Exhibit 4.6

                       PREFERRED STOCK PURCHASE AGREEMENT

      PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of December
3, 1997 by and between ImClone  Systems  Incorporated,  a Delaware  corporation,
with a principal  place of business at 180 Varick Street,  7th Floor,  New York,
New York 10014, USA (the "Company"),  and Merck KGaA,  Frankfurter  Strasse 250,
D-64271, Darmstadt 1, Germany (the "Buyer").

      WHEREAS:

      A. The Company and the Buyer are executing and  delivering  this Agreement
in reliance upon the exemption from securities registration afforded by Rule 506
under  Regulation  D  ("Regulation  D")  as  promulgated  by the  United  States
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act");

      B. The Buyer  wishes to  purchase,  in the  amounts and upon the terms and
conditions  stated  in  this  Agreement,   shares  of  the  Company's  Series  A
Convertible  Preferred Stock, $1.00 par value per share (the "Series A Preferred
Stock"); and

      "C.  WHEREAS,  the parties have also on this day entered into an amendment
to their Research and License  Agreement  dated December 19, 1990, as previously
amended by amendments dated each of September 1, 1993,  November 2, 1993 and May
14, 1996" (the "Amendment").

      NOW THEREFORE, the Company and the Buyer hereby agree as follows:

1.    PURCHASE AND SALE OF PREFERRED STOCK.

      a.  Purchase of Preferred  Stock.  The Company shall issue and sell to the
Buyer on the  Closing  Date (as  defined  below)  and the Buyer  shall  purchase
400,000 shares of Series A Convertible  Preferred Stock (the "Series A Preferred
Shares"),  which shall be convertible into shares (the  "Conversion  Shares") of
the Company's  common stock,  $.001 par value (the "Common Stock") in accordance
with the  terms of the form of  Certificate  of  Designations,  Preferences  and
Rights of Series A Convertible Preferred Stock attached hereto as Exhibit A (the
"Certificate  of  Designations").  The per share purchase price for the Series A
Preferred Shares shall be One Hundred Dollars ($100).

      b. Form of Payment. The Buyer shall pay the $40,000,000 purchase price for
the Series A Preferred Shares (the "Purchase  Price") by wire transfer of United
States  Dollars to the  Company on the  Closing  Date (as  defined  below).  The
Company shall deliver to the Buyer a stock certificate,  duly executed on behalf
of  the  Company,  representing  the  Series  A  Preferred  Shares  (the  "Stock
Certificate") on the Closing Date.


                                       1
<PAGE>

      c. Closing Date.  The date and time of the issuance and sale of the Series
A Preferred  Shares (the  "Closing  Date")  shall be no later than 4:00 p.m. New
York Eastern  Standard Time on December 15, 1997 or such other date to which the
parties may mutually agree.

2.    BUYER REPRESENTATIONS AND WARRANTIES

      The Buyer represents and warrants to the Company that:

      a.  Organization  and  Qualification.  The  Buyer  is a  corporation  duly
organized and existing in good standing  under the laws of the  jurisdiction  in
which it is incorporated.  The Buyer is duly qualified as a foreign  corporation
to do business and is in good standing in every jurisdiction in which the nature
of the business conducted by it makes such qualification necessary and where the
failure so to qualify  would have a  Material  Adverse  Effect on it.  "Material
Adverse Effect" means any material  adverse effect on operations,  properties or
financial condition.

      b.  Investment  Purpose.  The Buyer is  purchasing  the Series A Preferred
Shares for its own account for  investment  only and not with a view towards the
public sale or distribution  thereof except pursuant to sales  registered  under
the 1933 Act or an exemption therefrom.

      c. Accredited  Investor Status.  The Buyer is an "accredited  investor" as
that term is defined in Rule 501(a)(3) of Regulation D.

      d.  Reliance  on  Exemptions.  The  Buyer  understands  that the  Series A
Preferred  Shares  are being  offered  and sold to it in  reliance  on  specific
exemptions from the registration requirements of United States federal and state
securities  laws and that the Company is relying upon the truth and accuracy of,
and the Buyer's compliance with, the  representations,  warranties,  agreements,
acknowledgments  and  understandings  of the Buyer set forth  herein in order to
determine the availability of such exemption and the eligibility of the Buyer to
acquire the Series A Preferred Shares.

      e.  Information.  The Buyer and its advisors,  if any, have been furnished
with all  materials  relating to the  business,  finances and  operations of the
Company and  materials  relating to the offer and sale of the Series A Preferred
Shares which have been  requested by the Buyer.  The Buyer and its advisors,  if
any, have been afforded the opportunity to ask questions of the Company and have
received  complete and  satisfactory  answers to any such  inquiries.  The Buyer
understands that its investment in the Series A Preferred Shares involves a high
degree of risk.

      f.  Governmental  Review.  The Buyer  understands  that no  United  States
federal  or state  agency or any other  government  or  governmental  agency has
passed on or made any  recommendation  or  endorsement of the Series A Preferred
Shares.


                                       2
<PAGE>

      g.  Transfer  or  Resale.  The  Buyer  understands  that (i) the  Series A
Preferred  Shares  and the  Conversion  Shares  have not been and are not  being
registered  under the 1933 Act or any United States state securities laws or any
other  laws,  and may not be  transferred  unless  (a)  subsequently  registered
thereunder,  or (b) the Buyer shall have  delivered to the Company an opinion of
counsel, reasonably satisfactory in form, scope and substance to the Company, to
the  effect  that  the  securities  to be  sold  or  transferred  may be sold or
transferred  pursuant to an exemption from such  registration;  (ii) any sale of
such securities made in reliance on Rule 144 promulgated  under the 1933 Act may
be made only in accordance with the terms of said Rule and further, if said Rule
is not applicable,  any resale of such securities  under  circumstances in which
the seller (or the person  through whom the sale is made) may be deemed to be an
underwriter  (as that term is  defined in the 1933 Act) may  require  compliance
with some other exemption under the 1933 Act or the rules and regulations of the
SEC  thereunder;  and (iii) except as specified in this  Agreement,  neither the
Company nor any other person is under any obligation to register such securities
under the 1933 Act or any state  securities laws or to comply with the terms and
conditions of any exemption  thereunder.  The Buyer agrees that in no event will
it make a disposition  of such  securities  unless and until it shall have first
(i) notified the Company of the proposed  disposition  and shall have  furnished
the Company  with a statement  of the  circumstances  surrounding  the  proposed
disposition;  and (ii) with respect to the Series A Preferred  Shares,  it shall
have obtained the prior written consent of the Company.

      h. Legends.  The Buyer  understands that the Series A Preferred Shares and
the  Conversion  Shares  may bear a  restrictive  legend  in  substantially  the
following form (and a stop-transfer order may be placed against transfer of such
stock certificates):

      The securities  represented by this  certificate  have not been registered
      under the United States Securities Act of 1933, as amended. The securities
      have been  acquired for  investment  and may not be sold,  transferred  or
      assigned  unless an effective  registration  statement for the  securities
      under said Act, or an opinion of counsel, reasonably satisfactory in form,
      scope and  substance to the  Company,  that  registration  is not required
      under  said Act has been  received.  The  securities  represented  by this
      certificate  are subject to certain  restrictions on transfer as set forth
      in a Preferred  Stock Purchase  Agreement  dated as of December 3, 1997, a
      copy of which is available for inspection at the executive  offices of the
      Company.

      i.  Authorization;  Enforcement.  This Agreement has been duly and validly
authorized,  executed  and  delivered  on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable in accordance with its terms, subject
as to  enforceability  to  general  principles  of  equity  and  to  bankruptcy,
insolvency,  moratorium,  and other similar laws  affecting the  enforcement  of
creditors' rights generally.


                                       3
<PAGE>

3.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

      The Company represents and warrants to the Buyer that:

      a.  Organization  and  Qualification.  The Company is a  corporation  duly
organized and existing in good standing  under the laws of the  jurisdiction  in
which it is incorporated. The Company is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which the nature
of the business conducted by it makes such qualification necessary and where the
failure so to qualify would have a Material Adverse Effect on it.

      b.  Authorization;  Enforcement.  This Agreement has been duly and validly
authorized,  executed and  delivered on behalf of the Company and is a valid and
binding  agreement  of the Company  enforceable  in  accordance  with its terms,
subject as to enforceability to general  principles of equity and to bankruptcy,
insolvency,  moratorium,  and other similar laws  affecting the  enforcement  of
creditors' rights generally.

      c. Capitalization. The authorized capital stock of the Company consists of
(i)  45,000,000   shares  of  Common  Stock  of  which  24,185,955  shares  were
outstanding  as of September 30, 1997,  and (ii)  4,000,000  shares of Preferred
Stock,  $1.00 par value, none of which were issued and outstanding.  All of such
outstanding   shares   have  been   validly   issued  and  are  fully  paid  and
nonassessable.  No shares of Common  Stock or  Preferred  Stock are  subject  to
preemptive rights or any other similar rights of the stockholders of the Company
or any liens or  encumbrances.  The Company has  furnished to the Buyer true and
correct copies of the Company's Certificate of Incorporation,  as amended, as in
effect on the date hereof  ("Certificate  of  Incorporation")  and the Company's
By-laws, as in effect on the date hereof (the "By-laws").

      d. Issuance of Shares.  The Series A Preferred  Shares are duly authorized
and, upon issuance in accordance with the terms hereof, shall be validly issued,
fully paid and  non-assessable,  and free from all taxes, liens and charges with
respect to the issue thereof.

      e. No Conflicts. The execution, delivery and performance of this Agreement
by the  Company  and  the  consummation  by  the  Company  of  the  transactions
contemplated hereby will not result in a violation of the Company's  Certificate
of  Incorporation  or  By-laws  or cause  the  Company  to be in  breach  of any
agreement  by which it is  bound.  The  business  of the  Company  is not  being
conducted in violation of any law,  ordinance or regulation of any  governmental
entity,  except for possible  violations which either singly or in the aggregate
do not have a Material Adverse Effect. Except as required under the 1933 Act and
any applicable  United States state securities laws, the Company is not required
to  obtain  any  consent,  authorization  or order  of,  or make any  filing  or
registration with, any court or governmental  agency in order for it to execute,
deliver or perform any of its  obligations  under this  Agreement in  accordance
with the terms hereof.

      f. Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation  before or by any court,  public  board or body pending or, to the
knowledge of the Company,  threatened against or affecting the Company,  wherein
an unfavorable decision,  ruling or finding


                                       4
<PAGE>

would  have a  Material  Adverse  Effect or which  would  adversely  affect  the
validity or  enforceability  of, or the  authority  or ability of the Company to
perform  its  obligations   under,  this  Agreement  of  any  of  the  documents
contemplated herein.

      g. No Material Adverse Change. Since September 30, 1997 there has occurred
no change which could  reasonably be expected to have a Material  Adverse Effect
on the Company.

4.    COVENANTS

      a. Best  Reasonable  Efforts.  The parties shall use their best reasonable
efforts timely to satisfy each of the conditions described in Section 5 and 6 of
this Agreement.

      b. Form D, Blue Sky Laws. The Company agrees to file a Form D with respect
to the Series A Preferred  Stock as  required  under  Regulation  D. The Company
shall,  on or before the Closing  Date,  take such  action as the Company  shall
reasonably  determine is necessary to qualify the Series A Preferred  Stock for,
or obtain  exemption for the Series A Preferred  Stock for, sale to the Buyer at
the closing pursuant to this Agreement under applicable securities or "blue sky"
laws of the states of the United States.

      c. Reservation of Shares.  The Company shall at all times have authorized,
and  reserved  for the purpose of  issuance,  a  sufficient  number of shares of
Common Stock to provide for the conversion of the Series A Preferred Shares.

      d. Market Stand-Off  Agreement.  The Buyer hereby agrees that,  during the
period of duration  specified by the Company and an  underwriter of Common Stock
or  other  securities  of  the  Company,  following  the  effective  date  of  a
registration  statement  of the Company  filed under the 1933 Act, the Buyer and
any  Affiliate (as that term is defined under Rule 405 under the 1933 Act) shall
not, to the extent  requested by the Company and such  underwriter,  directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale),  grant any option to purchase or otherwise  transfer or dispose
of (other than to donees who agree to be similarly  bound) any securities of the
Company held by it at any time except insofar as such  securities are covered by
such registration  statement;  provided,  however, that such agreement shall not
exceed 90 days.

            In order to enforce the foregoing  covenant,  the Company may impose
stop-transfer instructions with respect to such securities of the Buyer (and the
shares or securities of every other person subject to the foregoing restriction)
until the end of such period.

      e. Stand-Still Agreement. Except for the acquisition of Conversion Shares,
for the exercise of any rights as a holder of Conversion  Shares or as otherwise
contemplated  by this  Agreement,  the Buyer hereby  agrees that for a period of
five  years  from the date  hereof,  without  the prior  written  consent of the
Company,  neither the Buyer nor any  Affiliate  (as that term is defined in Rule
405 under  the 1933 Act) of the Buyer  (regardless  of  whether  such  person or
entity is an Affiliate  on the date hereof) will (i) acquire,  offer to acquire,
or agree to acquire,  directly or


                                       5
<PAGE>

indirectly,  by  purchase  or  otherwise,  any  voting  securities  or direct or
indirect rights or options to acquire any voting securities of the Company, (ii)
make, or in any way participate,  directly or indirectly,  in any "solicitation"
of "proxies' to vote (as such terms are used in the proxy rules of the SEC),  or
seek to advise or  influence  any person or entity with respect to the voting of
any voting securities of the Company, (iii) form, join or in any way participate
in a "group"  within  the  meaning of  Section  13(d) (3) of the  United  States
Securities  Exchange  Act of  1934,  as  amended  with  respect  to  any  voting
securities  of the  Company,  or (iv)  otherwise  act,  alone or in concert with
others,  to seek to control or influence the  management,  board of directors or
policies of the Company.  Buyer  acknowledges that the Company would not have an
adequate  remedy at law for money  damages in the event that this  covenant were
not performed in accordance  with its terms and therefore agree that the Company
shall be entitled to specific enforcement of the terms hereof in addition to any
other remedy to which it may be entitled, at law or in equity.

      f.  Resales  of  Conversion  Shares.  Except  pursuant  to a  registration
statement  provided in Article 8 hereof, the Buyer hereby agrees that Conversion
Shares shall only be sold by it and any  Affiliate (as defined in Rule 405 under
the 1933 Act) in accordance with the following:

            (i)  Conversion  Shares  relating  to  Tranche I (as  defined in the
Certificate of  Designations)  (a) shall not be sold prior to December 31, 1998;
and (b) shall not be sold during the period  December 31, 1998 through  December
31, 1999 in an amount that is excess of that  amount  specified  in Rule 144 (e)
(1) of the 1933 Act.

            (ii)  Conversion  Shares  relating  to Tranche II (as defined in the
Certificate of  Designations)  (a) shall not be sold prior to December 31, 2000;
and (b) shall not be sold during the period  December 31, 2000 through  December
31, 2001 in an amount that is in excess of that amount specified in Rule 144 (e)
(1) of the 1933 Act.

            (iii)  Conversion  Shares relating to Tranche III (as defined in the
Certificate of  Designations)  (a) shall not be sold prior to December 31, 2001;
and (b) shall not be sold during the period  December 31, 2001 through  December
31, 2002 in an amount that is in excess of that amount specified in Rule 144 (e)
(1) of the 1933 Act.

            (iv)  Conversion  Shares  relating  to Tranche IV (as defined in the
Certificate of  Designations)  (a) shall not be sold prior to December 31, 2002;
and (b) shall not be sold during the period  December 31, 2002 through  December
31, 2003 in an amount that is in excess of that amount specified in Rule 144 (e)
(1) of the 1933 Act.


                                       6
<PAGE>

5.    CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

      The  obligation  of the Company  hereunder  to sell the Series A Preferred
Shares is subject to the satisfaction, at or before the Closing Date, of each of
the following  conditions,  provided that these conditions are for the Company's
sole  benefit  and  may  be  waived  by the  Company  at any  time  in its  sole
discretion:

      a. The parties shall have  executed this  Agreement and delivered the same
to each other.

      b. The Buyer shall have delivered the Purchase Price to the Company.

      c. The  representations  and  warranties  of the  Buyer  shall be true and
correct in all material  respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and the Buyer shall have performed,  satisfied and
complied in all material respects with the covenants,  agreements and conditions
required by this  Agreement to be  performed,  satisfied or complied with by the
Buyer at or prior to the  Closing  Date  and an  officers'  certificate  to such
effect delivered to the Company.

      d. The parties shall have executed the Amendment.

6.    CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

      The  obligation of the Buyer  hereunder to purchase the Series A Preferred
Shares is subject to the satisfaction, at or before the Closing Date, of each of
the following  conditions,  provided that these  conditions  are for the Buyer's
sole benefit and may be waived by the Buyer at any time in its sole discretion:

      a. The parties shall have  executed this  Agreement and delivered the same
to each other.

      b. The Company shall have caused the  Certificate  of  Designations  to be
filed with the Secretary of State for the State of Delaware of the United States
at or before the Closing Date.

      c. The  representations  and  warranties  of the Company shall be true and
correct in all material  respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants,  agreements and conditions
required by this  Agreement to be  performed,  satisfied or complied with by the
Company at or prior to the Closing  Date and an  officers'  certificate  to such
effect delivered to the Buyer.

      d. The Company shall have delivered to the Buyer the Stock Certificate.

      e. The parties shall have executed the Amendment.


                                       7
<PAGE>

7.    REGISTRATION RIGHTS

      The Buyer  shall have the right to  request,  once for  Conversion  Shares
relating to each tranche,  that the Company effect  registration with respect to
all or part of Conversion Shares relating to the relevant tranche.  Upon written
request of the Buyer in compliance with the preceding  sentence that the Company
effect registration with respect to all or a part of the Registrable Securities,
the Company will, as expeditiously as reasonably possible:

      a. prepare and file with the Commission a  registration  statement on Form
S-3 or on any form for which the Company then qualifies or which counsel for the
Company  shall  deem  appropriate,  as the case may be,  and which form shall be
available  for the sale of the  Registrable  Securities;  provided,  that before
filing  with the  Commission  a  registration  statement  or  prospectus  or any
amendments or supplements  thereto,  the Company will (i) furnish to one counsel
selected by the Buyer copies of all such documents  proposed to be filed,  which
documents will be subject to reasonable advance review of such counsel, and (ii)
notify the Buyer of any stop order issued or  threatened by the  Commission  and
take all reasonable  actions required to prevent the entry of such stop order or
to remove it if entered;

      b. keep such registration effective for a period of no longer than two (2)
years after the date of filing of such registration statement or until the Buyer
has completed the distribution  described in the registration statement relating
thereto, whichever first occurs;

      c. prepare and file with the Commission such amendments and supplements to
such  registration  statements and the Prospectus  used in connection  with such
registration  statement as may be necessary to comply with the provisions of the
1933 Act with  respect  to the  disposition  of all  securities  covered by such
registration statement;

      d.  furnish  to the Buyer  such  number  of  copies  of such  registration
statement,  each  amendment and  supplement  thereto (in each case including all
exhibits  thereto),  the  Prospectus  included  in such  registration  statement
(including each preliminary prospectus),  in conformity with the requirements of
the 1933 Act and such other  documents  as the Buyer may  reasonably  request in
order to facilitate the disposition of the Registrable  Securities  owned by the
Buyer;

      e.  advise  the Buyer  and the  managing  underwriters,  if any,  and,  if
requested by the Buyer or the managing underwriters, if any, confirm such advice
in writing,  when a  registration  statement or any  amendment  thereto has been
filed  with  the  Commission  and  when  the   registration   statement  or  any
post-effective amendment thereto has become effective;


                                       8
<PAGE>

      f. use its best efforts to obtain the  withdrawal of any order  suspending
the  effectiveness  of  any  registration  statement,  or  the  lifting  of  any
suspension  of  the  qualification  (or  exemption  from  qualification)  of the
Registrable  Securities for sale in any  jurisdiction,  at the earliest possible
time;

      g. cause all such  Registrable  Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed;

      h.  provide  a  transfer  agent  and  registrar  for all such  Registrable
Securities not later than the effective date of such registration statement;

      i.  immediately  notify the Buyer at any time when a  Prospectus  relating
thereto is required to be delivered  under the 1933 Act, of the happening of any
event  as a  result  of  which  the  Prospectus  included  in such  registration
statement  contains an untrue statement of a material fact or omits to state any
material fact required to be stated  therein or necessary to make the statements
therein not misleading in light of the  circumstances  then  existing,  and will
promptly  prepare and furnish to the Buyer a  supplement  or  amendment  to such
Prospectus so that, as thereafter delivered to the purchasers of the Registrable
Securities,  such Prospectus will not contain an untrue  statement of a material
fact or omit to state  any  material  fact  required  to be  stated  therein  or
necessary  to make  the  statements  therein  not  misleading  in  light  of the
circumstances then existing;

      j.  make   available  for  inspection  by  the  Buyer,   any   underwriter
participating in any disposition  pursuant to such registration  statement,  and
any  attorney,  accountant or other agent  retained by the Buyer or  underwriter
(collectively,  the  "Inspectors"),  all financial and other records,  pertinent
corporate documents and properties of the Company (collectively,  the "Records")
as shall be reasonably  necessary to enable them to exercise their due diligence
responsibility,  and cause the  Company's  officers,  directors and employees to
supply all information reasonably requested by any such Inspectors in connection
with such registration statement;  provided, however, that such Inspectors shall
first agree in writing with the Company that any Records that are reasonably and
in good faith  designated by the Company as confidential at the time of delivery
of such Records shall be kept confidential by such Inspectors; and

      k. in connection  with  underwritten  offerings,  use its reasonable  best
efforts  to  obtain a  comfort  letter  from the  Company's  independent  public
accountants in customary form and covering such matters of the type  customarily
covered by comfort letters as the Buyer reasonably requests.

      The Buyer agrees that,  upon receipt of any notice from the Company of the
happening of any event of the kind  described in Section 7(i) hereof,  the Buyer
will forthwith discontinue disposition of Registrable Securities pursuant to the
registration  statement  covering such Registrable  Securities until the Buyer's
receipt of the copies of the supplemented or amended Prospectus  contemplated by
Section 7(i) hereof, and, if so directed by the Company,  the Buyer will deliver
to the Company (at the Company's expense) all copies,  other than permanent file
copies  then  in  the  Buyer's  possession,  of  the  Prospectus  covering  such
Registrable Securities current at the time of receipt of such notice.


                                       9
<PAGE>

8.    PIGGYBACK REGISTRATION

      If the Company  proposes to file a registration  statement  under the 1933
Act with respect to an offering by the Company of any class of securities  after
the Closing Date (other than a registration  statement on Form S-4 or S-8 or any
successor  form to such Forms,  or filed in connection  with a merger,  exchange
offer or an  offering  of  securities  solely to the  existing  stockholders  in
connection with a merger,  exchange offer or an offering of securities solely to
the existing  stockholders  in  connection  with a rights  offering or solely to
employees of the Company),  then the Company  shall give written  notice of such
proposed filing to the Buyer at least twenty days before the anticipated  filing
date, and such notice shall offer Buyer the  opportunity to register such amount
of Registrable  Securities as Buyer may request.  The Company shall use its best
efforts  to  cause  the  managing  underwriter  or  underwriters  of a  proposed
underwritten  offering to permit the Buyer to include  such  securities  in such
offering  on the same terms and  conditions  as any  similar  securities  of the
Company included  therein.  Notwithstanding  the foregoing,  (i) if the managing
underwriter or underwriters of such proposed  underwritten  offering  delivers a
written notice to the Buyer that the total amount of securities which the Buyer,
the Company and any other persons or entities  (other than such other persons or
entities  with whom the Company has  agreements  on the date hereof  prohibiting
reduction or limitation as  contemplated  herein)  having  registration  rights,
intend to include in such offering is  sufficiently  large as to materially  and
adversely affect the success of such offering,  then the amount of securities to
be offered  for the  accounts  of the Buyer and for the  accounts  of such other
persons  or  entities  shall  be  reduced  or  limited  in  proportion  to their
respective  amounts of  securities  to the extent  necessary to reduce the total
amount of securities  to be included in such offering to the amount  recommended
by such managing underwriter;  provided,  that no reduction shall be made in the
securities  to be  offered  for the  account  of the  Company;  and (ii) if such
proposed  underwritten offering involves only equity securities and the managing
underwriter or underwriters thereof shall have delivered a written notice to the
Buyer that the  inclusion of any  Registrable  Securities  in such offering will
materially  and  adversely  affect  the  success  of  such  offering,   then  no
Registrable Securities shall be included in such offering.

9.    EXPENSES OF REGISTRATION.

      All Registration  Expenses  incurred in connection with any  registration,
qualification  or compliance  pursuant to Section 7 or Section 8 hereof shall be
borne by the Company.  All Selling Expenses relating to securities so registered
shall be borne by the Buyer.

10.   INDEMNIFICATION.

      a.  Indemnification by the Company.  The Company will, and it hereby does,
agree to indemnify and hold harmless,  to the full extent  permitted by law, the
Buyer,  its directors  and officers and each other person,  if any, who controls
the Buyer  within the meaning of the 1933 Act or the Exchange  Act,  against any
and all losses, claims,  damages or liabilities,  joint or several, and expenses
(including any amounts  personally  paid in any  settlement) to which the Buyer,
any such director or officer or controlling  person may become subject under the
1933 Act, common law or otherwise,  insofar as such losses,  claims,  damages or
liabilities (or actions or proceedings in respect


                                       10
<PAGE>

thereof) or expenses arise out of or are based upon (i) any untrue  statement or
alleged  untrue  statement of any material  fact  contained in any  registration
statement under which such  securities  were registered  under the 1933 Act, any
preliminary,  final or summary prospectus contained therein, or any amendment or
supplement  thereto, or (ii) any omission or alleged omission to state therein a
material fact required to be stated  therein or necessary to make the statements
therein not  misleading,  and the Company will reimburse the Buyer and each such
director,  officer or  controlling  person  for any legal or any other  expenses
reasonably  incurred by them in connection with  investigating or defending such
loss, claim, liability, action or proceedings;  provided, that the Company shall
not be liable in any such case to the extent that any such loss, claim,  damage,
liability (or action or proceeding in respect thereof) or expenses arises out of
or is based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such registration  statement or amendment or supplement
thereto or in any such preliminary, final or summary prospectus in reliance upon
and in conformity with written information furnished to the Company by the Buyer
for use in the preparation thereof; and provided, further, that the Company will
not be liable to the Buyer or any other person,  if any, who controls the Buyer,
under  the  indemnity  agreement  in this  Section  10(a)  with  respect  to any
preliminary  prospectus  as amended or  supplemented  as the case may be, to the
extent  that  any  such  loss,  claim,  damage  or  liability  of the  Buyer  or
controlling  person  results  from the  fact  that the  Buyer  sold  Registrable
Securities  to a person to whom there was not sent or given,  at or prior to the
written confirmation of such sale, a copy of the final prospectus (including any
documents  incorporated by reference therein),  whichever is most recent, if the
Company  has  previously  furnished  copies  thereof to the Buyer and such final
prospectus, as then amended or supplemented, has corrected any such misstatement
or omission.  Such indemnity shall remain in full force and effect regardless of
any  investigation  made by or on  behalf  of the  Buyer or any  such  director,
officer or controlling  person and shall survive the transfer of such securities
by the  Buyer.  It is agreed  that the  indemnity  agreement  contained  in this
Section  10(a) shall not apply to amounts paid in  settlement  of any such loss,
claim, damage,  liability,  or action if such settlement is effected without the
consent of the Company (which consent has not been unreasonably withheld).

      b.  Indemnification  by the  Buyer.  The Buyer  will,  if the  Registrable
Securities  are  included  in the  securities  as to  which  such  registration,
qualification,  or compliance is being effected, indemnify and hold harmless (in
the same manner and to the same extent as set forth in  subdivision  (a) of this
Section  10) the  Company,  any  underwriter  and their  respective  controlling
persons  within the meaning of the 1933 Act and the Exchange  Act, and all other
prospective sellers and their respective controlling persons with respect to any
statement  or alleged  statement  in or omission or alleged  omission  from such
registration statement,  any preliminary,  final or summary prospectus contained
therein, or any amendment or supplement,  if such statement or alleged statement
or omission or alleged omission was made in reliance upon and in conformity with
written  information  furnished  to the  Company  by the  Buyer  for  use in the
preparation  of such  registration  statement,  preliminary,  final  or  summary
prospectus or amendment or supplement,  or a document  incorporated by reference
into any of the foregoing.  Such indemnity shall remain in full force and effect
regardless  of any  investigation  made by or on  behalf of the  Company  or any
underwriter  or  any of  the  Buyer  or  any  of  its  directors,  officers  and
controlling  persons and shall  survive the transfer of such  securities  by the
Buyer; provided,  however, that the obligations of the Buyer hereunder shall not
apply to amounts paid in  settlement  of any such claims,  losses,  damages,  or
liabilities (or actions


                                       11
<PAGE>

in respect  thereof) if such  settlement is effected  without the consent of the
Buyer (which consent shall not be unreasonably withheld).

      c. Notices of Claims,  Etc. Each party entitled to  indemnification  under
this  Section  10 (the  "Indemnified  Party")  shall  give  notice  to the party
required to provide  indemnification  (the "Indemnifying  Party") promptly after
such  Indemnified  Party has actual knowledge of any claim as to which indemnity
may be sought,  and shall permit the Indemnifying Party to assume the defense of
such claim or any litigation resulting therefrom, provided, that counsel for the
Indemnifying  Party,  who  shall  conduct  the  defense  of  such  claim  or any
litigation  resulting  therefrom,  shall be  approved by the  Indemnified  Party
(whose approval shall not unreasonably be withheld),  and the Indemnified  Party
may participate in such defense at such party's expense, and provided,  further,
that the failure of any  Indemnified  Party to give  notice as  provided  herein
shall not relieve the Indemnifying  Party of its obligations  under this Section
10, to the extent such failure is not prejudicial. No Indemnifying Party, in the
defense of any such claim or litigation,  shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
that  does not  include  as an  unconditional  term  thereof  the  giving by the
claimant or plaintiff to such Indemnified  Party of a release from all liability
in respect to such claim or  litigation.  Each  Indemnified  Party shall furnish
such  information  regarding  itself or the claim in question as an Indemnifying
Party may reasonably  request in writing and as shall be reasonably  required in
connection with defense of such claim and litigation resulting therefrom.

      d. Contribution. If the indemnification provided for in this Section 10 is
held by a court of competent  jurisdiction  to be  unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage, or expense referred to
therein,  then the Indemnifying  Party, in lieu of indemnifying such Indemnified
Party  hereunder,  shall  contribute  to the  amount  paid  or  payable  by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such  proportion  as is  appropriate  to reflect  the  relative  fault of the
Indemnifying  Party on the one hand and of the Indemnified Party on the other in
connection  with  the  statements  or  omissions  that  resulted  in such  loss,
liability,  claim,  damage,  or expense as well as any other relevant  equitable
considerations.  The  relative  fault  of  the  Indemnifying  Party  and  of the
Indemnified  Party shall be  determined  by reference  to,  among other  things,
whether  the  untrue or alleged  untrue  statements  of a  material  fact or the
omission  to state a  material  fact  relates  to  information  supplied  by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge,  access to  information,  and  opportunity to correct or prevent such
statement or omission.


                                       12
<PAGE>

11.   DEFINITIONS

      The term "Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time  administering the 1933 Act or the Exchange
Act.

      The term "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended,  or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time and a reference
to a particular  section  thereof  shall be deemed to include a reference to the
comparable section, if any, of any such similar successor federal statute.

      The term  "person"  shall mean an  individual,  partnership,  corporation,
limited liability company, trust,  unincorporated  organization or government or
political department or agency thereof or other entity.

      The  term  "Prospectus"   shall  mean  the  prospectus   included  in  any
Registration  Statement  (including,   without  limitation,  a  prospectus  that
discloses  information  previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the 1933 Act),
as amended or  supplemented  by any prospectus  supplement,  with respect to the
terms of the offering of any portion of Registrable Securities,  covered by such
Registration  Statement,  and all amendments and  supplements to the Prospectus,
including post-effective  amendments, and all material incorporated by reference
into such Prospectus.

      The term "Registrable  Securities" shall mean any Conversion Shares. As to
any  Registrable  Securities,  such  securities  shall  cease to be  Registrable
Securities  when (i) a  registration  statement with respect to the sale of such
securities  shall have become  effective  under the 1933 Act and such securities
shall have been disposed of pursuant to such effective  registration  statement,
(ii) such  securities  shall have been  distributed  pursuant to Rule 144,  Rule
144A, or any similar  provision  then in force,  under the 1933 Act,  (iii) such
securities  shall have been otherwise  transferred,  new  certificates  or other
evidences  of  ownership  for them not  bearing  a  legend  restricting  further
transfer and not subject to any stop  transfer  order or other  restrictions  on
transfer shall have been delivered by the Company and subsequent  disposition of
such  securities  shall  not  require  registration  or  qualification  of  such
securities under the 1933 Act or any state securities laws then in force or (iv)
the sale of such  securities by the Buyer shall no longer  require  registration
under the 1933 Act or such securities shall cease to be outstanding.

      The terms  "register,"  "registered" and  "registration"  shall refer to a
registration  effected  by  preparing  and filing a  registration  statement  in
compliance  with  the  1933  Act  and  the  applicable   rules  and  regulations
thereunder,  and  the  declaration  or  ordering  of the  effectiveness  of such
registration statement.

      The term  "Registration  Expenses"  shall mean all  expenses  incurred  in
effecting   anyregistration  pursuant  to  this  Agreement,   including  without
limitation, all registration,  qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel


                                       13
<PAGE>

for the  Company,  blue sky fees and  expenses  and  expenses  of any regular or
special audits incident to or required by any such  registration,  but shall not
include Selling Expenses.

      The term  "Selling  Expenses"  shall mean all  underwriting  discounts and
selling  commissions  applicable to the sale of the  Registrable  Securities and
fees  and  disbursements  of  counsel  for the  Buyer  (other  than the fees and
disbursements  of counsel  constituting a part of blue sky fees and expenses and
included in Registration Expenses).

12.   GOVERNING LAW; MISCELLANEOUS.

      a. Governing Law. This Agreement  shall be governed by and  interpreted in
accordance  with the laws of the State of Delaware of the United States  without
regard to the principles of conflict of laws.

      b.   Counterparts.   This  Agreement  may  be  executed  in  two  or  more
counterparts,  all of which shall be considered  one and the same  agreement and
shall become effective when such counterparts have been signed by each party and
delivered to the other party.  In the event any  signature  page is delivered by
facsimile transmission,  the party using such means of delivery shall cause four
(4) additional originally executed signature pages to be physically delivered to
the other party within five (5) days of the execution and delivery hereof.

      c.  Headings.  The  headings  of this  Agreement  are for  convenience  of
reference  and shall not form part of, or affect  the  interpretation  of,  this
Agreement.

      d.  Severability.  If any provision of this Agreement  shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or  enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.

      e.  Entire  Agreement;  Amendments.  This  Agreement  and the  instruments
referenced  herein contain the entire  understanding of the parties with respect
to the matters covered herein and therein and, except as specifically  set forth
herein or therein,  neither the Company nor the Buyer makes any  representation,
warranty,  covenant or undertaking with respect to such matters. No provision of
this  Agreement  may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

      f. Notices. Any notice or communication  hereunder shall be in writing and
delivered by messenger,  overnight  courier,  first class mail,  (return receipt
requested) or telex or telecopy (with such telex or telecopy  confirmed promptly
in writing by first class mail return receipt requested), as follows:


                                       14
<PAGE>

     If to the Company:

     ImClone Systems Incorporated

     180 Varick Street, 7th Floor
     New York, NY  10014
     Telephone: (212) 645-1405
     Telecopy: (212) 645-2054
     Attention: Corporate Secretary

     With copy to:

     Howard, Darby and Levin
     1330 Avenue of the Americas
     New York, NY  10019
     Telephone: (212) 841-1000
     Telecopy:   (212) 841-1010
     Attention:   Lawrence A. Darby III, Esq.

     If to the Buyer:

     Merck KGaA
     Frankfurter Strasse 250
     D-64271 Darmstadt 1
     Germany
     Telephone:  (011) 49 61 51 72 21 24
     Telecopy:    (011) 49 61 51 72 34 35
     Attention: Edward R. Roberts, President,  World Pharmaceuticals

     With copy to:

     Coudert Brothers
     1114 Avenue of the Americas
     New York, NY  10036-7703
     Telephone:  (212) 626-4682
     Telecopy:  (212) 626-4120
     Attention:  Edwin S. Matthews, Jr., Esq.

or in each case,  to such address or telex or telecopy  number as such party may
designate  in  writing  to the  other by  written  notice  given  in the  manner
specified herein.  All such  communications  shall be deemed to have been given,
delivered or made when so delivered  personally,  by overnight  courier or first
class  mail  or sent by  telex  or  telecopy  (confirmation  received),  or five
business days after being so mailed.


                                       15
<PAGE>

      g. Successors and Assigns.  This Agreement shall be binding upon and inure
to the benefit of the  parties and their  successors  and  assigns.  Neither the
Company nor the Buyer shall assign this  Agreement or any rights or  obligations
hereunder  without the prior written  consent of the other (which consent may be
withheld for any reason in the sole discretion of the party from whom consent is
sought).

      h. Third Party  Beneficiaries.  This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit  of, nor may any  provision  hereof be  enforced  by, any
other person.

      i. Survival. The representations, warranties and agreements of the Company
and the  Buyer  set  forth in  Sections  2, 3, 4, 7, 8, 9,  10,  11 and 12 shall
survive the closing.

      j.  Publicity.  The  Company and the Buyer shall have the right to approve
before  issuance any press  releases,  SEC or NASD filings,  or any other public
statements  with  respect to the  transactions  contemplated  hereby;  provided,
however,  that the Company shall be entitled,  without the prior approval of the
Buyer,  to make any press  release or SEC or NASD  filings  with respect to such
transactions as is required by applicable law and regulations.

      k. Further  Assurances.  Each party shall do and  perform,  or cause to be
done and  performed,  all such  further acts and things,  and shall  execute and
deliver all such other agreements,  certificates,  instruments and documents, as
the other  party may  reasonably  request  in order to carry out the  intent and
accomplish  the  purposes  of  this  Agreement  and  the   consummation  of  the
transactions contemplated hereby.

      IN WITNESS  WHEREOF,  the Buyer and the Company have caused this Preferred
Stock Purchase Agreement to be duly executed as of the date first above-written.

                                        IMCLONE SYSTEMS INCORPORATED

                                        By:   /s/ Samuel D. Waksal
                                           ------------------------------------
                                        Name: Samuel D. Waksal
                                             ----------------------------------
                                        Its:  President & CEO
                                            -----------------------------------

                                        MERCK KGaA

                                        By:   /s/ E. R. Roberts
                                           ------------------------------------
                                        Name: E. R. Roberts
                                             ----------------------------------
                                        Its:  Head of Pharmaceuticals
                                            -----------------------------------



                                       16
<PAGE>

                                                                       Exhibit A
                                                                              to
                                              Preferred Stock Purchase Agreement

                    CERTIFICATE OF DESIGNATIONS, PREFERENCES

                       AND RIGHTS OF SERIES A CONVERTIBLE

                                 PREFERRED STOCK

                                       OF

                          IMCLONE SYSTEMS INCORPORATED

      IMCLONE SYSTEMS INCORPORATED (the "Company"),  a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the Board of Directors of the
Company by the  Certificate  of  Incorporation,  as amended,  of the Company and
pursuant to Section 151 of the General Corporation Law of the State of Delaware,
the Board of  Directors  of the  Company at a meeting  duly held on  December 3,
1997,  adopted  resolutions  providing  for the  designations,  preferences  and
relative,  participating,  optional  or other  rights,  and the  qualifications,
limitations or restrictions  thereof,  of four hundred thousand (400,000) shares
of Series A Convertible Preferred Stock (the "Series A Preferred Shares") of the
Company, as follows:

      RESOLVED, that the Company is authorized to issue 400,000 shares of Series
A Convertible Preferred Stock (the "Series A Preferred Shares") which shall have
the following powers, designations, preferences and other special rights:

      II.  Dividends.  The  holders of the then  outstanding  Series A Preferred
Shares shall be entitled to receive,  out of funds legally  available  therefor,
cumulative  dividends  at the  annual  rate of 6% of the  Stated  Value  thereof
compounded  annually  (pro-rated for any portion of the applicable period during
which such  Series A  Preferred  Shares  are  outstanding).  Dividends  shall be
payable on the Series A Preferred  Shares then  outstanding in cash (i) annually
on December 31st of each year beginning on December 31, 1999 or (ii) at the time
of  conversion  or  redemption  (as


                                       17
<PAGE>

provided herein) of the Series A Preferred Shares on which the dividend is to be
paid,  whichever  is sooner.  Dividends  on the Series A Preferred  Shares shall
accumulate  and accrue from the date of original  issuance and shall accrue from
day to day  thereafter,  whether  or not  earned  or  declared.  Until  any such
dividend in arrears is paid, dividends shall continue to accrue on each Series A
Preferred Share but the percentage rate expressed herein shall be applied to the
Stated Value thereof plus all dividends thereon  (including  dividends  computed
pursuant to this sentence).

      III.  Conversion of Series A Preferred Shares. The holders of the Series A
Preferred Shares shall have the right, at their option,  to convert the Series A
Preferred  Shares  into  shares  of  Common  Stock on the  following  terms  and
conditions:

            A. Each Series A Preferred Share shall be convertible at any time as
      hereinafter  provided (or, if such Series A Preferred  Share is called for
      redemption,  at any time up to and including,  but not after, the close of
      business on the fifth full  business  day prior to the date fixed for such
      redemption,  unless  default shall be made by the Company in providing the
      funds for the  payment  of the  redemption  price),  into  fully  paid and
      nonassessable  shares  (calculated  to the nearest  whole share) of Common
      Stock of the Company as constituted at the time of such conversion, at the
      conversion  price  in  effect  at the  time of  conversion  determined  as
      hereinafter  provided (the  "Conversion  Price").  Each Series A Preferred
      Share  shall have a value of $100 (the  "Stated  Value") and the number of
      shares of Common Stock  issuable  upon  conversion of each of the Series A
      Preferred  Shares shall be determined by dividing the Stated Value thereof
      by the  Conversion  Price then in effect.  Every  reference  herein to the
      Common Stock of the Company  (unless a different  intention is  expressed)
      shall be to the  shares  of the  Common  Stock of the  Company,  $.001 par
      value, as such stock exists immediately after the issuance of the Series A
      Preferred  Shares  provided  for  hereunder,  or to stock  into which such
      Common Stock may be changed from time to time thereafter.

            B. The Series A  Preferred  Shares  shall be  convertible  as of the
      dates set forth in (i) - (iv) below.

                  (i) up to 100,000  Series A  Preferred  Shares  ("Tranche  I")
            shall be  convertible  at any time on or after the date on which the
            Series A Preferred Shares are issued (the "Issuance Date");  (ii) up
            to an additional  100,000 Series A Preferred  Shares  ("Tranche II")
            shall be  convertible  at any time on or after  January 1, 2000 (the
            "Second Anniversary Date"); (iii) up to an additional 100,000 Series
            A Preferred  Shares ("Tranche III") shall be convertible at any time
            on or after January 1, 2001 (the "Third Anniversary Date"); and (iv)
            up to an additional 100,000 Series A Preferred Shares ("Tranche IV")
            shall be  convertible  at any time on or after  January 1, 2002 (the
            "Fourth Anniversary Date").

            C. The  Series  A  Preferred  Shares  shall  be  convertible  at the
      Conversion Prices set forth in (i) - (v) below.


                                       18
<PAGE>

                  1.  Series  A  Preferred  Shares  converted  on or  after  the
            Issuance  Date and  before  the  Second  Anniversary  Date  shall be
            convertible at a per share  Conversion  Price equal to $12.50;  (ii)
            Series  A  Preferred   Shares  converted  on  or  after  the  Second
            Anniversary  Date and  before  the Third  Anniversary  Date shall be
            convertible  at a per share  Conversion  Price  equal to 100% of the
            Average  Market Price (as defined below) of the Common Stock for the
            five (5)  consecutive  trading  days ending one trading day prior to
            the  Second  Anniversary  Date;  (iii)  Series  A  Preferred  Shares
            converted  on or after the Third  Anniversary  Date and  before  the
            Fourth  Anniversary  Date  shall  be  convertible  at  a  per  share
            Conversion  Price  equal to 100% of the  Average  Market  Price  (as
            defined  below) of the  Common  Stock  for the five (5)  consecutive
            trading  days ending one trading day prior to the Third  Anniversary
            Date;  (iv)  Series A  Preferred  Shares  converted  on or after the
            Fourth  Anniversary  Date  and  before  January  1,  2003  shall  be
            convertible  at a per  share  Conversion  Price  equal to 88% of the
            Average  Market Price (as defined below) of the Common Stock for the
            five (5)  consecutive  trading  days ending one trading day prior to
            the  Fourth  Anniversary  Date;  and (v) Series A  Preferred  Shares
            converted on or after January 1, 2003 shall be  convertible at a per
            share Conversion Price equal to 100% of the Average Market Price (as
            defined  below) of the  Common  Stock  for the five (5)  consecutive
            trading  days ending one (1) trading day prior to the receipt by the
            Company of the Conversion Notice (as defined below).

            D. Notwithstanding anything to the contrary contained herein, in the
      event (i) the  Conversion  Price in effect from time to time under Section
      2(c) is less  than the  Average  Market  Price (as  defined  below) of the
      Common Stock for the five (5) consecutive  trading days ending one trading
      day prior to the  Issuance  Date,  and (ii) the number of shares of Common
      Stock that would be issued at such  Conversion  Price  would  exceed  that
      number of shares of Common  Stock  permitted  to be issued by the  Company
      without shareholder  approval under the rules of the National  Association
      of  Securities   Dealers   Automated   Quotation  System  ("NASDAQ")  (the
      "Permissible Shares"), then the Company shall issue the Permissible Shares
      as  herein  provided,  and with  respect  to those  shares  exceeding  the
      Permissible  Shares  (the  "Excess  Shares")  the  Company  shall  use its
      reasonable best efforts to take such action as will permit it to issue the
      Excess  Shares,  and if the  Company  is unable to  obtain  such  required
      permission   within  a  reasonable  period  of  time,  the  Company  shall
      repurchase  the Excess Shares at a per share  purchase  price equal to the
      Stated Value, plus accrued and unpaid dividends thereon.

            E. Notwithstanding anything to the contrary contained herein, should
      the Average  Market  Price (as defined  below) of the Common Stock for the
      five (5)  consecutive  trading  days  ending one  trading day prior to any
      trading  day  during  which  any of the  Series  A  Preferred  Shares  are
      outstanding  exceed 150% of the Conversion  Price then in effect,  then so
      long as such price is in excess of such  percentage  the  Company,  in its
      sole discretion,  may require the holder of such Series A Preferred Shares
      to convert all such Series A Preferred Shares as may then be convertible.


                                       19
<PAGE>

            F.  "Average  Market  Price" of any security for any period shall be
      computed as the arithmetic average of the closing prices for such security
      for each trading day in such period on the NASDAQ National Market,  or, if
      the NASDAQ  National  Market is not the principal  trading market for such
      security, on the principal trading market for such security, or, if market
      value cannot be calculated for such period on any of the foregoing  bases,
      the average fair market value during such period as reasonably  determined
      in good faith by the Board of Directors of the Company.

            G. The Conversion Price shall be subject to adjustments from time to
      time as follows:

                  1. If and whenever on or after the  Issuance  Date the Company
            issues,  sells or exchanges  other than in an Excluded  Issuance (as
            hereinafter defined),  any share of Common Stock for a consideration
            per share less than the Average Market Price of the Common Stock for
            the five (5)  consecutive  trading days ending one trading day prior
            to such  event  (the  "Actual  Price") (a  "Dilutive  Event"),  then
            forthwith  upon such  issue or sale the  Conversion  Price  shall be
            decreased by multiplying the Conversion Price in effect  immediately
            before the Dilutive  Event by a fraction,  the numerator of which is
            the  number of shares of Common  Stock  that are  Outstanding  on an
            As-Converted   Basis  (as  defined  below)  immediately  before  the
            Dilutive  Event plus the number of shares of Common Stock that could
            be purchased  at the Actual Price at the time of the Dilutive  Event
            for the  aggregate  consideration  paid or payable  upon the sale or
            issuance of Common Stock in the Dilutive Event,  and the denominator
            of  which  is  the  number  of  shares  of  Common  Stock  that  are
            Outstanding on an As-Converted Basis immediately before the Dilutive
            Event plus the number of shares that are  acquired or to be acquired
            upon the sale or issuance of the Common Stock in the Dilutive Event.
            For purposes of this paragraph (1),  "Outstanding on an As-Converted
            Basis  immediately  before the Dilutive  Event" means the sum of (i)
            all Common  Stock  issued  and  outstanding  immediately  before the
            Dilutive  Event plus (ii) ---- all Common  Stock  issuable  upon the
            exercise  of  options  or  warrants  or  conversion  of  convertible
            securities outstanding immediately before the Dilutive Event.

                  2. "Excluded  Issuance"  means the issue or sale of (i) shares
            of Common  Stock by the Company  pursuant to the exercise of options
            and warrants outstanding  immediately prior to the Issuance Date (as
            adjusted  pursuant to the terms of such securities to give effect to
            stock  dividends  or stock  splits  or a  combination  of  shares in
            connection with a recapitalization,  merger,  consolidation or other
            reorganization  occurring after the Issuance Date),  (ii) options to
            acquire  Common Stock pursuant to a resolution of, or a stock option
            plan  approved by a  resolution  of, the Board of  Directors  of the
            Company (or the  compensation  committee or stock  option  committee
            thereof)  to  the  Company's  employees,   directors  or  Scientific
            Advisory  Board  members,  or (iii) shares of Common Stock issued by
            the Company as  dividends  on, or upon  conversion  of, the Series A
            Preferred Shares.


                                       20
<PAGE>

                  3. If after the Issuance Date the Company in any manner grants
            or issues any option,  warrant or convertible security and the price
            per share for which  shares of Common  Stock are  issuable  upon the
            exercise of any such option, warrant or convertible security is less
            than  the  Actual  Price  with  respect  to such  date of  grant  or
            issuance,  then such shares of Common  Stock shall be deemed to have
            been issued and sold by the  Company at the time of the  granting or
            issuance of such option,  warrant or  convertible  security for such
            price  per share  and the  Conversion  Price  shall be  adjusted  in
            accordance with paragraph (i) above. For purposes of this paragraph,
            the "price per share" for which  shares of Common Stock are issuable
            upon  the   conversion  or  exercise  of  any  option,   warrant  or
            convertible  security  shall be equal to the sum of the  amounts  of
            consideration  (if any)  received or  receivable by the Company with
            respect to such shares of Common Stock upon the granting or issuance
            of the option,  warrant or convertible security and upon exercise or
            conversion  of the  option,  warrant  or  convertible  security.  No
            further  adjustment of the  Conversion  Price shall be made upon the
            actual issue of such Common Stock upon the exercise or conversion of
            such option, warrant or convertible security.

                  4. If after the Issuance Date the purchase  price provided for
            in any option or  warrant,  the  additional  consideration  (if any)
            payable upon the issue,  conversion  or exchange of any  convertible
            security,   or  the  rate  at  which  any  convertible  security  is
            convertible  into or  exchangeable  for Common Stock  changes at any
            time, any Conversion Price previously  adjusted with respect to such
            option, warrant or convertible security and in effect at the time of
            such change shall be readjusted to the Conversion  Price which would
            have  been in  effect  at such  time had  such  option,  warrant  or
            convertible  security  originally provided for such changed purchase
            price,  additional  consideration or changed conversion rate, as the
            case may be, at the time initially granted, issued or sold.

                  5.  Upon  the  expiration  of any  option  or  warrant  or the
            termination of any right to convert any convertible security,  after
            the  Issuance  Date,  without  the  exercise  of any such  option or
            warrant,  any  Conversion  Price then in effect  hereunder  shall be
            adjusted to the Conversion  Price which would have been in effect at
            the time of such expiration or termination had such option,  warrant
            or convertible security, to the extent outstanding immediately prior
            to such expiration or termination, never been issued.

                  6. In case any option or warrant is issued in connection  with
            the  issue  or sale of other  securities  of the  Company,  together
            comprising  one (1)  integrated  transaction  in which  no  specific
            consideration  is allocated to such option or warrant by the parties
            thereto,  the option or warrant  shall be deemed to have been issued
            for a consideration of $.0l.

                  7. If the  Company  shall  consolidate  with or merge into any
            corporation  or reclassify  its  outstanding  shares of Common Stock
            (other than by way of subdivision or reduction of such shares) (each


                                       21
<PAGE>

            a "Major  Transaction"),  then each Series A  Preferred  Share shall
            thereafter  be  convertible  into the  number  of shares of stock or
            securities (the "Resulting  Securities") or property of the Company,
            or of the entity  resulting from such  consolidation  or merger,  to
            which a holder of the  number of  shares of Common  Stock  delivered
            upon  conversion  of such Series A  Preferred  Share would have been
            entitled upon such Major Transaction had the holder of such Series A
            Preferred  Share  exercised  its  right of  conversion  and had such
            Common  Stock been issued and  outstanding  and had such holder been
            the holder of record of such Common  Stock at the time of such Major
            Transaction, and the Company shall make lawful provision therefor as
            a part of such consolidation, merger or reclassification.

                  8. If at any  time,  or from time to time  after the  Issuance
            Date,  the  Company  shall (i) declare and pay, on or in respect of,
            its Common Stock any  dividend  payable in shares of Common Stock or
            (ii) subdivide the outstanding shares of Common Stock into a greater
            number of  shares,  or reduce  the  number of  outstanding  Series A
            Preferred  Shares by combining such Series A Preferred Shares into a
            smaller number of Series A Preferred Shares, the Conversion Price in
            effect at the time of the  taking of a record for such  dividend  or
            the taking of such other action shall be  proportionately  decreased
            as of such time, and  conversely  (iii) if at any time, or from time
            to time, the Company shall reduce the number of  outstanding  shares
            of Common  Stock by combining  such shares into a smaller  number of
            shares, or subdivide the outstanding  Series A Preferred Shares into
            a greater number of Series A Preferred Shares,  the Conversion Price
            in effect  at the time of the  taking  of any such  action  shall be
            proportionately increased as of such time.

                  9. Anything in this Section 2 to the contrary notwithstanding,
            the Company  shall not be required to give effect to any  adjustment
            in the  Conversion  Price  unless and until the net effect of one or
            more adjustments,  determined as above provided, shall have resulted
            in a change of the  Conversion  Price by at least  $0.05,  provided,
            however,  that  when the  cumulative  net  effect  of more  than one
            adjustment so determined  shall be to change the Conversion Price by
            at least $0.05 such change in the Conversion  Price shall  thereupon
            be given effect.

                  10. The  Company  shall not issue any  fraction  of a share of
            Common Stock upon any conversion,  but shall pay in cash therefor at
            the Conversion Price then in effect multiplied by such fraction.

                  11. Notice of  Adjustments  of Conversion  Rate.  Whenever the
            Conversion Price is adjusted as provided  herein,  the Company shall
            promptly (and, in any event, not later than the fifteenth (15th) day
            following the  occurrence of the event  requiring  such  adjustment)
            compute the adjusted  Conversion  Price in  accordance  herewith and
            shall prepare a report  setting forth such  adjustment.  The Company
            will  promptly  (and,  in any event,  not later than such  fifteenth
            (15th) day) furnish a copy of each such report and such verification
            to the holder of any Series A Preferred Share. The Company will also
            keep  copies  of all  such  reports  and such


                                       22
<PAGE>

            verifications at its principal office, and will cause the same to be
            available for inspection at such office during normal business hours
            by the holder of any Series A Preferred Shares.

                  12. Notice of Certain Corporate Action. In case:

                        (1) the Company  shall  declare a dividend (or any other
                  distribution)  on its Common Stock payable  otherwise  than in
                  cash out of its earned surplus; or

                        (2) (a) of any  reclassification  of the Common Stock of
                  the  Company,  or (b) of any  consolidation,  merger  or share
                  exchange  to  which  the  Company  is a party  and  for  which
                  approval of any  stockholders  of the Company is required,  or
                  (c) of the  conveyance,  transfer,  sale  or  lease  of all or
                  substantially all of the assets of the Company; or

                        (3)  of  the  voluntary  or   involuntary   dissolution,
                  liquidation or winding up of the Company;

            then the Company,  ten (10)  business  days prior to the  applicable
            record,  expiration or effective date hereinafter  specified,  shall
            give to each  holder of Series A Preferred  Shares a notice  stating
            (x) the date on which a record  is to be taken  for the  purpose  of
            such dividend, distribution,  rights or warrants, or, if a record is
            not to be  taken,  the  effective  date as of which the  holders  of
            Common   Stock  of  record  to  be   entitled   to  such   dividend,
            distribution,  rights or warrants are to be determined, (y) the date
            on  which  such  reclassification,   consolidation,   merger,  share
            exchange,   conveyance,    transfer,   sale,   lease,   dissolution,
            liquidation or winding up is expected to become  effective,  and the
            date as of which it is  expected  that  holders  of Common  Stock of
            record  shall be entitled to exchange  their  shares of Common Stock
            for  securities,  cash  or  other  property  deliverable  upon  such
            reclassification, consolidation, merger, share exchange, conveyance,
            transfer, sale, lease, dissolution, liquidation or winding up.

            H. On presentation and surrender to the Company (or at any office or
      agency  maintained  for the transfer of the Series A Preferred  Shares) of
      the  certificates  of Series A Preferred  Shares so to be converted,  duly
      endorsed in blank for transfer or  accompanied  by proper  instruments  of
      assignment or transfer in blank (a "Conversion  Notice"),  with signatures
      guaranteed,  the  holder  of such  Series  A  Preferred  Shares  shall  be
      entitled,  subject  to the  limitations  herein  contained,  to receive in
      exchange  therefor  a  certificate  or  certificates  for  fully  paid and
      nonassessable  shares,  which certificates shall be delivered by the fifth
      trading day after the date of delivery of the Conversion  Notice, and cash
      for fractional  shares, of Common Stock on the foregoing basis. The Series
      A Preferred Shares shall be deemed to have been converted,  and the person
      converting  the same to have become the holder of record of Common  Stock,
      for all purposes as of the date of delivery of the Conversion Notice.


                                       23
<PAGE>

            I. The  Company  shall,  so long as any of the  Series  A  Preferred
      Shares are  outstanding,  reserve and keep available out of its authorized
      and  unissued  Common  Stock,  solely  for the  purpose of  effecting  the
      conversion of the Series A Preferred  Shares  outstanding,  such number of
      shares of Common Stock as it shall  reasonably  believe shall from time to
      time be  sufficient  to  effect  the  conversion  of all of the  Series  A
      Preferred Shares then outstanding.

            J. The Company shall pay any and all taxes which may be imposed upon
      it with  respect to the  issuance  and  delivery of Common  Stock upon the
      conversion  of the  Series A  Preferred  Shares  as herein  provided.  The
      Company  shall not be required  in any event to pay any  transfer or other
      taxes by reason of the  issuance of such Common  Stock in names other than
      those in which the Series A Preferred  Shares  surrendered  for conversion
      are  registered  on the  Company's  records,  and no  such  conversion  or
      issuance  of Common  Stock  shall be made  unless  and  until  the  person
      requesting  such  issuance  has paid to the Company the amount of any such
      tax,  or has  established  to the  satisfaction  of the  Company  and  its
      transfer agent, if any, that such tax has been paid.

      IV.  Voting  Rights.  Holders of Series A Preferred  Shares  shall have no
voting rights, except as required by law, by Section 7 hereof and, to the extent
permitted by applicable laws and regulations,  as provided in this Section 3. If
during any fiscal year of the  Company,  the Company  shall be in arrears in the
payment of any  dividend  on the Series A  Preferred  Shares for a period of six
months  or  more  during  such  fiscal  year,  then  at the  annual  meeting  of
shareholders relating to such fiscal year, the holders of the Series A Preferred
Shares  shall have the right to  designate a nominee for director to be included
on the slate of the Company's  nominees for directors for such annual meeting of
shareholders,  and further,  shall have the right,  voting as a class,  to elect
such  nominee  as  a  director  of  the  Company  at  such  annual   meeting  of
shareholders.

      V.  Redemption.  The Company may,  but shall not be  obligated  to, at any
time, and from time to time, redeem on the terms and conditions herein provided,
the whole or any part of the Series A  Preferred  Shares then  outstanding  at a
redemption price of $120 per Preferred Share,  plus accrued and unpaid dividends
thereon, in accordance with the following procedures:

            A. In case of  redemption  of only  part of the  Series A  Preferred
Shares at any time outstanding, the Company shall designate the amount of Series
A Preferred  Shares so to be redeemed  and shall  redeem such Series A Preferred
Shares ratably from each tranche.

            B. Notice of every redemption shall be given by mail to every holder
of record of any Series A Preferred Shares then to be redeemed,  at least thirty
(30), but no more than ninety (90), days prior to the date fixed as the date for
the redemption thereof, at the respective  addresses of such holders as the same
shall appear on the stock transfer books of the Company.  The notice shall state
that the Series A  Preferred  Shares  shall be  redeemed  by the  Company at the
redemption price specified above,  upon the surrender for  cancellation,  at the
time and place designated in such notice,  of the certificates  representing the
Series A  Preferred  Shares  to be  redeemed,  properly  endorsed  in blank  for
transfer,  or  accompanied  by proper  instruments of assignment and transfer in
blank, with signatures guaranteed, and bearing all necessary transfer tax stamps
thereto  affixed and  canceled.  On


                                       24
<PAGE>

and after the date  specified  in the notice  described  above,  each  holder of
Series A Preferred  Shares  called for  redemption  shall be entitled to receive
therefor the specified  redemption price upon  presentation and surrender at the
place  designated  in such  notice of the  certificates  for Series A  Preferred
Shares  called  for  redemption,  properly  endorsed  in blank for  transfer  or
accompanied  by proper  instruments  of  assignment  or transfer in blank,  with
signatures  guaranteed,  and bearing all necessary  transfer tax stamps  thereto
affixed and canceled.

            C. If the Company shall give notice of redemption as aforesaid  (and
unless  the  Company  shall  fail to pay the  redemption  price of the  Series A
Preferred Shares  presented for redemption in accordance with such notice),  all
Series A Preferred  Shares  called for  redemption  shall be deemed to have been
redeemed on the date specified in such notice,  whether or not the  certificates
for such Series A Preferred Shares shall be surrendered for redemption, and such
Series A  Preferred  Shares so called for  redemption  shall from and after such
date cease to represent any interest  whatsoever in the Company or its property,
and the  holders  thereof  shall have no rights  other than the right to receive
such redemption price without any interest thereof from and after such date.

      VI. Liquidation, Dissolution, Winding Up. In the event of any voluntary or
involuntary  liquidation,  dissolution or winding up of the Company, the holders
of the Series A Preferred Shares shall be entitled to receive in cash out of the
assets of the  Company,  whether from capital or from  earnings,  available  for
distribution  to its  stockholders  (the "Preferred  Funds"),  before any amount
shall be paid to the  holders of the Common  Stock or holders of shares of other
classes or series of capital  stock of the Company  (the  "Junior  Shares"),  an
amount equal to the Stated Value per Series A Preferred Share  outstanding  plus
accrued and unpaid dividends thereon,  provided that, if the Preferred Funds are
insufficient  to pay the full  amount due to the  holders of Series A  Preferred
Shares, then each holder of Series A Preferred Shares shall receive a percentage
of the  Preferred  Funds equal to the full amount of Preferred  Funds payable to
such holder as a percentage of the full amount of Preferred Funds payable to all
holders of Series A Preferred Shares.  The purchase or redemption by the Company
of stock of any  class,  in any manner  permitted  by law,  shall  not,  for the
purposes hereof, be regarded as a liquidation,  dissolution or winding up of the
Company.  Notwithstanding  the foregoing,  to the extent that Series A Preferred
Shares shall be converted or redeemed, as the case may be, the Company may issue
shares of other classes or series of preferred  stock of the Company that are of
equal rank with the Series A Preferred  Shares (the "Pari  Passu  Shares"),  and
such Pari Passu Shares shall be entitled to distributions of the Preferred Funds
on the same basis as the Series A Preferred  Shares.  Neither the  consolidation
nor merger of the Company with or into any other  corporation  or  corporations,
nor the sale or transfer by the  Company of less than  substantially  all of its
assets,  shall,  for  the  purposes  hereof,  be  deemed  to  be a  liquidation,
dissolution or winding up of the Company. No holder of Series A Preferred Shares
shall  be  entitled  to  receive  any  amounts  with  respect  thereto  upon any
liquidation,  dissolution  or winding up of the  Company  other than the amounts
provided for herein.

      VII. Preferred Rank. Except with respect to any Pari Passu Shares that the
Company  may  issue  from  time to time  pursuant  to  Section  5, all  Series A
Preferred  Shares shall be of senior rank to all Junior Shares in respect to the
preferences as to dividends and distributions and payments upon the liquidation,
dissolution or winding up of the Company. In the event dividends on the Series A
Preferred  Shares are in  arrears,  the  Company  shall not be  entitled  to pay
dividends on any,  Junior


                                       25
<PAGE>

Shares or Pari Passu Shares. The rights of the Junior Shares shall be subject to
the  preferences  and  relative  rights  of  the  Series  A  Preferred   Shares.
Notwithstanding the foregoing, the Company may authorize and issue additional or
other  preferred  stock which is of junior  rank,  or equal rank as permitted by
Section 5, with the Series A Preferred  Shares in respect of the  preferences as
to dividends and distributions and payments upon the liquidation, dissolution or
winding up of the Company;  provided,  however, that for so long as the Series A
Preferred  Shares  remain  outstanding  the Company  shall not issue any capital
stock which is senior in rank to the Series A Preferred Shares in respect of any
of the foregoing preferences. In the event of the merger or consolidation of the
Company with or into another  corporation,  the Series A Preferred  Shares shall
maintain  their  relative  powers,  designations  and  preferences  provided for
herein.

      VIII.  Vote to  Change  the  Terms  of  Series  A  Preferred  Shares.  The
affirmative  vote at a meeting  duly  called  for such  purpose  or the  written
consent  without a meeting of the holders of not less than  two-thirds  (2/3) of
the then  outstanding  Series A  Preferred  Shares  shall be  required to amend,
alter, change or repeal any of the powers, designations,  preferences and rights
of the Series A Preferred Shares.

      IN WITNESS  WHEREOF,  the Company has caused this certificate to be signed
by, its President, and its Secretary, this 3rd day of December 1997.

                                          IMCLONE SYSTEMS INCORPORATED

                                          By:    /s/ Samuel D. Waksal
                                             ---------------------------------
                                          Name:  Samuel D. Waksal
                                               -------------------------------
                                          Title: President & CEO
                                                ------------------------------

ATTEST

By:    /s/ John B. Landes
   ---------------------------------
Name:  John B. Landes
     -------------------------------
Title: Secretary
      ------------------------------


                                       26