<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
CELGENE CORPORATION
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
.................................................................
2) Aggregate number of securities to which transaction
applies:
.................................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it was
determined):
.................................................................
4) Proposed maximum aggregate value of transaction:
.................................................................
5) Total fee paid:
.................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.................................................................
2) Form, Schedule or Registration Statement No.:
.................................................................
3) Filing Party:
.................................................................
4) Date Filed:
.................................................................
<PAGE>
CELGENE CORPORATION
7 POWDER HORN DRIVE
WARREN, NEW JERSEY 07059
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------------
The annual meeting of stockholders of CELGENE CORPORATION (the
'Corporation') will be held at the Somerset Hills Hotel, 200 Liberty Corner
Road, Warren, New Jersey on Friday, June 16, 1995, at 1:00 p.m., local time, for
the following purposes:
1. to elect six directors;
2. to consider and act upon a proposal to approve the adoption of the
Corporation's 1995 Non-Employee Directors' Incentive Plan;
3. to consider and act upon a proposal to confirm the appointment of
KPMG Peat Marwick LLP as the independent certified public accountants of
the Corporation for the current fiscal year; and
4. to transact any such other business as may come before the meeting
or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on Friday, April 28,
1995, as the record date for determining stockholders entitled to notice of and
to vote at the meeting.
A proxy and return envelope are enclosed for your convenience.
Directions to the Somerset Hills Hotel appear on the back cover of the
Proxy Statement.
By order of the Board of Directors,
RICHARD G. WRIGHT,
Chairman of the Board and
Chief Executive Officer
April 28, 1995
YOUR VOTE IS IMPORTANT
Please mark, sign, and date the
enclosed
proxy card and return it promptly in
the enclosed
self-addressed, stamped envelope.
<PAGE>
CELGENE CORPORATION
7 POWDER HORN DRIVE
WARREN, NEW JERSEY 07059
---------------------------------
PROXY STATEMENT
---------------------------------
This Proxy Statement is furnished to the stockholders of Celgene
Corporation, a Delaware corporation (the 'Corporation'), in connection with the
solicitation of proxies by the Board of Directors for use at the annual meeting
of stockholders of the Corporation to be held on June 16, 1995, and any
adjournment or adjournments thereof. A copy of the notice of meeting accompanies
this Proxy Statement. It is anticipated that the mailing of this Proxy Statement
will commence on or about May 2, 1995.
Only stockholders of record at the close of business on April 28, 1995, the
record date for the meeting, will be entitled to notice of and to vote at the
meeting. On the record date the Corporation had outstanding 7,862,689 shares of
common stock, par value $.01 per share (the 'Common Stock'), which are the only
securities of the Corporation entitled to vote at the stockholders meeting, each
share being entitled to one vote.
Stockholders who execute proxies may revoke them by giving written notice
to the Chief Executive Officer of the Corporation at any time before such
proxies are voted. Attendance at the meeting shall not have the effect of
revoking a proxy unless the stockholder so attending shall, in writing, so
notify the Secretary of the meeting at any time prior to the voting of the
proxy.
The Board of Directors does not know of any matter that is expected to be
presented for consideration at the meeting, other than the election of
directors, approval of the adoption of the Celgene Corporation 1995 Non-Employee
Directors' Incentive Plan (the '1995 Directors' Plan'), and the confirmation of
the appointment of KPMG Peat Marwick LLP as the independent certified public
accountants of the Corporation for the current fiscal year. However, if other
matters properly come before the meeting, the persons named in the accompanying
proxy intend to vote thereon in accordance with their judgment.
The Corporation will bear the cost of the meeting and the cost of
soliciting proxies, including the cost of mailing the proxy material. In
addition to solicitation by mail, directors, officers, and regular employees of
the Corporation (who will not be specifically compensated for such services) may
solicit proxies by telephone or otherwise. Arrangements will be made with
brokerage houses and other custodians, nominees, and fiduciaries to forward
proxies and proxy material to their principals, and the Corporation will
reimburse them for their expenses.
All proxies received pursuant to this solicitation will be voted except as
to matters where authority to vote is specifically withheld and, where a choice
is specified as to the proposal, they will be voted in accordance with such
specification. If no instructions are given, the persons named in the proxy
solicited by the Board of Directors of the Corporation intend to vote FOR the
nominees for election as directors of the Corporation listed herein, FOR
approval of the adoption of the 1995 Directors' Plan, and FOR the confirmation
of the appointment of KPMG Peat Marwick LLP as independent certified public
accountants of the Corporation for the current fiscal year. With regard to the
election of directors, votes may be cast in favor of or withheld from each
nominee; votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on all proposals except the
election
<PAGE>
of directors, and will be counted as present for purposes of determining the
existence of a quorum regarding the item on which the abstention is noted.
Pursuant to the NASD Rules of Fair Practice, brokers who hold shares in
street name have the authority, in limited circumstances, to vote on certain
items when they have not received instructions from beneficial owners. A broker
will only have such authority if (i) the broker holds the shares as executor,
administrator, guardian, trustee, or in similar representative or fiduciary
capacity with authority to vote or (ii) the broker is acting pursuant to the
rules of any national securities exchange of which the broker is also a member.
Under applicable Delaware law, a broker non-vote will have no effect on the
outcome of the election of directors and will be the equivalent of a vote
against the adoption of the 1995 Directors' Plan but will be considered present
for purposes of determining a quorum.
PRINCIPAL STOCKHOLDERS
The only person known by the Board of Directors to be the beneficial owner
of more than five percent of the outstanding shares of Common Stock, as of March
31, 1995, is indicated below:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
- - -------------------------------------------------------------------- ---------- --------
<S> <C> <C>
Dimensional Fund Advisors Inc. ..................................... 602,300(1) 7.7%
1299 Ocean Avenue
Santa Monica, CA 90401
</TABLE>
- - ------------
(1) Information regarding Dimensional Fund Advisors Inc. ('Dimensional') was
determined according to a Schedule 13G filed with the Securities and
Exchange Commission. Dimensional, a registered investment advisor, is deemed
to be the beneficial ownership of and have sole dispositive power over
602,300 shares of Common Stock as of December 31, 1994. Such shares are held
in portfolios of DFA Investment Dimensions Group Inc., an open-end
investment company registered under the Investment Company Act of 1940 (the
'Fund'), series of the DFA Investment Trust Company, a Delaware business
trust (the 'Trust'), or DFA Group Trust and the DFA Participating Group
Trust, investment vehicles for qualified employee benefit plans, as to all
of which Dimensional serves as investment manager. Dimensional disclaims
beneficial ownership of such shares. Persons who are officers of Dimensional
also serve as officers of the Fund and the Trust. In their capacity as
officers of the Fund and the Trust, these persons vote 227,800 additional
shares owned by the Fund and 4,800 shares owned by the Trust, and
Dimensional is deemed to have sole dispositive power over such shares.
------------------------
Except as noted in the footnote above, (i) none of such shares is known by
the Corporation to be shares with respect to which the beneficial owner has the
right to acquire beneficial ownership and (ii) the Corporation believes the
beneficial holder listed above has sole voting and investment power regarding
the shares shown as being beneficially owned.
2
<PAGE>
ELECTION OF DIRECTORS
At the meeting, six Directors are to be elected, each to hold office
(subject to the Corporation's By-Laws) until the next annual meeting and until
his successor has been elected and qualified. If any nominee listed in the table
below should become unavailable for any reason, which management does not
anticipate, the proxy will be voted for any substitute nominee or nominees who
may be selected by the management prior to or at the meeting, or, if no
substitute is selected by the management prior to or at the meeting, for a
motion to reduce the membership of the Board to the number of nominees
available. Directors will be elected by a plurality of the votes cast. The
information concerning the nominees and their security holdings has been
furnished by them to the Corporation.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
THE PAST FIVE YEARS, ANY YEAR FIRST
OFFICE HELD IN THE CORPORATION, ELECTED
NAME AGE AND OTHER DIRECTORSHIPS A DIRECTOR
- - --------------------------------- --- ------------------------------------------------------------ ----------
<S> <C> <C> <C>
Richard G. Wright................ 61 Chairman of the Board and Chief Executive Officer of the 1994
Corporation since March 1994; Group Vice President of
Storz Instrument Company, a pharmaceutical and medical
device company, from 1991 to March 1994; President and
Chief Executive Officer of Xenon Vision, Inc., an
ophthalmic pharmaceutical company, from 1989 to 1991;
President and Chief Operating Officer of Foster Grant
Corporation, a consumer products company, from 1986 to
1989.
Sol J. Barer..................... 47 President of the Corporation since October 1993 and Chief 1994
Operating Officer of the Corporation since March 1994;
Senior Vice President -- Science and Technology and Vice
President/General Manager Chiral Products of the
Corporation from October 1990 to October 1993; Vice
President -- Technology of the Corporation from September
1987 to October 1990.
Frank T. Cary.................... 74 Chairman of the Executive Committee of the Board since June 1986
1990; Chairman of the Board of the Corporation from July
1986 to July 1990; Former Chairman of the Board and Chief
Executive Officer of International Business Machines
Corporation, a computer and business equipment
manufacturer, from 1973 to 1981; director of Capital
Cities/ABC Inc., Cygnus Therapeutic Systems, Lincare,
Inc., ICOS Corporation, and SPS Transaction Services, Inc.
Richard C. E. Morgan............. 50 A general partner of Wolfensohn Partners L.P., a venture 1987
capital partnership and the general partner of Wolfensohn
Associates L.P., since 1986; Chairman and director of
MediSense, Inc.; Chairman, Chief Executive Officer, and
director of Lasertechnics, Inc.; director of Liposome
Technology Inc., and Quidel Corp.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING
THE PAST FIVE YEARS, ANY YEAR FIRST
OFFICE HELD IN THE CORPORATION, ELECTED
NAME AGE AND OTHER DIRECTORSHIPS A DIRECTOR
- - --------------------------------- --- ------------------------------------------------------------ ----------
<S> <C> <C> <C>
Walter L. Robb................... 66 Private consultant and President of Vantage Management Inc., 1992
a consulting and investor services company, since January
1993; Senior Vice President for Corporate Research and
Development of General Electric Company, a consumer and
industrial products company and broadcaster, and a member
of its Corporate Executive Council from 1986 to December
1992; Chairman of the Board of Neopath, Inc.; director of
Marquette Electronics, Inc. and Cree Research Inc.
Lee J. Schroeder................. 66 President of Lee Schroeder & Associates, Inc., 1995
pharmaceutical business consultants, since 1985; director
of FirsTier Bank Lincoln, N.A., Harris Technology Group,
Inc., Bryan Memorial Hospital, MGI Pharma, Inc., Ascent
Pharmaceuticals, and Interneuron Pharmaceuticals, Inc.
</TABLE>
BENEFICIAL OWNERSHIP OF DIRECTORS AND MANAGEMENT
The table below sets forth the beneficial ownership of the Common Stock as
of March 31, 1995 (i) by each director, (ii) by each of the executive officers
named in the 'Summary Compensation Table,' and (iii) by all directors and
current executive officers of the Corporation as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF
COMMON STOCK AS PERCENT
NAME POSITION OF MARCH 31, 1995 OF CLASS
- - ------------------------------ ----------------------------------------------- ----------------------- --------
<S> <C> <C> <C>
Richard G. Wright............. Chairman of the Board and Chief Executive 100,000(1) 1.3%
Officer
Sol J. Barer.................. President, Chief Operating Officer, and a 122,182(1) 1.5%
Director
Frank T. Cary................. Director 55,000(1)(2) *
Richard C.E. Morgan........... Director 282,055(1)(2)(3) 3.6%
Walter L. Robb................ Director 10,500(1)(2) *
Lee J. Schroeder.............. Director --(2) --
John L. Ufheil................ Former Chief Executive Officer and Chairman of 225,000 2.8%
the Board
All directors and current executive
officers of the Corporation as a group (six persons)......................... 569,737(4) 7.0%
</TABLE>
- - ------------
* Less than one percent (1%).
(1) Includes shares of Common Stock which the directors and executive officers
had the right to acquire through the exercise of options within 60 days of
March 31, 1995, as follows: Richard G. Wright -- 100,000 shares; Sol J.
Barer -- 113,849 shares; Frank T. Cary -- 30,000 shares; Richard C.E.
Morgan --
(footnotes continued on next page)
4
<PAGE>
(footnotes continued from previous page)
25,000 shares; Walter L. Robb -- 6,000 shares; and John L. Ufheil -- 225,000
shares. Does not include shares of Common Stock which the directors and
executive officers had the right to acquire through the exercise of options
not exercisable within 60 days of March 31, 1995, as follows: Richard G.
Wright -- 50,000 shares; Sol J. Barer -- 61,471 shares; Frank T.
Cary -- 5,000 shares; Richard C.E. Morgan -- 5,000 shares; and Walter L.
Robb -- 2,000 shares. Includes as to Dr. Barer, 8,333 shares of Common Stock
subject to restricted stock awards. Includes as to Mr. Robb, 4,000 shares of
Common Stock subject to restricted stock awards, 2,667 of which shares were
subject to forfeiture as of March 31, 1995.
(2) Excludes as to each of Messrs. Cary, Morgan, Robb, and Schroeder 20,000
shares of Common Stock which the directors will have the right to acquire
through the exercise of options granted under the 1995 Directors' Plan,
which plan is subject to stockholder approval. See 'Approval of the Adoption
of the 1995 Non-Employee Directors' Incentive Plan.'
(3) Includes 252,055 shares of Common Stock owned by Wolfensohn Associates L.P.,
of which Wolfensohn Partners L.P. is the general partner. Mr. Morgan is a
general partner of Wolfensohn Partners L.P. Mr. Morgan's indirect pecuniary
interest in such shares of Common Stock, within the meaning of Rule
16a-1(a)(2)(ii)(B) under the Securities Exchange Act of 1934, is
significantly less than the amount disclosed. Mr. Morgan otherwise disclaims
beneficial ownership of such shares of Common Stock owned by Wolfensohn
Associates L.P.
(4) Includes or excludes, as the case may be, shares of Common Stock as
indicated in the preceding footnotes. Does not include shares beneficially
owned by John L. Ufheil, who currently is not an employee of the
Corporation.
------------------------
Except as noted in the footnotes above, (i) none of such shares is known by
the Corporation to be shares with respect to which such beneficial owner has the
right to acquire beneficial ownership and (ii) the Corporation believes the
beneficial holders listed above have sole voting and investment power regarding
the shares shown as being beneficially owned by them.
DIRECTOR COMPENSATION
Directors do not receive salaries or cash fees for serving as directors nor
do they receive any cash compensation for serving on committees; however, all
members of the Board of Directors who are not employees of the Corporation
('Non-Employee Directors') are reimbursed for their expenses for each meeting
attended and are eligible to receive stock options pursuant to the 1995
Directors' Plan, which is subject to the approval of stockholders. For a
description of the 1995 Directors' Plan, see 'Approval of the Adoption of the
1995 Non-Employee Directors' Incentive Plan.' Prior to the adoption of the 1995
Directors' Plan, the Non-Employee Directors were eligible to receive stock
options and restricted stock awards pursuant to the Corporation's 1992
Non-Employee Directors' Incentive Plan (the '1992 Directors' Plan'). If the 1995
Directors' Plan is not approved by the stockholders at the annual meeting, the
Non-Employee Directors will continue to receive options and restricted stock
awards under the 1992 Directors' Plan.
Under the 1992 Directors' Plan, each new Non-Employee Director, upon the
date of his election or appointment, receives a non-qualified option to purchase
8,000 shares of Common Stock and a
5
<PAGE>
restricted stock award of 4,000 shares of Common Stock. Additionally, upon the
date of each annual meeting of stockholders, each Non-Employee Director who has
served as a director of the Corporation for three years receives a non-qualified
option to purchase 5,000 shares of Common Stock, except that the Chairman of the
Board receives a non-qualified option to purchase 6,500 shares if he has been a
Non-Employee Director for three years. The shares subject to an initial option
granted to a Non-Employee Director vest in four equal annual installments
commencing on the first anniversary of the date of grant, assuming the
Non-Employee Director remains a director. The shares subject to any subsequent
option granted to a Non-Employee Director vest in full on the date of the first
annual meeting of stockholders held following the date of grant, assuming the
Non-Employee Director has been a director though that date. The exercise price
of such options is equal to the fair market value of the Common Stock on the
date of grant. The options expire no later than 10 years from the date of grant.
In addition, Common Stock awarded to Non-Employee Directors pursuant to
restricted stock awards are subject to forfeiture under certain circumstances as
set forth under the 1992 Directors' Plan.
Under both the 1995 Directors' Plan and the 1992 Directors' Plan (together,
the 'Directors' Plans'), if a Non-Employee Director ceases his service on the
Board of Directors for any reason, any exercisable option which has not expired
may be exercised at any time until the date of expiration of such option with
respect to the number of shares of Common Stock which were exercisable on the
date the Non-Employee Director terminated his service with the Corporation. In
addition, if there is a change in control (as defined in the Directors' Plans)
and within two years thereafter a director ceases his service on the Board of
Directors for any reason, all restrictions relating to a restricted stock award
automatically will terminate (under the 1992 Directors' Plan only) and all
unvested portions of a stock option automatically will vest.
In 1994, pursuant to the 1992 Directors' Plan, each of Messrs. Cary and
Morgan received an option to purchase 5,000 shares of Common Stock at an
exercise price of $6.94 per share, the fair market value of the stock on the
date of grant.
BOARD COMMITTEES AND MEMBERSHIP
The Corporation has an Executive Committee of the Board of Directors, whose
current members are Frank T. Cary, Chairman, Richard C. E. Morgan, and Richard
G. Wright. The Executive Committee did not meet in 1994. The Executive Committee
has and may exercise all of the powers and authority of the full Board of
Directors of the Corporation, subject to certain exceptions.
The Corporation has an Audit Committee of the Board of Directors,
consisting entirely of outside directors, the current members of which are
Walter L. Robb, Chairman, Frank T. Cary, Richard C. E. Morgan, and Lee J.
Schroeder. The Audit Committee held one meeting in 1994. The Board of Directors
has delegated to the Audit Committee the following duties: reviewing with the
independent auditors the plans and results of the audit engagement; reviewing
the adequacy, scope, and results of the internal accounting controls and
procedures; reviewing the degree of independence of the auditors; reviewing the
auditors' fees; and recommending the engagement of auditors to the full Board of
Directors.
The Corporation has a Management Compensation and Development Committee
(the 'Compensation Committee') of the Board of Directors, whose current members
are Richard C. E. Morgan, Chairman, Frank T. Cary, Walter L. Robb, and Lee J.
Schroeder. The Compensation Committee held two meetings in 1994. The
Compensation Committee has (i) the full power and authority to interpret the
provisions and supervise the administration of the Corporation's 1986 Stock
Option Plan and 1992
6
<PAGE>
Long-Term Incentive Plan and to grant options outside of these plans and (ii)
the authority to review all matters relating to the personnel of the
Corporation.
The Corporation does not have a nominating committee. The Board of
Directors held five meetings during 1994. During 1994, all of the directors
attended more than 75% of the aggregate of (i) the total number of meetings of
the Board of Directors and (ii) the total number of meetings of all committees
of the Board of Directors on which such director served.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Under the securities laws of the United States, the Corporation's
directors, executive officers, and any persons holding more than 10 percent of
the Common Stock are required to report their ownership of Common Stock and any
changes in that ownership, on a timely basis, to the Securities and Exchange
Commission. Based on material provided to the Corporation, all such required
reports were filed on a timely basis in 1994 except for one report covering two
transactions required to be filed by Richard M. Clarke, a former director of the
Corporation, which report was filed one day past the due date.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table contains information about the compensation paid by the
Corporation for services rendered in all capacities during the three years ended
December 31, 1994 to the Chief Executive Officer of the Corporation, the most
highly paid executive officers of the Corporation, and the former Chief
Executive Officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
ANNUAL ----------------------
COMPENSATION RESTRICTED
------------ STOCK OPTIONS/
NAME AND PRINCIPAL POSITION YEAR SALARY ($) AWARD(S)($) SARS(#)
- - ------------------------------------------------------------------ ---- ------------ ----------- -------
<S> <C> <C> <C> <C>
Richard G. Wright ................................................ 1994 $195,288(1) -- 150,000
Chief Executive Officer and 1993 -- -- --
Chairman of the Board 1992 -- -- --
Sol J. Barer ..................................................... 1994 $197,000 --(3) 54,080
President and Chief Operating Officer 1993 180,000 -- 30,000
1992 167,833 -- 22,500
John L. Ufheil ................................................... 1994 $ 96,000(2) -- --
Former Chief Executive Officer and 1993 288,400 -- 25,000
Chairman of the Board 1992 268,000 -- --
</TABLE>
- - ------------
(1) Mr. Wright commenced his employment with the Corporation in March 1994.
Accordingly, this number reflects a partial year's salary and a relocation
allowance in the amount of $18,750.
(2) Mr. Ufheil's employment with the Corporation terminated in March 1994.
Accordingly, this number reflects a partial year's salary.
(3) No restricted stock awards were granted to Dr. Barer during the last three
years. As of December 31, 1994, Dr. Barer held 8,333 shares of Common Stock
subject to restricted stock awards, which
7
<PAGE>
awards were granted pursuant to the Corporation's 1986 Stock Option Plan. As
of December 31, 1994, the fair market value of the shares of Common Stock
was $46,915.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
Pursuant to his employment arrangement with the Corporation, Richard G.
Wright, Chairman of the Board and Chief Executive Officer of the Corporation,
will receive $225,000 if he is terminated by the Corporation without cause.
Sol J. Barer, President and Chief Operating Officer of the Corporation, is
a party to an employment agreement with the Corporation expiring in September
1996. Pursuant to such agreement, Dr. Barer receives an annual salary of
$200,000, subject to increase upon annual review. Except under certain
circumstances, the Corporation may not terminate this agreement without 12
months' prior notice to Dr. Barer. Pursuant to Dr. Barer's employment agreement,
he will be entitled to receive a cash payment equal to 2.99 times his base
salary in the event of the termination of Dr. Barer's employment as a result of
(i) his disability, (ii) the occurrence of certain events subsequent to a change
in control of the Corporation (as defined in such agreement), or (iii) certain
material breaches by the Corporation of such agreement.
As described in footnote 1 to the table entitled 'Option/SAR Grants in Last
Fiscal Year,' if during the two-year period following a change in control of the
Corporation (as defined in the Corporation's 1992 Long-Term Incentive Plan), (i)
there is a change in an employee's title or a significant change in the nature
or scope of his employment or duties and such person terminates his employment
within 90 days following such change or (ii) the recipient's employment by the
Corporation is terminated without cause (as defined), then all of the options
held by such employee then outstanding will become immediately and fully
exercisable, and all restrictions applicable to restricted stock automatically
will terminate.
STOCK OPTIONS
The following table contains information concerning the grant of options
during the year ended December 31, 1994 to each of the executive officers named
in the 'Summary Compensation Table.' No stock appreciation rights ('SARs') were
granted in 1994.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------- POTENTIAL REALIZABLE
PERCENT OF VALUE AT ASSUMED
TOTAL ANNUAL RATES OF STOCK
OPTIONS/SARS PRICE APPRECIATION FOR
GRANTED TO EXERCISE OR OPTION TERM(5)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE) DATE 5% ($) 10% ($)
- - ------------------------------- ------------ ------------ ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Richard G. Wright.............. 150,000(2) 35.8% $6.88 3/01/04 $784,858 $1,986,013
Sol J. Barer................... 50,000(3) 11.9% 6.88 3/01/04 216,183 547,849
4,080(4) 1.0% 8.38 3/24/04 21,489 54,458
John L. Ufheil................. -- -- -- -- -- --
</TABLE>
(footnotes on next page)
8
<PAGE>
(footnotes from previous page)
(1) The exercisability of these options is dependent on continued employment
with the Corporation. Options were granted at the fair market value of the
Common Stock on the date of grant and expire 10 years from the date of
grant. The option exercise price may be paid in shares of Common Stock owned
by the executive officer, in cash, or in any combination thereof. In the
event of a change in control of the Corporation, these options may vest
automatically and be exercisable immediately in full, under certain
circumstances. See 'Executive Compensation and Other Information --
Employment Agreements and Termination of Employment Arrangements.'
(2) These options are exercisable as follows: 50,000 shares on March 1, 1994;
50,000 shares on March 1, 1995; and 50,000 shares on March 1, 1996.
(3) Twenty-five thousand of these options became exercisable on March 1, 1995
and twenty-five thousand options will become exercisable on March 1, 1996.
(4) These options will become exercisable as follows: 1,359 shares on March 24,
1995; 1,360 shares on March 24, 1996; and 1,361 shares on March 24, 1997.
(5) The potential realizable value represents the estimated future gain in the
value of the options over their exercise price which may exist immediately
prior to the scheduled expiration date of the options. The calculation
assumes the specified compounded rates of appreciation in the per share
price of the Common Stock starting on the date of grant and further assumes
that the options will be exercised on their expiration date. The actual
value, if any, which may be realized will depend upon the market price of
the Common Stock on the date the option is exercised. There is no assurance
that the actual value, if any, which may be realized will be at or near the
value estimated by the calculations above. The market price of the Common
Stock at December 31, 1994 was $5.63 per share.
------------------------
The following table sets forth information with respect to the exercise of
options during 1994 and the options held as of December 31, 1994 by each of the
executives named in the 'Summary Compensation Table.' There were no options or
SARs exercised during 1994 and as of December 31, 1994 no SARs were outstanding.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON
STOCK UNDERLYING UNEXERCISED
OPTIONS/SARS AT FISCAL
YEAR-END (#)(1)
----------------------------
NAME EXERCISABLE UNEXERCISABLE
- - ---------------------------------------------------------------------------- ----------- -------------
<S> <C> <C>
Richard G. Wright........................................................... 50,000 100,000
Sol J. Barer................................................................ 87,490 87,830
John L. Ufheil.............................................................. 212,500 12,500
</TABLE>
(footnotes on next page)
9
<PAGE>
(footnotes from previous page)
(1) None of the options held by Mr. Wright, Dr. Barer, or Mr. Ufheil were
in-the-money as of December 31, 1994. Options would have been in-the-money
if the closing market price of the Common Stock at December 31, 1994 of
$5.63 per share exceeded the exercise price per share.
CERTAIN TRANSACTIONS
For a discussion of certain transactions see 'Compensation Committee
Interlocks and Insider Participation.'
REPORT OF THE MANAGEMENT COMPENSATION AND DEVELOPMENT COMMITTEE
The Compensation Committee determines the Corporation's executive
compensation policies. The Compensation Committee determines the compensation of
the Corporation's executive officers and approves and oversees the
administration of incentive compensation programs for all employees including
the executive officers. The Compensation Committee is composed solely of outside
directors.
EXECUTIVE COMPENSATION POLICIES AND PROGRAMS
The Corporation's executive compensation program is part of a company-wide
program covering all employees. The program's goals are to attract, retain, and
motivate employees, and it utilizes incentives such that employees and
stockholders share the same risks. The compensation program is designed to link
compensation to performance. A portion of each employee's compensation relates
to the grant of stock options, and such grants are based on the successful
attainment of strategic corporate, business unit, and individual goals. As the
Corporation has not as yet attained significant commercial revenues, goals are
set which relate to the successful attainment of strategic events.
The Corporation does not have a pension plan or other capital accumulation
program. Grants of stock options are therefore of great importance to executives
as well as all employees. Any value to be derived long-term from such grants
will be consistent with stockholder gains.
Executive and employee compensation includes salary, employment-related
benefits, and long-term incentive compensation:
Salary. Salaries are set competitively relative to the chemical,
biotechnology, and pharmaceutical industries -- industries with which the
Corporation competes for its highly skilled personnel. Individual experience and
performance is considered when setting salaries within the range for each
position. Annual reviews are held and adjustments are made based on attainment
of individual goals.
Benefits. All employees are eligible for similar benefits, such as health,
disability, and life insurance.
Long-Term Incentive Compensation. An incentive compensation program is
established annually. The purpose of this program is to provide financial
incentives to executives and employees to achieve annual corporate, business
unit, and individual goals. The incentive program also aligns executive and
employee interests with those of stockholders by using grants of stock options.
Such grants vest over time thereby encouraging continued employment with the
Corporation. The size of grants is tied to comparative biotechnology industry
practices. To determine such comparative data, the Corporation relies on outside
compensation consultants, the Corporation's auditors, and third party industry
surveys.
Under the Corporation's 1994 incentive program, it was agreed, subject to
the achievement of certain goals in 1994 by the Corporation, that the
Corporation would grant at a future date options to
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<PAGE>
purchase shares of Common Stock. Based upon achievement of Corporation
objectives in 1994, approximately 78,868 options were granted on February 15,
1995 to employees other than the executive officers of the Corporation. Options
were granted at an exercise price of $5.44 which was equal to the fair market
value of the Common Stock at the date of grant. Such options vest over a
four-year period.
A similar incentive program has been designed for 1995 based on attainment
of corporate, business unit, and individual goals. The program is open to all
regular full-time employees, other than the executive officers of the
Corporation.
Chief Executive Officer Compensation. During 1994, Mr. Ufheil served as
Chairman and Chief Executive Officer of the Corporation until March 18, 1994, at
which time Richard G. Wright assumed the position of Chairman and Chief
Executive Officer. Pursuant to his employment agreement with the Corporation,
Mr. Ufheil received $96,000 for the period during which he served as Chief
Executive Officer. Mr. Ufheil did not participate in the 1994 incentive program.
Mr. Wright's arrangement with the Corporation provides for an annual salary
of $225,000. During 1994, Mr. Wright received $195,288 in salary, which amount
includes an $18,750 relocation allowance. Mr. Wright did not participate in the
1994 incentive program and is not eligible to participate in the 1995 incentive
program. However, Mr. Wright's long-term incentive derives from the grant of
options to purchase 150,000 shares of Common Stock awarded to him at the time he
began serving as Chief Executive Officer, 100,000 of which are vested and 50,000
of which will vest in March 1996.
Members of the Management Compensation
and Development Committee
RICHARD C. E. MORGAN, Chairman
FRANK T. CARY
WALTER L. ROBB
Lee J. Schroeder was appointed to the Management Compensation and Development
Committee on March 22, 1995, and therefore did not participate in the
discussions and determinations contained in this Report of the Management
Compensation and Development Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Richard C. E. Morgan,
Chairman, Frank T. Cary, Walter L. Robb, and Lee J. Schroeder. Richard C. E.
Morgan is a general partner of Wolfensohn Partners L.P., which is the general
partner of Wolfensohn Associates L.P. In connection with the purchase of Common
Stock in a private placement in 1986, Wolfensohn Associates L.P. received
certain demand and 'piggyback' registration rights with respect to the Common
Stock purchased by them under certain conditions.
PERFORMANCE GRAPH
The following chart shows changes over the past five years in the value of
$100 invested in: (1) the Corporation's Common Stock; (2) the Standard & Poor's
500 Index; (3) the Specialty Chemicals Industry Index published by Standard &
Poor's; and (4) the NASDAQ Pharmaceutical Index.
The Corporation has included the NASDAQ Pharmaceutical Index in the
following chart because of the changing nature of its business from specialty
chemical to pharmaceutical as a result of the Corporation's focus on its chiral
and immunotherapeutic programs. The Corporation intends to delete the Specialty
Chemicals Industry Index in future proxy statements.
11
<PAGE>
FIVE-YEAR CUMULATIVE TOTAL RETURNS
Value of $100 Invested on December 31, 1989
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
FISCAL YEAR ENDING DECEMBER 31
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
- - -----------------------------------------------------------------------------
Celgene Corp 100 87 203 175 93 75
S&P 500 100 97 126 136 150 152
S&P Specialty Chemical 100 102 144 153 174 152
NASDAQ Pharm 100 120 319 266 237 178
</TABLE>
APPROVAL OF THE ADOPTION OF THE 1995
NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN
GENERAL
The following description of the 1995 Directors' Plan is a summary and is
qualified in its entirety by reference to the 1995 Directors' Plan, which is
attached hereto as Exhibit A.
The 1995 Directors' Plan was adopted by the Board of Directors on April 5,
1995, subject to the approval of the Corporation's stockholders. The 1995
Directors' Plan provides for the granting of non-qualified options to purchase
an aggregate of not more than 250,000 shares (subject to adjustment in certain
circumstances) of Common Stock to Non-Employee Directors. The 1995 Directors'
Plan is designed to provide a means of giving existing and new Non-Employee
Directors an increased opportunity to acquire an investment in the Corporation,
thereby maintaining and strengthening their desire to remain with the
Corporation's Board of Directors and stimulating their efforts on the
Corporation's behalf. It is also expected that the 1995 Directors' Plan will
encourage qualified persons to become directors of the Corporation.
Non-Employee Directors, including members of the Compensation Committee,
are eligible to receive options under the 1995 Directors' Plan in accordance
with the terms of the 1995 Directors' Plan. Each new Non-Employee Director, upon
the date of his election or appointment, will receive a non-
12
<PAGE>
qualified option to purchase 20,000 shares of Common Stock. Upon the date of the
1995 Annual Meeting of Stockholders and the approval of the 1995 Directors'
Plan, each Non-Employee Director who is reelected and continues as a member of
the Board of Directors will receive a non-qualified option to purchase 6,000
shares of Common Stock. Upon the date of the Annual Meeting of Stockholders each
year after 1995, each Non-Employee Director who is reelected and continues as a
member of the Board of Directors will receive a non-qualified option to purchase
10,000 shares of Common Stock (or a pro rata portion thereof if the director did
not serve the entire year since the date of the last annual meeting).
Additionally, each Non-Employee Director as of April 5, 1995, the date of the
adoption of the 1995 Directors' Plan, was granted a non-qualified option to
purchase 20,000 shares of Common Stock, subject to the approval of the
stockholders of the Corporation of the 1995 Directors' Plan.
The shares subject to an initial option granted to a Non-Employee Director
and the shares subject to the options granted on the date of the adoption of the
1995 Directors' Plan vest in four equal annual installments commencing on the
first anniversary of the date of grant, assuming the Non-Employee Director
remains a director. The 6,000 or 10,000 shares subject to any subsequent option
granted to a Non-Employee Director will vest in full on the date of the first
Annual Meeting of Stockholders held following the date of the grant, assuming
the Non-Employer Director has been a director through that date.
The options will expire no later than 10 years from the date of grant and
no options may be granted after April 5, 2005.
If a Non-Employee Director terminates his service on the Board of Directors
for any reason, any exercisable option which has not expired may be exercised at
any time until the date of expiration of such option with respect to the number
of shares of Common Stock which were exercisable on the date the Non-Employee
Director terminated his service with the Corporation. In addition, if there is a
change in control (as defined in the 1995 Directors' Plan) and within two years
thereafter a director ceases his service on the Board of Directors for any
reason, all unvested portions of a stock option will automatically vest.
The 1995 Directors' Plan is administered by the Board of Directors which
has the full and final authority to interpret the 1995 Directors' Plan and to
adopt and amend such rules and regulations for the administration of the 1995
Directors' Plan as the Board may deem desirable. In addition, the Board of
Directors has the right to amend, suspend, or terminate the 1995 Directors' Plan
at any time; provided, however, that unless first duly approved by the holders
of Common Stock entitled to vote thereon, no amendment or change may be made in
the 1995 Directors' Plan: (i) increasing the maximum number of shares for which
options may be granted under the 1995 Directors' Plan; (ii) increasing the
number of shares subject to an option; (iii) reducing the purchase price
previously specified for the shares subject to options; (iv) extending the
period during which options may be granted or options exercised under the 1995
Directors' Plan; or (v) changing the class of persons eligible to receive
options under the 1995 Directors' Plan.
Any options granted under the 1995 Directors' Plan prior to the date of the
Annual Meeting of Stockholders will terminate in the event that the 1995
Directors' Plan is not approved by the stockholders of the Corporation. If the
1995 Directors' Plan is not approved by the stockholders, the Non-Employee
Directors will continue to receive options under the 1992 Directors' Plan. See
'Election of Directors -- Director Compensation' for a description of the 1992
Directors' Plan. If the 1995
13
<PAGE>
Directors' Plan is approved by the stockholders of the Corporation, no
additional options or restricted stock awards will be granted under the 1992
Directors' Plan.
The 1995 Directors' Plan is not subject to any of the requirements of the
Employee Retirement Income Security Act of 1974, as amended. The 1995 Directors'
Plan is not, nor is it intended to be, qualified under Section 401(a) of the
Code. Options granted under the 1995 Directors' Plan will be 'non-qualified'
stock options and are not intended to qualify as incentive stock options under
Section 422A of the Code.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The principal Federal income tax consequences with respect to stock options
granted or to be granted pursuant to the 1995 Directors' Plan are summarized
below. The following discussion does not set forth any state or local tax
consequences that may be applicable. Individuals are urged to obtain
professional advice regarding the applicability of federal, state, and local tax
laws to them.
The options granted or to be granted under the 1995 Directors' Plan do not
and will not qualify as incentive stock options and are herein referred to as
non-qualified stock options. An optionee will realize no income at the time he
is granted a non-qualified stock option. Such conclusion is predicated on the
assumption that, under existing Treasury Department regulations, a non-qualified
stock option, at the time of its grant, has no readily ascertainable fair market
value. Except with respect to the exercise of a non-qualified stock option for
stock which is 'not transferable' and subject to a 'substantial risk of
forfeiture,' as described below, ordinary income will be realized when a non-
qualified stock option is exercised. The amount of such income will be equal to
the excess of the fair market value on the exercise date of the shares of Common
Stock issued to an optionee over the option price. The optionee's holding period
with respect to the shares acquired will begin on the date of exercise.
Special rules are applicable to stock which is 'not transferable' and
subject to a 'substantial risk of forfeiture.' In general, such stock (i) is
subject to a substantial risk of forfeiture if the optionee's right to full
enjoyment of the stock is conditioned upon the future performance of substantial
services and (ii) is not transferable if a transferee would take the stock
subject to the same restrictions. Stock acquired pursuant to the exercise of an
option as to which a service requirement is imposed could be so treated.
Unless the optionee elects to be taxed at the time of exercise (an '83(b)
election'), the optionee will recognize ordinary income on the first day that
the stock is either transferable or not subject to a substantial risk of
forfeiture. In the case of any other stock subject to a service requirement,
this will depend on the individual facts and circumstances. The ordinary income
in such case will be the excess of the fair market value of the stock on such
date over the option price and the optionee's holding period will begin on that
day.
An optionee who makes an 83(b) election will recognize ordinary income on
the date of exercise equal to the excess of the fair market value of such stock
at the time of exercise over the option price. The optionee's holding period
with respect to such stock will begin on the date of exercise.
The tax basis of the stock acquired upon the exercise of any option will be
equal to the sum of (i) the exercise price of such option and (ii) the amount
included in income with respect to such option. Any gain or loss on a subsequent
sale of the stock will be either long-term or short-term capital gain or loss,
depending on the optionee's holding period for the stock disposed of.
14
<PAGE>
In addition, any officers and directors of the Corporation subject to
Section 16(b) of the Securities Exchange Act of 1934 may be subject to special
tax rules regarding the income tax consequences concerning their non-qualified
options. A participant subject to Section 16(b) should consult his or her tax
advisor as to whether, as a result of Section 16(b) of the Securities Exchange
Act of 1934 and Section 83 of the Internal Revenue Code and the regulations
thereunder, the timing of income recognition is deferred to any period following
exercise of an option (e.g., the six-month period following such exercise).
The Corporation will be entitled, subject to rules regarding reasonableness
of compensation, to a deduction for Federal income tax purposes at the same time
and in the same amount as the optionee is considered to have realized ordinary
income in connection with the exercise of the option. The deduction will be
allowed for the taxable year of the Corporation in which or with which ends the
taxable year of the optionee in which such ordinary income is recognized.
NEW PLAN BENEFITS
On April 5, 1995, the date the 1995 Directors' Plan was adopted (subject to
stockholder approval), each of Messrs. Cary, Morgan, Robb, and Schroeder was
granted under the 1995 Directors' Plan a non-qualified option to purchase 20,000
shares of Common Stock. These options have an exercise price of $5.63 per share,
the fair market value of the Common Stock on the date of grant, and vest in four
equal annual installments commencing on the first anniversary of the date of
grant. On April 24, 1995, the closing price of the Common Stock was $5.38 per
share.
VOTE REQUIRED
The affirmative vote of the holders of at least a majority of the
outstanding shares of Common Stock present and entitled to vote at the annual
meeting is required to approve the adoption of the 1995 Directors' Plan. THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE THEIR SHARES FOR THE
PROPOSAL TO APPROVE THE ADOPTION OF THE 1995 DIRECTORS' PLAN.
INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP, independent
certified public accountants, to audit the books and records of the Corporation
for the current year, and the Board recommends that the stockholders of the
Corporation confirm such appointment.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
meeting of stockholders and will be given an opportunity to make a statement if
they so desire. They are expected to be available to respond to appropriate
questions.
15
<PAGE>
STOCKHOLDERS PROPOSALS
Stockholders of the Corporation wishing to include proposals in the proxy
material in relation to the annual meeting of the Corporation to be held in 1996
must submit the same in writing so as to be received at the executive office of
the Corporation on or before December 28, 1995. Such proposals must also meet
the other requirements of the rules of the Securities and Exchange Commission
relating to stockholders' proposals.
By Order of the Board of Directors,
RICHARD G. WRIGHT,
Chairman of the Board and
Chief Executive Officer
April 28, 1995
16
<PAGE>
EXHIBIT A
CELGENE CORPORATION
1995 NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN
1. PURPOSE
The purpose of the Celgene Corporation 1995 Non-Employee Directors'
Incentive Plan (the 'Plan') is to secure for Celgene Corporation (the
'Corporation') and its stockholders the benefits of the incentive inherent in
increased ownership of common stock, par value $.01 per share (the 'Common
Stock'), of the Corporation by the members of the Board of Directors (the
'Board') of the Corporation who are not employees of the Corporation or any of
its subsidiaries ('Non-Employee Directors'). It is expected that such ownership
will provide such Non-Employee Directors with a more direct stake in the future
welfare of the Corporation and encourage them to remain directors of the
Corporation. It is also expected that the Plan will encourage qualified persons
to become directors of the Corporation.
2. ADMINISTRATION
The Plan shall be administered by the Board, and in connection therewith,
the Board shall have all the powers vested in it by the terms of the Plan,
including authority (within the limitations described herein) to prescribe the
form of the agreements embodying awards of stock options made under the Plan
(the 'Options'). Subject to the provisions of the Plan, the Board shall have the
power to construe the Plan, to determine all questions arising under the Plan,
and to adopt and amend such rules and regulations for the administration of the
Plan as it may deem desirable. Any decision of the Board in the administration
of the Plan, as described herein, shall be final and conclusive. The Board may
act only by a majority of its members in office, except that the members thereof
may authorize any one or more of their number or the Secretary or any other
officer of the Corporation to execute and deliver documents on behalf of the
Board. No member of the Board shall be liable for anything done or omitted to be
done by such member or by any other member of the Board in connection with the
Plan, except for such member's own willful misconduct or as expressly provided
by statute.
3. AMOUNT OF STOCK
The stock which may be issued or transferred pursuant to the exercise of
Options granted under the Plan shall not exceed 250,000 shares of Common Stock,
subject to adjustment as provided in Section 9. The Common Stock to be issued
may be either authorized and unissued shares or previously issued shares
acquired or to be acquired by the Corporation and held in treasury. Any shares
subject to an Option which for any reason expires or is terminated unexercised
may again be subject to a new Option.
4. ELIGIBILITY
Each Non-Employee Director shall be eligible to receive non-qualified stock
options in accordance with Section 5. Options granted under the Plan shall each
be evidenced by an agreement in such form as the Board shall prescribe from time
to time in accordance with the Plan.
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<PAGE>
5. GRANT OF OPTIONS
Each Option automatically shall be granted in accordance with the following
terms and conditions:
(a) upon the date of the approval of this Plan by the Board, each
Non-Employee Director shall receive an Option to purchase 20,000 shares of
Common Stock, subject to adjustment as provided in Section 9;
(b) upon the date of initial election or appointment as a member of
the Board, each new Non-Employee Director shall receive an Option to
purchase 20,000 shares of Common Stock, subject to adjustment as provided
in Section 9;
(c) upon the date of the Annual Meeting of Stockholders of the
Corporation to be held on June 16, 1995 (the '1995 Annual Meeting') or any
adjournment or adjournments thereof, each Non-Employee Director who has
been reelected at the 1995 Annual Meeting and is continuing as a member of
the Board as of the completion of the 1995 Annual Meeting shall receive an
Option to purchase 6,000 shares of Common Stock, subject to adjustment as
provided in Section 9; and
(d) each year after the 1995 Annual Meeting, upon the date of an
Annual Meeting of Stockholders of the Corporation (an 'Annual Meeting')
each Non-Employee Director who has been reelected at such Annual Meeting
and is continuing as a member of the Board as of the completion of such
Annual Meeting shall receive an Option to purchase 10,000 shares of Common
Stock, subject to adjustment as provided in Section 9; provided, however,
that a Non-Employee Director who has been reelected at such Annual Meeting
and is continuing as a member of the Board as of the completion of such
Annual Meeting but has not been a member of the Board during the entire
period between such Annual Meeting and the prior Annual Meeting shall
receive an Option to purchase that number of shares equal to the product of
(i) 10,000 and (ii) a fraction, where the numerator is the number of days
in the 12-month period immediately preceding such Annual Meeting during
which such Non-Employee Director was a Non-Employee Director and the
denominator is 365.
6. EXERCISE PRICE
The Option exercise price per share shall be 100% of the fair market value
of a share of Common Stock on the date of grant, subject to adjustment as
provided in Section 9. As used herein, fair market value shall be the closing
price of the Common Stock on the date of determination (if the Common Stock is
then traded on a national securities exchange or in the NASDAQ National Market
System) or, if not so traded, the average of the closing bid and asked prices
thereof on such day or, if the Common Stock is not traded on the date of
determination, on the last preceding date on which the Common Stock is traded.
7. EXERCISE OF OPTIONS
(a) No Option shall be exercisable until and unless the Plan is approved by
the Corporation's stockholders at the 1995 Annual Meeting and, unless the Plan
is so approved, all Options will terminate and be of no further force or effect
on the earlier to occur of (i) the day after the 1995 Annual Meeting and (ii)
April 4, 1996.
(b) The shares subject to an Option granted pursuant to Section 5(a) or
5(b) shall vest in four equal annual installments, with the first installment
vesting on the first anniversary of the date of grant if the
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holder thereof has been a Non-Employee Director of the Corporation at all times
since such date of grant. The shares subject to an Option granted pursuant to
Section 5(c) or 5(d) shall vest in full on the date of the first Annual Meeting
held following the date of grant if the holder thereof has been a Non-Employee
Director of the Corporation at all times from such date of grant to the date of
such Annual Meeting.
(c) If a person shall cease to be a Non-Employee Director for any reason
('Termination') while holding an Option that has not expired and has not been
fully exercised, such person, or in the case of his or her death or adjudication
of incompetency, his or her executors, administrators, distributees, guardian,
or legal representative, as the case may be, may, at any time until the
termination of such Option, exercise the Option with respect to any shares of
Common Stock as to which it was exercisable on the date the person ceased to be
such a Non-Employee Director.
(d) No Option or any part of an Option shall be exercisable:
(i) after the expiration of 10 years from the date the Option was
granted; and
(ii) unless written notice of the exercise is delivered to the
Corporation specifying the number of shares to be purchased, and payment in
full is made for the shares of Common Stock being acquired thereunder at
the time of exercise.
(e) An Option shall not be transferable by the optionee otherwise than by
will or the laws of descent and distribution or pursuant to a qualified domestic
relations order, as defined in the Internal Revenue Code of 1986, as amended
(the 'Code'), and shall be exercisable during this lifetime only by the
optionee, his or her guardian or legal representative, or the recipient thereof
pursuant to a qualified domestic relations order.
8. ACCELERATION OF VESTING
(a) If Termination occurs within two years following a Change in Control
(as defined in Section 8(b) hereof), an Option shall automatically be vested and
immediately exercisable in full. In such event, notwithstanding the provisions
of Section 7, an Option recipient, or in the case of his or her death or
adjudication of incompetency, his or her executors, administrators,
distributees, guardian, or legal representative, as the case may be, may, at any
time until the termination of such Option, purchase some or all of the shares
covered by such recipient's Options.
(b) For the purposes hereof, a change in control (a 'Change in Control')
shall be deemed to occur:
(i) if any person within the meaning of Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, other than the Corporation or any of
its subsidiaries, has become the beneficial owner, within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, of 30 percent or more
of the combined voting power of the Corporation's then outstanding voting
securities; or
(ii) when a majority of the directors elected at any special or annual
meeting of stockholders are not individuals nominated by the Corporation's
incumbent Board or when individuals who are members of the Board at any one
time shall immediately thereafter cease to constitute a majority of the
Board.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
(a) If dividends payable in Common Stock during any fiscal year of the
Corporation exceed in the aggregate 5% of the Common Stock issued and
outstanding at the beginning of such fiscal year, or if
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there is during any fiscal year of the Corporation one or more splits,
subdivisions, or combinations of shares of Common Stock resulting in an increase
or decrease by more than 5% of the shares outstanding at the beginning of the
year, the number of shares subject to Options to be granted thereafter to
Non-Employee Directors pursuant to Section 5 shall be increased or decreased
proportionately, as the case may be, and the number of shares deliverable upon
the exercise thereafter of any Options theretofore granted shall be increased or
decreased proportionately, as the case may be, without change in the aggregate
purchase price. Common Stock dividends, splits, subdivisions, or combinations
during any fiscal year which do not exceed in the aggregate 5% of the Common
Stock issued and outstanding at the beginning of such year shall be ignored for
purposes of the Plan. All adjustments shall be made as of the day such action
necessitating such adjustment becomes effective.
(b) In case the Corporation is merged or consolidated with another
corporation, or in case all or substantially all of the property or stock of the
Corporation is acquired by another corporation, or in case of a reorganization
or liquidation of the Corporation, the Board, or the board of directors of any
corporation assuming the obligations of the Corporation hereunder, shall either
(i) make appropriate provisions for the protection of any outstanding Options by
the substitution on an equitable basis of appropriate stock of the Corporation,
or appropriate stock of the merged, consolidated, or otherwise reorganized
corporation or (ii) give written notice to optionees that their Options, which
will become immediately exercisable notwithstanding any waiting period otherwise
prescribed by the Board, must be exercised within 30 days of the date of such
notice or they will be terminated.
10. MISCELLANEOUS PROVISIONS
(a) Except as expressly provided for in the Plan, no Non-Employee Director
or other person shall have any claim or right to be granted an Option under the
Plan.
(b) Nothing in the Plan or in any Option agreement shall confer any right
to continue as a director of the Corporation or interfere in any way with the
right of the Corporation to remove such option holder or not to nominate such
option holder for election as a director of the Corporation at any time.
(c) The Corporation shall not be obligated to deliver any shares of Common
Stock hereunder until there has been qualification under or compliance with such
state or federal laws, rules or regulations as the Corporation may deem
applicable.
(d) Stock purchased pursuant to the exercise of an Option shall at the time
of purchase be paid in full in cash, or with shares of Common Stock, or a
combination of cash and Common Stock to be valued at the fair market value
thereof on the date of such exercise; provided, however, that any shares of
Common Stock so delivered shall have been beneficially owned by the optionee for
a period of not less than six months prior to the date of exercise. Upon receipt
of payment and such documentation as the Corporation may deem necessary to
establish compliance with the Securities Act of 1933, the Corporation shall,
without stock transfer tax to the optionee or other person entitled to exercise
the Option, deliver to the person exercising the Option a certificate or
certificates for such shares. It shall be a condition to the obligations of the
Corporation to issue or transfer shares of Common Stock upon exercise of an
Option, that the optionee (or any person entitled to act under Sections 7(c) and
7(e)) pay to the Corporation, upon its demand, such amount, if any, as may be
requested by the Corporation for the purpose of satisfying any liability to
withhold federal, state, local or foreign income or other taxes. If the amount
requested is not paid, the Corporation may refuse to issue shares of Common
Stock. Such taxes may be paid in cash or by tender of the option holder or the
withholding by the Corporation of
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<PAGE>
the number of shares of Common Stock whose fair market value equals the amount
required to be withheld.
(e) A recipient of Options shall have no rights as a stockholder with
respect to any shares issuable or transferable upon exercise thereof until the
date a stock certificate is issued to him for such shares. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.
(f) The expenses of the Plan shall be borne by the Corporation.
(g) If an Option is exercised by the executors, administrators, legatees,
or distributees of the estate of a deceased optionee or by the guardian or legal
representative of an optionee, the Corporation shall be under no obligation to
issue stock thereunder unless and until the Corporation is satisfied that the
person or persons exercising the Option are the duly appointed legal
representatives of the optionee or of the deceased optionee's estate or the
proper legatees or distributees of such estate.
11. AMENDMENT OR DISCONTINUANCE
The Plan may be amended at any time and from time to time, but not more
than once in a six-month period, by the Board as the Board shall deem advisable
including, but not limited to, amendments necessary to qualify for any exemption
or to comply with applicable law or regulations; provided, however, that except
as provided in Section 9, the Board may not, without further approval by the
stockholders of the Corporation, increase the maximum number of shares of Common
Stock as to which Options may be granted under the Plan, increase the number of
shares subject to an Option, reduce the minimum Option exercise price described
in Section 6, extend the period during which Options may be granted or exercised
under the Plan or change the class of persons eligible to received Options under
the Plan. No amendment of the Plan shall materially and adversely affect any
right of any holder of an Option with respect to any Option theretofore granted
without the written consent of the holder of such Option.
12. TERMINATION
The Plan shall terminate upon the earlier to occur of (a) the adoption of a
resolution of the Board terminating the Plan, (b) April 5, 2005, and (c) April
4, 1996 if the Plan has not been approved by the Corporation's stockholders at
the 1995 Annual Meeting.
13. EFFECTIVE DATE OF PLAN
The Plan shall become effective as of April 5, 1995, provided that the
Corporation's stockholders shall have approved the Plan at the 1995 Annual
Meeting.
14. 1992 NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN
If the Corporation's stockholders approve the Plan at the 1995 Annual
Meeting, the Corporation's 1992 Non-Employee Directors' Incentive Plan shall
terminate and no additional options and restricted stock awards may be granted
thereunder, provided that all options and restricted stock awards previously
granted thereunder shall remain subject to the terms and conditions of the 1992
Non-Employee Directors' Incentive Plan. If the Plan is not approved by
stockholders at the 1995 Annual Meeting, the 1992 Non-Employee Directors'
Incentive Plan shall remain in full force and effect.
A-5
<PAGE>
DIRECTIONS TO THE SOMERSET HILLS HOTEL
200 LIBERTY CORNER ROAD
WARREN, NEW JERSEY 07059
PHONE # 908-647-6700
FAX # 908-647-8053
FROM CONNECTICUT, WESTCHESTER, AND NORTH SHORE LONG ISLAND
From George Washington Bridge, follow signs to I-80 West. Follow I-80 West until
I-287 South ( 1/2 hour from bridge). Exit will read 'Somerville-Morristown.'
Follow I-287 South until the Mt. Airy Road exit. Exit on Mt. Airy Road and make
a left onto Mt. Airy Road. Follow through 2 lights and at the third light make a
left. Hotel will be on the left. Total travel time is 50-55 minutes.
FROM SOUTH (WASHINGTON, D.C.)
Take New Jersey Turnpike North and exit at Exit 10. Get on I-287 North.** Follow
I-287 North to I-78 East. Follow I-78 East to Exit 33
(Bernardsville-Martinsville). At the end of the ramp make a left turn at light.
Follow through 2 lights and make a right at the third light. Total travel time
from Exit 10 is 40 minutes.
FROM MIDTOWN MANHATTAN
Take the Lincoln Tunnel to New Jersey Turnpike South. Exit at Exit 14 (Newark
Airport) and follow signs to I-78 West. ## Follow I-78 West to Exit 33
(Bernardsville-Martinsville). At the end of the ramp make a right and at the
second light make a right to the hotel. Total travel time is 40 minutes.
FROM BROOKLYN OR SOUTH SHORE LONG ISLAND
Take the Verazzano Bridge which will bring you to I-278 West. Follow I-278 West
to Route 440 South. Follow 440 South to the Outerbridge Crossing. Follow signs
to I-287 North and follow Washington, D.C. directions starting with **.
FROM UPSTATE NEW YORK
From the New York Thruway, get on the Garden State Parkway South. At Exit 142
(I-78) go west and follow Midtown Manhattan directions from ##.
FROM SOUTH NEW JERSEY (ATLANTIC CITY)
Take the Garden State Parkway to I-287 North. Follow I-287 North to I-78 East.
Follow I-78 East to Exit 33 (Martinsville-Bernardsville). Make a left at end of
ramp and at the third light make a right. The hotel will be on the left. Total
travel time is 2 hours.
<PAGE>
APPENDIX 1
PROXY CARD
CELGENE CORPORATION
PROXY
The undersigned hereby appoints Richard G. Wright and Sol J. Barer, and
each of them, with power of substitution, to represent and to vote on behalf of
the undersigned all of the shares of Celgene Corporation (the "Corporation")
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
to be held at the Somerset Hills Hotel, 200 Liberty Corner Road, Warren, New
Jersey on Friday, June 16, 1995, at 1:00 p.m., local time, and at any
adjournment or adjournments thereof, hereby revoking all proxies heretofore
given with respect to such stock, upon the following proposals more fully
described in the notice of and proxy statement for the meeting (receipt of which
is hereby acknowledged).
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR (1), (2), and (3).
1. ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked to the contrary) [ ]
WITHHOLD AUTHORITY to vote for all nominees listed below [ ]
Nominees: Richard G. Wright, Sol J. Barer, Frank T. Cary,
Richard C. E. Morgan, Walter L. Robb, Lee J. Schroeder
(INSTRUCTION: To withhold authority to vote for
any individual nominee, write that
nominee's name on the space provided
below.)
------------------------------------------------------------------------
2. PROPOSAL TO APPROVE THE ADOPTION OF THE 1995 NON-EMPLOYEE DIRECTOR'S
INCENTIVE PLAN.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF THE CORPORATION.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion upon such other matters as may properly come before
the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, AND 3.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
-----------------------------
Signature
-----------------------------
Signature if held jointly
Dated:_________________, 1995
Please return in the enclosed postage-paid envelope.
I will [ ] will not [ ] attend the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
