**Exhibit 10.40**

 

**IMCLONESYSTEMS INCORPORATED**

**TRANSITIONSEVERANCE PLAN**

 

**EffectiveAs Of March 1, 2006**

 

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**TABLE OF CONTENTS**

 
| ARTICLE I -   | INTRODUCTION                    | 1                          |
|--------------------|---------------------------------|----------------------------|
|               |                            |                       |
| ARTICLE II -  | DEFINITIONS AND INTERPRETATIONS | 1                          |
|               |                            |                       |
|               | 1.                              | Agreement and Release      | 1 |
|               |                            |                       |   |
|               | 2.                              | Board                      | 1 |
|               |                            |                       |   |
|               | 3.                              | Cause                      | 1 |
|               |                            |                       |   |
|               | 4.                              | Change in Control          | 2 |
|               |                            |                       |   |
|               | 5.                              | Committee                  | 4 |
|               |                            |                       |   |
|               | 6.                              | Company                    | 4 |
|               |                            |                       |   |
|               | 7.                              | Effective Date             | 4 |
|               |                            |                       |   |
|               | 8.                              | Eligible Employee          | 4 |
|               |                            |                       |   |
|               | 9.                              | Good Reason                | 5 |
|               |                            |                       |   |
|               | 10.                             | Participant                | 5 |
|               |                            |                       |   |
|               | 11.                             | Plan Administrator         | 5 |
|               |                            |                       |   |
|               | 12.                             | Term                       | 5 |
|               |                            |                       |   |
|               | 13.                             | Termination Date           | 5 |
|               |                            |                       |   |
|               | 14.                             | Termination of Employment. | 5 |
|               |                            |                       |   |
|               | 15.                             | Base Pay                   | 6 |
|               |                            |                       |
| ARTICLE III - | ELIGIBILITY TO PARTICIPATE      | 6                          |
|               |                            |                       |
| ARTICLE IV -  | BENEFITS PAYABLE FROM THE PLAN  | 7                          |
|               |                            |                       |
|               | 1.                              | Severance Pay              | 7 |
|               |                            |                       |   |
|               | 2.                              | Other Benefits             | 7 |
|               |                            |                       |   |
|               | 3.                              | Withholding                | 7 |

 

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| ARTICLE V -   | HOW AND WHEN SEVERANCE WILL BE  PAID                  | 7                                               |
|--------------------|-------------------------------------------------------|-------------------------------------------------|
|               |                                                  |                                            |
| ARTICLE VI -  | MISCELLANEOUS PROVISIONS                              | 8                                               |
|               |                                                  |                                            |
|               | 1.                                                    | Amendment and Termination                       | 8 |
|               |                                                  |                                            |   |
|               | 2.                                                    | No Additional Rights Created                    | 8 |
|               |                                                  |                                            |   |
|               | 3.                                                    | Records                                         | 8 |
|               |                                                  |                                            |   |
|               | 4.                                                    | Construction                                    | 8 |
|               |                                                  |                                            |   |
|               | 5.                                                    | Severability                                    | 9 |
|               |                                                  |                                            |   |
|               | 6.                                                    | Incompetency                                    | 9 |
|               |                                                  |                                            |   |
|               | 7.                                                    | Payments to a Minor                             | 9 |
|               |                                                  |                                            |   |
|               | 8.                                                    | Plan Not a Contract of Employment               | 9 |
|               |                                                  |                                            |   |
|               | 9.                                                    | Financing                                       | 9 |
|               |                                                  |                                            |   |
|               | 10.                                                   | Nontransferability                              | 9 |
|               |                                                  |                                            |
| ARTICLE VII - | WHAT ELSE A PARTICIPANT NEEDS TO  KNOW ABOUT THE PLAN | 9                                               |
|               |                                                  |                                            |
|               | 1.                                                    | Claim Procedure                                 | 9 |
|               |                                                  |                                            |   |
|               | 2.                                                    | Plan Interpretation and Benefit  Determination. | 11 |
|               |                                                  |                                            |   |
|               | 3.                                                    | Your Rights Under ERISA                         | 12 |
|               |                                                  |                                            |   |
|               | 4.                                                    | Plan Document                                   | 13 |
|               |                                                  |                                            |   |
|               | 5.                                                    | Other Important Facts.                          | 13 |

 

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**IMCLONE SYSTEMS INCORPORATEDTRANSITION SEVERANCE PLAN**

 

# **ARTICLE I - INTRODUCTION**

#  

ImCloneSystems Incorporated (the “Company”) hereby establishes the ImClone SystemsIncorporated Transition Severance Plan (the “Plan”), effective as of March 1,2006, to provide severance benefits to select employees of the Company whosuffer a loss of employment under the terms and conditions set forth in thePlan. The Plan will remain in effect for a period of 18 months following itseffective date (i.e., through August 31, 2007) (the “Term”), and isintended to make severance payments in lieu of, and not in addition to, paymentsunder any and all severance plans, policies and/or practices of the Company(including the ImClone Systems Incorporated Senior Executive Severance Plan) ineffect for covered employees. The Plan is not intended to supersede or replacesuch other severance plans, policies and/or practices following the expirationof the Term, and such other severance plans, policies and/or practices willcontinue to apply, if then in effect, following the expiration of the Term inaccordance with their terms. The Plan is intended to fall within the definitionof an “employee welfare benefit plan” under Section 3(1) of theEmployee Retirement Income Security Act of 1974, as amended (“ERISA”). Noemployee or representative of the Company or its affiliates is authorized tomodify, add to or subtract from the terms and conditions in the Plan, except inaccordance with the amendment and termination procedures described herein.

 

# **ARTICLE II - DEFINITIONS AND INTERPRETATIONS**

#  

The followingdefinitions and interpretations of important terms apply to the Plan.

 

## 1.                                       Agreementand Release. An Agreement and General Release in a form acceptable tothe Plan Administrator, in its sole and absolute discretion, under which, amongother things, the Eligible Employee releases and discharges the Company andrelated entities (as well as any third party for whom the Eligible Employeeprovides services on the Company’s behalf) from any and all claims andliabilities relating to the Eligible Employee’s employment with the Companyand/or the termination of the Eligible Employee’s employment, including withoutlimitation, claims under the Title VII of the Civil Rights Act of 1964, theAmericans with Disabilities Act, the Family and Medical Leave Act, the AgeDiscrimination in Employment Act, the Sarbanes Oxley Act and, where applicable,the Older Workers Benefit Protection Act, the New Jersey Law AgainstDiscrimination, the New Jersey Conscientious Employee Protection Act(Whistleblowing Law) and the New York State and City Human Rights Laws (andsimilar laws of any other state or locality).

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## 2.                                       Board.The Board of Directors of the Company.

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## 3.                                       Cause.Any one of the following circumstances:

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### (i)                                     theperformance by the Eligible Employee of his or her employment duties in amanner deemed by the Company to be unsatisfactory in any way; provided that theEligible Employee had previously received a written warning identifying theproblem and

 

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### outlining a course ofcorrective action, has been given a reasonable opportunity to correct his orher performance, and has failed or refused to do so;

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### (ii)                                  theperformance by the Eligible Employee of his or her employment duties in amanner deemed by the Company to be grossly incompetent or grossly negligent;

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### (iii)                               anyother willful misconduct or gross negligence resulting, in either case, in harmto the Company or a subsidiary;

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### (iv)                              indictmentinvolving a felony or misdemeanor involving moral turpitude or the commissionof a criminal act by the Eligible Employee, whether or not performed in theworkplace, which subjects, or if generally known, would subject, the Company topublic ridicule or embarrassment;

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### (v)                                 failureto carry out directions of the Board or the Eligible Employee’s immediatesupervisor;

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### (vi)                              fraud,embezzlement, theft or dishonesty against the Company or a subsidiary resultingin harm to the Company or a subsidiary;

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### (vii)                           materialviolation of Company policies, rules or procedures resulting in harm tothe Company or a subsidiary;

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### (viii)                        violentacts, threats of violence or unauthorized possession of alcohol or controlledsubstances on Company property; or

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### (ix)                                actsintended to result in personal gain at the expense of the Company or throughthe improper disclosure of proprietary information or trade secrets.

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Thedetermination of whether a discharge or other separation from employment is forCause shall be made by the Plan Administrator, in its sole and absolutediscretion, and such determination shall be conclusive and binding on the affectedEligible Employee.

 

## 4.                                       Changein Control. The occurrence of one of the following events during the Term:

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### (i)                                     individualswho, on the Effective Date, constitute the Board (the “Incumbent Directors”)cease for any reason to constitute at least a majority of the Board; providedthat any person becoming a director subsequent to the Effective Date whoseelection or nomination for election was approved by a vote of at leasttwo-thirds of the Incumbent Directors then on the Board (either by a specificvote or by approval of the proxy statement of the Company in which such personis named as a nominee for director, without objection to such nomination) shallbe an Incumbent Director; provided, further, that no individual initiallyelected or nominated as a director of the Company as a result of an actual orthreatened election contest with respect to directors or as a result of anyother actual or threatened solicitation of proxies by or on behalf of anyperson other than the Board shall be an Incumbent Director;

 

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### (ii)                                  any“person” (as such term is defined in Section 3(a)(9) of theSecurities Exchange Act of 1934 (the “Exchange Act”) and as used in Sections13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after theEffective Date, a “beneficial owner” (as defined in Rule 13d-3 under theExchange Act), directly or indirectly, of securities of the Companyrepresenting 40% or more of the combined voting power of the Company’s thenoutstanding securities eligible to vote for the election of the Board (the “CompanyVoting Securities”); provided, however, that an event described in this Clause (ii) shallnot be deemed to be a Change in Control if any of following becomes such abeneficial owner:

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#### (A)                              theCompany or any majority-owned subsidiary (provided, that this exclusion appliessolely to the ownership levels of the Company or the majority-ownedsubsidiary),

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#### (B)                                anytax-qualified, broad-based employee benefit plan sponsored or maintained by theCompany or any majority-owned subsidiary,

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#### (C)                                anyunderwriter temporarily holding securities pursuant to an offering of suchsecurities, or

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#### (D)                               anyperson pursuant to a Non-Qualifying Transaction (as defined in Clause (iii) below);

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### (iii)                               theconsummation of a merger, consolidation, statutory share exchange or similar form ofcorporate transaction involving the Company or any of its subsidiaries thatrequires the approval of the Company’s stockholders, whether for suchtransaction or the issuance of securities in the transaction (a “BusinessCombination”), unless immediately following such Business Combination:

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#### (A)                              50%or more of the total voting power of:

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(x)                                   thecorporation resulting from such Business Combination (the “SurvivingCorporation”), or

 

(y)                                 ifapplicable, the ultimate parent corporation that directly or indirectly hasbeneficial ownership of 100% of the voting securities eligible to electdirectors of the Surviving Corporation (the “Parent Corporation”),

 

is representedby Company Voting Securities that were outstanding immediately prior to suchBusiness Combination (or, if applicable, is represented by shares into whichsuch Company Voting Securities were converted pursuant to such BusinessCombination), and such voting power among the holders thereof is insubstantially the same proportion as the voting power of such Company VotingSecurities among the holders thereof immediately prior to the BusinessCombination;

 

#### (B)                                noperson (other than any employee benefit plan (or related trust) sponsored or maintainedby the Surviving Corporation or the Parent Corporation), is or becomes thebeneficial owner, directly or indirectly, of 40% or more of the total voting

 

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#### power of the outstanding votingsecurities eligible to elect directors of the Parent Corporation (or, if thereis no Parent Corporation, the Surviving Corporation); and

####  

#### (C)                                atleast a majority of the members of the board of directors of the ParentCorporation (or if there is no Parent Corporation, the Surviving Corporation)following the consummation of the Business Combination were Incumbent Directorsat the time of the Board’s approval of the execution of the initial agreementproviding for such Business Combination

####  

(any BusinessCombination which satisfies all of the criteria specified in (A), (B) and (C) aboveshall be deemed to be a “Non-Qualifying Transaction”); or

 

### (iv)                              stockholderapproval of a liquidation or dissolution of the Company, unless the votingcommon equity interests of an ongoing entity (other than a liquidating trust)are beneficially owned, directly or indirectly, by the Company’s shareholdersin substantially the same proportions as such shareholders owned the Company’soutstanding voting common equity interests immediately prior to suchliquidation and such ongoing entity assumes all existing obligations of theCompany under this Plan.

###  

Notwithstandingthe foregoing, a Change in Control of the Company shall not be deemed to occursolely because any person acquires beneficial ownership of more than 40% of theCompany Voting Securities as a result of the acquisition of Company VotingSecurities by the Company which reduces the number of Company Voting Securitiesoutstanding; provided, that, if after such acquisition by the Company suchperson becomes the beneficial owner of Company Voting Securities that increasesthe percentage of outstanding Company Voting Securities beneficially owned bysuch person, a Change in Control of the Company shall then occur.

 

## 5.                                       Committee.The Compensation Committee of the Board.

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## 6.                                       Company.ImClone Systems Incorporated, and its successors.

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## 7.                                       EffectiveDate. March 1, 2006.

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## 8.                                       EligibleEmployee. Any active, regular, full-time, U.S.-based, salaried employee ofthe Company in a position at a level of Vice President or below who isdesignated by the Plan Administrator, in a written designation delivered to theEligible Employee, as eligible to become a Participant under this Plan. Notwithstandingthe preceding sentence, “Eligible Employee” does not include any employee whois a party to a formal, written employment agreement with the Company thatprovides for severance or other payments in the event of the individual’stermination of employment or other separation from service with the Company(regardless of the circumstances). “Eligible Employee” also does not includeany individual (i) designated by the Company as an independent contractorand not as an employee at the time of any determination under the Plan, (ii) beingpaid by or through a third party agency, (iii) designated by the Companyas a freelance worker and not as an employee at the time of any determinationunder the Plan, (iv) designated by the Company as a seasonal, occasional,limited duration, leased or temporary employee, during the period theindividual is so paid or

 

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## designated. Any such individualshall not be an Eligible Employee even if he or she is later retroactivelyreclassified as a common-law or other type of employee of the Company duringall or any part of such period pursuant to applicable law or otherwise. Employeesof the Company in a position at a level of Senior Vice President or above arenot eligible to participate in the Plan.

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## 9.                                       GoodReason. Any one of the following circumstances that occurs on or followinga Change in Control, and within the 60-day period preceding a Termination Date:

##  

### (i)                                     areduction in the Eligible Employee’s base salary without the Eligible Employee’sprior written consent (other than any reduction applicable to similarlysituated employees of the Company generally); or

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### (ii)                                  anactual change in the Eligible Employee’s principal work location by more than35 miles from its current location and more than 35 miles from the EligibleEmployee’s principal place of abode as of the date of such change in joblocation without the Eligible Employee’s prior written consent.

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## 10.                                 Participant.An Eligible Employee who meets the requirements for eligibility under the Plan,as set forth in Article III of the Plan. An individual shall cease being aParticipant once all Plan benefits due to such individual under the Plan havebeen paid (or, if earlier, upon the death of the Participant) and no personshall have any further rights under this Plan with respect to such formerParticipant.

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## 11.                                 PlanAdministrator. The Chief Executive Officer of the Company. The ChiefExecutive Officer may designate a person or committee to perform dayto day administrative duties for the Plan.

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## 12.                                 Term.The period of 18 months following the Effective Date (i.e., through August 31,2007). The Plan applies to Participants who experience a Termination ofEmployment during the Term.

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## 13.                                 TerminationDate. The date on which a Participant experiences a Termination ofEmployment with the Company.

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## 14.                                 Terminationof Employment.

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### (i)                                     Thetermination by the Company of an Eligible Employee’s employment relationshipwith the Company as the result of job elimination, job discontinuation, officeclosing, staff reduction, organizational restructuring, or unsatisfactory jobperformance that does not constitute Cause; or

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### (ii)                                  Thetermination by the Eligible Employee of the Eligible Employee’s employmentrelationship with the Company for Good Reason.

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Termination ofEmployment does not include termination of an Eligible Employee’s employmentrelationship with the Company due to death or disability, or a

 

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discharge or separation from service with the Company under any of thefollowing circumstances: retirement, voluntary resignation without Good Reason orjob abandonment (including the termination of employment of an EligibleEmployee for excessive absenteeism).

 

Thedetermination as to whether a termination is made by the Company with orwithout Cause, or by the Eligible Employee with or without Good Reason, will bemade by the Plan Administrator, in its sole and absolute discretion, and suchdetermination shall be final and binding on all affected Eligible Employees. Ifan Eligible Employee terminates employment or is terminated from employment andit is subsequently determined that either before or after the termination,Cause existed or exists, the Eligible Employee’s separation of employment willbe deemed to have been for Cause.

 

## 15.                                 BasePay. The Eligible Employee’s annual base salary at the time of his or herTermination of Employment, excluding bonuses, overtime pay, premium ordifferential pay, commissions, non-cash compensation, incentive or deferredcompensation or any other additional compensation. However, Base Pay willinclude salary reduction contributions made on an Eligible Employee’s behalf toany plan of the Company under Section 125, 132(f) or 401(k) of theInternal Revenue Code of 1986, as amended.

##  

# **ARTICLE III - ELIGIBILITY TO PARTICIPATE**

#  

An EligibleEmployee becomes a Participant in the Plan and shall be entitled to severancebenefits only if he or she:

 

### (i)                                     Isnotified in writing by the Plan Administrator of his/her Termination Date;

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### (ii)                                  Remainsin the continuous employ of the Company until his or her Termination Date, doesnot terminate his or her employment without Good Reason, and is not terminatedby the Company for Cause (as defined above);

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### (iii)                               Experiencesa Termination of Employment; and

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### (iv)                              Timelyreturns and does not revoke (if applicable) a signed, dated and notarized originalAgreement and Release.

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An EligibleEmployee shall become a Participant and payment of benefits under the Plan willbe made only after the Agreement and Release has been signed and the time forthe Eligible Employee to revoke the agreement and general release (as set forthin the Agreement and Release), if any, has expired (the “Release Effective Date”).Participation in this Plan does not affect an Eligible Employee’s right to anybonus, incentive pay, stock options or pension benefit to which he or she wouldotherwise be entitled under the terms of the respective plans governing thoseprograms on account of service with the Company prior to the Termination ofEmployment.

 

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# **ARTICLE IV - BENEFITS PAYABLE FROM THE PLAN**

#  

## 1.                                       SeverancePay

##  

Participantsshall be entitled to receive severance pay based on their position as follows:

 

*Vice Presidents and Assistant Vice Presidents*:  Participants in a position at the level of VicePresident or Assistant Vice President shall receive twelve (12) months of BasePay.

 

*All other Participants: *Participants in aposition at a level below Assistant Vice President shall receive six (6) monthsof Base Pay.

 

## 2.                                       OtherBenefits. If an Eligible Employee is eligible to receive any benefits paidunder the Plan, such Eligible Employee shall not be entitled to receive anyother severance, separation, notice or termination payments on account of hisor her employment with the Company under any other plan, policy, program oragreement (other than the exercise of stock options or other long-termincentive awards pursuant to the terms of the applicable plan). If, for anyreason, an Eligible Employee becomes entitled to or receives any otherseverance, separation, notice or termination payments on account of his or heremployment or termination of employment with the Company, including, forexample, any payments required to be paid to the Eligible Employee under anyFederal, State or local law (including, without limitation, the WorkerAdjustment and Retraining Notification Act) or pursuant to any agreement(except unemployment benefits payable in accordance with state law and paymentfor accrued but unused vacation)**,**hisor her severance under the Plan will be reduced by the amount of such otherpayments paid or payable. An Eligible Employee must notify the PlanAdministrator if he or she receives or is claiming to be entitled to receiveany such payment(s). With respect to an Eligible Employee in a position at thelevel of Vice President who becomes a Participant entitled to receive severancepay under Section 1 of this Article IV, (i) the severance payamounts set forth in Section 1 of this Article IV are intended to bein lieu of, and not in addition to, any amounts otherwise payable to suchParticipant under Section 1 of Article IV of the ImClone SystemsIncorporated Senior Executive Severance Plan, if applicable to such Participantpursuant to the terms of that plan, and (ii) such Participant may beeligible for the continued health benefits set forth in Section 2 of Article IVof the ImClone Systems Incorporated Senior Executive Severance Plan, ifapplicable to such Participant pursuant to the terms of that plan.

##  

## 3.                                       Withholding.Severance pay is subject to Federal and State income and Social Security taxwithholdings and any other withholdings mandated by law.

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# **ARTICLE V - HOW AND WHEN SEVERANCE WILL BE PAID**

#  

Severance paywill be paid in a single lump sum payment as soon as practicable following theParticipant’s Release Effective Date, but in no event more than ten (10) daysfollowing the participant’s Release Effective Date.

 

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The Companyintends that all payments under the Plan be made on a basis that complies with Section 409Aof the Code. Accordingly, in the event that any Participant is considered a “SpecifiedEmployee” as defined in Section 409A of the Code or the guidance issuedthereunder (“Section 409A”), and any payments to the Participant under thePlan are considered “deferred compensation” under Section 409A of a typerequiring payment six months after the date of the Participant’s separationfrom service (within the meaning of Section 409A), then to the extentrequired by Section 409A, such payment shall be delayed until six (6) monthsafter the date of the Participant’s separation from service. The Companymakes no guarantee with respect to the tax treatment of payments hereunder, andthe Company shall not be responsible in any event with regard to non-compliancewith Code Section 409A.

 

# **ARTICLE VI - MISCELLANEOUS PROVISIONS**

#  

## 1.                                       Amendmentand Termination. The Company reserves the right, in its sole and absolutediscretion, to terminate, amend or modify the Plan, in whole or in part, at anytime and for any reason by action of the Committee; provided that no amendment may reducethe level of benefits provided for hereunder during the Term, and notermination shall be effective prior to the first anniversary of such Committeeaction; provided further that the Committee may not act to designate anEligible Employee as ineligible to participate in the Plan and receive benefitsthereunder at any time during the six month period prior to a Change in Controlor thereafter during the Term; and provided, further that the Company shall notamend or terminate the Plan at any time after (i) the occurrence of aChange in Control or (ii) the date the Company enters into a definitiveagreement which, if consummated, would result in a Change in Control, unlessthe potential Change in Control is abandoned (as publicly announced by theCompany), in each case except as may be required by applicable law.

##  

## 2.                                       NoAdditional Rights Created. Neither the establishment of this Plan, nor anymodification thereof, nor the payment of any benefits hereunder, shall beconstrued as giving to any Participant, Eligible Employee or other person anylegal or equitable right against the Company or any officer, director oremployee thereof; and in no event shall the terms and conditions of employmentby the Company of any Eligible Employee be modified or in any way affected bythis Plan.

##  

## 3.                                       Records.The records of the Company with respect to periods of service, employmenthistory, base salary, absences, and all other relevant matters shall beconclusive for all purposes of this Plan.

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## 4.                                       Construction.The respective terms and provisions of the Plan shall be construed, wheneverpossible, to be in conformity with the requirements of ERISA, or any subsequentlaws or amendments thereto. To the extent not in conflict with the precedingsentence or another provision in the Plan, the construction and administrationof the Plan shall be in accordance with the laws of the State of New Yorkapplicable to contracts made and to be performed within the State of New York(without reference to its conflicts of law provisions).

 

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## 5.                                       Severability.Should any provisions of the Plan be deemed or held to be unlawful or invalidfor any reason, such fact shall not adversely affect the other provisions ofthe Plan unless such determination shall render impossible or impracticable thefunctioning of the Plan, and in such case, an appropriate provision orprovisions shall be adopted so that the Plan may continue to functionproperly.

##  

## 6.                                       Incompetency.In the event that the Plan Administrator finds that a Participant is unable tocare for his or her affairs because of illness or accident, then benefitspayable hereunder, unless claim has been made therefor by a duly appointedguardian, committee, or other legal representative, may be paid in suchmanner as the Plan Administrator shall determine, and the application thereofshall be a complete discharge of all liability for any payments or benefits towhich such Participant was or would have been otherwise entitled under thisPlan.

##  

## 7.                                       Paymentsto a Minor. Any payments to a minor from this Plan may be paid by thePlan Administrator in its sole and absolute discretion (a) directly tosuch minor; (b) to the legal or natural guardian of such minor; or (c) toany other person, whether or not appointed guardian of the minor, who shallhave the care and custody of such minor. The receipt by such individual shallbe a complete discharge of all liability under the Plan therefor.

##  

## 8.                                       PlanNot a Contract of Employment. Nothing contained in this Plan shall be heldor construed to create any liability upon the Company to retain any EligibleEmployee in its service. All Eligible Employees shall remain subject to dischargeor discipline to the same extent as if the Plan had not been put into effect.

##  

## 9.                                       Financing.The benefits payable under this Plan shall be paid out of the general assets ofthe Company. No Participant or any other person shall have any interest whatsoeverin any specific asset of the Company. To the extent that any person acquires aright to receive payments under this Plan, such right shall not be secured byany assets of the Company.

##  

## 10.                                 Nontransferability.In no event shall the Company make any payment under this Plan to any assigneeor creditor of a Participant, except as otherwise required by law. Prior to thetime of a payment hereunder, a Participant shall have no rights by way ofanticipation or otherwise to assign or otherwise dispose of any interest underthis Plan, nor shall rights be assigned or transferred by operation of law.

##  

# **ARTICLE VII - WHAT ELSE A PARTICIPANT NEEDSTO KNOW ABOUT THE PLAN**

#  

## 1.                                       ClaimProcedure. An Eligible Employee may file a written claim with the PlanAdministrator with respect to his or her rights to receive a benefit from thePlan. The Eligible Employee will be informed of the decision of the PlanAdministrator with respect to the claim within ninety (90) days after it isfiled. Under special circumstances, the Plan Administrator may require anadditional period of not more than ninety (90) days to review a claim. If thathappens, the Eligible Employee will receive a written

 

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## notice of that fact, which willalso indicate the special circumstances requiring the extension of time and thedate by which the Plan Administrator expects to make a determination withrespect to the claim. If the extension is required due to the Eligible Employee’sfailure to submit information necessary to decide the claim, the period formaking the determination will be tolled from the date on which the extensionnotice is sent until the date on which the Eligible Employee responds to thePlan’s request for information. The Plan Administrator has delegated to theVice President of Human Resources of the Company the authority to make theinitial decision on any claim not brought by such individual.

##  

If a claim isdenied in whole or in part, or any adverse benefit determination is made withrespect to the claim, the Eligible Employee will be provided with a writtennotice setting forth the reason for the determination, along with specificreferences to Plan provisions on which the determination is based. This noticewill also provide an explanation of what additional information is needed toevaluate the claim (and why such information is necessary), together with anexplanation of the Plan’s claims review procedure and the time limitsapplicable to such procedure, as well as a statement of the Eligible Employee’sright to bring a civil action under Section 502(a) of ERISA followingan adverse benefit determination on review. If an Eligible Employee is notnotified (of the denial or an extension) within ninety (90) days from the datethe Eligible Employee notifies the Plan Administrator, the Eligible Employee may requesta review of the application as if the claim had been denied.

 

If theEligible Employee’s claim has been denied, or an adverse benefit determinationhas been made, the Eligible Employee may request that the Committee (orits delegate) review the denial. The request must be in writing and must bemade within sixty (60) days after written notification of denial. In connectionwith this request, the Eligible Employee (or his or her duly authorizedrepresentative) may (i) be provided, upon written request and free ofcharge, with reasonable access to (and copies of) all documents, records, andother information relevant to the claim; and (ii) submit to the Committee(or its delegate) written comments, documents, records, and other informationrelated to the claim.

 

The review bythe Committee (or its delegate) will take into account all comments, documents,records, and other information the Eligible Employee submits relating to theclaim. The Committee (or its delegate) will make a final written decision on aclaim review, in most cases within sixty (60) days after receipt of a requestfor a review. In some cases, the claim may take more time to review, andan additional processing period of up to sixty (60) days may be required. Ifthat happens, the Eligible Employee will receive a written notice of that fact,which will also indicate the special circumstances requiring the extension oftime and the date by which the Committee (or its delegate) expects to make adetermination with respect to the claim. If the extension is required due tothe Eligible Employee’s failure to submit information necessary to decide theclaim, the period for making the determination will be tolled from the date on whichthe extension notice is sent to the Eligible Employee until the date on whichthe Eligible Employee responds to the Plan’s request for information.

 

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The Committee’s(or its delegate’s) decision on the claim for review will be communicated tothe Eligible Employee in writing. If an adverse benefit determination is madewith respect to the claim, the notice will include (i) the specificreason(s) for any adverse benefit determination, with references to thespecific Plan provisions on which the determination is based; (ii) astatement that the Eligible Employee is entitled to receive, upon request andfree of charge, reasonable access to (and copies of) all documents, records andother information relevant to the claim; and (iii) a statement of theEligible Employee’s right to bring a civil action under Section 502(a) ofERISA. The decision of Committee (or its delegate) is final and binding on allparties. The Committee has delegated to the Chief Executive Officer of theCompany the authority to make a determination on the claim for review.

 

No civilaction for benefits may be commenced until the exhaustion of theseprocedures.

 

## 2.                                       PlanInterpretation and Benefit Determination.

##  

### (i)                                     ThePlan Administrator (or, where applicable, any duly authorized delegee of thePlan Administrator), and the Committee (or its delegate) for purposes of thePlan’s claims procedures, shall have the exclusive right, power, and authority,in its sole and absolute discretion, to administer, apply and interpret thePlan and any other documents and to decide all factual and legal mattersarising in connection with the operation or administration of the Plan.

###  

### (ii)                                  Withoutlimiting the generality of the foregoing paragraph, the Plan Administrator (or,where applicable, any duly authorized delegee of the Plan Administrator), andthe Committee (or its delegate) for purposes of the Plan’s claims procedures,shall have the sole and absolute discretionary authority to:

###  

#### (A)                              takeall actions and make all decisions (including factual decisions) with respectto the eligibility for, and the amount of, benefits payable under the Plan;

####  

#### (B)                                formulate,interpret and apply rules, regulations and policies necessary to administer thePlan;

####  

#### (C)                                decidequestions, including legal or factual questions, relating to the calculationand payment of benefits, and all other determinations made, under the Plan;

####  

#### (D)                               resolveand/or clarify any factual or other ambiguities, inconsistencies and omissionsarising under the Plan or other Plan documents; and

####  

#### (E)                                 process,and approve or deny, benefit claims and rule on any benefit exclusions.

####  

Alldeterminations made by the Plan Administrator (or, where applicable, any dulyauthorized delegee of the Plan Administrator), and the Committee (or itsdelegate) for purposes of the Plan’s claims procedures, with respect to anymatter arising under the

 

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Plan shall be final and binding on the Company, Eligible Employee,Participant, beneficiary, and all other parties affected thereby.

 

## 3.                                       YourRights Under ERISA. As a participant in the Plan you are entitled tocertain rights and protections under the Employee Retirement Income SecurityAct of 1974, as amended (“ERISA”). ERISA provides that all Plan participantsshall be entitled to:

##  

*Receive Information About YourPlan and Benefits*

 

Examine,without charge, at the Plan Administrator’s office and at other specifiedlocations, such as worksites, all documents governing the Plan, includinginsurance contracts, and a copy of the latest annual report (Form 5500Series), if any, filed by the Plan with the U.S. Department of Labor andavailable at the Public Disclosure Room of the Pension and Welfare BenefitAdministration.

 

Obtain, uponwritten request to the Plan Administrator, copies of documents governing theoperation of the Plan, including insurance contracts, and copies of the latestannual report (Form 5500 Series), if any, and updated summary plandescription. The Plan Administrator may make a reasonable charge for thecopies.

 

Receive asummary of the Plan’s annual financial report (if any). The Plan Administratoris required by law to furnish each Participant with a copy of this summaryannual report.

 

*Prudent Actions by PlanFiduciaries*

 

In addition tocreating rights for Plan participants, ERISA imposes duties upon the people whoare responsible for the operation of the employee benefit plan. The people whooperate your Plan, called “fiduciaries” of the Plan, have a duty to do soprudently and in the interest of you and other Plan participants andbeneficiaries. No one, including your employer or any other person, may fireyou or otherwise discriminate against you in any way to prevent you fromobtaining a welfare benefit or exercising your rights under ERISA.

 

*Enforce Your Rights*

 

If your claimfor a welfare benefit is denied or ignored, in whole or in part, you have aright to know why this was done, to obtain copies of documents relating to thedecision without charge, and to appeal any denial, all within certain timeschedules.

 

Under ERISA,there are steps you can take to enforce the above rights. For instance, if yourequest a copy of Plan documents or the latest annual report from the Plan anddo not receive them within 30 days, you may file suit in a Federal court. Insuch a case, the court may require the Plan Administrator to providematerials and pay you up to $110 a day until you receive the materials, unlessthe materials were not sent because of reasons beyond the control of the PlanAdministrator. If you have a claim for benefits which is denied or ignored, inwhole or in part, you may file suit in a state or Federal

 

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court. If you are discriminated against for asserting your rights, you may seekassistance from the U.S. Department of Labor, or you may file suit in aFederal court. The court will decide who should pay court costs and legal fees.If you are successful the court may order the person you have sued to paythese costs and fees. If you lose, the court may order you to pay thesecosts and fees, for example, if it finds your claim is frivolous.

 

*Assistance with Your Questions*

 

If you haveany questions about your Plan, you should contact the Plan Administrator. Ifyou have any questions about this statement or about your rights under ERISA,or if you need assistance in obtaining documents from the Plan Administrator,you should contact the nearest office of the Pension and Welfare BenefitsAdministration, U.S. Department of Labor, listed in your telephone directory orthe Division of Technical Assistance and Inquiries, Pension and WelfareBenefits Administration, U.S. Department of Labor, 200 Constitution AvenueN.W., Washington, D.C. 20210. You may also obtain certain publicationsabout your rights and responsibilities under ERISA by calling the publicationshotline of the Pension and Welfare Benefits Administration.

 

## 4.                                       PlanDocument. This document shall constitute both the plan document and summaryplan description and shall be distributed to all Eligible Employees in thisform.

##  

## 5.                                       OtherImportant Facts.

##  

| OFFICIAL NAME OF THE PLAN:             |   | ImClone Systems Incorporated Transition  Severance Plan |
|----------------------------------------|--------|---------------------------------------------------------|
|                                   |   |                                                    |
| SPONSOR:                               |   | ImClone Systems Incorporated                            |
|                                   |   | 180 Varick Street, 6th Floor                            |
|                                   |   | New York, NY 10014                                      |
|                                   |   | (212) 645-1405                                          |
|                                   |   |                                                    |
| EMPLOYER IDENTIFICATION  NUMBER (EIN): |   | 04-2834797                                              |
|                                   |   |                                                    |
| TYPE OF PLAN:                          |   | Employee Welfare Severance Benefit Plan                 |
|                                   |   |                                                    |
| END OF PLAN YEAR:                      |   | December 31                                        |
|                                   |   |                                                    |
| TYPE OF ADMINISTRATION:                |   | Employer Administered                                   |

 

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| PLAN ADMINISTRATOR: |   | ImClone Systems Incorporated        |
|---------------------|--------|-------------------------------------|
|                |   | c/o Vice President, Human Resources |
|                |   | 33 ImClone Drive                    |
|                |   | Branchburg, NJ 08876                |
|                |   | (908) 541-2300                      |
|                |   |                                |
| EFFECTIVE DATE:     |   | March 1, 2006                  |

 

The Plan Administrator keeps records of the Plan and is responsible forthe administration of the Plan. The Plan Administrator will also answer anyquestions you may have about the Plan.

 

Service of legal process may be made upon the Plan Administrator.

 

No individual may, in any case, become entitled to additional benefitsor other rights under this Plan after the Plan is terminated. Under nocircumstances, will any benefit under this Plan ever vest or becomenonforfeitable.

 

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