionee's employment or
relationship as a consultant.
(h) The Option may, but need not, include a provision whereby the
optionee may elect at any time during the term of the optionee's employment or
relationship as a consultant with the Company or any Affiliate to exercise the
Option as to any part or all of the shares subject to the Option prior to the
stated vesting dates of the Option. Any shares so purchased from any unvested
installment or Option may be subject to a repurchase right in favor of the
Company or to any other restriction the Board or the Committee determines to be
appropriate.
(i) To the extent provided by the terms of an Option, each optionee
may satisfy any federal, state or local tax withholding obligation relating to
the exercise of such Option by any of the following means or by a combination of
such means: (i) tendering a cash payment; (ii) authorizing the Company to
withhold from the shares of the Common Stock otherwise issuable to the optionee
as a result of the exercise of the Option a number of shares having a fair
market value less than or equal to the amount of the Company's required minimum
statutory withholding; or (iii) delivering to the Company owned and unencumbered
shares of the Common Stock having a fair market value less than or equal to the
amount of the Company's required minimum statutory withholding.
6. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
--------------------------------------------------------
Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the terms
and conditions of separate agreements need not be identical, but each stock
bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:
(a) The purchase price under each stock purchase agreement shall be
such amount as the Board or Committee shall determine and designate in such
agreement. Notwithstanding the foregoing, the Board or the Committee may
determine that eligible participants in the Plan may be awarded stock pursuant
to a stock bonus agreement in consideration for past services actually rendered
to the Company or for its benefit.
6
<PAGE>
(b) No rights under a stock bonus or restricted stock purchase
agreement shall be assignable by any participant under the Plan, either
voluntarily or by operation of law, except where such assignment is required by
law or expressly authorized by the terms of the applicable stock bonus or
restricted stock purchase agreement.
(c) The purchase price of stock acquired pursuant to a stock purchase
agreement shall be paid either: (i) in cash at the time of purchase; (ii) at
the discretion of the Board or the Committee, according to a deferred payment or
other arrangement with the person to whom the Common Stock is sold; or (iii) in
any other form of legal consideration that may be acceptable to the Board or the
Committee in their discretion; including but not limited to payment of the
purchase price pursuant to a program developed under Regulation T as promulgated
by the Federal Reserve Board which results in the receipt of cash (or a check)
by the Company before Common Stock is issued or the receipt of irrevocable
instruction to pay the aggregate exercise price of the Company from the sales
proceeds before Common Stock is issued. Notwithstanding the foregoing, the
Board or the Committee to which administration of the Plan has been delegated
may award Common Stock pursuant to a stock bonus agreement in consideration for
past services actually rendered to the Company or for its benefit.
(d) Shares of Common Stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.
(e) In the event a person ceases to be an employee of or ceases to
serve as a consultant to the Company or an Affiliate, the Company may repurchase
or otherwise reacquire any or all of the shares of Common Stock held by that
person which have not vested as of the date of termination under the terms of
the stock bonus or restricted stock purchase agreement between the Company and
such person.
7. COVENANTS OF THE COMPANY.
------------------------
(a) During the terms of the Stock Awards granted under the Plan, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards up to the number of shares of Common Stock
authorized under the Plan.
(b) The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of Common Stock under the Stock Awards granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any Stock Award granted under
the Plan or any Common Stock issued or issuable pursuant to any such Stock
Award. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority that counsel for the Company
deems necessary for the lawful issuance and sale of Common Stock under the Plan,
the Company shall be relieved from any liability for failure to issue and sell
Common Stock upon exercise of such Stock Awards unless and until such authority
is obtained.
7
<PAGE>
8. USE OF PROCEEDS FROM COMMON STOCK.
---------------------------------
Proceeds from the sale of Common Stock pursuant to Stock Awards
granted under the Plan shall constitute general funds of the Company.
9. MISCELLANEOUS.
-------------
(a) The Board or Committee shall have the power to accelerate the
time during which a Stock Award may be exercised or the time during which a
Stock Award or any part thereof will vest, notwithstanding the provisions in the
Stock Award stating the time during which it may be exercised or the time during
which it will vest. Each Option providing for vesting pursuant to paragraph 5(e)
shall also provide that if the employee's employment or a consultant's
affiliation with the Company or an Affiliate of the Company is terminated by
reason of death or disability (within the meaning of Title II or XVI of the
Social Security Act or comparable statute applicable to an Affiliate and with
such permanent and total disability certified by (i) the Social Security
Administration, (ii) the comparable governmental authority applicable to an
Affiliate, (iii) such other body having the relevant decision-making power
applicable to an Affiliate or (iv) an independent medical advisor appointed by
the Company, as applicable, prior to such termination), then the vesting
schedule of Options granted to such employee or consultant or to the Trusts of
such employee or consultant shall be accelerated as of the date of such
termination by twelve months for each full year the employee has been employed
by or the consultant has been affiliated with the Company and/or an Affiliate of
the Company.
(b) Neither an optionee nor any person to whom an Option is
transferred under the provisions of the Plan shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares subject
to such Option unless and until such person has satisfied all requirements for
exercise of the Option pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any eligible employee, consultant,
optionee or holder of Stock Awards under the Plan any right to continue in the
employ of the Company or any Affiliate or to continue acting as a consultant or
shall affect the right of the Company or any Affiliate to terminate the
employment or consulting relationship of any eligible employee, consultant,
optionee or holder of Stock Awards under the Plan with or without cause, at any
time and with or without notice. In the event that a holder of Stock Awards
under the Plan is permitted or otherwise entitled to take a leave of absence,
the Company shall have the unilateral right to (i) determine whether such leave
of absence will be treated as a termination of employment or relationship as
consultant for purposes hereof, and (ii) suspend or otherwise delay the time or
times at which exercisability or vesting would otherwise occur with respect to
any outstanding Stock Awards under the Plan.
10. ADJUSTMENTS UPON CERTAIN TRANSACTIONS.
-------------------------------------
(a) In the event that any dividend or other distribution (whether in
the form of cash, Common Stock, other securities, or other property),
recapitalization, reclassification, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or
8
<PAGE>
substantially all of the assets of the Company, or exchange of Common Stock or
other securities of the Company (other than pursuant to the conversion of
convertible securities), issuance of warrants or other rights to purchase Common
Stock or other securities of the Company, or other similar corporate transaction
or event, in the Board's or the Committee's sole discretion, affects the Common
Stock such that an adjustment is determined by the Board or the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to Stock Awards, then the Committee or the Board shall, in such manner as it may
deem equitable, may make the following adjustments to the Plan and with respect
to any or all of the outstanding Stock Awards:
a. the number and kind of shares of Common Stock (or other
securities or property) with respect to which Stock Awards may be granted
under the Plan (including, but not limited to, adjustments of the
limitations in paragraph 3(a) on the maximum number and kind of shares
which may be issued under the Plan and in paragraph 4(b) on the maximum
number of shares subject to Stock Awards which can be granted any person in
a calendar year),
b. the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Stock Awards, including by
providing, either by the terms of such Stock Awards or by action taken
prior to the occurrence of such transaction or event, that upon such event,
such Stock Award shall be assumed by a successor or survivor corporation,
or a parent or subsidiary thereof, or shall be substituted for by similar
Stock Awards covering the stock of a successor or survivor corporation, or
a parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices, and
c. the grant or exercise price with respect to any Stock Award.
(b) In the event that the Board or Committee adjusts any or all of
the outstanding Stock Awards by providing that such Stock Awards shall be
assumed by a successor or survivor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar options, rights or awards
covering the stock of a successor or survivor corporation, or a parent or
subsidiary thereof, the Board or the Committee may, in its sole discretion,
determine that the transfer of the optionee's or other holder's employment or
consulting relationship to such successor or survivor corporation or a parent or
subsidiary thereof shall not constitute a cessation of the optionee's or
holder's employment or consulting relationship with the Company or an Affiliate
for the purposes of paragraph 5(g).
(c) Any adjustments made by the Board or the Committee under
paragraphs 10(a) and 10(b) shall be final, binding and conclusive on all
persons.
11. CHANGE OF CONTROL.
-----------------
(a) Notwithstanding anything to the contrary in this Plan, in the
event of a Change in Control (as hereinafter defined), then, to the extent
permitted by applicable law:(i) the time during which Stock Awards become vested
shall automatically be accelerated so that
9
<PAGE>
the unvested portions of all Stock Awards shall be vested prior to the Change in
Control and (ii) the time during which the Options may be exercised shall
automatically be accelerated to immediately prior to the Change in Control. Upon
and following the acceleration of the vesting and exercise periods, at the
election of the holder of the Stock Award, the Stock Award may be: (x) exercised
(with respect to Options) or, if the surviving or acquiring corporation agrees
to assume the Stock Awards or substitute similar stock awards, (y) assumed; or
(z) replaced with substitute stock awards. Options not exercised, substituted or
assumed prior to or upon the Change in Control shall be terminated.
(b) For purposes of the Plan, a "Change of Control" shall be deemed
to have occurred at any of the following times:
(i) upon the acquisition (other than from the Company) by any
person, entity or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act (excluding, for this purpose, the Company or its affiliates, or
any employee benefit plan of the Company or its affiliates which acquires
beneficial ownership of voting securities of the Company), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of fifty percent (50%) or more of either the then outstanding shares of Common
Stock or the combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of directors; or
(ii) at the time individuals who, as of December 9, 1997,
constitute the Board (the "Incumbent Board") cease for any reason to constitute
at least a majority of the Board, provided that any person becoming a director
subsequent to December 9, 1997, whose election, or nomination for election by
the Company's stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the Exchange Act) shall be, for purposes of the Plan,
considered as though such person were a member of the Incumbent Board; or
(iii) immediately prior to the consummation by the Company of a
reorganization, merger, consolidation, (in each case, with respect to which
persons who were the stockholders of the Company immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter, own more
than fifty percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or consolidated
company's then outstanding voting securities) or a liquidation or dissolution of
the Company or of the sale of all or substantially all of the assets of the
Company; or
(iv) the occurrence of any other event which the Incumbent
Board in its sole discretion determines constitutes a Change of Control.
10
<PAGE>
12. QUALIFIED DOMESTIC RELATIONS ORDERS.
-----------------------------------
(a) Anything in the Plan to the contrary notwithstanding, rights
under Stock Awards may be assigned to an Alternate Payee to the extent that a
QDRO so provides. (The terms "Alternate Payee" and "QDRO" are defined in
paragraph 12(c) below.) The assignment of a Stock Award to an Alternate Payee
pursuant to a QDRO shall not be treated as having caused a new grant. If a Stock
Award is assigned to an Alternate Payee, the Alternate Payee generally has the
same rights as the grantee under the terms of the Plan; provided however, that
(i) the Stock Award shall be subject to the same vesting terms and exercise
period as if the Stock Award were still held by the grantee, and (ii) an
Alternate Payee may not transfer a Stock Award.
(b) In the event of the Plan administrator's receipt of a domestic
relations order or other notice of adverse claim by an Alternate Payee of a
grantee of a Stock Award, transfer of the proceeds of the exercise of such Stock
Award, whether in the form of cash, stock or other property, may be suspended.
Such proceeds shall thereafter be transferred pursuant to the terms of a QDRO or
other agreement between the grantee and Alternate Payee. A grantee's ability to
exercise a Stock Award may be barred if the Plan administrator receives a court
order directing the Plan administrator not to permit exercise.
(c) The word "QDRO" as used in the Plan shall mean a court order (i)
that creates or recognizes the right of the spouse, former spouse or child (an
"Alternate Payee") of an individual who is granted a Stock Award to an interest
in such Stock Award relating to marital property rights or support obligations
and (ii) that the administrator of the Plan determines would be a "qualified
domestic relations order," as that term is defined in section 414(p) of the Code
and section 206(d) of the Employee Retirement Income Security Act ("ERISA"), but
for the fact that the Plan is not a plan described in section 3(3) of ERISA.
13. AMENDMENT OF THE PLAN.
---------------------
The Board at any time, and from time to time, may amend the Plan.
Rights and obligations under any Stock Award granted before amendment of the
Plan shall not be impaired by any amendment of the Plan, unless: (i) the
Company requests the consent of the person to whom the Stock Award was granted;
and (ii) such person consents in writing.
14. TERMINATION OR SUSPENSION OF THE PLAN.
-------------------------------------
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on December 9, 2007. No Stock Awards
may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any Stock Awards granted while the
Plan is in effect shall not be impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Stock Award was granted.
15. EFFECTIVE DATE OF PLAN.
----------------------
The Plan shall become effective as determined by the Board.
11
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.60
<SEQUENCE>6
<FILENAME>dex1060.txt
<DESCRIPTION>AGREEMENT BETWEEN AMGEN & DR. BETH C. SEIDENBERG
<TEXT>
<PAGE>
Exhibit 10.60
December 14, 2001
Beth C. Seidenberg, M.D.
8 Wolf Lane
Basking Ridge, NJ 07920
Dear Beth:
Following our discussions over the last several weeks, and on behalf of the
Amgen Executive Committee, I am pleased to offer you the position of Senior Vice
President, Development, salary grade E37, reporting to me.
In this position, you will have responsibility for all aspects of Worldwide
Clinical Development and Regulatory Affairs within the Amgen R&D organization.
Reporting to you will be: Colin Broom, M.D., Vice President, Clinical
Development, Europe; Alan Forsythe, Ph.D., Vice President, Corporate Biomedical
Information; Jan Gheuens, M.D., Ph.D., Vice President, Clinical Development
U.S.; and Ralph Smalling, M.S., Vice President, Regulatory Affairs. As Senior
Vice President, Development, you will serve as a member of the Amgen Executive
Committee, in which capacity you will have the opportunity to help chart the
future course of this extraordinary company. Kevin Sharer has already expressed
to you his enthusiasm for your participation in our most senior governance body.
Your base salary will be $41,667 per month. You will be entitled to a signing
bonus of $325,000, the net amount of which (less federal and state tax
deductions and other applicable withholdings) will be paid within 30 days of
your start date. If you are not still employed as of the date the bonus is paid,
the bonus will not be considered earned or vested and will not be prorated. In
addition, you will be entitled to receive a retention bonus of $200,000, the net
amount of which (less federal and state tax deductions and other applicable
withholdings) will be paid within 30 days of the first anniversary of your start
date. You must remain actively employed by Amgen through the first anniversary
of your start date to receive this bonus.
In addition, you will be granted the option to purchase 100,000 shares of Common
Stock at a price equal to 100% of the fair market value on your start date. All
of these shares will vest at a rate of 25% per year for four years, beginning
one year from the date of grant, and the options will expire seven years from
the date of grant.
You will be eligible to participate in the Amgen Management Incentive Plan (MIP)
with a target award of 65% of base pay. Performance against pre-established
goals and Amgen's performance will determine your actual incentive each year.
Subject to the terms of the MIP, Amgen will guarantee a prorated 65% of your
2002 earned salary (dependent on your start date in 2002) as a bonus for 2002;
and for 2003, 65% of your base salary earnings or the actual results from the
MIP, whichever is greater. You must be actively employed by Amgen on December
31, 2002 and on December 31, 2003 to receive the guaranteed payments for 2002
and 2003, respectively.
Amgen will award you 27,500 shares of restricted stock under Amgen's 1991 Equity
Incentive Plan, in consideration of your payment of the $.0001 per share par
value of the restricted shares (the "Par Value Price"), in the aggregate amount
of $2.75. This grant will vest as follows, contingent upon your being actively
employed with Amgen on each vesting date:
<PAGE>
Beth C. Seidenberg, M.D.
December 14, 2001
The second anniversary of your start date 5,000 shares
The third anniversary of your start date 7,500 shares
The fourth anniversary of your start date 7,500 shares
The fifth anniversary of your start date 7,500 shares
Upon the termination of your active employment with Amgen, any unvested shares
of restricted stock may be repurchased by Amgen at their Par Value Price, except
that upon termination of your employment due to your "Permanent and Total
Disability," as defined below, or your death, then the vesting of the unvested
shares of restricted stock will be accelerated so that all the restricted stock
will be fully vested as of the date of termination. For the purposes of this
provision only, you shall have incurred a "Permanent and Total Disability" when
such a disability has been certified by the Social Security Administration prior
to the date of termination. Amgen will hold the certificates representing any
unvested shares of restricted stock until the shares vest, at which time Amgen
will issue you a certificate representing the vested shares.
In addition, you are eligible to participate in the Amgen Deferred Compensation
Plan (the "DCP"). The DCP is a non-qualified executive benefit plan that
enables Management Incentive Plan ("MIP") participants to voluntarily defer, on
a pre-tax basis, a portion of their annual pay, including MIP payments. Upon
receipt of your acceptance of employment at Amgen, you will be contacted
directly by a member of the Amgen Executive Compensation Group to provide you
with further details of the DCP and, if you wish, to arrange for your enrollment
in the plan. For this enrollment, which must be completed prior to your date of
employment at Amgen, you may elect to defer up to 50% of your 2002 base salary
and up to 100% of your 2002 MIP bonus to be paid in 2003.
If, within the first three years of your employment with Amgen, either: (i)
Amgen terminates your employment without Cause, as defined below, or (ii) you
resign your employment due to a reduction of your duties or your base salary or
annual target incentive opportunity under the MIP, then you will be entitled to
three years of base salary and target incentive, paid monthly, and health care
coverage unless coverage is obtained from another employer, but only if you sign
a general release form furnished to you by Amgen. If you intend to resign your
employment for reduction of duties or compensation, you must notify the Company
in writing. If Amgen fails to cure or remedy your reason for resignation within
thirty (30) days of its receipt of your notification and you still choose to
resign, you must do so within fifteen (15) days of Amgen's failure to cure or
remedy your reason. If you are also entitled to receive severance benefits
under the Amgen Inc. Change of Control Severance Plan (the "COC Plan") on
account of a termination covered by this provision, you will be paid the greater
of the amount provided above or provided in the COC Plan, but not both amounts.
Solely for the purpose of this provision, "Cause" means (i) your conviction of a
felony, (ii) the engaging by you in conduct that constitutes willful gross
neglect or willful gross misconduct in carrying out your duties to Amgen,
resulting, in either case, in material economic harm to Amgen, unless you
believed in good faith that such conduct was in, or not contrary to, the best
interests of Amgen, (iii) your material breach of any of the terms of this
letter agreement or the Proprietary Information and Inventions Agreement or (iv)
your failure to follow any lawful directive given by me with respect to your
employment. For purposes hereof, no act, or failure to act, on your part shall
be deemed "willful" unless done, or omitted to be done, by you not in good
faith.
By signing this letter, you understand and agree that your employment with Amgen
is at-will. Therefore, your employment can terminate, with or without cause,
and with or without notice, at any time, at your option or Amgen's option, and
Amgen can terminate or change all other terms and conditions of your
<PAGE>
Beth C. Seidenberg, M.D.
December 14, 2001
employment, with or without cause, and with or without notice, at any time. This
at-will relationship will remain in effect throughout your employment with Amgen
Inc. or any of its subsidiaries or affiliates. This letter constitutes the
entire agreement, arrangement and understanding between you and Amgen on the
nature and terms of your employment with Amgen. This letter supersedes any prior
or contemporaneous agreement, arrangement or understanding on this subject
matter. By executing this letter as provided below, you expressly acknowledge
the termination of any such prior agreement, arrangement or understanding. Also,
by your execution of this letter, you affirm that no one has made any written or
verbal statement that contradicts the provisions of this letter. The at-will
nature of your employment, as set forth in this paragraph, can be modified only
by a written agreement signed by both Amgen's Vice President of Human Resources
and you which expressly alters it. This at-will relationship may not be modified
by any oral or implied agreement or by any Company policies, practices or
patterns of conduct.
You will also have the opportunity to participate in our comprehensive benefits
program. Amgen's excellent health care plan currently includes medical, dental,
and vision coverage for you and your eligible dependents. Amgen currently pays
the major expense for these programs while staff members share through payroll
deductions. Please be advised that in order for you and your dependents to be
eligible for Amgen's medical coverage you must:
1. Report to work at Amgen or another location to which you are required to
travel and perform the regular duties of your employment.
2. Contact the Amgen Benefit Center at Fidelity, 1-877-999-7779, to enroll
within 31 days of your hire date.
3. Meet all other eligibility requirements under the plan.
Amgen's Retirement & Savings 401(k) Plan provides an opportunity for you to save
up to 15% of your pay on a tax-deferred basis. Amgen will also contribute to
your 401(k) account to help you save for your future financial goals. These
benefits, services and programs are summarized in the enclosed brochure called
"A Guide to Your Pay and Benefits."
This offer is contingent upon the completion of the verification of the
information listed on your application for employment at Amgen.
Enclosed and included as part of this offer (Attachment 1) is information
regarding Amgen's Proprietary Information and Inventions Agreement, the
Immigration Reform & Control Act, and a packet of materials entitled
"Arbitration of Disputes - Amgen Inc." which includes a Mutual Agreement to
Arbitrate Claims. This offer is contingent upon your completing the items
described in Attachment 1.
Also enclosed and included, as part of this offer (Attachment 2), is information
about the main points of the relocation assistance that Amgen will provide to
you to relocate to the "local area." The brochures included describe each
component in more detail.
Upon acceptance of this offer, please fill out the attached "Moving
Forward...With Amgen" acceptance form and fax it to the Relocation Department at
(805) 376-9862 to initiate your relocation benefits. Gail Thomas will contact
you as soon as possible to walk you through the process.
Beth, all of those with whom you have met here are extremely keen to recruit you
to Amgen. We are enthusiastic about the contribution you can make, and we
believe that Amgen can provide you with extraordinary opportunities for personal
achievement and growth. I look forward to your favorable reply
<PAGE>
Beth C. Seidenberg, M.D.
December 14, 2001
by December 21, 2001. If you accept our offer, please sign and date the copy of
the letter and return it in the enclosed envelope to our Staffing Department
along with the completed and signed Proprietary Information and Inventions
Agreement and the Mutual Agreement to Arbitrate Claims. Please retain the
original offer letter for your records. If you have any questions regarding this
offer, please contact John Hillins at (805) 447-7456.
Sincerely,
/s/ Roger M. Perlmutter
Roger M. Perlmutter, M.D., Ph.D.
Executive Vice President
Research & Development
RMP:JH/lf
Enclosures
/s/ Dr. Beth C. Seidenberg 12/21/01
- --------------------------------------
Signature of Acceptance Date
01/14/02
- --------------------------------------
Anticipated Start Date
(Please select a Monday start date if possible in order to coincide with our New
Hire Orientation Schedule)
<PAGE>
Beth C. Seidenberg, M.D.
December 14, 2001
ATTACHMENT 1
Page 1 of 1
In order to accept our offer you will be required to:
A) Complete, date and sign the Amgen Proprietary Information and
Inventions Agreement and return it with your signed offer letter.
B) Date and sign the enclosed Mutual Agreement to Arbitrate Claims
and return it with your signed offer letter.
C) You will be required to provide Amgen with proof of your identity
and eligibility for employment per requirements of the Immigration
Reform and Control Act of 1986 within 3 (three) days of hire.
Information pertaining to this Act and required proof are
enclosed.
<PAGE>
Beth C. Seidenberg, M.D.
December 14, 2001
ATTACHMENT 2
Page 1 of 3
RELOCATION ASSISTANCE COVERAGE
- ------------------------------
All relocation expense coverage to be provided as a part of your Amgen
employment offer is outlined in this attachment. This relocation expense
coverage is designed to offset most of the cost of your relocation. However, as
a new staff member, it is expected that you will make every effort to reduce or
eliminate relocation expense wherever possible.
Please Note: Upon acceptance of this offer, please fill out the attached "Moving
Forward...With Amgen" acceptance form and fax it to the Relocation Department at
(805) 376-9862 to initiate your relocation benefits. Gail Thomas will contact
you as soon as possible to walk you through the process.
Marketing Assistance and Home Sale Program
- ------------------------------------------
A Marketing Assistance Program is available to assist in the sale of your
current primary residence. Also, through the Home Sale Program, we will offer
you the opportunity for a third party purchase of your current primary residence
if you are unable to sell your home within 90 days. Under this program, an
interest-free equity bridge loan is available to assist in the purchase of your
new residence. Amgen will pay the seller's normal, non-recurring closing costs
associated with the sale of your home (i.e., real estate commission, title
expense, etc.). For additional information, and to initiate the program contact
the Relocation Coordinator. You must contact the Relocation Coordinator before
--------------------------------------------------
taking any action to sell your home.
- ------------------------------------
Additionally, if you have your home listed, are actively participating in the
Home Marketing Assistance program and are closing escrow on the purchase of a
home in the new "local area" prior to the sale of your current residence, Amgen
will reimburse up to 3 months of your current mortgage payment and other
reasonable related costs (i.e., utilities, prorated taxes, insurance, etc.).
Homes excluded from eligibility may include but are not limited to: cooperative
apartments, mobile homes, homes with more than two units, vacation or second
homes, homes with excessive acreage, investment properties, homes with
unmarketable titles, homes with E.I.F.S. (synthetic stucco) siding, homes with a
history of water related or structural problems, or homes where environmental
problems (i.e. underground fuel storage tanks, radon, asbestos) exists.
Temporary Living Expenses
- -------------------------
Temporary living lodging expense will be covered for a period of up to 180 days
in Amgen leased lodging units. If you need to stay in the temporary lodging unit
more than 180 days, you will be responsible for the cost of the unit at the
daily rate negotiated by Amgen. Since Amgen has contracted for these temporary
lodging accommodations, there is no need to make arrangements on your own. The
Relocation Coordinator will assist in making these lodging arrangements for you.
One-Way Travel Expenses
- -----------------------
Amgen will reimburse one-way travel expenses for you and your household members
to take residence in the "local area." If Amgen has arranged for your car to be
moved by a moving company, Amgen will also pay for rental of one automobile for
up to 14 days. You should contact Dollie or Marta at 805-447-6110 in Amgen's
Corporate Travel Dept. to make your travel reservations.
<PAGE>
Beth C. Seidenberg, M.D.
December 14, 2001
ATTACHMENT 2
Page 2 of 3
Moving Household Goods
- ----------------------
Amgen will arrange for packing, moving, and unpacking of normal household
possessions, including up to two automobiles. Amgen will also pay for up to 180
days storage of household goods, if necessary.
Lump Sum Allowance
- ------------------
Amgen will provide you with a $3,000.00 lump sum to be used at your discretion,
to cover incidental expenses associated with your move, which are not covered in
other sections of relocation coverage. Receipts or other accounting for the use
of this allowance are not required.
Rental Assistance - Security Deposit New Residence
- --------------------------------------------------
Amgen will reimburse you for the deposit on a rental property in the new "local
area" in an amount not to exceed the equivalent of one month's rent.
Non-Recurring Home Purchase Closing Costs
- -----------------------------------------
Amgen will reimburse loan origination fees of up to 1% of the mortgage amount
and loan discount points according to the sliding scale below, which is governed
by current mortgage market conditions.
The sliding scale for loan discount points is based upon the prevailing 30/year
--------
60/day Yield as set by the Federal National Mortgage Association (FNMA), and as
published in the "Money Rates" section Wall Street Journal on the day you lock-
in your mortgage interest rate. The following sliding scale applies:
-If FNMA index is 8% or less, 0 discount points will be reimbursed;
-If FNMA index is at least 8.01% but not more than 8.49%, 0.5 points will
be reimbursed;
-If FNMA index is at least 8.5% but not more than 8.99%, 1.0 point will be
reimbursed;
-If FNMA index is at least 9% but not more than 9.99%, 1.5 points will be
reimbursed; and
-If FNMA index is 10% or higher, 2 points will be reimbursed.
(the 1% loan origination fee will be reimbursed regardless of FNMA rate;
scale applies only to loan discount points)
In addition, you will be reimbursed for other Lender's fees, including but not
limited to fees for the appraisal, credit report, tax service fees, processing
fees, flood zone determination fees, underwriting fees, warehouse fees, rate
lock-in fees, broker fees, lender document preparation fees, commitment fees,
lender courier fees, escrow waiver fees, and loan review fees, in an amount not
----------------
to exceed Six Hundred Fifty and No/Dollars ($650.00). You will also be
- ----------------------------------------------------
reimbursed for the customary non-recurring buyer's closing costs for Escrow
and/or Title fees.
Adjustable Rate Secured Loan
- ----------------------------
To aid in the purchase of a home in the "local area", Amgen is prepared to offer
you a five-year, adjustable rate loan, which will be secured as a second
mortgage on your new primary residence.
However, you will be expected to provide a minimum down payment investment of at
least 5% of the purchase price from your own funds or other sources which are
not secured by this home.
<PAGE>
Beth C. Seidenberg, M.D.
December 14, 2001
ATTACHMENT 2
Page 3 of 3
The amount of the loan can be up to one-third of the documented purchase price
of a home not to exceed $1,000,000. The loan will be funded prior to close of
escrow at a date to be determined solely by Amgen. This loan will not be funded
prior to you beginning your employment at Amgen.
The 2001 rate on the loan is 5.0%. The rate is adjusted January 1st of each
year based on the average "Introduction Rates" on adjustable loans as offered by
California banks and savings & loans. The most the rate will change each year
is 1% with a cap of 3% over the life of the initial loan.
You will be required to make semi-monthly interest-only payments by payroll
deduction, with the principal amount due on or before the end of the five-year
period. At the end of this period you may discuss with Amgen an option to
convert to a fully amortized loan payable over an additional five-year period
with terms agreed upon at that time.
Tax Gross-up Assistance
- -----------------------
Amgen will provide for tax assistance (gross-up) for the non-deductible portion
of those reimbursed relocation expenses, which are considered as ordinary income
for state or federal income tax purposes.
Local Area
- ----------
References to the "local area" generally means the new work site is a minimum of
50 miles from the staff member's current residence, and the move to the new
residence reduces commuting time by at least 50%.
Duration of Relocation
- ----------------------
This relocation expense coverage is intended to assist in getting you
established in your new residence in the "local area" as quickly as possible.
Therefore, it is required that all relocation assistance provided for in this
attachment and all expense reimbursements for this assistance be completed
within one year from your date of hire in your new location.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.61
<SEQUENCE>7
<FILENAME>dex1061.txt
<DESCRIPTION>AMENDMENT TO AGREEMENT - DR. BETH C. SEIDENBERG
<TEXT>
<PAGE>
Exhibit 10.61
December 20, 2001
Beth C. Seidenberg, M.D.
8 Wolf Lane
Basking Ridge, NJ 07920
Dear Beth:
As a follow up, I would like to confirm the amendment that Amgen has made to our
original offer letter dated December 14, 2001. The amendment is as follows:
Concurrent with Amgen's annual periodic stock options granted annually, you will
receive a grant of 100,000 stock options. This grant is normally scheduled for
the first business day in July. This grant, of course, required the approval of
Amgen's Compensation Committee and is currently scheduled for Monday, July 1,
2002.
Vesting for all of your restricted stock will accelerate if there is a change-
in-control of Amgen.
If you are terminated without cause, restrictions on a pro rata number of shares
will be removed based upon your number of full months of active employment
divided by the total months of each restriction period.
Unvested options are generally terminated as of employment termination.
Your guaranteed 2002 MIP payment of $325k (minimum) will not be reduced if your
hire date is in January 2002. However, you can receive an award greater than
that based upon your and Amgen's performance. Actual base salary earnings for
the year are one of the variables in calculating your performance based 2002
award under our shareholder approved management incentive plan. Therefore, the
calculated performance based award will be prorated.
All other aspects of your original offer letter remain the same. If you accept
our offer, please sign and date the copy of this letter and return in the
enclosed envelope to our Staffing Department. Should you have any questions or
concerns please do not hesitate to contact John Hillins at (805) 447-7456.
Sincerely,
/s/ Brian McNamee
Brian McNamee
Sr. Vice President
Human Resources
BM:JH/lf
/s/ Dr. Beth Seidenberg 12/21/01
- -------------------------------------------
Accepted Date
(Please select a Monday start date in order coincide with our New Hire
Orientation schedule)
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.62
<SEQUENCE>8
<FILENAME>dex1062.txt
<DESCRIPTION>SECOND AMENDMENT TO AMGEN SRP
<TEXT>
<PAGE>
Exhibit 10.62
SECOND AMENDMENT TO THE
AMGEN SUPPLEMENTAL RETIREMENT PLAN
AS AMENDED AND RESTATED EFFECTIVE NOVEMBER 1, 1999
The Amgen Supplemental Retirement Plan as amended and restated
effective November 1, 1999 (the "Plan") is hereby amended, effective January 1,
2002, as follows:
1. Article I shall be amended and restated in its entirety as follows:
The Amgen Supplemental Retirement Plan (the "Plan") was established by
Amgne Inc. (the "Company") effective as of January 1, 1993, was amended and
restated effective January 1, 1998, and was amended and restated again
effective November 1, 1999. The purpose of this Plan is to provide benefits
to employees of the Company and certain of its affiliates and subsidiaries
whose Matching Contributions and Nonelective Contributions are limited
under the Amgen Inc. Retirement and Savings Plan (the "Retirement Plan"),
whether because of statutory limitations or because of employee deferrals
to the Amgen Nonqualified Deferred Compensation Plan (the "NQDC"). The
Company intends that the Plan will aid in retaining and attracting
employees of exceptional ability by providing them with these benefits.
2. Section 2.7 shall be amended and restated in its entirety as follows:
2.7 Compensation has the same meaning as such term has under the Retirement
------------
Plan, except that, for purposes of this Plan, Compensation is not limited
by the Salary Cap, includes amounts that are deferred into the NQDC, but
does not include any foreign assignment differential, that is, an amount
paid to you to compensate for costs unique to an overseas assignment.
3. A new Section 2.14 shall be added and all Sections under Article 2 are
hereby renumbered accordingly, and any references to any Sections under
Article 2 in the Plan are hereby amended to refer to the Sections as
renumbered hereunder:
2.14 NQDC means the Amgen Nonqualified Deferred Compensation Plan.
----
4. Section 3.1 shall be amended and restated in its entirety as follows:
3.1 Eligibility. You are eligible to elect to receive credits in your
-----------
Account as provided in Section 4.2 of the Plan during the time you are a
Regular Full-Time Employee and either your Compensation for the relevant
calendar year is in excess of the Salary Cap, or you elect to make a
deferral into the NQDC.
5. Section 4.2 shall be amended and restated in its entirety as follows:
4.2 Credits. The Company will credit your Account with your share of
-------
Matching Credits and Core Credits.
<PAGE>
(a) Core Credits. The amount of Core Credits to be credited to your
------------
account will be determined by calculating first what you would
have received as a nonelective contribution under the Retirement
Plan as if the Salary Cap were not in effect, and as if you had
not deferred any amounts under the NQDC, less the amount of
nonelective contributions that were actually contributed on your
behalf to the Retirement Plan.
(b) Matching Credits. The amount of Matching Credits to be credited
-----------------
to your account will be the amount of matching contributions that
would have been made on your behalf under the Retirement Plan had
the Salary Cap not been in effect, and had you not deferred any
amounts under the NQDC, based on your Deferral Commitment in
effect at the time your Compensation reaches the Salary Cap for
the year (provided that you can demonstrate to the Company that
you have set aside for investment an amount equal to the amount
you were prevented from deferring because of the Salary Cap),
less the amount of matching contributions that were actually
contributed on your behalf to the Retirement Plan.
To record this Second Amendment to the Plan as set forth herein, the Company has
caused its authorized officer to execute this document this 1st day of February,
--- --------
2002.
AMGEN INC.
By: /s/ Brian M. McNamee
-----------------------------------------
Title: Senior Vice President, Human Resources
--------------------------------------
2
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.63
<SEQUENCE>9
<FILENAME>dex1063.txt
<DESCRIPTION>THIRD AMENDMENT TO AMGEN RSP
<TEXT>
<PAGE>
Exhibit 10.63
THIRD AMENDMENT TO THE
AMGEN RETIREMENT AND SAVINGS PLAN
AS AMENDED AND RESTATED EFFECTIVE OCTOBER 23, 2000
The Amgen Retirement and Savings Plan as Amended and Restated Effective
October 23, 2000, (the "Plan") is hereby amended as follows:
1. Section 2.20 shall be amended and restated in its entirety to read as
follows:
"Employee" means an individual who (a) on the Payroll of a member of the
--------
Affiliated Group or (b) is a "leased employee" with respect to a member of
the Affiliated Group. "Employee" shall not include a nonresident alien who
receives no earned income (within the meaning of Section 911(b) of the
Code) from a member of the Affiliated Group that constitutes income from
sources within the United States (within the meaning of Section 861(a)(3)
of the Code).
The term "leased employee" means any person (other than an employee of the
recipient) who pursuant to an agreement between the recipient and any other
person ("leasing organization") has performed services for the recipient
(or for the recipient and related persons determined in accordance with
section 414(n)(6) of the Internal Revenue Code) on a substantially full
time basis for a period of at least one year, and such services are
performed under primary direction or control by the recipient.
Contributions or benefits provided a leased employee by the leasing
organization which are attributable to services performed for the recipient
employer shall be treated as provided by the recipient employer. A leased
employee shall not be considered an employee of the recipient if: (i) such
employee is covered by a money purchase pension plan providing: (1) a
nonintegrated employer contribution rate of at least 10 percent of
compensation, as defined in section 415(c)(3) of the Code, but including
amounts contributed pursuant to a salary reduction agreement which are
excludable from the employee's gross income under section 125, section
402(e)(3), section 402(h)(1)(B) or section 403(b) of the Code, (2)
immediate participation, and (3) full and immediate vesting; and (ii)
leased employees do not constitute more than 20 percent of the recipient's
nonhighly compensated work force.
2. Section 5.2 shall be amended and restated in its entirety to read as
follows:
Nonelective Contributions. Subject to the limitations Section 5.6 and
-------------------------
Articles 13-16, each Participating Company may, in its discretion, make
Nonelective Contributions in an amount determined by the Participating
Company. Such Nonelective Contributions shall be allocated to each
Participant in the ratio that such Participant's compensation bears to the
compensation of all Participants. The Company, in its sole discretion, may
determine that the allocation of part or all of the Nonelective
Contribution for a Plan Year shall be limited to the Nonelective
Contribution Accounts of Participants who remain Eligible Employees on the
last day of the relevant Plan Year. The Company may limit the
<PAGE>
amount of Compensation that is taken into account for purposes of
allocating Nonelective Contributions, and it may determine that allocations
of Nonelective Contributions shall be limited to a specified group of
Eligible Employees; provided, however, that the Nonelective Contribution
formula(s) shall not discriminate in favor of Highly Compensated Employees.
For purposes of allocating such Nonelective Contributions for any Plan Year
or other allocation period based on an Employee's Compensation, only
Compensation attributable to periods in such Plan Year or other allocation
period during which such Employee was an Eligible Employee shall be taken
into account. Nonelective Contributions shall be paid to the Trustee as
soon as reasonably practicable following the close of the pay period to
which it relates and shall be allocated to the Accounts of Participants as
provided in Section 6.6.
Nonelective Contributions may include a core contribution equal to a
specified percentage of Compensation to be made by the Company for each
payroll period during the Plan Year.
3. Section 13.3 shall be amended and restated in its entirety to read as
follows:
Allocation of Excess Contributions to Highly Compensated Employees. Any
------------------------------------------------------------------
Excess Contributions for a Plan Year shall be allocated to Highly
Compensated Employees by use of a leveling process, whereby the amount of
Aggregate 401(k) Contributions of the Highly Compensated Employee with the
highest amount of Aggregate 401(k) Contributions is reduced to the extent
required to (a) eliminate all Excess Contributions or (b) cause such Highly
Compensated Employee's amount of Aggregate 401(k) Contributions to equal
the amount of Aggregate 401(k) Contributions of the Highly Compensated
Employee with the next highest amount of Aggregate 401(k) Contributions.
The leveling process shall be repeated until all Excess Contributions for
the Plan Year are allocated to Highly Compensated Employees.
Notwithstanding the foregoing, for Plan Years beginning after December 31,
1996, any determination of Excess Contributions of a Highly Compensated
Employee shall be made on the basis of the Highly Compensated Employee's
actual deferral ratio in accordance with Code Section 401(k)(8)(C) and the
Regulations promulgated thereunder.
4. Section 13.4 shall be amended and restated in its entirety to read as
follows:
Distribution of Excess Contributions. Excess Contributions allocated to
------------------------------------
Highly Compensated Employees for the Plan Year pursuant to Section 13.3,
together with any income or loss allocable to such Excess Contributions,
shall be distributed to such Highly Compensated Employees not later than
two-and-one-half months following the close of such Plan Year, if possible,
and in any event no later than 12 months following the close of such Plan
Year. Any Participant Elected Contributions distributed pursuant to this
Section 13.4 shall not be included in the Participant Elected Contributions
to which a Matching Contribution under Section 5.1 or a Qualified Matching
Contribution under Section 5.4 of the Plan attaches. Notwithstanding the
foregoing, for Plan Years beginning after December 31, 1996, any
distribution of Excess Contributions for a Plan Year to Highly Compensated
Eligible Employees shall be made on the basis of the dollar
<PAGE>
amount of Participant Elected Contributions made by, or on behalf of, each
such Highly Compensated Eligible Employee in accordance with Code Section
401(k)(8)(C).
5. Section 13.7(f) shall be amended and restated in its entirety to read as
follows:
Income (and loss) allocable to Excess Contributions for the Plan Year shall
be determined pursuant to the provisions for allocating income (and loss)
to a Participant's Accounts under Section 6.10 of the Plan.
Notwithstanding the foregoing, such income and loss shall be calculated
including the period between the end of the Plan Year and the date on which
the Excess Contributions are distributed. The income and loss allocable to
the Excess Contributions shall bear the same proportion to the total income
and loss allocable to a Participant's Account as the Excess Contributions
bear to the Participant's Account.
6. Section 13.9(e)(5) shall be amended and restated in its entirety to read as
follows:
Any of the definitions of Section 414(s) Compensation set forth in
Subsections (1), (2), (3) and (4) above, modified to include the following:
(a) any elective contributions made by a member of the Affiliated Group on
behalf of the Employee that are not includable in gross income under
Section 125, 132(f)(4), 402(e)(3), 402(h) or 403(b) of the Code; (b)
compensation deferred under an eligible deferred compensation plan within
the meaning of Section 457(b) of the Code; and (c) employee contributions
described in Section 414(h)(2) of the Code that are picked up by the
employing unit and thus are treated as employer contributions; or
7. Section 14.2 shall be amended and restated in its entirety to read as
follows:
Allocation of Excess Aggregate Contributions to Highly Compensated
------------------------------------------------------------------
Employees. Any Excess Aggregate Contributions for a Plan Year shall be
---------
allocated to Highly Compensated Employees by use of a leveling process,
whereby the Aggregate 401(m) Contributions of the Highly Compensated
Employee with the highest amount of Aggregate 401(m) Contributions is
reduced to the extent required to (a) eliminate all Excess Aggregate
Contributions or (b) cause the amount of such Highly Compensated Employee's
Aggregate 401(m) Contributions to equal the amount of Aggregate 401(m)
Contributions of the Highly Compensated Employee with the next-highest
amount of Aggregate 401(m) Contributions. The leveling process shall be
repeated until all Excess Aggregate Contributions for the Plan Year are
allocated to Highly Compensated Employees. Notwithstanding the foregoing,
for Plan Years beginning after December 31, 1996, any determination of
Excess Aggregate Contributions of a Highly Compensated Employee shall be
made on the basis of the Highly Compensated Employee's actual deferral
ratio in accordance with Code Section 401(k)(8)(C) and the Regulations
promulgated thereunder.
<PAGE>
8. Section 14.3 shall be amended and restated in its entirety to read as
follows:
Distribution of Excess Aggregate Contributions. Excess Aggregate
----------------------------------------------
Contributions allocated to Highly Compensated Employees for the Plan Year
pursuant to Section 14.2, together with any income or loss allocable to
such Excess Aggregate Contributions (calculated to include income and loss
for the period between the end of the Plan Year and the date on which the
Excess Aggregate Contributions are distributed), shall be distributed to
such Highly Compensated Employees not later than two-and-one-half months
following the close of such Plan Year, if possible, and in any event no
later than 12 months following the close of such Plan Year, but only to the
extent the Highly Compensated Employee has a nonforfeitable interest in the
Excess Aggregate contributions. Excess Aggregate Contributions (for
Participants who are Highly Compensated Employees), to the extent not
vested, may be forfeited and allocated, after all other Forfeitures under
the Plan, to other Participants (but in no event to any Highly Compensated
Employee) in the proportion that such Participant's Participant Elected
Contributions, if any, for that Plan Year bears to the total Participant
Elected Contributions of all such Participants for the Plan Year. Any such
amounts shall be included in the calculation of the Actual Contribution
Percentage and in the calculation of the limits set forth in Article 16.
The income and loss allocable to the Excess Aggregate Contributions shall
bear the same proportion to the total income and loss allocable to a
Participant's Accounts as the Excess Aggregate Contributions bear to the
Participant's Accounts. Notwithstanding the foregoing, for Plan Years
beginning after December 31, 1996, any distribution of Excess Aggregate
Contributions for a Plan Year to Highly Compensated Eligible Employees
shall be made on the basis of the dollar amount of Participant Elected
Contributions made by, or on behalf of, each such Highly Compensated
Eligible Employee in accordance with Code Section 401(k)(8)(C).
9. Section 16.2 shall be deleted in its entirety.
10. Section 16.4 shall be amended and restated in its entirety to read as
follow:
Excess Company Contributions. If the amount of the Company Contributions
----------------------------
allocated to a Participant for any Plan Year must be reduced to meet the
limitation described in Section 16.1, then the amount of the reduction
shall be applied to reduce the total amount that the Participating
Companies otherwise would contribute for such year pursuant to Article 5 of
the Plan. If the amount that the Participating Companies may contribute is
thereby reduced to zero and if there are Company Contributions that still
cannot be allocated to any Participant because of the limitation described
in Section 16.1, then the excess shall be transferred to a suspense
account. Any gains, income or losses attributable to the suspense account
shall be allocated to such account. All amounts credited to the suspense
account shall be applied to reduce the total amount that the Participating
Companies otherwise would contribute to the Plan for the next Plan Year,
and for succeeding Plan Years if necessary. Such amounts shall be
allocated among Participants pursuant to Article 5 of the Plan until the
suspense account is exhausted
<PAGE>
(subject to this Article). No Participant Elected Contributions or Company
Contributions shall be made as long as any amount remains in the suspense
account. However, this method of addressing Excess Company Contributions
will only be permitted in the event the excess Annual Additions result from
the allocation of forfeitures or result from a reasonable error in
determining the amount of elective deferrals under section 401(g)(3).
To record this Third Amendment to the Plan as set forth herein, the Company has
caused its authorized officer to execute this document this 1st day of February,
--- --------
2002.
AMGEN INC.
By: /s/ Brian M. McNamee
--------------------------------
Title: Senior Vice President, Human Resources
---------------------------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.64
<SEQUENCE>10
<FILENAME>dex1064.txt
<DESCRIPTION>AMGEN EXECUTIVE NONQUALIFIED RETIREMENT PLAN
<TEXT>
<PAGE>
Exhibit 10.64
AMGEN INC. EXECUTIVE
NONQUALIFIED RETIREMENT PLAN
WHEREAS, Amgen Inc., a Delaware corporation (the "Company") desires to
establish the Amgen Inc. Executive Nonqualified Retirement Plan to provide
supplemental retirement income benefits for a select group of management and
highly compensated employees through Company contributions, effective as of
January 1, 2001;
NOW, THEREFORE, effective as of January 1, 2001, the Plan is hereby
adopted to read as follows:
ARTICLE I.
TITLE AND DEFINITIONS
---------------------
1.1 Title.
------
This Plan shall be known as the Amgen Inc. Executive Nonqualified
Retirement Plan.
1.2 Definitions.
------------
Whenever the following words and phrases are used in this Plan, with
the first letter capitalized, they shall have the meanings specified below.
(a) "Beneficiary" or "Beneficiaries" shall mean the person or persons,
including a trustee, personal representative or other fiduciary, last designated
in writing by a Participant in accordance with the procedures established by the
Committee to receive the benefits specified hereunder in the event of the
Participant's death. However, no designation of a Beneficiary other than the
Participant's spouse shall be valid unless consented in writing by such spouse.
No Beneficiary designation shall become effective until it is filed with the
Committee. Any designation shall be revocable at any time through a written
instrument filed by the Participant with the Committee with or without the
consent of the previous Beneficiary, (unless such previous Beneficiary was the
Participant's spouse). If there is no Beneficiary designation in effect, or the
designated Beneficiary does not survive the Participant, then the Participant's
spouse shall be the Beneficiary. If there is no surviving spouse, the duly
appointed and currently acting personal representative of the Participant's
estate (which shall include either the Participant's probate estate or living
trust) shall be the Beneficiary. In any case where there is no such personal
representative of the Participant's estate duly appointed and acting in that
capacity within 90 days after the Participant's death (or such extended period
as the Committee determines is reasonably necessary to allow such personal
representative to be appointed, but not to exceed 180 days after the
Participant's death), then Beneficiary shall mean the person or persons who can
verify by affidavit or court order to the satisfaction of the Committee that
they are legally entitled to receive the benefits specified hereunder. In the
event any amount is payable under the Plan to a minor, payment shall not be made
to the minor, but instead be paid (a) to that person's living parent(s) to act
as custodian, (b) if that person's parents are then
<PAGE>
divorced, and one parent is the sole custodial parent, to such custodial parent,
or (c) if no parent of that person is then living, to a custodian selected by
the Committee to hold the funds for the minor under the Uniform Transfers or
Gifts to Minors Act in effect in the jurisdiction in which the minor resides. If
no parent is living and the Committee decides not to select another custodian to
hold the funds for the minor, then payment shall be made to the duly appointed
and currently acting guardian of the estate for the minor or, if no guardian of
the estate for the minor is duly appointed and currently acting within 60 days
after the date the amount becomes payable, payment shall be deposited with the
court having jurisdiction over the estate of the minor. Payment by the Company
pursuant to any unrevoked Beneficiary designation, or to the Participant's
estate if no such designation exists, of all benefits owed hereunder shall
terminate any and all liability of the Company.
(b) "Board of Directors" or "Board" shall mean the Board of Directors of
the Company.
(c) "Cause" shall mean (i) a Participant's conviction of a felony, (ii)
the engaging by Participant in conduct that constitutes willful gross neglect or
willful gross misconduct in carrying out his or her duties to the Company,
resulting, in either case, in material economic harm to the Company, unless the
Participant believed in good faith that such conduct was in, or not contrary to,
the best interests of the Company, (iii) the Participant's material breach of
any of the terms of his or her offer letter agreement or the Proprietary
Information and Inventions Agreement or (iv) the Participant's failure to follow
any lawful directive of Amgen Inc.'s Chief Executive Officer with respect to the
Participant's employment. For purposes hereof, no act, or failure to act, by
Participant shall be deemed "willful" unless done, or omitted to be done, by
Participant not in good faith.
(d) "Change of Control" shall be as defined under the Amgen Inc. Change of
Control Severance Plan.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Committee" shall mean the Compensation Committee of the Board.
(g) "Company" shall mean Amgen Inc., and any successor corporations.
Company shall also include affiliates and subsidiaries of Amgen Inc., and any
successor corporations, if the Committee provides that such corporation shall
participate in the Plan.
(h) "Company Discretionary Contributions" shall mean, for each
Participant, the discretionary amount that the Company allocates to a
Participant under this Plan as determined by the Committee. Such amount may
differ from Participant to Participant, including no contributions.
(i) "Crediting Date" shall mean the date, as determined by the Committee,
on which a Participant's Nonqualified Retirement Account is credited with the
Company Discretionary Amount.
(j) "Disability" shall mean a permanent and total disability that has been
certified by the Social Security Administration prior a Participant's
Termination of Employment.
<PAGE>
(k) "Disability Prorated Nonqualified Retirement Account Amount" shall
mean portion of the Nonqualified Retirement Account Amount based upon the ratio
of (x) the sum of the number of full months of the Participant's active
employment with the Company plus 24 months and (y) the number of months between
the Participant's first day of participation in the plan and the Crediting Date.
(l) "Effective Date" shall mean January 1, 2001.
(m) "Eligible Employee" shall mean individuals selected by the Committee,
in its sole discretion, from those staff members of the Company.
(n) "Nonqualified Retirement Account" shall mean the bookkeeping account
maintained by Company for each Participant that is credited with an amount equal
to the Company Discretionary Amount, if any, and any interest credited pursuant
to Article 4.
(o) "Participant" shall mean any Eligible Employee who is selected by the
Committee, in its sole discretion, to participate in the Plan.
(p) "Plan" shall mean the Amgen Inc. Executive Nonqualified Retirement
Plan set forth herein, now in effect, or as amended from time to time.
(q) "Plan Year" shall mean the initial period beginning on January 1, 2001
and ending on December 31, 2001 and thereafter the 12 consecutive month period
beginning on each January 1 and ending on each December 31.
(r) "Prorated Nonqualified Retirement Account Amount" shall mean a
prorated portion of the Nonqualified Retirement Account Amount based upon the
ratio of (i) the number of full months of the Participant's active employment
with the Company and (ii) the number of months between the Participant's first
day of participation in the Plan and the Crediting Date, provided, however, that
if such a Termination of Employment occurs within 2 years after a Change of
Control of the Company, as defined in the Amgen Inc. Change of Control Severance
Plan, the Participant shall be paid (i) the Prorated Nonqualified Retirement
Account Amount plus (ii) an amount equal to the Discretionary Company
----
Contribution minus the sum of (x) the Prorated Nonqualified Retirement Account
Amount and (y) an amount equal to the aggregate spread between the exercise
prices of the Participant's unvested Company stock options which are in the
money and the vesting of which is accelerated by the Change of Control and the
NASDAQ closing price of the Company stock, with such spread being determined as
of the date of the Change of Control. (See Appendix B for an example).
(s) "Retirement Date" shall mean the date upon which a Participant
completes 10 years of active employment with the Company and attains age sixty
(60).
(t) "Termination of Employment" shall mean the Participant ceasing to be
an employee of the Company.
<PAGE>
ARTICLE II.
PARTICIPATION
-------------
2.1 An Eligible Employee shall become a Participant in the Plan if the
Committee designates such Eligible Employee, in writing, as a Participant. The
Committee shall also designate the date on which an Eligible Employee becomes a
Participant.
ARTICLE III.
ACCOUNTS AND TRUST FUNDING
--------------------------
3.1 Nonqualified Retirement Account.
--------------------------------
(a) The Committee shall establish and maintain a Nonqualified Retirement
Account for each Participant under the Plan, which shall be credited the amount
of Company Discretionary Contributions, if any, contributed to the Plan on
behalf of such Participant.
3.2 Trust Funding.
-------------
The Company shall pay all Plan benefits. At its discretion, the
Committee may establish one or more trusts, with such trustees as the Board may
approve, for the purpose of providing for the payment of such benefits.
Although the principal of such a trust and any earnings thereon shall
be held separate and apart from other funds of Company and shall be used
exclusively for the uses and purposes of Plan Participants and Beneficiaries as
set forth therein, neither the Participant nor their Beneficiaries shall have
any preferred claim on, or any beneficial ownership in, any assets of the trust
prior to the time such assets are paid to the Participants or Beneficiaries as
benefits and all rights created under this Plan shall be unsecured contractual
rights of Plan Participants and Beneficiaries against the Company. Any assets
held in the Trust will be subject to the claims of Company's general creditors
under federal and state law in the event of insolvency.
ARTICLE IV.
CREDITING OF ACCOUNTS
---------------------
4.1 Crediting of Company Discretionary Contributions. If the
------------------------------------------------
Participant is actively employed by the company on the Crediting Date, the
Company shall credit the Nonqualified Retirement Account with the Company
Discretionary Contributions.
4.2 Termination of Employment before Crediting Date. In the event that
-----------------------------------------------
the Participant's active employment with the Company is terminated before the
Crediting Date for any reason, no credits will be made to the Nonqualified
Retirement Account and the Participant will not be paid any portion of the
Nonqualified Retirement Account, except as set forth below.
(a) If the Participant's employment is terminated by reason of the
Participant's Disability before the Crediting Date, on the second anniversary of
the date upon which the
<PAGE>
Participant last completes one week of active employment with the Company, the
Company shall pay the Participant a Disability Prorated Nonqualified Retirement
Account Amount. No interest shall be credited on any such payment.
(b) If the Participant's employment is terminated by the Company without
Cause before the Crediting Date, between January 2 and January 31 of the year
following the year in which the Participant's employment terminates, the Company
shall pay the Participant a Prorated Nonqualified Retirement Account Amount. No
interest shall be credited on any such payment.
(c) If the Participant's employment is terminated by reason of the
Participant's Disability before the Crediting Date, on the second anniversary of
the date upon which the Participant last completes one week of active employment
with the Company, the Company shall pay the Participant a Disability Prorated
Nonqualified Retirement Account Amount. No interest shall be credited on any
such payment.
4.3 Interest. No interest shall be credited to the Nonqualified
--------
Retirement Account prior to the Crediting Date, in any event. However, if the
Participant is actively employed by the Company on the Crediting Date, from and
after the Crediting Date the Company shall credit the Nonqualified Retirement
Account with interest as set forth below.
(a) Interest after Retirement Date. If the Participant continues to be
------------------------------
actively employed by the Company until his or her Retirement Date, the Company
shall credit interest annually on the Nonqualified Retirement Account at a rate
equal to 125% of the 10-year moving average yield on 10-year U.S. Treasury
notes, adjusted annually and compounded annually, from the Crediting Date until
the date upon which the Nonqualified Retirement Account and accrued interest is
distributed. In the event that the Participant elects to receive his or her
distribution in installments, as provided below in Section 5.1(b), interest will
be credited on the declining balance of the Nonqualified Retirement Account
until it is finally distributed.
(b) Interest before Retirement Date. If the Participant's employment with
-------------------------------
the Company is terminated for any reason before his or her Retirement Date, the
Company shall credit interest annually on the Nonqualified Retirement Account at
a rate equal to 100% of the 10-year moving average yield on 10-year U.S.
Treasury notes, adjusted annually and compounded annually, from the Crediting
Date until the date upon which the Nonqualified Retirement Account, and accrued
interest is distributed to the Participant.
ARTICLE V.
DISTRIBUTIONS
-------------
5.1 Distribution of Accounts. If the Participant is actively employed
------------------------
by the Company on the Crediting Date, from and after the Crediting Date, the
Company shall make distributions from the Nonqualified Retirement Account as set
forth below.
(a) Distribution upon Termination of Employment before Retirement Date. If
------------------------------------------------------------------
the Participant's employment with the Company is terminated for any reason
before the Participant's Retirement Date, the amount credited to the
Participant's Nonqualified Retirement Account, plus interest credited to the
date of termination, shall be distributed to the Participant in a lump sum
<PAGE>
between January 2 and January 31 of the year following the year in which the
Participant's employment terminates.
(b) Distribution upon Termination of Employment after Retirement Date. If
------------------------------------------------------------------
the Participant's employment with the Company is terminated for any reason on
or after the Participant's Retirement Date, the amount credited to the
Participant's Nonqualified Retirement Account shall be distributed to the
Participant in a lump sum between January 2 and January 31 of the year following
the year in which the Participant's employment terminates, unless the
Participant elects to be paid in ten or less substantially equal annual
installments, beginning between January 2 and January 31 of the year following
the year in which the Participant's employment terminates. The Participant must
make any election to receive his or her payments in annual installments at least
13 months prior to the date upon which the Participant's employment terminates.
(c) Distribution upon Death. In the event of the Participant's death, any
-----------------------
unpaid amounts with respect to the Nonqualified Retirement Account shall be paid
to the Participant's named Beneficiaries in a lump sum, or the Participant's
estate if the Participant does not designate any Beneficiaries, between January
2 and January 31 of the year following the year of the Participant's death.
ARTICLE VI.
ADMINISTRATION
--------------
6.1 Powers and Duties of the Committee.
-----------------------------------
(a) The Committee, on behalf of the Participants and their Beneficiaries,
shall enforce the Plan in accordance with its terms, shall be charged with the
general administration of the Plan, and shall have all powers necessary to
accomplish its purposes as set forth herein, including, but not by way of
limitation, the following:
(1) To construe and interpret the terms and provisions of the
Plan and to remedy any inconsistencies or ambiguities hereunder;
(2) To select employees eligible to participate in the Plan;
(3) To compute and certify to the amount and kind of benefits
payable to Participants and their Beneficiaries;
(4) To maintain all records that may be necessary for the
administration of the Plan;
(5) To provide for the disclosure of all information and the
filing or provision of all reports and statements to Participants, Beneficiaries
or governmental agencies as shall be required by law;
(6) To make and publish such rules for the regulation of the
Plan and procedures for the administration of the Plan as are not inconsistent
with the terms hereof;
<PAGE>
(7) To appoint a plan administrator or any other agent, and to
delegate to them such powers and duties in connection with the administration of
the Plan as the Committee may from time to time prescribe; and
(8) To take all actions necessary for the administration of the
Plan.
6.2 Construction and Interpretation.
--------------------------------
The Committee shall have full discretion to construe and interpret the
terms and provisions of this Plan, which interpretations or construction shall
be final and binding on all parties, including but not limited to the Company
and any Participant or Beneficiary. The Committee shall administer such terms
and provisions in a uniform and nondiscriminatory manner and in full accordance
with any and all laws applicable to the Plan.
6.3 Information.
------------
To enable the Committee to perform its functions, the Company shall
supply full and timely information to the Committee on all matters relating to
the Compensation of all Participants, their death or other events that cause
termination of their participation in this Plan, and such other pertinent facts
as the Committee may require.
6.4 Compensation, Expenses and Indemnity.
-------------------------------------
(a) The members of the Committee shall serve without compensation for
their services hereunder.
(b) The Committee is authorized at the expense of the Company to employ
such legal counsel and other advisors as it may deem advisable to assist in the
performance of its duties hereunder. Expenses and fees in connection with the
administration of the Plan shall be paid by the Company.
(c) To the extent permitted by applicable state law, the Company shall
indemnify and save harmless the Committee and each member thereof, the Board of
Directors and any delegate of the Committee who is an employee of the Company
against any and all expenses, liabilities and claims, including legal fees to
defend against such liabilities and claims arising out of their discharge in
good faith of responsibilities under or incident to the Plan, other than
expenses and liabilities arising out of willful misconduct. This indemnity
shall not preclude such further indemnities as may be available under insurance
purchased by the Company or provided by the Company under any bylaw, agreement
or otherwise, as such indemnities are permitted under state law.
6.5 Annual Statements.
------------------
Under procedures established by the Committee, a Participant shall
receive a statement with respect to such Participant's Accounts on an annual
basis as of each December 31.
6.6 Disputes.
---------
<PAGE>
(a) Claim.
-----
A person who believes that he or she is being denied a benefit to
which he or she is entitled under this Agreement (hereinafter referred to as
"Claimant") may file a written request for such benefit with the Company,
setting forth his or her claim. The request must be addressed to the Vice
President, Human Resources, or his designee, of the Company at its then
principal place of business.
(b) Claim Decision.
--------------
Upon receipt of a claim, the Company shall advise the Claimant
that a reply will be forthcoming within ninety (90) days and shall, in fact,
deliver such reply within such period. The Company may, however, extend the
reply period for an additional ninety (90) days for special circumstances.
If the claim is denied in whole or in part, the Company shall
inform the Claimant in writing, using language calculated to be understood by
the Claimant, setting forth: (i) the specified reason or reasons for such
denial; (ii) the specific reference to pertinent provisions of this Agreement on
which such denial is based; (iii) a description of any additional material or
information necessary for the Claimant to perfect his or her claim and an
explanation of why such material or such information is necessary; (iv)
appropriate information as to the steps to be taken if the Claimant wishes to
submit the claim for review; and (v) the time limits for requesting a review
under subsection (c).
(c) Request For Review.
-------------------
With sixty (60) days after the receipt by the Claimant of the
written opinion described above, the Claimant may request in writing that the
Committee review the determination of the Company. Such request must be
addressed to the Secretary of the Company, as its then principal place of
business. The Claimant or his or her duly authorized representative may, but
need not, review the pertinent documents and submit issues and comments in
writing for consideration by the Committee. If the Claimant does not request a
review within such sixty (60) day period, he or she shall be barred and estoppel
from challenging the Company's determination.
(d) Review of Decision.
------------------
Within sixty (60) days after the Committee's receipt of a request
for review, after considering all materials presented by the Claimant, the
Committee will inform the Participant in writing, in a manner calculated to be
understood by the Claimant, the decision setting forth the specific reasons for
the decision contained specific references to the pertinent provisions of this
Agreement on which the decision is based. If special circumstances require that
the sixty (60) day time period be extended, the Committee will so notify the
Claimant and will render the decision as soon as possible, but no later than one
hundred twenty (120) days after receipt of the request for review.
<PAGE>
ARTICLE VII.
MISCELLANEOUS
-------------
7.1 Unsecured General Creditor.
---------------------------
Participants and their Beneficiaries, heirs, successors, and assigns
shall have no legal or equitable rights, claims, or interest in any specific
property or assets of the Company. No assets of the Company shall be held in
any way as collateral security for the fulfilling of the obligations of the
Company under this Plan. Any and all of the Company's assets shall be, and
remain, the general unpledged, unrestricted assets of the Company. The
Company's obligation under the Plan shall be merely that of an unfunded and
unsecured promise of the Company to pay money in the future, and the rights of
the Participants and Beneficiaries shall be no greater than those of unsecured
general creditors. It is the intention of the Company that this Plan be
unfunded for purposes of the Code and for purposes of Title I of ERISA.
7.2 Restriction Against Assignment.
-------------------------------
The Company shall pay all amounts payable hereunder only to the person
or persons designated by the Plan and not to any other person or corporation.
(a) No right, title or interest in the Plan or in any account may be sold,
pledged, assigned or transferred in any manner other than by will or the laws of
descent and distribution. No right, title or interest in the Plan or in any
Account shall be liable for the debts, contracts or engagements of the
Participant or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition is
permitted by the preceding sentence.
(b) Notwithstanding the provisions of a subsection, a Participant's
interest in his Account may be transferred by the Participant pursuant to a
domestic relations order that constitutes a "qualified domestic relations order"
as defined by the Code or Title 1 of ERISA.
7.3 Withholding.
------------
There shall be deducted from each payment made under the Plan or any
other Compensation payable to the Participant (or Beneficiary) all taxes that
are required to be withheld by the Company in respect to such payment or this
Plan. The Company shall have the right to reduce any payment (or compensation)
by the amount of such of cash sufficient to provide the amount of said taxes.
<PAGE>
7.4 Amendment, Modification, Suspension or Termination.
---------------------------------------------------
The Committee may amend, modify, suspend or terminate the Plan in
whole or in part, except that no amendment, modification, suspension or
termination shall have any retroactive effect to reduce any amounts allocated to
a Participant's Accounts. In the event that this Plan is terminated, the
amounts allocated to a Participant's Accounts shall be distributed to the
Participant or, in the event of his or her death, his or her Beneficiary in a
lump sum within thirty (30) days following the date of termination.
7.5 Governing Law.
--------------
This Plan shall be construed, governed and administered in accordance
with the laws of the State of California.
7.6 Payments on Behalf of Persons Under Incapacity.
-----------------------------------------------
In the event that any amount becomes payable under the Plan to a
person who, in the sole judgment of the Committee, is considered by reason of
physical or mental condition to be unable to give a valid receipt therefore, the
Committee may direct that such payment be made to any person found by the
Committee, in its sole judgment, to have assumed the care of such person. Any
payment made pursuant to such termination shall constitute a full release and
discharge of the Committee and the Company.
7.7 Limitation of Rights and Employment Relationship
------------------------------------------------
Neither the establishment of the Plan nor any modification thereof,
nor the creating of any fund or account, nor the payment of any benefits shall
be construed as giving to any Participant or other person any legal or equitable
right against the Company except as provided in the Plan, and in no event shall
the terms of employment of any Employee or Participant be modified or in any be
effected by the provisions of the Plan.
7.8 Exempt ERISA Plan
-----------------
The Plan is intended to be an unfunded plan maintained primarily to
provide nonqualified retirement benefits for a select group of management or
highly compensated employees within the meaning of Sections 201, 301 and 401 of
ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA.
7.9 Notice
------
Any notice or filing required or permitted to be given to the
Committee under the Plan shall be sufficient if in writing and hand delivered,
or sent by registered or certified mail, to the principal office of the Company,
directed to the attention of the General Counsel and Secretary of the Company.
Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.
7.10 Errors and Misstatements
------------------------
<PAGE>
In the event of any misstatement or omission of fact by a Participant
to the Committee or any clerical error resulting in payment of benefits in an
incorrect amount, the Committee shall promptly cause the amount of future
payments to be corrected upon discovery of the facts and shall pay or, if
applicable, cause the Trustee to pay, the Participant or any other person
entitled to payment under the Plan any underpayment in a lump sum or to recoup
any overpayment from future payments to the participant or any other person
entitled to payment under the Plan in such amounts as the Committee shall direct
or to proceed against the Participant or any other person entitled to payment
under the Plan for recovery of any such overpayment.
7.11 Pronouns and Plurality
----------------------
The masculine pronoun shall include the feminine pronoun, and the
singular the plural where the context so indicates.
7.12 Severability
------------
In the event that any provision of the Plan shall be declared
unenforceable or invalid for any reason, such unenforceability or invalidity
shall not affect the remaining provisions of the Plan but shall be fully
severable, and the Plan shall be construed and enforced as if such unenforceable
or invalid provision had never been included herein.
7.13 Status
------
The establishment and maintenance of, or allocations and credits to,
the Account of any Participant shall not vest in any Participant any right,
title or interest in and to any Plan assets or benefits except at the time or
times and upon the terms and conditions and to the extent expressly set forth in
the Plan and in accordance with the terms of the trust, if applicable.
7.14 Headings.
---------
Headings and subheadings in this Plan are inserted for convenience of
reference only and are not to be considered in the construction of the
provisions hereof.
IN WITNESS WHEREOF, the Company has caused this document to be
executed by its duly authorized officer on this 1st day of February, 2002.
--- --------
By: /s/ Brian M. McNamee
--------------------
Its: Senior Vice President, Human Resources
--------------------------------------
<PAGE>
APPENDIX A
<TABLE>
<CAPTION>
Name of Participant Date of Participation Crediting Date Discretionary Company
- ------------------- --------------------- -------------- Contribution
------------
<S> <C> <C> <C>
Roger Perlmutter January 16, 2001 September 16, 2007 $10,000,000
George Morrow January 19, 2001 January 19, 2006 $15,000,000
</TABLE>
<PAGE>
APPENDIX B
Other Participating Companies
-----------------------------
Amgen USA Inc., effective January 1, 2002
<PAGE>
APPENDIX C
For example:
<TABLE>
<CAPTION>
Name of Participant Date of Participation Crediting Date Discretionary Company
- ------------------- --------------------- -------------- ---------------------
Contribution
------------
<S> <C> <C> <C>
Participant A January 1, 2001 January 1, 2007 $1,000,000
</TABLE>
If the Company were to terminate the Participant's employment without Cause on
July 31, 2003, the Participant would be paid $430,555 ($1,000,000 x 31/72). If,
however, such a termination were to occur within 2 years after a Change of
Control of the Company and on the date of the Change of Control the Participant
hold unvested options for 10,000 shares of the Company stock and if each of such
options has an exercise price of $80 and the NASDAQ closing price of the Company
stock on the date of the Change of Control were $120, the Participant would be
paid $600,000: ($430,555 + ($1,000,000 - ($430,555 + (($120 - $80) x
10,000)))).
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.65
<SEQUENCE>11
<FILENAME>dex1065.txt
<DESCRIPTION>NONQUALIFIED DEFERRED COMPENSATION PLAN
<TEXT>
<PAGE>
Exhibit 10.65
[LOGO]
Amgen Nonqualified Deferred Compensation Plan
Plan Document
================================================================================
Nonqualified Deferred Compensation Plan
Effective January 1, 2002
Copyright (C) 2001
By Clark/Bardes Consulting -- Compensation Resource Group
All Rights Reserved
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Purpose............................................................................................. 1
ARTICLE 1 Definitions............................................................................. 1
ARTICLE 2 Selection/Enrollment/Eligibility........................................................ 5
2.1 Selection by Committee.................................................................. 6
2.2 Enrollment Requirements................................................................. 6
2.3 Eligibility/Commencement of Participation............................................... 6
2.4 Termination of Participation and/or Deferrals........................................... 6
ARTICLE 3 Deferral Commitments/Company Matching/Crediting/Taxes................................... 6
3.1 Minimum Deferrals....................................................................... 6
3.2 Maximum Deferrals....................................................................... 7
3.3 Election to Defer/Effect of Election Form............................................... 7
3.4 Withholding of Annual Deferral Amounts.................................................. 8
3.5 Annual Company Contribution Amount...................................................... 8
3.6 Vesting................................................................................. 8
3.7 Crediting/Debiting of Account Balances.................................................. 9
3.8 Distribution............................................................................ 10
ARTICLE 4 Short-Term Payout/Unforeseeable Financial Emergencies/Withdrawal Election............... 11
4.1 Short-Term Payout....................................................................... 11
4.2 Other Benefits Take Precedence Over Short-Term.......................................... 11
4.3 Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies................... 11
4.4 Withdrawal Election..................................................................... 12
ARTICLE 5 Retirement Benefit...................................................................... 12
5.1 Retirement Benefit...................................................................... 12
5.2 Payment of Retirement Benefit........................................................... 12
5.3 Death Prior to Completion of Retirement Benefit......................................... 13
ARTICLE 6 Pre-Retirement Survivor Benefit......................................................... 13
6.1 Pre-Retirement Survivor Benefit......................................................... 13
6.2 Payment of Pre-Retirement Survivor Benefit.............................................. 13
</TABLE>
- --------------------------------------------------------------------------------
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE 7 Termination Benefit..................................................................... 14
7.1 Termination Benefit..................................................................... 14
7.2 Payment of Termination Benefit.......................................................... 14
ARTICLE 8 Disability Waiver and Benefit........................................................... 14
8.1 Disability Waiver....................................................................... 14
8.2 Continued Eligibility/Disability Benefit................................................ 14
ARTICLE 9 Beneficiary Designation................................................................. 15
9.1 Beneficiary............................................................................. 15
9.2 Beneficiary Designation Change/Spousal Consent.......................................... 15
9.3 Acknowledgement......................................................................... 15
9.4 No Beneficiary Designation.............................................................. 15
9.5 Doubt as to Beneficiary................................................................. 15
9.6 Discharge of Obligations................................................................ 16
ARTICLE 10 Leave of Absence........................................................................ 16
10.1 Paid Leave of Absence................................................................... 16
10.2 Unpaid Leave of Absence................................................................. 16
ARTICLE 11 Termination/Amendment or Modification................................................... 16
11.1 Termination............................................................................. 16
11.2 Amendment............................................................................... 17
11.3 Plan Agreement.......................................................................... 17
11.4 Effect of Payment....................................................................... 17
ARTICLE 12 Administration.......................................................................... 17
12.1 Committee Duties........................................................................ 17
12.2 Administration Upon Change In Control................................................... 18
12.3 Agents.................................................................................. 18
12.4 Binding Effect of Decisions............................................................. 18
12.5 Indemnity of Committee.................................................................. 18
12.6 Employer Information.................................................................... 19
ARTICLE 13 Other Benefits and Agreements........................................................... 19
13.1 Coordination with Other Benefits........................................................ 19
</TABLE>
- --------------------------------------------------------------------------------
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE 14 Claims Procedures....................................................................... 19
14.1 Presentation of Claim.............................